Seattle, A Multimedia Kind Of Town

The names are tongue-in-cheek--Mammoth, Humongous, and Hyperbole--but their outsized ambitions are for real. These startups and at least a dozen others clustered in and around Seattle are determined to strike it big in multimedia, a new category of software combining video, sound, and graphics. In the process, they're putting Seattle on the map, right next to cre-

ative centers such as Hollywood and San Francisco's so-called Multimedia Gulch.

Why Seattle? First and foremost, there's Microsoft Corp. The $4.5 billion software giant, located on a 265-acre campus in Redmond, across Lake Washington from Seattle, has brought an abundance of programming whiz kids to the area, along with scores of software startups. But these young companies also draw on Seattle's right-brain side: its renowned music scene, acclaimed theater, and a surprising array of creative talent including filmmakers, animators, writers, producers, and artists. The result is a thriving new media community--call it Multimedia Grove.

All told, the 500 or so employees of Seattle's 16 most promising multimedia outfits could fit into one wing of Building 25, the latest addition to Microsoft's sprawling campus. But because the latest startups are focusing on what market researchers say will be close to a $1 billion market in 1995, they're attracting the attention, and dollars, of venture capitalists and industry watchers from all over. "Seattle is really coming into its own. Only recently have there been really interesting, backable companies outside Microsoft and [desktop-publishing software maker] Aldus," says Douglas J. Mackenzie of Kleiner Perkins Caufield & Byers, a top Silicon Valley venture capital firm.

The money is rolling north. In January, Redmond-based Edmark Corp., a maker of educational software for kids, raised $5.5 million from Kleiner Perkins and two other venture funds. Brisk sales of "edutainment" titles such as a series featuring Putt Putt, an animated car, drew an unsolicited investment offer for Humongous Entertainment from Palo Alto-based Hummer Winblad Venture Partners. The Woodinville (Wash.) startup was founded in 1992 by Shelley Day and Ron Gilbert, former game producers at LucasArts. They met with more than 10 investor groups before accepting $1.2 million from Hummer Winblad in April. Says Ann Winblad: "We pursued them to convince them that venture capital might help them."

Seattle's upstarts are also drawing the interest of newspaper and magazine publishers rushing to grab a piece of the multimedia pie. In May, The Washington Post bought 80% of CD-ROM producer Mammoth Micro Productions, which operates out of Seattle. And on June 8, Meredith Corp., publisher of Better Homes & Gardens, bought a minority stake in Seattle's Multicom Publishing, a three-year-old maker of home-oriented CD-ROM programs.

"CHOMPING AT THE BIT." Microsoft money also plays a big role. Microsoft co-founders Paul G. Allen and William H. Gates III are dipping into their respective personal fortunes to finance multi-media projects at companies such as Starwave Corp. and Continuum Productions Corp. And Microsoft employees regularly turn entrepreneur overnight by cashing in stock options. Patrick Ford, for example, resigned from Microsoft's Multimedia Systems group where he was a manager for interactive TV tools in February, one week after he became fully vested, to start Splash Studios Inc. "I was just chomping at the bit to start my own company," he says. With his $1 million nest egg, Ford, 35, plans to produce four multimedia CD-ROM titles for kids this year, hopes to move into interactive TV. He dreams of $100 million in sales in 10 years.

Steve Podradchik, 27, couldn't wait for his options. He quit his job as a product manager at Microsoft last August, four months short of vesting, to start Medio Multimedia Inc. By November, Medio had published three CD-ROM titles, including an attention-grabbing disk on the JFK assassination that uses video clips, animation, and book excerpts. Its 22 employees, crammed into three rooms in Redmond, have produced six titles and generated more than $1 million in sales.

Other Microsoft alums haven't had such overnight success. Raymond Bily left Microsoft in 1986, the year it went public, and cashed in his shares to found Midisoft, whose software lets you create electronic music. Bily, 33, struggled until 1992, when the market for computer sound cards exploded and makers of the cards began "bundling" Midisoft software with their products. Sales jumped to $1 million in 1992 and $2.5 million in 1993, when the company went public.

DATA GLOVES. Money's not the only advantage proximity to Microsoft brings. While the San Francisco area's aultimedia industry grew up around Apple Computer Inc. and its Macintosh, Se-

attle's developers are attuned to Windows and are now riding the success of that software, which is a far bigger market than Macintosh represents. And Seattle-area developers run to Redmond when they need help. Says Humongous' Day: "It's very advantageous in Windows development to have Microsoft here."

But it's also clear Microsoft will be an awesome rival for Seattle's multimedia hopefuls. Its rapidly growing Consumer Div. is spending hundreds of millions to develop multimedia programs, including edutainment disks. Says Ford of Splash Studios: "You can't be in the software business and not compete directly with Microsoft."

Whether Microsoft is friend or foe, Seattle is likely to continue to draw multimedia talent. It offers a reasonable cost of living--including no state income tax--plus an outdoorsy lifestyle and a thriving arts community. It was Seattle's lively music scene, for example, that attracted Mark Lacas, co-founder of Lone Wolf, a maker of software for professional audio equipment. Lacas moved Lone Wolf in February from Redondo Beach, Calif., to a new office next door to The Vogue, the nightclub where the rock band Nirvana got its start.

But it was more than grunge that attracted Lacas. He was also taken by Seattle's innovative arts scene. One example he cites: a little known club called the Northwest CyberArtists, where members combine experimental music, art, dance, and technology in such avant garde shows as a water fountain controlled by music, or data gloves that can point to a spot and make sound come from it. "These things wouldn't happen in L.A. or the Bay Area because there's no economic incentive to them," says Lacas. "The Northwest has a better ethic for the creation of new media." In addition to artistic fervor, Lacas enjoys the funding he received from billionaire Paul Allen.

For Greg Roach, Seattle's strong acting community was a major draw. He moved his company, Hyperbole Studios, from Houston to Bellevue last year. An actor himself, he used 30 live actors for his interactive CD-ROM adventure movie, Quantum Gate. "Interactive media is a potential new art form," says Roach, 32. He prefers the counterculture image but is learning to live in the world of business. Because of financial difficulties at his distributor, Media Vision, Roach is in search of a new partner, preferably one with $10 million to invest.

Meanwhile, Seattle is becoming a destination for Hollywood entertainment professionals. Paul Allen's Starwave is producing CD-ROMs in collaboration with big names such as British rock star Peter Gabriel and actor-director Clint Eastwood. Even Allen's Asymetrix, which started out by making software-development tools, has gotten into the act. The company's new entertainment division has worked with MCA Inc. and Steven Spielberg's Amblin Entertainment to produce a Jurassic Park screen saver. Next for Asymetrix: software featuring cartoon favorites Rocky and Bullwinkle and the Pink Panther.

Other Hollywood transplants include producer Scott Rosenfelt (Home Alone) and actor Tom Skerritt (Picket Fences). Their new company, Seattle-based ShadowCatcher Entertainment, has plans to develop projects to meld film and TV with computing. "Seattle is becoming a hotbed of people who came from film, TV, games, computers, and music," says Lucie Fjeldstad, ShadowCatcher's new chairman, at one time IBM's multimedia chief.

Even if today's startups don't turn into humongous or mammoth successes, Seattle could still become the multimedia mecca of the '90s. Why? "It has a very interesting approach to blending culture and technology, and that's what multimedia is all about," points out Mammoth co-founder Tom Lopez. Hollywood, look out.

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