Cover story

When famed computer company founder Rick Inatome took the CEO's chair at an Internet upstart, he faced an immediate, unspoken, and infuriating question: Do you get it, Rick?

They seemed like perfectly appropriate choices. For his first day as CEO at Internet education company ZapMe Corp., Rick Inatome wore his finest blue pinstriped suit and his favorite Hermès tie. Addressing most of the company's 111 staffers for the first time, he felt comfortable and confident, calmly happy to describe for their benefit how he had founded Inacomp Computer Centers back in the 1970s, led the company, based in Troy, Mich., through a successful initial public offering and merger, and eventually built it, as Inacom, into a $7 billion Fortune 500 business. Good stuff, he figured. But as Inatome surveyed the crowd, he realized with a shudder that everyone was eyeing him suspiciously. Worse, when he opened the floor to questions, the room fell silent. "Come on," Inatome implored. "Ask me one question." At last, a lone voice called out, "Why are you wearing a tie?"

It would be, it turns out, only the first of many not-so-subtle messages sent Inatome's way. Having abandoned the trappings of a luxurious executive lifestyle, 46-year-old Inatome suddenly saw himself as a stranger in a very strange land. "In this new Internet economy, it doesn't mean anything -- what you've done, where you've been, what your old network is," he now says. "What matters is whether you 'get it.' " And to his skeptical new charges, the tie screamed that, no, he didn't.

A week later, as Inatome embarked on a road show for ZapMe's October 20, 1999, IPO, he became painfully aware that "getting it" -- understanding on a gut level how the Internet economy works -- would turn his world inside out. Inatome's induction into the new new economy would require changes both superficial and profound. He overhauled his wardrobe, replacing suits with neutral-toned polos and khaki slacks (which could still stand to lose some crease), and he overhauled his head, rethinking his position on some of the most fundamental aspects of business.

On the road with his investment bankers from Merrill Lynch, Inatome recalls, "I would walk around literally shaking my head and saying to myself, 'I just can't believe what I'm seeing here. I can't fathom it. How can we go out and say that for the next 36 months we're going to lose $80 million and still ask anybody to give us any money? How can we raise a hundred million in an IPO?' To me it was just so outrageous. It was like I had stepped into the Twilight Zone."

The specific ways in which all this was shocking to Inatome are almost less interesting than the fact that someone like Inatome could be shocked at all. He was, after all, a lifelong entrepreneur and digital sophisticate, not some old-line corporate manager. He was among the tech industry's original whiz kids, one of the twentysomething geeks jumping on the trampoline in Bill Gates's backyard during Microsoft's early days. He had been raised on the cutting edge of technology. While other boys and their dads had tossed around footballs in the backyard, Inatome's father -- relocated to Michigan upon release from a U.S. Japanese-internment camp -- set his 10-year-old son to work assembling an analog computer. "The proclivity to take hold of new things, new technologies, was sort of ingrained in me from the very beginning," he says. In addition to cofounding Inacomp with his father, Inatome started up Computer City and helped turn around American Speedy Printing Centers Inc. He helped invent the new economy; how could he -- of all people -- be disoriented by it?

It didn't take long for ZapMe to show him how. Described by Inatome as an "Internet media channel," ZapMe offers satellite-speed access to exclusive advertising-accompanied content aimed at 13- to 19-year-old students; hot links to thousands of prescreened Internet education sites; and the tech infrastructure to connect parents, teachers, and students in an online communication loop that, in theory, can involve parents in schoolwork in an unprecedented way. Launched in 1996 by Lance Mortensen, whose Monterey Pasta Co. ranked #43 on the 1994 Inc. 500, ZapMe now has 1,200 schools signed up for its Internet programming. Its service comes with the enticement of free hardware -- servers, computers, and printers -- and incentive-based buying programs through which teachers and students can find bargains on school supplies, clothes, and "cool stuff."

When Mortensen lured Inatome to ZapMe's helm, last fall, the company was days away from its pre-IPO road show and projecting losses of $80 million over the next three years against expected annual revenues of $760,000. (It plans to make money by getting content providers to pay for having their material posted on ZapMe's service, by selling on-screen advertising, and by renting computer labs outside school hours to test-prep companies and others.) For Inatome, arriving at ZapMe was like stepping through the looking glass. He may have been a recognized leader in what he now terms the "old" information technology world, but here he was a novice.