Steve Perlman, the man behind tech incubator Rearden, is a serial entrepreneur with more than 30 years’ experience in the tech industry. He built his first computer from a kit during high school in 1976. He developed graphics at Atari and worked as a principal scientist at Apple, leading the development of a variety of multimedia technologies, including QuickTime. His string of start-ups includes General Magic, Catapult Entertainment, WebTV (sold to Microsoft for more than $500 million) and Moxi Digital. Since 2000, he’s been investing in new technologies at Rearden. The company, named after the company Rearden Steel in Ayn Rand’s “Atlas Shrugged” novel, is working on a wide range of R&D in a variety of fields and spins out start-ups as the R&D approaches commercializaton. Perlman believes that swinging for the fences, solving deep problems through years of research, and learning from mistakes is the only way to keep Silicon Valley moving forward. I was happy to have a chance to sit down with him at Web 2.0 and find out more about his business.
VB: How exactly does Rearden work?
SP: Rearden is an incubator. We’ve been around since 2000. What we do is take a look far forward into the future. We see a need for a technology or a production technique. We set out how to solve a problem. At that early stage, we won’t know how to solve it and won’t know how big the market will be when it’s solved. So, unfortunately, at that stage, you can’t bring in outside financing. We fund the companies ourselves. Most of the things we’ve tried have worked. A few don’t. But that’s fine. We learn from them. It very often takes years before we can show the technologies work. At that point, we build a large team and bring in outside funding. Then we move to product release. Some businesses stay within the Rearden fold and operate as cash businesses. We also cross-pollinate across all of these different companies. It’s not just ideas but people transferring from one company to another. A lot of the R&D that is gained from one company feeds into another.
VB: Can you give me an example of that cross-pollination?
SP: Ice Blink Studios did the art work for four feature films. That could be low tech. But those films were high-tech. They were “War of the Worlds,” “Monster House,” “Polar Express,” and “Beowulf.” We learned how to develop techniques for very large-budget films. We learned about the film business, like how they are financed, developed, distributed and sold. All that feeds into basic technologies we developed, like Contour Reality Capture, which is used to capture faces with our Mova start-up.
There were a lot of things we tried that worked for faces but were not optimized for the way people work on a production set. We had to learn about how almost all of the cost for traditional motion capture of faces and bodies for animations in films came from cleaning up the data that you captured. We had to make sure that whatever we did was as automated as possible in cleaning up the data. That seems obvious now. We came up with something that made it easier for the actors. We applied phosphorscent make-up to their faces. The cameras could capture every dot on the actors’ faces. It was comfortable enough. Now we don’t have to clean up a lot of inaccurate data. Then we talked to the video game folks, who are right behind the film folks in special effects. We bring high-quality stuff from films that is applied to games. Right behind the game people are web people doing Flash animations on web sites. These Flash animations are moving forward and you used to be able to only do them on a video game machine seven or eight years ago. You see a trailing effect. Rearden Studios does audio and visual editing. Mova does motion capture with Contour.
WOA.TV (Women of Action TV) is a community service site with videos of athletic women like Jackie Joyner-Kersee or Florence Griffith Joyner. But it is also a technology site. It was one of the very first sites with high-definition video being distributed on the Internet. As people used that site, we saw how well it ran on different machines. We looked at the algorithms. WOA TV was a complete test bed for us and a cool site for something that wasn’t covered enough, like women in sports.
VB: How do you bankroll all of this?
SP: I was at Apple early on. I did reasonably well there. I was also at General Magic. Did reasonably well there. Same for Catapult Entertainment. WebTV did reasonably well. I’m lucky in the sense that every start-up I’ve done produced liquidity. Given how many I’ve done and how many start-ups reach liquidity, it’s an unusual record. The ventures we’ve done within Rearden continue to feed back in and bankroll us.
VB: And how do you manage the funding for your startups?
SP: The companies are funded internally in early stages. As the companies evolve, the outside companies fund the [internal] companies, pick up the costs, and then they can move forward. They bring in capital, they operate, they are sold or do an IPO. We haven’t had an IPO yet. The Ice Blink Studios team became part of ImageMovers Digital at the beginning of 2007. ImageMovers Digital built their office around our office. Moxi Digital merged with Digeo. Rearden Studios and Mova are still part of the family. Other companies are unannounced. Read the rest of this entry »
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