What’s more natural in Silicon Valley than a rich but hidebound old company trying to stay ahead of the market by snapping up a successful, innovative startup? What could be less surprising? And yet there is a persistent sense of unreality for me that is itself taking me by surprise. When I first heard the news I was momentarily stunned, and then I recovered and said to myself, “OK, that’s that,” and expected to remain cool and unperturbed about it from then on. What other reaction even makes sense? But that’s not how it’s turning out. I’ve been in a kind of a daze. Why?
Obviously it’s due to the echoes, for me, of NCD’s acquisition of Z-Code in 1994 (which also happened mostly in February; which, come to think of it, was the same month that I first interviewed for the Z-Code job in 1992). I was a very early employee at Z-Code and along with the rest of the engineering staff expected that we were on a path to taking the company public. We had a successful product and some lucrative partnership deals, we’d won some industry awards, and we always got good press.
Now that I have a much better understanding of what’s involved in taking a company public, I can see how naïve it was to flatly insist that Z-Code turn down the NCD offer and continue trying to IPO. In 1994 the dot-com boom was still a few years away and Z-Code was having distinct growing pains; it was by no means certain we could remain a leader in the e-mail software market.
But at the time none of this was obvious to us. All we knew was that the upside of this deal was much, much smaller than what we’d been toiling for, and that NCD in particular was an odd choice of an acquisition partner. (They produced X terminal hardware; we produced an e-mail client to run on a huge variety of platforms.) The engineering staff was disappointed and bitter. We opened bottles of tequila and vodka the night we got the news that the deal had closed; it’s the drunkest I’ve ever been. Z-Code’s founder, Dan Heller, who sold out to NCD over our objections, became the focus of our resentment. It has taken me this long to be able to say: sorry, Dan.
It’s hard to overstate the intensity of my emotions when the NCD deal happened. I had committed myself body and soul to a vision that was being allowed to die. It was the biggest trauma I had ever suffered. I threw tantrums. For example, I just found this in my e-mail archive:
To: schaefer, lowery
Date: Wed, 9 Feb 1994 14:26:20 -0800
I am staging a work stoppage. I don’t know when I’ll be back. Bye.
In the end I grew a little more mature, professional, and jaded; the deal went through and the companies combined; and NCD managed Z-Code (and then itself) into the ground over the next few years. Our Z-Code equity translated into just enough NCD stock options to allow me and three co-workers to leave two years later (again, in February!) and bootstrap our own e-mail startup, which still exists today, so, not a bad outcome. But the psychic damage had been done, and my reaction today to being gobbled up by Microsoft is perhaps not so hard to understand.