From: "Jim Bumgardner" 
Subject: RE: Request for a short interview
Date: Thu, 24 Oct 2002 10:51:47 -0700

>      Dear Mr. Bumgardner:
>      I want to thank you for answering my email.
>      First let me tell you that I admire you for creating such an amazing
> product, which, in my opinion, revolutionized the communication and
> entertainment in the Internet.

That's an overstatement, but thank you :)

>      I would like to know more about the reasons you had to create the
> Palace, what was in your mind while you were developing it: Was it
> something you needed? Did     you needed money and wanted a product that
> you could sell? Somebody else asked you to do it because he/she needed it?
> Is there any funny experience or         anecdote you can tell about what
> inspired you to develop your product?
>      I'm asking you for the personal reasons for its creation rather than
> for technological reasons.

The short answer is that I created the Palace because I thought it would be
a fun thing for me to work on, and for me (and others) to use.  I didn't
develop it because I wanted to make money -- that has never been my
primary motivation -- I program because I love the creative process.

I was employed by Time Warner Interactive as a lead programmer in 1994 when
I first developed the Palace.  At the time I was mostly developing internal
authoring tools for Multimedia production, and I also worked on a lot of
flashy demos for the division.

I had always been interested in multi-user chat and game software, and had
created other (text-based) multi- user apps in the 80s, such as a bulletin
board system, and a MUD-like system.  In the 90s, I was doing a lot of
graphical / multimedia programming (as I still am) and I thought it would be
neat to create a visually rich chat application.  Also, I had read a lot of
articles about "3D virtual reality" systems, and it struck me that I (as a
programmer) could achieve a lot of the same fun & excitement in a 2D world - I
believed (and I still believe) that the real thrills that come from using 3D
virtual reality systems comes from the use of your imagination, and the social
interaction, all of which are provided in 2D spaces with far less effort on
both the programmer's part, and the computer's part.

Although I had been thinking about these ideas, I didn't really get a chance
to work on them until I found an excuse to work on them as an official Time
Warner project in 1994.   As I said, I was working for Time Warner
Interactive, which made CD-ROM games and "edutainment" products.  One day, the
employees were alerted that one of the other divisions, Time Warner Cable, was
seeking "game ideas" to be used for Interactive Cable TV.  At this point I
said "aha! - I'll repackage my graphical chat idea, and present it to them as
a 'game', and maybe they'll let me work on it!" and I wrote a quick proposal
outlining my idea (a copy of this memo is on my website in the Palace History
area) with a picture of some smiley faces playing cards in a Casino.  I was
proposing a kind of multiuser "Caesar's Palace" that you could use on your TV
set.  I didn't really want to make it an Interactive TV application, (I prefer
desktop computer apps because Interactive TV was (and is) very limited), but
this seemed like the best avenue for me to be able to work on the project.

A few days later, I received word from Mike La Joie (a Time Warner exec) that
Time Warner Cable wasn't interested in my idea.  "But," he said, "I know you
have an interesting idea here and can probably make a pretty cool demo, so why
don't you take a few days and make a demo?"  This was all the incentive I
needed, I whipped together a basic version of the Palace in about 2 weeks,
with background artwork of a few rooms (Harry's Bar, and a few others)
provided by in-house artist Damon Williams.

This version was very similar in many respects to the Palace you know today,
it had similar looking art, it had smiley faces, it had some basic props
(cigarette, martini glasses, party hat, and so on).  But it didn't work on the
Internet, instead, it ran on the local office (Appletalk) network, and it
didn't allow you to customize the avatars or make new ones, and it didn't have
a built-in scripting language - all that was to come later. But it did allow
the folks at Time Warner Interactive to experience the basic "palace

So after those two weeks, when the demo was ready, I put a bunch of floppy
disks on the front receptionists desk.  Each one had a "smiley face" sticker
pasted to it, and I left some flyers with a picture of a smiley face, that
said something like "Hi! I'm Sparky!" (Sparky was an early code-name for The
Palace), "Try Me!". And we got a bunch of secretaries and other employees to
try it out that day, around lunch time.

All the folks who tried it *loved* it, and got addicted immediately.  It was a
big hit with them, and they generated a lot of positive buzz inside the
company, which helped convince management to put more resources into the
project, and change it from a "demo" to a "real thing".

>      When and why did you decide to sell the Palace? Can you tell me about
> it: Did you contact someone to sell the product? Did somebody contact you?
> Who       convinced you of selling it? Who has the patent? Is there an
> agreement about the rights of the product? How was your process of getting
> in this business?

So, Time Warner Interactive decided to get behind "The Palace" as a product,
and they made me the technical lead on the team, and they brought in another
guy (Mark Jeffrey) to be the "producer" and handle a lot of the business and
management stuff (which I have never been all that interested in).  We were
basically co-producers in that I handled the creative and design end of things
and Mark handled the business side, although we collaborated on a lot of
things.  Mark had a lot of good design ideas, and some of my marketing ideas
(such as the idea to "sell the client and give away the server - which seemed
unusual at the time) came from me.

