The genius who built a multimillion-dollar software company known worldwide for its pioneering “zip” files had died of acute pancreatic bleeding caused by chronic alcoholism.
He was alone, estranged long ago from his family and a virtual stranger to employees of his own company, PKWare Inc. of Brown Deer.
He was 37.
It was an ignominious end for a man who created one of the most influential pieces of software in the world – PKZip – and it attracted the attention not only of the techno-faithful but of the mainstream press across the nation.
Katz’s inventions shrink computer files 50% to 70% to conserve precious space on hard disks. His compression software helped set a standard so widespread that “zipping” – compressing a file – became a part of the lexicon of PC users worldwide.
But the riches his genius produced were no balm for what had become a hellish life of paranoia, booze and strip clubs. Toward the end, Katz worked only sporadically, firing up his computer late at night, while filling his days with prodigious bouts of drinking and trysts with exotic dancers.
Katz owned a condominium in Mequon but rarely stayed there. Desperate to avoid warrants for his arrest, he bounced between cheap hotels near the airport. He got his mail at a Mailboxes Etc. store in Franklin.
“This guy did not have one friend in the world. I mean, a true friend,” says Chastity Fischer, an exotic dancer who often spent time with Katz and was one of the last people to see him alive.
“Just imagine having nobody in your life. Not anybody to call. Nobody.”
High School Outcast
Phil Katz was a quiet, asthmatic child whose athletic pursuits as a kid went no further than riding dirt bikes in his Glendale neighborhood.
A 1980 graduate of Nicolet High School, Katz was a “geek” long before that term was linked with dot-com companies and piles of money.
“He was an outcast, definitely someone who was picked on,” says Rick Mayer, who graduated with Katz. “He spoke in a somewhat nasal tone. He was short, and, well I don’t want to say homely, so I’ll say he was plain looking.”
After hearing of Katz’s death, Ray Fedderly, a Milwaukee cardiologist who sat next to Katz in high school honors math and physics classes, opened his high school yearbook and found an angst-ridden message.
“I enjoyed working with you in mathematics and physics classes through the four terrible, long, unbearable, tortuous, but wonderful years at Nicolet,” Katz wrote. “I hope your future is bright and your life is happy (if possible). May a calculator bring great happiness to you.”
“If I were a physician as I am now when I was 18, I would have known what to do with that note,” Fedderly says. “I now know that that was a call for help. That was not a joke.”
A loner by nature, Katz gravitated to analytical pursuits.
Katz and his father, Walter, spent weekend afternoons playing chess and evenings writing code for programmable calculators in the days before PCs forever changed computing.
Since programmable calculators had very little memory, Phil and Walter had to work very efficiently.
“The earliest program I remember him writing was a game program that dealt with landing on the moon,” says Brian Kiehnau, Katz’s former brother-in-law who met him in 1977.
“It was very crude and simple, but it was complex for what he had in terms of hardware. He got real good at optimizing programs, and he learned to get the job done with the least amount of instructions and running times.”
In 1980, Katz entered the computer science program at the University of Wisconsin-Milwaukee. Around the same time, Walter and Hildegard Katz bought Phil his first computer, an original IBM PC. It had two floppy drives, a monochrome monitor and 64K of memory, an astoundingly small amount compared with today’s machines.
Once he got the PC, Katz started writing programs, spending most of his free time on electronic bulletin board services, the precursors of the Internet.
The services quickly became Katz’s social circle, a place where he hooked up with others who understood his sophisticated programming techniques and shared his passion for computers.
Gradually, Katz developed a fondness for sharing information on the services, since interacting with others helped make his programs better. Those experiences would influence Katz to embrace the “shareware” approach to distributing PKWare’s software. With shareware, users try a product, and if they find it valuable, pay the person who created it. In the case of PKWare, users paid $47 and received a manual and free upgrades.
“He spent many, many hours talking to people and helping people. He would go to computer user groups and spend hours with them,” Hildegard Katz says. “He was very, very, giving. This was his great love.”
But in the spring of 1981, tragedy overtook the family, and things would never be the same for Phil Katz.
Walter, 55, plagued by recurring chest pains, underwent open heart surgery. Within hours, he was dead.
