A Truck Full of Money (15 page)

When Paul left the xiangqi palace and looked around his attic, he would be reminded once again that only a month ago he'd been the VP of a hot new tech start-up. But at times up there under the rafters, transported into the realm of xiangqi, he became a leader with an idea for an enterprise and a little team to enact it. At first this team included the Boston University grad students, but eventually they had to leave for paying jobs, and then the team was only he and Karl. Periodically, Paul would write to Karl that he was courting financiers, assuring Karl that someday they'd get paid for creating this site. One time, Paul offered Karl a token payment of a thousand dollars, Karl wrote that it wasn't necessary, Paul sent the check anyway, and Karl wrote, “Gee, thanks.”

Karl had left Interleaf and had another paying job. He had some time to spare, and he'd always liked to work with Paul. Paul was so energetic and generous, his management style so different from the bureaucratic, rule-bound norm. By summer he and Paul had put together a functioning, though rudimentary, website. Karl wrote the administrative programs. Paul, meanwhile, was planning to write new foundations for their site—a big coding job.

In better days, Paul had bought a summer house in Hull, larger than his parents' cottage and situated on the shore of Massachusetts Bay. In mid-June he and his wife and two small children moved there for the summer. For Paul and indeed all the English family, Hull had always felt more like home than Perham Street. Hull was the place where he and Danny had done their most inventive mischief, the place where he had felt a part of a truly happy family. He knew the history of the town and of the harbor islands in its panorama. Every upstairs room of the house commanded lovely views, boats on blue waters, the grand old Boston Light, and in the distance to the west across Boston Harbor, the towers of the financial district. There were times of relief this summer, when for instance he took the ferry to Boston and returned to find his infant son and daughter and wife waiting for him at the terminal in Hull, and his heart lifted. Or the times when he made chocolate cake, his daughter standing on the counter covered in flour. But the main escape from the gloom that lingered in Paul's mind lay on his computer screen.

In moving to Hull, Paul had traded his attic office for a basement room. It was barely large enough for a desk and a couple of tables to hold computing gear. Down there, all that Paul could sense of the oceanfront world came through a small window near the top of one wall, high above eye level, which he had installed to replace an even smaller window with a rotten frame. The room had a concrete floor, usually damp, and the place smelled musty, like the converted garage on Perham Street. There at his desk in the basement, with just a patch of sunlight or moonlight in the window above his head, the dank little room seemed to him like a fair representation of the feelings that kept returning, his interior darkness made tangible.

Emails to Karl still read like descriptions of how Paul wished he felt. He and Karl were going to learn everything “soup to nuts” about what it took to make a good website. Theirs was sure to be a hit.

The sound in Paul's mind was much more tentative. The challenge he had set himself, and had postponed for some months, was to rewrite from scratch two large programs, the new foundation of code for the xiangqi gaming palace. It had been a long time since he'd done a coding job this large and complicated. Could he do it?
Can I create again? I'm not sure I can create again.
But when he sat down at his computer in his basement office, on a day in July, he knew—it was reflexive—just how and where to start.

Some coders draw diagrams of their programs before they begin to write them. Paul had never felt the need. He'd always been able to hold a large, complex construction in his mind. His picture of the two programs was like a map of all their parts and the connections among them. A kinetic map. He loved populous Manhattan avenues. Imagined from above, they were like an efficient program, he thought, the crowds moving in opposing currents and crosscurrents that never quite touched, that seldom interfered with each other.

Donald Knuth once said, “Computer scientists seem to have an uncanny ability to jump between levels of abstraction—to see things ‘in the small' while at the same time seeing them ‘in the large.' ” Paul could still do this. He could still write something like a cascade of coded routines, each hanging from the one above, like a Calder mobile.

As the programs took shape on his screen, he felt more and more nearly obsessed with this odd adventure at every level of abstraction, as in the old days at Interleaf and before Interleaf. He still lay awake in the middle of many nights, but he wasn't huddled on the floor waiting for the sun. He was lying in bed thinking about the code he had written and the code still to write, or he was down in the basement with the lights on, writing it. This wouldn't be the road to mental health for most people, but for him it felt more and more like a way back, a new beginning.

