Founders at Work.pdf

Steve Perlman 187
Then there’s Sand Hill Road with all the VCs and other potential investors,
who are all clustered together. You literally might do two or three presentations
to different VCs all in the cluster of buildings on Sand Hill Road.
The other thing is that there’s kind of an attitude here that people should try
things, and, if they fail, if they understand why they failed, they may actually be
a better investment in the next round than somebody who quickly succeeded
just by sheer luck.
Livingston: Were there any powerful interests who did not like what you were
doing and tried to stop WebTV? Like maybe Microsoft saw it as a threat to
Windows?
Perlman: With WebTV . . . Microsoft, I found out over time that they probably
. . . I mean, they’re a very cautious company, and they proactively worry about
any potential threats. I don’t know if they saw WebTV immediately as a threat,
but they saw it as a potential threat.
We didn’t sell that many units the first Christmas. We were too high-priced.
We were $329 when it came out, and the lesson learned there is that you don’t
charge both a high price and a subscription fee. Just one or the other, right?
When we repriced WebTV at $99, then we sold a lot of them.
So when Microsoft came to acquire us, we only had 56,000 subscribers,
which was a fairly modest number. But they still were very interested in us and
that convinced me—perhaps wrongly, but nonetheless convinced me—that
their real objective was to capitalize on this market, to grow from what we were
doing. Also their desire to create the campus here in Silicon Valley was the
other thing. So I kind of thought—and maybe even this was their objective at
the time—that they really were going to develop this area of advanced television
systems. But, as time went on, it became apparent that they simply wanted
to make sure that nobody else successfully deployed a product in this area.
I think they saw WebTV as the only viable player out there.
Who knows? Maybe it was a compound decision for them. Maybe they
thought, “Well, maybe there’s a market here, and maybe we can protect our
flank to make sure nobody else does it.” I don’t know.
But there were some things that I was not allowed to do, which made it
impossible for me to stay. They reneged on their commitment to support
RealNetworks and Java, and I didn’t know how we were going to build a good
web-surfing experience without Real and Java compatibility. Then, as we went
through the budgeting process and everything else there, and I began to get to
know the other top executives at Microsoft, they were talking about negotiating
this and that funding, and cutting back products to the point where they no
longer made sense. I said, “Look, can’t we all agree on what is the right objective
for the whole company and then fund that? I don’t care if it’s in your group
or my group or whatever, but we should do the right thing.” It didn’t work that
way and, of course, any big company is like this. People have certain things they
control. That’s why there’s politics in large companies.
I can’t operate in that environment. I’m just far too focused on the end
result. And so for all those reasons—the fact that they were very resistant to