JB: Let's go back before the beginning....
CHOU: My father and my mother came from Shanghai during the Second World War. My mother's father was the Chinese ambassador to Czechoslovakia in the 1930s. They were reassigned to London in '41, or '40, when the bombs were falling on London in the Battle of Britain, and then ended up in California in LA just before Pearl Harbor. My mother's father was also the first Chinese to get a degree at Harvard University in philosophy. He had a particular interest in the study of humanism and the philosophy of media.
My father's side of the family was also very interested in philosophy. In fact I just found out that my great-grandfather on my father's side wrote a seminal book in Chinese on Western Philosophy and intellectual history, back in the mid-19th century. There was a real keen interest in philosophy from day one, and that's what I grew up in. That and music, because both my parents ended up being professional musicians.
My mother's parents were diplomats. Father's parents were a whole variety of different stuff, what in China we call "wen-ren," which means "culture people." Probably the closest Western translation is "Renaissance Man." They were extremely erudite scholars who were able to live in a culture where that was enough to float your boat economically.
The word for "Chinese" is "chung-wen" — "chung" is "middle", "wen" means "culture". So to say someone's Chinese is actually to say that he is in the center of culture. And "ren" means "person", so "wen-ren" means cultured person. My father's name is Wen-Chung, which is Chinese, backwards. It's a wonderful tick of the language, which really means that culture was not only important to my family, but is really at the center of what it means to be Chinese.
My father spent about six years running from the Japanese during the war, and ended up getting a scholarship to Yale, in civil engineering, in '49, just before the Communist revolution. He took a boat over, went to Yale for about two months, and realized that that's not what he wanted to do. What he really wanted to do was play violin. So he left Yale, much to the chagrin of the Dean of the Engineering School who told him please never send your son or your daughter to apply for a scholarship to Yale. He took off for Boston where his only relative in the U.S., his brother, was at Harvard at the time working on military technology. He was working on the timing system for the guns in the wings of the American fighter planes that were shooting down Japanese zeros. My father ended up getting a scholarship to New England Conservatory to play violin and viola, and then eventually ended up at Columbia University as a composer. And he's been a composer ever since. My mother came over because her father had gotten stationed in the United States. She came over early, she went to Hollywood High School, and grew up in Beverly Hills 90210. She was a pianist and played at the Hollywood Bowl.
After the Communists took China, there was obviously a tremendous division in the family. Those who were in the States lost all contact with those who were in China. My father's parents were in China and half of his brothers and sisters were in China, the other half were in the States. The Communists tried very hard to convince my father to come back to China, as they were trying to do before the Cultural Revolution. Their aim was to try and bring back all the intellectuals back to China, particularly Western-trained scholars. They literally put together a cell of his friends, led by his high school sweetheart, to write him daily letters to convince him to come back. They wrote him for months and months and months, and finally he wrote a letter back, saying, I'm not coming back. I don't want to have anything to do with you. I renounce everything that you folks stand for. This was a very painful decision because he realized that it meant he might never see his parents again. But he decided that Communism was wrong. And then he lost touch with everyone, for years and years and years after that.
The irony of it is that my father now goes back to China between two and ten times a year. In fact he's there right now. He's 74 and still travels there at least twice a year. He runs a cultural exchange with China, and he's considered a favorite son now in China. But had he gone back when the cell was trying to convince him to go back, undoubtedly he would have been at the very least tortured and probably executed, given his western training.
My relatives who stayed in China had extremely varied experiences. Some were tortured during the Cultural Revolution. Most endured extreme suffering. My aunt, my father's sister, interestingly, became one of the chief negotiators for the Chinese during the Korean War with the United States. My father found out about it reading a newspaper, by seeing a picture of her at the bargaining table. She ended up marrying a fellow who became one of the top military people in China as well. The two of them were both top ranking military officials. During the recent Tienanmen incident, he was on the wrong side of the political divide; he was a liberal in the military, and he was purged, kicked out. They're fine now, but went through a lot during that period. They have seen a lot of history on the Chinese side. I really should be doing with them what you're doing with me, and find out what really happened between '49 and now.
