Andrei hesitated. The sum they were considering spending was so large. The chances of success, he estimated, were no better than fifty-fifty. Perhaps less.
But he couldn’t say no. He just could not bring himself to walk away. The challenge was too tempting.
So, after three years of avoiding the entanglements of venture capitalists, Andrei Koss finally found himself driving the two miles into the very heart of their lair in Sand Hill Road and sitting alongside Chris Hamer in a meeting room at LRB, pitching Fishbowl to Robert Leib with the help of a salmon-fishing palotl.
*
The $300 million injection that Robert Leib agreed to provide took six weeks to finalize after the meeting at the LRB office. Leib organized a syndicate with two other venture capital firms to raise the money. He could have had his choice of two dozen. There wasn’t a venture capitalist on earth who wouldn’t have jumped at the chance of getting a piece of Fishbowl, especially at a valuation that came in at around a quarter of the consensus valuation of the company. Leib had had his analysts comb through the company books and had calculated that Fishbowl was worth even more than that.
Andrei met the investors in the syndicate. Chris’s strategy was perfect. Blinded by the gift that Andrei had seemed to place on a platter for them, they demanded remarkably little detail about the specific projects for which the cash was earmarked. Andrei told them that he needed it to fund further web service development and other expansion activities, and gave some examples that had nothing to do with the palotl project that he and Chris had in mind. He used a lot of technical language that only someone with an advanced degree in computer programming would have understood. It was good enough for Leib and his partners. Despite having made multiple tech investments in the past, none of them knew any specifics about the costs of developing programming improvements – other than that it cost a lot – and weren’t in a position to judge whether the projects Andrei mentioned required the sum they were putting in – or a tenth as much, or ten times as much. Once you decided to make an investment, Leib believed, you had to trust people, tech people above all. In his experience, you got the best out of tech people by letting them do what they did best and making sure they had good commercial people around them to monetize the product. If you tried to understand the detail, all you’d do was stand in the way. As an investor, all he wanted to know was that there was going to be a way to turn great programming ideas into revenue. With Fishbowl, Andrei Koss had already demonstrated abundantly that he was able to do that.
With outside investment came the need, for the first time in the company’s history, to set up a real board. Andrei made it a condition of the deal that he retain control. His lawyer devised a dual class stock arrangement that gave a certain class of shares – the ones Andrei would continue to hold – amplified voting rights, so he would effectively retain control of the company unless his holding fell below 10 per cent of the total stock.
Normally, Robert Leib wouldn’t have stood for a provision that effectively gave indefinite control of the company to the founder of a start-up. But Fishbowl was no ordinary start-up and Andrei was no ordinary founder – and the likely returns Leib was going to make on this investment were no ordinary returns. The statutes of the company were changed accordingly, and the new stock structure implemented. The board had six seats. Andrei took one, nominating Chris and Kevin for another one each. Robert Leib, representing the VC syndicate, which now held 4 per cent of the stock and an option for a further 3 per cent in a year’s time, held a fourth seat. The fifth seat went to Pete Muller, an internet entrepreneur whom Andrei had met and respected. He left the sixth seat vacant.
Andrei could still vividly remember the day that the first half-million dollars from 4Site had hit his bank account, back in the days when Fishbowl had still been run out of the suite in Robinson House. It was a measure of how far he had come that the day Leib’s $300 million was wired to the Fishbowl account didn’t stick in his memory at all. It was simply an amount of money he needed in order to do something and, when it arrived, he could forge ahead. His chief financial officer put his head around the door of the office that Andrei now occupied and told him the funds had arrived. Kevin was with him at the time, deep in discussion about the project for which those funds were required. Andrei simply nodded at the CFO and turned back to Kevin.
A team of headhunters was already at work for a multi-million-dollar fee. Their brief over that winter was to lure the world’s best talent in artificial intelligence and linguistics programming. MIT, Stanford, Imperial College in London, and the dozen other top academic software labs in the world were targeted, with the inducement of multi-million-dollar salaries and generous relocation packages to California. It didn’t prove too hard to tempt away brilliant young associate professors earning a fraction of that sum, with the additional prospect of life-changing sums in stock options and the prospect of working alongside the most outstanding brains of their generation. To add to the academic talent, the most creative programmers in Seattle and Silicon Valley were offered a doubling of their existing remuneration package and a bundle of stock options as well. Hollywood and video games developers were raided for the leading talents in visuals. Altogether, a team of sixty-eight of the world’s most gifted researchers and programmers was recruited and relocated to the Bay Area.
The project was to run under strict secrecy. Jenn McGrealy found an office away from the rest of Fishbowl in a nondescript block on Manhattan Avenue in East Palo Alto, just south of Route 101. The people recruited were instructed to tell their spouses that they were working in a private academic research institute, which was strictly true, since a private institute, separate from Fishbowl, had been incorporated under which all salaries and expenses were paid. The institute was owned by a Cayman Islands-based holding company, which in turn was confidentially owned by Fishbowl, so no casual association would link Fishbowl to the work being done there. Non-disclosure clauses in the employment contracts were draconian. Administration and infrastructure was to be run by a small team within the office on Manhattan Avenue that was unconnected with Fishbowl’s support services. Besides Andrei, Chris, Kevin and Jenn McGrealy, no one in the wider Fishbowl organization knew that the project existed.
