Ted Waitt

Theodore (Ted) Waitt is the founder and CEO and Gateway, Inc., a direct seller of made-to-order personal computers (PCs). He is credited for parlaying a home-based business into a $10 billion mail-order PC powerhouse in just 15 years. Under Waitt's direction, Gateway was the first direct PC seller to offer its machines on the Internet and the first to offer its own Internet services along with its PCs.

The foundation for Gateway was first established in 1985 when, along with partner Mike Hammond, the 22-year-old Waitt abandoned his studies at the University of Iowa to create TIPC, a mail-order company selling peripheral computer equipment and software directly to Texas Instruments computer owners. With a $10,000 loan co-signed by Waitt's grandmother, operations launched in Sioux City, Iowa, in a farmhouse owned by Waitt's parents. In 1986, Waitt decided that the PC market would be more lucrative than peripherals, and he began assembling his own computers and selling customized versions to customers. The following year TIPC unveiled an IBM-compatible PC similar to the one sold by Texas Instruments. With a price tag of $1,995, however, it cost only half what the Texas Instruments machine cost.

Waitt changed his firm's name to Gateway 2000 in 1988, and he relocated headquarters from his family home to a 5,000-square-foot facility. Although employees were paid only $5.50 an hour, they were able to earn extra money via monthly bonuses based on profits. Sales jumped from $1.5 million to $12 million that year and to $70.6 million in 1989. Waitt moved his firm to South Dakota in 1990. He also hired six experienced computer industry executives to help him manage Gateway's explosive growth and a marketing manager to develop advertisements that focused on the firm's unlikely rural location. Sales that year grew more than threefold to $275 million.

Inc. magazine named Gateway the fastest growing private firm in the U.S. in 1991. That year, the company began selling its PCs to corporations. Sales exceeded $1 billion for the first time in 1992, and earnings reached $1.1 million, positioning Gateway as the nation's top mail order computer maker. Finding itself unable to fulfill a flurry of orders at the end of the year, Gateway hired 200 new employees. Waitt launched Gateway's international expansion in 1993 by establishing a unit in Dublin, Ireland. Waitt also took his firm public, retaining an 85 percent stake, and funneled the $150 million raised into product line expansion efforts. By 1994, Gateway was selling printers, networking products, fax modems, and software along with its PCs.

When competitors began charging fees for technical support, Waitt decided to continue offering services free of charge and also to upgrade Gateway's support operations. International expansion continued into France, Germany, Japan, and the United Kingdom. Sales grew to $3.5 billion in 1995. Modeled after European showrooms, Waitt began opening Country Stores to allow consumers to inspect products before placing mail orders. The firm shortened it name to Gateway Inc. in 1998. Waitt spent considerable time in the late 1990s reshuffling his management team after outside evaluators determined that the firm's top 100 employees were lacking in several areas. To improve Gateway's ability to recruit industry leaders, Waitt also moved headquarters to San Francisco, California.

Gateway began offering Internet services via Gateway.net in 1999. Waitt relinquished the title of CEO to Jeff Weitzen in January of 2000, retaining the role of chairman. However, after earnings dropped 26 percent in 2000, Weitzen regained control of his firm early in 2001. He refocused Gateway on its direct sales operations and launched cost-cutting measures such as reducing Gateway's workforce by 12 percent.