I've gone to China three times, but I haven't been there for ten years and I really want to go back. We're selling our software there now. My father says the country has changed dramatically even in the last two years, let alone in the last ten years since I've been there.
There's no question it's the most vital and thriving, and fastest growing, part of the world right now. Shanghai is one of the greatest cities in the world. It was when I was there, and certainly it was when my father grew up there. Now, with all of the development and growth, it's a very exciting place. I want to go back very badly. JB: Luyen, you're in the wrong business. How about a multi-generational novel about a Shanghai Mandarin dynasty which begins with the scion of the family wearing all black in a Soho office being asked "What questions are you asking yourself?"
CHOU: There are a number of questions that I'm asking myself right now. One of them is whether or not there really is a CD-ROM industry? Another one is, what is the Web going to do to publishing? And probably the most important one right now, from a business standpoint: is anyone ever going to make any money off of this crazy interactive junk?
JB: How did you prepare for this?
CHOU: I probably have a typical background for interactive multimedia — namely I come from having done just about everything except technology. I was a philosophy major; I was interested in history; I was teaching education and philosophy; and in the meantime I was a hobbyist in technology, mostly to earn beer money while I was in college. I was extremely interested in education, and teaching, and I was extremely interested in technology, but for me there were two worlds and "never the twain shall meet". I looked at what people were doing in so-called educational technology, back in the early 80s, and I thought it was such garbage that I didn't want to have anything to do with it. It really compromised what I loved about education, and what I loved about technology. When I got out of Harvard, I started teaching at the Dalton School, my alma mater, and started to get involved in the project there called Archeotype, which was a network-based archeological dig simulation on the computer. It completely transformed my notion of where technology and education were going to intersect, because all of a sudden it became clear to me that what we in the educational domain were calling "constructivism" or "progressive education" was really only possible in a new media digital environment. Where Dewey and others had failed was that they had underrated the gravity of the technology that they were working with — paper and chalk, and textbook. All of a sudden we found ourselves in the midst of this liberating technology that was going to allow us to do what we wanted to do as educators. So I got very involved in educational technology — this was around '89 — and to make a long story short, decided that I didn't just want to do it in the research context, but I really wanted to start my own company. In '93 my partners, Ludmil Pandeff and Frank Moretti, and I got funding from Time Warner to start Learn Technologies Interactive.
Learn Technologies is developing what we consider to be the cutting edge in educational multimedia. This is CD-ROM based as well as Internet-based. Most of our products to date have been CD-ROM based, but the idea is to bring the cutting edge in terms of engineering, and production values typically only associated with games on the market, with the latest concepts in education and pedagogy. Interestingly, this is something that no one else is doing. If you look at educational products out there, they're usually five to ten years old in terms of the technology and the production values, whereas if you look at games they're really at the leading edge—or the so-called bleeding edge. Our question was, why couldn't these things be combined? And if you combine them can't you create something that really is much more powerful than either games or current educational software. That's the vision for the company, and we've grown in size tremendously. We're about 50 people now. We started as two guys in a Wall Street office cubicle about 3 by 3. We have offices in Bulgaria, Dallas, Ohio, and New York, with Time Warner, Inc., and Carvajal S.A., the Milia D'Or at Milia a big Latin American media company, as major investors, and six products out on the market and five or six major multimedia awards. We're building a company that everyone involved in is incredibly excited about because it's different from what everyone else is doing
JB: The Bulgarian connection?
CHOU: The biggest problem right now in the software industry is the cost of development, and if anything is going to kill our business, particularly on the consumer side, it's that it just takes too much money to build quality content. We understand that so a fundamental part of our business plan is how do we reduce costs to the extent that this makes it feasible as a business. The way that we've done that is to go offshore for our programming, which is one of the most important and difficult strategic decisions our company has made. My partner, Ludmil Pandeff, initiated the transition. He is of Bulgarian descent, and speaks the language. His father is involved in high-tech venture capital, and has been very involved in emerging business opportunities in Bulgaria. We took seven guys that we had in Dallas and reduced it to essentially one, and we started ten guys in Bulgaria, now there are 17, by the end of the year, 35.
JB: Good work. Six families in Dallas don't eat.
