JB: I haven't seen too many software success stories coming out of New York and "Silicon Alley," have you?

CHOU: To be frank, and I don't think I'm stepping on anyone's toes by saying this, there's shitty engineering in New York. New York is not an engineering kind of town. There's great art, there's great culture, a lot of money is transacted, a lot of deals are made here in New York, but this is not an engineering town. The real engineering talent is either in Silicon Valley or it's in Texas, or it's in Bulgaria. And as much as we call ourselves content people, this is still a technology-driven business. Frankly, the mistake that a lot of longtime players in New York have made is trying to see this as a non-technology-oriented business. This is an engineering business. It still is, and it's going to be for a long time.

This is where it comes back to my Chinese origin � the whole concept of yin and yang. It's a balancing act. How you create a culture and a spirit that balances engineering formalism with real artistry. That's the hardest thing to do. That's where I think we have our biggest strategic advantage. It's not just, as I said, the fact that we have access to low-cost engineering, but it's the fact that we know how to use that engineering for something that's really interesting.

JB: Talk about products. Let's have more of that yin and yang.

CHOU: It's an interesting topic right now because our strategy and philosophy is undergoing a transformation, as it has every day for the last three and a half years. We're trying to combine the most successful elements from education on the one hand and games on the other hand. While our products entertain, we try not to use the word "edutainment". First, it's such a bastardization of the English language; second, the whole notion of edutainment can be easily caricatured. What we are not talking about is taking very, very dry multiple choice-based educational stuff and combine it with the graphics from an arcade game.

What we've been struggling with as designers is, what makes education and scholarship really fun? What we keep coming back to is that real scholarship is like mystery work. When you're a scholar, what you're doing is, you're like an archeologist, you're piecing together clues � constituent clues � and you're trying to create a picture that makes sense. You're starting with constituent pieces and you're trying to construct a story. When we teach in schools we usually do just the opposite. We get kids to memorize a story, and then sometimes we'll show them the constituent pieces just to prove that the story is right. This makes education extremely boring. So throughout all the things that we've been building, the approach has been to try and figure out, how do you create an experience where people are interacting with really compelling constituent elements of information, and trying to construct their own understanding out of it. In other words, elements of mystery, puzzle-solving, and game-play are fundamental to educational experiences. And the opposite is true too. Most good entertainment is intellectualy demanding; it stimulates thought, interacts with your brain.

The title that probably epitomizes this is this title Qin, which is an adventure. It's a mystery-adventure, set in a highly accurate 3-D reconstruction of a Chinese tomb, a historical tomb. As a game player you're trying to piece together the clues you need in order to tell the story what happened in this ancient tomb � what went awry, why am I here, and what do I have to do in order to make things go right. We designed it with an entire encyclopedia of Chinese history in the product. In order to solve the puzzles, you need to find things out about Chinese history, so you go in the encyclopedia, to find the clues you need to solve the puzzles. What we're trying to do is create a new symbiosis between reference material and the narrative impetus of an unfolding game.

That's an interesting and compelling experience to me, because that is something that is extremely difficult to do in another media. There's historical fiction, but it doesn't have the same level of engagement and discovery of something like Qin. What's exciting to me is that this medium is presenting us with ways to construct experiences that are compelling, in ways that are completely different from what the old media was able to provide. But at the same time there's this sort of irony in what we're doing because as much as we can create material now that really defies traditional characterization, the market is driving us increasingly towards traditional characterization.

So how do I sell a box titled "Qin," which is not quite a game, not quite a reference product, not quite an educational product, but more of each of those, on its own combined, � how do I sell that? Unfortunately there's no shelf for it. The software retail channel is getting increasingly bifurcated between games on the one hand, and curriculum software and reference on the other. What we were excited about was that we were able to sell domestically, a hundred thousand copies of Qin. In my business that's a hit. That means that there are people there to buy this thing despite the fact that the channel doesn't quite know how to deal with it yet.

