In the Company of Giants

by Rama Dev Jager

  When you have nothing, you have nothing to lose; you haven’t that far to fall. That’s why so few entrepreneurs can do it a second time.

  Because they’ve already made it and have much more to risk?

  Once you’ve done it, you don’t want to eat hamburgers anymore when you’re used to eating steak. In order to do a startup you have to be willing to get down and dirty. Even Jim Clark didn’t really start Netscape. He identified these smart guys with the technology. That’s the way you can do it. Or Steve Jobs with Pixar; he saw a product, saw that the idea was good, and financed the idea. It’s the only way you can really do it successfully the second time around because you need other people who are very hungry and are willing to take the risks.

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  SANDY KURTZIG

  What is your life like after ASK? Do you miss working there after devot-ing so much of yourself to it?

  My case is a little unusual. My initial business idea was to start a family and have a part-time job. I didn’t quite succeed at that idea since I was working 20-hour days. To make anything successful I think you have to work 20-hour days. Also, 65 percent of my business was outside the United States, so there was a lot of traveling in my work. I felt that I could always go back into business if I wanted to, but I couldn’t turn back the clock and spend more time with my children. On my gravestone I’d like written, “Mother of Andy and Kenny”—not “Mother of Silicon Valley” or “Mother of MANMAN.”

  I left ASK both times because I wanted to spend time with my children. Luckily my children are turning out great—so far, anyway.

  It’s been an enjoyable time. It’s very hard for entrepreneurs who turn their companies over because there aren’t really any successes after owners turn their companies over to someone else. I think that Apple fell apart because no new products were developed. The last time a good product was developed, other than Newton—which was a failure—was when Steve Jobs was there.

  But HP managed to evolve and grow after Bill Hewlett and David Packard left.

  Yes. HP was, is, very unusual. HP has definitely carried on the culture of Packard and Hewlett. I think if Gates left Microsoft the company would go on for a while, but it wouldn’t be a stock you’d want to hold for too long. The same is true with Ellison and Oracle. I think there was a good transition at Intel because Andy Grove and Gordon Moore are still there. It’ll be interesting to see what happens when Grove and Moore retire. It’s very difficult. The entrepreneurs you are interviewing have created a culture. For better or for worse, the CEO

  sets the culture. That’s the main job. Employees who have come to that company have chosen to live by that culture. In the case of HP

  you see that culture pervasively instilled throughout the organization, no matter where you go in the world. Then a new CEO came in.

  John Young, as much as I like him, didn’t quite instill that same culture that Hewlett and Packard did.

  So yes, I miss the company. I’m very proud of its reputation for producing good products and good customer service and being a

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  good place to work. On the other hand, there are other things in life than ASK and working 18- to 20-hour days.

  If you were starting over would you go back into manufacturing management software or would you read journals and consider going into other industries?

  Would I go into manufacturing software? No, for the wrong reason. I wouldn’t because I’m sort of bored with it. I’ve done it for twenty-some years. But I think there’s still an incredible opportunity with the transition in technology. We succeeded during the transition from mainframes to minicomputers. Now there’s a transition from minicomputers to client/server, and a transition from hierarchical databases to relational databases, and transitions from line-by-line user interfaces to GUIs [Graphical User Interfaces, e.g., Apple’s MacOS

  or Microsoft Windows]. There’s incredible opportunity in the market.

  Some of the new companies have done well. There’s more opportunity today in manufacturing software than there ever was before. So, the answer is I’m bored with manufacturing software; I probably wouldn’t do it over again, but I think there’s still an incredible amount of opportunity in that market. There are other markets that I think are exciting. One is software for healthcare information systems. It has all the makings of a boom market for all the same reasons: transitions in markets and transitions in the industry itself. Any software that was written a few years ago is obsolete.

  My number-one piece of advice for would-be entrepreneurs is to go for it. I’d say the top things are:

  ●

  Believe in yourself. If you don’t believe in yourself, no one else is going to believe in you. You’re not going to be able to communicate well if you don’t believe in your idea.

  ●

  Surround yourself with good people. Have a good team and don’t be afraid to share the glory and the responsibility and the authority. It takes a lot of hard work, and as the company gets bigger, it doesn’t take any less. The work is just different.

  ●

  Be willing to make mistakes. You just have to make a few less mistakes than your competition.

  ●

  Don’t get wrapped up in your success. When we went public all of a sudden we were the fair-haired children of the penin-

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  SANDY KURTZIG

  sula and we were the overnight success. But it took six or seven years of hard work and 20-hour days to become the overnight success.

  ●

  You’re still the same person you were when you started. You still stand in line at the post office, you still put your pants on one leg at a time, and just because all of a sudden everybody thinks you’re great, don’t let it go to your head. If you do, when your business has a problem, you won’t be able to cope with it.