CHOU: We're part of the problem, right. Ross Perot would have a field day with us. We are the great sucking sound. But the sucking sound's coming from Bulgaria, not Mexico.
JB: What about Malaysia or India?
CHOU: India is almost too expensive as an alternative now. India, as far as programming goes, has become the First World rather than the Third World. The cheapest high-quality engineering is in Eastern Europe. An interesting story behind why all of this happened, and this is classic Marxist economics — when the Soviets were around, they parcelled out industries by satellite. Czechoslovakia was heavy machinery, Poland was whatever, and Bulgaria was software engineering. So Bulgaria is in a unique position, and it is less exploited than Malaysia and Indonesia and even Singapore and India right now in terms of programming. Plus there are fewer language issues, and they are closer. Even the few hours time difference that they're closer make a big difference.
JB: So you create product and then you go to Milia, which seems more like a flea market, compared to, say, the Frankfurt Book Fair. Isn't this a miserable way to market your products?
CHOU: The difference between Milia and Frankfurt is sort of a microcosm of the difference multimedia software business and the book business. Over the last 10 or 15 years, multimedia software, and software in general, has really not become a content business yet, despite what people will tell you. It's not the book business, it's not the record business. There is not the economics for the kind of diversity of content that there is in the book industry. The cost of development is too high, the market is too small. Unlike Frankfurt where every year there are tens of thousands of books and book proposals for people to look at, at Milia you basically have a rehashing of products that everyone already knows. And even when there are new titles they are basically rehashing ideas that everyone already knows, because people are trying to fit their products into these incredibly narrow vertical market niches, because there isn't the diversity of interest out there in order to stimulate real innovation. It's a real problem for the industry. I wouldn't have said this six months or a year ago, but I think that it seriously places in jeopardy the concept of being able to turn electronic media into a content-driven business. It may turn out that it's not possible, and all this goes by the wayside for another five years before the next great advancement comes, whether it's DVD interactive, or it's whatever. The industry is facing a real problem. That said, Milia is probably, ironically, the best show in the world right now, for this stuff. That's an indication of where our industry is right now.
At the recent Milia in February, we won the Award for Best Art and Culture title, which was an interesting experience. We won it for a title we developed with the Smithsonian Institution — the National Museum of American Art. Picture this: Milia is in Cannes and there's literally two thousand, people in auditorium. It's like the Oscars. Then the announcement of nominees and the winner. We were up against Microsoft, and Corbis, and several large European companies.
The announcement that we won the award was greeted by a cacophony of catcalls and boos throughout the hall. This continued as we approached and walked onto the stage. The French couldn't handle the fact that an American developer, and an American publisher, won Best Art and Culture with a title that was about American art. This was my moment, pissing off the French no end by winning their Best Art and Culture Award.
JB: Little did they know they were up against the Shanghai-Sofia-Cali content connection. Speaking of content....
CHOU: The use of the word content, and interactivity, and all these things, indicate the infancy of our industry. I always feel like a caveman. We talk about things with such large clunky terminology, but that's where our industry is right now. It's so simplistic that our business basically divides between engineering and content. Obviously that has absolutely no meaning or purposefulness in the book industry or the movie industry. On the other hand, if you think about the multimedia software industry, it's a little bit like the movie industry, if it were so early in the movie industry that you actually had to build your own cameras and film in order to make your movie. You would make distinctions between content and technology.
One of the big buzz words, along with content, and interactivity, and multimedia right now is engines. Everyone's talking about engines, and everyone means something completely different by the word. But the basic concept behind engines is that the industry is getting to a point where you cannot reinvent the technology every time you want to put out a title, whether it's on Leonard Bernstein, or dinosaurs, or whatever. You've got to figure out a way to standardize the substructure, so what you're concentrating on is the content. But that is fundamentally at odds with another one of the benefits of digital interactive multimedia, which is its unexpectedness. What people pay for is the fact that when you pop the CD-ROM into the machine, or you call up a Web page, you can't necessarily anticipate what its architecture is, what its capabilities are, what its functions are. Depending on how you look at it, that is considered a value. You would not consider it a value if every time you bought a book you'd have to figure out, do I read from left to right, do I read from bottom up or up down, or upside down, but that's part of what people are excited about with this new media. The question is how do you reconcile the desire for unpredictability in interface design, with the need for consistent underlying engines, so that publishers, like myself, can concentrate on content rather than technology. Nobody has solved that problem yet.
