Startup

by S. Jerrold Kaplan

  Mike Homer, as our VP of marketing, saw that the first chance for a public announcement was at the upcoming Mobile92 conference, put on by the industry analyst and ex-Wall Street Journal reporter Dick Shaffer. Shaffer’s organization, Technologic Partners, published a newsletter and ran conferences targeted to computer industry investors, analysts, and executives. Jumping on the pen-computing bandwagon, Shaffer had decided to start a new annual conference, to be held in mid-July at a hotel near the San Francisco airport. Whereas most conferences take a few years to develop a constituency broad enough to make them profitable, this one was an instant success—it attracted thirty-nine exhibitors and more than eight hundred attendees.

  The big draw at Mobile92 was Larry Tesler of Apple, who for the first time was going to demonstrate publicly a working prototype of Newton’s software. He was supposedly taking time off from a sabbatical to make the presentation, but I later heard that he had actually been sequestered at Apple, working night and day on future Newton plans.

  Mike was determined to blunt the effects of Apple’s public relations blitz in general, and Tesler’s presentation in particular, in any way possible. Working with the AT&T PR department, Mike attempted to rename and reposition the field. He developed a lengthy briefing paper about a new class of devices called personal communicators, made possible by the joining of Hobbit and Penpoint technologies. The piece contained graphs, predictions, and sketches of futuristic devices combining the functions of pen computers and mobile telephones. He arranged to have a copy of the briefing paper placed on every seat in the hotel’s ballroom on the afternoon Tesler was to speak. Then he scheduled a joint press conference with AT&T for the morning of Tesler’s talk. It was a bold and brilliant marketing move, designed both to cement AT&T’s support and to excite the public.

  Meanwhile, Bill had cultivated a personal relationship with Bill Warwick, a seasoned and effective AT&T executive who had the ear of the CEO and whose current assignment was to turn around the microelectronics division. AT&T Microelectronics, the $2-billion-a-year integrated-circuit design and manufacturing arm of the phone company, was responsible for the Hobbit chip. Though it was one of the largest chip manufacturers in the world, it represented only about 3 percent of AT&T’s revenue.

  Warwick, who was at least ten years Bill’s senior, had the relaxed, affable manner of a television grandfather. Fortunately, he was willing to put the full force of AT&T’s credibility and support squarely behind GO and Penpoint, which he did at the joint press conference. He even announced the creation of a new business unit, AT&T Personal Communications Systems, to develop, license, and sell products based on the Hobbit-Penpoint technologies. “GO is the leading provider of mobile operating-system software,” he intoned with a sonorous voice. “We look forward to working closely with our new partner to develop a powerful new standard platform for personal communicators.” He then presented slides describing an elaborate and expensive ten-year development plan, culminating in the production of wireless, portable, full-motion video phones.

  Then Bill got up to speak. “We have one advantage over AT&T in this relationship.” Everyone perked up at this odd comment. “Our founders are still alive!” Following his presentation, and overcome with gratitude at Warwick’s unflinching support, Bill walked over and gave him a big hug. Warwick’s face turned a deep red at this show of emotion.

  “This is what IBM was supposed to do for us,” Bill said to me privately as we walked out together. “Can you imagine Cannavino ever saying those things? Warwick is a stud buffalo in my book.” He was beaming.

  That afternoon, Robert and I sat together throughout Tesler’s demo. The software ran on some sort of prototype board mounted in a Macintosh, but nonetheless it was fabulous. Newton had the trademark Apple playfulness—little sounds and clever animations—that showed off the true power of the ARM chip. Apple’s engineers had plainly learned whatever they could from GO and others, but had the intellectual honesty to develop their own distinctive user interface. For the five years since the original meetings with Steve Sakoman in a Boston hotel, the engineers had been able to focus all their attention on building a great product, undistracted by hardware partners, fundraising, and customers. And now they were ready to show their results. Robert and I were impressed—and more than a little worried.

