Overdrive, page 24
Reardon called Mike Tyrrell in Cambridge. “All hell is breaking loose out here. What’s going on?” Tyrrell, who did not know about Colbeth’s lunch talk with the InfoWorld reporter, insisted that the leak had not come from Spyglass. “When the story broke, we refused to confirm it,” said Tyrrell. “The deal had not even been signed yet. There was no way we were going to say anything. That would have been stupid.”
A clean copy of the contract between Spyglass and Microsoft was ready to be signed on Friday, December 9. Gates insisted that Colbeth sign first. But before he could do so, he had to talk with the university and get its blessing. By the time he had a letter of approval from the university and contacted Microsoft late that Friday afternoon, he was told he had missed Gates by about 30 minutes and Gates would not be able to sign until the following week.
That next week proved to be hellish for Krauskopf and Tyrrell. As the tension mounted, they worried that Netscape had made a last-minute deal with Microsoft, much as AOL had come in at the eleventh hour and snatched Booklink away from Microsoft. By December 14, the day of the Spyglass Christmas party, which was held in a campus building at the University of Illinois in Urbana-Champaign, the contract still had not been signed by Gates. From the party, Tyrrell was calling his voice mail and Microsoft every half hour throughout the evening. “I did not enjoy the Christmas party at all,” said Tyrrell. “I was a complete basket case. It was a salesperson’s worst nightmare. I had a huge cell-phone bill. This was such an important contract for Spyglass. And as each minute went by, the likelihood that Father Murphy would tap me on the shoulder and give me the bad news increased dramatically. I was worried about the competition getting in there and getting Microsoft’s business.”
It was not until Friday, December 16, late in the afternoon on the East Coast, that Reardon phoned Tyrrell and congratulated him. Gates had just signed the contract. “This was a great deal for Spyglass, and I believe a great deal for Microsoft,” said Tyrrell. “It’s not often that you can walk away from a deal, particularly a deal with a company of Microsoft’s size and reputation, and six months later both companies can look each other in the eye and say that was a fair deal. When everything was said and done, this was fair to both. We got a fair price for the technology, and Microsoft saved itself perhaps as much as the year it would have taken them to build a browser and get back in the race against Netscape. And by then, who knows? Netscape might have had an insurmountable lead, and no one would be talking about how quickly Microsoft was able to make that turnaround.”
On the afternoon of December 16, Microsoft issued a news release, but not regarding the just-completed deal with Spyglass. It came from Microsoft’s public relations department, and it denied a news account published on the Internet that the company had agreed to buy the Catholic Church. Microsoft, a Johnny-come-lately to the Internet, was the victim of a huge cyberprank. As best as it could be determined, around December 1, a very clever cyberprankster had posted a fake dispatch from the Associated Press, the world’s largest news organization. Datelined Vatican City, the story reported that Microsoft had agreed to acquire the Roman Catholic Church in exchange for an unspecified number of shares of Microsoft common stock. “If the deal goes through,” it read, “it will be the first time a computer software company has acquired a major religion.”
Under terms of the alleged deal, Microsoft would get exclusive electronic rights to the Bible and the Vatican’s prized art collection, including works by Michelangelo and da Vinci.
Pope John Paul II would become the senior vice president of the combined companies’ new religious software division. Two Microsoft senior vice presidents, Steve Ballmer and Mike Maples, would be invested in the College of Cardinals.
Further, the story quoted Gates as saying, “We expect a lot of growth in the religious market in the next 5 to 10 years. The combined resources of Microsoft and the Catholic Church will allow us to make religion easier and more fun for a broader range of people.”
Finally, according to the Internet story, the Microsoft Network would make sacraments available on-line for the first time. “You can take Communion, confess your sins, receive absolution—even reduce time in Purgatory—all without leaving your home.”
The story concluded by predicting that the Microsoft acquisition could spark a wave of mergers. It quoted Herb Peters of the U.S. Southern Baptist Conference as saying that other churches would now have to scramble to strengthen their position in the increasingly competitive religious market.
