This Month’s Q&A: August 2021

A headshot of an old man with gray hair and glasses wearing a patterned blue shirt with trees in the background.

John Chamberlin, Tech Entrepreneur, Teacher,

& Cheerleader for Arkansas’ Computing History,

Part 2

JOHN CHAMBERLIN, FOUNDER (in 1975) of Arkansas Systems, Inc., is a diehard promoter of this state’s long, impressive, and generally underappreciated history of technological expertise and accomplishment. In last month’s newsletter, Chamberlin recounted how he, James Hendren, and their team turned Arkansas Systems into one of the most prominent ATM companies in the U.S. This month, Chamberlin takes the Arkansas Systems story global and links it, and so many other homegrown efforts, to his current passion—establishing a formal repository of Arkansas’ Computing History.


When we last spoke, Arkansas Systems had become a major player in the ATM market in this country. Where do we go next?

Well, we were installing ATMs and banking network connections, integrating with every bank-accounting software vendor. Whenever they set up accounting software for a bank, part of the process was converting the files from the old computer system to their system, which they didn’t like doing. So they subcontracted that to us and we got to be really efficient at doing file conversions. This developed closer relationships with these vendors and we got referrals from them, as well as from IBM and other ATM vendors. IBM liked to sell their own ATMs, but if they could sell the computer with Diebold or NCR ATMs, they would take that sale too.

Then international things started to happen. As I told you, we worked a lot with IBM and they had customers in the Caribbean, who wanted ATM and network products. Trinidad, I think was first up. We made these sites work, so now we had the beginnings of what might be called “international customers.”

Then, gradually, from the early to the middle ’80s, we got more contracts in Central America, the Caribbean, and Latin America. We built a national ATM switch for Honduran banks, and another in Bolivia. We also moved to larger banks. Some of that came when our solution for a small bank in Curaçao attracted the attention of multinational banks. One example was a contract with Bank of Nova Scotia in a dozen countries or more.

We were not the only Arkansas software company moving into global markets. American Express went with Systematics for processing their military banking contracts. We assisted with file conversions and some consulting on the Systematics financial management system, which I had written in the early 1970s.

When, in the late ’80s, Systematics decided to go after international business in a serious way, their first client was in Indonesia. Interestingly, we were also working on our first Asian clients in Indonesia. I thought Systematics had preceded us in that, but recently, in my research, I discovered otherwise. We had received a call from IBM Indonesia asking if we could do a system with one of their business partners on a System 36. That led to AS/400-based installations in the next year.

Were you travelling a lot during this time?

Yes, I was. I was comfortable internationally, and I went to Indonesia for that first install and spent three weeks there so I could do the install, train their sales people to sell our products, and then, in the evenings, we talked about how you build a software business. My Indonesian friends considered me to be the “grandfather of their company.” I’ve got a plaque on my wall to that effect. We ended up doing 30 systems in Indonesia out of that initial one. We were also growing organically in Latin America and the Caribbean, and we did some other ones in Asia as well. We also had a contract to do check processing for the People’s Bank of China.

But even into the early ’90s we hadn’t penetrated Europe. This was because IBM Europe said, “Who needs these guys from Arkansas? We’ve got people doing this stuff all over Europe.”

In particular, they had a company in Paris that did IBM ATMs on System 36s and AS400s—the IBM AS400 was the hot new machine. So IBM got their guys from Paris to bid on a project in Istanbul, and that made NCR Turkey mad because they thought they were going to sell ATMs to that bank. The company in France didn’t support NCR or Diebold ATMs; they just supported IBM. And they had convinced the IT manager of the Istanbul bank that it was impossible to hook an NCR machine to IBM’s AS400 system.

Well, we got called to go visit with NCR Turkey. So I went over and performed a demo that didn’t do the full ATM functions, but it did establish that the NCR computer could communicate with IBM’s AS400—simply by changing the date and time on it and doing some basic functions. So the Istanbul bank ended up not buying the IBM ATMs; instead, they bought NCR ATMs. And now IBM Europe was mad at little Little-Rock-based Arkansas Systems.

Sometime after that, I went to Europe and made a point of visiting Vienna, where the headquarters for the post‑Iron-Curtain Europe expansion of IBM was. After that, I called on the IBM finance headquarters in Boeblingen, Germany. They said, basically, “Why should we work with you when we’re angry at you about this bank deal in Istanbul? And besides, we’ve got this other company in Paris that is partners with the German company that does banking software, and we’re happy with them. Why in the world would we want to go to Little Rock when we can go to Paris? But go ahead—you’ve got thirty minutes to convince us.”