Body Voyage is another title right now that is of real personal interest to me, and again is indicative of what the new technology is providing to people, on a very widespread basis at a very low cost, and was never available even to professionals until a few years ago. Body Voyage is based on the work of a friend of mine, Alexander Tsiaris, a prizewinner medical photojournalist who's been on the cover of Life Magazine and Time and so on. He has basically traded his Leica cameras in for Silicon Graphics and Sun work stations, and for Cat Scan and MRI machines. In other words, his photography now is digital photography of the body, rather than traditional optical cameras. What he has been able to do is to do some of the most compelling reconstruction of the human body, in 3-D, that has ever been seen.

A couple of years ago, a guy in Texas was sentenced to death, for killing a man during a robbery. The murderer, Joseph Jernigan, donated his body to science, and when he was executed, through lethal injection, his body was frozen and he was flown immediately to an NIH lab in Boulder, Colorado. Because the guy was in terrific physical shape his body had absolutely no pathology, except a missing testicle that was removed due to a noncancerous tumor. And since he was executed through lethal injection, there was no pathology due to the circumstance of his death.

At the lab his body was scanned and digitized in every conceivable form of technology that is currently available to the medical profession. And they sliced him - in the thinnest cross-sections ever sliced, millimeter cross-sections � and they stuck all of this data on 8 gigabytes of hard drive space � and they put it on the Web. Because that's what you do with everything now, you stick it on the Web. But nobody knew what to do with the data, a tremendous amount of numerical data. You have to have real artistry to turn that into 3-D and to do something about it.

Along comes my friend Alexander who takes all that data and turns it into incredibly compelling 3-D imagery of the human body. What Learn Technologies has done is to take all of that stuff, and create out of his imagery, a navigable version of a real human body. So Body Voyage is the first time that a lay person can literally travel through a real human body, not a Gray's Anatomy drawing, but a real 3-D photograph of a human body. This is a title that sells for $49.95, and for $49.95 a person with a PC or a Mac has the capability to truly explore a frontier that no one has explored before, that is probably closest to us � our own body.

JB: Let's get down to the good stuff. What about money?

CHOU: We began the company by bootstrapping it. We started by doing a lot of working for Steve Brill at Court TV. We got Time Warner to sign on board in the fall of '93, and then last spring, we took on a second round of investment from a Colombian-based media company.

It's an amazing company. In fact, the first time I flew down there to negotiate with them, I was picked up at the airport in a new Toyota Land Cruiser, and we pull out of the airport. I start to knock on the window, and I realize that you can't lower any of the windows, and they sound very thick � well, they're all inch and a half thick armor-plated window.

It's about 11 o'clock at night, and we pull into Cali, heading to the hotel and all of a sudden a white unmarked truck cuts us off. Our driver, who's one of the board members and the head of multimedia for this company, stops the car � he doesn't know what to do � and out of the back of the van pour six commandoes with M-16s. They start banging their rifle butts on the windows, and they signal us to get out. We're standing there � my partner is Italian, and so he understood very vaguely what they were saying, and he turns to me and says, I think they're saying "Up against the wall, mother-fuckers." And so we're there, literally an hour after getting in Colombia, spread-eagled against the wall with M-16s in our backs. That was our introduction to Colombia.

On the other hand, what we discovered was that Colombia is an incredibly vital place. Every road was being torn up and fiber-optic cable is being laid down. Our colleagues have a direct satellite connection with Miami, so when they make a call to us it's a United States call, because it's literally hooking up to their Miami office. These guys want in. They want in on multimedia and high-tech. And they've been fantastic partners; they've been very active in a positive sense; they're distributing our products in Latin America and Spain, and they have funded original titles that we are developing for them as well.

The key from day one was not to take venture money. Our feeling was that was the kiss of death. What we wanted to do was take money from strategic partners, whose own fates were in their minds tied to our fate and whose dollars counted for more than just dollars. In other words, we wanted to work with people who were bringing something more to the table. In both of our partners' cases it was distribution, it was content, et cetera. Because we knew that if we raised the same amount of money from the VC's we would have to raise as much money again to get the distribution and the content. So we've gone the strategic partnership route, and we'll probably go through a third round of financing probably before the end of this year.

That's under negotiation right now. We're still in early stages, we're looking at a couple of different options. We're figuring out what the next steps are. It may not be IPO since the IPO market right now has been tough on our industry. It may very well be some kind of large-scale acquisition. We want to make ourselves as valuable as possible to other people in the business.