Change at the Top in Silicon Valley; Some Early Technology Leaders Prosper After Internet Gold Rush; Life After the Dot-Com Demise
Steve Perlman is enjoying the revenge of the geeks. From his third-floor office here, he can peer down through a spacious atrium at the offices of his computer designers and reflect that while the new dot-com economy may be in disarray, the original Silicon Valley is doing just fine.
Mr. Perlman is a computer scientist whose career has included tours at the early video-game company Atari, Apple Computer Inc. and three other start-ups, including WebTV Networks Inc., of which he was a co-founder and which was sold to Microsoft Corp. for $425 million in 1997
On Monday, he announced the first major financing for his new venture, Rearden Steel Inc., which is developing computerized technology for the home- entertainment market. He is keeping the company's plans vague, but people familiar with his work say it is an effort to combine elements of television, the Internet and video games into a single entertainment system. The financing is noteworthy not only for its size, $67 million, but for its sources, investors that include America Online Inc.; Washington Post Co.; Cisco Systems Inc.; Paul Allen, the Microsoft co-founder, and Jim Barksdale, the former chief executive of Netscape Communications Corp. Mr. Perlman said the financing was an indication that while the dot-com era may have ended, the original technology-driven Silicon Valley is very much alive.
In fact, Mr. Perlman views the dot-com demise as a return to sensibility. ''It was the new California gold rush, and so many people came to Silicon Valley who were not technologists,'' he said. ''We would call these people carpetbaggers.''
Although Mr. Perlman will talk only in generalities, friends say he has ambitious plans for Rearden Steel. The biggest gambles in Silicon Valley in the past two decades have been taken by technically oriented entrepreneurs who bet they could use advances in hardware and software to create technology platforms that either redefine markets or create businesses.
''In Silicon Valley,'' Mr. Perlman said, ''the big success stories that are lasting ones are ones that are run by geeks.''
After selling WebTV to Microsoft, for which his share was $70 million, Mr. Perlman stayed on to run the division, which offers Web access through television sets. In an interview last week, he said that at first he had hoped he would be able to use Microsoft's size and resources to push in new directions.
But he soon found that Microsoft was more a ''fast follower'' than an innovator. ''What I found was that, like any big company, at Microsoft politics got in the way,'' he said.
So he left Microsoft in June 1999 and took several months off to explore new ideas, which led to starting Rearden Steel in January 2000. The name of the venture is an allusion to Hank Rearden, the protagonist in the 1957 Ayn Rand novel ''Atlas Shrugged.'' Rearden was an industry executive trying to defend his steel empire from government taxes and regulation.
Mr. Perlman's big bet is precisely at the intersection of Silicon Valley and Hollywood, a nexus where he contends that computer technology can make a difference.
Richard Doherty, a consultant to the computer and entertainment industries, said that ''this is a platform play,'' a system on which others might develop specialized applications such as games.
But Mr. Doherty, who is president of Envisioneering Inc., a technology assessment and market research firm based in Seaford, New York, said that in trying to build a new entertainment platform, Mr. Perlman also needed to build new entertainment development tools, the equivalent of cameras, microphones and special-effects equipment for creating the art forms his technology is intended to allow.
''I think Steve Perlman is going to produce a digital artists repertory company,'' Mr. Doherty said. ''He's made sure that the right tools and right canvases are there for creating the next Spielberg.''
In addition to offices in two locations in Palo Alto, Mr. Perlman has started Rearden Steel Studios in San Francisco's South of Market Street district. The studios include a motion-capture set where computer artists can create lifelike or superhuman action figures by monitoring the movements of human models.
Already, Mr. Perlman has used the studio as a laboratory for digital film technology, to work on several movie projects that he has started and to perform contract work for film and television productions that require motion- capture technology. His recent clients have included HBO.
What will set him apart if he succeeds, Mr. Perlman contends, is that he will create computer-based technologies that advance home entertainment. Rearden Steel has applied for 38 patents in 15 months. The wherewithal to pursue true technical innovation, he said, ''is what sets this venture apart from his earlier work at WebTV.
''At WebTV the wolf was always at the door,'' he said. The company was chronically underfinanced. ''We had to design things very quickly. This time around we've had the luxury of doing things the right way.''