Stuffed in a dusty corner of Kim B. Edwards' closet, buried behind dark blue suits and crisp white shirts with his initials monogrammed on the cuffs, is a Bernoulli Box.
Iomega Corp. sent Edwards the tape backup machine, its star product, back when the company was trying to convince him to sign on as CEO and lead it out of the doldrums. He had pulled the Bernoulli out of its cardboard package, glanced over the instructions, and promptly shelved it.At his job interview with the Roy, Utah, company Edwards got right to the point: The Bernoulli had no future.
"It was too expensive, too difficult to use, too big, too heavy, too everything bad," Edwards said. Even the name, Bernoulli, was intimidating.
The Iomega bigwigs told Edwards he didn't "understand" the business. But they hired him anyway.
Good move. Since he joined Iomega in January 1994, Edwards has proved he did understand the Bernoulli. He was right. It was dying - and even more importantly, that he understands consumers.
In two years, he's transformed a boring, wheezing company into a hot, hip business. Iomega's revenues are surging (sales are up 131 percent over last year), and its stock has soared, split twice and was $40.50 early Monday, up from about $3 a year ago.
On Tuesday Edwards will tell shareholders at the annual meeting that he did it with a simple strategy: provide customers with what they want, when they want it,and at a price they can afford.
To learn that, Iomega talked to consumers in 1,000 surveys, 150 interviews and more than 50 focus groups. What it found was people needed a way to store and share the "stuff" on their computers. And they wanted it to be quick, easy and inexpensive. So Edwards ordered the engineers to work.
On March 7, 1995, barely 15 months after Edwards' arrival, Iomega introduced the Ditto Easy 800, an 800-megabyte internal tape backup drive with a teensy price of $99. An external version, priced at $149, followed. With the push of a button, the drives let computer users copy everything from a hard drive onto a magnetic tape disk.
Next in the Iomega lineup was the Zip drive, which premiered March 24, 1995. It uses 100-megabyte removable disks. One Zip disk can hold as much stuff as 71 floppy disks. The drive costs $199, a disk as little as $14.95.
"We think Zip has got the chance to be the floppy for the multimedia age," Edwards said. "As we hear of people down-load-ing off the Internet, we just drool. We consider ourselves the catcher's mitt for the In-ter-net."
That's because a lot of the stuff on the Internet is data heavy; files loaded with sound and photos and even video can't be squeezed onto a floppy disk with a meager 1.44 megabytes of space.
The Zip received lots of attention from the computer industry, winning accolades and awards. But for Edwards, the crowning moment came when Vogue Magazine listed the Zip drive as one of the 10 most wanted objects of desire.
In December, Iomega began shipping the Jaz drive, which uses disks that store a gigabyte - 1,000 megabytes - of data.
Iomega's drives are being incorporated in computers built by about six companies, and it announced last week that Sony Pictures Entertainment will include the Jaz drive in an unspecified product.
When Edwards joined Iomega two years ago, he wasn't interested in shifting paradigms. He wanted to "smash" them. That meant not transforming a company, but building a whole new business.
Company officials now refer to it as the "new Iomega." Two statistics illustrate what they mean:
- Of the 84 marketing employees who work at Iomega, only 13 predate Edwards' arrival in 1994.
- Iomega sold 1 million Bernoulli drives in 15 years. By November 1995 Iomega had sold 1 million Zip and Ditto drives. The company announced in March it had sold yet another million Zip, Ditto and Jaz drives.
Edwards formed the new Iomega around a, well, zippy image that makes data storage as familiar and fun as tinkering in your attic or garage. Its slogan - "Iomega Corporation provides personal computer storage solutions that help people manage their computer stuff - anywhere" is as distinctive as the corporate logo: "i".
"To get somebody's attention for a storage device required a very fresh and unique approach in how you communicate to them," said Tim Hill, marketing vice president. "And `stuff' is just a very typical word that is used around the world that is very personal. It's how people refer to their personality, to the things they own, to what they do."
Besides language usage rules, Iomega broke the computer industry's color barrier: Its drives come in cobalt blue, maroon and forest green.
Iomega also is unique in attracting a cult of devotees, the Motley Fools. An investment advisement firm started by David and Tom Gardner, the Fools have extolled Iomega since early 1995 in a newsletter and later on their America Online site.
The Gardners borrowed their name from Shakespeare's "As You Like It." The fools, they note, were the only ones who could tell rulers the truth without getting their heads whacked off. So the Fools have said "Fiddlesticks!" to Wall Street and come up with their own strategy for beating the market.
Much of the Fools' success and acclaim - they grace the cover of the April 8 issue of Fortune - is due to Iomega. The shareholder's meeting will be a fools' fest, with the Gardners on hand for the revelry.
As flattering as the Fools' attention is, Edwards said he's never dropped in on their site, though he acknowledges much of Iomega's stock success is likely due to the Motley Fools.
"They've been very supportive of us," Edwards said. "We attribute a lot of the sales of Zip, and maybe even Ditto, and certainly Jaz to the Motley Fools."
He takes a similar arms-length view of the shorts - people who bet a stock price will drop - that haunt Iomega and try to talk down the company.
"They are a reality of the marketplace. We're not going to make them go away," he said.
What drives Edwards is figuring out what consumers will need next for their stuff, and how to be the first to provide it.
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ADDITIONAL INFORMATION
Iomega Corp.
Headquarters: Roy
Business: personal computer storage devices
Employees: About 1,972 worldwide
Leadership: Kim Edwards, president and CEO; Tim Hill, marketing vice president; Ted Briscoe, sales vice president; Len Purkis, chief financial officer; Bill Kennedy; logistics vice president; Wayne Stewart, operations vice president; and Reed Brown, manufacturing vice president.
Stock: $40.50 early Monday, up from about $3 a share a year ago.
Finances: Earned $10.1 million on sales of $222 million in the first quarter of 1996, up 453 percent over the first quarter of 1995, and up 49 percent from the fourth quarter of 1995.