By March, Fishbowl’s new employees and their families were flying in to Palo Alto at the rate of twenty a week. After six months of recruitment, the team assembled for the first time on Manhattan Avenue. They were greeted by Andrei, Chris and Kevin.
Andrei gave a welcome speech in the atrium of the office, standing in front of the obligatory Fishbowl aquarium. He told the assembled cohort that the work they were going to undertake together in that place would one day be looked back upon as having changed the world. There were no smirks, no rolling of eyes. This was a collection of men and women of such talent that a comment like that didn’t seem to them in the least hyperbolic.
‘What’s this project called?’ asked one of them, when Andrei had finished.
Andrei glanced at Chris. They had been referring to it simply as the Farming Project, which wasn’t very inspirational. ‘We thought we’d leave it to you to come up with a name. There ought to be enough brainpower here to think of one.’
A ripple of laughter ran through the group.
‘What about the Manhattan Project?’ said a Spanish accented voice from the group, citing the name of the Second World War project that had spawned the atom bomb. ‘We’re on Manhattan Avenue, no?’
‘That’s right,’ said a third voice. ‘And, like you said, Andrei, we’re changing the world.’
Chris laughed. ‘Let’s just hope we don’t blow it up.’
34
THE PLAN WAS for Kevin to be in charge of the project. He relocated to Manhattan Avenue, leaving Fishbowl’s projects in the hands of two senior programmers who became joint heads of development.
Initially, Andrei planned to drop in from time to time to check on progress, but he soon found that he couldn’t stay away. The office on M
anhattan Avenue housed the smartest, sharpest group of people Andrei had ever come across, passionate about knowledge, about their own areas of expertise, about breaking new ground. Just walking in there gave him a buzz. The thought that he had brought this group together made him feel both uniquely privileged and proud. He would go over to Manhattan and sit there for hours, listening, immersing himself in the detail. As people from so many varying disciplines came together, there was much shared education. There were long discussions about the nature of linguistics and its programmability and what amounted to seminars by the artificial intelligence gurus as they explained their field to everybody else. People from different disciplines brought new perspectives that opened up new ideas. The place was a hothouse of creativity.
And yet nothing much happened. Weeks went by, then months. Despite the sharing of so much knowledge, communication about the actual work underway seemed poor. Andrei knew about individual pieces of investigation that other people in the office seemed to be unaware of. He heard about collaborations that started, then stopped. Work was being done, interesting work, but it was going in a thousand directions.
After three months Andrei asked Kevin to organize a week-long seminar in which everyone would present the work they were doing. He asked Chris to join them. Chris didn’t care too much about the detail of how the problems were being solved and hadn’t spent much time in the Manhattan office, so most of it went over his head, but certain things were clear. At lunch on the second day he said to Andrei: ‘This is all over the place. These guys are running amok. And you can see they don’t think shit of Kevin.’
That was what Andrei had been thinking. The Manhattanites were treating Kevin with disdain. It was obvious that they didn’t respect him – at least partly because Kevin, from his side, didn’t seem to have put any kind of order into what they were doing and appeared to be waiting for it to emerge by itself.
The following week, Andrei went to the Manhattan office for a talk with Kevin. Kevin’s response made it the toughest conversation he had ever had. He asked Kevin to go back to Embarcadero and take up overseeing other projects again, while he, Andrei, led the Manhattan project personally. Kevin asked for more time, then begged for it. Andrei said he couldn’t give it to him. The burn rate on the project was in excess of $10 million a month and, every month, Jenn McGrealy would ask him what was happening out there. Even if it had been a tenth as much, he would have done the same thing. He had assembled the smartest team of people that probably existed anywhere on the planet at that point in time. He couldn’t waste that firepower.
Kevin left and Andrei moved in.
Andrei had already realized that the ways he had conceptualized the problems to be solved in the months prior to setting up the project were simplistic. They were much more complex. If the project was to have any hope of solving them, it needed structure. It couldn’t be run in the informal, fortuitous way that most things at Fishbowl were run. In that respect, Kevin had been the worst person Andrei could have chosen to head the project. He had a taste for anarchy that was normally compensated by a group of senior programmers who knew his foibles and ensured that projects were completed despite him. But these lieutenants were lacking at Manhattan Avenue.
Fortunately, despite what had happened under Kevin, Andrei still had an opportunity to recover the situation. He had the respect of the Manhattanites. They knew better than anyone that the project had been going nowhere under Kevin, and removing him showed decisiveness. Although each of them was far more knowledgeable than Andrei in his or her field, they were impressed by the way he had spent time sitting and listening, by the questions he had asked, and by the engagement with their answers that he had shown. They also recognized that he had envisioned and built what was clearly by now one of the world’s great websites, and had also envisioned this project of which they were lucky enough to be a part. And every one of them, no matter how gifted or arrogant, did feel lucky to be a part of it, and not only because of the money they were earning and the stock that was accumulating in their options accounts. To be part of a group like this was a once-in-a-generation experience, given to very few. The departments they had come from could only dream of pulling together this concentration of talent and expertise. All of them had often imagined what they could achieve, what apparently insurmountable obstacles could be overleapt, if only the whole range of talents could be brought into the room. And here, on Manhattan Avenue in East Palo Alto, thanks to Andrei, they had been.
