Bob: Dan, welcome to Nerd TV.
Dan: Thank you. I look forward to this. It'll be interesting.
Dan: Well I don't get on TV, even, or the internet all that often.
Bob: Oh, that's a shame. That's just because you're one of these hidden heroes.
Dan: Right. Well I don't know. Yes, yes, hidden, anyway. We had one person who was attracted to publicity, quite deservedly, and didn't enjoy it at all. And there's no need to compete with that spotlight.
Bob: Okay. Now for the people in the audience who don't know of you or haven't heard of you, you were one of the founders of Autodesk.
Bob: And as I recall, Autodesk began-well let's jump back. What were you doing before Autodesk?
Dan: Before Autodesk, I was mainly working with John Walker in an operation that he started called Marinchip. There's an old-they built Liberty Ships down in Sausalito at Marin Ship, so he called it Marinchip. He had invented-I'm going to be stuck in a lot of background here.
Dan: These are things that were done 30 years ago. He had invented a way of putting a 16-bit processor on the S100 Bus. Now the S100 Bus was what all the old-the first computer kits were made on. It had 100 pins on its motherboard, connectors on its motherboard, because the guy who made the kit had a lot of those connectors around the house. And so he designed 100 pin Bus and put the 8080 on it and started shipping the Altair kit.
Dan: So that was the original Altair Bus that was picked up by Ed Godbout and those guys who codified it and made into the S100. And it was kind of regularized. It's not exactly ISO. And so John had invented a way, found enough extra bits on the Bus to put a 16-bit processor on it, which was the Texas Instruments 9900. A very nice little machine with an enormous chip and very decent instruction set and no marketing. But he, of course, invented it for other purposes than hubris. And he put it on a modified S100 Bus with a standard that other people tended to pick up later and started doing software with it. The partner he had kind of fell by the wayside and they brought me in to work on it, on whatever there was, including more software, and getting parts and shipping them and what have you. He had written a simple operating system for Ed about-not radically different than, say, CP/M or DOS, and then had to put together almost all of a much more sophisticated operating system for it, pretty much single-handed. And we were selling these things, small numbers of them.
Bob: Was it a completed computer or a processor board?
Dan: We attempted to diversify. We'd sell both. Mainly it was selling the processor. You can buy your S100 equipment from anybody, plug in this processor and load up the 8-inch floppy disk with the operating system and go. But we would ship-we did some shipping of whole systems. And so we went through that for a while, and the hopelessness of doing that on a small basis without a huge capital became very apparent. And the fact that these serious companies were doing serious things with a micro-with microcomputers became apparent. John had a chance to see where a lot of Sony machines-Sony has had-wound up having no affect on the market. But he saw a large operation Sony was setting up with some clever computers. And it was obvious that these things would need software. It was also obvious at the time that virtually nobody who was in the business then knew anything about computers. It was ____ getting into it and learning about the stuff the hard way. They knew nothing about operating systems, etcetera, with a few exceptions, of course. CP/M, actually, was done by somebody who knew computers. But most people who knew anything about computers were holding nice jobs at IBM or Intel or somewhere. And the fact that this large expanding business would need software was the key insight here.
So we began getting in touch with a lot of the people we knew from earlier jobs and trying to put together a group to do-to be some kind of software company. And that's-of course, I should mention the Audodesk file at this point. That's-John collected a lot of the papers with commentary in his book The Autodesk File, which is on his website now. And anybody who has the time can look at it and get a lot more information than I can give, but not the same information. And so we organized and had to figure out a business form and what kind of software we were going to work on and so on. It was pure-we will make software packages and we'll follow up on what succeeds.
Bob: So you got together a group of people, resolved to form a company to make software, without knowing what the software was you were going to make.
Dan: That's right. I'm afraid it's true. We had some ideas and again, some of them were documented. There was a crude CAD program which we had been distributing on the Marinchip system-for the Marinchip computers which was the product of a guy out of state who knew something about CAD and had written this program. There was a possibility of porting that onto the big time computers. We knew, of course, that the Marinchip things were going to work. That was the point. There were lots of new computers coming out and it wasn't even-16-bit ones were obviously going to be like the 8086, were obviously going to be more powerful and important than the 8080, but there's no telling how fast that transition would be.
Anyway, we were going to port that and we had some clever ideas, including a program called Autodesk, which would fundamentally take over your screen-which remember, was not a graphical screen at the time-to give you capabilities of taking notes, accessing notes, fundamentally free-form things: answer the phone, hit the button and space for taking notes pops up and so on. These things were fairly new ideas at the time, running a microcomputer that way. And of course, we'd keep an eye on IBM, which was just getting into the business, and the other makers of little computers.
Bob: Dan, what timeframe are we talking about?
Dan: Yeah, right. This is end of '81, beginning of '82.
Dan: And he-and so we had several organizational meetings. And it took a while to figure out. We were reasonable people here. We didn't like corporations, or we had all worked in corporations and didn't like them. So some kind of partnership, share the work and sharing the revenues and things seemed reasonable. But the more you look at it, the more the world isn't set up for doing that, and we wound up with-and there's subchapter S for tax purposes and all kinds of stuff-subchapter S, yes. And we wound up with a plain old corporation, organized it in end of March, '82. And then we had a corporation-no offices and no people on the payroll-and started working on some of these projects, to the extent we were able. John and I were timesharing that with running the Marinchip business. Other people were timesharing it with their day jobs and so on. And we started writing and converting software for this.
Bob: So what was the first product to take off?
Dan: The only one that took off at the time-the thing was that it was a CAD program. We signed a deal with the author, who is not one of the-he didn't want to be in the founding group.
