Edited by Douglas Harbrecht

A TALK WITH THE FATHER OF NOTES, AS HE STARTS A NEW VENTURE

Ray Ozzie is a rare bird in the world of technology. An ace software developer, he has grace and charm -- much like a charismatic Bill Gates or Marc Andreessen. Ozzie has developed a rock star's following among techies for inventing Lotus Notes, a software package that enables workers to collaborate over computer networks. His importance to Lotus was underscored in 1995, when IBM moved to acquire the company for $3.5 billion. Before the deal closed, Lou Gerstner made a special trip by helicopter to pay a call on Ozzie at his farm in rural Massachusetts, just to answer his questions.

Now, Ozzie is striking out on his own, starting a company called Rythmix Corp. IBM and Lotus appear poised to back the new venture, and Ozzie's departure likely won't kill Lotus. He spoke on Oct. 1 with Business Week Boston bureau Correspondent Paul C. Judge about his new venture.

Q: Why are you leaving Lotus and IBM?

A: I've had the luxury over the past few years, as Notes has become successful, of watching how people use Notes and seeing how our customers are taking advantage of the technology. About 18 months ago, I started to say, maybe we should start exploring some of these tangential opportunities that we can see, and not just let others take advantage of them.

Q: So what's the opportunity you see here?

A: I don't want to get too close to the area I'm going to be working on. I need a little bit of space to develop this stuff before going public. In general, though, there is a herd mentality now about PCs and the Internet. People think of the World Wide Web as the ultimate use of the Internet. But the Web isn't used for much more than publishing and sharing documents now. If you step back and think of the Internet as this global pipe, there are other ways to make use of it besides publishing documents.

Q: Why are you reluctant to talk about your plans?

A: The key to any good environment for innovation is the ability to innovate without time pressures, as much as possible, and without market pressures or expectations. I'm not an unknown, and people will be watching. But to the extent that I can keep the team insulated from all that, I think we can get more done.

Q: Couldn't you have done the same thing without leaving IBM and Lotus?

A: I could have. But I happen to like doing it this way. It's my personal preference as a software development manager, which is a creative role. It's worked this way for me in the past. I had an immensely effective partnership with Lotus in developing Notes. We started as completely separate entities, and we operated separately for quite a while, and success brought us together.

Q: Have you found IBM to be overbearing?

A: Not in the least. I've been incredibly impressed with what they have done with Notes. I was worried...I was apprehensive, when IBM bought Lotus. But [IBM CEO] Lou Gerstner and John Thompson [IBM senior VP and software group executive] understood they should listen to what we were saying about what was important. They took it to heart, provided resources and technology when we needed it. It has worked out very well.

Q: What are the biggest challenges facing Lotus now?

A: The biggest challenges we have had since the acquisition is that success itself produces volume and growth. Every part of the Notes product has to scale up, particularly customer support. In the early years, when not as many people were using Notes, we could give a lot of attention to our customers. Now that people are running their companies on Notes, it has become very challenging to scale up the support for customers.

Q: Will IBM be investing in your new company?

A: We're not talking about the relationship. I will tell you that the issues I discuss with IBM in this venture are much more important than issues of money. They are issues of partnership: how to maintain a partnership and get the best of what they bring to table, and what we bring. Money is a very small component. Getting the product out to customers is a critical component.

Q: How does it feel to have arrived at this turning point?

A: I would say it's a milestone. A turning point would imply a change of direction, and I'm not so sure it's a turning point. This is a positive thing for Notes and for IBM, because they are making the most effective use of a good resource. Who knows where our new product will end up? But this is a way to invest in the growth of some new stream rather than simply amplifying an existing stream.