About the Author
CHARLES H. FERGUSON founded Vermeer Technologies with Randy Forgaard in 1994. Previously, Ferguson consulted to the White House and some of the world's leading high-tech companies. He has written for the Harvard Business Review, the New York Times, and Foreign Policy, and is the coauthor (with Charles R. Morris) of the critically acclaimed Computer Wars. He currently divides his time between economic policy research and high technology investing.
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"A billion here, a billion there, and pretty soon you're talking about real money."
--Senator Everett Dirksen
"You are not the kind of guy who would be at a place like this at this time of the morning. But here you are . . ."
--Jay McInerney, the opening lines of Bright Lights, Big City
In the late summer of 1993, I got the beginnings of a very cool, very big idea--an idea that could create a huge new industry. After spending the rest of the year timidly thinking of starting a company, I finally decided to try. Randy Forgaard and I shook hands and founded Vermeer Technologies in April of 1994. Barely a month later, we discovered that about two-thirds of my idea was useless--the World Wide Web had gotten there first. However, the Web also seemed to make the remaining portion of my idea even more powerful. We refocused on that and rolled the dice. We secured $4 million in venture capital in February 1995, shipped the first version of the FrontPage product in October 1995, and sold the company to Microsoft in January 1996. It was a wild ride: fascinating, exciting, brutal, tense, unforgettable. Some of it, including my sudden wealth, sometimes feels bizarre. I grew up in a poor family and had finished graduate school thirty thousand dollars in debt only a few years before starting Vermeer.
Yet, by the standards of the Internet industry, we barely made it into the middle class. Jeff Bezos of Amazon and Jerry Yang of Yahoo! are each worth billions; five years ago, nobody had heard of either of them. For better or worse, one of the most striking characteristics of American high technology is that sudden riches like this are almost routine. No other industry, in any nation, makes it so easy to start a business, make a difference, get rich--and do it fast. This is not to say that success is easy, or that there are any guarantees. Our principal competitors were Microsoft, America Online (AOL), and Netscape; many of the other start-ups we either competed or partnered with in 1994 and 1995 got killed or were snapped up at fire-sale prices.
But if you get it right, the results are staggering. As I write this, FrontPage has already become the industry standard for Web site development software. It has nearly three million users and holds about 70 percent of the world market for Web page development software. A rapidly increasing fraction of the world's Web servers are equipped with FrontPage software. As I had predicted, our technology has become strategically critical to Microsoft. FrontPage is being bundled with the new version of Microsoft Office, and from now on, Office will use FrontPage's technology for posting documents to Web servers. Nobody else has that technology.
Since Office has more than 90 percent market share, we can safely assume that within a few years, virtually all Web servers will be FrontPage enabled, and Microsoft will be on its way to securing yet another monopoly. No, this does not make me totally happy, but as you'll see, we had little choice. Netscape under Jim Barksdale was out to lunch, and Microsoft would have killed us if we had tried to go it alone.
And yet even Microsoft's power can't suppress the wave of new start-ups driven by the Internet revolution. Despite its many flaws, the Silicon Valley start-up system unquestionably works. It is the crown jewel of the American economy and a critical driver of American high technology. Silicon Valley itself is an amazing place--electric, addictive, vulgar, full of brilliance, brutally fair and brutally unfair, fiercely competitive, often dishonest, tremendously exciting, and utterly unique. It is no coincidence that the Internet revolution is headquartered there. I'd spent a lot of time in the Valley before starting Vermeer, but I had never really appreciated the sheer intensity of the place until my own future, my own fortune, and the careers of fifty other people who had put their faith in me were on the line.
I've been fortunate enough to observe and participate in the high technology world from several different angles, and at levels ranging from working-level employee to start-up founder to MIT policy analyst to White House consultant. Highest level is not always best; I learned more by starting Vermeer than I did by testifying before Congress. But I think the combination of these experiences has been extremely valuable and has given me an unusual perspective on high technology and the Internet industry, their effects on the world, and the issues they raise. In fact, government policy has been much more important in shaping the Internet industry than most people realize, and it played a major though indirect role in Vermeer's ultimate fate.
Thus, I hope to capture the entire high technology experience in this book: making a start-up really work; raising venture capital; being inside a world-historic revolution; dealing with Microsoft's power, trying to affect White House policy; being forced to deal with the environment that government policy has created. I want to convey the highs and the lows, the electric energy, the brainpower, and the quirky personalities in the Valley, as well as the brutal, ruthless maneuvering that few outsiders ever see. I also want to show how brilliant policymaking by technologists helped create this revolution, and yet how foolish regulatory policies and interest group politics are slowing it down.
Consequently this book tells three interconnected stories. The first is a personal account of what it really takes to do a winning high technology start-up, especially in the Internet industry, where any speed below warp nine doesn't even get you to takeoff. When I started this book, I discovered to my surprise that virtually nobody had written about this experience from the inside. Second, I describe the Internet revolution and analyze the strategic war for control of it, particularly the contest between Microsoft and Netscape and its effect on Vermeer. In doing this I combine my firsthand experience with a broad strategic analysis. And finally, I address the large-scale economic and political issues raised by the Internet and the information era: the question of Microsoft's power, the even worse problem presented by telecommunications monopolies, and the new issues of electronic money, privacy, political censorship, and the effects of information technology on the American and global economies. Forgive me; I still have the MIT political scientist lurking inside.