Bob: He didn't want to make any money, did he?
Dan: Right. Well no, he really wanted to make money. We signed a royalties deal with him. There's a long history of this in the CAD business. We were unknowingly following a great tradition of; some guy writes this CAD program and somebody commercializes it and makes a deal for it, buys the rights and starts working on it and finds himself pretty much rewriting it from scratch, because it wasn't really as much as they thought. We did that and we went on paying royalties.
Bob: And you were saying the royalty obligation, you're rewriting the program.
Dan: That's right. That was reasonable. One thing was that we were paying a royalty on the price of the product and extra cost add-ons would be-he didn't ever write in them, because we were writing them. And that, of course, it gave us some incentive to putting this stuff in extra cost add-ons, which is not a bad business decision anyway. So we kept the base price down and did add-ons. In fact, the first version we shipped, I believe, if you wanted ____ that would actually put dimensioning into your drawings, that was an add-on and we kept the money for that. The first one was not extremely capable.
Bob: It sounds like you buy the car keys, but the body of the car is an option.
Dan: Well you could, by the standards of the time, do work with the thing. But yes, we're in regards to dimensioning now, such an outlandishly elementary thing that you do have to buy the add-on package. And we went for years with a base package and an add-on package of various sorts.
Bob: So the product that took off came to be known as AutoCAD.
Bob: And its, I guess, still the number one CAD program around.
Dan: I think-yeah. I don't know about the entire CAD business, but on the reasonable sized computers, personal computers and similar, yeah, it's, I think, still way number one.
Bob: And what was the CAD market or industry like pre-AutoCAD?
Dan: It was big computers. It was big systems distributed by people like IBM and-my first memory lapse-giant companies, including ones dedicated to computer added design. And you would sign a contract and get a certain number of these expensive workstations and support and training for these very complicated programs and so on. We were not about to do that. Our motto was: you sell this cheap software and you ship it with a good manual, and people will use it for whatever they can use it for, when the entire system costs a couple of thousand dollars. And that was the motto. And the big companies, of course, could have come out after us any time and put out stuff that was-in principle, put out stuff that was much better, but they couldn't afford to compete with themselves. It would undermine the entire big business. We got to understand that fairly early. And we were always afraid of major competition, and at times, it really could have happened. But it never came up. The competitors were other garage shops in the microcomputer industry, because it was not worth their-true, they had a lot more capability than we had in the big systems, and selling something to undercut their capable systems was not their business.
Bob: And yet, in the long run, I guess you took a lot of business away.
Dan: We sure did, yeah. A lot of the business-a lot of stuff-once our stuff got better and the computers got better, a great deal can be done-we took away a certain amount of business, because the computers got better. And of course, we created a great deal of business. This was one of these major prices that make a difference in the market. We started selling to people who would never have considered a computer aided design system. And this fairly primitive and slow thing we had was an enormous improvement in their work. And so surveyors-we used to have this list on our advertising materials of people who are now using it; lighting designers and surveyors, particularly, and construction people and stained glass window design. We like the esoteric ones to make it look imaginative. Anyway, so it created a very significant market that could not have existed at substantially higher prices.
Bob: Sure. Now at the time that the first versions of AutoCAD were coming out, did you have to make a decision about which operating system you were going to build on?
Dan: To some extent, yes. In fact, we had-well the beginning of this thing, when we started converting AutoCAD-and other people were working on some of the projects, they were progressing, we had an editor and the beginnings of that AutoCAD, Autodesk products and so on-the two of us, Greg Lutz and I were working on converting it into C on the machine. It had been written in and odd system programming language that we had on the other machine. So we were con-
Bob: What language is that?
Dan: I don't even remember its name, but it's nothing you would ever-it's nothing that anybody ever heard of. I think it was a general log. It was run on some standard-compiled by some standard parser and a nice little first system programming language. And we had to make the decision that; no, that wouldn't fly. And so we started C, which was, incidentally, the first significant C-the first non-play C that any of us have ever done. You get _____ and you read it. The first time I read it, a year or two before that, I was like, "Oh, what an awful language, all kitchen sink stuff, pre-incrementation, post-decrementation. It looked to me weird. The second time I read it, about this time, I said, "Gee, that ____ fun of programming." And we all started programming in C and I have great fondness for the language. It would do great things, if you used it right, instead of the way it was usually used. And so we were putting in a C. And John was, meanwhile, compiling it to PL-1. The digital research had a PL-1 compiler, a very decent little PL-1 subset or small set that ran on the 8080. So he was doing that one. That was a shippable product for a while, but it didn't have a future. And we did the C conversion on it.
Bob: He loved PL-1. Gary Kildeau loved PL-1.
Dan: Yeah. I think you can tell from the product.
Bob: He thought that that was the future.
Bob: Oh well.
Dan: Yeah. It probably should have been. And they supported it very well. They, unlike the other company that was arising and they marketed stuff for the business-you reported a bug and they would fix it and send you a fixed version.
Bob: That was digital research would do that.
Bob: In those days, Gordon Eubanks, who went on to run Symantec, was running the Digital Research language division.
Dan: Oh, I didn't know that.
Bob: Yeah. He had been a submarine commander.
Dan: Right. I met him once before that, when he was doing-what was it-the database system, I guess. We talked briefly, at one point, about maybe carrying-doing his product or something.
Bob: A very disciplined guy.
Dan: Yeah. You have to be, if you're doing your programming on a submarine, yes.
Bob: So you had to make a decision between CP/M and MS-DOS then?
