Founders at Work.pdf

Mike Ramsay 201
controls. We knew these guys, and there was no hatred, but there was a definite,
very intense competitive attitude. Our aim was to get them out of our hair,
out of our business. This wasn’t, “There’s enough room for everybody.” This
was, “They have to go. They are the enemy and we’re not going to let anything
stand in the way of us beating them.”
While that was very angst-ridden and a lot of our employees were very concerned
and sometimes upset about what Replay said about us, I think it was a
great time for the company because the company learned how to compete. I
know, from my standpoint, I had never worked in a company that really competed
before. SGI, if it found competition, it went elsewhere. HP was not as
competitive back then as it is today. They relied on doing things very new and
different, so they differentiated themselves. In those days, they weren’t going to
say, “You have one of them, I have one of them, I’m going to compete with you,
and this is not going to be clean.” So we were doing that; we were competing.
I look back on that and it was a lot of fun, especially since we beat them. We
saw things that they were doing wrong. If you are playing a competitive game,
you worry about winning the game, but you are so much in the game that, while
you are doing it, you are not thinking, “Oh, gee, I’m going to lose.” You are
thinking about “How do I win?” And that was very much that spirit.
The next big competitive threat was with DIRECTV. DIRECTV decided
that, in addition to us, they wanted to do a deal with Microsoft. Microsoft had
just bought WebTV, and they were building a DVR. DIRECTV decided they
wanted to have that DVR, too. So then all of a sudden DIRECTV was selling
both of them. They were under probably pretty similar financial agreements, so
for them it didn’t make a whole lot of difference who bought which one. Except
Microsoft was pouring hundreds of millions of dollars into trying to develop this
market, and here’s little TiVo with—although we’d raised a lot of money, we
didn’t have that kind of resource at our disposal.
Lo and behold, we found out that we were outselling them by a significant
amount. People loved TiVo. The brand was getting known by then, and we were
better. We discovered that people preferred what we were doing to Microsoft
on a fair and level playing field. It was not our doing; this was DIRECTV
marketing it on an equal basis. It got so bad for Microsoft—they were putting
so much money into it—that they finally gave up. We thought, “This is great,
they gave up. Let’s celebrate.”
We then thought that the consumer electronics companies would come in,
and we were worried about that, because we thought it was a natural for Sony.
So what we did there was license our technology to them. We got some good
license deals and that sort of took that one off the table.
Most recently, a big competitive threat is from cable companies and satellite
companies, who are entering this market and essentially giving away DVR for
free. That’s been a big issue for TiVo over the last several years. While TiVo has
been able to do deals with several cable and satellite companies, there are competitors
like EchoStar against whom we have had to enforce our patents in
court.