How to build a startup, sell it to Microsoft and JUST keep your sanity.

High Stakes, No Prisoners : A Winner's Tale of Greed and Glory in the Internet Wars by Charles H. Ferguson

The story of the author’s East coast startup, Vermeer Technologies, which was bought by Microsoft in a deal concluded in January 1996, has been hailed as classic of tech autobiography. It’s a rare insight into the unique blend of intelligence, good timing, cunning and an almost magical ability to squeak through the narrowest of gaps, that characterises successful tech entrepreneurship.

Ferguson’s account has the added attraction of being gob-smackingly rude about some of his colleagues and business partners. More of that later.

What I hadn’t expected is the other strand, the chapters of industry analysis that draw on Ferguson’s previous career as a consultant to big tech companies, an occupation that he disarmingly tells us he was very good at.

You can see why. The talent to skewer a deceitful colleague with a brilliantly apposite phrase is the same one that lets Ferguson sum up complex industry trends and deliver judicious, forward-looking assessments that nobody in their right mind could disagree with. I can well imagine how lazy or not too bright CEOs felt good about paying Ferguson do their strategic thinking.

More than ten years on, much of Ferguson’s analysis looks prescient. He highlights privacy and piracy; he enthuses about the online distribution of all forms of artistic and entertainment content but worries about the business model: “one thing that recording companies, publishers and movie studios do well is make sure that they get paid.” And he recognises a world in which there will be “an increasing premium on people with high levels of education” and a widening gap between rich and poor “both within and between nations”.

He argues for the breakup of Microsoft into an operating system business and an applications business (which was being discussed at the time as part of the Department of Justice’s case against the company). But he praises Bill Gates for his relentless focus and professionalism and for the setting of uniform standards in the emerging computer industry that benefitted consumers. He blames Netscape for a disastrous and unforced throwing away of an initial lead over Microsoft in the ‘browser wars’.

All this is interesting and written with pace and passion. But it’s the other part of the book that gives it its reputation. When Ferguson takes us into the daily traumas of setting up and eventually selling Vermeer, we feel we’re at the table with him, struggling to handle the pressures of his manipulative VCs, of rival companies springing up with what looks like the same idea, and worst of all, the greedy CEO he hired in what he later sees as a moment of tragic misjudgment.

His name was John Mandile. I can’t imagine how the book ever got past the lawyers or, since it did, how Mandile ever recovered from what Ferguson had to say about him. But apparently he did, since according to Bloomberg Businessweek, he’s now managing director of Sigma Partners, one of the VC companies that backed Vermeer.

He accuses Mandile of a litany of elaborate self-interested moves starting with deliberately delaying the signing of his contract as CEO in order to put Vermeer into a more desperate position, thereby improving his bargaining power.

Together with Ferguson’s mortgage problems, his relationship with his girlfriend, and the need to hit trade show deadlines with impressive demos, the life of a tech entrepreneur is evidently mind-bogglingly complicated.

Whilst I loved the book for its raw, slapstick material – the clash of big ambitions, big egos and big money – for that kind of thing I still marginally prefer Michael Wolff’s Burn Rate (published in 1998, a year before Ferguson’s book, but covering the same era). But High Stakes, No Prisoners is right up there with it, and provides a richer insight into the mainstream of tech history, with its graphic presentation of the impossible choice Ferguson faced between falling into the arms (or jaws) of Netscape and those of Microsoft.

I won’t spoil things by telling you it all turns out well. Ferguson cashes his $14 million cheque, buys himself a first class ticket to California, feeling “numb yet free”, and settles down to recover – by writing the book,


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