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Behind Steve Perlman's big score
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Is your product going to compete with Microsoft's UltimateTV?
• Worked for Atari and ColecoVision
during summers while at Columbia University as an undergrad
• On teaming up with Apple Computer:
"I saw an ad in the New York Times, a two-page spread for the Mac, and I said, 'This is amazing. I have to help those guys.' I kept calling them and said I wanted to develop the color Mac.
• While working at Apple, Perlman's wife was recruited to make "monkey" sounds for the Mac.
"My girlfriend at the time, now my wife, got dragged into the sound lab, and they asked her to make every weird sound she knew how to make. Her "eep-eep" became the monkey sound on the Mac. It was recorded in 1986."
I can't comment on that because it gets into what we're doing. We are
in the home entertainment space, and you'll find there's overlap, but our
The many moving parts of Steve Perlman
• Designed a graphics system at age 16, his first computer at 18.
"I was more interested in the arts than in engineering. I've always been doing things on the side."
What are the key features that a set-top box should include?
That is a long discussion. There are all sorts of circumstantial issues, such as the particular characteristics of the economic model and the
target customer, and clearly it matters what infrastructure you have. One thing you can say is that whatever the set-top box is, it should be very inexpensive. The DCT-5000 (General Instrument's set-top box that offers two-way communications capabilities over a coaxial cable) tries to be
too many things, is very expensive, and that's the reason we haven't seen widespread deployment from MSOs (multi-system operators).
Mark Snowden, an analyst with the Gartner Group, said in reference to your funding, "I don't see how a new company starting up right now is
going to be able to displace anybody else. I think even TiVo is going to have trouble going forward as an independent company. And all the set-top box manufacturers are incorporating persona video features into their next-generation boxes. Cable companies are looking at introducing new services. And standalone boxes haven't taken off in the market." What's your response to that?
I would agree with (Snowden) generally, that someone without the right partnerships in place cannot make it in this market. But if you do have those partnerships, and you have endorsements by the major stakeholders
in the entertainment market, and those stakeholders say "we want what
you're doing and we're going to help you do it," then that's a different story.
Tell me about the invention of WebTV.
I went to Fry's and got a whole bunch of parts and about $3,000
worth of stuff and brought it home and started working on it. Prior to that, I developed much of the multimedia technology behind the Mac. We developed all the graphics and sound and color in the Mac 2. My team developed QuickTime technology and developed all the video output technology that Apple uses.
When I saw Netscape 1.0, when I was at Catapult (Entertainment, a multiplayer gaming company), I said, 'I'll bet I could get a Web page to look good on a TV set.' I worked three days straight, through two nights. Then I showed it to my partner Bruce Leak, who said, 'What'd you do to the TV set?' I hadn't done anything to it--I just figured out how to get the signal going into it. Bruce said, "We'd better start a company."
We started calling people to set up partnerships and went about trying
to raise money. I was very happy to get $1.5 million in financing--it
seemed like the king's ransom! By the time we got our Series B, I had had to mortgage my house to pay salaries.
What were some of the highlights of the WebTV experience?
Did you ever see any specials on the moon landing? There was a lot of concern that the surface of the moon was all very soft and that the
vessel was going to go right through the ground. Well, there had never been a successful interactive television system. No one had successfully shown that you can interact with a TV. We were relying on being able to use
the remote control, and that was a scary proposition. There was no greater height than seeing how it changed people's lives. People weren't online with PCs for a number of reasons: because they couldn't figure it out, because they couldn't afford it, because they were handicapped. And we
were hearing stories of people who found long-lost family members--that sort
of thing was really powerful.
What were some of the lows?
Any start-up has its tough times. In March 1996 I got a certified letter from Sony saying they weren't going to work with us. It happened days before our Series B, and I had mortgaged my house to make payroll. Fortunately, the VCs said they were going to invest anyway, despite
Sony's withdrawal. Those were some pretty dark days. In the end, Sony came
back. We had our other challenges. Our first big Christmas, we had so many
people signing up for WebTV that on Christmas day it overwhelmed our system and took it down. We all gave up our holidays. We had never been able to
test such huge demand. But we got through it and learned how to scale. The product only won a limited audience. But it did pave the way for the paradigm of interactive television, and it paved the way to show you
could build a very complex, remotely updated and reliable home entertainment system. Our reviews said that if you were used to working on computers, WebTV would seem very strange for this reason: it didn't crash. It would boot in five seconds. There were a lot of things we pioneered and that
I'm quite proud of. And having 1 million subscribers means having WebTV in
one out of every 100 American households.
What got you interested in this business?
What I'm interested in is products. I like seeing average people having access to technology without hassle, and I like the link to
entertainment. I like to write and am working now as a hobby with some folks who are doing motion picture development.
One of the very telling statistics is that if you've read TiVo's announcements of its end-of-year results--they have a very nice product--but nonetheless they said that just half the product that was purchased over Christmas had not been hooked up yet. People got this thing, saw what it took to put it up, and said, 'It's not worth it!' We had the same thing with the WebTV Plus. Why is it so hard to take a neat tech and make use of it? Why do people have to know about video-in and video-out? Why not turn something like Napster into something that people can readily turn on in the home? Napster is actually very hard to use. We have all these disparate efforts and haven't really figured out a way to make things easy to use and make then intuitive. The world really needs to have these problems solved.
Microsoft has no incentive to make PCs boot fast--but when it comes to your entertainment system, it's about life, it's about feeling good from the experience, not about 26 remote controls and cables and configurations and crashing because the thing is gobbling up the disk drive. Come on guys, we didn't used to design product like that.
What's Rearden Steel Studios?
Rearden Steel Studios is a small operation in San Francisco, on Bryant Street in South Park, where we have a team of four people who do motion capture, Webcasting and video work. We just did a big motion capture
for HBO. Motion capture is where a performer puts on a suit so cameras or a magnetic structure can keep track of his movements. We have three movie products under development. Hollywood moves very slowly. It's a
completely different pace than Silicon Valley. One of the things I've learned through that process of creating WebTV is that it wasn't just about the technology. You have to understand what
goes into creating content. Through the Rearden Steel Studio, I'm getting
more insight into what goes into this. As we deliver new delivery systems, we have to understand new paradigms, just as they had to in early
television emerging from the radio. It's the same thing that's needed for the brave new world of digital entertainment. 