JB: Where are we in terms of engines?
CHOU: There are some standardized engines. In a funny way, Hypercard became a standardized engine, not necessarily because it became the basis for a lot of products, but because of the metaphors that it used: the idea of a stack; the idea that you could graphically see your path that you had taken and used in the program, you could step back through it. All of these concepts have become standard concepts within multimedia products in general. But there really hasn't been an engine which has standardized the publishing model for multimedia.
People are now trying to do that. For instance, Bob Stein is trying to do that right now, and he's been in the business of trying to create tool kits that would underlie publishing efforts. But no one has achieved it yet. I think it's really a Holy Grail, and I think there's a tremendous opportunity for someone who's able to figure it out.
If there is something that holds the most promise for being an engine, it's probably the Web, because the Web has become a highly standard publishing vehicle that's used as much by someone at home as it is by a major publisher, and it's fairly finite in terms of what the possibilities are.
JB: What about Java?
CHOU: I'll go out on a limb here and say that I really think Java has been dramatically overrated in terms of its ultimate impact on the industry. Java is so premature and not ready for prime time, that it would be surprising to me if it isn't overtaken by a lot of other proprietary technologies at this point. I don't see it offering enough advantage to people to really be interesting, and it's too slow and inflexible.
JB: How's life in the start-up lane? We've been talking for half an hour and you have yet to utter the magic mantra: "IPO."
CHOU: Wait. I was working up to it. Running a startup is a wild experience. For starters, I'm not a B-School type, my background's in philosophy, so I've had to do a lot of learning. We're living in a time where someone like me, who's 29 years old, who has a lifetime's experience in multimedia, compared to other people, eight years in the business, you can say, because of where this industry is right now, which is really at ground zero, I have as good a chance as anybody else out there. That's the attitude we've taken, and we've really charged in. In fact we feel like we have an even better chance because we're not as much in the grip of the older paradigms, and we're thinking more creatively.
Another thing that is a benefit of not being hamstrung with any of the sort of habits of older business, older industries, and older technologies, is that we thought about our business being virtual and global from day one. That was really our mantra. In other words we don't care where the hell people are, we want to find the best people, and we want to assemble them. If we have to assemble them virtually, fine. So we have a company that probably exists more on the Internet that it exists in physical reality. The Internet is our office space.
JB: How do handle communication between your groups?
CHOU: All the communications between the offices is over the Internet, but it's over our own proprietary Lotus Notes databases. You can access it through the Web, but it's secure, and it's really only accessible in its full form through our own custom clients. We also are doing a lot of live telephony, and even video, over the Internet now. When our lead program designer in New York gets in the office, he always knows whether the Bulgarian engineer is still in his office or not because when the engineer in Bulgaria puts his favorite CD in his PC in Bulgaria, it gets streamed over our Internet connection and out onto the speakers in our offices. He can literally hear what's being played on the CD player in the Bulgarian engineer's machine. We are treating our communications as though we're in one physical space.
JB: This gives us all something to look forward to. Can we talk about business opportunities in China today?
CHOU: One of the products which we developed and own, is a product called Qin (pronounced "ching"), which is an adventure game set in the tomb of the first Emperor of China, which is probably the most famous historical site in China, if not one of the most important in the world. Talk about selling coals to Newcastle, we did a deal with an American company, that has set up a localization shop in Shanghai, and we did a deal for half a million units for two of our games, Qin and The Robot Club, and sold them to China. When I was offered this deal I said to the guy "you're crazy, what are you talking about, they can't have more than 500 computers there, let alone 500,000." And he told me that the big computer manufacturers are projecting between six and ten million multimedia PC's units sold in China over the next year. I've corroborated this independently. The Chinese growth rate in terms of both disposable income, but also specifically in terms of consumer demand for computers, which is right up there now with refrigerators and 32" television sets, it's just tremendous. What the localizing companies do is sell products like ours in bundles with these computers, at relatively low unit costs, but at incredibly large volume rate. So we're doing a lot of business there. In fact our first revenues for those products came from China.