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  JOHN WARNOCK/

  CHARLES GESCHKE

  Adobe Systems

  ON PARTNERSHIP

  The difficulty of starting a business by oneself is perhaps exceeded only by starting one with a co-founder. Capability, money, and ego almost invariably conspire to tear asun-der any hint of a previously well-oiled partnership. In some cases the split is both planned and beneficial. More often, the divorce threatens to undermine the venture itself. With the exception of Hewlett and Packard and perhaps Gordon Moore and Andy Grove of Intel, no other duo has managed to withstand the rigors a technology startup faces and operate with such hand-in-glove efficacy as John Warnock and Chuck Geschke, the co-founders of Adobe Systems.

  Geschke hired Warnock to the famed Xerox PARC in 1978. Their research derived advanced graphics capabilities and led the development of graphics-imaging standards.

  In the past, developers and users of personal computers struggled with the challenges of printing documents.

  Developers had to write different pieces of software for each 99

  Copyright 1997 Rama D. Jagar and Rafael Ortiz. Click Here for Terms of Use.

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  JOHN WARNOCK/CHARLES GESCHKE

  printer on the market and users were often unable to make screen text appear the same on paper, a maddening problem.

  Warnock and Geschke did away with all this by creating software that linked the printer and the computer in such a way that users could print to any connected printer and manipulate the text and images on the fly. It was this technology that helped create the “desktop publishing” industry of the

  ’80s.

  Like so many other innovative microcomputer technologies that emanated from PARC, Xerox saw no commercial value in their technology. Convinced otherwise, Warnock and Geschke went into business for themselves.

  They arranged a meeting with Apple’s Steve Jobs, then leading the Macintosh development project and in search of a hot new technology to showcase his new computer. Jobs reportedly offered them $1 million to bring their software, known as PostScript, and join Apple; they demurred. Adobe Systems was bor
n.

  Adobe leveraged its PostScript franchise by developing technically superior applications, acquiring companies with complementary products, and delicately treading between the competing interests of its two largest partners, Apple and Microsoft. Today, Adobe is on target to break $1 billion in yearly revenues. However, the internet’s impact on the computer industry reorders Adobe’s world. For a company that built a business on creating professional-quality documents, the paperless world of cyberspace poses some challenges to Adobe’s continued growth and good health.

  Warnock and Geschke’s similarities extend to physical appearance and demeanor; both in their mid-fifties, bearded, and gray-haired, they are the very picture of unassuming Ph.D. engineers. Warnock, chairman and CEO, is often described by outsiders as the technologist of the two. Geschke, the firm’s president, is known for focusing on the business and marketing aspects of the business.

  We met with these two quiet giants in Warnock’s modest first-floor office to better understand how they turned a professional friendship into the dominant force in desktop publishing.

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  “The fact that I’m an entrepreneur is just an

  accident of my situation.”

  When Adobe started, there were already two very large players, namely Microsoft and Apple, whose interests you had to balance between. How did you handle it?

  W: How did we manage it? In licensing PostScript, Apple wanted a window of opportunity. So PostScript’s early licensees were more complementary than competitive to Apple and that gave them a running start on the desktop publishing business. As they gained strength and others entered the market, we started licensing to more competitive companies.

  In the ’84–’85 time frame, we had a great relationship with Microsoft. Bill [Gates] was a very approachable guy and we had friends who worked at Microsoft.

  At Apple we had a great relationship with Steve [Jobs]. The Macintosh was just hitting the street and there didn’t exist the competitive atmosphere even though Apple’s “1984” ad campaign positioned Mac versus PC as this very, very competitive thing. It felt that way from the Apple side but not from the Microsoft side.

  G:

  Early in Adobe’s life people advised us to go after the biggest computer manufacturer. Instead, we went with Apple, which needed us in order to establish a position in the market. By establishing a micro-industry within the computer business, we could then go to companies like IBM and Hewlett-Packard.

  So your explicit strategy was to work with smaller, less established companies?

  G:

  Right. We also recognized that, unless we established ourselves as a strong technology vendor, we would be in a very weak position to negotiate realistic licensing agreements with the likes of IBM or HP, and probably wouldn’t have been able to create enough value in the company.

  W: It was valuable to tell potential partners, “We have this very, very profitable business with Apple. If you want to license from us, it had better be with the same terms and conditions.” Had we shot-gunned the market we wouldn’t have been in a strong negotiating position.

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  JOHN WARNOCK/CHARLES GESCHKE

  The basis for this technology of yours was developed when you were both at Xerox PARC. PARC is famous for being a great research center that can’t implement its technology. Is that why you left?

  G: There are really two parts to the question. Many who’ve written books about Xerox PARC placed 100 percent of the onus on Xerox management. In truth, management deserves some of the onus, but not all of it. First, Xerox management had no technology background even though they were viewed by many as a technology company.

