New Web-Software Start-Up
Is a Thorn in Microsoft's Side
By REBECCA BUCKMAN
Staff Reporter of THE WALL STREET JOURNAL
REDMOND, Wash. -- When Tod Nielsen worked at Microsoft Corp., he was one of the company's loudest cheerleaders for Internet software incorporating XML, a hot computer language that is central to Microsoft's new, make-or-break Web strategy.
Mr. Nielsen is still a vocal proponent. Only now, he is doing it as chief executive officer of another company -- a quiet start-up called Crossgain based a mile or two from Microsoft's headquarters.
Crossgain, founded in February by two other top former Microsoft programmers including XML expert Adam Bosworth, hasn't gone unnoticed by the big company down the road. Microsoft has lost so many employees to Crossgain that it worked out a special antipoaching agreement with the closely held firm. Microsoft declines to comment.
As if that isn't enough, Crossgain announced, as reported, that it has received funding from the Barksdale Group, a Silicon Valley venture-capital outfit headed by former Netscape Communications Corp. CEO James Barksdale. Mr. Barksdale testified against Microsoft at its high-profile antitrust trial, where Microsoft was accused of using illegal practices to thwart upstart Netscape.
Crossgain announced that it has received a total of $10 million from the Barksdale firm and another investor, Benchmark Capital. As part of the investment, Benchmark partner Bill Gurley has joined Crossgain's board.
The relationship with Barksdale "is somewhat ironic, given my role in the trial," acknowledges Mr. Nielsen, 35 years old, who spent six months in Washington, D.C., providing technical help to Microsoft's lawyers and dealing with the press. The gregarious Mr. Nielsen was also Bill Gates's eyes and ears during the proceedings, reporting back to the Microsoft chairman on the courtroom goings-on. In addition, he was an expert spinmeister: At one point, Mr. Nielsen handed out seat cushions to reporters to ease the discomfort of sitting on the courtroom's hard benches. Attached to the cushions was a note that read, "Microsoft Innovative? You bet your a -- ."
But now, as Crossgain moves out of "stealth mode" and begins selling itself to the public, Mr. Nielsen seems to have taken a more conciliatory approach, and he and Mr. Barksdale have made peace. During a phone chat this past spring, Mr. Nielsen says Mr. Barksdale assured him that he never had a "vendetta" against Microsoft and was only trying to do what was best for Netscape during the trial.
Mr. Barksdale says he always figured that "whatever [Microsoft] had done to break the law, it had come more from the people at the top and their take-no-prisoners attitude." Microsoft denies it broke the law and is appealing a federal antitrust verdict handed down in June. As for working with Crossgain, where about half the 45 employees come from Microsoft, Mr. Barksdale says: "I felt that if they could be open minded about it, we could be open minded about it."
Mr. Barksdale and the other venture capitalists at his firm are more interested in talking about Crossgain's business, which will deliver Internet-based services to software developers. Though the details are still being worked out, Crossgain's technology, expected to be test-launched later this year, will help developers write applications for the Web without worrying about time-consuming, "plumbing"-type issues, such as Internet security and scaling the programs to run on large computer systems, Mr. Nielsen says.
Crossgain is also banking on the trend of developers writing code using XML, short for extensible markup language. The Internet standard allows different applications to talk to each other over the Web, enabling companies to automatically share information and better automate processes such as supply-chain management. Other start-ups are expected to focus on the technology, and many firms are already building such software layers to run on top of Web platforms.
That's the same trend Microsoft is betting on with its new Microsoft.NET strategy, which aims to adapt the company's existing software products to the Net and create new services that will run across personal computers and wireless devices.
Mr. Nielsen, who left Microsoft as a vice president overseeing the company's relationships with software developers, calls Microsoft's strategy much broader than Crossgain's. He says his business should be complementary with Microsoft's and hopes to find ways the two firms can cooperate.
But the two could end up competing in some areas. Microsoft's BizTalk server software, for instance, uses XML to automate business processes like supply-chain management. And its Visual Studio tools for software developers aim to give programmers shortcuts when they write code.
Still, most of Microsoft's products assume developers are writing for its Windows platform, says Rob Enderle, an analyst at Giga Information Group. Significantly, Crossgain wants its products to run on top of a variety of computing platforms, including Linux and Unix. "If you really want that kind of cross-platform capability, Microsoft doesn't have a solution," Mr. Enderle says, calling the business of helping developers write XML Web applications "a huge potential market."
Crossgain certainly has experienced XML hands. Mr. Bosworth, a company co-founder, worked at Microsoft for 10 years and was one of its first big XML proponents. Former Microsoft Senior Vice President Brad Silverberg calls the brainy Mr. Bosworth "one of the best product people I've ever met ... he's got an exciting vision around solving very hard business problems, with a solution based on XML."
After 12 ex-Microsoft employees, including Mr. Bosworth and co-founder Rod Chavez, formed Crossgain, Microsoft became so concerned that it called out its lawyers. Now, any Microsoft employee who wants to talk to Crossgain about a possible job must send management a note stating that he or she is looking at "outside opportunities," according to Mr. Nielsen. If a Microsoft employee comes to Crossgain seeking a job, Crossgain must tell the employee of this requirement, he says.
Mr. Nielsen, one of the key architects of Microsoft's .NET strategy for developers, says it is "not a company objective or goal to raid Microsoft" and that he "still views Microsoft as my family." But, he adds, "I'm loving my new life."
Write to Rebecca Buckman at rebecca.buckman@wsj.com |
