Fwd: Crossgain Fires a Quarter of Its Employees

From: Rohit Khare (Rohit@KnowNow.com)
Date: Tue Jan 16 2001 - 01:17:40 PST

This is really sad and pathetic on MSFT's part, and an embarrassment
for all concerned, including Benchmark. This is practically
Justice-worthy, but probably not in a Bush administration... My best
wishes to all who were involved, and that they may compete again --
with all of us! -- on a level playing field... Rohit

> http://interactive.wsj.com/articles/SB979612543677285500.htm
>January 16, 2001
>Crossgain Fires a Quarter of Its Employees,
>As It Faces Legal Pressure From Microsoft
>Crossgain Corp., a high-profile Web start-up facing pressure from
>Microsoft Corp., abruptly fired about a quarter of its employees in an
>attempt to cool tensions with the giant software company, people
>familiar with the matter said.
>Software Defectors From Microsoft Resettle Together to Form 'Spinouts'
>(Oct. 16, 2000)
>New Web-Software Start-Up Is a Thorn in Microsoft's Side (Sept. 11,
>* * *
>Company Profile: Microsoft
>The unusual action Monday affected more than 20 of Crossgain's 80
>workers, all of whom were former employees of Microsoft, including
>Crossgain's two founders and its chief executive officer. Employees were
>told they were being terminated until the expiration of noncompete
>agreements they had signed at Microsoft, after which time they could be
>rehired by Crossgain, according to people familiar with the matter.
>Crossgain had attracted unusual attention because it is working on new
>Internet-based standards and tools for software developers. That is an
>area that is central to Microsoft's new, make-or-break Web initiatives,
>which must succeed for Microsoft to stay dominant in the software
>Microsoft declined to comment on the Crossgain matter. But the people
>familiar with the situation say senior Microsoft officials continued to
>be angry at the prospect that Crossgain employees might improperly
>compete with their former employer.
>The situation also highlights Microsoft's broader worries about a brain
>drain that has siphoned off some of its top technical talent, despite
>recent signs that some defectors are now returning to Microsoft from
>failed dot-com start-ups.
>Crossgain, based just a few miles away from Microsoft in Redmond, Wash.,
>was founded in February 2000 by Adam Bosworth and Rod Chavez, both
>former Microsoft managers who specialized in a hot Web technology known
>as XML, for extensible mark-up language. The company received $10
>million in funding from two prominent Silicon Valley venture-capital
>firms, Benchmark Capital and the Barksdale Group.
>Other former Microsoft engineers who had signed noncompete agreements
>also were hired. Crossgain executives argued that it didn't directly
>compete with Microsoft, though Microsoft officials were skeptical about
>that claim, the people familiar with the situation said.
>Crossgain employees were told at a meeting called by company officials
>Monday that they were being terminated until the expiration of the
>noncompete agreements with Microsoft, which usually extend for a year,
>these people said. It isn't clear whether the agreements expire at a
>different time for each employee or if they all expire at a particular
>In addition to the terminations, Mr. Bosworth and Mr. Chavez resigned,
>as did CEO Tod Nielsen, another well-known former Microsoft manager who
>left the giant last June.
>Crossgain declined to comment. But the development is clearly a blow to
>the start-up, which still hasn't released its technology or described it
>in detail.
>Though scores of new companies have been formed by Microsoft refugees,
>Microsoft executives were believed to be especially perturbed by
>Crossgain, the people familiar with the matter said. It didn't help
>matters that Crossgain got funding from the Barksdale Group, the
>venture-capital firm founded by James Barksdale, the former CEO of
>Netscape Communications Corp. who helped inspire the government's
>antitrust case against Microsoft.
>Crossgain CEO Mr. Nielsen spent six months in Washington, D.C., during
>the trial providing technical and public-relations help to Microsoft's
>lawyers. Last fall, he said in an interview that he and Mr. Barksdale
>had made peace. With regard to Microsoft, Mr. Nielsen said he thought
>the two companies' technologies could be complementary, instead of
>Microsoft may have been upset that Crossgain planned to build its
>services on a competing technology platform more compatible with
>products from Microsoft competitors such as Sun Microsystems Inc. and
>Oracle Corp., though Crossgain did talk to Microsoft about working
>together, the people familiar with the matter said. Sun and Oracle are
>two of Microsoft's most formidable rivals.
>Write to Rebecca Buckman at rebecca.buckman@wsj.com
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