Dan: Well the management-the economy did that for us, the market, because there wasn't-I don't believe there was an 8086 CPM. I may be getting this all wrong.
Bob: It was, eventually, CPM-86, but it wasn't right away.
Dan: No. And there wasn't-well CP/M-86 was out at this time, but there wasn't a-I don't think they had the PL-1 out is what I'm saying. Anyway, the C1 caught on. Now CP/M-86 was out and it existed, this obscure company in Seattle, as you know, the Seattle micro-
Bob: What were they called?
Dan: Seattle Computer Products, I think. Yeah, I'm pretty sure it was. We bought one of theirs. They had a 16-bit board, too, 8080 board, and so we bought one and looked at their stuff, and there was no reason to do business, no synergy there. But so they had their crude little-they had their crude little DOS system. I forget what it was called.
Bob: QDOS - Quick and Dirty Operating System.
Dan: Yeah, that's right. So they had their 16-bit thing and CP/M was working on it. And we all know which one Bill Gates bought into. So we wound up doing both of those on different machines. Yeah, we wound up doing both versions for both operating systems. One of our important connections in the early days was Victor. I don't know if you remember the Victor9000.
Dan: Yeah, right. That was a neat-much higher tech than the IBM 8086 machine. And so I was in charge of that one for a time. And that was running CP/M-86, mainly. And the market pressure to hurry up and get an MS-DOS version out of that made our decision. We went entirely MS-DOS. We had a long process of what John calls "management by lack of alternatives". We couldn't pursue. It was our business plan to pursue a bunch of things. We couldn't pursue them very far. We didn't have the capabilities. And so we made a lot of decisions because that was the only thing we could do at the time, including the time in '83 when we were actually shipping AutoCAD and had these other products and we realized, no matter what the opportunities were for these others, there was no way we could develop them and have the-and put as much work into AutoCAD, which was making us money, as we should. So everything else went away for a while and we concentrated on one thing.
Bob: So they had to die.
Dan: Yes, right.
Bob: Was that a tough decision? Is it hard to give up something that you've put a lot of time into?
Dan: Oh it always is, yes. I personally got out of that because I was working with AutoCAD from the start. It always had a look of-well as I said, we were starting from something that appeared to be a working program, so we had a pretty clear idea of what it was doing and what its working capabilities were. The others were more speculative and just not as profitable.
Bob: When you started Autodesk and presumably, AutoCAD, as well, what sense did you have of how big the business could be?
Dan: That's a very good one. We realized-again, the very early information letters in the Autodesk file indicate that-we perceived it was essentially unlimited. But we had no idea what it would be like, what it would be like to do it. We were just going to go out there and pursue what we could and see what happened, that this could be a very big business, eventually. Of course, we didn't set it as a big CAD company at the time. We saw it as a big software company. But it was clear that the market was going to expand and we new Moore's laws as well as anyone else. It was going to be, the computers were going to get better.
And that's, incidentally, speaking of trivial things you know the other guys don't, we did know that and we built our software in the most general way we could. We had a couple of really fast competitors, whose CAD programs were much faster than ours, because I ran editor's software. Well Integer, for all the-not to insult any existing CAD companies-but the Integer set packages that you could make on such a computer just weren't going to hack it. We started out making things as general as would fit in that tiny memory. And we had the advantage that where Intel really saved us, and also my PC suppliers, Intel had this 8087 chip that would do math. And for some reason, IBM and the others put an 8087 socket on their motherboards. And so we were able to do full input from the beginning. Our guys reverse engineered how you determined whether or not there's an 8087 plugged in and hacked the code, because of course, compilers were not set up to go one way or the other at whim, to use faster or slower arithmetic, depending. And so with that we were able to run flowing point stuff. As computer power became available, we moved into it very rapidly. In fact, we past the point we were usually exceeding what was available.
Bob: Did you consider carrying 8087 chips?
Dan: No. We were completely out of hardware at that point. We didn't sell any-the only hardware we ever sold was the hardware lock that we once had as anti-piracy measure.
Dan: Yeah. But no, we didn't do any hardware at the time. John and I realized that that's a high capital business and we were not going to go after that.
Bob: So you, at this point are committed to Microsoft. What was it like dealing with them as a developer in those earlier days?
Dan: Right. Well one complaint, as I say, early on we had the Victor and the Victor was a very convenient connection. We got cheap computers from them because they wanted, and we made another connection that was very useful, got us into our first Comdex, which was an interesting time for us. It got us some attention at the first Comdex, because we got ourselves in a couple of booths that were more conspicuous than ours. And so we had-the answer is we had no connection with Microsoft. We bought the software where we could. We made our stuff work on the MS-DOS releases as they came out and had-except we occasionally bought some stuff, we didn't use their compilers-no connection at all with them.
In fact, the first company that ever-we ever came to the attention of-and this was much later, when we were-yeah, we actually had offices in offices in Sausalito-was Compaq, because of course, Compaq was busily making computers that were better in every way than IBM or anybody else. They were the first people to realize you can build a useful 386 computer. And so since their stuff was more powerful, they were interested in programs. They'll sell more machines if there's more software that requires the power. And so they got-they came up to us and we had a lot of various local operations with them. They got better access to new hardware and software than we did and it was mutually beneficial. But we never dealt-eventually, we dealt with Microsoft, but not very much, never had a whole lot of corporate connection with them.
Dan: I think the first time we heard from Microsoft was when they were coming out with MS-DOS 4. They made the tour of everybody, because this was a big, fancy new release and it would have the brand new 3 _ inch disk drives. And everybody would support them and everybody had to support that on day one. And so they were doing proselytizing and handing out operating system versions with, of course, a different code name for every company they handed it to, so they had a better chance of tracing down the leaks and swearing us to secrecy. We set up a hidden room with our stuff in it and so on. That about the first time we had any sort of contact with Microsoft.
