When Kaleida CEO Mike Braun

broke the news that the company

would be closing January 16 to

the assembled troops last week,

he made the comment that there's

never a good time for a move

like this. For Braun, this was

the second such move since he

took up tenure as the President

and CEO of Kaleida. The company,

formed as a joint venture

between Apple and IBM three

years earlier, has suffered a

violent history as it's

struggled to deliver its ScriptX

product under the yoke of

byzantine Apple politics,

management turnover, and the

shifting battleground of the

digital media industry.

The scene at Kaleida last week

must have seemed like "deja-vu

all over again" for Braun, who

had taken similar, though not as

lethal, draconian steps over a

year ago in an effort to

clean up the mess left by his

predecessor, digital

"renaissance man" and "new age"

manager Nat Goldhaber. At the

time, Braun could take comfort

in the fact that his decisive

"right-sizing" moves would be

instrumental to the turnaround

of the company. For all the pain

involved, he was making things

better. Still, the parting

comments made by previous CEO

Goldhaber, replaced by Braun in

the fall of 93, must have given

Braun some food for thought. Was

it sour grapes or was there a

kernel of truth to Goldhaber's

assertions that it was the

conflicting directions and

political maneuvering of the

parent companies that had

brought on Kaleida's malaise?

Whether the game was rigged

against Kaleida, or the result

of Goldhaber's extravagant

management style, Braun, a

20-year veteran of IBM, must

have taken the job with the

confidence that, whatever the

problems, he had seen worse in

his tenure at IBM. A little over

a year later, as Braun presided

over the dismantling of the

company that he had taken such

pains to rebuild, we think that

he might be more inclined to take

a more charitable view of

Goldhaber's comments.

Digital Convergence Meets
Harmonic Convergence

The Kaleida of November 1995 was

not the Camelot that it had been

in 1992. The new joint venture,

a result of the "end of the cold

war" Apple/IBM negotiations

(that have produced, among other

things, the now ubiquitous

PowerPC), was charged with the

mission of spearheading and

focusing both parent companies'

divergent multimedia efforts

into a next generation

object-oriented multimedia

operating system and hardware

reference platform, to be used

for everything from ITV settop

boxes, to handheld devices, to

CD-ROM-equipped personal

computers. On the heels of

Apple's successful introduction

of QuickTime, the formation of

Kaleida was hailed by both the

press and analysts, who

believed, with the parent

companies, that an independent

organization would be better

able to serve the needs of

multimedia developers than Apple

or IBM, and, because of its

relative autonomy, capable of

forging the cross-industry

alliances needed to bring about

what was being called by

starry-eyed industry futurists

as the "digital convergence".

With the goal of playing Wired to

Macromedia's Mondo 2000, the

original management lineup

included ex-Macromedia alumni

and other multimedia pioneers;

the engineering department was

handpicked from Apple's

QuickTime team and other covert

Apple projects. Presiding over

the venture was Nat Goldhaber, a

former venture capitalist and

one of the founders of the

Electronic Frontier Foundation.

Goldhaber was seen as the kind

of "high bandwidth" manager

needed to make the project

happen. Harboring a remarkable

vision of the future of digital

media and experience in getting

ideas off the ground, as well as

extensive contacts in the

burgeoning multimedia industry,

Goldhaber was the type of CEO

that Wired loves to profile. In

fact, Wired's first press

release claimed that it had

formed an editorial "brain

trust" which included Goldhaber

and other industries heavies,

such as Lotus founder Mitch

Kapor. Unfortunately, the

infamous road warrior cover

treatment wasn't going to be in

the cards.

The Envy of the Industry

Under Goldhaber's watch, Kaleida

kept a high profile. Maybe too

high a profile - while

underfunded startups might be

said to run on vapors,

silver-spoon Kaleida was running

on vaporware as the promises of

ScriptX were backed with

unrealistic ship dates destined

to slip. The engineers, while

the best and brightest in the

industry, were caught in the

fatal crossfire of having to

deliver the goods on a vision

that was changing from day to

day. Tough work, especially when

they had been lured to the

venture on the promise of being

able to "do things right." For

an engineer, doing things right

means being given the

opportunity to think out design

and architecture, and that takes

time. Under the microscope of

analysts, competitors, and

fickle Apple and IBM execs, time

was the one thing that Kaleida

had little of.

One thing that Goldhaber was

delivering, in addition to a

hype machine in full gear, was a

string of deals and partnerships

that were the envy of the

industry. Unfortunately, some of

that envy was being harbored by

high-placed execs a few miles

away on Apple's Cupertino

campus.

In order for the big Kaleida

picture to succeed, Goldhaber

had to convince the giants of

the entertainment,

telecommunications, and software

industries that ScriptX was the

common ground on which the next

generation of new media products

would be delivered. Unlike many

of his competitors, Goldhaber

was making progress forming

industry alliances, and had just

signed an ITV deal with Motorola

and with Scientific Atlanta to

deliver ScriptX as the OS for

their new settop boxes.

The story on the street is that

Apple PIE division exec Gaston

Bastiaens went nonlinear when he

got the news of the settop

agreements. The PIE (Personal

Interactive Electronics)

division was also working deals

for settop boxes, and from

Bastiaens's perspective,

Goldhaber had just eaten his

lunch. Goldhaber's ambitions

were in full gear at this point,

with plans for a Kaleida IPO

were circulating at the Mountain

View offices.

Apple has never been comfortable

with the idea of a spin-off

going public, and Goldhaber

might have taken a lesson from

former Claris CEO Bill Campbell,

who got yanked for trying to

make his Claris shares worth

something on Wall Street.

