Multimedia Wizard -- Paul Allen Links Investments With Digital Foresight

It's the year 2000. You're living in the new Seattle Commons development on the south shore of Lake Union. You've just settled down in your living room to watch the NBA playoff game between the Sonics and the Trail Blazers.

You tell the screen, "NBA playoffs," and a wireless link connects a large flat-panel screen on your wall to America Online, an electronic information service. On comes the game.

You've missed the first five minutes. No problem. You say "Open replay window" to your screen and fast-forward digitally through the action so far.

The first image is the national anthem, a multimedia reproduction of Jimi Hendrix's Woodstock rendition. A button in the top corner of the screen says, "Click here for more from Seattle's new Hendrix Museum."

You ignore it for now and fast-forward ahead to a crashing dunk by Shawn Kemp and, using the remote as a pointer, click on a Kemp Watch button on the screen. You get Kemp's vital statistics, minutes per game, season scoring average, plus elevation off the floor for the dunk.

You get news stories about Kemp from all over the planet: What the Atlanta Constitution columnist is writing about Kemp, what they're saying in the Italian league, the latest from the Shawn Kemp Fan Club in Elkhart, Ind.

There's even a button to order Shawn Kemp souvenirs - T-shirts, mugs, coasters, autographed balls.

Back to the action. The camera is on a Portland player, but

you want to see Kemp's defense on the center. You open a highlight window and click on a button labeled "camera angle." The camera follows your eyes, focusing on the part of the action you want to focus on.

Welcome to the first fruits of Digital Convergence. AKA the Data Highway. Or Interactive TV.

Courtesy of Seattle native Paul Allen.

Allen, the 40-year-old co-founder of Microsoft, is the shyest multibillionaire you'll never meet. Unlike brash captains of future tech, the John Malones and Barry Dillers who spend their time hyping new markets and hatching mega-deals, Allen operates quietly on his own, behind the scenes.

But he lives like you and I would if we had his money. He flies family and friends to Hawaii on his private jet to see a solar eclipse. He takes his sister and mom to Ashland for the Shakespeare festival. He scuba dives, he plays rock guitar, shoots hoops in his backyard gym on Mercer Island, relaxes on his yacht.

And plays with his computers.

Next to Bell Atlantic-TCI, or Paramount-QVC, or US West-Time Warner or McCaw-AT&T, Allen's $3 billion to $4 billion net worth looks like loose change. If you believe the Merger of the Week line, you figure the future of the Information Age belongs to the big boys.

But does it?

Take our opening scenario, crystal-gazing at its finest. It may never happen in exactly the manner described. But if it does, nearly every piece of the interactive network could have the name of Paul Allen stamped on it.

Over the past couple of years Allen has compiled an intriguing lineup of investments with an eye toward molding the Digital Society. He has backed unique start-ups, financed his own companies and hired an impressive group of thinkers, scientists, technologists and marketeers.

You might think of Allen as the Merlin of Multimedia. The era of the couch potato is about to end, he says: "Society is going to be much more involved than it has been when people were just passive viewers of video."

Assume high bandwidth, he's told his people. Assume that the telephone and/or cable companies will deliver the capacity to handle huge amounts of data - 500 channels, or one channel with 500 on-demand program options, from first-run movies to you-are-there travel guides - via telephone, cable, fiber-optics, satellites.

Figure out how your expertise in computer hardware and software can provide new media to the customer. Figure out how a Shakespeare aficionado can get all the plays from Ashland, or how a politics junkie can follow the campaign trail minute by minute, or how a basketball fan can get all the details about all the games - not just the home team - day in, day out.

Give devotees whatever they want - interactively, digitally.

"Our whole idea is to get to people who want more information on their interest, whether it's movies, golf or the opera, than they currently have, in a richer form," says Mike Slade,

chief executive officer of StarWave, a fast-growing Allen-financed start-up in Bellevue. StarWave, expected to more than double to 125 employees in coming months, is putting together multimedia titles for compact discs (CD-ROM) and on-line (telephone) delivery - on sports, news, entertainment and family/children interests.

