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What if they could take the rush they felt when they played music and package it for popular consumption? They created a computer program that applied basic musical rules to allow anyone to improvise solos by moving a joystick while popular music played. It sounded somewhat funky, and people seemed to have fun with it. "We decided that after we finished our degrees, we had to start a company to try to bring this concept to the world," Rigopulos says. Like so many would-be entrepreneurs with a treasured idea, they were unprepared for a world that didn't really care.

Dude, get up! There's an investor coming!"

It was spring 1996 at the rent-controlled apartment in Cambridge that Egozy shared with two roommates, and Rigopulos had arrived to wake him up. Rigopulos frantically tossed dirty socks and paper into the closet. Egozy folded his futon into a couch and booted up his Mac. A few minutes later, an investor looking to place $25,000 or $50,000 arrived for a demo of The Axe, the name Rigopulos and Egozy had given to their music improvisation software. They can't remember his name; he didn't invest, and more than one Series B financing meeting happened in Egozy's bedroom.

Rigopulos (still living in his parents' attic) was CEO, and Egozy was chief technical officer. They had started Harmonix with $100,000 from friends and family and were now pursuing every other funding contact they could. After losing in MIT's business plan competition, Egozy thought one of the judges' names sounded familiar. He went to the Alpha Delta Phi fraternity house, where he had lived as an undergrad, checked the photos of alumni on the wall, and recognized brother Brad Feld.

"I was completely entranced by Eran and Alex," recalls Feld, now managing director of Foundry Group, a venture capital firm in Boulder, Colorado. "They were incredibly passionate about both music and technology and had tons of ideas." Feld, who had recently sold his own tech company, committed $25,000, made some calls, and delivered a round of $500,000 from angel investors who didn't expect a quick return. And so began the slow beating.

In the Media Lab, it had been enough for Rigopulos and Egozy to create magical demonstrations. That was the end product. It took them years to learn that technical awesomeness was no longer enough. "We had this naive assumption that if we made something that had a lot of 'Wow, how'd they do that?' factor, it would sell," Rigopulos says.

In 1997, Harmonix, which had grown to a staff of about 25, self-published The Axe. A few reviewers marveled at it, and it sold about 300 copies. Rigopulos and Egozy spent months working a deal in which Intel might bundle a demo of The Axe with Intel-based PCs. Once people tried it, they'd be hooked! During a call with Intel that wasn't going well, the automated conference system ran out of time and hung up on everyone. "We tried calling back," Egozy says. "No one picked up. There was no follow-up e-mail. That was the last time we ever spoke to those people."

Rigopulos revised the business plan every year, always building around the core vision of letting nonmusicians make music. "The introduction section didn't change, but what we were going to do changed from year to year," he says. "It was this exercise in fiction writing."

Still, Rigopulos and Egozy were well pedigreed and impressive, and there was a lot of money looking for technologically sophisticated start-ups, and Harmonix raised about $10 million in 10 years. Financing would arrive just in time. "There were at least a couple of rounds where if we didn't get them closed before the next payroll, it would have shut down the company," Rigopulos says. The founders whittled away their equity to stay alive. Soon, Rigopulos and Egozy owned "way less" than half of Harmonix (they won't be more specific). They had few qualms about it; it was do or die. "Cash is oxygen. Cash is life," Rigopulos says.

The investors didn't want control, and that allowed Rigopulos and Egozy to continue getting clobbered by reality. In 1998, Harmonix won a deal to put its Axe technology in a music-making exhibit at Disney's (NYSE:DIS) Epcot. It was a technical marvel, as usual, and the job cost about three times more to do than it paid. The same year, Japanese giant Softbank (OTC:SFTBF) invested $2 million. In 1999, the Taiwanese computer maker Acer also invested $2 million. By then, some investors were asking things such as whether the company might consider changing its name to Harmonix.com and how it planned to get "eyeballs." A plan that finally had an Internet component, a website with play-along music, quickly failed.

The vision and the software had hit a wall. The company was burning through $1 million to $2 million a year. Sales were nil. "To a large degree, my sense of self-worth was tied up in the company," Rigopulos says. "Everything we were doing was built upon a founding premise that the world was full of people who feel this urge to make music. We certainly felt it. Every time we were smacked in the head by one of these failures, I found myself questioning -- Do we actually have something in common with the rest of humanity? This was like our life's work, and we were just facing defeat at every turn."

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