JB: What's happening here? How's business?
CHOU: Try to be delicate and yet meaningful. We took on an investment from Time Warner — they continue to be a strategic partner and are a very important shareholder in our company. What's happening now is that we're in a transition period where we were essentially a developer for Time Warner, and Time Warner was the publisher, and is the publisher. They distribute and market our titles. The truth is now that they are downsizing their operations that are related to publishing and distributing multimedia, and CD-ROMs specifically. What's happening is that in the meantime we are growing from being a developer to being a publisher.
We signed the Time Warner partnership about two years ago. Time Warner has been a fantastic partner, but there was an attitude among the major media companies that the software business, particularly in the content-focused software business, was ripe for the taking. This is the idea that there was a bunch of knucklehead, propeller-head software guys in there who really didn't understand the business of publishing and selling real quality material, and the big players were going to take this business by storm.
The truth is, they've had a hell of a time trying to make it work. And the guys who are still really making money at it are either the software guys, who've been in it from day one, for whom this is a core business; or it's companies like Disney, who see this business as merchandising as much as publishing. It's putting Goofy, or Aladdin, on a CD-ROM, as opposed to a sneaker or a sweatshirt. The big media companies are taking a step back and reassessing the situation. They spent a lot of money; they didn't get the results they wanted to; and the smart ones are doing what Time-Warner is doing with us, which is they are maximizing their investment in outside companies for whom this is a core business , rather than spending a tremendous amount of internal overhead on trying to make this work on their own.
JB: Why do they have this overhead problem?
CHOU: There are a couple of reasons why there's a difference in the overhead between Time Warner and us. The easiest and probably most sort of glib answer is they probably pay double per square foot what we pay for our real estate. Now that's obviously a minor aspect of it. But also, we don't pay ourselves a lot. We're in it because we love this business and because we have a piece of the upside. We're not trying to create salaried positions for ourselves that we'll live with for the next four years and draw pensions off of. I'll be frank: we plan to take this company public or to sell it. We want to make some real money on the upside on this thing. We have a team of people who have that spirit, and also have an almost evangelical spirit about what it is that they're building. That's probably even more important than the economics of the whole thing. So, we don't pay ourselves a lot; we work ridiculous hours, I'd say 60 - 70 hours is common — people pull hundred plus hours relatively regularly — and there's a real commitment to getting it done. And we're extremely careful about how we spend money. When you have money you spend it; when you don't have money you're real careful about how you spend it. As a result I think that we're able to be more effective with our dollars than some of the big guys are. I've watched what some of the big companies have done and it's just absolutely amazing how they spend their money. When I think what we could do with the money that's been wasted by some of these outfits is just mind-boggling. So that's the spirit that we're trying to attain — more with less.
JB: What's your business plan?
CHOU: Whether it's an IPO, or an acquisition, the idea is to create a company with very high growth potential; very fast growth. We have doubled our revenues each year, and we want to increase that rate even more. I can't say what the revenues are now, but I will say that we should be profitable by this year, and that the revenues by the end of this year will be substantial. We've gone through two rounds of financing; we've had a very nice sort of infusion of capital from two partners, and we've been well-valued, and, I believe, fairly valued. The key is, as I say, creating a company that has very high growth potential — and very high margins. The Bulgarian connection is a key, because if we can be seen increasingly as a gateway to really high-quality, low-cost engineering, we have a strategic advantage that is extremely valuable.
JB: Engineer in Bulgaria, sell in China, take meetings and have lunches in New York?
CHOU: Exactly — we're only in New York because we like the restaurants here — otherwise we'd be in Sofia or Beijing! But it's really true: sell globally, and build globally, and set up your shop wherever you want to be. It's a maxim that my partner believed in from day one. I was slower to believe, but I've got the religion now too.
JB: I haven't seen too many software success stories coming out of New York and "Silicon Alley," have you?
