Founders at Work.pdf

Steve Perlman 179
value of it was, but he nonetheless committed to put some seed funding in. We
ended up raising $1.5 million from Marvin, and that’s what we started the company
with.
That was in July of 1995. I think I got the thing working first in April 1995,
so from April to July, I kind of pulled together the business plan and at least the
first couple of guys that were going to help me, spent a lot of time calling different
people who we might be able to work with, went looking for office space,
and so on. We were working out of my dining room in my house.
After we got the money from Marvin, we went and found an old BMW dealership
that was vacant. It was mostly garage, but they had a little bit of office
space. There was no connectivity there; I think there were three phone lines
going into it. But, it was about 90 cents a square foot per month, so I thought,
“OK, perfect.” It was right near downtown Palo Alto, and so we moved in there.
Literally, we had three phone lines. There was always one of them with a dialup
connection, because we were doing experiments and everything. I was trying to
do business calls on the other one, and there were modems always interrupting.
We finally were able to convince Pac Bell, the phone company at the time,
to bring a T1 line in there. I remember talking to the guy and saying, “We want
a T1 line here. We’ve got this big business we’re growing. We’re eventually
going to need very high bandwidth connections and optical fiber, and all this
kind of stuff.” I hear some paper flipping in the background, and he says, “Is
this some kind of a joke? It says here on the manifest that this is a car dealership.”
And I said, “No, no. We’re running a big online service business. It’s
going to affect people all over the United States. It’s going to be really huge.”
The guy says, “OK. Who put you up to this?” It was like a joke trying to get connectivity
there. We literally had to go to several levels up in Pac Bell until they
finally believed that we were a startup using an old car dealership to set up an
online service.
Livingston: How many cofounders did you have when you started?
Perlman: There were three total: Bruce Leak, Phil Goldman, and me. Phil
passed away 2 years ago of a sudden heart attack, sadly. That was a real tragedy.
So then we started hiring people and getting things going. I’m doing something
that I wasn’t that familiar doing, which was business development. That
was all new for me. As I said, I may not have an engineering degree, but that’s
what I’ve always done for my vocation.
I called Sony and said, “Hey, we should go and do this cool thing.” Sony was
interested—I networked through some of the contacts I had made at General
Magic, but they were slow getting through the company. We also began to
speak with Philips. Sony finally said they wanted to go forward with WebTV, but
they’d have to be exclusive for a year. They’d brand WebTV with a Sony logo,
and they’d distribute it through their stores, and so on. But we could begin to
have other licensees for the technology after a year. So we told Philips that they
would have to wait a year, even though they were all hot to trot. At the time—
and probably still today—Sony was the stronger brand in the United States.