The prospect of an AT&T alliance had spurred Heard and Trueman to hire the technically sophisticated Golden in the first place. With the contract in hand, they signed on Walton and began to look at their future in a wholly different light. "It really launched us into ascendancy as a big firm," says Justus.
As Neographic grew, so did its space needs. It moved in the spring of 1995 from shared Manhattan offices to its own quarters on 19th Street between Fifth and Sixth Avenues, in the heart of the city's Silicon Alley. "There was a wonderful spirit," says Trueman. "The firm was doubling every quarter," says Heard. "Things were moving incredibly rapidly, and we were highly profitable." Besides AT&T, other big customers included Reuters and Dow Jones.
As the Internet companies Netscape and Yahoo! took off in 1996, Neographic's crew thought, "Why not us?" Trueman busied himself with project development and customer relationships while Heard was out recruiting customers and hatching proprietary schemes, such as an on-line stock brokerage, that could take the company to the next level. His brainstorm--fairly novel at the time, now commonplace--was to create an arm of the company that would execute trades for a discounted fee. "If you had 10,000 customers, you would break even," says Heard. "If you had 11,000 customers, you were making money hand over fist."
Heard's vision was as imaginative as it was grand. He wanted Neographic to succeed not by dominating a niche but by running numerous projects of radically different stripes, projects managed by what Heard describes as semiautonomous teams compensated according to performance.
The open-ended model, if not the strategy, was clear enough: Neographic could become the next Microsoft.
Friction Between the Partners
Despite Neographic's burgeoning customer list, the kind of success Heard envisioned did not require immediate expansion. It required, he believed, a great team with lots of autonomy. "This is a business where you can operate a world-scale commerce venture with 12 people," he says. "And the less oversight they have by someone who has some part-time authority over them, the better they will operate."
For a while, that model served the company well. Before long, however, there was friction between Heard and Trueman. As Trueman, a lanky aesthete with an interest in 19th-century literature and a passion for playing competitive team sports, became more closely acquainted with Heard, he found himself reevaluating his partner. Heard certainly fit the stereotype of an eccentric genius, sometimes inspirational, sometimes scary. "He is just this roaring lion," says Trueman, who, at six feet four inches, towered over Heard physically but not in presence. "He could be incredibly sweet and compassionate, and then he could be a raging maniac."
For his part, Heard was becoming increasingly frustrated by what he perceived to be the growing cliquishness in the production teams, whose primary relationships were with hands-on executives like Walton, Justus, and Golden, but whose distance from the partners, he felt, undermined his management control. He began to think about bringing in outside financial people who could set and enforce standards. Like many moneymaking upstarts in the early days of the Internet, the company was basically a seat-of-the-pants operation with little structure or cost accountability. Both partners recognized those deficiencies as problems. The company had a more worrisome flaw, however, in having equal partners whose visions for their company were diverging.
Yet Heard and Trueman still saw eye to eye on some key aspects of the business. Besides an urgent need for a controller, the partners agreed, Neographic required growth capital. Also, Trueman secretly hoped that outside investors might rein in his temperamental partner. So he was especially relieved when, in July 1996, Heard himself volunteered a candidate for financial big brother. The choice was a longtime family friend, Ken Gibbs, who had been a high school classmate of Heard's wife. The two families had grown close over the years. Together they owned a summer house on Cape Cod. Gibbs, a smart ("cocky" in Trueman's estimation) investment banker involved largely with municipal finance, had worked on some huge projects, including the new Denver airport. His rÉsumÉ was impeccable: he had held positions at First Boston and Lazard FrÈres before joining First Albany as a senior vice-president and director of municipal finance. A small, well-regarded investment bank headquartered in the New York State capital, First Albany was well known for its work in municipal bonds.
Trueman, Heard, and First Albany agreed that the investment bankers would try to raise money in a private placement while acting as Neographic's financial adviser--a dual role that is not uncommon in the industry. It was agreed, says Heard, that if First Albany brought in $1 million, it would get 5% of the company, plus an equal partnership in the on-line brokerage that Neographic was developing. For starters, First Albany lent Neographic $100,000 to fuel its growth. Lawyers were consulted here and there, but neither Trueman nor Heard sought advice from qualified outsiders before the bankers came on board. And neither partner seemed to realize what a critical--and ultimately, fateful--omission that would be.
Heard Cut Off
Before looking for new financing, First Albany urged the writing of a business plan as a top priority. Heard, as the company's evangelist, seemed the ideal author. In a companywide contest in October 1996, Heard's choice for a new company name--the Buoyant Co.--prevailed: he wanted something, as he put it, "life loving" and "energetic," that suggested the outfit was "not a priesthood of technologists."
Soon, however, it became apparent that the basic building blocks of a business plan--including a shared sense of mission and fundamental agreement on the company's worth--were glaringly absent. Heard had expected that Gibbs would endorse his dream of diversification and proprietary-project development. Instead, Gibbs and First Albany, according to Heard, began to see the company's future in the way that Trueman and many of Buoyant's key executives, including Golden, Justus, and Walton, did. They defined its mission, Heard recalls, as providing steady, predictable Web services to their customers. (Trueman disputes this view.)