Although the story was obviously a hoax, conservative talk show host Rush Limbaugh read it on his national television program. Soon thereafter, Microsoft was fielding calls and e-mail from angry people who believed the story to be true. Microsoft was not amused, and on December 16, the company issued this terse statement: “The story has no truth and was not generated by the company. The company is not aware how the electronic message originated, but maintains strict policies internally concerning the proper use of electronic communications.” Subsequently, a legitimate wire service story about the hoax carried by the Associated Press quoted Microsoft spokeswoman Christine Santucci as saying: “Given the seriousness of the issue, it’s not something we wanted to be associated with.”
Hoax though it was, the story made news around the world, and finally proved to Bill Gates just how big the Internet had become.
Nothing But Net
It was no longer fun. Bill Gates had won.
Philippe Kahn, president, chief executive officer, and chairman of the board of Borland International, once the third biggest computer software company in the world and the leading contender for the title of “The Next Microsoft” was fed up.
Despite a reputation for having an unlimited appetite for work, fun, food, and mischief, he had been beaten down by this last year. He was tired, damn tired; tired of having to tell good men and women who worked for him that the company faced further restructuring and more cutbacks, tired of Wall Street analysts and institutional investors calling for his head.
Most of all, he was sick and tired of being a punching bag for the industry press, which blamed him for everything that had gone wrong at Borland. The recent flurry of negative stories about him had become a major distraction, overshadowing anything positive the company tried to do.
As he sped along Highway 17 in the predawn darkness, the whine of his powerful motorcycle piercing the thick blanket of fog that hung over Scotts Valley, all he wanted was to get to the San Jose Airport, climb into the cockpit of his plane, and fly off into the December morning, leaving behind all the bullshit.
It had gotten so bad around the office that he had even ducked the big Borland news conference the day before, leaving his staff and public relations people to explain to analysts and the press that the company would suffer another substantial quarterly loss, followed by another major layoff, the second of the year. But that was yesterday, and with a new day about to dawn, Kahn was off on vacation, to the ski slopes of Aspen, Colorado. There, in the mountains, he would sort it all out, decide his future.
In Kahn’s wilder days, when he was collecting speeding tickets that built on his reputation as the bad boy of the computer industry, Kahn would hop into his white Porsche and race along Highway 17 from Borland’s headquarters in Scotts Valley, on the outskirts of Santa Cruz, to the San Jose Airport in less than 30 minutes. He loved the challenge, the exhilaration, of slamming the sports car hard into the serpentine turns at high speed, zipping up and down the mountain on the edge. But he had long ago gotten rid of the Porsche. Now he tooled around on his Honda CBR900/RR motorcycle. The 120-horsepower engine could propel this fastest commercial motorcycle made at speeds of more than 170 miles per hour.
But as much as Kahn wanted to get to the airport this morning, he had to take his time. An enveloping fog made it too dangerous to speed. When he finally reached the airport about 7:00 a.m., Kahn rode his motorcycle over to the hangar where he kept his plane and began preparing it for the trip. Just being around the plane took his mind off the problems at Borland and filled him with excitement and anticipation for the adventure and long flight ahead. He had owned the plane for about a year. It was an Extra 300, a stunt plane, the same kind flown by three-time U.S. acrobatic champion Patty Wagstaff. With a glass bubble cockpit on a body made of lightweight carbon fiber composite, the German-made Extra was a high-tech hot-rod of the skies, a real aviator’s plane—and a handful to fly. Kahn called it !,ooncy Hines. Some might say the moniker reflected the nature and passions of its saxophone-playing pilot.
The airport was still socked in when Kahn finished his preflight preparations, so there was nothing to do but wait. Alone with his plane and surrounded by an eerie quiet produced by the absence of the usual air-splitting roar of jet engines, Kahn watched through the hangar door as the morning fog slowly burned away. It was two days before Christmas, 1994. Only a couple of miles away was Stevens Creek Boulevard, where it had all begun in a cheap motel a dozen years earlier.
