The early Seattle streaming pioneer is long past its heyday now, but it proved a good training ground for a generation of startup executives.
The first thing Dave Cotter saw when he started his new job at RealNetworks in 1997 was a man with his feet casually perched on a desk, leaning back with his keyboard on his lap. His typing, the fastest Cotter had ever seen, made a loud “whirrrrrrring” noise throughout the room.
“I remember thinking, ‘Man, who’s that cocky dude?’ ” Cotter said.
That dude was Sujal Patel, who went on to found Seattle technology company Isilon and later sold it to data-storage giant EMC for $2.3 billion — one of the region’s largest tech transactions ever.
RealNetworks at a glance
CEO: Rob Glaser
Headquarters: Seattle’s Sodo neighborhood
Claim to fame: RealPlayer, a streaming audio and video technology popular in the late 1990s and early 2000s
Peak revenue: $604.8 million in 2008
2015 revenue: $125.3 million
Source: Seattle Times, S&P Global Market Intelligence
During RealNetworks’ heyday in the late 1990s and early 2000s, the pioneering Seattle company had one of the most innovative and widely used technologies — online software that could stream audio (and later video) to computers across the world using its RealPlayer.
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Since then RealNetworks has scaled back deeply, but employees like Patel, Cotter and dozens of others have become influential entrepreneurs across the Pacific Northwest.
A recent effort by Madrona Venture Partners, a leading venture-capital group, to map out a constellation of tech companies and their connections across the region counted more than 10 emerging directly from RealNetworks’ orbit.
Len Jordan, now a managing partner at Madrona and a tech veteran who once led a major business unit at RealNetworks, says a complete list would be much longer: at least 35 companies in the region that are led by, or heavily influenced by, RealNetworks veterans, or Real People, as they call themselves.
His list included IMDb Chief Operating Officer Rob Grady; Ian Freed, Amazon.com restaurants vice president; Big Fish CEO Paul Thelen; and Patel. And of course there is three-term U.S. Sen. Maria Cantwell, who worked at RealNetworks until 1999 as a marketing executive.
Now Madrona, arguably the region’s most active venture firm, has at least six portfolio companies whose CEOs are RealNetworks veterans, including Peter Godman of Qumulo, a storage-software company that raised $32.5 million in March, and Cotter, who heads shopping messaging service ReplyYes.
As Gary Greenbaum, a former RealNetworks manager, put it, the company “literally had people ranging from rocket scientists to concert musicians to a current senator.”
RealNetworks itself has downsized dramatically and posted growing losses as competition in streaming technology and changes in the tech landscape ate away at its presence in the industry. Now, Real focuses on photo sharing and casual-gaming services.
But there was something about the company during those days 15 to 20 years ago, a current of energy and invincibility running through its ranks, that attracted some of the biggest thinkers of the emerging tech world. Inside, RealNetworks’ quick growth and no-holds-barred attitude fostered the young entrepreneurs.
Jordan, who led the company’s media systems and consumer-appliances divisions for five years, remembers a meeting where RealNetworks founder and CEO Rob Glaser briefly mentioned a technical issue: Was it possible to make Flash animation work over the company’s video streaming product?
Chief Technology Officer Philip Rosedale went home that day and wrote a program. overnight.
That was how RealNetworks tried to do things. If it could be done, someone would do it, and do it fast. The staff drank millions of cans of Diet Coke and stayed at work until midnight many nights, Jordan said. But no one was checking their watches; they were having fun.
“I think a lot of the people that went on to start companies just don’t take no for an answer,” Jordan said. “They just assume that if you move fast enough and you persuade people convincingly enough, that you’ll get them to go do what you want to do.”
The motivation to keep going was intrinsic for Halley Bock, a videographer who ultimately led RealNetworks’ media lab. Bock fell hard for the company’s vision of democratizing media. She liked the idea of broadcasting political speeches instantaneously, of showing concerts to people across the world.
She wasn’t alone. The common element among RealNetworks’ employees at the time was passion, and that was by design.
“The technology was groundbreaking at the time and that was very exciting,” Bock said. “That alone draws the risk-takers.”
Recruiters actually went out of their way to find those people. Colleen Moffitt started as a recruiter at the company in 1997 and was instructed to find people who thrived by being thrown into the deep end of the pool.