  Management consisted mostly of people from sales, marketing, or finance. Their body language when they visited PARC was to have their arms crossed in front of them—which you know is the defensive strategy—“I don’t want to deal with this.” You can fault Xerox management for simply not understanding the products. On the other hand, it would be incredibly unfair to take us researchers off the hook. We had built ourselves a wonderful sandbox there, and though we very much wanted Xerox to succeed, we weren’t realistic about the difficulty of selling an idea in an organization. We learned more about how hard that is after we left Xerox. As a research group we were never disciplined, motivated, or trained to do that. As a result, it didn’t happen.

  Technology travels with people. You can’t just throw it over the wall and, because it’s such a good idea, expect another engineering group to simply pick it up and run with it.

  W: I joined Xerox in 1978—

  G:

  Hiring John was my best hiring decision.

  W: Chuck was at Xerox for ten years and I had been there four years when we left. I had been with a number of startups and came to Xerox Research with my eyes wide open. I said, “God, this is the world’s greatest place to do research.” It really was. Great equipment.

  Great people. You could learn more in one year at Xerox PARC than you could anywhere else in five years. It was unbelievable. But, after talking to some of the senior managers it became clear to me that there wasn’t a path from the research organization into the product world. There was no mechanism. Xerox essentially built the research organization— in toto—with no communication paths to the rest of the company and basically said about us, “These guys will invent things.” The respective cultures of the manufacturing and the research organizations were like night and day. And the researchers had no desire to—

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  G:

  —get their hands dirty.

  How does a company devolve to that state of affairs?

  G:

  I’m more interested in figuring out how not to devolve to that position.

  W: I think it was obvious. Xerox was a copier company. It was making a ton of money. It had cash, it had the franchise, it had the patent protection. It was the only copier company in the world and had great advance planning: “What should we do with cash? We’d better invest in our future. Let’s throw a ton of money at investing in our future without worrying about the cultural aspects.” That caused PARC to occur.

  G:

  It’s something we all struggle with when we have an incredibly successful product. It’s difficult to invest resources in something other than the successful product unless you can predict the new one will be at least as successful as the current winner. Well, it’s hard to figure out where the next multi-billion-dollar business is. It’s much better to create a few ten-million-dollar businesses and see which ones emerge. And that’s a problem we struggle with here. We have some product lines here that are multi-hundred-million-dollar product lines but we can’t put all of our resources in those businesses. We have to build new businesses. So we go develop products like Acrobat and use the profits and the successes in the other businesses to invest in the new ones.

  W: But the culture of the organization must be united. Having a research organization with no connection to reality is, in some sense, doomed to failure.

  G:

  Here we have what you would call a research group, our Advanced Technology Group. But those people often work on specific aspects of a product’s technology and they work with it all the way until product delivery and they then recycle back to the development group. We purposely keep an easily penetrable membrane between the research and product groups.

  So your researchers in Advanced Technology don’t just hand it off to the folks in product development?

  No.

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  JOHN WARNOCK/CHARLES GESCHKE

  One of the hallmarks of successful startups is their ability to adapt to their market situation. When you first wrote your business plan, the idea was to create a print shop business. How did you adapt?

  W: Actually, there was the very first business plan, then there was the second business plan, and then the third business plan...

  G: We never actually wr
ote the third business plan.

  W:

  We were talked out of the first—starting service bureaus for printing and publishing. We thought that companies needed printed material and that we could combine laser printers with computers and take the companies’ print jobs.

  G: We were going to do PIP (Postal Instant Press) kinds of things.

  Just a single store?

  GW: It was going to be a whole franchise!

  G: All this stuff we knew nothing about.

  W:

  Right. And Bill Hambrecht [of the San Francisco investment bank, Hambrecht & Quist], rightly said, “You guys don’t know anything about that business. It’s a street savvy, down-and-dirty kind of business. You don’t want to be in that kind of business.”

  G: We only had our two beards.

  W:

  Hambrecht said, “You need to figure out something that leverages the technology. You’re technologists.” We said, “That’s cool.” At the time there weren’t cheap laser printers. Laser printers were $20,000 items at that time and Sun Workstations were just coming out. We thought we had a huge opportunity by putting a Sun workstation together with a $20,000 printer and making publishing solutions for corporations. Boeing and Hughes had problems. All the big aerospace companies had big publishing problems. Six startups in 1982 tried to do this business model: Interleaf, Xyvision, Tekset, Qubix, Viewtec, and Kamex.

  They’re all gone now?

  G: Interleaf is still around.

  W: Xyvision may still be around. Kamex got swallowed up by Du Pont. About six startups had exactly the same business plans.

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  G: Which is why it was easy to raise money. It’s always harder to raise money when you’re alone with a product or service idea.

  W:

  We raised two-and-a-half-million dollars with that business plan. We then hired our VP of sales and marketing and did the technical development for PostScript. Then we got the famous phone call from Steve Jobs.

  G: In all fairness we got the first call from Gordon Bell [vice-president of engineering] at DEC. It turned out that he had the same problem that Steve had.