He had arrived in San Jose in 1982 by bus from the San Francisco Airport, a 30-year-old Frenchman with a tourist visa, a black belt in karate, and $5,000 borrowed from his dad. He was alone; his wife and two daughters were back home at an artists’ colony in the south of France. His eclecticism was homebred. His father was a die-hard socialist. His mother, a singer and filmmaker who had survived Auschwitz, died when Kahn was in his early teens. Although Kahn was a promising student of mathematics with a passion for music, he dropped out of one of the world’s great universities in Zurich after reading Henry David Thoreau’s Walden. The book had such an impact on him that he disappeared into the high reaches of the French Pyrenees, where he tended a few goats, practiced his music, and contemplated his future.
When he finally came down from the mountains almost a year later, Kahn took a job teaching mathematics. He also began to rediscover the rewards of capitalism, and bought an Apple II computer with some of the money he made. By this time, the personal computer revolution was well under way in America, and Kahn had decided he wanted to be part of it. And the headquarters of the revolution was in the Valley of Silicon Dreams.
Upon arrival in America, he was unable to get a job in San Jose with companies like Hewlett-Packard, because he did not have a green card. Undeterred, the crafty Kahn started his own computer consulting business, which he called MIT, for Market In Time. The acronym was no coincidence. By the time the original MIT took notice and started making noise about a lawsuit, Kahn had moved from San Jose across the Santa Clara mountains to Scotts Valley, where he was doing business in a small office above an auto repair shop, using the imposing name Borland International. It was there that the legend began.
But now his days as Borland’s leader were numbered. He wanted out. Earlier in the year, Kahn and his live-in girlfriend, Sonia Lee, a respected Silicon Valley graphics designer, had started a new venture called Starfish, which was dedicated to producing small and fast software products called slimware— the fewer lines of code the better. Kahn was flying on this December morning to meet Lee in Aspen. She had left several days earlier, driving in their 18-foot motor home with Samuel Kahn, Philippe’s young son from his now ended marriage. After the vacation, Kahn planned to drive back to Scotts Valley with Lee and his son. A friend would fly his plane back from Aspen.
By 10:00 A.M., the fog lifted at the San Jose Airport, and Kahn strapped himself in Looney Tunes and taxied out to runway 29. Cleared for takeoff, he gave the plane full throttle and accelerated down the runway. Kahn gave a wing waggle to the controllers in the tower and headed east, leaving Borland and his troubles far behind.
A week later, on December 30, 1994, two days before the New Year, Kahn phoned a reporter acquaintance. He, Lee, and his son had stopped for the night near Dinosaur National Monument on the Colorado-Utah border, en route back to Scotts Valley. The topic and tone of the discussion that night was set immediately by Kahn. He wanted to talk about the man he viewed as the Satan incarnate of the computer industry: Bill Gates.
“It’s just amazing how destructive he is,” said Kahn, comparing Gates to John D. Rockefeller, who created the Standard Oil monopoly. He com plained that Microsoft’s “predatory pricing” of its products had crippled Borland and other software companies. “He’s made it unprofitable for the rest of us. There is no balance of power.” Gates, he insisted, would eventually control every aspect of the computer industry, from applications and operating systems to home banking and interactive television. “It will be a total dictatorship,” Kahn said. “This guy will go down in history as one of the most ruthless and powerful people of all time.”
Kahn had heard that the Wall Street Journal was soon to release an article about just how ruthless Gates was, and he was worried that Gates would use his enormous influence to have the article killed. Kahn believed he had every reason to be worried. For years, Gates had Kahn in his sights. In the mid-1980s, when Borland’s Turbo Pascal was blowing away Microsoft’s competing product, Gates held meetings that became known around Microsoft as Borland War Councils, during which his staff plotted how to beat the fun-loving Frenchman. Gates reportedly walked into one such meeting, threw Kahn’s picture down on a table, and said, “How can I get rid of this guy?” A product group at Microsoft passed out T-shirts that read “Delete Philippe.” Some prankster at Microsoft sent one of the shirts to Kahn.