Relationships - hundreds of them - will build the new media, Slade says. High-bandwidth TV may be able to deliver huge volumes of programming. But it won't mean much without new programming. You can only recycle "I Love Lucy" and the Beav so long.

Allen doesn't have the earth movers to build the Data Highway. But that could work to his advantage. Without the huge overhead and bureaucracy of conglomerates, he can react to markets more quickly, find overlooked niches. He doesn't have to build the highway to drive on it.

A technologist at heart, he also may understand the emerging markets better.

"Paul can be pretty nimble," says Denise Caruso, editor of Digital Media newsletter. "And I think the nimble-footed will win the race on this one."

Being independent "really helps," Slade says. "We're not tied to any big company, and yet we have the resources to do things right."

Eighteen months ago, the Allen dream began morphing into reality with the formation of Interval Research Corp. in Palo Alto, Calif., with fellow industry pioneer David Liddle. At Xerox's Palo Alto Research Center in the 1970s, Liddle helped develop the Star, the first commercial computer to use a graphical interface later popularized by the Apple Macintosh and Microsoft Windows.

Other big names followed Liddle through the door: Lee Felsenstein, former Berkeley Barb counterculturist and early Homebrew Computer Clubber; Brenda Laurel, stage artist, CyberVision software designer and author of "Computers as Theatre"; and Paul Freiberger, veteran Bay Area technology journalist who co-authored "Fire in the Valley," the first in-depth look at Silicon Valley, and more recently "Fuzzy Logic," examining how machines could become intelligent.

Allen is counting on them to understand the links between media and technology, between content and delivery. It was Allen whose unique understanding of the relationship between hardware and software allowed himself, Microsoft Chairman Bill Gates and Harvard math student Monte Davidoff to write BASIC for the MITS Altair, the first mass-marketed personal computer, using Allen's software simulator on a DEC PDP-10.

Like Allen, Liddle and Felsenstein could divine the coming Digital Age's links between hardware and software. Laurel knows the artistic and cultural links. Freiberger understands how high bandwidth will affect dissemination of news, newspapering and new kinds of data.

Interval supplies the incubation. Allen's investments are the hatchlings. Here's a highly theoretical look at how it could work:

You're living in Seattle Commons. Allen loaned $20 million to the planned community between Seattle Center and the Freeway. Partly it was a philanthropical gesture for his home town. But like Craig McCaw, the cellular phone king who gave $1 million to the project, Allen has to be intrigued by the technological possibilities of a wide open, ground-floor-up residential-commercial-business villa.

You're watching the Sonics and Trail Blazers. A big basketball fan, Allen owns the Trail Blazers. He talks to other NBA owners. He can convince them of the value of putting league games on the Data Highway. Or he can do it himself as a pilot: As Ted Turner has shown, send out a signal and the fans will come to you from all over - not just Atlanta, not just Portland.

You tell the screen, NBA playoffs. Allen, 10 days ago, invested $15 million in Lancaster, Pa.-based Cardinal Technologies, known for computer modems. Cardinal also has a hot new sound board for personal computers featuring its own DSP, or digital signal processor - a chip that, as computers gain more sound capabilities, will become as important as the microprocessor itself.

DSPs are used for, among other things, speech recognition. Cardinal's is unique because it's software upgradable - you can enhance its capabilities without replacing the board.

A wireless connection to your flat-panel screen. Well, maybe not wireless - for video, at least. But Allen has poured $17.5 million into Los Gatos, Calif.-based Metricom, which specializes in wireless networks over small areas . . . e.g., the Commons. Another possibility: Before it went into bankruptcy, SkyPix, based in Kent, was working on impressive video compression technology that would enable beaming on-demand signals to smallish 18-inch dishes in condos, apartments and homes.