CHOU: To be frank, and I don't think I'm stepping on anyone's toes by saying this, there's shitty engineering in New York. New York is not an engineering kind of town. There's great art, there's great culture, a lot of money is transacted, a lot of deals are made here in New York, but this is not an engineering town. The real engineering talent is either in Silicon Valley or it's in Texas, or it's in Bulgaria. And as much as we call ourselves content people, this is still a technology-driven business. Frankly, the mistake that a lot of longtime players in New York have made is trying to see this as a non-technology-oriented business. This is an engineering business. It still is, and it's going to be for a long time.
This is where it comes back to my Chinese origin — the whole concept of yin and yang. It's a balancing act. How you create a culture and a spirit that balances engineering formalism with real artistry. That's the hardest thing to do. That's where I think we have our biggest strategic advantage. It's not just, as I said, the fact that we have access to low-cost engineering, but it's the fact that we know how to use that engineering for something that's really interesting.
JB: Talk about products. Let's have more of that yin and yang.
CHOU: It's an interesting topic right now because our strategy and philosophy is undergoing a transformation, as it has every day for the last three and a half years. We're trying to combine the most successful elements from education on the one hand and games on the other hand. While our products entertain, we try not to use the word "edutainment". First, it's such a bastardization of the English language; second, the whole notion of edutainment can be easily caricatured. What we are not talking about is taking very, very dry multiple choice-based educational stuff and combine it with the graphics from an arcade game.
What we've been struggling with as designers is, what makes education and scholarship really fun? What we keep coming back to is that real scholarship is like mystery work. When you're a scholar, what you're doing is, you're like an archeologist, you're piecing together clues — constituent clues — and you're trying to create a picture that makes sense. You're starting with constituent pieces and you're trying to construct a story. When we teach in schools we usually do just the opposite. We get kids to memorize a story, and then sometimes we'll show them the constituent pieces just to prove that the story is right. This makes education extremely boring. So throughout all the things that we've been building, the approach has been to try and figure out, how do you create an experience where people are interacting with really compelling constituent elements of information, and trying to construct their own understanding out of it. In other words, elements of mystery, puzzle-solving, and game-play are fundamental to educational experiences. And the opposite is true too. Most good entertainment is intellectualy demanding; it stimulates thought, interacts with your brain.
The title that probably epitomizes this is this title Qin, which is an adventure. It's a mystery-adventure, set in a highly accurate 3-D reconstruction of a Chinese tomb, a historical tomb. As a game player you're trying to piece together the clues you need in order to tell the story what happened in this ancient tomb — what went awry, why am I here, and what do I have to do in order to make things go right. We designed it with an entire encyclopedia of Chinese history in the product. In order to solve the puzzles, you need to find things out about Chinese history, so you go in the encyclopedia, to find the clues you need to solve the puzzles. What we're trying to do is create a new symbiosis between reference material and the narrative impetus of an unfolding game.
That's an interesting and compelling experience to me, because that is something that is extremely difficult to do in another media. There's historical fiction, but it doesn't have the same level of engagement and discovery of something like Qin. What's exciting to me is that this medium is presenting us with ways to construct experiences that are compelling, in ways that are completely different from what the old media was able to provide. But at the same time there's this sort of irony in what we're doing because as much as we can create material now that really defies traditional characterization, the market is driving us increasingly towards traditional characterization.
So how do I sell a box titled "Qin," which is not quite a game, not quite a reference product, not quite an educational product, but more of each of those, on its own combined, — how do I sell that? Unfortunately there's no shelf for it. The software retail channel is getting increasingly bifurcated between games on the one hand, and curriculum software and reference on the other. What we were excited about was that we were able to sell domestically, a hundred thousand copies of Qin. In my business that's a hit. That means that there are people there to buy this thing despite the fact that the channel doesn't quite know how to deal with it yet.
Body Voyage is another title right now that is of real personal interest to me, and again is indicative of what the new technology is providing to people, on a very widespread basis at a very low cost, and was never available even to professionals until a few years ago. Body Voyage is based on the work of a friend of mine, Alexander Tsiaris, a prizewinner medical photojournalist who's been on the cover of Life Magazine and Time and so on. He has basically traded his Leica cameras in for Silicon Graphics and Sun work stations, and for Cat Scan and MRI machines. In other words, his photography now is digital photography of the body, rather than traditional optical cameras. What he has been able to do is to do some of the most compelling reconstruction of the human body, in 3-D, that has ever been seen.
