John Sculley: Call Him TechSmart

Most people still think of John Sculley as a schmo, or worse, naove. He tried to follow Steve Jobs at Apple and later he burnished the image of Spectrum Information Technologies Inc. before its scandal and bankruptcy. LivePicture Inc., the last venture he was known for backing, had to be bought out of bankruptcy.

So what has the genius got for us today? Quite a lot, actually. Most of the firms backed by Sculley Brothers LLC – founded by brothers John, Arthur and David in 1995 – are big winners. We’re talking names like NetObjects,, PeoplePC, and LivePerson.

What Sculley called about, however, was TechSmart, a new way to move used computers founded by Dennis Lynch. Lynch said that in the six months since the Sculleys got involved with his company, monthly growth rates have ranged from 20 to 60 percent.

“This interested us because it brings together a market that already exists but was served by small companies, and the opportunity to scale it up and do it with first-tier business partners like Compaq, Staples and Comdisco, bringing big brand Internet marketing to it,” explained Sculley.

TechSmart takes off-lease servers and new, returned machines, refurbishes and backs them, then ships them to buyers lured by the prices on its web site and the auctions it runs. The Sculleys renamed it (it had been, advised on advertising and positioning, helped recruit top-flight managers, and opened the Rolodex to build those partnerships.

“It was a magic wand,” said Lynch. was a used computer store. The TechSmart story notes that the percentage of computers under lease is doubling, to 30 percent of the market, while lease terms are tumbling to 24 months. TechSmart takes these machines on consignment, refurbishes and guarantees them, then ships them from fancy warehouses (Lynch spent $120,000 on the anti-static floor in one) that give more reassurance.

The buyers are companies like yours, firms with 25-300 employees that might upgrade their clients if they could do it at $300/employee, and who want to save on servers by picking up those other buyers returned.

Careful management and computerized management systems tell Lynch whether the computers he’s getting should be sold for parts, sold directly to the small office/home office market, or put up for auction. “We’ve positioned ourselves in the management team with people experienced in each channel,” said Lynch.

Partnerships are key to getting the best price on the merchandise, said Sculley. “We’re not only bidding off our own site, we have a number of partner auction sites we’re working with.”

“We built real infrastructure to give a value-add proposition to our customers,” added Lynch. “We’ve built a large barrier to entry.”

Sculley only had a few minutes to spare; another of the companies he’s backing, Intralinks Inc., plans to go public this quarter.

So maybe history will write that in the glare of the spotlight John Sculley sometimes came off second-best. But getting rich in the company of family is a fine revenge. Besides, if you need a computer, John Sculley still has a deal for you…

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