Letter #111: John Warnock (1986)
Founder & CEO of Adobe and Principal Scientist at Xerox PARC | First Adobe Shareholder Letter
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Over the weekend, Adobe cofounder John Warnock passed away. Today, I’d like to share with you the very first shareholder letter he wrote for Adobe after they went public in 1986.
John Warnock founded Adobe in his garage in 1982 alongside Charles Geschke, serving as President for the first two years and CEO for the next 16 years. Warnock retired as CEO in 2000 and as CTO in 2001, but served as chairman of the board until 2017 and remained on the board until his death this weekend. John and Charles started Adobe to further develop Interpress and focus on developing the Postscript page description language, and under their leadership, Adobe went from an idea to a ~$250B company.
The year John and Charles founded Adobe, Steve Jobs actually tried to buy it for $5mn, but was rebuffed. However, their investor urged them to work something out, and they sold him ~20% of the company and secured a 5-year license fee for Postscript in advance. This reportedly made Adobe the first company in the history of Silicon Valley to be profitable in it’s first year.
The Adobe and Apple partnership proved to be a fruitful one, with Adobe’s software and Apple’s hardware forming the first desktop publishing DTP system (DTP systems allowed people to electronically compose documents and print them as they appeared onscreen).
Prior to Adobe, John was a principal scientist at the legendary Xerox PARC (Palo Alto Research Center) alongside Charles. It was there that they developed Interpress, the printer protocol that would become the foundation of Adobe. However, when Xerox declined to pursue the Interpress idea further, John and Charles decided to leave and start Adobe.
Prior to PARC, Warnock held key positions at Evans & Sutherland Computer Corporation, Computer Sciences Corporations, IBM, and the University of Utah. He has received many awards, including the National Medal of Technology and Innovation (one of the nation’s highest honors bestowed on scientists, engineers, and inventors), the Computer Entrepreneur Award (from IEEE Computer Society), the Marconi Prize, and many more.
Relevant Resources:
Letter
The year 1986 was eventful for the printing and publishing industry and a year of growth for Adobe Systems Incorporated. In almost every computer industry show, conference and trade magazine, the term "Desktop Publishing" became commonplace. This term is used to characterize a rapidly growing group of computer systems and programs that have changed the way printed material is produced in business. This new use of personal, mini and mainframe computers is penetrating almost every aspect of business communication.
Adobe Systems is participating as a strategic component in this rapidly growing market. Our activity is focused in three key areas.
Adobe's POSTSCRIPT® page description language, is being adopted by a growing number of companies for use in their laser printers. POSTSCRlPT's widespread use is making it a de facto standard for controlling laser printers. Seventeen different printers incorporating POSTSCRIPT interpreters are now offered by thirteen companies. Additionally, the language is supported by more than 180 software firms.
Adobe Systems also develops a variety of character styles (typefaces) that are used with laser printers. Because of the large installed base of POSTSCRIPT machines, and our aggressive typeface development schedule, Adobe's business of supplying typefaces to users is growing al a steady rate. This technically difficult and time consuming expansion of our library is also increasing the barrier to entry for companies with competitive language interpreters.
This last year we developed cheaper and faster printer controller designs for use by our customers. We organized our internal development systems so that we can bring customers to market in a more timely manner. And we implemented a variety of printer controller emulators for use with POSTSCRIPT interpreters in our customers' machines.
We have also increased our research and development aimed at new products and technologies. This development effort will diversify our business base, but will also strengthen our current activities.
In 1984 XEROX announced lnterpress, a competing language to POSTSCRIPT. Although XEROX has delivered a reduced-functionality version of Interpress on a few machines, we believe that the presently available level of Interpress does not compete effectively with POSTSCRIPT. In 1986 Imagen announced DDL, another competing language. This company has not as yet delivered a product to the marketplace. We expect, however, that Imagen's customer, Hewlett Packard, will ship machines in the first half of calendar 1987.
Although the general computer market has experienced a slowdown during 1986, our business has grown through the buyer's acceptance of Desktop Publishing. This acceptence is due primarily to Apple Computer's success in selling its Macintosh computer along with its LaserWriter, and LaserWriter Plus printers. In 1986 our revenues grew to $16.1 million from $4.6 million in 1985. This represents a 240% increase. Our net income in 1986 grew lo $3.5 million as compared with $.5 million in the previous year. The 1986 profit represents a 623% increase over the previous year.
We at Adobe Systems feel positive about our business prospects, and look forward to an exciting year ahead.
John E. Warnock
President, and Chief Executive Officer
Wrap-up
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