The Rise and Fall of a Software Star; Phil Katz Loved Code - and Liquor


MILWAUKEE -- To his fans, Phillip W. Katz was a folk hero of the computer culture, a pioneer who set the standard for file compression, or "zipping." Employees at his company, PKWare Inc., found him a beneficent, if often absentee, boss. Friends knew him as a shy jokester who loved partying and picked up tabs with wads of 50- and 100-dollar bills.

But there was a darker Phil Katz, one only half-hidden from those who knew him. For years, he nurtured a serious, steadily worsening drinking problem. As it deepened, Mr. Katz spent more and more time drinking alone, often in strip clubs. He brushed off questions about his problem and fell away from his friends. Even his widowed mother, when she challenged him one too many times, was cut out of his life. At the office, "it was well-known that you didn't mess with him," says Steven Burg, a longtime employee who left the closely held PKWare in 1997. The tacit understanding, he says, was simple: "Phil drinks, and there's nothing you can do about it if you want to stay employed here."

[illustration of Phil Katz]Eventually, Mr. Katz, while still nominally running the company, embarked on a strange underground life. He stopped coming to work and stayed in touch with the office only by fax and e-mail. Fearful of arrest warrants stemming from his drunk driving, he kept away from his condominium in a wealthy northern suburb and stayed in a series of South Side hotels. In one such place, a maintenance man found the 37-year-old Mr. Katz dead on April 14. He had checked in a week earlier, left instructions for housekeepers to bypass his room and hung a "Privacy Please" sign on his door handle. He was sitting on the floor by his bed in his underwear, cradling an empty bottle of peppermint schnapps in his left arm, with two other empty liquor bottles nearby. The official cause of death: acute pancreatic bleeding caused by chronic alcoholism.

A Man Alone

Mr. Katz had long been troubled, but few who knew him realized how badly. His image as a software pioneer masked a profoundly isolated man who was slowly killing himself. Largely outside his colleagues' view, a sinking Mr. Katz had gradually disassembled his old life and constructed a new one centered on his illness. He made a serious effort to turn things around in early 1999, receiving about eight weeks of treatment at a hospital and staying sober through the summer. But he started drinking heavily again early this year, says a friend, Lisa Marie Marciniak. "This spun out of control within 90 days," she says. "He spiraled quicker than any time before. He went from fine to dead." As a teenager, friends say, Mr. Katz was a skinny, mop-haired, asthmatic kid. Confident in a few arenas -- he enjoyed motor biking with friends -- he was awkward in social situations, especially dating. Shorter than most, he was nicknamed The Elf in high school and known as one of the "brains," says a friend, James G. Chizek. He avoided athletics, excelled at chess and perpetually ran late.

Death in the Family

When Mr. Katz was 19, his father, Walter, with whom he had spent many hours playing chess, died unexpectedly after heart surgery at the age of 55. Though he rarely showed much emotion, friends say the young man struggled with the loss.

After graduating from the University of Wisconsin in Milwaukee with a computer-science engineering degree in 1984, Mr. Katz moved through two jobs writing code. Well into his 20s, he lived at home with his mother, Hildegard, on a quiet street in suburban Glendale.

At home, Mr. Katz often worked late into the night at his IBM personal computer, recalls Brian Kiehnau, ex-husband of Mr. Katz's older sister, Cynthia. He quickly found a place in the growing network of computer hobbyists. Home computing was then a cloistered world of clunky personal computers with little memory. Users communicated through networks of bulletin boards, a chat-room precursor.

Mr. Katz became known for posting long, often witty messages online. He also displayed a formidable intelligence, spending his spare time tackling a sticky problem: how to compress information so that downloading could be faster and more data stored on computer disks. He ultimately produced a breakthrough program that combined several techniques then in use and automatically determined the best in any situation.

"He didn't do it to get rich," says Bob Mahoney, who then ran a big bulletin-board system, ExecPC BBS. "He did it for himself."

Mr. Katz posted his code, which he first called PKArc, on Mr. Mahoney's bulletin board, using the "shareware" approach, in which users are invited to try a program and send money to the inventor if they like it. Almost overnight, dozens of people started calling and sending Mr. Katz money, recalls Douglas Hay, who with Mr. Burg shared an office with Mr. Katz at a small company called Graysoft Inc.

"Here's Phil, making, I'm guessing, $30,000 a year or so, and all of a sudden he got a $10,000 check in the mail," Mr. Hay says. "Then he got another $10,000 check in the mail, and he had made almost a year's salary in two weeks. That's when he decided he could quit."

On His Own

In 1986 Mr. Katz started his own firm, PKWare, working from his mother's kitchen table and awarding her a small ownership stake. Mrs. Katz quit her job as a nurse instructor at a technical college to handle administrative duties, while he wrote code.