Linked to America Online. Allen lost $10 million or so on SkyPix, but has turned America Online shares to gold. Since his investment, the stock has more than doubled, to about $61 a share.

Basketball games may not wind up on America Online, which is an information service similar to CompuServe or Prodigy. But the young company is doing some pioneering things over phone lines, including posting the entire San Jose Mercury News daily. Readers can actually get more text on-line than in the newspaper itself.

A service like America Online is expected to wind up carrying basketball games, along with supplemental data on players, league results and memorabilia. It will be home shopping, trivia contests, ESPN and the daily newspaper, all dedicated to sating the basketball fan's appetite - or lacrosse or soccer fan's, for that matter.

You click on a Kemp Watch button. Your interactive network will know, in other words, that you're a big Shawn Kemp fan. It will use little news-gathering genies to search out, collect and suck into a database all there is to know about the Sonic star, hour by hour, day after day.

Allen has invested an undisclosed amount in SureFind, a Seattle-based telephone-classifieds provider. You call in with preferences about a car model or home location, and SureFind's electronic genies find what's out there and go looking for more.

You order Kemp souvenirs. How do you track electronic ordering, billing and services? Harbinger-EDI in Atlanta, an Allen investment to the tune of 20 percent of the company, specializes in Electronic Data Interchange for banks, oil companies, computer companies, electric utilities and other service providers handling immense amounts of data.

On an interactive TV network, you won't just shop from home. You'll order first-run movies, you'll visit the Caribbean digitally to check out the weather for next week's vacation, you'll take guitar lessons electronically. There will have to be methods to bill you for all this.

You experience a multimedia version of Hendrix's Woodstock performance. Allen has been a Hendrix fan since his Lakeside days, when he discovered Hendrix's "Are You Experienced?" album. Now he's putting big bucks - an estimated $10 million or more - behind a proposed Seattle Center Hendrix museum, to feature not only the Seattle rock star but other Northwest acts such as the "Louie Louie" Kingsmen, Paul Revere & the Raiders and, more recently, Pearl Jam and Nirvana.

The museum will have computer stations featuring rock performances and other multimedia - a specialty of Allen's Asymetrix software company, formed in 1985 after he left Microsoft. Asymetrix, in Bellevue, is leading the way in multimedia programming with ToolBook and multimedia presentation software with Compel.

Have you thought about how commercials in an interactive setting will have to be lots more creative to hold viewers' interest? Asymetrix has.

"Paul's long-term vision for Compel is to be the best way for people to create commercials on TV," said Bert Kolde, head of Asymetrix. Commercials, even business presentations, will have to "look as good as if every one was 60 seconds on the Super Bowl."

As for the Hendrix museum, there'd be little reason to keep it inside a building when you can pipe it digitally all over the world.

You want the camera to focus on Shawn Kemp, not a Trail Blazer. Another Allen investment, Lone Wolf, in Redondo Beach, Calif., specializes in remote control of multimedia networks. Lone Wolf is developing a Visual Network Operating System, using it experimentally to control vehicles remotely. For example, when the operator at a terminal turns his or her head, the vehicle turns.

As a sports fan, Allen wants an interactive TV viewer to be able to control the camera angle - to see the game from underneath the basket (his favorite place), for instance, or midcourt. Or to focus on a player or strategy not immediately apparent from an overall court shot.

Viewer customization is considered a cornerstone of interactive TV.

Maybe you don't have to have initials for a name to be a player in the Digital Future.

In the mid-1970s, it wasn't IBM or Digital Equipment Corp. or Xerox who, with all their billions, foresaw the Information Age. It was people like a Washington State University dropout, Paul Allen, who upon seeing a Popular Electronics cover story on the Altair, ran across Harvard Square to tell his friend Bill Gates that the revolution was about to begin.

"You don't need the resources of TCI or Bell Atlantic to be a player," is the way Caruso puts it. "All you need to do is be smart."