Features - February 24, 1999
Cybervisions
Computer entrepreneurs chase the new American
Dream
Amazon.com, yahoo!, ebay, Broadcast. com -- if you haven't heard of these
companies, you've been living in a proverbial investor's cave. Internet
stocks have become one of the hottest business stories ever, prompting comparisons
to inventions like the telephone, the automobile, the airplane. Investors
in these companies have watched their holdings skyrocket (and plummet) like
fireworks, sometimes in a matter of hours.
Companies like these and many others from Silicon Valley to Silicon Alley
-- California and New York, respectively -- are being fueled by brain power,
the vast majority of it from under-40 (and frequently, under-30) engineers
and computer scientists lured by the excitement, the challenge, and, yes,
the riches they offer. Be they from Princeton, Harvard, MIT, or CalTech,
college graduates have surged into the computer industry. Its siren song
is as loud as Wall Street's a decade ago. Everyone knows that Microsoft
founder Bill Gates is the world's richest man, and that hundreds of millionaires
are being minted monthly as stocks soar and new companies go public.
The computer industry as we know it really germinated in the early 1980s
with the rise of the personal computer. Last year, 100 million PC's were
sold, and Internet shopping became the talk of the holiday season (even
Macy's is now offering wares on-line). Collectively, the market capitalization
of software, semiconductor, and other computer-related stocks is challenging
the supremacy of America's traditional corporate elite, the General Electrics
and DuPonts and other multinational firms.
The Princetonians (mostly but by no means exclusively young) who have
flocked to the front lines of the computer industry are no different from
their peers throughout the industry in many ways -- competitive, eager,
and enjoying the pursuit as much as the reward that may or may not lie ahead.
Here are a few of their stories.
Sacrifice and reward
Magda Nour *90's Outsource Laboratories
Beanie babies cluster atop the computer monitor, junk-food packages
litter the desk, and scenes from the animated movie Toy Story click
across the computer terminal's screen saver. A near-lifesize inflatable
toy based on Edvard Munch's painting The Scream offers silent commentary.
If the office of Magda F. Nour *90 is more college dorm than executive suite,
perhaps that's appropriate: During her 80- to 90-hour work weeks at the
software and training company she cofounded in 1996, she sometimes sleeps
on the floor ("It's more comfortable than you think"), rather
than lose time by heading home.
In three years of crazy hours, Nour -- an MIT graduate who earned an
M.S.E. in computer science from Princeton -- and her two partners have built
Outsource Laboratories (www.outsource-labs.com)
into a 30-person company expecting $3 million in revenue this year. A third
of the Shrewsbury, New Jersey-based firm's business comes from training
corporate employees in Internet languages like Java or HTML, the lingua
franca of the World Wide Web. The rest comes from software development:
corporations subcontract programming tasks to the firm, which specializes
in graphical user interfaces -- what computer users see on their screens,
especially when that includes elements like graphs, charts, or maps.
Most of the company's customers are in telecommunications; Nour and her
partners worked at Bell Laboratories in the early 1990s designing software
that helped run the domestic telephone network. In late 1995, as AT&T
prepared to split into three corporations, the partners used their buyouts
as seed money for their own business. Within six months, they had landed
a Java training contract with Lucent Technologies, the AT&T spinoff
that includes their old employer, Bell Labs. They haven't looked back. Recently,
Outsource Laboratories won a share of a $17-million contract from AT&T;
to finance the rapid growth they now need, the partners are seeking capital
from a private investor and hope to go public within a year.
Along the way have come sacrifices. Nour, 31 -- the only child of an
Egyptian father and a Colombian mother who met in an English conversation
class in New York City -- talks wistfully about finding time to play the
piano, or go to the movies, or get married. Over Christmas, she took her
first vacation in two years but returned early. "There was all this
stress involved," Nour said. "I was really glad to be back, because
at least I wasn't worrying remotely. That's something that never used to
happen at Bell Labs -- when I was on vacation, I wouldn't even call in."
Management responsibilities have also taken Nour away from her first love,
the beautiful logic of programming. "I miss the technical part,"
she said. "I still do some, but when you're working so much, you don't
enjoy it that much, because it's very hurried."
Despite the stress and sacrifice, Nour is glad she gambled on entrepreneurship.
"We've built this company, and it's kind of neat, because it's big
now," she said. "Before, we were just three people in a room with
some ideas and willing to work a lot of hours. But now we actually have
something."
-- Deborah Yaffe
Three game guys
Former roommates give cyberplayers a voice
A common fantasy among college roommates is that at some point after
school they will get together and form a company -- I remember that some
of my friends had a very ambitious plan that only broke down after a dispute
over who would be in charge of product testing at their brewery.