  When Tesler finished to thunderous applause, Robert leaned over to me and whispered, “One thing’s for sure. This shows that there are lots of ways to do it—Microsoft didn’t have to copy from us. But we better hurry the hell up and get our Hobbit version out with EO.”

  The strong AT&T announcement counterbalanced the Newton announcement somewhat, but we all knew we had barely dodged another bullet. “Looks like we made the switch to AT&T just in the nick of time,” Kevin said at the conference reception. “Without them, we would have been buried alive.”

  12

  The Bubble

  WITH Microsoft, IBM, NCR, Grid, Apple, AT&T, and GO all trumpeting their efforts at every opportunity, a firestorm of publicity raged throughout the last half of 1992. The hype had gone well beyond the trade magazines: GO was featured on a CNN piece spotlighting companies that were thriving despite the recession; USA Today ran an article on the front page of its Money section, with a large color photo of me showing off Penpoint. The weekly pile of press reports provided by a professional clipping service had grown so thick that no one had time even to scan it all. Any conference with “pen” in the title drew huge crowds of curious onlookers wondering what all the fuss was about, and most of them left impressed—by the size of the crowds, if nothing else. The smoke was so thick it didn’t seem to matter that there was virtually no fire at all.

  In this overheated environment, I was unexpectedly invited to speak at a technical seminar at Intel, to help educate its marketing staff about the potential impact of PDAs. There were six participants, representing hardware and software companies doing work in pen computing—including Microsoft, which sent Lloyd Frink, the technical leader of the Pen Windows project. Intel had asked Michael Rogers, a technology writer for Newsweek, to be the moderator.

  The panel convened in a large, windowless, amphitheater-style classroom, with a projection booth at the back and a narrow stage in front. It was a beautiful day outside, so the ventilation system had to work that much harder to remove any trace of the sweet, lazy afternoon air of August. We sat on the stage behind a row of long tables littered with tented name cards, plastic jugs of ice water, and complimentary leather folios with “Intel” stamped on them in gold leaf. Tacked on the wall to our right were large framed copies of Intel’s corporate mission statement, in case anyone wanted to brush up should the presentations drag. To my surprise, the room was packed, despite the fact that it was a warm August day.

  Rogers started off by referring to a recent comment—attributed to Andy Grove, Intel’s CEO—that the PDA market was little more than “a pipe dream driven by greed.” He followed this with some tongue-in-cheek remarks lamenting the proliferation of acronyms for the new field. Then the panelists each spent about fifteen minutes presenting their points of view, mainly in vacuous generalities. Given the size of the panel and the participants’ inability to stay within their allotted time, these preliminary statements took up close to two hours, during which portions of the audience seemed to nod off.

  Finally, Rogers asked each panelist to answer the question “What can Intel do for me?” By this time, even the speakers were looking at their watches and hoping someone would pull the fire alarm. When he got around to me, I dutifully hit on the subject of not designing future microprocessors around DOS. “Don’t make us pay for DOS compatibility,” I said, a subtle jab at Microsoft’s licensing practices. The suggestion that DOS might not be required for a pen computer was a novel concept to much of the audience, since the ubiquity of DOS on Intel processors was precisely what was paying their mortgages. The remaining panelists were happy to have a real issue to talk about, so much of the subsequent discussion cent
ered around this question of desktop compatibility.

  Rogers toyed absent-mindedly with a pencil as he gave Lloyd Frink his chance to speak. Throughout most of the afternoon, Frink had sat quietly hunched over, staring down at the table in front of him as though lost in thought. Now he looked directly ahead and spoke as if in a trance, addressing no one in particular. “There are two kinds of compatibility. One is being able to leverage the development tools, which we think is important, and the other is the applications—being able to use the same applications.” Everyone was waiting for him to extol the virtues of leveraging the installed base of DOS and Windows applications, which of course required an Intel-compatible processor. Instead he said, “And, um, we don’t think that’s important for this market.”

