TCI’s vision for CareerTrack never happened

BOULDER — Jimmy Calano wasn’t initially interested when TCI and Jeffrey Reiss approached him to buy CareerTrack.

They weren’t offering enough money, and Calano didn’t think they knew the business as well as he and his partner, Jeff Salzman. But Calano and Salzman sold, thinking they’d taken CareerTrack as far as they could. TCI had deep pockets, and Reiss was a pioneer of pay-per-view and the two-hour made-for TV movie, as well as a founder of cable stations Showtime and Lifetime.

Reiss was going to put CareerTrack on the fast track to people’s homes. He planned to change CareerTrack from a direct-mail and direct-marketing company to an electronic company, complete with the Internet, interactive CD-ROMs and a professional development television station to be called XL.

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But it didn’t happen.

CareerTrack ended up losing millions of dollars. Its staff was cut in half. Then TCI moved on to greener pastures.

Calano and Salzman sum it up in one word — “sad.”

“On one hand, it’s very sad to see it come to this sort of conclusion, and on the other hand, there’s nothing I can do about it,” Calano says. “I sold it three and a half years ago, and I had great hopes and expectations that TCI would do what they said they were doing to do.”

Calano and Salzman were in their mid-20s when they launched CareerTrack. Calano had a marketing degree from CU-Boulder; Salzman had a degree in political science and journalism from Indiana University of Pennsylvania and was editor of his college paper. Salzman had experience in advertising; Calano in training. They complemented each other, Calano says.

With $10,000 they changed the seminar industry when they started their business in 1982. They offered low-cost seminars (CareerTrack’s were $50 while others were $145) on subjects that ran the gamut from communication, customer service, management and time management to writing skills, building self-esteem and desktop publishing.

Trainers presented 15 to 20 seminars per quarter in big cities, and they’d treat their clients to coffee and snacks during the breaks. For those who couldn’t travel far, CareerTrack trainers would bring the seminars directly to the business. The company also sold video and audio tapes of their seminars in retail outlets and by mail order. The company compiled names and mailed out millions of catalogs and brochures on their business.

Revenue the first year was $220,000. Five years later, it was $38 million. CareerTrack then branched out internationally with employees in England and Ireland. When Calano and Salzman sold the company in June 1995, revenues were close to $80 million.

But there were tough times, Calano concedes. Losing $1.5 million one quarter “was a wake-up call,” he says. But the company would land on its feet.

“It was nothing more than our entrepreneurial skill and our terrific staff,” Calano says. “It was being conservative when we needed to, being aggressive when we needed to. No public money; no big debt; nothing; just reinvested profit.”

They were young, hard-working and energetic, Salzman adds. “Our marketing was good, but then we delivered because we had this good organization and good people,” he says. “I remember Jimmy and I would walk around the halls sometimes and think, How did we pull all these people together?’ It had a certain X-factor. There was a certain magic to it.”

Bart Emery, who’d worked at CareerTrack for 10 years, was optimistic when TCI joined with CareerTrack but says the “luster wore off.” Calano and Salzman had cemented a solid foundation for the company, but TCI’s Reiss didn’t appreciate that, Emery says.

Two consulting firms came in, after Reiss’ arrival, to redefine the company. Reiss said he couldn’t tell if CareerTrack was a direct-mail, seminar or training company. But employees say Reiss was trying to fix something that wasn’t broken. The executives would go off on retreats and come back with grand ideas for the staff. Reiss wanted to add a spiritual element to CareerTrack’s programming, but employees bristled.

Reiss also sought to install a new order-entry system. Instead, millions of dollars were lost, Emery says, after the company developed a computer system that it couldn’t get to work. “They then realized that the direction they were going was going to take too long and cost too much money,” he explains. But at the same time, consultants were saying that production time should be speeded up, so they spent time in meetings to figure out a strategy.

“I’d never been in so many meetings in my life as during that period,” Emery says. “Everyone in the company went through what they called a vision quest, where they spelled out where they thought CareerTrack was going. There were some changes, but after a year and a half, we basically were doing business the same way we were before.”

Reiss told The Boulder County Business Report in a May 1996 article that he’d spent most of his first year establishing a definition for CareerTrack. He wouldn’t get to do much more than that, because in August 1996 — just 14 months after taking over as CEO — Reiss stepped down.

