Vermeer
Harvard Business School
9-397-078
Rev. July 2, 1997
DO
Vermeer Technologies (A): A Company is Born
Charles Ferguson was exhilarated as he hung up the telephone after talking with Andy
Marcuvitz, co-leader of the venture capital (VC) consortium that was considering financing Vermeer
Technologies, Ferguson’s startup for developing software for the Internet. It was the first week of
January 1995. Marcuvitz had called Ferguson to tell him that the group was prepared to make an initial infusion of $4 million.
T
NO
The moment was an unparalleled one for Ferguson. After years of dispensing advice as a consultant, he had finally realized his ambition of owning his own company–and at a juncture in information technology that he believed was revolutionary. It had been only eighteen months since
Ferguson had first had the idea for Vermeer.
And yet, Ferguson was having second thoughts about proceeding further with the VCs.
Marcuvitz had made the funding decision contingent on some rather onerous conditions. Delighted though he was with the VCs’ decision to back him, Ferguson was nevertheless wondering whether he should pull back from the deal.
Founding the Company
PY
CO
The thinking that led to Vermeer began late in 1993, shortly after Ferguson had completed a consulting project for Apple on electronic publishing and on-line services. As he thought about his findings over the subsequent months, Ferguson concluded that there were fundamental problems with existing offerings. These services were based on a centralized design and used proprietary technology. Consequently, not only were these services extremely expensive to develop (costs ran up to $50 million for complex systems), but they were also incompatible with other services. As a result, businesses using these services found themselves locked into a limited set of subscriber-customers.
They found it difficult to link into their own internal data-bases because of technological incompatibilities. Besides, they had
9-397-078
Rev. July 2, 1997
DO
Vermeer Technologies (A): A Company is Born
Charles Ferguson was exhilarated as he hung up the telephone after talking with Andy
Marcuvitz, co-leader of the venture capital (VC) consortium that was considering financing Vermeer
Technologies, Ferguson’s startup for developing software for the Internet. It was the first week of
January 1995. Marcuvitz had called Ferguson to tell him that the group was prepared to make an initial infusion of $4 million.
T
NO
The moment was an unparalleled one for Ferguson. After years of dispensing advice as a consultant, he had finally realized his ambition of owning his own company–and at a juncture in information technology that he believed was revolutionary. It had been only eighteen months since
Ferguson had first had the idea for Vermeer.
And yet, Ferguson was having second thoughts about proceeding further with the VCs.
Marcuvitz had made the funding decision contingent on some rather onerous conditions. Delighted though he was with the VCs’ decision to back him, Ferguson was nevertheless wondering whether he should pull back from the deal.
Founding the Company
PY
CO
The thinking that led to Vermeer began late in 1993, shortly after Ferguson had completed a consulting project for Apple on electronic publishing and on-line services. As he thought about his findings over the subsequent months, Ferguson concluded that there were fundamental problems with existing offerings. These services were based on a centralized design and used proprietary technology. Consequently, not only were these services extremely expensive to develop (costs ran up to $50 million for complex systems), but they were also incompatible with other services. As a result, businesses using these services found themselves locked into a limited set of subscriber-customers.
They found it difficult to link into their own internal data-bases because of technological incompatibilities. Besides, they had