While most of those plans die with graduation, three college roommates
are actually living their dream. Adam Frankl '86, Tony Lovell '86, and Henri
de Marcellus '86 are three of the four founders of Resounding Technology,
Inc. (www.resounding.com), a software startup
in Malden, Massachusetts, that specializes in creating voice radio for online
games.
The three met during freshman week in 1982 at a Simulation Games Union
meeting, and drawn together by a common love of computer games, they soon
became best friends and roommates. After graduation, however, the trio went
their separate ways. Frankl and Lovell went into the computer industry:
Frankl developed games for the Army and Air Force and then became the director
of marketing at Rational Software, while Lovell worked in robotics before
becoming the cofounder of Wildfire Communications, a firm that makes speech-recognition
software.
Meanwhile, de Marcellus was doing something completely different. After
earning a commission through Army ROTC, he was assigned to the 2nd Armored
Cavalry and spent 1987-90 patrolling the Czechoslovakian border. After leaving
the Army, he got his doctorate in classics at Oxford University, then spent
two years heading the classics department at the University of Malawi, in
southeast Africa.
Although their professional paths had diverged, Frankl says, "it
was always in the back of our heads that we should start a company together."
Last year, with all three friends at a transition point in their careers,
the timing finally seemed right. Given their love of computer games, the
focus of the company seemed obvious. "We're not just chasing some hot
thing," de Marcellus says. "We're pursuing something that we're
all interested in."
The idea that became Resounding Technology's first product came to Lovell
while he was thinking about how today's games could be improved. "We're
trying to take a missing element from games -- voice -- and help develop
their real social promise," he explains. The product, Roger Wilco,
is a stand-alone application that allows cyber-gamers to talk to each other.
The company's Website has audioclips of gamers using Roger Wilco: two pilots
in a cyber-dogfight bark instructions to one another, and several antagonists
talk smack while stalking one another with guns through a virtual maze.
Resounding just discovered it has competition in its market, but the
partners feel their greatest challenge is coordinating their new enterprise.
"We're running this as a virtual company," Lovell says. "We
have eight people in five cities." Although Frankl, the company's CEO,
admits to lying in bed and worrying that the other members of his far-flung
enterprise aren't working on their assignments, he believes that having
close friends as partners has helped alleviate some of those concerns. "Knowing
one another is absolutely essential," he says. "We trust each
other."
The firm released a demo version of Roger Wilco last fall, and the finished
product should be available by the end of this month. "Now with the
Internet we're in the golden age of computer games," Frankl says. And
who better to exploit a golden age than a classics scholar and his two friends?
-- Wes Tooke '98
Going mainstream
WebTV connects your tube to the Internet
For Phillip Y. Goldman '86, being first is a bit old hat. As a senior
at Princeton he had the best grade-point average in the engineering school.
In 1997, he and his wife, Susan, gave $2 million to create an endowed chair
in computer science. That made him the youngest person ever to endow a professorship
at Princeton, beating out Samuel Dod, Class of 1857.
Goldman is one of three young computer mavens who in June 1995 created
WebTV Networks Inc. (www.pactive.com/webtv), a Palo Alto, California-based
company that marries television with the Internet. (WebTV subscribers buy
a set-top box that gives them access to the World Wide Web, with their TV
screen, in effect, becoming a computer screen and their TV remote control
the means for navigating around the Internet.) As senior vice-president
of engineering, Goldman oversees the integration of WebTV's proprietary
technology into the set-top boxes, as well as monitoring the server technology
that drives the network.
Microsoft snapped up the company in August 1997 for $425 million, making
Goldman and his partners instant multimillionaires and new denizens of Bill
Gates's financial realm. Microsoft's outlay was considered a huge bundle
for a company that industry consultants say was making $30 million to $50
million in revenue after losing almost $30 million in its first two years.
Goldman's short career has taken him to a couple of top Silicon Valley
companies -- and kept him close to his roots. He went to San Mateo High
School, and says he still has close contacts there. Prior to forming WebTV,
he had engineering management roles at General Magic, Inc., and is credited
with creating the Magic Cap operating system and much of the company's software.
He began his career at Apple Computer as the creator and cofounder of MultiFinder,
a program allowing Macintosh users to run more than one program simultaneously
-- a forerunner of the now-familiar "multi-tasking."
While launching a new company is always a gamble, Goldman says that he
and his partners "felt very strongly that WebTV was the right product
at the right time. We saw the World Wide Web grow and grow in success, but
at the same time we saw it fundamentally limited to a very small set of
people: professionals who had access to a personal computer or computer
workstation."