Goldhaber's IPO ambitions,

combined with the perception of

Goldhaber as a "Scully-era"

manager in Spindler's Apple

keiretsu, Kaleida's very real

out-of-control burn rate

(estimated in some publications

at the time to be as high as $20

million a year), and the fact

that progress on ScriptX

development could generously be

called a train wreck, gave Apple

all the excuse it needed to step

in. In July of 93, Apple pulled

Goldhaber out of the driver's

seat and kicked him upstairs to

co-chair the company.

IBM Lends Some Braun

IBM, which had thus far been

footing half the Kaleida bills,

and had taken a hands-off

approach to directing the

company, was not going to sit on

the sidelines after watching the

six-colored bloodbath that had

ensued after Apple started

playing in the ant farm. The

next choice of CEO would have to

be someone who Big Blue felt

comfortable with. That someone

became Mike Braun, an industry

veteran with over 20 years at

IBM, strong ties to IBM's

multimedia divisions, and

experience in fixing other

IBM-backed startups.

An amiable man who spoke of

ScriptX as a practical tool for

the classroom, Braun was also a

level-headed manager who liked

to have things under control.

Braun's moves were to bring

focus to the company: sever the

ITV and network activities,

discontinue work on the

high-level tools, and throw all

the company's resources behind

getting the core ScriptX product

out the door. To Braun's dismay,

his experts informed him that

the development effort had taken

a Xanadu-like turn, and the

publicly announced timelines for

delivery could, at best, be

euphemistically called

optimistic.

There was no choice but to finish

the product at all costs,

rewriting major sections if

necessary. ScriptX 1.0 shipped

in late 94, over a year past the

original launch date. By that

time, many people had written

off Kaleida. The irony is that

the 1.0 release, which comes

with 4 phone book-sized manuals,

delivered beyond expectations in

many areas. ScriptX was far from

perfect, and the huge memory

footprint and less than optimal

performance didn't exactly fit

with the image of "small, fast,

and cool" that the company had

once tried to project, but the

product was well within

tolerances for a 1.0 release.

Meanwhile, major changes were

taking place in the digital

media industry. Macromedia had

reached a critical mass with

Director, which had become not

only the dominant multimedia

authoring tool, but also the

product that most developers had

committed to to such an extent

that they were either incapable

or unwilling to look at other

solutions. For those who still

had an open mind, companies like

mFactory were delivering

products that offered most of

the power of ScriptX with

substantially more ease-of-use.

More ominously, with the growing

popularity of the Web, the

multimedia industry was

undergoing a paradigm shift,

those once-a-decade events which

upset existing market leaders

and create new powerhouse

competitors. With the right

moves, it could have been

Kaleida's finest hour. Instead,

the shake-up toppled Kaleida.

The irony is that at this point,

Braun's pragmatic and cautious

management team could have taken

lessons from the Goldhaber era.

"Signed - Your Small, Fast, and
Cool Friends at Kaleida."

Braun wasn't about to repeat the

mistakes made by Goldhaber. This

Web stuff sounded suspiciously

like the ITV shenanigans that

contributed to Goldhaber's rapid

departure; Macromedia's announce

first, ask questions later

Shockwave PR, which should have

prompted equally vague promises

from Kaleida, was too

reminiscent of the vaporware

reputation fairly or unfairly

applied to the previous

administration for Braun to

issue a response. Kaleida would

take the high road and perfect

the product. The PR and

marketing machine could be

switched into overdrive later,

after the company had all the

bases covered. Underpromise and

overdeliver. The market would

eventually see through products

like Director; as for Java and

mFactory, if people liked those,

just imagine how ecstatic they'd

be once they found ScriptX.

By most reckonings, the closing

of Kaleida's doors couldn't have

been more inopportune. Kaleida

had just announced a ship date for

version 1.5 of ScriptX, which

would fix most of the problems

with the earlier release, as

well as add Internet support

(built upon the cool work of Don

Hopkins). And although Kaleida

may have dropped the ball in

regards to aggressive licensing

of ScriptX to compete with Java,

it had just announced a plug-in

that would allow ScriptX titles

to be played within the Netscape

browser, and the company was in

negotiations with other browser

vendors as well. According to

sources, a number of high-level

authoring tools were in the

queue from third parties, as

well as from Apple, IBM, and

Kaleida itself.

As of right now, the plan is for

the company's technology and a

select group of Kaleida

engineers to be shipped over to

Apple, which has voiced a

commitment to keeping ScriptX

alive. Given Apple's recent

track record, however, this

doesn't exactly inspire

confidence. With the best

intentions, Apple has thrown

every able-minded engineer at

finishing System 8, which needs

to be Apple's first priority.

How long will it be before

pragmatism demands that the

ScriptX engineers be reassigned

to help out on the project which

Apple's future hinges upon? For

the rest of the Kaleidans is the

memory that they were once part

of a project that had such

promise, and the unenviable

position of getting to watch the

rest of the industry appropriate

all of their best ideas,

although they shouldn't mope for

long. No sooner than the

announcement had come over the

ScriptX mailing list, did an

opportunistic headhunter send an

email welcoming resumes from all

displaced Kaleida employees.

For Goldhaber and Braun, we

recall the line of Guildenstern

in coming out the losers in a

game of princes and kings from

Tom Stoppard's Rosencrantz and

Guildenstern Are Dead: "There

must have been a moment, at the

beginning, where we could have

said - no."