So I told them all the things we could do, and after 30 minutes they said, “Mmm, you do quite a few things, don’t you? In fact, you do more than the people in Paris do. Let’s have another meeting—there are two other people we need you to talk with, and you can present to them in more detail.” So we began that process, walking these other people through the details of what we could do. Eventually, one of those two people came to work for us, so we must’ve done a fairly good job of convincing them of our abilities. At the end of this whole dance, IBM Europe said, “Okay, we’ll work with you.”

We were ready for such a partnership and IBM Europe sent us to Moscow to propose an AS/400-based ATM system for Stolichny Bank. Ironically, the bank accounting vendor for the system was the German sister company of the French firm with ATM software. This was an interesting installation, as none of the bank’s employees were familiar with either debit cards or ATMs and we had to train them. We also interfaced the bank to the Visa and Europay networks. This was our first Europay link and important to future European business.

Stolichny had a branch that was on Red Square and we put the ATMs into there. At the time, that seemed very symbolic of the end of the Cold War. I don’t know if you know Moscow, but the GUM department store, on Red Square, was the big Soviet era department store. It was really more like a mall because it contained a lot of independent shops in one building, and we provided a point-of-sale system for all the shops in the GUM.

Systematics was also doing business in Moscow at the same time. That’s the oddity of it: You could also buy Yarnell’s ice cream there. And chicken from Arkansas. The Russians bought a lot of drumsticks. They called them “Bush legs,” in reference to our President George H.W. Bush.

That’s funny. So tell me about selling your company.

Well, after we’d started working with IBM Europe, I had made a trip to Budapest and talked with some banks there, and we had become partners with a Hungarian company as our local support group. Later, a couple of guys from Kansas City came over to look at business opportunities in Eastern Europe and visited Budapest. One of them was Michael Brown, who had founded Informix—or, more specifically, a part of the company that eventually rolled up to become Informix. It was a big competitor to Oracle.

He sold his company, cashed out with lots of money, and he thought there must be something going on in Eastern Europe that he could take advantage of. Michael Brown’s brother‑in‑law was Dan Henry, whose cousin Jack Henry started the financial technology company Jack Henry and Associates. Anyway, Mike and Dan went to Budapest and they didn’t take cash—they thought they would use ATMs, but there were no ATMs. So they decided they would start a company to do outsourcing of ATM work for banks.

They talked with IBM, who told them to talk with us and our partner in Hungary. They did, and they started their business and it grew. Then in ’97 or early ’98 they did an IPO, which Mike Brown knew well how to do because of Informix, and they raised $80 million. While they were at it, they also did a bond issue whose denomination was euros, so later on when euros went down versus the dollar, they were able to pay back in euros. Let’s just say they were well funded. And they looked at how they’d built their business, and from their viewpoint, every penny of their income depended on Arkansas Systems.

So they made a first approach to buy us by buying the stock, and we didn’t like that—it would’ve been a bad deal. Then after several months they came back and said they’d just like to take some of that $80 million and buy us. We negotiated that and reached an agreement in October of 1998, with November being due diligence month. I made a trip to Romania that month to help them out, and then I stayed with the company through 2001 to make sure things went well. It was a great merger. After 20-plus years, there are still more than 100 people employed at Euronet Software Solutions here in Little Rock. The Vice President in charge of that, Tony Warren, worked for us as a manager back in ’98, so the core of what was Arkansas Systems is still here and running several decades later.

Great, and now let’s shift gears a bit. At some point you started channeling a big part of your energy toward supporting and celebrating the tech and entrepreneurship community here in Arkansas. How did that come about?

Well, you know, things build on things. So back when I was with Arkansas Systems, James Hendren and I were partial founders or original board members of a group called the Arkansas Association of Entrepreneurs. This was in the late ’80s, early ’90s, and it did well for its time and then petered out.

Also, I was appointed by Governor Bill Clinton to an adjunct board of the Southern Growth Policies Board called the Southern Technology Council. It had two people from each state, and I was on it for about eight years, and probably the main thing I did was convince them that education was part of building technology. That you had to improve education and performance in education to support knowledge-based companies. I also served a couple of stints on our state’s Science Advisory Committee, which had links to the National Science Foundation and other federal funders. So I got to know about those programs.

