Startup: A Silicon Valley Adventure

by S. Jerrold Kaplan

  “What about Windows?” I asked. Windows was the graphical user interface developed by Microsoft in an attempt to cut into Apple’s market. The strategy was to copy the Macintosh’s “look and feel” onto IBM PCs and compatibles. To date, this approach hadn’t worked. Windows 2.0—the second attempt by Microsoft—had just come out, and was getting more reasonable reviews, though it was still a far cry from the polish and ease of use of the Macintosh. Bill Gates had started the project almost immediately after Steve Jobs had privately shown him the first Macintosh, as yet unannounced, in order to persuade him to write applications software for the machine. Gates had been impressed—he had an unerring eye for important new technology—and agreed to write applications for Jobs, but with a deeper goal: to learn enough about this new graphical technology to take the market away from Apple. Now Gates’s company was a leading supplier of Macintosh applications, as well as Apple’s leading challenger. Gates had them right where he wanted them—dependent on him as a competitor.

  “Windows is a joke,” Gassée said. “They’ll never catch up.” He looked approvingly at Steve Sakoman. Even for an Apple executive, Gassée’s complacency seemed extreme. Nonetheless, it was fed by an ever-widening circle of Macintosh devotees and sycophants. Like Pepsi, where Sculley had been an executive, Apple was selling a product wrapped in a dream: buy a Macintosh and it will make you cool. As in sports car ads, the models in Apple’s advertising tacitly posed the question: Do you want to look like me? Buy this product and you will.

  Sculley was the perfect CEO for Apple: greatly concerned with corporate image, not to mention his own. Under the paternal eye of its founder, Steve Jobs, Apple had reared an entire generation of yuppies who had ripened from innocent yearning into rampant materialism. This was Jobs’s legacy—imprinting his self-interested personal style on thousands of impressionable young Apple recruits, who tended to measure their success by job title and the number of people below them on the organization chart. In a symbolic rite of passage, Sculley had deposed the creative and irascible Jobs in a palace coup, replacing Jobs’s persona but not his technical insight. The organization adapted accordingly.

  Sculley opened his door and invited us to enter. He had a chiseled, windswept look, and his head sloped back as if he were gazing far into the distance. An improbable wave of brown hair completed his young statesman’s visage. Gassée ushered us into the room as though he were the host, and followed us in. I surmised that he acted as a kind of gatekeeper to Sculley, at least for certain matters.

  Sculley’s office was dominated by a round wooden table supported by thin chrome bars clamped to a chrome rail. It gave the illusion of hovering in midair, defying gravity. He sat directly opposite me. Steve was to my left and Gassée to my right, with hands cupped on the table as though about to play a round of poker.

  Sculley began. “I’d like to show you something. This hasn’t been seen outside Apple yet, so I have to ask you to keep it quiet.”

  “No problem,” I said.

  He swung around and opened the doors of a cabinet. Inside was a complete audio-visual setup. He inserted a videotape and the screen lit up.

  An actor portraying a pleasant but nerdy-looking fellow in a white shirt and suspenders was sitting at a desk. The room was filled with knickknacks of various styles and eras. A rotating ceiling fan projected dramatic shadows across the scene. On the desk in front of the actor lay a flat, art deco tablet with a screen. As he spoke, the screen came to life.

  “I need to give a lecture on the African rain forest. What’s available on this subject?” The actor was obviously supposed to be a professor. A small “window” opened on the tablet and a smiling geeky face with a bow tie appeared, eager to please.

  “Just a moment,” the electronic pixie said. “I’ll check all major libraries.” In seconds, a bibliography appeared on the screen.

  For the next several minutes, the actor engaged this electronic elf in a free-ranging dialogue. The elf displayed a mastery of colloquial English and conversational dynamics. Periodically, the actor would touch the screen to bring up startling color pictures, answer a video phone call, or select from a menu. The drama ended on a light note, with the actor sneaking out when a call from his mother appeared on the screen.

  At first I was a bit confused. What was the point of this fantasy? My background was in computational linguistics, the processing of human languages by computers. Knowing the practical difficulties of speech recognition made me less able to get into the spirit of the thing. To me, the premise of this slick, expensive production was preposterous.

  When the video ended, Sculley swung around to assess my state of mind. “What do you think of our Knowledge Navigator?” This was apparently the name of the tablet sitting on the desk, which existed only through the magic of video special effects. To his dismay, my feet were firmly planted on the ground.

  “Are you planning on building this thing?” I asked.

  Before he could answer, Gassée, noticing my skepticism, jumped in. “Well, it’s really just a concept piece.”

  “Yes, it’s our ten-year vision, the direction of our company,” Sculley added.

  I wasn’t going to let him off that easy. “John, since the ancient linguist Panini, who in the fifth century B.C. attempted to write the grammatical rules of his native Sanskrit, scientists have been stymied by the complexities of language. I don’t think Apple’s engineers will solve this problem in the next decade.” Steve Sakoman winced noticeably. In retrospect, I had probably sounded too pompous.

  “As I say, it’s really just a concept piece.” Gassée was clearly doing damage control. He seemed as concerned that I might raise doubts about their project in Sculley’s mind as he was with my own reaction. But Sculley wasn’t giving up.

