1995 = 1492

High Stakes, No Prisoners by Charles H. Ferguson

1995 was to the Internet what 1492 was to the discovering-New-Worlds biz: the inauguration of Manifest Destiny. In 1995, the Federal Government officially lifted the ban on Internet commerce; Netscape went public and became a financial sensation; and on May 26th, Bill Gates wrote an infamous memo vowing to beat the competition.

Vermeer Technologies was among the most promising software start-ups of 1995. Charles Ferguson had founded the company in 1994. His “very good idea” had been a three-part user suite, which got honed down to one: a visual end-user development tool. In other words, an inexperienced user could now make a Web site. Ferguson and his partner took on the business functions of the company, leaving the engineering team to design what they called FrontPage. In a mini-miracle of planning, they actually launched it in October of 1995. On January 12, 1996, they sold FrontPage to Microsoft—which, by early 1999, had sold at least 3 million copies. Everyone reading this has probably used it.

Ferguson’s memoir of that packed, panicked year reads like a footnote to Neal Stephenson’s novel, Cryptonomicon, a sinkhole of paranoia, competitiveness, and libertarian ideology that mix to produce the culture of Net related start-ups (and if you haven’t read Cryptonomicon, why am I talking to you?). Imagine a high school science fair where, instead of prizes, they give out billions of dollars.

Ferguson is arrogant, aggressive, and self-important. He’s also smart and relatively straightforward. He made a name for himself coming out of MIT in the 80s, and he warned against the Japanese predominance in the semiconductor industry. Later he consulted for high-tech industries and made a vast number of acquaintances in Silicon Valley. One of the pleasures of this book is that he is incorrigible to bullshit. He doesn’t take reputations on trust, and it isn’t in him to hero worship the way Michael Lewis does.

The book consists mainly of a dense recounting of the various miseries attendant on setting up a company. Since Ferguson is not an engineer, his functions were financial, legal, and connective. Funding was the most painful. His portraits of venture capitalists, a less excitable industry in 1994, are harrowing; Ferguson draws general lessons from his particular case, and budding entrepreneurs should certainly review these chapters for tips. Ferguson is an unsparing assessor of his own beginner’s mistakes, and the dubious machinations and often astonishing ignorance of the VC people he encountered.

Because FrontPage was so dependent on the major players in the Net industry, Ferguson is an involved and intelligent commentator on the battle between Netscape and Microsoft. He’s very harsh regarding Netscape’s CEO, Jim Barksdale. A key sentence in Ferguson’s book refers to his conception of Vermeer: “You have to design your strategy alongside your product; in fact, you have to design and build your strategy into your product.” To Ferguson, Barksdale transgressed this basic rule. Netscape’s management was too swayed by hacker culture and a gut-level dislike of Microsoft to think strategically about Windows, and about thwarting Microsoft’s opportunities, given Microsoft’s inevitable turn to the Internet.

“Netscape’s management was too swayed by hacker culture, with its inveterate dislike of Microsoft, to think strategically about Windows and about thwarting Microsoft’s opportunities.”

A lot of this criticism is fair, though it is rather odd coming from a man whose company ultimately sold only 289 copies of its product before selling out. Although Ferguson acknowledges that Vermeer was pitifully unprepared to market FrontPage, there seems to be a bigger story he doesn’t reveal.

The book ends with a balanced consideration of Microsoft. Back in 1995, Ferguson spoke out on the issue of Microsoft’s monopolistic practices. But clauses in the sale of FrontPage gagged Ferguson until 1998 from saying anything publicly about Microsoft. Ferguson is not a man who enjoys a gag, which might explain the book’s exasperated tone. Ferguson convincingly argues for Microsoft being split up between the operating system and the applications. He also points out an oddity in the Justice Department’s case against Microsoft–its lack of interest in Microsoft Office, which includes FrontPage, and has marginalized all competitors. Ferguson’s funny and sometimes mean account will be of special interest to Judge Richard A. Posner, currently mediating the case against Microsoft.

High St@kes, No Prisoners by Charles H. Ferguson (Times Business, ISBN: 0812931432)

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