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I can t tell you how hard it was to get a bad review. It just tore the company apart if somebody wrote a bad review about TiVo and we read it. Oh God. How can we deal with this It was a gut-wrenching time for the company. As everyone started to review it, some people liked it, some people didn t. But at the end of the day, it worked out just fine.
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Livingston: Back to your first customers were there any features you were surprised they wanted as they started using it Ramsay: The thing that really got them was pausing live TV. That was the hook.
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You go, Blah blah blah and it can pause live TV. They d look at you and go, Wait a minute. Pause live TV How do you do that Well, technically, you do it this way and that way. That doesn t work. You can t pause live TV. It s live! We couldn t get people to understand it. We d say things like, It s not like the actors take a break or anything. You pause live TV. Then you d show it to them, and we got pretty good at this after a while, where we d surprise them with this and we d pause live TV and you could see them going, Wow. I never thought that would ever be possible. So that was a big catalyst. Once people got that idea, they realized it was something really different. The other things that people wanted to do and I don t know if it was because we did it and then they liked it or if it was because they asked for it and then we did it but this idea of a season pass or a wish list where you just put in something a very small amount of information saying, I want this and, for the rest of your life, you get it. So if you want to see The Sopranos and you want it every week, you do a Season Pass, and that Season Pass will look out for The Sopranos every time it s broadcast. It s clever enough not to get any repeats, so you only get the real one. And it s clever enough to deal with times changing and durations changing. So if you have a season finale that lasts two hours, TiVo will automatically figure that one out. People loved this idea of Get me a Season Pass, and then they can forget about it. We expanded that to WishList, which says, Get me all the Martin Scorsese movies, or stuff like that. Clint Eastwood westerns. Those were very attractive to people, and over time it became pretty clear that this was something very new and different.
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Livingston: Tell me a little bit about times that you were most worried about
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Ramsay: The Replay thing was definitely an interesting case in point. We were
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on parallel paths, and it was a bit of a mystery to us how we managed to get on parallel paths. We kept hearing rumors about them, and I m sure they heard rumors about us. They went out with a very different proposition. Theirs was much more techie. They had no monthly fees; you bought a box. They were really scrappy. We were kind of taking the high ground, and they were down there doing all the dirty tricks to try to compete with us. During that time, both their CEO and myself were getting interviewed by the press, and they had us doing photo shoots together with dueling remote
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controls. We knew these guys, and there was no hatred, but there was a definite, very intense competitive attitude. Our aim was to get them out of our hair, out of our business. This wasn t, There s enough room for everybody. This was, They have to go. They are the enemy and we re not going to let anything stand in the way of us beating them. While that was very angst-ridden and a lot of our employees were very concerned and sometimes upset about what Replay said about us, I think it was a great time for the company because the company learned how to compete. I know, from my standpoint, I had never worked in a company that really competed before. SGI, if it found competition, it went elsewhere. HP was not as competitive back then as it is today. They relied on doing things very new and different, so they differentiated themselves. In those days, they weren t going to say, You have one of them, I have one of them, I m going to compete with you, and this is not going to be clean. So we were doing that; we were competing. I look back on that and it was a lot of fun, especially since we beat them. We saw things that they were doing wrong. If you are playing a competitive game, you worry about winning the game, but you are so much in the game that, while you are doing it, you are not thinking, Oh, gee, I m going to lose. You are thinking about How do I win And that was very much that spirit. The next big competitive threat was with DIRECTV. DIRECTV decided that, in addition to us, they wanted to do a deal with Microsoft. Microsoft had just bought WebTV, and they were building a DVR. DIRECTV decided they wanted to have that DVR, too. So then all of a sudden DIRECTV was selling both of them. They were under probably pretty similar financial agreements, so for them it didn t make a whole lot of difference who bought which one. Except Microsoft was pouring hundreds of millions of dollars into trying to develop this market, and here s little TiVo with although we d raised a lot of money, we didn t have that kind of resource at our disposal. Lo and behold, we found out that we were outselling them by a significant amount. People loved TiVo. The brand was getting known by then, and we were better. We discovered that people preferred what we were doing to Microsoft on a fair and level playing field. It was not our doing; this was DIRECTV marketing it on an equal basis. It got so bad for Microsoft they were putting so much money into it that they finally gave up. We thought, This is great, they gave up. Let s celebrate. We then thought that the consumer electronics companies would come in, and we were worried about that, because we thought it was a natural for Sony. So what we did there was license our technology to them. We got some good license deals and that sort of took that one off the table. Most recently, a big competitive threat is from cable companies and satellite companies, who are entering this market and essentially giving away DVR for free. That s been a big issue for TiVo over the last several years. While TiVo has been able to do deals with several cable and satellite companies, there are competitors like EchoStar against whom we have had to enforce our patents in court.
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