Bob: But you did have to function in their environment.
Dan: We had to adapt to the stuff they were shipping, right. But again, it wasn't an operating system then. There was competition in the applications.
Bob: As I recall, of course, it was a single task in the operating system and you had a multi-tasking application.
Dan: Not really. It was essentially a single task. It was essentially a single task operation. We may have made some things look like it, but it wasn't-we were not, at that time, ahead of that curve. We used our system expertise on a number of things. One time we had a crisis caused by deficiencies and the linker we were using in the way it interacted with the compiler we were using. And so again, people went out. Two or three different groups of one or two went out over the weekend and investigated the possibilities we had found. And somebody found a proper hack to modify the way the linker worked and we made it work. We did a lot of that stuff. But we never were really multi-tasked until our operating systems would support it.
Bob: When did you know that the company was going to succeed?
Dan: I really don't have much of an answer for that one. I do remember waking up one morning, thinking seriously about it and realizing the whole thing was hopeless-that was about the time we were starting to ship product-that it was ridiculous and I ought to be out doing a job and making some money. But fortunately, I didn't have the nerve to drop out of the organization at the time and that passed.
I think the-we were all ready on some level of success. We moved into our new offices. We had had-we've had some offices down by the bay at the edge of Mill Valley, and we found some-oh, and then we had some offices at the end of Sausalito, and finally moved into a new building in Sausalito and had real offices, the whole company in this one building and some real offices. And when I walked across the hall into the accounting department and saw all of these people working in this nice office and raking in the money, I realized, "Yeah, okay, now we're there." I had-I realized I had had no picture of what it would be like to be there, but we were at last making money and running a real company and, "Oh gosh, now we're running a real company and we have to fake it that we can run one." But that was it, when I got the feeling that it was really happening when I saw that nice, orderly office and people handling money.
Bob: Often, in startups, the founders don't stick around.
Bob: How soon did you see people starting to bail?
Dan: Actually, very few found-let me think about this, and I hope I'm not slandering anyone. Yeah, one of our founders did get into the position that he was just not-he wasn't fitting. This was a business by the early '90's here. We shipped our first product at the end of '82. And by the early '90's some things were happening. One of our people, who was not the standard personality type-not the standard programmer personality type, which of course, increased his value if you had decent management-but he found himself increasingly not interested in the company's money grubbing business and made a deal with management, just before the management changed. And then of course, the changed management didn't hold-didn't live up to it and he took his retirement and severance pay and left. That wasn't terribly long before I left. So we didn't-people just didn't-weren't jumping ship. There were a few people, when we went public; we were issuing lots of stock options from the beginning to everybody. We had a little trouble with our first law firm about that. That was considered dangerous to issue stock options.
There was a case in 1948 or something in which they showed us Proctor & Gamble had been issuing stock options to everybody, and they got in trouble with the regulations over having issued stock options to a secretary who was not sufficiently a key person to deserve them. I think it was more employee protection than SEC frivolous investor, but it may have had the investor thing. You're not allowed to invest if you're-aren't already rich. So our law firm in San Francisco, a first class, prime law firm in San Francisco, great clients like Standard Oil, raised lots of questions about that, and we just kind of refused to pay attention to them. This helped convince us that what you need in a law firm is people who know not only the law, but how the law works. And we eventually were able to get a reference to Wilson Sonsini, and after a brief conversation with them and their condescending to take our business, we were happy as clams. That was a good firm.
So I've now lost the thread. We were giving out lots of stock options. And so some people, when we went public, suddenly had a lot of money and a number of sales. Some people, who were very, very early employees, went off and spent their money. But the founders all stuck around for a considerable time.
Bob: But going public changes a company.
Dan: It does, right. Yeah, we learned a lot about that process and about the realities of the national market. I had a certain amount of connections with financial market felony connection. My father was in the finance business, actually, in municipal finance, until he retired from that and became a professor of the history of science, which is an interesting mid-life change. And my uncle was a bank vice-president in the trust department. So I had a lot of-a certain amount of capitalist connection at the time. But the real-I wasn't shocked much, except the specific sorts of corruption in the financial markets, you don't really read about. In the '90's, we read about-or at the end of the '90's, you read about all of these corrupt practices like feeding stock to the-like, "Gee, a Chinese wall between the analysts and the finance company isn't really impenetrable. And you mean that they try to curry favor with the boss of the company-the investment banker is trying to curry favor with the boss of the interesting company by having them have an account and allocating him lots of stuff, and the IPO's are guaranteed to go up." Well come on, folks. This is some secret? It was going on in 1985. It was standard practice. It just got too blatant in the '90's.
So it does change. It changed the company some, not very radically. Over time, people began carefully watching the stock price. And when the internet became available, they would be watching the stock price, which we considered a disgusting practice. You're supposed to build a company and the stock will follow, if you're not stupid. And it's as much growth as being public in our case, I think. Growth, people get, "Oh hey, we're number one. We can get complacent. Nobody can catch us." That really annoys the old-timers. And it gets large. We have very small ideas of what large is and harder to manage. And of course, the company does come under pressure to make the numbers look good.
After years of watching it, I realized that I did not approve of our practice-of our financial practices, which did far more smoothing and window dressing than was really consistent with the ethical standards that I thought I approved of. I didn't understand that business, particularly. But there was a lot of having to please the analysts and a lot of pressure, "Gee, release-you've gotta release something by the end of the year. We don't care what it is, but release something." The techies get very touchy when they get that kind of advice straight out, straight out from the financial experts. That was fairly late in my tenure there.