Kahn recalled that he once had found Gates at an industry conference in the late 1980s sitting alone in a corner, looking at a photograph in his hands. “It was a picture of me,” said Kahn. In the early 1990s, an ex-Borland employee who went to work for Microsoft sent Kahn a photo of what allegedly was a room at Microsoft filled with pictures of Kahn. Kahn showed the photograph to the author of this book.
In an interview for an article that appeared in the New York Times Magazine in 1991, Kahn described Gates’s technical capabilities as all talk. "It’s an image he’s trying to put out," said Kahn. When Gates was asked to respond to Kahn’s remark by Stephen Manes and Paul Andrews, the authors of Gates, a book about Microsoft published in 1993 by Doubleday, Gates exploded: “Fuck this guy! I mean I really hate this guy.... I’m so much more technical than that guy.”
For Kahn, the unkindest cut may have come not from Gates but from his former wife, Martine. When they divorced in the early 1990s, the first man Martine dated was Bill Gates. “It made Philippe a little crazy,” said Martine.
In late 1994, during a trip overseas, Kahn had eaten dinner one night with someone he described as a Microsoft executive. “He told me that Gates hates me, that it’s even shocking to Microsoft people,” recalled Kahn. “He said Gates has sworn to destroy me personally by all means; that he is obsessed; that he is paying people to spin bad news about Borland. I can’t think of anything that I’ve done or said about the guy. It’s pretty scary, given the power that he has.”
Whether Gates was obsessed with Kahn or Kahn with Gates really didn’t matter. The long and the short of it was that Microsoft had won and Borland had lost. On January 11,1995, shortly after Kahn returned from his vacation in Colorado, Borland announced that Kahn had resigned as president and chief executive officer, though he would remain on the board. The board had shoved Kahn aside because of a disagreement over the direction in which he wanted to take the company— back to its roots. “I wanted to sell off everything but tools, including Paradox and dBase, and get out of the suites business,” said Kahn. “But the board didn’t want to follow through with ‘Project Boomerang.’ We got into a match and they fired me.”
USA Todays story on Kahn’s resignation on page 2 of the business section the next day was directly above a piece about Bill Gates by USA Today business columnist Kevin Maney. Headlined “Getting One’s Fill of the Ubiquitous Bill,” the article began, “I’m so sick of Bill Gates I could barf.” Maney went on to complain that Gates was everywhere he turned: on the covers of magazines, in newspapers, on television. Gates recently had begun writing a weekly newspaper column that appeared in papers around the country, Maney said. Gates was also the subject of an entire newsgroup on the Internet, on which people around the planet could post “thousands of messages a day about nothing but what Gates says, how he looks, and whether his house on Lake Washington near Seattle is an architectural disgrace,” wrote Maney.
Already ubiquitous or not, Gates was about to be in the news a lot more. The day before Kahn “resigned,” his good friend Gary Reback, a Silicon Valley lawyer, filed a long brief on behalf of three unnamed Microsoft competitors, asking federal Judge Stanley Sporkin in Washington, D.C., the judge known as “Attila the Hun,” to block the Justice Department’s antitrust settlement with Microsoft. Among the supporting documents that Reback used to make his case was an old Microsoft memo that talked about “sticking it to Philippe.” It would become a critical piece of evidence in helping to convince Sporkin that Anne Bingaman had treated Gates with kid gloves and that the consent decree was not in the best interest of the public. Kahn would finally get to stick it to Gates.
It was just the luck of the draw—literally—that the most significant antitrust case in the history of the personal computer industry had landed in the lap of one of the most colorful, controversial, and independent judges on the federal bench. In the United States District Court for the District of Columbia, consent decrees are assigned by lottery to federal judges, who determine whether they are in the public interest. The Microsoft case had gone to Stanley Sporkin, three days after it was filed on the night of July 15, 1994. Consent decrees are routinely approved after a 60-day public comment period and a hearing, which is required by the Tunney Act. (The act was passed by Congress in 1974 in response to allegations that the government was making sweetheart deals with companies to settle antitrust cases.) But the 63-year-old Sporkin was no rubber-stamp judge. A recent profile in a Washington, D.C., news magazine had described him as “the most irritating judge in town.”