Microsoft has proven a beneficent owner, he says. "The greatest
help to WebTV has been the doors it has opened to us for new partnerships
in the TV space" -- partnerships with cable content providers like
Microsoft affiliate MSNBC, Discovery, Showtime, E! Online, and TV Guide
Online. WebTV had grown by January to 700,000 subscribers -- more than triple
the 200,000 they had a year earlier, Goldman says.
In remarks to the Princeton Entrepreneurship Club made in December on
campus, Goldman noted, "There's a huge advantage to being first in
a category." The biggest challenge facing WebTV now, he says, is navigating
"from a startup to a well-established company. We've already succeeded
in moving from a development-based company to an operational company, and
the next phase requires us to provide a stable, growing set of services
and products that become truly mainstream."
-- Jeffrey Marshall '71
Creating value
See-mail sends pictures and voice
You can't say that necessity was the mother of Jim Sherman '69's invention.
Thousands of parents send kids off to college every year, and as much as
they know that they will miss their children, they manage to resign themselves
to infrequent e-mails and telephone conversations as the only means of communication.
No, Sherman didn't need to invent See-mail. He just really wanted to.
With his son about to leave their Boulder, Colorado, home, Sherman realized
that e-mail and telephone calls just weren't going to cut it. "I wanted
to use e-mail to both see and hear him," says the computer engineer.
"There were no products to do that at the time, so I created the first
version of See-mail."
The program allows the user to send a picture, a recorded voice message,
and a text message -- all bundled together -- as a regular piece of e-mail.
From the sending end, all that is required is a microphone, and either a
digital camera hooked up to the computer or some other means of saving an
image to the computer's hard drive. The See-mail program walks the user
through the process and even launches the computer's e-mail program automatically.
At the receiving end, the only requirement is a computer with the ability
to access e-mail. Sherman demonstrates by sending a sample See-mail message.
It appears as an attachment to a regular e-mail file, and a double-click
on the icon quickly brings up a photograph of Sherman, clad in leather jacket
and denim shirt, relaxing in front of his computer. Another click, and a
voice message from Sherman begins to play -- all with no prior preparation
on the receiving end.
"The user doesn't have to know how to do anything," says Sherman.
That's our whole theory on the use of the Web -- that most people aren't
too proficient, but there are things they want to do. So we automate the
whole process."
The e-mail-sending public has been pretty receptive. Sherman says that
his company, RealMedia Inc. (www.realmediainc.com), has sold several hundred
thousand copies of the See-mail software, which is now in its fifth version.
"We started with 3.1 and we're on 3.5 now, so it's pretty bulletproof
in terms of its capability to run on any Windows or Macintosh machine."
The software received high marks when reviewed by Windows magazine,
and it now comes bundled with Connectix brand digital cameras and CUSeeMe
videoconferencing products. It is available over the Web at realmediainc.com.
With See-mail selling well, Sherman is now looking at a different application
of his computer expertise. RealMedia's new Website, Starbeat.com,
brings some of the elements of See-mail to the world of online marketing.
Sherman and his partner, an Emmy award-winning producer and director, create
customized multimedia e-mail messages for their clients, typically rock
groups or film producers.
The e-mails then go out to a list of customers who have signed up to
receive such solicitations. A recent mailing for computer reseller DEC had
a 20-percent response rate, says Sherman, pointing out that typical direct-mail
campaigns get a 1-percent response.
With one successful product on the market, and another beginning to get
some notice, one might expect Sherman to be an outspoken proponent of the
information revolution. Not so. "I appreciate technology, but technology
is not the answer to happiness," he says. "The answer is something
far simpler than that."
For Sherman, the reward is in the act of creating more than it is in
high sales figures. "I have always been interested in creating things,"
he says, "and the thrill has been in the creation of something that
is new and has value for people."
-- Rob Garver
Life of a
launch
From startup to delivery -- all in a year
What a year! For the past eight months, I've gotten out of bed between
4:30 and 5:30 each morning to be at work early so I can put in a solid 14
hours. Saturdays and Sundays, though, I usually scale back to a leisurely
eight or 10 hours. If all goes according to plan, all this effort will pay
off when my company, Nanocosm Technologies, launches its "killer"
Internet product just a few days before this article goes to press.
Based in Foster City, California, Nanocosm is an Internet software startup.
We employ 30 talented and dedicated engineers, artists, marketers, systems
operators, business developers, and accounting and support staff. Our product
is software that helps users display information on and navigate the Web.
