The RealNetworks chief talks about reinventing his company, the evolution of the industry, tech booms in Seattle and what he thinks of Microsoft these days.
Rob Glaser has seen his share of technology booms.
The challenge the 53-year-old executive faces is that his company, RealNetworks, is struggling to navigate the current one.
Glaser spent a decade at Microsoft as the company grew from startup to behemoth. He left to found RealNetworks, a pioneer of music and video-streaming technology, at the dawn of the commercial Internet.
RealNetworks was stung by the dot-com bust and subsequent proliferation of competing streaming-media tools. But it survived.
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The company is running out of wiggle room, however, as its losses mount. RealNetworks’ revenue has declined in every year since 2008, falling by 74 percent in that span. Its cash cushion stood at $134 million at the end of March, from $161 million three months earlier.
RealNetworks has released a series of programs since Glaser returned to the CEO role in 2012, including RealPlayer Cloud, in a bid to stem the losses. They haven’t produced meaningful revenue yet.
The latest effort is RealTimes, introduced Tuesday, which automatically splices users’ videos and photos into 30-second montages.
Glaser has plenty invested in the effort. He owns 36 percent of RealNetworks’ stock.
In a recent interview, he spoke about his hopes for the company, the challenges it faces, and the rare cases when technology companies get a second wind.
An example he cites, Steve Jobs’ turnaround of Apple, hits close to home for Glaser. One of the architects of the iPod, Apple’s smash hit that led to the iPhone, had pitched the idea earlier to RealNetworks.
An edited interview follows:
Q: What’s the idea behind RealTimes?
A: Everyone is walking around with a camera phone in their pocket all the time. You’re creating hundreds, if not thousands, of pictures a year, and tens if not hundreds of videos a year.
When you start taking pictures of your kids? The sense is just like sand going through your fingers. The great news is you’ve got a camera phone that’s recording all these great memories that are happening, but the not-so-great-news is what do you do with that?
Q: How do you go from dominance in media streaming to having to reinvent yourself?
A: It’s true in almost every industry. If you look at my former company across the lake, and their market position in mobile, it rounds to zero. It’s an age-old thing, which is reinvention is hard.
The company that is the gold standard for reinvention is what Apple did. They reinvented themselves by focusing messianically on a very different mission.
So we thought about it, obviously at a much smaller scale, OK, how do we reinvent our company? We thought, let’s start with something that we know we can do.
The way I think about RealPlayer Cloud is kind of our iPod — it’s a way to get into the future. I wouldn’t go so far as to say RealTimes is the iPhone. I mean, we operate at different scale. But RealTimes is at least five times the scope of what RealPlayer Cloud was.
Q: What does that retooling entail?
A: We had to reinvent how this company made software. We had to bring in some trainers. We had to bring in some new people.
The role of design in the PC software era was a 7 or 8 [out of 10] in importance. In mobile, it’s a 10 — unless it’s an 11.
You have to make sure that everything you’re doing fits together. We’ve had to bring in some different skill sets, had to sort of reorient how the team does things.
Q: If this works, what kind of a company does RealNetworks become?
A: We are in the process of going from being a caterpillar to a butterfly, I guess I would say. RealTimes is first and foremost a consumer service, so I would say that one of the decisions we’ve taken is we’re going to focus on our consumer-product offerings.
But it will be about, insofar as you’d think of Facebook, Instagram, Twitter, Dropbox, any of those companies that fundamentally are companies that build end-user consumer products, and they work with lots of different channels to bring products to market.
Q: The numbers for RealNetworks look pretty bleak.
A: What do you think Twitter’s finances would look like in the early years before they went public? What do you think Dropbox’s numbers look like, maybe even now?
These models that are based on free products, huge user base, converting to paid. [They] are inverted pyramids in terms of where the investment happens vs. where the payback happens.
Investors in private markets understand this incredibly well. We are an unusual case in that we are making this transformation [while] making quarterly [earnings] reports.
But I agree that if you just look at the headlines, the headlines would be very negative. But we know what we’re doing.
Q: How does this technology boom compare to the dot-com boom of the 1990s?
A: The first Internet bubble had many, many more ridiculous companies in it than this one. It was clear that there was something really huge happening, but what’s happening now is 10 times bigger.
The PC phenomenon, while it was a really big deal, was primarily a U.S., Europe, Japan phenomenon. This is a global phenomenon — Apple’s biggest market is now China.
Q: How is Seattle different now than in the earlier boom?
A: I worked with a great group of people in Seattle, but there wasn’t nearly as much talent there [before]. Weren’t nearly as many examples of companies that built successful businesses.
It’s two-sided. On the one end, [now] there are more places that talented people can go, and on the other there are more talented people in the pool.
There were a lot of people who were naive, thinking the music was never going to stop. I think people are a bit more savvy or realistic about the fact that economies have ups and downs. What you’ve gotta do is if you make good products and build great businesses; they’ll be durable.
Q: Any impressions of your old company, Microsoft, under new CEO Satya Nadella?
A: I have gotten to know [Nadella] much better in the last year and a half. He is a change agent. His style is much less bombastic, let’s say, than his predecessor. Which is a little bit of a low bar.
It might be possible to underestimate the degree to which he is changing that culture and that company. Change doesn’t happen overnight, but I think he’s absolutely moving in the right direction. I have huge respect for what he’s doing.
I think that Microsoft could well end up having a really interesting renaissance under Satya.
I’ve focused most of my time and energy on doing the same.