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Adobe's Brick-Solid Partnership Faces Its Toughest Test Yet

Software: John Warnock and Charles Geschke are out to have their company dominate the Internet. That won't be easy.


MOUNTAIN VIEW, Calif. — In an industry where few partnerships have withstood the test of time, Adobe Systems Inc. co-founders John Warnock and Charles Geschke are an anomaly. Since 1978, when Geschke hired Warnock to work with him at Xerox's famed Palo Alto Research Center, the two bearded computer scientists have set ego aside and together developed much of the software that has built the desktop publishing industry.

Adobe Systems, which Warnock and Geschke founded in 1982, has succeeded where nearly every other PC software company has failed: It faced Microsoft head-on and came out on top, establishing its own technology as the industry standard.

But now Warnock and Geschke are facing the most formidable challenge of their long partnership: They must cope with the sudden changes wrought by the Internet while simultaneously curing a bad case of indigestion caused by an acquisitions binge.

In early January, Adobe announced that it had lost $11.8 million for the fiscal quarter ended Dec. 1, a disclosure that sent its stock price tumbling $13.50, or 23%, to $45 per share in a single day. Many analysts believe that while cost cutting and other conventional measures can solve the short-term problems, the Internet riddle will not be solved so easily.

Warnock, normally reserved, becomes animated when talking about the subject, his pale blue eyes flickering with intensity. "There's no chance we won't dominate the Internet," he contends. "Adobe's success is that we have not ignored 500 years of graphic-arts history. That's a mistake being made by the computer industry."

With a product called PageMill, which makes it possible to quickly and easily create visually appealing "pages" for the part of the Internet known as the World Wide Web, Adobe hopes to carve out a role as a key vendor of Internet tools.

And with Acrobat, a technology that makes it possible to exchange fully formatted documents among many different types of computers, Adobe hopes to establish a standard for World Wide Web documents that are more elaborate and sophisticated than those displayed according to the simple language known as HTML.

Certainly, Warnock and Geschke have an impressive record when it comes to anticipating what will be important in publishing. When they were still at PARC, they began working on PostScript, a piece of software that makes it possible for a printer to understand and reproduce a complex document created on a computer.

The utility of such a technology was anything but obvious at the time--neither the desktop computers nor the printers of the day were generally capable of taking advantage of such software--and they spent two years on PostScript only to see Xerox ignore it.

"We spent two years of our lives going to meetings," Warnock recalls. "Chuck and I were totally frustrated. One day, I went to Chuck's office and said, 'We can't continue to live in the world's best sandbox."


And so they left to launch Adobe. Because Warnock had briefly worked at a start-up and Geschke had spent his entire career in research, it was decided the Warnock would be chief executive and Geschke president. "I said, 'This might not work long term, but since I've done it before, I should probably be chief executive,' and we've never talked about it again," Warnock recounts.

The original plan called for Adobe to bundle its software with printers purchased from third parties, a rather ambitious plan for a start-up with limited resources. Warnock and Geschke found little interest among Silicon Valley venture capitalists, but they got help from Warnock's graduate advisor at the University of Utah--David Evans, a highly regarded computer scientist who is considered the father of the supercomputer.

Evans called a San Francisco investment banker, William Hambrecht. "I wasn't overly impressed with their business plan, but my real mentor in this business was Dave Evans," Hambrecht said of that time. "Dave called me and said, 'C'mon, these guys are real good.' "

Steve MacDonald, Adobe's first sales vice president and a recruit from Hewlett-Packard, recalls the painstaking progress of the early days, when Geschke and Warnock were writing most of the software themselves.

"One day I heard all this shouting and screaming," MacDonald said. "I thought, 'Finally they've succeeded in getting a page with different typefaces on it.' I ran back to where they were sitting and saw that they were excited because they had gotten the printer to spit out one little black square.

"I thought, 'Oh my god, I left H-P for this?' "

But soon the company was making money, and the big breakthrough came in 1984, when Warnock received a call from Apple co-founder Steve Jobs. The then-new Macintosh computer turned out to be the perfect piece of equipment for desktop publishing, and PostScript was a crucial piece of software. Together, Apple and Adobe created desktop publishing.

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