The idea for it, which began in early 1998 as a gleam in my eye, evolved
rapidly, passing through a number of crucial and occasionally painful changes
and managing to avoid inadvertent extinction along the way. During the past
year, we refined our vision, hired core team members (no small achievement
in a full-employment economy), bought equipment, and began in earnest. All
of us have sweated the details to get our product (a free 3D home page)
finished and operable by the date we promised our investors. No pressure,
of course.
I'm not complaining, though: the months leading up to our big launch
have been some of the most exhilarating, intense, and education-filled (pace,
alma mater) of my life. I just would have liked two or three more months
to fit everything in. Here in Silicon Valley it has become a cliché
that life in an Internet startup moves at a speed at least seven times as
fast as the rest of the business world, but in my experience it's absolutely
true. By their very nature, Internet companies are participating in the
world's most dynamic and fastest evolving medium, and those who are slow
or fail to adapt are dead and forgotten before they realize it.
For me, a philosophy major who later practiced commercial law in Asia
for more than a decade, the most rewarding aspect of this journey has been
seeing my team take an idea and shape it in such a way that its potential
to be a groundbreaking online consumer product may be realized. The process
is fascinating: each "wouldn't-this-be-great" feature or function
has its fervent champion within engineering or marketing, but the final
arbiter is always our intended consumer -- will he or she like it, find
it useful, valuable, or fun? But when real-world data indicate that an idea
doesn't work for real people (i.e., those outside the crazy world of the
Internet), it must be abandoned. Although Web-based, our product is designed
to be useful and interesting to people who don't use the Internet every
day, and who don't know how (or don't want) to code in one or another esoteric
programming language.
You can imagine the thrill we felt when we demonstrated an early version
of our radically new product to a consumer and he grinned widely and said,
"Cool! When can I get it?" Then, the long hours and painful lessons
and money spent seemed more than worthwhile. My company is lucky because
the service we have created is entertaining, easy to use, and provides a
fresh 3D experience to ordinary, nontechnical Web users; I shudder to think
how we'd have remained so motivated these many months if we had been trying
to bring a dry, highly technical product to a narrow market.
The intense effort and commitment needed to launch a successful Internet
product are not for everyone. My company has had a few employees along the
way who, for a variety of reasons, found the entrepreneurial culture and
demands more than they bargained for. The final weeks leading up to the
launch were some of the most challenging I have faced in my professional
life. There were times when achieving our launch date seemed hopeless, times
when we had to postpone adding a particular treasured feature to the product
until a future release, and times when other unexpected crises turned my
hair (what is left of it) a little bit grayer. But all along the way, I
have maintained the entrepreneur's confidence that our product would be
launched on time and that through our vision and persistence, millions of
people around the world will enjoy a unique new experience.
If you want to share in the success of our Internet launch, please check
us out at our Website, www.nanocosm.com.
And if you like it, tell a friend.
-- Alex D. Sanford '81
Startup
stress
Beating the clock and sleeping under desks
In 1996, immediately after graduating from Princeton, I started my first
job as a software engineer for an Internet commerce company. In the next
three months, the company completely revamped its overall strategy, discontinued
our product line, and my entire team dissolved. They say that startups have
to be able to turn on a dime, but these turns were simply dizzying -- after
only 14 weeks my first job had come and gone.
Oddly enough, every person on my team subsequently joined an even smaller
startup, taking on much greater risk. In the same spirit, I followed my
manager, John R. Ellis '78, to an Internet marketing startup in Silicon
Valley. The interview took place in a local coffee shop, since there weren't
really any offices to speak of; corporate headquarters was a single phone
and a borrowed folding table tucked away in a back corner of a venture capitalist's
office. I only spoke with the CEO during my interview; I already knew John,
who accounted for the other half of the two-person operation.
Before accepting the job, I carefully scrutinized the company's business
plan, the roadmap that defines what the company will do and how it will
do it. It wasn't until my first week of work that I realized that the business
"plan" I had read was really a business "guess." In
fact, it was the 17th iteration of the plan; over 15 subsequent refinements
of the plan found their way into various venture capitalists' offices as
we solicited investments.
We spent a significant portion of the next nine months trying to secure
investments from venture capitalists in Silicon Valley. It's not an easy
task. In one hour you have to convince a person to give you a million dollars.
The clock is always ticking, and if you can't find a new set of investors
before your current money runs out, it's all over. We were lucky enough
to beat the clock, and in September 1997 we finalized our first major round
of funding, guaranteeing that the company would last for at least another
year.
While we were selling our story to the investors, we were also trying
to sell our product to potential customers. This sales job was complicated
by the fact that we had no product, no references, and, if we didn't secure
our first round of financing, we might not even be around in a few months.
