Shawn Fanning's Struggle

An uncle helped the troubled teen find his way--and he went on to create the smash Napster program

At the nondescript offices of Napster Inc. in San Mateo, Calif., I'm waiting to meet 19-year-old Shawn Fanning, its co-founder, for a lunchtime interview. Right now, Napster--a startup named for the company's free software program that lets users turn their PCs into servers to exchange MP3 music files--may be the hottest thing on the Internet. The software, developed by Fanning while he was a freshman at Boston's Northeastern University, has proved so powerful that the Recording Industry Association of America (RIAA) and 18 record companies are suing Napster for copyright infringement. By enabling individuals to tap into each other's personal song files, Napster has the potential to create the world's biggest bootleg record collection.

Fanning finally stumbles into the office wearing a dark, long-sleeved T-shirt, tan khakis, black leather shoes, and a University of Michigan baseball cap that seems glued to his head. He speaks softly and would rather stare at his shoes than look you in the eye. "Sorry I'm late," he says. "I was up until 7 this morning working on the new version of Napster."

THREE-BEDROOM HOUSE. Most coverage of the Napster story has focused on the legal controversy and on the company created to capitalize on Fanning's cult-like program. But behind the now-familiar story of the whiz kid who drops out of college to found the Next Big Dot-Com lies a more complicated tale of personal heartbreak and struggle. If this sounds like the makings of a movie-of-the-week melodrama, that's because Fanning's story nearly is. In fact, John Fanning--Shawn's uncle and Napster's co-founder, chairman, and largest shareholder--says he's trying to make a movie based on Shawn's life.

Back in 1980 in working-class Brockton, Mass., the Fannings were a big clan stuffed into a three-bedroom house--a family with eight children that, in the words of John Fanning, had "climbed back out of homelessness into poverty." At the time, John was 14 and his older sister, Colleen, was 17. One night, their older brother threw a party celebrating his high-school graduation. The family hired a local band called MacBeth to play at the party. It was a smash. Some 3,000 people mobbed the house. John went around with a hat, raising money to pay for the band, and netting a couple of grand by the end of the night--his first entrepreneurial experience. That same night, Colleen hooked up with one of the musicians and wound up pregnant.

With her dad's support, Colleen kept the baby--Shawn. But Shawn's biological father, who happened to be the son of one of the richest families in Massachusetts, bailed out. Colleen eventually ended up marrying an ex-Marine who drove a delivery truck for a local bakery. They had four more kids, and Colleen took care of them while her husband worked. "Money was always a pretty big issue," Shawn says. "There was a lot of tension around that."

But luckily for Shawn, his uncle John, who had become a computer games entrepreneur, decided to look out for him and give him a shot at success. "I've always thought of him as being my little boy," says John. When it became clear that Shawn was a bright little kid with potential and a knack for sports, it only strengthened John's commitment. John rewarded A's in school at $100 a pop--and Shawn racked up a bunch of them.

During Shawn's sophomore year in high school, John gave him his first computer, an Apple Macintosh 512+, and Shawn took to it immediately. "I saw this as a way for him to work his way out of his situation," says John, and it was an alternative to Brockton's mean streets. John soon added an Internet connection and paid for a new phone line so Shawn could surf whenever he wanted. "He absorbed the stuff faster than anyone I've ever known," recalls John. Soon enough, Shawn found out about Internet relay chat (IRC), a Net application, and was gabbing away with kids from all over the world.

Meanwhile, Shawn's family life was taking a turn for the worse. Colleen and her husband had a falling out, and things got so bad that for a year, Shawn and his siblings lived in a foster home. But John was always there to give him a boost. During the summers in high school, Shawn worked as an intern at John's company, NetGames, where he learned a lot about programming from kids who were studying computer science at Carnegie Mellon University. Although Shawn knew he wanted to study computer science at Carnegie Mellon, it wasn't to be: CMU rejected him. Instead, he got into Northeastern, where he was bumped up to junior and senior level courses. Even so, he was bored and hated college.

But he was fascinated by the Internet. Armed with a new $7,000, tricked-out notebook his uncle bought him, Shawn caught the MP3 bug from his roommates. He started downloading MP3 files and collecting them. He also was hanging around John's office instead of going to school, and he introduced John to MP3. John let his nephew invent his own project: developing a music application for the Internet. That software turned out to be Napster, which Shawn conceived as a much more powerful way than common search engines to track down and play MP3 music files. For the first time ever, Shawn was focused, and he was working 16 hours a day.

Shawn shipped the test version of Napster on June 1, 1999. He gave the software to some 30 friends he met through the chat rooms--on condition that they not tell anyone about the proj-ect. Of course, when they got their hands on the program, they couldn't resist spreading it. After a few days, Napster had been downloaded by 10,000 to 15,000 people. "We all knew from the beginning that this would be huge," says John Fanning.

Talking about Napster's future plans clearly jazzes Shawn. Since unleashing the program, the Napster snowball has continued to get bigger. Napster won't say how many times it has been downloaded, but estimates range from the hundreds of thousands to the millions. Network administrators at more than 130 universities have banned Napster. And Napster's growth may accelerate when the company's software is able to link even more servers together later this year.

FLOURISHING. Of course, if the RIAA wins its lawsuit and shuts down Napster, that could put a crimp in Fanning's grand plans. But even then, the Napster genie will be difficult to stuff back in the bottle. That's because plenty of other MP3 file-sharing programs, such as Gnutella and Inc., are flourishing on the Net. Shawn Fanning's legacy seems assured.

Still, Napster is trying to work out a deal with the record industry. The idea is that Napster would be the music industry's ultimate marketing vehicle. John Fanning puts forth the interesting argument that "Napster represents an opportunity for the record industry to monetize the activity because it's centralized." Pre-Napster, it was impossible to track the circulation of MP3 files because people would get them from any number of sources.

None of these ups and downs surprises Shawn Fanning. He has seen a lot in his short 19 years. Two years ago, for example, John tracked down Shawn's biological father and set up a meeting between Shawn and his dad in a small sandwich shop. They drove around and talked for a few hours. "It was pretty strange," says Shawn. Turns out that Shawn's dad runs a software company.

Before it's here, it's on the Bloomberg Terminal.