Home' Technology Review : May 2005 Contents 12
From the Editor Jason Pontin
A invention seems ri-
diculous to most people when they rst encounter
it. This is a rule of technological innovation.
In 1998, I ate lunch with an entrepreneur at a
vegetarian restaurant in San Francisco. The entre-
preneur, an ascetic and a yogi with startling blue eyes, spooned a
lone bowl of bean soup and told me, "Software is a living tree."
He said he had invented a new kind of software called PowWow
that "would allow people to r un in tribes on the Internet." He
boasted that Tribal Voice, his new venture, would be the physical
manifestation of what Indian shamans call "the golden thread."
I was nonplussed.
Yet Tribal Voice could not be immediately dismissed, be-
cause the entrepreneur was John McAfee, the founder of the
antivir us company McAfee Associates, for
some years the most pro table company on
earth. In 1989, when McAfee Associates was
starting up, its business seemed as ridiculous
as Tribal Voice did in 1998. It gave away its
most important program, VirusScan, and sold
licenses and support to corporations. This
idea had made John McAfee supremely rich.
McAfee conceived of his rst company af-
ter posting free antivirus software on elec-
tronic bulletin boards. This "freeware" was
very popular: computer users could download
and use it without worrying about infringing
copyright. Although infor mation technology
managers never planned it, the computers they
managed were soon protected mainly by Vir usScan. McAfee s
great insight was that corporations would buy expensive licenses
and premium services for free software their employees were al-
ready using. This innovation became the business model of the
Internet and today is employed by most software companies.
Tribal Voice was equally inventive. PowWow allowed com-
puter users to instantaneously communicate with other users
with similar interests. From 1994 to 2001, more than eight mil-
lion people congregated in "tribes" using PowWow. Tribal
Voice was arguably the rst social-networking company and
among the rst to distribute a multiprotocol instant-messaging
(IM) program---that is, software that works with multiple IM
standards and providers so that anyone registered with Yahoo s
instant-message ser vice, say, can exchange messages with bud-
dies at AOL. Tribal Voice raised $10 million from Summit Part-
ners in Palo Alto, CA, and TA Associates in Boston, MA; was
purchased by CMGI, a ser vices company, in Waltham, MA; and
was distributed by AT&T and FreeSer ve as their preferred
But John McAfee s entrepreneurial career suggests another,
less happy rule of innovation: the rst attempt to commercialize
an invention almost never succeeds.
There are two reasons for this. First, the innovator is often
early: the really important market for the invention does not yet
exist. Second (the point is related), the innovator doesn t know
how to make money from the invention: the business model that
will support the invention is imperfectly understood. Usually,
therefore, another organization succeeds where the innovator
failed. This is sometimes called the Second-Mover Advantage.
There are many examples of this advantage. Apple invented
the Newton, but Palm successfully commercial-
ized the personal digital assistant. Microsoft
didn t create the personal computer, but because
the company controlled the "platform" for soft-
ware, it bene ted most from the PC.
John McAfee s two companies nicely con-
form to this rule. McAfee Associates pro ted
from the freeware movement where the rst,
countercultural freeware developers did not. But
Tribal Voice collapsed in early 2000 when AOL,
a mortal enemy of CMGI, blocked PowWow
tra c completely, thereby isolating PowWow
users from the largest community of IM users.
Tribal Voice was the innovator in two emerg-
ing markets, now much in the news, whose dy-
namics are still only partially known. The rst is multiprotocol
IM. The second is social networking. Today, thriving companies
like Cer ulean Studios and LinkedIn can be found in both mar-
kets. But John McAfee was there rst, even if he didn t know
how to make money from Tribal Voice.
John McAfee s inventions were maddeningly di cult to
judge. This was not only because of their novelty. He was unable
to describe his businesses except in New Age aphorisms. He
liked to say, "Software wants to be free." But Walter Kortschak,
the venture capitalist at Summit Partners who invested in Tribal
Voice, thought McAfee was a canny old hippie. He once told Red
Herring, the magazine I used to edit, "John has an incredible
appreciation of how to make money. The rest is just bull...."
Today, McAfee practices yoga at his several homes in Hawaii
and Colorado. Do you believe in the Second-Mover Advantage?
Write to me at email@example.com. ■
FROM THE EDITOR
The Rules of Innovation
John McAfee s
another rule of
first attempt to
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