Bob: Well now there must be, as a technical person who ends up in some sort of a management role, you have to learn how to play that game. Don't you?
Dan: Yeah-which was why I dropped out of the management role-yeah, the management game is not very congenial to some people. Some people can do it and some people like doing it. John found that by-I don't know what it was, '88, '87-the pressures of running the outfit were damaging his health and he insisted on getting out of the CEO job. One thing in management, you have to have a lot of tolerance for people who don't do things right, and a lot of patience in telling them over, and over and over again, because they keep doing it wrong. None of us was very well qualified for that. Yeah, so he learned to play these games of pleasing the analysts and so on, but they're no fun and they distract you from running the company. They are detrimental to the company and the company does change that way when it goes public.
Bob: Now originally, AutoCAD came out on DOS, MS-DOS.
Bob: But eventually, Windows came along.
Bob: Was there a decision point where you had to decide whether or not to move and when to move?
Dan: It was kind of obvious. Again, there was kind of an obvious decision point. Once Windows-when Windows came along, it was uninteresting, because it had no capability and it was wildly unreliable, and so we watched what it was doing. And by that time, indeed, we were getting some communication with Microsoft and some idea-exchanging some ideas of what the future was. But it did not have much capability. It was not worth anything. You couldn't really run AutoCAD under it. That was that, and so we watched, waiting for enough capability to come out, a tiny address space run out of resources all the time, etcetera. And finally, Windows 3 was good enough-or 3.1. We actually put out a release that it ran under. It was kind of clumsy, because the program was not written for that environment. It took a lot of work to make it work pretty well and not crash too much. But it was the kind of things that was a forgoing conclusion, once it was technically possible; because it was clear by the time it was technically possible, it was clear that's where things were going.
Bob: Did you continue the DOS product for a while?
Dan: Not for very long. I don't remember, exactly, but we dropped it-I don't know-one or two releases after the Windows version became available. By that time, we were running-shipping a Sun version, also. Okay, techies like technically good computers. And besides, it was a lot easier-once Sun became really available, it was a lot better developed software on one of them than on some other puny machine. So we were doing our software development on it and shipping product on it, and we'd have the unfortunate necessity of maintaining the parallel on Windows.
Bob: Wasn't that kind of scary, though, because you could be seduced onto the workstation side, but the bulk of market was going to continue to be on the PC.
Dan: Right. That was, I won't say scary. It was a danger, but there wasn't any real temptation in it. We knew the money was coming in from the PC's and probably most of the money would keep coming in. Remember, it was our idea to cover lots of different platforms. We wrote a lot of different video drivers and things. And so the Windows development was kept up quite in parallel with the Sun. Sun never went out ahead and did something innovative that we couldn't keep up with on the DOS or Windows systems. And we recognized that that was dangerous. I think the phrase "eating your own dog food" wasn't in use at the time, but using your own stuff and not using the fancy development system, and then condescending to port it down to the field systems, we knew this stuff. So it wasn't really a problem, except that it was much less fun to develop on anything other than the Sun, and the big time feature development was not on the Suns.
Bob: Well of course, you have been out of Autodesk for a long time. I would presume that they probably don't still support the Sun.
Dan: Very shortly after I left, they formally dropped support for anything but the Windows. Yeah, that was-when I left was around the time, or just before Windows 95 came out, before their supposedly from the ground up Windows system came out. And about that time, the company made a major shift to Windows only-everybody else can go fish-and forcing all of the programmers not to use the Sun. And a group at least as resentful, forcing all of the QA people not to have any Suns there, because on Sun they could run really sophisticated test sweeps because they had some proper programming facilities. And they were badly crippled when they had to run on Windows. There were some fights about that, I heard about. But it was, yeah.
Bob: Now in your earliest days with AutoCAD, you were the little PC CAD company going up against the big minicomputer CAD companies.
Bob: And eventually, those, for the most part, subsided and you were suddenly the big CAD company. Were there little companies that came nipping at your heels?
Dan: Well again, we weren't really the big CAD company. People still buy big systems and things. But we did produce a big split in the market. Anything below a very large size was our market. There were competitors coming up. Of course, we had competitors from the beginning. There was a company called-a product called VersaCAD, which was our main competitor at the time. That was done by a team that had the wrong orientation. One person was an actual engineer with lots of CAD experience, and the implementation done was done by a recent computer science graduate, his son, who did it right and used the nice, sophisticated UCSD p-System. Well the trouble with UCSD Pascal was slow and incompatible. And we actually investigated that at one time at Marinchip, part of that.
But anyway, we were heavily into open systems, to a certain extent, from day one. We wanted things that would run reasonably fast. I was a little surprised when we went to trade shows and demonstrated and people would talk about-praise our product for its speed, and it was actually very slow. But they had been comparing it with VersaCAD. And their system was incompatible with anything, whereas it was our idea from the start to interface with as many other programs as we could. Again, a decision you necessarily get to, and you're not big enough to monopolize the market.
And so we out-competed on that ground and became the big guy among the equals. And then cheap little CAD companies started coming up. And I won't try to stop long enough to remember the name of the little CAD company in-very cheap CAD company in Washington that came up and was giving us some serious competition.
Bob: That's right. They did a $99 product.
Dan: Right. And so we bought them out, a decision which was highly controversial.
Bob: Why was that?
Dan: Because it was buying a market and there were people that didn't like it. Again, Walker in particular, did not like the spirit; we're going to buy a market. The thing to do is go in and compete personally with your own stuff. And in fact, that merger went on for a while and it wasn't terribly profitable for us, I think. And of course, their users all felt betrayed; because the great big monopolist, Autodesk, had thought up there the company they liked so much. And eventually, that went by the boards and we had our AutoCAD LT as our low-cost product.
So the competitors popped up and, generally, we beat them down, unless they had something exceptional. There were some people who beat us into the heavyweight 3D design stuff and they're still there. But otherwise, they made fewer-we made fewer marketing decisions than most of these.
Bob: Did you worry about, when you got pretty big, that you would attract the attention of even bigger competitors?
Dan: Yeah, although we were all along. Go back to '84, '85 when we've been shipping our product for all of two years, and we have done $10 million of sales in our second fiscal year. To us, that was big. It was ten times growth from the previous year. And we were big enough to attract attention. And the possibility of IBM announcing one day that they were coming out with a product for their PC's was always on our mind. We were trying to get some more financing so we'd have a cushion. You don't get financing for a cushion after they've made their announcement. But we had no outside financing at the beginning. And we were talking from time to time and got more serious about talking with Venture Capitalist. And then investment bankers started showing up and talking about the advantage of going public.
So among the motivations for going public at the time we did, was to put some millions in the bank and be able to survive the initial announcement. We would probably out-compete people who had internal conflicts on marketing, but the announcement would hurt us desperately. And so we were waiting for that to happen, and it fundamentally never did.
Bob: So IBM never took the plunge.
Dan: That's right. They had something and they talked about having things, but never really-it never came out. And of course, then a little later on, there was the-well Microsoft-does Microsoft have a secret building in the corner of Seattle, where they're defaulting, using their human way of programmer-programming to develop a competitive product? Well they didn't.
Bob: It's funny to think about that. The IPO-you went public-prior to that, you were sort of bootstrapped. And if you read the Autodesk files, there's this intense concentration on your checking account.
Bob: It's like, how much money do we have in the bank today?
Bob: And we've got this money market account and we've got this other account, and everyone knows how much is where. So I take it that you actually built this company out of nothing.
Dan: We really did. On our first day, when we signed the corporation papers, I went to the bank the next business day with $59,030. That's a number that's, when I go to my grave, you'll find $59,030 engraved in my heart, because that's what we had for initial capital, plus some computers that people had traded for stock. And there was also a limited amount of stock sold for an IOU. But that was our cash.
And we got a little further cash. There were some other people involved. And in fact, we had an investment from a person I knew long ago who had some financial connections and he came as an investor and a director, and our legal connection had an investment, too. And a couple of other people came in buying stock, as they found it associated. But there was no outside financing at all. It was all-we had that to work with and our revenues, so we had strong incentives to keep positive cash flow and profitability. We knew that selling-well we talked to lots of venture capitalists. We knew that handing out a piece to them was a problem. Anyway, yes, we were very frugal about it and as a result, very few other people had a finger in it when we finally went public.
Bob: So the founders probably did pretty well.
Dan: We did fairly well. In the public offering, we were naively, if you like, well-behaved in these things, when we were told about; what's the best way to handle it and how not to scare people off by selling too much stock. We didn't sell too much stock at our public offering. We did sell. Everybody got a wad of money out of it. But mostly, it was new stock being sold to the people.
Bob: So money comes by the wad?
Dan: Well that's one way it comes.
Bob: And when you finally get rich, or at least on paper rich, as a technical person, does it have any impact on the way you live your life?
Dan: That depends who you are. Yeah, it had fairly little effect on most of the people. The techies were still-fundamentally, everybody who was really among the founders was too busy in the company at that point to waste much time buying, shopping for big cars. I got a little kidding. I think I was the first one after the offering in 1985 to buy a new car. I replaced my '72 Datsun with a brand new Honda CRX and it cost me $10,001. That was my extravagance. And there was not a lot of conspicuous spending. It grew, rapidly, of course. People were liquidating some assets and people started buying houses and things. But there was not radical change. In fact, one of our-the chief Wilson Sonsini lawyer who handled our stuff, at the time of a public offering, congratulated us on being in Marin County, because he was always working in Silicon Valley and he saw the highly competitive try to get richer and buy a bigger car, rather than concentrate on the business atmosphere that's there-or that's how he identified it-and figured we were lucky to be 50 miles away from there in our cocoon, just working on the company.
Bob: That's funny. That's funny. And yet, once the company has a lot of liquid assets, there's a tendency to consider other things. I remember that Autodesk invested in Ted Nelson.
Dan: Yes, right.
Bob: And Xanadu.
Bob: Now how the heck did that come about?
Dan: Well it was an interesting product-project. You don't know whether-how many orders of magnitude it is away from being technically feasible, until you've tried seriously to do it. The answer was three.
Bob: Three orders of magnitude?
Dan: At one point, that was the estimate. That was when it was being worked on seriously. A bunch of very bright people got together in their spare time and put together a lot of very bright ideas. They tended to try to keep-Ted had the basic idea and we liked him.
Bob: Which was what ____?
Dan: Well he and I, probably not. He was one of the two people credited with inventing the whole idea of links, hypertexts.
Dan: Which he did because he had an increasing number of storage lockers across the country filled with his papers they had collected, and he wanted some-when he first heard of computers, he thought, "Oh boy, now I can organize all of that in the computer," and he found out-well they wrote a book about all of that. So he was brilliant with the ideas and that appealed to us. And there were this group of people who had started doing serious technical talk about it and they talked about all of the problems.
Okay, Xanadu was hypertext, as it ought to have been. You could link to an arbitrary section of text in any other document. Everything had a back link, which means that if you wanted to-if somebody found an error in this financial document, or let's say, a technical document you put out, you didn't have to find all the people who had that error. You'd change it and if they were pointing to that piece of text, they get the new text. They can also get the old text. And every link is signed. And so when in this giant world database, somebody-there's a crackpot, you just don't see his stuff, because he's adjusted your stuff not to see, or you could assign weights to different signatures and see the stuff that made sense. And maybe, once in a while, at random, pick up some random person that you don't know. I'm talking here probably from my conception of it and it would be described differently by the people in it.
But the point is it was a whole technology of links that were signed, were bi-directional that could point to an arbitrary piece of text, which you could have included in your document just by its being there. Possibilities of the data being duplicated or being replicated and distributed, so you're not going to Timbuktu to pick up a copy, and copy writing with micro-money charges for every action to this. So it had all of that stuff. And they worked it out. All the things I had thought of in daydream bull sessions, they had worked out in detail over the years.
Bob: It sounds a little like the World Wide Web.
Dan: It's what the worldwide web would have been if they had failed to invent it for another ten years, right. Yeah, and so we were working on this thing and the web was just about to come into noticeable size, about to be invented when we took up this. Trouble is, they were heavy techies who wanted to get things right, and did not have the "you must ship something" imperative that the old hacking types did. They designed, and designed and designed and had a great trouble getting any-some crummy thing to ship. That was part of the problem. The other problem was sheer-oh, and then the project ran into-suddenly they realized object-oriented programming was it and had to-invented a really weird system for writing it in, I think, in C++ and-no, writing it in small talk and translating it to C++, this didn't help the speed of the project.
Anyway, it was impossible to get anything to ship. And as I said, a brilliant idea, we tried to make it work and it just was not able to get off the ground, as much for technical things as for the critical things I've said here about design.
Bob: Yeah. Well it seems to me that it was six to ten years ahead of the hardware it was going to run on it.
Dan: Yeah, that was part of the problem. And really, there was a report at one time that they had working stuff and how they would overcome the three orders of magnitude, too slow it was. And well there wasn't time to do that. We were, I think, too slow. We, meaning the old regime of the company were really too slow about just cutting it loose and saying sorry. Really, the new people who took over when the new CEO came in did so, although this caused a lot of resentment. They're cutting loose this brilliant technical thing. It was a reasonable business decision.
Dan: But we were trying to diversify. Again, we didn't see it as a CAD company. It was a software company that made a big success in CAD and we were trying to diversify and get new stuff going.
Bob: But today, years later, it's a CAD company.
Dan: Yes. Well of course, although the section that does-their graphic section, it doesn't really-
Bob: What do they do, AutoSketch, products like that?
Dan: There's a major multimedia section of the company that even was located at one time in multimedia gulfs in San Francisco, because, as I said, to be in the right place, which isn't really CAD. It was a sideline, which was, incidentally, started by one of our founders who was-felt himself, maybe, rattling a bit loose, said we ought to get into this 3D business and pushed for our 3D products and so on. And the new management inherited the product we already had there and really built that product.
Bob: Is it hard to see someone else take over your company?
Dan: Yes and no. Again, we-the company was formally in the hands of professional management from '87 or '88. John got out there a certain question of who would be a successor and a possible co-CEO and things. And I realized that I didn't really want, as the obvious candidate, didn't really want the CEO's job. I was learning enough by that time about what was involved in management. I didn't particularly want it and rather than do that or a co, I would be happy to let Al Greene, who was our financial person, take the CEO job. And so to some extent, other people were taking it over then, but the founders were still there and had disproportionate amounts of influence.
Eventually, we were reconciled to a new, new CEO from outside the company. And how much of it is not wanting to let go and let somebody else run the company, and how much of it is disagreeing with the way the company is run? I can't make a decision on that.
Bob: Who can say? So Carol Barts is running the company now.
Bob: How's she doing?
Dan: Well let's see. Shall I say that I took my retirement about a year after she took over? Does that sound too rude?
Bob: I think that covers it fairly well.
Dan: It was, in any case-and this is not starting with her coming onboard-it was turning into another big company. And I spent some time in my last year or two there looking around for something I could do that was really useful. I did my last serious implementation job on release 12, which shipped just about the time the change of management took place. And I had been looking around and continued to look around for things I could do usefully around the company. And I found, really, that the company and I had not much use for each other. What it was doing was no longer much fun. The way it was doing it was no longer much fun. The things that I thought I might be useful in doing, as a senior programmer who had been through it all-and there were a lot of un-senior programmers in there who had better computer science education and a lot less skill in programming than I-I could have been-the seniors, it seemed to me, needed-the senior people could have been doing something useful on how the company does its technical work. And there was no way I could scout up any real interest by doing that. And so eventually, I made the decision that I would head off to the beach.
Bob: And do you-to the beach, that's great! Do you do much with computers today?
Dan: No. I only have about five of them and only three that I use regularly. I don't-I've done various programming jobs. I picked up Java after I retired, because it looked cute. But I'm doing less and less actual programming these days. And I have had a couple of involvements in technical things that, again, didn't develop into anything. So I'm doing, essentially, no development or serious computer work now.
Bob: What do you wish would happen in the software market now?
Dan: Right. Microsoft goes bankrupt. I don't know.
Bob: You have a problem with Microsoft?
Dan: I have never much liked it. I haven't liked their company since 1982 when I was using their C compiler on the 8080 and found out-and assembler--and found out what degree of reliability and responsiveness they had. Never been very fond of it, in point of fact, I do not personally possess a machine that has Windows installed on it. That's my-
Bob: What's your operating system choice?
Dan: Well last year, for the first time I bought a McIntosh. We talked about our-putting AutoCAD on Windows back then. Well you may remember that back then the company that was doing it right, before Windows 95 came out, was IBM or IBM in cooperation with Microsoft making OS2. I still have a computer down at the office that runs all the stuff I like to run on a daily basis on OS2. It runs very nicely, reliable too, within reason. So because I realized quickly after retiring that one of my advantages was, I don't have to keep up with all the trends. I can keep up with the ones I want to. So I am not up with Microsoft stuff at all.
Bob: There's one thing I wanted to cover before we finish, if we have time. You wrote something about companies that buy back their shares.
Bob: And what's really going on there, because it's a pretty popular technique to say that; we're turning value to shareholders by buying back our stock, taking our cash, buying back the stock that pumps up the price and therefore, you, as the shareholder, now have something that's more valuable.
Bob: Do they?
Dan: Not really. Sometimes, since I wrote that-and it's not quite in my grasp-but some things happen when you buy back the stock with your retained earnings. One is; you reduce the amount of stock and therefore, the earnings per share. You reduce the number of shares of stock, if the remaining shares represent more of the company and they're worth more. And also, you pump up the price of the stock by the act of buying. There's no buyer in the market and that raises the price by supply and demand. I don't know if the theory is well developed on how those two interact. But the point is, in the first case, the company is using its money to increase the value of their stick. It ought to have a better use for its money than buying back extremely high priced stock. That's what they always buy back. It ought to have a better use for its money. It ought to, like in extreme cases; it can get a bigger return on its dollars by buying treasury bonds in a short term and in conservative terms. And it could also, maybe, invest its money into the business. And the other is its very valuable, because the company's price is pumped up, as long as you're buying stock. If, for some reason, you stop buying the stock, the company's stock price goes down. It hasn't given you any value, unless you sell out while the price is being pumped up. So it's an incentive for people to sell the stock, not to own it and hold it. This is not really in the company's interest.
Bob: No. Well then whose interest is it in?
Dan: Largely, insiders who have-people that profit from the stock price in the short term; insiders who want to brag about how the stock is, insiders who have large stock options and want to cash them and sell the stock at a high price, and there are also analysts and so on who have predicted your stock will go up, and they'll be much happier in their company if it does go up, regardless of how artificial the means are.
Bob: Thank you. I now understand. If you were going to start-would you start a software company today?
Dan: I'm not all sure of that. I don't understand the-we started in a remarkably narrow window, when you can start with little money. And today you need serious money to get anything on the market, unless you're in the free software business, and I don't have anything wise to say about the open software business. I might, but I don't know at all what it would be like.
Bob: Is there-forgetting the business side of it, is there a technical opportunity that attracts you? Is there something that needs to be done?
Dan: Not really. I have-there hasn't been a great product idea going through my mind that I have to do. As I think I've said, I've had less-have not done a lot of intensive computer programming over the last few years.
Bob: And is there-is open source a threat to Autodesk?
Dan: Good question. And again, I don't know, really. It's pretty hard to implement something. That's a huge-that's a vast program now, with a lot of pieces to it. And it's pretty hard to replace it with an open source thing, when the big company is devoting its attention to keeping it up. I wouldn't-I don't know what advise I'd give them if I were-
Bob: So do they have anything to worry about?
Dan: I think the only thing they have to worry about is the same thing you do whenever you're a big company, which is getting fat and complacent and dull. It's not as interesting a place, from my point of view, to work at as it was when I first started working at it. And it's dangerous to be fat and dull, because its not specifically open source, it's something comes and gets you, bites you, if you are thinking complacent.
Bob: That's right, because the other thing that John Walker did that had great impact was that memo, The last days of Autodesk.
Dan: Yes, the final days.
Bob: The Final Days of Autodesk, which apparently motivated Bill Gates like gangbusters.
Dan: Yeah, yeah. He got a copy of it. Boy that was an outrageous incident. Yeah, it was a crazy incident. This memo got circulated within the company and instantly, everybody was talking about it. It was supposed to be a little less-John did not hand it on everybody's desk, but it would up everywhere. It became extremely controversial. Yes, and then Bill Gates got hold of a copy of it and was apparently extremely impressed by it and started commenting on it to Microsoft.
Bob: Well he saw it as the same threat-it was the same threat that Microsoft was facing.
Dan: Right, right. And its-we were already going through some-well he wrote it-John wrote it, of course, because the company was going through changes and a lot of uncertainty. And actually, the day I-I was-had long been out of official management, and I had sort of sequestered myself to avoid a lot of the noise, so I could do programming at that time. It had enough noise. And when this came out, I called the guy, the manager of the group I was working in and said, "Get me an office in another building." I came down the stairs and everybody was talking about this in hidden terms. And I frankly-it was very, very disloyal of me, but I was not up for these discussions. I wanted to finish my project. And so I called the guy who was in charge of the project and said, "Get me an office." I was in a room, and since I was working for him and I was a founder, he got me instantly-and he was a smart guy-got me instantly an office down the street, and I sat out a good deal of the brouhaha. That's how strong my devotion to the company was at the time.
Bob: Well if you think about it, you were espousing, maintaining the original ideals of the company. And all of this arguing about, are we too fat, is just another way of saying, "Yes, we are."
Dan: That's true. That's a nice, pleasant way of putting it. And indeed, I was trying to go back to the good old days of programming.
Bob: Well Dan, thanks a lot.
Dan: Thank you. It's been a pleasure.
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