Computer Pioneer Turned Investor, Activist

Max Palevsky made some of the first mainframe computers, then cashed out with one of the early personal fortunes in the computer industry. He became a flamboyant Democratic money man, movie producer and art collector. Mr. Palevsky, who died Wednesday at age 85, was co-founder of computer manufacturer Scientific Data Systems, which innovated with small mainframes based on silicon chips. Though never in the top tier of computer makers, SDS was profitable nearly from its inception in 1961.

"Many of us early workers in computers were philosophy majors," Mr. Palevsky told the Chicago Tribune in 1968. "You can imagine our surprise at being able to make rather comfortable livings."

So much so that just a year later, Xerox Corp., seeking to develop a digital complement to its imaging systems, paid $910 million in stock for the company at a time "when $1 billion meant something," as Mr. Palevsky once said. He walked away with about $100 million and became the chairman of Xerox's executive committee.

A philosophy major chairing an executive committee?

Mr. Palevsky used his fortune to fund a series of projects, including in 1970 an investment in the fledgling magazine Rolling Stone. "We were looking for a business counselor or adviser," magazine co-founder Jann Wenner said Thursday. "He was a restlessly curious individual." Mr. Palevsky served as chairman of Rolling Stone's board for a time, and befriended one of the magazine's writers, Hunter S. Thompson. Published letters to Mr. Palevsky from Mr. Thompson in 1973 record the writer's dismay that Mr. Palevsky had the temerity to ask for repayment of a $10,000 personal loan.

The association with Rolling Stone soon ended, too. "We had the typical Max falling out," Mr. Wenner said. "He could be very rigid."

Mmm. Wonder if that was simply a one-way street.

In 1972, Mr. Palevsky was for a time the largest contributor to George McGovern's presidential campaign. But he abruptly quit the campaign and gave interviews criticizing it as a slapdash organization. A year later, he was back in the arena as campaign manager for Tom Bradley's first successful run for mayor of Los Angeles. He was often associated with a group of wealthy, liberal donors known as the "Malibu Mafia."

Born and raised in Chicago, Mr. Palevsky was the son of Russian immigrants who spoke Yiddish at home. His father was a house painter. Mr. Palevsky often spoke darkly about his childhood. During World War II, he served as a meteorologist in the Army Air Corps, stationed in New Guinea. He then studied mathematics and philosophy at the University of Chicago. He embarked on an academic career but said he dropped out of graduate school after hearing a lecture on computers by John von Neumann, one of the fathers of computer science.

Starting in the 1950s, Mr. Palevsky worked on early computers at Bendix Corp., then helped Packard-Bell Electronics Corp. launch a computer affiliate. In 1961, he and several Packard-Bell colleagues launched SDS to produce small computers for scientists and industrial controls, a market that larger manufacturers such as International Business Machines Corp. had ignored.

Bendix? A familiar name. Car parts, supplies? ("Supplier of air brake and filtration systems to the heavy-duty commercial vehicle industry.") And, yes, indeed, Mary Cunningham was there when William Agee was CEO and launched a hostile takeover: the details are sketchy, but I remeber them both.


As an executive, Agee was recognized in Time Magazine for his creative vision that Bendix could break from its history of being a slow growth manufacturing company in a mature industry (automotive parts) by diversifying into high-tech through selective bold acquisitions. It was this diversification strategy that ultimately allowed the shareholders of Bendix to dramatically increase their stock value during his tenure despite a recession that afflicted two of its main businesses, automobile parts and machine tools. While competitors floundered in 1981, Bendix' profits increased 136% and revenues for its fiscal year rose to $4.4 billion.

Time magazine in 1967 hailed SDS for its innovations, but Xerox wasn't able to keep the company's profits rolling. It shuttered SDS, renamed Xerox Data Systems, in 1975.

One of the great all-time fiascos: Xerox leaving the computer industry, unable to make money.

Mr. Palevsky served for many years on the board of Intel Corp., but eventually abandoned the computer industry. In a 2001 interview with the Los Angeles Times, Mr. Palevsky proclaimed himself "a Luddite." He dabbled in the film business, producing "Fun With Dick and Jane" and "Islands in the Stream." He built up a collection of modern art and furniture from the arts and crafts era, much of which he donated to the Los Angeles County Museum of Art — though he once sued the museum, claiming it had promised to let him take charge of the architecture of a new gallery.

Maybe Jann Wenner was right, after all.


Mr. Palevsky's interest in politics persisted, and in the past decade his main cause was campaign-finance reform. In a statement of support in 2000 for Proposition 25, which would have limited campaign donations, he wrote, "I am making this million-dollar contribution in hopes that I will never again legally be allowed to write huge checks to California political candidates." But his ability to donate survived as the proposition failed.

REMEMBRANCES. MAY 7, 2010

Max Palevsky 1924-2010
Computer Pioneer Turned Investor, Activist
By STEPHEN MILLER. Printed in The Wall Street Journal, page A7