Businessweek Archives

A $75 Million `Joyride To Hell'


Books

A $75 MILLION `JOYRIDE TO HELL'

STARTUP

A Silicon Valley Adventure

By Jerry Kaplan

Houghton Mifflin 322pp $22.95

When Jerry Kaplan launched computer-software startup GO Corp., he chose the ant as the company mascot. He set up an ant farm near the company kitchen and told his troops the insects captured the right attitude--they were egoless, cooperative, diligent, and, he added, "excellent engineers." Meanwhile, he confided in his top lieutenants that whether GO was a huge success or a huge failure, it would be a "hell of a joyride." Weeks later, the ants were dead, and one of those lieutenants had a new prediction: It could be a "joyride to hell."

Thus begins Startup, the story of GO, one of Silicon Valley's hottest outfits gone dead cold. GO was launched in 1987 by Kaplan, then a 35-year-old techno-visionary who could see a day when people would use personal computers like notebooks--scribbling on the screens and having the writing instantly turned into computer text. One key snag: The technology, including translating the quirks of individual handwriting, was not up to the task at an affordable price. Six years later, GO--along with hundreds of jobs and $75 million--had evaporated.

What it left behind is grist for Kaplan, who gives a delectable account of what it's like to try to spin a dream into Silicon Valley gold. Few succeed--the odds are 10 to 1 against. But that fact only makes Kaplan's firsthand glimpse into one of computerdom's big failures all the more intriguing.

That said, his story is anything but a case study of the dos and don'ts of startups. Kaplan doesn't preach; he places no blame and doles out no lessons. Instead, Startup is, in Kaplan's words, a "factual novel" that whisks the reader along as a passenger on his "joyride."

During the trip, we encounter computer titans Bill Gates, John Sculley, and Andrew Grove--all of whom want a piece of the action. We tag along as Kaplan plays "Dialing for Dollars"--a near-constant quest to keep the startup afloat that eventually takes him to deep-pocketed partners: IBM, whose bureaucracy weighs GO down like "rocks in your backpack," and AT&T, whose strategizers flip-flop more than a sea bass out of water. But what the book really offers is the flavor of the wacky, ruthless politics in an industry that plays by few rules.

Kaplan learned that at the get-go. He first cooked up the idea of pen computing during a 1987 conversation with Mitchell Kapor, founder of Lotus Development Corp., where Kaplan had been working as a consultant. The two assembled a small team that included Steve Sakoman of Apple Computer Inc. to mull over the idea. At first, it appeared everyone was hot to trot. But when Sakoman broached the idea of leaving Apple, word reached Sculley, company chairman, who enticed Sakoman to stay by setting him up with a similar project of his own. GO had a rival before it even incorporated.

Sakoman left Apple a few years later anyway. But his project went on to become the "Great White Hope at Apple--the Newton," says Kaplan. While the Newton is one of the few pen-based devices that has reached the market, it has failed to become a commercial hit. Still, the Apple product dogged GO. At one point, Kaplan says, Sculley considered dropping Apple's software and using GO's Penpoint operating system. But the Newton team threatened revolt, and the idea was forgotten.

Years later, just as Penpoint was ready for market, key partner AT&T nearly swapped it for Newton technology as part of a possible AT&T-Apple joint venture. But when AT&T's Robert Kavner failed to win support among his lieutenants, he stuck with Penpoint.

GO also had run-ins with Microsoft Corp. In the early days, GO invited hyper-aggressive Microsoft CEO Bill Gates to look over its concept in hopes that Microsoft would write software for Penpoint. Gates expressed interest--but also pointed out he had previously thought of a pen-computer himself. Still, he sent one of his engineers to get a closer look. "All they did," complained Robert Carr, GO's research and development chief, "was beat me up about why we should be using Windows. They insinuated that if we didn't, they might do this themselves." Sure enough, GO wouldn't switch to Windows, and Microsoft started a competing project, Pen Windows--which, incidentally, still has not appeared on the market. Fumed Carr: "They ripped off our stuff!"

Did they? While this tale is timely, given Microsoft's fight with a federal judge over its business practices, Kaplan never says Microsoft broke the law. He instead takes us along to the Federal Trade Commission, which called GO for information regarding its inquiry into Microsoft. There, Kaplan tells his story to eager investigators. Afterward, according to Kaplan, an FTC staff economist told him: "This looks like a textbook case of abuse of monopoly power." But in the end, Kaplan says, the FTC decided the GO material was immaterial to its investigation.

If all this sounds like living on the edge, it is. GO's final days were full of more twists than a Hollywood whodunit. GO spun out its hardware into a separate company, EO, in which AT&T took a stake. As funding began to run dry for GO, it merged itself back into EO--and Kaplan and other execs resigned. Just two weeks after the merger was completed, an AT&T exec recommended closing EO entirely. EO fought back, laying off staff and convincing AT&T to hold on. For a short while, there was hope. But on July 29, 1994, about six months after the merger, AT&T pulled the plug.

Did all this sour Kaplan? Not at all. He has launched a new Silicon Valley startup, ONSALE, an electronic shopping service that debuts on the Internet May 29. It's joyride time again.BY KATHY REBELLO


The Good Business Issue
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus