JAVA INTERNET VENTURE FUND
The Wall Street Journal Interactive Edition -- August 21, 1996
Big High-Tech Players Back
Java Internet Venture Fund
By JARED SANDBERG
Staff Reporter of THE WALL STREET JOURNAL
NEW YORK -- Ten of the most powerful high-technology
companies are investing in a venture fund to support
start-ups developing Internet software using the touted Java
programming language.
International Business Machines Corp., Sun Microsystems
Inc., Compaq Computer Corp., U S West Inc.,
Tele-Communications Inc., Netscape Communications
Corp. and Oracle Corp. are among the investors in the
Java Fund, a fund of $100 million that will be administered
by venture-capital powerhouse Kleiner Perkins Caulfield &
Byers. The widespread and ringing endorsement for the
Java Fund, which also includes investments from
network-gear company Cisco Systems Inc., cable giant
Comcast Corp. and Japanese trading giant Itochu Corp.,
marks an unprecedented rate of adoption for a single
technology across a wide range of high-tech industries.
"Nothing like this level of adoption and endorsement has
ever happened in computing," said John Doerr, a partner at
Kleiner Perkins. Beyond financial investment, companies
also are planning on putting their weight behind new
technologies in return for getting early access to any
breakthroughs.
John O'Farrell, president of U S West's Interactive services
group, said the fund "combines a set of world-class
corporations, which can contribute marketing muscle,
distribution and technology with Kleiner Perkins's expertise
in identifying promising Internet companies."
Java has been hailed as a revolutionary technology because
of its ability to create multimedia computer programs that
work on all operating systems, whether Apple Computer
Inc.'s MacOS or Microsoft Corp.'s Windows. Many
industry watchers believe that may help put an end to
Microsoft's dominance of the software industry, which has
long relied on the Windows platform that Microsoft
controls.
But Mr. Doerr said the fund isn't an attempt to thwart
Microsoft's Internet efforts, which include a push to make a
versatile multimedia technology known as ActiveX an
Internet standard. "Java isn't in competition with ActiveX.
That's not what this fund is about. It's about encouraging
entrepreneurs," said Mr. Doerr, who added that Microsoft
has been one of the most staunch supporters of Java
technology. Added Bob Stearns, senior vice president at
Compaq: "If Microsoft wasn't a licensee of Java, I don't
think I would be interested. They become a major driver of
Java themselves." Mr. Stearns noted that the investment
opportunities allow Compaq to get an early look at
emerging technologies that can be incorporated into the
company's products.
Greg Maffei, vice president of corporate development said
Microsoft welcomed the fund "because it furthers Web
applications" but noted that the company has never invested
in venture funds.
While Java, which was introduced by Sun Microsystems
more than a year ago, has taken the Internet industry by
storm, relatively few computer programs have been created
with the programming language. Most users are more
familiar with goofy Java programs such as tic-tac-toe and
on-line Rubik's cubes than mission-critical business
software.
"It would be nice if some of these applications were more
than charm bracelets or just little trinkets," said Richard
Shaffer, founder of high-tech publisher Technologic
Partners. "This is to make sure Java gets plenty of funding
from the highest level and plenty of visibility," he said. Jerry
Michalski, managing editor of high-tech newsletter Release
1.0, said Java "still has a ways to go before making this
thing robust and fool proof." Java "applets," as they are
called, still won't allow users to print off the screen or take
advantage of simple mouse commands. The fund, he said,
"is a nice way of creating credibility, momentum and some
additional weight behind Java."
Sponsors of the fund hope to accelerate the development of
such programs by investing in about 25 start-ups that plan to
use the Java language. "We've got to jump-start the
development of these applications," said Eric Schmidt, chief
technology officer of Sun Microsystems, which is the
second-largest investor in the fund after Kleiner Perkins.
"The Java fund will find the next killer app," he said,
referring to the kinds of computer applications such as Lotus
1-2-3 that helped ignite the fortunes of the PC industry.
Mr. Schmidt said Java programs could soon provide users
with programs that take real-time stock quotes from the
Internet and determine, according to a user's criteria,
whether to buy or sell a stock. Java programs could also
run collaborative applications similar to Lotus Development
Corp.'s Notes products to allow employees world-wide to
share information in new, and still unconceived ways.
Moreover, Java could create software for future cell
phones to send and receive e-mail or help companies pull
information from various incompatible systems, Mr. Schmidt
said.
Kleiner Perkins will be the largest investor in the Java
Fund, followed by Sun Microsystems. All other companies
are said to have invested between $4 million and $7 million.
The plan is to take start-ups public and pay stock out to the
fund's investors over a period of time.
Three companies have already received funding, including
Marimba Inc., which was founded by some of Java's
original developers at Sun. Start-up Active Software Inc. is
developing a Java application that allows companies to
present information from their older incompatible
business-software programs out onto the Internet's World
Wide Web, while Calico Technology is developing software
to enable a sales force to quote and order complex
products and services. |