By September, when he and his family returned to Arlington, the bulk of the two programs was written: about 10,000 lines of code, which, if printed out, would fill about 170 dense and very neat-looking pages. There had been much more prodigious feats of programming, but this was a large job for one person to have accomplished in about two and a half months.

I still have it,
he told himself.
I still have my chops.

The Club Xiangqi caught the attention of a few companies, including Yahoo. One of its founders came to Boston and talked about buying both the site and Paul. Yahoo made him a handsome offer, and Paul wanted to accept it, but the company was situated in California, and he couldn't move there and leave most of his extended family. For a time he thought he was slipping back toward despair. The world was going mad for people who knew how to create things for the Internet, and for a while he felt stuck outside looking in. He still had money in the bank, but it was ebbing. He worked briefly as a part-time programmer for a small company, earning $80 an hour, thinking again of how far he had fallen, thinking, as he sat in a cubicle making boring repairs to badly written code,
My normal self would rewrite all of this.

But his gloom didn't last long this time. Soon after he turned down Yahoo, he had a chance encounter, on a Massachusetts golf course, of all places—he could scarcely play the game—where he met a man who was working for
The Boston Globe,
managing the paper's online store. Soon afterward Paul had a deal to improve the
Globe
's website, to make it a place where visitors could easily buy all sorts of Boston-related stuff, such as T-shirts and snow globes and sports team paraphernalia. The contract was for $50,000, a contract for a product before Paul had a company to build it. He had a name, though—Boston Light Software.

If all went well, he'd assemble a great team and they'd build Boston Light into a website creator that would serve all sorts of giant corporations, once they'd done their first job for the
Globe.
He imagined that he and Karl would make good use of their Xiangqi experience, not the actual code they'd written but what they had learned about creating a complicated site on the Web.

He felt proud of what he and Karl had done, constructing out of the ephemeral stuff of code what seemed like a real community, indeed a real place where tens of thousands of people all over the world were hanging out electronically and competing and learning the game of xiangqi. He liked to go to the club himself and enter a room to watch a game, and if a player in Malaysia made a bad move, it was as if Paul could hear his fellow spectators—one might be in Japan, another in China—murmuring: “Can you believe he did that?”

Paul felt that Xiangqi had saved him from despair. But he had been spending fifty to sixty hours a week on the Xiangqi League, and none of his dreams of making money from it had materialized. He had two houses and a wife and young children. He had taken a step back to a former self. He had programmed his way out of depression. Now it was time to go back to work.

When Paul founded Boston Light—in 1998, three years after he quit Interleaf—impermanence had become the norm, new inventions displacing ones that only yesterday seemed new, computer-related businesses forming and dying, flourishing and dissolving and being bought for their patents, or disappearing, as Interleaf was soon to do, into other companies. The latest craze now was business on the Internet. Part of the promise lay in the old idea of making money through advertising. The medium was new, though, and so were the terms for it: e-commerce, information technology, the tailored Web experience, dot-coms, all amounting to nothing less than a New Economy.

Virtually all the dot-coms listed their shares on the NASDAQ exchange. That index doubled between 1999 and March 2000. One estimate has it that in the midst of the boom the value of the 371 publicly traded Internet companies amounted to $1.3
trillion,
about 8 percent of the value of all the stock traded in the United States.

To take another measure of the era, the number of venture capital firms—many “VCs” specialized in financing new dot-coms—also nearly doubled between 1996 and 1999, and the capital they had to spend grew threefold, from about $50 billion to more than $160 billion. In retrospect, these amounted to clear symptoms of a bubble. Some people involved in the financial markets saw trouble coming, but in finance as in technology, being right too soon is as punishing as being right too late. Even some wary investors felt they had to follow the herd or risk a fatal loss of reputation, or at least of opportunity.

In the context of that period's economy—manic, not just hypomanic—Paul's Boston Light was a model of sanity. He had a paying customer and something like a business plan—to make handsome and reliable websites for all sorts of companies. He didn't even try to raise money from outside investors. Making software didn't require anything like the capital involved in manufacturing. He figured he had enough to open the doors of Boston Light with the $50,000 from the
Globe
and what remained of his savings.