Then six years ago, in 2015, I did the thing that probably put me on a slightly different path. I had been going to the Venture Center when it started, and I’d been working with universities through the Science Advisory Committee, so I got tapped to mentor a team in the National Science Foundation’s Innovation Corps program, or I-Corps. That program basically tries to take ideas that come out of research and help scientists who want to become entrepreneurs build those ideas into companies.

So I did a stint as an I-Corps mentor in 2014 and 2015, and I became very enthusiastic about it and wanted us to do something like that in Arkansas. So with Jeff Stinson and Carol Reeves, we started the Innovation Fund or I-Fund program. Jeff has gone onto other things, and Carol has her own program, but I still instruct in I-Fund.

Then sometime in that same period, I decided that we didn’t talk enough in Arkansas about how good we are at technology. If you look at our Fortune 500 companies, part of why Dillard’s and Walmart are good in retail is that they automated fairly early—Dillard’s actually before Walmart. Anyway, I just saw that we haven’t been very good at tooting our own horn. People in Jakarta knew that there were two big Fintech companies in Arkansas, but people in Arkansas didn’t know that.

A funny story—there was another computer company in Arkansas with a name similar to Arkansas Systems, and a bank in Siberia called them thinking they were us and they did a project in Siberia. It’s like the name Arkansas means something to people outside of Arkansas, so I started this Techtober thing to just acknowledge that we have a lot going on in technology and entrepreneurship here in our state.

What exactly is “this Techtober thing,” and when did you start it?

I think 2015. In the fall there are a lot of tech activities going on, and I thought we ought to have a way to get together and talk about and celebrate all that we’re doing and have done. I decided to call it Techtober and bought the Internet domains. There are as many as 100 events that people have established in September and October that relate to Arkansas entrepreneurship and Technology, and lists those and promotes them. This year we may add a few new things like digital escape rooms that help educate about Arkansas and technology.

Then, related to that, I became interested in capturing some of the history of tech in our state. We had done some of that in the Arkansas Academy of Computing (AAoC), which started in 2006, with induction of about 40 people. Eugene Jones, who started at Arkansas Systems in 1976—is the current president.

How did this Arkansas Computing History project come about?

From my viewpoint, it’s something we had tiptoed around the fringes of, doing a few videos and things, and the Venture Center and their Fintech accelerators had bragged on the heritage, but we didn’t have anything concrete. So at the end of last year, I wrote down a set of things that I thought needed to happen, and this Arkansas Computing History Project was one of them.

We had some meetings. The Little Rock Chamber has been very supportive, as has the Venture Center. We are working on getting UA Little Rock involved, and hope to work with them to create an archive. We’re close to agreeing to do something there, or at least close to determining how best to do it. That’s where it stands. We’re recording interviews and writing things up.

I think if UA Little Rock agrees to do the initial part of the archive, then we’ll put out a call for archival material. A lot of people have boxes of stuff from Systematics or Acxiom or Arkansas Systems in their closets that they don’t want to throw away but don’t quite know what to do with. We’ll take those off their hands. We’ll put them in the archive.

Well, it all sounds fascinating.

And it’s not just the old we want to celebrate. It’s the continuation of that tradition of tech innovation as well. Take the FinTech software company Teslar, up in Springdale. A young man named Joe Earhardt worked in banks, worked around technology, and decided maybe he needed to work for himself, so he quit the bank, developed some software, and was off and running. But he wanted to raise money, so he talked to the Fund for Arkansas’ Future and got some ideas and followed their advice in order to get funding.

Then he went through the ICBA Fintech accelerator at the Venture Center. There he was introduced to more banks, and his company has grown and grown. Teslar processed a large percentage of the PPP loans during COVID, a real coup. To me, Teslar in this period—the 2020s—looks a lot like Arkansas Systems in the 1980s or Systematics in the early 1970s. So we’ve got a well‑formed tradition that’s over 50 years old and still going strong.

So in celebrating this tradition, you’re also passing the baton, right?

Yes, it’s passing the baton and building on what’s already here, which we need to acknowledge and celebrate. If it was important for us to get a lesson in Arkansas history about the Bowie knife, we should certainly have one about this state’s rich tradition in software.