  Those who were still listening looked around the room, then quickly roused their neighbors. Could this really be what Frink meant to say? As a spokesman for Microsoft, could he be suggesting that pen computers were not going to be mere extensions of the desktop monopoly that had built the twin powerhouses of Intel and Microsoft? Was he really repudiating the basic premise behind Pen Windows—that compatibility with keyboard-driven computers would be enough to steamroller any competitive challenges?

  Rogers dropped his pencil to the table. The entire audience now paid close attention. Oblivious of the abrupt change of mood, Frink continued. “It’s going to require new applications, a new interface, much easier to use—simpler than what you even get with Windows today.” Everyone froze in silence at this confirmation of their worst nightmare, brought to life by the only person whose credibility and lack of self-interest in making the statement could not be questioned. A wall thermostat released a hissing sigh, telling the overhead vents to drop a fresh blanket of cool air on the room.

  Still staring straight ahead into the distance, Frink simply blinked once. It wasn’t the reflexive blink that clears the eye. Nor was it the subtle, deliberate blink that a gambler uses to signal his partner. It was the lingering, involuntary blink of capitulation, of reluctant acknowledgment of a change of heart. In that pure silent instant, which swung past like the flash of a distant lighthouse beacon, I knew that we had at last made our point. Five years of hard work, the efforts of an army of dedicated supporters, and over $50 million, all came down to this one extraordinary moment. Frink’s modest disclosure of Microsoft’s new direction was the final stroke needed to transform opinion into truth: pen computers were something new and different, a class of device distinct from keyboard-driven machines. From that moment on, I never again heard this proposition credibly questioned.

  When the seminar ended, Lloyd Frink and I left without exchanging a word. I drove north, back to my office. When I pulled into the parking lot, Robert was just getting into his car. “So, how’d the panel go at Intel?” he asked facetiously. “Who’d they believe, us or Microsoft?”

  “They blinked,” I said.

  “Who blinked?”

  “Microsoft.”

  He looked wistful. “Huh” was all he said. He reached out of his car window and shook my hand. Then he added, “It’s about time, my friend.”

  A principle widely held by physicists states that there is no such thing as a truly independent observer, that every act of perception, no matter how trivial, affects whatever is observed. Information theorists recognize a similar principle: every message, no matter how perfunctory, is carried by a medium that colors its meaning for the recipient. An Egyptian obelisk, standing tall in the shifting sands, tells of gods and kings with permanence and power. A tightly folded classroom note, surreptitiously passed from desk to desk, speaks with urgency and danger. And electronic mail, dashing through the netherworld of packet-switched networks, delivers its data with indifference and harshness. That’s why Bill Campbell, the embodiment of warmth and charisma, almost never sends e-mail.

  So the hallways buzzed with rumors when Bill electronically ordered the entire company to attend a meeting at noon on Monday, August 10, 1992. It added to the mystery that his summons was followed by a series of codicils from his administrative assistant, amending the time to and fro until it finally settled at one o’clock. Up to the moment Bill stood to address the crowd, the staff spent the last hour monitoring their computer screens for further postings, forestalling lunch, once again proving that fear is stronger than hunger.

  The employees gathering in the main conference room remained tense until Bill broke into a proud smile. “I’ve called you here today for a special reason. We have a distinguished visitor, whose name you may have heard around our halls for some time. He has just arrived by corporate jet from New Jersey to talk to us about our partnership and his vision for our future together. I’d like to introduce Bob Kavner of AT&T.” The audience could tell from Bill’s uncharacteristic formality and dramatic tone that he was impressed by Kavner’s willingness to make a personal appearance. Indeed, no IBM executive of any significant rank had ever taken the time to speak at a company function.

  Kavner’s background was as an accountant, having spent eighteen years with Coopers & Lybrand. After joining AT&T as its chief financial officer in 1984, he worked his way up the organization chart. Ultimately he headed the multimedia products and services group, reporting directly to Bob Allen, the company’s CEO.

