JB: What about Java?

CHOU: I'll go out on a limb here and say that I really think Java has been dramatically overrated in terms of its ultimate impact on the industry. Java is so premature and not ready for prime time, that it would be surprising to me if it isn't overtaken by a lot of other proprietary technologies at this point. I don't see it offering enough advantage to people to really be interesting, and it's too slow and inflexible.

JB: How's life in the start-up lane? We've been talking for half an hour and you have yet to utter the magic mantra: "IPO."

CHOU: Wait. I was working up to it. Running a startup is a wild experience. For starters, I'm not a B-School type, my background's in philosophy, so I've had to do a lot of learning. We're living in a time where someone like me, who's 29 years old, who has a lifetime's experience in multimedia, compared to other people, eight years in the business, you can say, because of where this industry is right now, which is really at ground zero, I have as good a chance as anybody else out there. That's the attitude we've taken, and we've really charged in. In fact we feel like we have an even better chance because we're not as much in the grip of the older paradigms, and we're thinking more creatively.

Another thing that is a benefit of not being hamstrung with any of the sort of habits of older business, older industries, and older technologies, is that we thought about our business being virtual and global from day one. That was really our mantra. In other words we don't care where the hell people are, we want to find the best people, and we want to assemble them. If we have to assemble them virtually, fine. So we have a company that probably exists more on the Internet that it exists in physical reality. The Internet is our office space.

JB: How do handle communication between your groups?

CHOU: All the communications between the offices is over the Internet, but it's over our own proprietary Lotus Notes databases. You can access it through the Web, but it's secure, and it's really only accessible in its full form through our own custom clients. We also are doing a lot of live telephony, and even video, over the Internet now. When our lead program designer in New York gets in the office, he always knows whether the Bulgarian engineer is still in his office or not because when the engineer in Bulgaria puts his favorite CD in his PC in Bulgaria, it gets streamed over our Internet connection and out onto the speakers in our offices. He can literally hear what's being played on the CD player in the Bulgarian engineer's machine. We are treating our communications as though we're in one physical space.

JB: This gives us all something to look forward to. Can we talk about business opportunities in China today?

CHOU: One of the products which we developed and own, is a product called Qin (pronounced "ching"), which is an adventure game set in the tomb of the first Emperor of China, which is probably the most famous historical site in China, if not one of the most important in the world. Talk about selling coals to Newcastle, we did a deal with an American company, that has set up a localization shop in Shanghai, and we did a deal for half a million units for two of our games, Qin and The Robot Club, and sold them to China. When I was offered this deal I said to the guy "you're crazy, what are you talking about, they can't have more than 500 computers there, let alone 500,000." And he told me that the big computer manufacturers are projecting between six and ten million multimedia PC's units sold in China over the next year. I've corroborated this independently. The Chinese growth rate in terms of both disposable income, but also specifically in terms of consumer demand for computers, which is right up there now with refrigerators and 32" television sets, it's just tremendous. What the localizing companies do is sell products like ours in bundles with these computers, at relatively low unit costs, but at incredibly large volume rate. So we're doing a lot of business there. In fact our first revenues for those products came from China.

JB: What's happening here? How's business?

CHOU: Try to be delicate and yet meaningful. We took on an investment from Time Warner � they continue to be a strategic partner and are a very important shareholder in our company. What's happening now is that we're in a transition period where we were essentially a developer for Time Warner, and Time Warner was the publisher, and is the publisher. They distribute and market our titles. The truth is now that they are downsizing their operations that are related to publishing and distributing multimedia, and CD-ROMs specifically. What's happening is that in the meantime we are growing from being a developer to being a publisher.

We signed the Time Warner partnership about two years ago. Time Warner has been a fantastic partner, but there was an attitude among the major media companies that the software business, particularly in the content-focused software business, was ripe for the taking. This is the idea that there was a bunch of knucklehead, propeller-head software guys in there who really didn't understand the business of publishing and selling real quality material, and the big players were going to take this business by storm.

The truth is, they've had a hell of a time trying to make it work. And the guys who are still really making money at it are either the software guys, who've been in it from day one, for whom this is a core business; or it's companies like Disney, who see this business as merchandising as much as publishing. It's putting Goofy, or Aladdin, on a CD-ROM, as opposed to a sneaker or a sweatshirt. The big media companies are taking a step back and reassessing the situation. They spent a lot of money; they didn't get the results they wanted to; and the smart ones are doing what Time-Warner is doing with us, which is they are maximizing their investment in outside companies for whom this is a core business , rather than spending a tremendous amount of internal overhead on trying to make this work on their own.

JB: Why do they have this overhead problem?

CHOU: There are a couple of reasons why there's a difference in the overhead between Time Warner and us. The easiest and probably most sort of glib answer is they probably pay double per square foot what we pay for our real estate. Now that's obviously a minor aspect of it. But also, we don't pay ourselves a lot. We're in it because we love this business and because we have a piece of the upside. We're not trying to create salaried positions for ourselves that we'll live with for the next four years and draw pensions off of. I'll be frank: we plan to take this company public or to sell it. We want to make some real money on the upside on this thing. We have a team of people who have that spirit, and also have an almost evangelical spirit about what it is that they're building. That's probably even more important than the economics of the whole thing. So, we don't pay ourselves a lot; we work ridiculous hours, I'd say 60 - 70 hours is common � people pull hundred plus hours relatively regularly � and there's a real commitment to getting it done. And we're extremely careful about how we spend money. When you have money you spend it; when you don't have money you're real careful about how you spend it. As a result I think that we're able to be more effective with our dollars than some of the big guys are. I've watched what some of the big companies have done and it's just absolutely amazing how they spend their money. When I think what we could do with the money that's been wasted by some of these outfits is just mind-boggling. So that's the spirit that we're trying to attain � more with less.

JB: What's your business plan?

CHOU: Whether it's an IPO, or an acquisition, the idea is to create a company with very high growth potential; very fast growth. We have doubled our revenues each year, and we want to increase that rate even more. I can't say what the revenues are now, but I will say that we should be profitable by this year, and that the revenues by the end of this year will be substantial. We've gone through two rounds of financing; we've had a very nice sort of infusion of capital from two partners, and we've been well-valued, and, I believe, fairly valued. The key is, as I say, creating a company that has very high growth potential � and very high margins. The Bulgarian connection is a key, because if we can be seen increasingly as a gateway to really high-quality, low-cost engineering, we have a strategic advantage that is extremely valuable.

JB: Engineer in Bulgaria, sell in China, take meetings and have lunches in New York?

CHOU: Exactly � we're only in New York because we like the restaurants here � otherwise we'd be in Sofia or Beijing! But it's really true: sell globally, and build globally, and set up your shop wherever you want to be. It's a maxim that my partner believed in from day one. I was slower to believe, but I've got the religion now too.