  “Maybe we can’t get there, but we can sure give it a try. As you know, Steve is working on a secret R&D project to bring the Knowledge Navigator to life, at least in an early form.” I wondered what exaggerated visions of Steve’s project were dancing in Sculley’s head. “In the early days of the Macintosh, we invited in selected software publishers to work closely with the development team. We hold you and your team in high regard, and would like to offer you the opportunity to be the premier applications developer for Steve’s project.”

  Gassée instinctively placed his hands flat on the table, as though he had just laid out his cards. Now all was clear. Sculley was using a time-honored technique with me that he had seen Jobs use repeatedly to his benefit: get a techie in the room, wow him with a slick personal pitch and a prototype, then hope he invests his time, money, and talent in support of an Apple project.

  I was so amazed at this ill-conceived attempt to sidetrack GO’s project that I couldn’t think of an appropriate response. I decided on the cowardly tactic of laying it off on our backers. “I appreciate the offer, but I’ve just raised money on a business plan that has specific goals, milestones, and deliverables, and the VCs aren’t going to stand for me changing horses in midstream.” This was only partly true. There wasn’t much of a business plan, and the backers would probably have gone along with Sculley’s plan if we had asked, but I wasn’t about to flake out on my teammates, especially in response to a magic show.

  “Perhaps you could consult with them,” Sculley politely suggested.

  “John, I’ll be happy to explore the issue with them and get back to you if they show any interest.”

  I turned to Steve as we walked out. “Thanks, Steve, it was a nice thought.” I think he was a little embarrassed.

  “Yeah. And good luck to you, Jerry.”

  I knew that he meant it. We were athletes in the same sport, just playing for different teams. We both knew that we had a lot in common, and that it might well be different the next time around. There was no reason to burn our bridges.

  A few years later, Steve Sakoman left Apple to join Jean-Louis Gassée in a new venture, Be Labs. I don’t think I ever talked to him again, but after his departure, his project went
on to become the Great White Hope at Apple—the Newton “personal digital assistant.” It was destined to have a profound impact on GO.

  When news of the Apple meeting spread through our offices, it created a good deal of excitement. Perhaps it was the thrill of knowing that someone of Sculley’s stature was worried about us, or perhaps it was the knowledge that there were real competitors out there. Whatever the reason, this first external threat to our company galvanized the team. It was time to establish a more explicit corporate culture and set near-term objectives. I discussed the subject at length with Robert Carr and Kevin Doren, then called a company meeting one day after lunch. We gathered in a small open area of our office near the Pullman-style kitchen.

  I had passed the word around that this might be a long meeting, so the first order of business was for everyone to stock up on munchies before we got started. There was always plenty of free food in the kitchen. The rule was that any food not labeled could be eaten by anyone—“No name, fair game.” The refrigerator shelves were dotted with little yellow stickies.

  Because I often worked late and was willing to eat anything, it soon became a matter of sport to feed me. I had a strict nondiscrimination policy with respect to color, age, or ethnic origin in my diet. That day, Celeste had put a special sandwich in the fridge with my name on it. This was an unusual courtesy, one that seemed too good to be true. Biting into it, I discovered two tiny pink plastic pigs, which I pocketed, and consumed the rest of the offering. Of course, she had told everyone about the prank, and they all waited for my reaction.

  “Hey Celeste, great sandwich. And thanks for the pig, too!” I called out across the room.

  “Pig?”

  “Yeah, the little pink piglet.”

  “One piglet?”

  “Why, does he have a friend?”

  She sat down and turned purple, to everyone’s delight.

  I called the meeting to order. “It may be hard to believe today, but pretty soon everyone in this room is going to be an old-timer at GO. We’re the ones that new recruits will look to for guidance, to see how they should think and act. Today I want to talk about some principles I’d like us to work by.

  “When I was a kid, I thought the moon shot was a remarkable scientific achievement. I now understand that the true triumph was not only technological, but also managerial. It was in 1961 that President Kennedy set a goal of putting a man on the moon by the end of the decade. It was in 1969—only seven years later—that this goal was achieved.”

  “Eight!” At least four people yelled this at once.

  “Nine minus one is eight,” Kevin said softly.

  “Thanks, I’ll remember that. During that time, hundreds of thousands of people were mobilized into a carefully choreographed ballet. There was no room for egos, no place for bullshit, and no excuse for delays. People’s lives and the prestige of the country were at stake.

  “Now, our task is simpler, but it’s still very risky. We are building an unproven product for an unproven market. And the key to success is to reduce risk whenever and wherever we can. Every one of us has an important role to play, and that makes us all part of management. In our company, everyone is responsible for understanding our goals and how their work contributes to it. That’s the first principle. If you don’t understand what’s going on, you should always feel free to raise your hand and ask.”

  Every hand went up in unison, and the room exploded with laughter. I shook my head in mock disgust.

  “The second principle is that there is no such thing as a great product that doesn’t sell. We aren’t here to promote truth and beauty, but to meet customers’ needs.