A couple of years ago, a guy in Texas was sentenced to death, for killing a man during a robbery. The murderer, Joseph Jernigan, donated his body to science, and when he was executed, through lethal injection, his body was frozen and he was flown immediately to an NIH lab in Boulder, Colorado. Because the guy was in terrific physical shape his body had absolutely no pathology, except a missing testicle that was removed due to a noncancerous tumor. And since he was executed through lethal injection, there was no pathology due to the circumstance of his death.
At the lab his body was scanned and digitized in every conceivable form of technology that is currently available to the medical profession. And they sliced him - in the thinnest cross-sections ever sliced, millimeter cross-sections — and they stuck all of this data on 8 gigabytes of hard drive space — and they put it on the Web. Because that's what you do with everything now, you stick it on the Web. But nobody knew what to do with the data, a tremendous amount of numerical data. You have to have real artistry to turn that into 3-D and to do something about it.
Along comes my friend Alexander who takes all that data and turns it into incredibly compelling 3-D imagery of the human body. What Learn Technologies has done is to take all of that stuff, and create out of his imagery, a navigable version of a real human body. So Body Voyage is the first time that a lay person can literally travel through a real human body, not a Gray's Anatomy drawing, but a real 3-D photograph of a human body. This is a title that sells for $49.95, and for $49.95 a person with a PC or a Mac has the capability to truly explore a frontier that no one has explored before, that is probably closest to us — our own body.
JB: Let's get down to the good stuff. What about money?
CHOU: We began the company by bootstrapping it. We started by doing a lot of working for Steve Brill at Court TV. We got Time Warner to sign on board in the fall of '93, and then last spring, we took on a second round of investment from a Colombian-based media company.
It's an amazing company. In fact, the first time I flew down there to negotiate with them, I was picked up at the airport in a new Toyota Land Cruiser, and we pull out of the airport. I start to knock on the window, and I realize that you can't lower any of the windows, and they sound very thick — well, they're all inch and a half thick armor-plated window.
It's about 11 o'clock at night, and we pull into Cali, heading to the hotel and all of a sudden a white unmarked truck cuts us off. Our driver, who's one of the board members and the head of multimedia for this company, stops the car — he doesn't know what to do — and out of the back of the van pour six commandoes with M-16s. They start banging their rifle butts on the windows, and they signal us to get out. We're standing there — my partner is Italian, and so he understood very vaguely what they were saying, and he turns to me and says, I think they're saying "Up against the wall, mother-fuckers." And so we're there, literally an hour after getting in Colombia, spread-eagled against the wall with M-16s in our backs. That was our introduction to Colombia.
On the other hand, what we discovered was that Colombia is an incredibly vital place. Every road was being torn up and fiber-optic cable is being laid down. Our colleagues have a direct satellite connection with Miami, so when they make a call to us it's a United States call, because it's literally hooking up to their Miami office. These guys want in. They want in on multimedia and high-tech. And they've been fantastic partners; they've been very active in a positive sense; they're distributing our products in Latin America and Spain, and they have funded original titles that we are developing for them as well.
The key from day one was not to take venture money. Our feeling was that was the kiss of death. What we wanted to do was take money from strategic partners, whose own fates were in their minds tied to our fate and whose dollars counted for more than just dollars. In other words, we wanted to work with people who were bringing something more to the table. In both of our partners' cases it was distribution, it was content, et cetera. Because we knew that if we raised the same amount of money from the VC's we would have to raise as much money again to get the distribution and the content. So we've gone the strategic partnership route, and we'll probably go through a third round of financing probably before the end of this year.
That's under negotiation right now. We're still in early stages, we're looking at a couple of different options. We're figuring out what the next steps are. It may not be IPO since the IPO market right now has been tough on our industry. It may very well be some kind of large-scale acquisition. We want to make ourselves as valuable as possible to other people in the business.