He rented an office in Arlington, the cheapest space he could find. It had no cleaning service and the heat was unreliable, but it cost only $8 a square foot. He fitted it out with used furniture and bought some new server computers. He recruited a team of fifteen, a couple of smart young businesspeople, support staff, and programmers. Most of these were old colleagues—such as the versatile programmer and manager Jim Giza, and also Karl, who would take care of the smooth operation of the company's systems. It was a big moment for Paul when Billo agreed to abandon his little start-up. When Schwenk and Rago followed, Paul felt he had the team he needed. He couldn't afford to pay them much, but for Billo and others there was the promise of adventure and money to come.

When Paul called asking Brenda to join Boston Light, she told him, “Yes. If I can work part-time.” Paul said she could, then put her in charge of creating the UI for the
Globe
's website, a more than full-time job. But to be working long hours among old friends, at communal tables in one big open room, felt like a return to what she thought of as her “glory days.” Karl was one of those old friends. She remembered asking back in Interleaf days why he kept wearing the same old wool sweater with holes in its sleeves, and Karl had told her his mother had given it to him and he was damned if he was going to replace it. It made her happy to see that he was still wearing it when she saw him again, for the first time in years, at Boston Light.

Paul made Karl a co-founder of the new company and endowed him with about a quarter of the stock, about half as much as Paul took for himself.

karl: It seems bizarre that I have so much. I could conceivably give some up if it seems appropriate.

pme: Please don't ever suggest that; you are *well* worth all the stock you have. It is very important to me personally (and the company) for you to be positive, and to feel good about your value here. I think if you felt >=50% as good about your value here as I felt about your value here, you'd be in good shape. :-)

It wasn't a calculated feeling, but clearly Paul wanted Karl around for something in addition to his expertise and trustworthiness, something more intangible. Karl hewed to his countercultural ideals—his scorn for the restrictions on freedom that the capitalist system wanted to place on programmers in the form of patents and other legal devices. This made him vulnerable in a world that cared for little more than money. He was someone Paul felt he could protect, someone on whose behalf Paul could practice his own idealism.

At one point, Paul asked Karl to sign a standard employment agreement. But Karl objected to a section of the document that would prevent him from working on the same kinds of projects as those at Boston Light for a year, if he should leave the company.

pme: …It is too late for us to make changes, we really do need you to sign it. Please take a leap of faith for me and just sign it as is, ok?

The exchange continued:

pme: …You have to sign it.

karl: No, I do not have to sign it. I will quit before I sign it as it stands. I will give you all the stock back.

pme: There is no need to escalate like this; threats are not nice, they don't show trust and beg for further escalation.

karl: It is not a threat and it has nothing to do with trust.

pme: It was a pretty powerful suggestion. :-)

karl: I trust you absolutely.

pme: Thank you; it makes me feel 1000% better. Trust is everything to me. :-) There must be a way we can do this…

And of course there was a way, essentially a promise from Paul that he would never enforce the clause. Karl approved of the compromise. He would not feel his principles had been violated. He added:

(This is of course completely an ethical/philosophical question on my part, not “practical.” I can't imagine having the slightest interest or capability of starting or joining an ecommerce company after boston light.)

Karl liked working with Paul as much as ever. For one thing, Paul would let him work remotely. “I think you overestimate the power of talking face-to-face,” Karl wrote him on one occasion, adding, “(And I know you think I underestimate it.)” Early on Paul did ask Karl to come in and look at the office. “Okay. Whatever,” Karl said. He had to set up the server computers from scratch. He didn't care what the office looked like, only that the machine room, his province, be suitable. He looked at it. It was large enough to work in comfortably. “Okay, I'm happy.” Once he had the machines set up, Karl resumed working mostly at home, visiting the office only now and then, talking mainly with Paul by email.

pme: I would really like to get cards for you, for when/if we are in meetings, and so your not getting cards is not seen as not being supportive of the team or something.

karl: If you insist, but I'll never use them.

pme: You can make up card games with them. What title do you want?

karl: “Programmer.” If you veto that, Co-founder.

pme: Ok.

