what I’ve always done for my vocation.
I called Sony and said, “Hey, we should go and do this cool thing.” Sony was
interested—I networked through some of the contacts I had made at General
Magic, but they were slow getting through the company. We also began to
speak with Philips. Sony finally said they wanted to go forward with WebTV, but
they’d have to be exclusive for a year. They’d brand WebTV with a Sony logo,
and they’d distribute it through their stores, and so on. But we could begin to
have other licensees for the technology after a year. So we told Philips that they
would have to wait a year, even though they were all hot to trot. At the time—
and probably still today—Sony was the stronger brand in the United States.
Steve Perlman 179
Then we went to raise more money. The Davises had committed to $3 million
that was going to be in tranches. We had $1.5 million, but the last $1.5 million was
contingent on us closing a deal for a consumer electronics partner . . .
Livingston: . . . who would manufacture it?
Perlman: If we could get the deal through Sony, they would manufacture
WebTV. Sony’s a big company. It takes a lot to get through the system there, and
we just could not get the deal through the system. As hard as we tried—they
were almost ready to go—we couldn’t get a commitment. So we went back to
the Davises, and they got very nervous. They don’t know about technology, and
they said, “Well, we’re only going to put in a million and a half.”
Well, now we had hired all these people—I think we had over 30 people
then. Though we were quite frugal, it still was a high cash burn. We were just
about out of money. So I mortgaged my house, liquidated all my assets, and
brought in all the cash I could to help it. (Although I did make some good
money from General Magic and Catapult, it wasn’t until after that point. Both
companies did their IPOs after that. There was a holding period for General
Magic, and so on.)
We didn’t tell the employees that we were running low, because we didn’t
want people to be in a panic. We were going to tell them if we were really hitting
a wall, but I could keep the company going a little bit longer.
Then we started going and talking to other investors and VCs, much sooner
than we thought we were going to have to.
Livingston: Because you were expecting the second tranche?
Perlman: Yes. These days I look at it, and I think, “Jeez, even $3 million is a
fairly modest amount for the scope of thing that we were trying to do.”
I remember we spoke to one semiconductor company that we got very far

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