By the late 1980s, Mr. Katz had become a major name online and a minor celebrity around Milwaukee. Big companies such as General Motors Corp. sent checks for the code, which became the computing standard.

When the former market leader in compression software, Systems Enhancement Associates Inc. of Clifton, N.J., sued for copyright infringement, claiming Mr. Katz had issued a simplified rewrite of its original Arc code, it only burnished his legend: Admirers orchestrated a campaign painting him as a David facing a corporate Goliath. The case was eventually settled. Mr. Katz retooled his code and renamed it "PKZip," implying speed.

Though uneasy with his growing fame, Mr. Katz enjoyed the benefits of success. He bought a condo by a golf course in the exclusive northern suburb of Mequon and finally left home. He started driving a red Nissan sports car with PKWARE plates. He bought compact disks by the score and developed a taste for fine watches and other jewelry.

And rumors began to spread about late nights, women and booze. "Frankly, we were saying, 'Go for it, Phil,' " says Greg Ryan, a veteran of the Milwaukee computer scene. "It actually gave a lot of the other programmers inspiration to do other things. I kind of revered him, too."

A Growing Company

As PKWare grew, Mr. Katz and his mother added staff and set up shop in an office complex in Brown Deer, north of Milwaukee. At its height, the firm employed about three dozen people and had annual revenue of around $5 million, insiders say. Robert Gorman, PKWare's sales and marketing director, declines to comment on the figures.

The Katzes seemed happy just to occupy a niche. "It was always a very relaxed atmosphere. There was never any pressure to release software," Mr. Burg says. The Katzes cultivated a family feeling, splurging on dinners out, paying generous Christmas bonuses and sometimes doubling contributions to employees' 401(k) retirement plan.

Mr. Katz never showed much interest in the mundane tasks of managing. While he ruled on strategic matters, he left duties such as licensing, payroll and managing employees to his mother, say current and former employees. They add that though she arrived early and demanded promptness from others, her son often didn't show up until lunchtime or later.

With time, the mother-son relationship grew strained. Some staffers complained to Mr. Katz that his mother was controlling and secretive, co-workers recall. His response was complicated, they say. He sometimes griped that she was domineering and was interfering in his life, yet he also leaned on her and castigated those who tried to go behind her back to appeal to him. To employees, Mrs. Katz seemed both fiercely protective of her son and frustrated by his seeming indifference.

Rather than assert more control, Mr. Katz started coming in later and later. He would go straight to his desk among the programmer -- rarely using his president's office -- and write code late into the night. While he didn't show much emotion, he liked hanging out, deconstructing "Star Trek" movies, telling jokes and competing in computer games such as Doom. "We almost lost a year of productivity playing Doom," says one employee.

"Anything that was related to paperwork, he just didn't care," Mr. Hay says. "He used to come in at, say, 4 o'clock and his mom would be standing there and he'd be like, 'What?' You could just tell he was already irritated.

"She'd say, 'You need to look over these faxes," " Mr. Hay continues. "He'd say, 'I don't have time." She'd say, 'They've been there two days." He'd say, 'Put them in my in-basket." She'd say, 'It's already an inch thick."

It didn't help that Mrs. Katz was increasingly pressuring her son to get help for his drinking and demanding to know more about the women she'd heard he was meeting at strip clubs, insiders say.

Mrs. Katz declined to comment for this article, as did her daughter, Cynthia Kiehnau. Asked in writing about several incidents employees described, the Katzes' attorney, Fredrick J. Safer, wrote that the questions contained "numerous inaccuracies" but declined to answer them or be specific.

Behind the Wheel

In 1990, Mr. Katz was charged with driving under the influence of alcohol. At least three other such charges followed, along with arrest warrants for driving with a suspended license and bail jumping. Mr. Katz paid thousands of dollars in fines but appears not to have served a 45-day jail sentence he was given in 1994 for drunk driving.

According to Milwaukee County District Attorney E. Michael McCann, Mr. Katz first delayed the sentence with an appeal, then twice failed to show up to arrange to serve the time. On his subsequent drunk-driving tickets and arrests, officials apparently didn't notice the unserved sentence. Mr. Katz usually just posted bond, often forfeiting it later by missing his court date, Mr. McCann says.

It isn't uncommon for traffic violators who jump bail to escape arrest, the D.A. says. The sheriff's office doesn't have the staffing to track many fugitives, and priority goes to serious offenders such as robbers. "I don't know any community of any size where there is a substantial effort to apprehend traffic offenders," he says.

The alcohol assessments that drunk-drivers must undergo in Wisconsin sometimes lead to mandatory treatment for alcoholism. Whether they did in Mr. Katz's case the records don't say.

