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Originally published January 13, 2010 at 9:33 PM | Page modified January 14, 2010 at 2:27 PM

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RealNetworks founder Rob Glaser steps aside

Rob Glaser, the idealistic founder of pioneering digital-media company RealNetworks, is stepping down as chief executive from the company he started in 1994 after he left Microsoft.

Seattle Times senior technology reporter

Bob Kimball

NAMED president and acting CEO of RealNetworks

Age: 46

Title before change: Executive vice president and general counsel.

At Real: Joined company in 1999.

Education: Bachelor's degree, University of Michigan; J.D., University of Michigan Law School

Previous jobs: Worked at Sidley & Austin law firm, Chicago, and as senior attorney at IBM Global Services

Source: RealNetworks Web site

Rob Glaser

STEPPING DOWN as CEO of RealNetworks

Age: 47

Title before change: Founder, chairman and CEO; will remain chairman.

At Real: Founded the company in 1994, then known as Progressive Networks.

Education: Yale University, bachelor's degrees in economics and computer science, master's degree in economics

Previous jobs: Worked for 10 years at Microsoft, including as vice president of multimedia and consumer systems

Source: RealNetworks Web site

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Rob Glaser, the idealistic founder of pioneering digital-media company RealNetworks, is stepping down as chief executive from the company he started in 1994 after he left Microsoft.

Over the years, the intense, direct and unpredictable New York native has been one of the more intriguing characters in Seattle's tech industry as it rapidly evolved in the 1990s beyond airplanes and operating-system software.

Glaser's success enabled him to become a co-owner of the Mariners, a major supporter of Democratic Party causes and a godfather in Seattle's tech industry, where many former employees went on to start their own companies.

Now he'll be spending more time with family and "civic" projects outside of Real, he told employees.

"It is the end of an era," said Dan Shapiro, who left Real to start phone-software company Ontela in 2005.

"That is one of the few companies that was founded in the image of one leader who stood the test of time, made it through two full cycles of the economy," Shapiro said. "It's going to be a lot less colorful of a place now that Rob's gone."

Glaser, 47, follows the path of entrepreneurs from Bill Gates on down who eventually and reluctantly cede control of their pride and joy.

Whether Glaser overstayed was a question on the minds of investors, who drove RealNetworks' shares up 4 percent to $4 in after-hours trading after his move was announced Wednesday. The stock kept rising Thursday, climbing 76 cents, or 19.7 percent from Wednesday's close, to $4.62.

Glaser, who was not available for comment Wednesday, is departing during a time of transition for himself and the Seattle-based company, which has struggled in recent years as first Microsoft and then Apple overtook Real's early lead in the delivery of digital music and video streamed over the Internet.

Over the past several months Real executives and board members have been preparing a new strategic plan for the company to reorganize and refocus.

Central to the discussion is the future of Real's casual-gaming business, which includes such titles as online "Scrabble" and "Uno." That business is a valuable asset Real considered spinning off into a separate company in 2008.

Sharing a limo with a reporter in Las Vegas last Friday at the Consumer Electronics Show, Glaser gave no indication of his imminent departure and waxed enthusiastic about the potential of Real's business producing games played on the PC and Facebook.

Now the company's new strategic plan will be put in place by Bob Kimball, the company's general counsel, who became president and acting chief executive.

"Rob has made his own decision to leave the company and change because the timing was right for him," spokesman Bill Hankes said. "The company has a strong management team in place to open the next chapter of the company."

Real is conducting a search for a new chief executive. Kimball, an IBM veteran who joined Real in 1999, is a candidate, Hankes said.

In an e-mail to employees, Kimball said Real will change the way it operates and organizes its business within a few weeks.

"We want RealNetworks to be a more focused, faster growing and profitable company," he wrote. "We are going to simplify the way we do business, empower employees to do their jobs, and hold people accountable for their results."

Real lost $199 million in the first nine months of 2009 on sales of $417 million, although it eked out a $1.5 million profit in the quarter ended Sept. 30.

Its fourth-quarter outlook predicted year-over-year declines in music and game sales and flat revenue in media software and services.

RealNetworks' chief operating officer, John Giametteo, announced Tuesday he's leaving for another company, but Hankes said the timing was "purely coincidental."

Meanwhile, Glaser's third child is on the way and he told employees he's looking forward to spending more time with his family and with civic pursuits.

"While there's never an ideal time to make a change like this, this is as good a time as any," he said in an e-mail sent to employees Wednesday afternoon.

"We've weathered the brunt of the Great Recession and have done what we said we wanted to do, which was to keep our core solid while also building for the future. We've also undertaken an extremely rigorous strategy review and have a very exciting road map for the future that you'll hear about in the days and weeks ahead. And the start of a new decade is a good time, poetically, to pass the baton."

Glaser has always been heavily committed to political causes.

The company was originally called Progressive Networks and dedicated a portion of its profits to nonprofit causes. Glaser's also been a major supporter of his former employee, Sen. Maria Cantwell.

While left-leaning political organizations may welcome Glaser's increased attention, Wall Street isn't shedding tears at his departure.

Most large investors have long since given up on the company, noted Andy Hargreaves, an analyst at Pacific Crest Securities in Portland.

"If they hadn't already run, I don't think they were there for Rob Glaser's guidance and management," he said.

When the stock market closed Wednesday, Real's $520 million market value was less than the $607 million assets Real reported in October, including $373 million in cash and short-term investments.

Hargreaves said it could make sense to break Real into pieces.

He thinks the games group is the most valuable piece, but the Rhapsody subscription music service could get a boost if Apple introduces a similar service and popularizes the approach.

Brier Dudley: 206-515-5687 or bdudley@seattletimes.com

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