  Since Kavner’s plane had been delayed, Bill didn’t want to postpone the meeting any longer and so didn’t take the time to brief him adequately. As a result, Kavner was unclear about what Bill wanted him to say. Heads strained to get a good look as Kavner stepped forward to speak. A pale-skinned man with a prominent nose and a crest of gray hair, he looked like a photograph of a parrot shot in black-and-white. He stood motionless as he delivered his remarks, making him appear uncomfortable. His reserved manner contrasted sharply with Bill’s barely restrained exuberance.

  “You are all to be congratulated on winning the AT&T Telepen RFP. You had some stiff competition, but were selected nonetheless.” Kavner’s eyes darted around the room when he spoke, as though he were looking for a familiar face. “But I want you to know that this is just the first step. Lots of these projects never lead to any revenue for the companies involved. Now you have to deliver a quality product, on schedule.”

  Bill’s smile began to fade, betraying his disappointment. The words were there, but this was not the enthusiastic salute and inspirational call to arms that he had expected.

  “One more thing,” Kavner said, turning to address Bill as much as the audience. “It’s important that you attract some other strong partners. The more big players behind you, the better for everyone. You shouldn’t be counting on AT&T as your only partner.”

  Did Kavner mean that AT&T wasn’t really committed, after all the hard work and public pronouncements, or merely that he would welcome the addition of other parties to help build momentum? His statement was ambiguous at best.

  Bill tried not to look concerned. He abruptly ended the meeting without permitting any questions, using the delayed lunch hour as a convenient excuse to move people gently on their way. The crowd shuffled out, muttering among themselves about what Kavner might have meant.

  I tapped the side of my glass with a fork to get everybody’s attention. The caterer stuck her head out of the kitchen, on the off chance that I was trying to summon her, then disappeared again. “Dearly beloved,” I intoned, “we are gathered here today to honor one of our own, the inimitable Kevin Doren, burner of the midnight oil, keeper of the sacred EPROM, and defender of the pen faith.”

  Kevin pounded the table, cutting through the laughter. “I’m not dead, you know, just leaving.” The board of directors and senior executives—those of us who were in town—had gathered at my house for his going-away dinner. Since the EO spinoff, there had been progressively less need for Kevin’s skills, and he was mature enough to realize that even as a company founder, it was best for both him and the organization to accept this sad fact and take appropriate action. A few weeks earlier, Bill and Kevin had agreed that he should move on some
time in the next few months, and now the time had arrived. Robert and I both felt as though a brother-in-arms, decorated repeatedly for bravery in combat, was being recalled from the front and returned to civilian life.

  After several bottles of Napa Valley chardonnay and a dinner of pasta primavera, the mood was convivial, if not a bit rowdy. We went around the room telling our favorite Kevin stories, which were usually about his miraculous gift for fixing complex electronic equipment with ordinary household articles such as toothpicks, straight pins, and rubber bands. After he was thoroughly roasted, the conversation turned to more serious matters.

  “What do you think about the problems with EO?” Robert asked David Liddle.

  Before David could respond, Randy Komisar jumped in. “The problem isn’t EO, it’s that Rossmann never sent over the engineers he promised to help with the Hobbit port.”

  Several months earlier, Bernie Lacroute had stepped down as EO’s chief executive, having completed his promised year of service, and took the title of chairman of the board. After searching outside the company for a replacement, the board appointed Alain Rossmann, EO’s vice president of marketing, to the position. Since then, Rossmann had shown himself to be undiplomatic and hard-nosed in his dealings with GO and other business partners. Although Bill Campbell had originally supported Rossmann, their relationship had begun to sour following his appointment. As Bill was now in Japan, and so was not present at Kevin’s dinner, this seemed to Robert to be a good opportunity to elicit some independent opinions.