Richard Thalheimer, Founder of Sharper Image, Talks for the First Time About His Ouster

Thalheimer says he believed he had made an accommodation with Levin and the investor group. "They expressed a willingness for us to work together and I took them at their word," he says. "I thought that with my merchandizing ability and their pragmatic business skills, it was really a strong combination."

But shortly after the board was reconstituted, he says it became plain that "Levin wanted to take the reins of the company and push me out." Last September, the new board named Levin chairman and interim CEO. A month later, the new regime told Thalheimer it wanted him off the board and out of the picture completely. After a severance package that included a $5 million payout, he surrendered his board seat on New Year's Eve.

"It was really ugly the way they ushered him out the door," says Nick Kiele, an information technology worker who spent eight years at The Sharper Image until leaving this year. "It shocked a lot of people."

Having had his corporate baby snatched from his grasp, Thalheimer appears bent on proving his conquerors wrong. Just over the Golden Gate Bridge, on a hilltop in Greenbrae, he has turned a remodeled residence into offices to accommodate the small staff of his latest creative incarnation — a privately held Internet specialty retailing company called RichardSolo.com.

Next to a beaming image of Thalheimer at the top of the RichardSolo.com Web site, a scrolling message reminds visitors of his earlier role as The Sharper Image's founder and thanks them for their "past business." Just as you might expect at The Sharper Image, RichardSolo.com is chock-full of tricked-out phones, power alarm clocks, and assorted novelty items. (Among them: a reconditioned slot machine and a crank radio that doubles as a night light.)

Although it isn't the Ionic Breeze, there's even an air purifier.

Meanwhile, the new Sharper Image regime is busy repudiating the longtime Thalheimer business model of finding the latest, coolest, hottest items around which to generate sales.

As a first order of business, the new team disbanded Sharper Image Design and announced that it would adopt a model similar to department stores in offering customers a choice in different price ranges across each of its product lines. Instead of developing products in-house, it hopes to strike deals with manufacturers to sell items exclusively at The Sharper Image before they are sold elsewhere.

Levin, who has avoided mentioning Thalheimer publicly, declined to be interviewed for this article. However, in a press release last year, at the time the Knightspoint takeover bid was announced, he stated that the company's results "demonstrated that its strategy has stagnated."

The Thalheimer way "is antiquated and doesn't work," Steve Lightman, the new CEO installed by Levin, says bluntly. He cites the "volatility" of hitching the company's fortunes to a few hot items, singling out its past overreliance on the Ionic Breeze as an example: "We don't believe that shareholders can withstand that kind of rolling of the dice."

So far, the jury is out on the new approach. In the year since the management coup, the company's store, catalog, and Internet sales have floundered, and analysts continue to criticize the product mix as stale. (Lightman says he expects that criticism will vanish with the promised roll-out of scores of new items for the holidays.)

The company's foray into selling high-end steaks bearing the brand of celebrity entrepreneur Donald Trump — to which it devoted several pages of the catalog during the spring — was a flop. And its stock has continued to slide, from a high of nearly $40 in early 2004, before the Ionic Breeze tailspin, to less than $3 as this article went to press. The stock has plummeted by more than 70 percent since May alone, when Thalheimer cashed out his remaining shares.

Still, Lightman expresses confidence that the troubled retailer is poised for a rebound. But an affidavit from one of the company's own consultants, introduced in August as part of the Florida court proceeding, takes a dimmer view. "[The company] has virtually no cash relative to total assets and is currently funding operations with borrowing," wrote James Hitchner, an Atlanta financial analyst. His conclusion: The Sharper Image faces a "high probability" of bankruptcy within a year.

You might think such news would give Thalheimer satisfaction. He insists it doesn't.

"I may not agree with how things turned out with me," he says. "But I don't want the company to fail."