  “Last, we treat everyone outside our organization with courtesy and respect. Here’s why. We have to innovate in hardware, software, applications, communications, marketing, and God knows what else. This project is so big, we can’t possibly get enough money to do it alone. We need other people to invest their attention and resources right alongside us. So here’s the strategy: we should do just enough in each of these areas to interest competent partners. If they’re willing to step in, we should let them, and we’ll back off. We have to provide compelling economic opportunities for everyone.”

  “Now wait a minute,” Todd Agulnick said. “Suppose we give everything away like you suggest. Then what’s left for us?”

  “Yeah, are we gonna wind up flipping burgers at the Doggy Diner?” Celeste added, gesturing toward the all-night burger joint on the corner, topped by a giant plastic smiling dog wearing a chef’s hat.

  Robert broke in with the answer. “Todd, when you strip everything else away, our value is the APIs.”

  API stands for application programming interface, the building blocks of the internal operating system out of which application programs are constructed. Every operating system has its own APIs that define what the system can do, how it will look to the user, and how to make it happen. APIs are the foundation on which applications programmers build and on which their products must depend.

  Creating an API is like trying to start a city on a tract of land that you own. First you try to persuade applications programmers to come and build their businesses on it. This attracts users, who want to live there because of all the wonderful services and shops the programmers have built. This in turn causes more programmers to want to rent space for their businesses, to be near the customers. When this process gathers momentum, it’s impossible to stop.

  Once your city is established, owning the API is like being the king of the city. The king gets to make the rules: collecting tolls for entering the city, setting the taxes that the programmers and users have to pay, and taking first dibs on any prime locations (by keeping some APIs confidential for personal use).

  This is the great secret of the computer industry. While the newspapers chronicle the daily skirmishes of computer companies and their products, the real wars are over control of APIs, a subject too arcane to attract the attention of the press. But once an API is established, the owner has a natural monopoly of unprecedented proportions. API wars are brutal, winner-take-all conflicts in which the losers become mere shadows, eking out a marginal existence in specialty markets.

  I completed Robert’s point. “It only looks like we’re a product company. In the end, the real game is won by establishing our own APIs. Because pen computing is a new industry where no one is established yet, we have a chance. If we succeed, it will be damn near impossible to stop us.” I waited a moment so the significance of this seeped in.

  “I want to do one last thing before we break. In honor of these principles, I would like to propose a company mascot—the ant.”

  I pulled an ant farm out of a paper bag. Not just any ant farm, but an Uncle Milton’s Ant Farm. This delightfully nerdy toy, touted for generations in the back pages of comic books, came with its own ants—real live ants, delivered by mail in a test tube. The newly installed residents had already set about constructing tunnels, which could be viewed through the plastic panels.

  “Yuck-o!” exclaimed Todd.

  “Anyway, I think they capture the right attitude. They are egoless, cooperative, and diligent, and are excellent engineers. Also, they live on a few drops of sugar water a week.”

  Todd was mentally exploring the possibilities. “Can we watch ’em breed?” he asked.

  “We need to get you a girlfriend,” Celeste said. He grinned and gave her a thumbs-up.

  As the meeting broke up, Phil Ydens—the laconic operating systems engineer from Grid, who had sat quietly throughout—walked up to me and said only one word, “Cool.” Then he returned to his desk. I took this as an expression of his approval. It made my day.

  Kevin, Robert, and I were the only ones left in the common area. The mood had been light, but the three of us knew the seriousness of the situation. We had spent several months now investigating the project, and it wasn’t going to be a cakewalk. There were all kinds of risks and no guarantee that we could make the milestone we had promised
the investors: to demonstrate a deskbound prototype of a pen computer by June of 1988, only about six months hence. Kevin was the first to speak. “GO is destined to be spectacular for sure—one way or the other.”

  “Yep, we’re either going to be a spectacular success or a spectacular failure,” Robert added.

  I bent over to pick up my empty soda can. “Either way, it’s going to be a hell of a joyride.”

  Kevin raised his eyebrows and nodded. “Or a joyride to hell.”

  For the next several weeks, the ant farm was the centerpiece of the office. Feeding time was a major event, and since everyone wanted to do it, we had to put up a schedule. One day I arrived at the office to find a sullen group standing around the farm.

  “Why’s everyone so down? This place looks like a funeral.”

  Robert pointed to the ant farm. “It is.” Our cherished mascots were now just curled black specs, lying motionless in their carefully excavated home.

  Todd was especially upset—he had developed a strong personal identification with the ants. He said, “I hope this isn’t going to happen to us.”

  After cleaning out the ant farm, I wiped the last of the sand from my hands and walked back to my office. I encountered Kevin in the hall. “Joyride to hell,” he repeated.

  As we got deeper into the project, it began to consume more and more of my time. Soon there was little left for any personal life. Before starting the company, I had been dating a flight attendant from Sweden, but she had grown increasingly impatient with my preoccupation with work. My parents also sensed a problem—it would sometimes take me a week to return their calls. They had only the vaguest understanding of what I was doing, and grew suspicious that I was risking my nest egg on a foolhardy undertaking. Unable to satisfy their curiosity by phone, they finally decided to make good on their threat to visit.