JULY 21, 2003

NEWSMAKER Q&A


"Our Biggest Competitor? The Status Quo"
The man behind Groove Networks talks about his collaborative system, the future of technology, and what he owes his video-gaming son


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To hear Ray Ozzie tell it, he and his cohorts at Groove Networks never thought about pitching their user-friendly collaboration software to small businesses. Then, the e-mails and phone calls started rolling in. "We've noticed this emerging phenomenon," Ozzie says. "The smaller businesses are just getting [the software] and figuring out what it's useful for." Now, Groove offers specific software packages for small and medium enterprises (SMEs), and is looking for ways to further extend its reach in both the U.S. and British small-business markets.


Ozzie's name-recognition -- he created Lotus Notes, whose potential was a major factor in IBM's 1995 decision to pay $3.5 billion for Lotus Development -- has helped convince large corporate clients to give Groove a try. But SMEs are largely immune to that pull. Instead, the key is to show them how easy-to-master Groove makes running a business both easier and cheaper (see BW Online, 7/21/03, For Some, a Godsend Called Groove).

Ozzie explained Groove's origins and potential to BusinessWeek Online's Lisa Miller. Edited excerpts of their conversation follow:

Q: You had an 'Ah-ha!' moment while watching your son play a video game, and it led to Groove. Share that story?
A: I had all these ideas of how I might be able to use software and mold it to help people work together more effectively. But people continued…to gravitate toward e-mail, which, from my perspective, was fairly inefficient, and I couldn't figure out a way to solve a number of the problems that I was trying to solve using either the [Lotus] Notes technology infrastructure or e-mail.

Every night, I would come home and my son -- he was not supposed to be, but he was sitting there in the family room playing Quake on this computer with his friend [online]. Watching him, it was dawning on me that he wasn't just playing a game. He was using an incredibly powerful collaboration tool that was focused on winning a capture-the-flag game, with his teammates, against another team, meaning he would be in a 3D environment and use a little chat tool to talk with his teammates about what they were going to do.... You could see them coordinating with one another in 3D. One would be hanging from the ceiling. One would be doing something else. But in essence they were working together online, using every bit of horsepower that the PC had in order to accomplish this shared objective.

It was an 'Ah ha!' from two aspects, number one, why the heck can't we in enterprise use technology anywhere nearly as effectively as these kids are using it? And...what is it about the architecture of this software that lets them get together all by themselves without any grand IT support to solve some problem? And that led directly to the founding of the company.

Q: And after that, you were never able to tell your son he could not play Quake.
A: He definitely never let me forget it after he read [about] it the first time. 'I'm just working, Dad. I'm collaborating!'

Q: With Groove, you're putting more stuff on the hard drive and getting rid of the server. Is this change possible because now people have huge hard drives they never fully utilize?
A: In terms of trends…there is a shift that's happening because the hard disks that are coming out on PCs are way bigger than most people know what to do with at this point in time.… I think a real benefit here in the small-business realm is that they can do an awful lot with the horsepower of what they already own.

Q: Groove is made only for Windows at this point. Do you have any plans to create a product for other operating systems?
A: I think it's a matter of maturity and time. I think, eventually, we will be on these other operating systems. People do use us today on the Mac and under Linux using emulators...It's a matter of balancing the resources to where the market is.

Q: You're also looking at increasing what Groove can do, correct?
A: We continue to add features and functions as time goes on. The company is 5½ years old, and if you look inside the product, there are hundreds and hundreds of different features that different sets of people use.… The thing we've learned from the small-business market is that, sometimes, less is more. That is, if you throw a bunch of things at people, they get more confused and they just put it away. So what we're concentrating on doing right now is creating a much simpler and more concise package of forms and templates, so that when a small-business user opens it, downloads it, and starts using it, or installs it off a CD, they can immediately see how they would apply it to their business.

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