After the Glamour, A Modest Return
Monday, July 18, 2005
There are no giant corporate logos or opulent executive suites at Map ROI, the 30-person start-up in Sterling that Internet pioneer William L. Schrader has joined as chief executive. There is no army of marketing and public relations agents clamoring for time on the schedule as they used to do at his high-flying PSINet Inc. There is no secretary.
Instead there's a half-eaten bucket of pretzels and a window that overlooks a narrow parking lot across a maze of low, warehouse-like buildings. There's a desk and a computer loaded with links to upcoming government contracts, and a business plan that aims to help other companies manage the process of bidding on them. It's the technological equivalent, perhaps, of becoming a plumber or dentist, something safe and steady that people will always need -- far from the globe-spanning vision Schrader hatched at PSINet, only to have it crash around him.
After years spent fighting more than 50 investor lawsuits, tinkering with computers in his Loudoun County home and largely avoiding publicity, "I wanted to find something I could do, that somebody wanted me to do," said Schrader. "It had to be important to customers and it had to be profitable."
Schrader, whose Ashburn Internet service provider PSINet rose and fell as thunderously as any technology company in the region, is still a hero to many of his loyalists. But to others -- particularly investors -- he will forever be seen as a foolish cowboy who embodied the folly of the dot-com era.
His story mirrors the evolution of the local tech industry. Washington was put on the technology map during the 1990s as a communications epicenter, attracting some of the best scientific minds in the world and promising to indelibly alter the way people work and live. The crash brought a measure of heartbreak and economic turmoil; when the rebound began, it was catalyzed not by paradigm-setting ideas but by the stable and unflashy flow of money from government agencies.
The leaders of the tech boom have since dispersed, most of them after cashing in enough stock options to do what they want for the rest of their lives. Some, like Mario Marino, founder of the firm that became Legent Corp., and James V. Kimsey, former chief executive of America Online, have devoted themselves largely to philanthropic causes. Others like Douglas E. Humphrey, founder of Digex Inc., are enjoying early retirements. Alex J. Mandl, former chief executive of Teligent Corp., and Craig O. McCaw, founder of XO Communications, have gone on to lead other telecom ventures. America Online co-founder Steve Case is still trying to change the world, this time through a health care and hospitality company called Revolution.
Schrader, 53, still believes his vision for PSINet was a good one, but concedes he got caught up in a dangerous race with competitors. The company was focused on getting bigger fast, not on making a profit or ensuring that the amount of fiber-optic cable it strung had some connection to consumer demand.
"We moved a little too fast. We didn't need to enter three countries at once," he said. "We could've just entered one. We would've been behind but we would still be in business now."
Schrader began building computer networks for universities in his native New York state in the early 1980s, but soon became convinced that there would be an enormous market for them in the commercial world. He founded Performance Systems International in 1989 with $80,000 in credit card debt, funds from an early partner and loans from friends and family.
He predicted the company, eventually renamed PSINet, would be a $1 billion firm in 10 years. He was wrong. It took 11.
Schrader's mission was to create the biggest, best-performing network in the world. The company went public in 1995, raised $4 billion on the capital markets, gobbled up dozens of Internet companies around the world, and grew to a 9,000-person firm with legions of employees who regularly worked six- and seven-day weeks.
"I know it sounds cliche, but this was the mid-1990s -- people really did drink the Kool-Aid," said Brian K. Muys, who worked in PSINet's public affairs division. "There was lots of excitement, and lots of stress to go with it."