Crossgain Vs. Microsoft: "Mooning The Giant"

It's a short trip between love and hate. Just ask Tod Nielsen. A year ago, he was a trusted employee at Microsoft Corp. Chairman William H. Gates III had such faith in the young vice-president that he pulled him aside and asked him to go to Washington, D.C., to be his eyes and ears at the landmark antitrust trial. There, even in the face of mounting evidence of anticompetitive behavior, Nielsen insisted that Microsoft was not the bully the government portrayed. These days, Gates and Nielsen talk only through lawyers, and Nielsen knows firsthand about Microsoft's strong-arm tactics.

It all started last fall when Nielsen, who had left Microsoft, became CEO of Crossgain Corp., a business launched by Microsoft alumnae in February, 2000. The startup's aim: to create a service that runs a company's big software programs over the Web. Despite Crossgain's roots, its top execs chose to develop their service using products from Microsoft rivals Sun Microsystems Inc. and Oracle Corp. That was one in a series of decisions that snubbed the software giant. By Jan. 15, Crossgain's employees were in Microsoft's crosshairs, accused of violating noncompete restrictions contained in their employment agreements with Microsoft. Nielsen and 22 of his compadres felt they had little choice but to fire themselves--wiping out 28% of Crossgain's workforce. They plan to trickle back to Crossgain when their yearlong noncompete restrictions expire.