TCI then put CareerTrack under one of its subsidiaries, ETC, an educational, training and communications company, and appointed Josh Klarin to finish out the year as CEO. By the end of 1996, according to court documents, CareerTrack lost $9.9 million.

Reiss says he stepped down when he realized TCI wasn’t interested in launching a cable channel. “As to why TCI decided not to pursue it, they changed their strategy,” Reiss says. “I would suggest they probably had bigger fish to fry with the current AT&T merger.”

So what was Klarin’s strategy?

CareerTrack employees say it was to dismantle the company. People were laid off. Budgets were slashed.

CareerTrack’s curriculum development department, which generated ideas for new products, was among the first hit. Emery saw that as a bad sign. “One of the things that kept the company going was new development,” he says.

The budget for trainers also was cut, which limited the number of seminars they could bring to different cities. Seminars were moved from classrooms into theaters and coffee breaks were eliminated to save money. But that move brought more customer complaints, Emery says. Clients preferred to have seminars in classrooms, which had desks and tables, so they could take notes. Customer service then suffered when people in the call center, which yielded calls from interested shoppers, were cut and replaced with temp workers, who knew little about the products they were hawking.

CareerTrack dropped another $3.6 million in revenue from January to May 1997, according to court documents. But all didn’t seem to be lost. ETC was mulling over an offer in September 1997 from Knowledge Universe, a Los Angeles-based training company, which wanted to run CareerTrack.

CareerTrack employees were excited. Knowledge Universe is a training company and would better understand CareerTrack’s direct-mail strategy, employees thought. The talk was that Knowledge Universe had even picked someone to be CareerTrack’s new CEO. But Knowledge Universe lost the deal, in part, because of Klarin, employees say.

Klarin was CareerTrack’s CEO while Knowledge Universe was trying to acquire the company. Klarin left CareerTrack in June and started working in September as a consultant with Thayer Capital, the company that later outbid Knowledge Universe. Employees believe Klarin had inside information.

“He worked with Knowledge Universe,” says one employee who wanted to remain anonymous. “He knew how much they were offering for the company, so he knew exactly how much to outbid them.”

Klarin denies that claim. “People are going to have their own views of everything,” he says.

Thayer Capital, a Washington D.C.-based venture capital firm, decided to close CareerTrack in Boulder and merge it with Pryor Resources, a training company in Kansas. Klarin will be president of the company formed from the merger, which adds insult to injury, employees say. Pryor was one CareerTrack’s main competitors.

Elliot Gerson, chief executive officer for ETC and acting CEO of CareerTrack, says the decision to sell to Thayer Capital was “purely financial” and that he “was unaware of the nature of Josh Klarin’s involvement with Thayer.”

Gerson adds that he doesn’t believe the seminar and training industry are unprofitable. Thayer wouldn’t have bought Pryor and CareerTrack if that were so, he says. TCI just changed its strategy. “ETC will probably disappear as a holding company at some point in the near future,” he says. “There’s just no place in the corporation that had an interest in focusing on the education and training business.”

So this month marks the end of an era in Boulder. CareerTrack will close its doors for good effective April 30.

Still, Salzman, 44, and Calano, 41, don’t have any regrets. They are financially secure. (TCI paid $41 million for CareerTrack’s assets in 1995.) Calano now spends his time between Boulder and Vail doing non-profit work and private investing. He and Salzman signed contracts, which expire in June, saying that they won’t operate competing businesses. “I ski as much powder as I can find,” Calano says. “I’ve got 31 ski days in this year.”

Salzman speaks to groups in Boulder and Santa Fe, N.M., about meditation. He was on his way to Honduras in March to help build an orphanage. “I can’t wait,” he says.

Calano and Salzman say they are just sorry that the TCI didn’t work out for their former employees. “I can’t tell you how enthusiastic I was about the deal at the time,” Salzman says. “I really thought, not only was it good for us — because I was definitely burned out and wanted to do something else with my life — but I thought this was the perfect hand-off.”

But TCI turned out to be the worse thing possible for the employees who were left behind. Emery says his colleagues feel like they are just graduating from high school. It’s like starting over, he says.

Emery concedes that CareerTrack was at the mercy of businesses that might have found other ways to train their employees but, he says, given the chance, CareerTrack would have rebounded.

Calano agrees. Training companies won’t be closing shop any time soon, he says. “These have been very good times in the last few years,” Calano explains. “I mean anybody who’s been in the business has been doing very well from what I’ve heard, seen and read.”