H.Brock

Shortly after the turn of the century, an entrepreneur named **Harold Brockman** started a small business selling used computers to third world countries. The business began when Brockman saw an infomercial on late night television which offered a pamphlet listing government auctions. Brockman paid $39.95 for what turned out to be a 36 page list of sales. Feeling somewhat ripped off, Brockman vowed to himself to go to each sale. At the very first sale, there was one lot which received no bids. This lot consisted of 38 computers which the government had retired because they were not Y2K compliant. Brockman did not bid on the computers either, but there was something about the experience which started him thinking.

Brockman himself knew very little about computers, but made some inquiries of a few friends and learned that there was a good chance that a BIOS upgrade was all the computers needed in order to run properly. Brockman returned to the department auctioning off the computers and on an impulse, bought the entire lot for $380 dollars.

With much swearing and confusion, Brockman downloaded copy of the required upgrade from a usenet and installed it on each of the computers. To his extreme satisfaction, every machine started and appeared to run properly.

For the next two months, Brockman went to every sale on his list and bought every lot of non-Y2K compliant computers he could find. At many of these auctions he found out about other sales and visited them as well. He financed these purchases with his savings and credit cards, as he did not want to have to tell anyone what he was doing or why he was doing it Eventually, Brockman had over 500 computers at his home and in three rented storage lockers. Of these, over three quarters were made useful by the BIOS upgrade.

Computer hardware technology was moving at a very fast rate at the time. Brockman could have sold his computers for a small profit at that point, but the computers were losing value by the hour as they sat in storage. Brockman however, had much bigger plans. The previous summer he had visited a third world country (which can not be named), and along with the enormous amount of literature included in his tour package was a pamphlet asking for donations of old computers to be sent to schools in the area.

Brockman contacted the local embassy of country X and offered his computers to them for a very low price. All he wanted was his purchase price and the service contract for all the computers in all the schools where the machines ended up. The officials of Country X leapt at the deal. These machines were far newer and more powerful than they were asking for, and Brockman’s price was still well below the market value for the machines, which were worth a lot more in the third world. At this point, Brockman was out of pocket for his time, the cost of the storage, the lawyer’s fees for drawing up what was a very elaborate support contract, and the $39.95 for the original pamphlet. As well, he had neither the expertise nor the resources to support over 400 computers on the other side of the world. But he had what he wanted, which was a contract.

Immediately, Brockman sub-contracted the service work to a large computer consulting company who had an office in country X. The end result was a sudden increase in the number of computer-literate children in country X, which to the government of country X more than offset the large support contract they were paying to company Y, who were passing a modest but very reliable revenue stream to Brockman. About a year later, Brockman took his strong but modest financials into a bank and bought Hang a Rat, a small but well-regarded software company, by picking up its debt and payroll. Hang a Rat made a couple of computer games that Brockman really liked, and he had been following their plans for new games on their Web site. Brockman knew that Hang a Rat was hemorrhaging money at an appalling rate, but this investment had three things going for it: A great product, a small but talented development team that liked working together, and a very loyal client base that was unfortunately too small to support the company. The company was at a classic dead end: It needed more money to compete with the big boys than it could generate, but its financial situation was too well known to allow it to go public. The developers were able to work for nothing, but without marketing clout, there was little hope for anything that they might produce. The vultures had been gathering for some time.

The first day he walked in the door as the new owner, nobody even looked up from their machines. They all figured that Brockman was there to fire them all and sell off the assets. They were half right. Brockman closed the door behind him, and went around getting everybody’s autograph. One by one, he thanked them for making the games that they had made and that he enjoyed so much. Then he asked them what they wanted. Then he told them that what he was going to do was not going to be pretty, or very nice, but he could get them what they wanted if they would work without pay for a month or maybe two.

First, Brockman licensed the games to a number of large online software distributors for a low price. He kept very close track of the sales. Again, this created a small but reliable revenue stream. Then, he took these sales figures to the most aggressive competitor he had. He told them that his company was halting development on that line of games, and by the time he had left he had sold his customer database for a large lump sum. Returning to the office, he drafted an announcement that all previous versions of the games were going to be released to open source.

Four weeks later, Brockman sold the company, which now consisted of nothing more than the development team and some computers, to his third largest competitor for a sum roughly equal to twice the original debt, which was still outstanding. Instead of a lump sum, Brockman took a contract to provide security for the companies' buildings. He sub-contracted this work the same day.

Brockman continued in this way, slowly eliminating cash from his dealings, and trading instead in assets, including personnel and expertise, and eventually developed an entire empire which had very little liquid capital. The Harold Brockman Group, or H.Brock, as it was eventually known, profited by owning and trading, rather than by buying and selling. All of its capital worth was in potential, not realization. Personnel provide expertise, and this, combined with information, can be used to make new things. Brockman was never terribly interested in creating new things himself, or having any of his companies do so. He was interested in putting together the building blocks required to create something new, then trading it to someone else, then taking what he received from the trade and building more potential.

Along the way, Brockman crystallized the idea of a company’s personnel being its greatest asset. He eventually insisted on having all of his employees sign personal services contracts, which were as likely to be major trading pieces in his deals as the bricks and mortar. Brockman was obsessed with people doing meaningful work however. It was not uncommon for him, towards the end of his life, to engineer enormous deals involving several Corps just to get all his personnel into positions they wanted. In all of these deals however, H.Brock always seemed to come out ahead as well.

Information is the other building block in this model. Brockman moved a great deal of information around, and always made sure that he got what he needed out of it before it went anywhere else.

Brockman wanted everyone to know who he was, but he didn’t necessarily want them to know what he was doing. The corporate, or Corp, portrait came out of this

* It is estimated that 2/3 of the assets on the planet during his life were either momentarily owned or in some way serviced by an H.Brock company.