Perhaps our vision of the market was too progressive, or just wrong. We
needed to find someone with a sympathetic ear and a long-term view. That
someone was Palm Computing, our first customer and one of the most successful
Silicon Valley startups ever. As seasoned risk-takers, its executives were
willing to place a bet on our company for the chance to take command of
their market.
The race to deliver our first product really took place over one long
day, which started sometime in November and ended in March. It was punctuated
by occasional naps under my desk, but in general every employee worked round
the clock to make our deadline. Money in the bank and a contract with our
customer in hand were no reasons to rest on our laurels. Everyone knew that
if the first customer was unhappy in any way, we might never find a second.
Exhausted but proud, we finally delivered the product (www.insync-palm.com).
It was extremely well received, and crucial to signing our second customer
(www.my.musicblvd.com). Today we're swamped
with new business, and our company, Post Communications, Inc. (www.postdirect.com), is 10 times bigger than when
I signed on. Our progressive vision is becoming accepted wisdom in the press,
and we're completing another round of investment this month. Even so, intensity
still permeates the company. E-mail is still sent at 4 a.m., and there's
always plenty of caffeine on hand. We all know that the real work has just
begun.
-- Peter Kovac '96
More computer entrepreneurs ...
Jeff Bezos '86
Amazon.com is an online bookstore founded in 1995 that offers
4.7 million titles in the categories of books, CDs, audiobooks, DVDs, and
computer games. Bezos is the founder and CEO. -- www.amazon.com.
[Paw's story on Bezos appeared in the issue of February 25, 1998.]
Brian Von Herzen '80
Rapid Prototypes helps customers develop new products in the consumer
electronic industry, PC applications, and other commercial products, by
providing turnkey electronic product-design services. Herzen's firm assists
clients with product specifications, engineering prototypes, and contract
manufacturing needed to introduce electronic products to the marketplace.
-- www.fpga.com.
John Rafter '83
Sfera Software, Inc. was founded a year ago. Rafter's company
builds pure Java middleware that enables its customers to create and deploy
a new generation of flexible analytical applications. These applications
draw data from across the enterprise and apply complex business rules in
real time to allow richer interaction between businesses and their customers.
-- www.sferasoft.com.
Rob DiGiacomo '87
KryoTech, Inc., uses patented cooling technology to improve the
performance and reliability of computer systems. The privately held company
was spun off from NCR Corp. in 1996. DiGiacomo is a cofounder. -- www.kryotech.com.
Steve Sashihara '80
Princeton Consultants Inc., a 50-person consulting firm based
in Princeton, blends information technology with management consulting.
Its client list ranges from Fortune 50 firms to startups. A third of the
firm's consultants graduated from Princeton. The company plans to open a
New York City office later this year. Sashihara is a cofounder. -- www.Princeton.com.
Ronald K. Perkowski '77
Indiana HealthCare Technologies, LLC provides turnkey scheduling
and billing systems to medical providers. Health Care Fraud Detection
Systems, Inc. offers programs for monitoring data and analysing health-care
claims. Perkowski is a cofounder of both companies. -- e-mail to ihct@iquest.net.
William Frederick Lewis '71
Prospect Technologies uses the Internet and advanced computer
technology to solve business problems for corporations, associations, and
governments. The company's clients include the U.S. Coast Guard, Princeton
University, SAIC, and McGraw-Hill. Lewis is president and CEO. -- www.Prospect-Tech.com.
Isaiah Cox '94 and Jonathan Edelson '92
Borealis Technical Limited , founded by Cox and Edelson, develops
cooling and power generation technologies designed to improve efficiency
while reducing cost, size, sound, complexity, weight, and environmental
damage. Borealis's technology is intended to be used throughout domestic,
commercial, and industrial cooling and power applications. -- www.borealis.com.
Chris Cleveland '84
Genesee develops custom software for companies in a dozen different
industries. Genesee also does technical work for political organizations.
Cleveland is president of the company. -- www.genesee.net.
Chris Daily '95
SilkStream has developed and patented technology that allows comprehensive
metering of large numbers of Internet servers. Its products enable companies
to verify that their Internet resources are performing as desired, and allow
system managers to allocate infrastucture costs based on usage. Daily is
the cofounder. -- www.silkstream.com
Devin Hosea '91
Predictive Networks provides next-generation Internet/broadband
advertising tools that allow Websites, Internet service providers, and TV
cable companies to create profiles of users. These profiles are used to
predict receptivity to advertisment format, content, and timing. Hosea founded
the company last year. -- www.predictivenetworks.com.
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