The first thing Andrei did on taking over was to organize a second seminar. He had everyone outline what they thought needed to be done to develop the Manhattan programme and what role they saw for themselves. There was vigorous, often passionate debate out of which emerged key themes, if not consensus. Then he worked with groups of people from within and across each of the disciplines in a series of wheelspin-type sessions to rank the issues and shape them into a work programme.
There was unhappiness about some people being chosen to work directly with Andrei and others not, but a hierarchy of sorts was emerging. Project leaders were named and teams were formed to work on each of the issues. They reported back to each other in an all-day Friday session each week.
Andrei found his new role both incredibly stimulating and extraordinarily challenging. He was constantly talking to people, identifying problems, trying to find ways to solve them. In that respect, he was like a kid with a toy box. But he was also constantly at the very edge of the envelope of his knowledge – or even outside it – with people whose minds were razor sharp. And, in many instances, those minds came with egos to match. He loved it and at the same time it scared him. He had never felt more alive.
Slowly, progress began to be made. Problems were solved. Solutions converged and new issues emerged. The progress got faster. In what seemed to Andrei like the blink of an eye, a year had passed. Already, $100 million dollars had been spent.
The rest of Fishbowl was running largely without Andrei. His tendency to bury himself in the fun stuff, which had started back in the days of James Langan, took over. At one point he hadn’t appeared at Embarcadero for over a month and Jenn McGrealy found herself having to physically go over to Manhattan to get things done. She insisted that he agree to spend at least one day in the Embarcadero office every week, and she set out to look for premises that would unite all the Fishbowl offices with space for the growth that was still taking place.
Andrei agreed for her to find somewhere new and to bring the Fish Farm onto the same campus, but he refused to move the Manhattan Project. Here groundbreaking work was being done, work that would have application, he knew, way outside Fishbowl. For Andrei, this had nothing to do with business. Here, a revolution was taking place, and it was going to stay in splendid isolation until it was done.
*
The bulk of the groundbreaking work in the Manhattan project was done in the first two years. Soon after that, as the focus shifted towards developing user applications, a number of the original members of the team left. Some were disgruntled at what they foresaw as the excessive commercialization of their work, although what else they imagined would be done with it, considering that the project was being funded by a private company, was unclear. Most of the leavers were academic linguists whose work was done anyway. Others were replaced by new people. The project’s secrecy held. None of those who left broke their nondisclosure agreements, probably motivated by the thought of stock options that wouldn’t vest for a further two years.
The two external members of the Fishbowl board, Robert Leib and Pete Muller, remained in ignorance throughout the project, just like the rest of the world. As far as they were aware, the escalating spend that they saw in the company accounts to the Caymans holding company, which they were told was being directed to the ‘Institute for Technical Science’, were payments to a Fishbowl-owned incubator which had been set up for tax purposes and was developing Fishbowl’s cutting-edge functionalities. Since neither Leib nor Muller knew enough about
the way a meta-network of Fishbowl’s size and stage of development operated its R&D to question the magnitude of the spending, few questions were asked. As far as they were concerned, the spend on the institute could have been $10 million or it could have been $100 million. A year after his first investment, Leib organized a second syndicate to exercise the option of taking another 2 per cent of Fishbowl for a further $300 million dollars, and counted himself lucky.
During this time, Fishbowl established itself as one of the unquestioned giants of the internet world, a feature of the landscape so ubiquitous and influential that it became hard to remember what internet life had been like before it existed. Constant focus on delivery and improvement of functionality was its hallmark. Jenn McGrealy proved herself to be a superb executive and leader, controlling not only the day-to-day operations of the company but also helping Andrei exert a discipline over the programmes run by the two heads of development that he wouldn’t have imposed by himself. Andrei came to rely heavily on her judgement on how to allocate his time outside the Manhattan office.
In Palo Alto, Fishbowl now had over 1,900 employees housed, with the exception of the Manhattanites, in an interconnected pair of buildings on University Avenue, and a further 600 employees worldwide. Its IPO was eagerly awaited and rumours regularly swept the market that Fishbowl was about to announce its public offering, which was expected to be amongst the highest ever to come to the market. Homeplace, once the monster of the social media world, was in steep decline, its user base having largely migrated to Fishbowl after it had been forced to open access for data transfer. The money spent on the political lobbying to force the move, and on developing services to outshine Homeplace’s, had paid off. As a combined network and meta-network, Fishbowl was the second most visited site on the net, its user numbers topping one billion. Its advertising revenues, both from what was regarded as traditional internet advertising and from its high-end Farming, escalated accordingly. Farming was being widely copied by other networks, many of which had lined up to condemn Andrei when Fishbowl had blazed the trail. Now they were scrambling to catch up.
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