Because he delegated many tasks, his alcoholism didn't much disrupt PKWare's day-to-day operations. It may have hurt strategically. Mr. Katz had always coded in DOS. But Windows was becoming the dominant operating system by the early 1990s. Mr. Katz, who couldn't write in Windows and dismissed it as a fad, didn't get a Windows product out until 1996.

Once, a staffer complained to Mr. Mahoney that Mr. Katz was delaying the release of a product and spending too much time away from work. To prod his old friend, Mr. Mahoney posted a notice on his bulletin board saying that the release had taken too long and threatening to switch his files to another format, which he says he never intended to do.

In one way, the ploy worked: Mr. Katz released his new software within a month. But he never spoke to Mr. Mahoney again. "I've always felt bad about the incident," Mr. Mahoney says. "But Phil was losing his connection to the responsibilities of the real world. The threat was a last resort to pull him back."

One day late in 1994 Mrs. Katz, unable to reach her son by phone, called Mequon police and asked them to check his home, according to local officials and friends of Mr. Katz. A police officer broke into Mr. Katz's condo through a basement window. He found mounds of garbage stacked on the floor and furniture. Mr. Katz, who was home, was frightened, then livid at his mother. He agreed to call his mother only when the officer promised to leave.

Break With Mother

Not long afterward, according to David Siebenaller, then PKWare's chief operating officer, Mr. Katz left a letter instructing Mr. Siebenaller to kick Mrs. Katz out of the company. Mr. Katz's former brother-in-law, Mr. Kiehnau, says that a flustered Mrs. Katz left on her own and eventually agreed to a buyout by her son.

Her departure sent a message to others about the consequences of confronting Mr. Katz about drinking. By this time, "you knew that if you said anything like, 'Phil, you've got a problem,' it would be the end of your discussion for the day," Mr. Hay says. "He would just turn away. You really were on pins and needles the whole time you were with him."

In 1995, Mr. Katz's legal troubles worsened. At 3:24 a.m. one night in May of that year, he was again pulled over for drunk driving. Given three tickets, he faced, if convicted, anywhere from 30 days to a year behind bars. He once again skipped court dates, though, and warrants for his arrest begin to pile up.

Police sometimes stopped by the office looking for Mr. Katz, but by the end of 1995 he wasn't coming to work at all, nor staying at his condo. Several colleagues say he feared jail and had told them he would disappear until his legal troubles blew over. Others say Mr. Katz, who was still drinking heavily, was simply ashamed. Though he continued to write code and make major corporate decisions, he stayed in touch only by fax and e-mail.

Days or even weeks could pass before he responded to messages. He began staying in motels and using a Mailboxes Etc. outlet. His $200,000 salary, plus other withdrawals he requested, was deposited directly into his account.

Day-to-day functions continued at PKWare. Mr. Katz laid out for his managers how far their authority went and when they needed to seek him out. "It still was a pretty fun place to work," says Travis Gensch, a former programmer there. "You got to do software which was used by the masses, which isn't too much of an occurrence in Milwaukee." Employees hoped Mr. Katz would someday sober up and return.

At the strip clubs where he drank, Mr. Katz rarely spoke of his company or his achievements. He was known as a quiet, very heavy drinker. He favored Bacardi-and-Coke and Rumple Minze, a 100-proof German liqueur that he drank in shots. He often chatted with the dancers but wasn't known to be pushy.

Dancer Friends

Chastity Fischer, a sometime dancer who met Mr. Katz in 1994, says she was one of his closest friends during the late 1990s. Ms. Fischer provided an account of her relationship with Mr. Katz to the Milwaukee Journal Sentinel last month. In an interview with The Wall Street Journal, she described him as sweet and naive, often too generous with dancers who asked him for favors.

[illustration of Chastity Fischer]

Several spent heavily on his credit cards. "You could almost just tell Phil what to do," she says. "People would go up and say, 'Phil, I need this right now. Could you please help me out?' I think he was like a little kid inside, almost childlike."

He bought Ms. Fischer a truck with the proviso that she chauffeur him on errands, such to the liquor store, she says. He took her to movies, sometimes carrying a flask that he tried to hide from her, and on cruises and trips to Las Vegas.

When Mr. Katz talked about work, he complained that people took advantage of him, Ms. Fischer says. She says he confided to her that he liked himself only when he was drinking -- that alcohol made him funnier and looser. Sometimes, Ms. Fischer says, he called her late at night and spoke into her answering machine, drunkenly moaning, "Chastity, I'm so alone." If she picked up the phone, he would hang up.

Occasionally he talked of his mother, with a mixture of bitterness and longing, Ms. Fischer says, and once or twice sent her e-mails. "He felt she was controlling, but when she wasn't there anymore, it was almost like he couldn't handle it," Ms. Fischer says. "He wanted her to be away, but I think when she really was, he almost freaked out. Real life was hard for him."

