When Jim Heard and Gregg Trueman, founding partners of the Buoyant Co., began to battle over key company decisions, their staff decided to oust them both.
A brief conversation at a college reunion united two former classmates as partners. Too bad it was so easy
When Jim Heard and Gregg Trueman ran into each other at a Princeton reunion in the spring of 1993, they were delighted to renew their acquaintance. Trueman owned a successful Web-design business that helped companies convert text-heavy pages into inviting interactive sites, and Heard had run a fledgling educational-software-design firm. Heard passionately argued that they couldn't go wrong by working together. With Heard's M.B.A., Trueman's established company, and their combined creativity and energy, they were sure to go far. They parted with plans to meet again soon, after Heard wrapped up some unfinished business.
A series of meetings followed, along with some joint "testing the waters" sales calls. Heard was nothing short of magnificent as a salesman. "I thought he had a wonderful ability to talk like a CEO to CEOs," Trueman recalls of the polished Heard, who has two master's degrees, in English and American studies, from Yale, and an M.B.A. from Wharton, besides his Princeton undergraduate degree.
Within a year of the reunion, the two men had hooked up as equal partners in Trueman's small company and set out to provide Internet services to large corporations. Business took off quickly, with revenues soaring from $550,000 in 1994 to $5 million two years later. But the classmates' collaboration would not end well. Indeed, the history of their company is a tale of what can happen when bright, talented people plunge into a joint venture without really knowing one another or thinking through vital matters of ownership, control, and dispute resolution. It is equally a cautionary tale for anyone starting a business in the dynamic world of the Internet and related information technologies. In the new economy, as Heard and Trueman learned to their regret, it's never been easier to start a company--and it's never been easier to screw one up.
A Wonderful Spirit
On June 8, 1994, Heard joined Trueman's digital-design company, Neographic, which was based in New York City and employed about a dozen people. Heard was 39, Trueman 38. For $100 Heard got 50% of the shares, with Trueman retaining the rest. Revenues at first came entirely from Neographic's small, established customer base. Heard took the title of CEO, and Trueman became president.
Neither Trueman nor Heard anticipated that joint ownership would cause problems; each thought he knew the other well enough--professionally and personally--to trust him with half of the potential fortune. Trueman's attorney looked over the partnership agreement on behalf of both men, but no serious legal, accounting, or other consulting advice played a role in the initial setup. At the time all that formality seemed unnecessary to them.
It was a heady time: a great wave in the computer movement, powered by the emergence of CD-ROMs in 1994 and the Internet in 1995, was sweeping the business world. The partners, already moving aggressively on Internet projects in 1994, were poised to cash in on the boom. Heard snagged customers who wanted their dull Web sites spruced up, and Trueman worked his magic to make the sites sparkle. One selling point was Trueman's twist on the conventional evolution of Web technology. Instead of waiting for innovations to come along and then adapting them to the needs of end users, Trueman thought he could anticipate consumer needs and design technical solutions that would be ready when customers realized what they wanted. For instance, Trueman early on was developing ways to incorporate electronic commerce into Web sites while naysayers were predicting that Web sites would remain unprofitable for years.
Heard and Trueman knew they made a good team, but they also recognized the importance of adding intellectual weight to the company's ranks. So they quickly built up a team of stars to fill programming, marketing, and other needs. To lure the best talent, they offered top employees an unusual degree of power and autonomy to develop and run projects and also promised them company stock. The partners' first executive hire was Brad Justus, an honors graduate of Amherst College and an advertising-executive-turned-computer-whiz. In eight years at a blue-chip advertising agency, Young & Rubicam, Justus had risen from copywriter to senior writer. Operating on his own for several years as a marketing consultant, he signed up corporate clients like Chase Manhattan and Random House. Then the bright promise of the then-emerging interactive computer technology captivated him, and he veered away from advertising, reinventing himself as a CD-ROM programmer. Justus would be one of a handful of employees given responsibility and creative freedom, an important consideration in getting talented people to work for a small company like Neographic.
Another hire lured to Neographic was Mitch Golden, then 35, an amiable physicist with degrees from Princeton and the University of California at Berkeley. He had watched from the sidelines as a teenager when the personal-computer industry exploded in the late 1970s. He had even joined with two friends in the mid-1980s to produce Eat New York, an interactive floppy-disk guide to New York restaurants. Golden's focus, however, was on an academic career, and he had landed at Harvard as a nontenured professor, a specialist in particle physics. All the while he was honing his Internet skills. (He had E-mail capability as far back as 1976 and created an early Web site, one for the Harvard physics department.) But when a federal project he was working on was scrapped, in 1993, Golden shifted his interest to the high-tech business world. "I remember feeling, 'Do it!' " Golden recalls. He came to New York to become Neographic's director of technology and head programmer.
A third hire, Pall Walton, then 39, had a master's in creative writing and credentials as a seasoned manager and digital designer and animator. He had made something of a name for himself as a freelance production manager of broadcast commercials--one radio spot he did for the Bose radio is still in use. Walton freelanced for Neographic in mid-1995 and then came on staff in August as head of production for a breakthrough deal with AT&T that was just getting under way.
"We were immediately successful," Heard recalls. Golden agrees, relating how Heard, Trueman, and Justus pulled off the AT&T coup: "Today three guys can't just walk into AT&T and say, 'We want to do your Web site.' But in 1995 you could." The telephone company had skipped over much larger agencies and asked the tiny firm to represent it in the new medium of interactive services. The Neographic team was ambitious: it had prepared a slide show--presented to AT&T's senior ranks--that showed how to draw the public to the Internet by giving AT&T's Internet service provider, WorldNet, a user-friendly, jazzy interface. Thus Neographic recast a small, floundering internal AT&T project as an innovative operation of unlimited potential, and today WorldNet is one of the world's largest Internet service providers. Snagging this prize, work worth $1.2 million in revenues the first year, elevated Neographic to a dramatically higher plane.