In a fairly typical early email to his managers, Paul announced exciting dot-com news, followed by an exhortation:

AOL market cap doubled this week to $62B…

This is fucking unreal.

Their valuation is based on the number of consumers they have.

If there's anything for us to learn from this, it is that everything we do should be focused on only one goal—

MAXIMIZE THE NUMBER OF SHOPPERS (and merchants) in 1999 THAT WILL USE BLS SOFTWARE…

The zeitgeist was with him. Software entrepreneurs, he wrote, were standing “in the middle of a hurricane.”

If you were a corporate manager at this time, you had to get a website built for your company. If you didn't, your business might not suffer right away, but your company's stock price certainly would. Paul figured he could talk a lot of companies, large and small, into hiring his team to create their sites. He had several friendly conversations, with a couple of hot young Internet companies, with Amazon, and with Intuit, a large and growing software company that provided tools for small businesses and accountants. None of those companies, Paul began to realize, wanted to buy Boston Light's services, but all, to one degree or another, expressed some interest in buying him and his team. He preferred Intuit because it was the only one of the suitors that was actually making money—$800 million in revenue and $386 million in profit in 1999.

Paul wasn't opposed to selling. He had stretched himself financially, a little with the Xiangqi adventure and a lot with Boston Light. Paying more than a dozen salaries had consumed his Interleaf money. He had sold all the investments in his pension plan. He was nearly broke, nearly “out of liquids,” and on the verge of turning to credit-card financing. He didn't feel desperate, but that didn't mean the situation wasn't desperate. When he felt the fire, being in a jam brought a kind of happiness. It eliminated distractions. It settled him. Whatever the jam, he felt sure he'd find a way out. This time he had help, in the person of his old friend Joe Mahoney, “the vice president of vocabulary,” from Interleaf days.

Joe was working in Massachusetts as an adviser to Intuit. At Joe's suggestion, the company dispatched a small team to visit Boston Light. They weren't ready to buy. They told Joe Mahoney that they liked Paul and his team but not the software they were building. Mahoney told them to forget the software, the prize was Paul. “This is a sui generis individual,” Joe remembered saying. “He is a completely unique guy. He can think decisively, omnivorously, in ways that you guys haven't seen before. And here's a chance to get
him
on our team, not just his technology.”

Mahoney arranged to have Paul join a phone conference about a start-up company that Intuit was thinking of buying. That start-up's young founder gave his pitch by phone to a scattered panel of judges: the Intuit executives in Mountain View, California, and Mahoney in his office in his house in Brookline, outside Boston, and Paul, who was sitting downstairs on an extension phone in Mahoney's kitchen.

When the young founder finished his pitch and hung up, the others all stayed on the line, offering their opinions. And then it was Paul's turn, his audition. He didn't talk long. (“The succission of it was almost miraculous,” Mahoney remembered.) Paul told them what he thought was right and wrong about the company in question. He raised issues that no one else on the call had considered. He didn't tell the Intuit people what to do but left them feeling that the decision was clear (they shouldn't buy).

The Intuit team was suitably impressed, enough that Intuit invested about two million in Boston Light and soon afterward decided to buy it. But what was the market value of a company only a little more than six months old, with fifteen employees and an unfinished first product? Paul heard that another old colleague from Interleaf had just negotiated the sale of a small new company. Paul called him for advice. The old friend asked him how much he planned to ask. Paul said he wasn't sure. Maybe twenty million? Ask for forty, his friend said.
Forty
? Paul said. Boston Light didn't have any revenue, said Paul, except for fifty grand from
The
Boston Globe.
His friend said to ask for forty million anyway. You could argue that this was a modest price, in the context of the moment. In 1999, a year of many buyouts, Yahoo agreed to pay $3.6 billion of its own overvalued stock for GeoCities, a very popular online “community,” and $6.1 billion for Broadcast.com, an Internet radio company that owned no content and produced audio and video of poor quality. Neither of those companies had ever made any money or even come very close to breaking even, and the same was true of most of the dozens of smaller dot-coms that were getting bought or going public.