Ms. Marciniak, who met Mr. Katz a decade ago when she worked as a bartender and dancer, says Mr. Katz lived in fear of being sent to jail. He dreaded the memory of his previous short stays in cells while awaiting bail. One thing he feared was that his asthma inhaler might be taken from him in jail.

"He was on the lam," Ms. Marciniak says. When he was sober, "the reality of jail came to him," and that often started him drinking again. "You'd think he was a murderer," she says. "That's how he felt they treated him."

Mr. Katz spent long days in his hotel rooms watching CNN, taking naps, reading science-fiction magazines and astronomy books and playing games or logging on to his computer, says Ms. Marciniak. "He wanted to be out and about," she says. "He loved going out to eat and he was trapped in hotel rooms eating pizza or Taco Bell. I would tell him, 'Phil, if you could just get this out of your way.' "

In 1997, when PKWare was inducted into the ShareWare Hall of Fame, Mr. Katz skipped the awards dinner in Rhode Island. When his childhood friend Mr. Chizek, now an Air Force chaplain, e-mailed an offer to help, there was no reply.

Inside the Condo

In August 1997, Mr. Katz faced a crisis when neighbors complained of a stench from his condo. Local officials couldn't reach Mr. Katz and finally got a search warrant to enter his home. The garbage piles had grown. Insects infested his home.

"It was quite a scene: a beautiful neighborhood, a very nice building," recalls John DeStefanis, Mequon's city attorney. "The interior was unbelievable: magazines, spoiled half-eaten food." Officials also found a collection of sex toys and videos.

The city cleaned up the mess, collecting $8,000 from him for its trouble. It did nothing for Mr. Katz. "You can't force anyone to get help unless he's a danger to himself or others," the city attorney says. But Mr. Katz told Ms. Fischer that the raid and local publicity about it made him feel invaded and embarrassed.

Until almost the end, Mr. Katz kept in sporadic touch with the office and occasionally saw his employees at computer trade shows out of town. He was involved in a breach-of-contract suit, now settled, that PKWare filed against another firm last year. A few months ago, PKWare released a software product Mr. Katz had worked on. But many of his oldest staffers say they saw him only a handful of times in the last five years.

Several say they considered calling the police and trying to find him and force treatment on him. "We thought, 'If we can get him into jail we can get this over,' " says Mr. Hay, who left the company last year. "But everyone said he would find out who called the cops and that person would be fired." They asked themselves if they would share the blame if their boss were involved in a fatal car accident and concluded that yes, they would.

By the last months of his life, Mr. Katz had lost most of his hair and developed a paunch, which he and Ms. Fischer joked about. She says that when she last saw him in 1999, he was drinking as much as three liters of liquor a day and hiccuping and belching uncontrollably. His teeth were rotting. He had the shakes.

"I told him, 'You just have to get some help,' " Ms. Fischer says. She says he told her on the phone that he had received a week's treatment, but then he stopped calling her. "I think he was more or less ashamed," she says.

Drying Out

His friend Ms. Marciniak says she and PKWare's Mr. Gorman escorted Mr. Katz to Charter Hospital in suburban West Allis at 4 o'clock one morning in February 1999. A doctor at the now-closed hospital told him he would die if he kept drinking, she says.

"He sat there and told me I saved his life," Ms. Marciniak says. "He did not want to die." Mr. Katz told her not to call his mother, she says.

In the latest visit, Mr. Katz stayed at the Charter near Milwaukee for about eight days, then spent about six weeks living with Mr. Gorman and attending daily sessions at the hospital, according to Ms. Marciniak. She says Mr. Katz stayed sober for as much as seven months after this treatment.

Last summer the two visited Mexico, where Mr. Katz climbed hundreds of narrow steps on Mayan temple ruins. "He was looking forward to just hanging out for a couple of more years," she says. "He wanted to run his company. He wanted his life back." She doesn't know why he eventually started drinking again.

When Mr. Katz's body was found in April, his mother said she hadn't seen him in five years, according to the medical examiner's report. Although she was notified within hours after his body was found, employees of PKWare say they weren't told until a few days later, after the funeral had been held.

Mrs. Katz, as next of kin under Wisconsin law, stands to inherit the company. Employees expect her to sell it. Their mood is somber, some expecting to lose their jobs when the firm is sold.

PKWare recently posted a brief remembrance of Mr. Katz on its Web site. "We will greatly miss his caring, generosity, help and kindness," it says, and "will always view him as a gentle and special human being who will be sadly missed."

Some nurse private regrets. "A few months ago, I was thinking about going out looking for him," Mr. Hay says. "I said one of these nights I'm going to go out and find him, see if he was doing OK. I didn't really know it had gotten that bad."