Merisel Mounts a Comeback

From out of the ashes, a new Merisel arises. It's run by CEO and president Tim Jenson, a nine-year company veteran and former CFO who saw the company through its worst days. The reorganized Merisel, however, has cash in the bank to the tune of $50 million and no debt. Oh yeah, and it has a plan, too. Here, Jenson shares that plan in an interview with VARBusiness' T.C. Doyle.

VB: I thought you guys were dead.
Jenson: The old Merisel, for all practical purposes, is gone. What we used to do,being a full-line distributor competing against Ingram and Tech Data,we no longer do. We did do some software licensing before, which is a big part of our new business. Today, the way I'd characterize ourselves is almost like a Home Depot or a Toys 'R' Us. We're more of a category-killer, and we're just going to be in software and just in software licenses.

VB: Why "Merisel?" Why not start life with a new name?
Jenson: We did a lot of study and talked with lots of people. Turns out the baggage was more good than bad. More people know us, both in the reseller community and in the vendor community. Merisel still has a very positive name within the industry.

VB: There's a couple of guys out there doing license management and distribution. How do you differ?
Jenson: Name which one, and I'll tell you how we differ.

VB: The guys in Redmond, Wash., that used to be with Microsoft. Licenses Online.
Jenson: Well, we're not bankrupt; Licenses Online will be shortly. They don't have the financial wherewithal to be a player...we're mostly a cash company today. We have $50 million in cash, no debt, no liabilities. Although their overall strategy was good, they financed themselves with what I'd call dot-com money. Good systems. Good ideas. But not the financial backing to make it work.

VB: How about Digital River, then?
Jenson: Digital River, from my understanding, is doing more software distribution electronically. In other words, ESD. They do some licensing as well, but their real motive and goal is to become an ESD provider, which, over time, is also where I believe the market is heading. You could say, though, they are ahead of their time. ESD works today in security, but not in many other areas, yet.

VB: Software is big. Where do you specialize?
Jenson: Off-the-shelf software. We're not going to do SAP or Baan or PeopleSoft. Our biggest volumes will be with the biggest players. Some we don't have. When we got out of distribution, for example, we discontinued our relationship with Microsoft. They have contacted us again and we're in talks to reopen that relationship.

VB: You're pretty confident you can close the door on that one?
Jenson: I think so. [Microsoft is concerned that, worldwide, some 70 percent of their distribution business goes through Ingram and Tech Data. They like being the one with the monopoly power.

VB: That's going to bite you in the...
Jenson: I've never believed they were a monopoly in the way the Federal, antitrust folks do. They like to have power in the channel.