Reply To: ATTN: Ken and Everyone! New news on Walter Forbes

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I’m commented on this a few times over the years.

For those who don’t know the story, here’s the quick version:

  • Sierra was a public company
  • Walter Forbes, of CUC, joined our board around 1992. At the time, Sierra was launching its TSN online gaming network, and I wanted a board member with communications industry and subscription management experience and contacts. Walter was a friend of one of our existing board members
  • Walter was a great board member, and a very creative, intelligent person. He doesn’t get the credit he deserves, but he was the father of modern online shopping
  • In 1996, Walter surprised me after a board meeting, by asking if Sierra could be acquired
  • At the time, Sierra was not for sale. We were doing extremely well, but as a public company, we had to listen.
  • CUC wanted to acquire several game industry companies and combine them into a mega-company. Companies like Lucasarts, Broderbund, Davidson (Blizzard) and others were discussed. This sounded good, because I felt there was an opportunity to create an unbeatable company with worldwide distribution.
  • On the other hand, CUC was discussing having Bob Davidson, of Davidson software (an educational software company) run the consolidated company. I had major reservations about this. Bob was a ‘big company’ guy and very conservative. I couldn’t imagine Bob managing Sierra’s highly creative development organization, or marketing some of our more controversial products; such as Leisure-Suit Larry and Phantasmagoria. On the other hand, Bob had Blizzard, which were doing well, so there was some indication that it could work
  • CUC was offering a price well above Sierra’s current stock trading price. To an extent the decision was out of my hands. As the CEO of a public company, I had an obligation to do what shareholders wanted. That said, I felt there was a risk in the transaction that Sierra could be ruined by becoming part of a larger entity, especially one run by Bob Davidson.
  • Based on my concerns that Sierra would fail if run by Davidson, I declined the acquisition offer. This resulted in CUC negotiating a post-deal working relationship that would keep Sierra’s development group independent of Davidson. There was a software board created, which consisted of Kirk Shelton (of CUC), Bob Davidson and myself. It was specifically agreed that Sierra’s development group would NOT be managed by Davidson.
  • Immediately after acquisition, it became obvious that things weren’t going to work. Plenty of finger-pointing ensued. It was clear that the ‘software board’ was never going to meet, and that neither Davidson nor CUC had an intention of working within the framework that had been completed.
  • I do not blame Bob Davidson. We have never spoken about what occured, but there are indications that he and I were told different stories about how the software division would be managed post acquisition.
  • One of my sayings is that ‘A ship should only have one captain’. Bob and I were trying to co-exist within one software company, and it wasn’t working. I felt betrayed by CUC, but wasn’t ready for retirement, and it was too painful to watch Sierra being destroyed. I thought Sierra’s best chance for survival was to end the adversarial relationship between CUC, Davidson and myself.
  • I asked Walter Forbes if there was something else within the company that I could do. At the time, CUC was heavily involved in shopping by telephone. They had a membership club which provided discount merchandise that was ordered over the phone, and wanted to transform this business to online shopping. I split off a group of developers from Sierra and started running a group known as NetMarket. We had a great run of success at NetMarket, and built a great online shopping service.
  • Meanwhile, Sierra was struggling. Davidson and CUC also weren’t getting along, and Davidson soon resigned.
  • I felt that the smart move would have been to put me in charge of the software business, and was confused when I wasn’t asked. Instead CUC moved one of their corporate vice presidents, with no experience in software, into the leadership position, and I left the company completely.
  • Soon after these events, CUC itself was merged with another company, and it was discovered that CUC had been ‘cooking its books’ dating back to several years prior to acquiring Sierra.
  • CUC’s stock value collapsed, and its senior officers were charged as criminals.
  • Kirk Shelton was sentenced to 10 years in jail.
  • Walter Forbes has been tried criminally twice, and escaped prosecution on both occasions. Both have continued to maintain their innocence.
  • I am frequently asked whether I believe that Walter and Kirk are crooks. I honestly have no idea. In Sierra board meetings, and during the brief period I was on CUC’s board, I never saw anything suspicious, other than their dishonorable dealings with Sierra and Davidson.
  • Two juries have heard far more evidence than I had access to, and neither found enough evidence to convict Walter. So, perhaps he is innocent. I wish it were more definitive than this. A lot of people (1,000 Sierra employees) were hurt horribly by what occurred. Thousands of others who would have someday worked for Sierra will never work there. A brand name that once was amongst the finest in the world, now means little. Games that would have existed will now never be created. Thousands of lives were ruined. Those who were guilty should be hunted down and prosecuted to the fullest extent of the law.

I hope that someday, someone will write a book about CUC. I’m as curious as everyone else to learn what happened.

-Ken W