Meeting at Microsoft
7 May 2002

RealNames and Microsoft

John Krass, Bill Bliss, Eric Watson, Murray Vince [All Microsoft]
Keith Teare, Mike Arrington, Nico Popp, Terri Holbrooke [All RealNames]
Ivy Li [Microsoft corporate] arrived just after Keith's initial comments

JK: Do you want to walk us through the highlights of your proposals?

KT: Well, only if there's a point to doing so. If you already know what you want to do, maybe we should begin with that.

JK: OK, well, We aren't going to continue to bet on Keywords

BB: It's intractable, the whole thing is just intractable

KT: There's mismatch of teams--MS as the architectural provider, infrastructural role

KT: Do you think we're irrelevant, do you think we're early?

BB: I guess it's both. I know that you're frustrated by your lack of exposure to others outside the MSN group. To be sure I haven't got a blind spot on this, I have spoken to .net people and others to see what they think. The consensus is that URLS do suck, that is true. But how much are we willing to do to fix it, how much effort should we put into it? We are also typically seen as "bad guys" if we try to do too much with Windows. Even if keywords were ubiquitous, how much are we willing to do: from a marketing POV, from a priority POV, from a cost POV. It's unclear what the gains would be. Even if Keywords couldn't be monetized, but were important and not disruptive, we'd probably be open to Keywords. But this is more complicated than that. There's diametrically opposed viewpoints, even in the team: those of "I don't think it's worth it." and those of "You don't get it."

KT: Infrastructure takes time, and you'd have to make an investment. It seems that you've decided it isn't worth it.

BB: You're right. On the other hand, SMS as an example of what works--nice to have, but not interfering. We can support it without giving up much.

JK: Keywords co-mingle with search, channel stuff. It's really too difficult to separate. Eureka will only make it worse.

BB: You'll never get out from under long standing expectations of it being "the next big thing."

KT: CNRP was endorsed by IETF, and is an endorsement of resolution approach. ICANN is at an impasse with DNS. People want it to be solved. People want MSFT to step up

BB: Agree that DNS is broken, but people disagree about how to fix it and who should fix it.

KT: I would summarize MSFT's position as: MSFT doesn't believe that the resources required are worth the result

JK: Problems include Basic Keywords, Frames, etc: MSFT, given user experience and economics, isn't willing to continue to bet on Keywords.

BB: The marginal value of the redirect is debatable within the team--both commercial and user experience wise.

KT: If you don't take on the infrastructure task--MSFT is going to be asked to do it and if you don't put in place the middleware that connects the desktop, you'll be missing the point.

BB: The Liberty alliance and others would disagree--they don't want to trust us to do it, they don't want to pay for it.

KT: How do you build the trust--you partner intelligently on things that you can't be the provider.

BB: If there's one service we'd make the case on, it would be authentication, not naming.

KT: I'd agree on the priority of authentication. But, I think MSFT isn't thinking big enough

JK: Regardless, we won't renew it after June 28th

KT: Board wants us to wind down the company in an appropriate way if MSFT wants to take out their cash, In that case you get ~5m. If you don't take your cash, we'll go on and try another business.

JK: You should assume we aren't willing to write off the debt.

KT: Well, given that, it is most likely that the Board will want us to terminate employees, and keep a few people to wind down.

JK: You are asking if we are going to put you into involuntary chapter 11?

KT: RIght. Alternatively, you could do what you did with Reciprocity.

MV: Are we going to petition RN to put you into bankruptcy? I'm not working to do that in an adversarial way. If you want to talk about an orderly exchange of assets and wind down, we'll participate.

KT: Do you want to value assets, acquire assets, if there's a good fit at MSFT, fine. We'll also look outside of MSFT to sell assets to gain cash to pay creditors.

BB: Outside of introductions, we don't consider people to be RN assets.

Ivy: Right, we need to separate the people from the IP--IP is the asset, people are free agents.

BB: There is no formal plan that would include a specific set of people moving over as a unit.

TH: The people piece is critical today. We will shortly be informing employees. So, lets stay on that topic for a moment

KT: We are approved by our Board to give 8 weeks severance for all employees. We will also recommend re-contracting 16 people to keep the service running through June 30. $2.5 for severance. Another million for the wind down team.

EW: 7 weeks is the most we need operationally--to June 28th.

KT: There will pr implications, There's more than the operations. We need an orderly business wind down.

EW: Come back with a proposal on what to do. Shall we turn off the service on June 28th or sooner.

BB: What are the big ticket spending items

TH: Please come up with a way for employees to contact Microsoft with resumes, etc. MSFT recruiting would be a positive message to employees.

MV: We need to talk to staffing, but we'll work on that, sounds right to do.

KT: We'll need to send you an outline of the severance plan, and outline the elements of the wind down team. Cash in the bank, severance, wind down plan, creditors, etc--we'll get that to you tomorrow am

TH: We'll also end an outline of the people

BB: They should indicate their willingness to relocate as well--we'll talk to others, but relocation opens the door to more job openings.

KT: Is a sale of the asset remotely interesting?

BB: I doubt it. I'm doing the natural interface platform, which is all about words to meaning to behavior mapping. Inference, intelligence, etc.

KT: What tolerance would you have for giving us some specific prefixes, ie Contact card?

JK: Unlikely

KT: Evan/LookSmart had an interest in what we do, what happened there?

JK: It comes down to the product. We don't believe in Keywords going forward, so there was no reason to follow up with LookSmart. That's what it really came down to.

MA: Is there anything we could have done or said or proposed that would have opened a door to a continued relationship, to a renewal?

BB: No, this was really a fundamental and forward looking decision about us going forward.

JK: OK, Terri and I will follow up as point people for RN and MSFT.

TH: We will be having an employee meeting tomorrow at which we will have to say something substantive. It's our intention to do the severance on Friday and put out statements starting on Monday.

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