Exact expertise can be taught, Moffitt said. What the company needed were good problem solvers who could withstand an intense environment.
That intensity came as the company hurtled toward an initial public offering and scrapped its way to stay a step ahead of Microsoft, its biggest competitor.
Joleen Winther Hughes, who started as an intern in the legal department, was getting ready to leave work one Friday evening when her boss walked in and said, “Oh, we’re all getting on a plane to New York because we’re creating a legal music service.”
And so MusicNet, a digital music service, came to be in five days.
One key to developing this hyperkinetic work culture was how RealNetworks operated like a collection of startups, Qumulo’s Godman said. They were all creating products at warp speed, and competing for resources with each other.
At the helm, Glaser was known to be hard-driving. He could flip through a slide deck for a presentation and find the only nugget of bad news buried on Page 28, said Cotter, who was a product manager at RealNetworks. He had an attitude of “Why aren’t we doing this? Let’s just do it.”
Glaser could be tough, company veterans say. He also was brilliant. (Glaser referred questions on this story to his public-relations team, which did not respond to questions.)
Former employees remember briefing him on the heavily technical details of products, such as codecs, or programs that manage digital streams of data.
“I remember telling him the underlying arcane technical details of codecs, and him then reciting that to another audience,” said Greenbaum, a startup founder and former RealNetworks engineer. “I was just impressed that he was able to absorb this whole new field of information.”
Glaser pushed the ballooning ranks to take risks, even if it meant failing.
By 2001, RealNetworks had gone public and grown to more than 1,500 employees. The company was flying high.
But the fast-inflating balloon started to lose air. The growth was overheated.
As more and more employees flooded in, it got harder to push middle management to take risks, Bock said. The visceral energy within the company started to change.
“When you’re an entrepreneur, that’s a hard environment to stay in,” Bock said.
People started to leave the company as the energy changed. Many, seeking that electric rush that was so apparent in Real’s early days, turned to entrepreneurship.
Cotter may be emblematic of the company’s work, culture and impact. He joined RealNetworks as employee number 196 in 1997 after hearing about person after person he respected joining the company. He “wanted to play for the Yankees,” Cotter said. He made the cut.
The job was challenging. Cotter remembers one sentence from Glaser that stuck with him for a decade — Glaser looking at disappointing numbers in a meeting, asking bluntly, “I don’t get it. How do you slip two months in two weeks?”
There were also softer sides of Glaser and the executive team — Mariners games (a team in which Glaser maintains a minority ownership stake) and support for philanthropic causes.
Cotter worked tirelessly, a task that was easier because he was in his 20s and had yet to have kids, he admits.
“I was probably young enough to believe it, but there really was a sense that we were fundamentally changing the world, and, actually, for a period of time we were,” he said.
Cotter said RealNetworks is still the most electric place he has worked, He got the chance to be a product manager, a program manager, a manager across many teams.
But, as the company grew, it didn’t have a strong-enough focus, a specific-enough mission to grasp onto, Cotter said. Some of the electricity started to fizzle.
He left the company in 2002 and went on to work at Oracle, Zulily and Amazon as well as starting three companies. He is now CEO of shopping messaging service ReplyYes and family social network SquareHub.
Without that vibrant time at Real, his career likely would have looked different.
“At RealNetworks,” he said, “ I was able to wear a lot of hats … it just kind of made me believe that I could do it.”
There’s little doubt that the Seattle area’s entrepreneurial vitality will always draw most of its strength from Microsoft and Amazon.
Chris Devore, an angel investor and head of Techstars Seattle, points to the two tech giants, as well as the University of Washington, as the impetus of most startups in the region. Rob Glaser himself started RealNetworks after 10 years at Microsoft.
“We’re always scratching around to find some other bright spots,” Devore said. “I think it’s a desire to create a more interesting, diverse story. I don’t know that it holds up to scrutiny very well.”
Still, it’s undeniable that companies like RealNetworks and entrepreneurs such as Sujal Patel and Paul Thelen have had a major impact in shaping the landscape.
In fact, it may be a good thing that RealNetworks didn’t become the next tech giant in Seattle.
Scores of people departed, but not before catching a bug for the adrenaline and work that comes with startups, Godman said.
“It fed this landscape of startups,” he said. “If every company were an Amazon, we would have a less-vibrant tech ecosystem than what we have now.”