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The year was 2000.

That's when the technology sector—after years of enormous growth—found itself in trouble. As the nation's economy slowed dramatically, the computer industry—faced with intense price competition and sagging consumer demand—was in a tailspin.

And industry trailblazer Gateway was right in the middle.

Internally, the alarms went off. "We were no different than the rest of the industry, says Jack Van Berkel, senior vice president of human resources. "We had a lot of broken parts and needed to fix them quickly if Gateway was going to emerge at the top of the industry."

A True Success Story

Ted Waitt, son of a fourth-generation Iowa cattleman, and his friend Mike Hammond cofounded Gateway in 1985 with a $10,000 loan guaranteed by Waitt's grandmother. The company's value proposition was simple—offer easy-to-use computer products directly to customers by telephone and build them to their specifications. With a sharp focus on customer satisfaction, the start-up grossed $100,000 the first year.

Throughout the '90s, Gateway experienced huge success and expansion. By 1999, the company had 23,000 employees and annual sales of more than $8 billion. Waitt decided to step aside and allow a professional management team to run the organization.

But the economy began to slow and Gateway found itself facing problems. Waitt returned to his leadership role in January 2001 and realigned his executive staff. Van Berkel joined the company at the same time.

"The culture at Gateway had to change. We needed to drive the organization in a different direction and return to the basics—what had made us a successful Fortune 500 company," Van Berkel says. "We needed to become less decentralized, improve customer satisfaction, simplify our product line, drive revenue and relaunch our brand."

The answer: a get-real, get-radical and get-results plan.

Gateway At-a-Glance Chairman and CEO Ted Waitt started Gateway in 1985 on his family's cattle farm in Iowa and took it public in December 1993. Gateway has grown from a two-person start-up to a multibillion-dollar Fortune 500 company employing 11,000 people. The Holstein dairy cows on the Waitt farm inspired the company's distinctive boxes. In 1988, Gateway shot its first magazine ad on the farm with a select few from the herd; in 1991, it began spray-painting black cow spots on every shipped box. Headquartered in Poway, California, the company was a pioneer in the build-to-order PC business. It has since expanded to offer a broad range of peripherals, accessories, software products and related services such as training, financing, high-speed Internet access and networking solutions for home and business.

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