Originally, Time Warner Interactive intended to distribute the Palace as a
commercial CD-ROM. It would work both over local-area networks (as the
original demo did) as well as the Internet. Mark and I both felt that a "total
Internet" solution was the way to go, and the success of the game of "Doom",
which was distributed over the Internet seemed to provide a convincing
argument. The Time Warner exec in charge of the project (David Reardon) was
not onboard with that idea though, much to our frustration.  We were also
frustrated because we (Mark and I) wanted to release a public-beta version of
the Palace on the internet (to generate some word-of-mouth) but David (and
Ralph, his marketing guy) wouldn't let us, because they were afraid of
generating negative press or too many customer support calls.

Fortunately, for Mark and I, the division of "Time Warner Interactive" was
officially disbanded by the parent company (Time Warner) in September of 1995,
a few months before the Palace was supposed to be released.  That day there
was a big staff meeting and everyone was told that they were to be let okay.
Mark and I were taken aside and told that the parent company had some interest
in the Palace and would keep us around a little while longer. Officially, Mark
and I were now reporting to a new execr who worked for Warner Records in New

This was actually very good news for Mark and I because it meant we now had
some autonomy. The very day of that staff meeting, Mark and I looked at each
other and said "Let's release it!" and we put a beta version of the Palace on
the Internet that evening.  The beta test ran during September and October and
generated huge buzz on the Internet. Mark was very effective in making sure a
lot of influential "digiterati" and alpha geeks became aware of it. This
helped solidify our position at Time Warner, and also aroused the interest of
other companies who wanted to buy the product from Time Warner.

So by the time we released the official product in November 1995, the
marketing strategy had changed to a totally internet-based strategy, as Mark
and I wanted to do all along.  We had a small team of about 6 people who
worked on building the product, making the website where it would be
distributed and supported, and running one of the larger "hub" servers, the

We contracted with a fullfillment house to take credit card orders and sold
"registration" codes for the client at $20 bucks a pop (or was it $25?, I
don't remember - something like that).

At this point a number of companies expressed interest in "buying" the Palace
outright from Time Warner, including News Corp, Prodigy and Intel.  Eventually
Intel came in with a very sweet offer which Time Warner accepted, they paid a
few million (6 million I think) to Time Warner, and then the two companies
jointly set up the "The Palace, Inc." as a stand-alone company with management
mostly from the Intel side.  Time Warner remained on the board of directors.
Intel brought in an exec to run the company, named Mike Maerz, and they hired
a bunch of engineers from a division of Intel up in Portland (whose product
had recently been cancelled) and set up headquarters in Portland.

This was the beginning of the end, as far as I was concerned - things really
began to go downhill at this point -- we went from a nimble 6 person operation
to a bloated 50 person operation overnight.  I stayed with this company for
nearly 3 years (as Chief Technology Officer), and eventually resigned.

>      Who or what represented the biggest competitor to the Palace? Another
> product? Another way of online communication or entertainment?

We viewed most other chat applications, as our competitors, especially
graphical ones.  These included Worlds Chat, Worlds Away, Alpha World, and
many others.  There was also a popular text-based chat app that was a big
competitor (they're gone now and I can't remember their name). AOL had a
product that they modified to be a near clone of the Palace, and Microsoft had
a very similar product as well.

A big problem with "The Palace Inc" (which was eventually merged into which had similar problems), was that the chief executive,
Maerz, was extremely paranoid about competition, and tended to adjust
corporate strategy too quickly to try to respond to things in "internet time".
A little "low pass filtering" would have been helpful here.  The company
mutated *way* too easily. For example, during one period in 1998, the company,
thinking that consumer chat was a dead-end, tried to transform itself into a
"corporate chat" app, which was *really* stupid.

>      What kind of advertising was used for the Palace? Did you have a
> marketing plan or strategy?

Mark had a lot of connections in hollywood (he was a former News Corp exec)
and he exploited these to get promotional tie-ins.  We created a lot of
speciality Palaces to promote movies, like "Independence Day".  This worked
both ways because it helped promote the movie, and it helped promote the
Palace.  "The Palace Inc" had various marketing strategies, but they tended to
change very few weeks, they didn't do a very good job, and unforunately, they
fired one of their better marketing folks early on.

>      I truly believe that your story is now part of the history of the
> Internet.
>      My goal is to develop a product, which would cause an impact on
> as much as yours did. Can you give me an advice on what people in the
> Internet are now    looking for?

The best advice I can give you is to do what I did, and use your own gut to
guide you.  If *you* like something, chances are that other people will like
it too.  That's the best you can do.

There are *far* too many people out there who don't trust their instincts, and
intentionally make products they don't themselves like (such as crappy
Hollywood movies) because they think the public wants them.  Don't create
products for an imaginary public, create them for yourself.

Also, don't be afraid of having a little personality.  Don't drain your
products of personality in an attempt to avoid offending people (this is
something else that "The Palace Inc" did to the Palace, much to its

Make them personal.  Make them reflections of who you are.  People respond to
geniune personality in products and can develop affection for the odd little
quirk.  The proud owners of (original) Macintoshes and the New Beetle are good

- Jim