Founders at Work.pdf

Steve Perlman 181
Livingston: Can you describe the investors’ initial responses? Did they say,
“What the heck is this?”
Perlman: The biggest issue they had was the concern that people did not want
to interact with their TV. I mean, we showed working prototypes, but that
wasn’t enough. By then we had a browser working that we had written from
scratch. In less than a year, we had a browser working. To give an example,
when Microsoft did Internet Explorer, they started with Mosaic. We couldn’t fit
Mosaic into our system. We only had 2 MB of RAM, and we had a 112 MHz
MIPS CPU, and we had 2 MB of ROM and 1 MB of flash memory.
None of these existing browsers could fit into a memory footprint so small.
So we had to go write the thing up from scratch. Of course, we had to deal with
the reality that a TV screen was very narrow. We had a different user interface
for the remote control. We had a custom chip, and we had a programmable gate
array doing the video. We were doing the image processing that I mentioned to
eliminate the interlace flicker and to sharpen the image. We were building the
whole network side, which was all the servers and the network that would handle
and proxy the information. For example, if a large JPEG came in that we
knew that a TV could not display, we would resize it in servers and send that
down to the box to make a faster experience.
Then we had to go set up a whole dial-up network. We had to make relationships
with dial-up providers all around the country, so that they would automatically
find a local phone number to dial. So there was huge range of things
we were doing to make this thing work. I don’t know, but, if I were advising a
VC, I’d see a bunch of guys with all these pieces of the puzzle and they were
executing and working with so little capital—I’d say, “Wow. I don’t care what
they’re going to do; something’s going to come out of it.” But that’s not the way
that most investors look at it.
Now, looking back, I think some of the investors saw us as potentially carrion
ready for the taking, if we ran out of money. None of them said that, and at
the time I wasn’t thinking that, but now I’ve seen it happen. I think other
investors were just nervous. Because all the other Internet plays are happening—this
was 1996, and huge deals are being done with the Internet. But, they
are all purely web-based: software running on servers somewhere. There were
no actual capital costs. We were talking about building a box that was going to
be deployed to people’s homes. It has to be manufactured; there are inventory
risks, all those kinds of things. It was just not something they were used to
doing.
But the biggest thing people would say is they didn’t think people would
want to interact with their TV. They could imagine them changing channels
with their remote control or playing a video game, but, as far as doing something
more advanced with the TV—like surfing the Web or doing email, or the
future things we were doing, where you had video content on the TV along with
the program guide (believe it or not, back then there weren’t program guides
on TV) or having video eventually recorded on a disk with pause/rewind—
people thought that was crazy. I know it sounds so obvious now, but back then
they thought it was crazy.