Phil Katz took his father’s death very hard. Years later, in the haze of his drinking binges, Katz told Fischer how the loss had affected him.
“It tore him up inside when his father died. One time we went to his grave,” Fischer says. “He’d always say that when his father was alive they’d go fishing and do man things.”
Walter’s death drove his son further into solitude and deeper into a one-on-one relationship with his computer, say friends and family members.
Writing Programs at Night
Katz graduated with a computer science degree in 1984and was hired as a programmer for Allen-Bradley Co. He wrote code to run “programmable logic controllers,” which operate manufacturing equipment on shop floors worldwide for Allen-Bradley’s customers.
Katz left Allen-Bradley in 1986 to work for Graysoft, a Milwaukee-based software company. He spent evenings holed up in his bedroom writing his own programs.
His project: An alternative to Arc, the then-common program for compressing files. Using algorithms, Katz wrote programs that imploded information by telling it, for example, to take every “a-n-d” out of text. That would eliminate every “and,” “hand,” and “sand.” A good program takes out these and thousands of other combinations of letters and restores them when needed.
Katz bounced early versions of the software, called PKArc, off his buddies on the bulletin boards and spent countless hours refining it. By 1987, the software had created such a buzz online that PKArc started to steal market share from Arc’s creator, System Enhancement Associates of New Jersey.
“I got a check in the mail and I thought, ‘Gee!’ that’s pretty neat,” Katz said in a 1994 interview with the Journal Sentinel. “Then over the next few months, I got more checks in the mail.”
He turned to his mother for help.
“People kept calling him saying, ‘We would like to use your software, and we want to pay you money for it,’ ” Hildegard says.
Katz left Graysoft in 1987 to strike out on his own. PKArc’s sales dwarfed his Graysoft salary, which was in the low-$30,000 range, says Steve Burg, a former Graysoft programmer who joined PKWare in 1988.
In the beginning, Katz did most of his work at Hildegard’s kitchen table. They hired an answering service to handle the flood of phone calls, and offered Burg a job as a developer.
Colleagues were impressed by his intellect.
“He was extremely intelligent,” says Doug Hay, who joined the company in 1988 and stayed until June of last year. “He had all the equations from exams memorized from 10 years earlier, things you generally forget 20 minutes after the test.”
Almost overnight, denizens of the bulletin boards switched from .arc compression to .zip in what became known as the arc wars.
System Enhancement sued PKWare in 1988 for copyright and trademark infringement. In 1989, as his legal costs mounted, Katz agreed to settle. Full terms of the settlement were not disclosed, but representatives of the New Jersey company may have been surprised when they finally met their nemesis.
“The lawyer for System Enhancement showed up at Hildegard’s house expecting a big company,” Kiehnau says. “He had an address from the bulletin boards, so he thought there would be a big glass building or something. It was really funny.”
Publicity about the lawsuit on bulletin board services nationwide helped fuel a backlash against System Enhancement, which accelerated the death of .arc as PKWare introduced new, incompatible archival tools with better compression algorithms.
Money poured in.
“Phil became a very wealthy man in a very short period of time,” Burg says.
While Hildegard worked to keep business matters in check, Katz devoted nearly all his time to programming. He didn’t come to work until late afternoon and worked well into the night, so he could have complete silence and not have to interact with anybody, early PKWare employees say.
“He was rarely around. He did what he had to,” Kiehnau says. “If the business would have went belly up two years after it started, I don’t think he would have cared.”
But Katz’s unpredictable schedule frustrated his family. “They’d say ‘You have this business, and it’s growing. Why aren’t you here?” Kiehnau says.
During his frequent absences, Katz kept in touch with Hildegard and PKWare executives through electronic fax services. He oversaw product upgrades and revisions, and occasionally gave Hildegard instructions on business matters.
As his business grew, his personal life unraveled. Hildegard heard rumors her son was going to strip bars, cavorting with women and drinking heavily. She questioned him about his personal affairs, people who know the family say, and the relationship between the worried mom and wayward son began to fray.
They also squabbled when Katz tried to take money out of PKWare. He sometimes wanted as much as $25,000, Kiehnau says.
“He thought it was ridiculous that a 30-year-old man would have to beg his mother for a check from his own company,” Kiehnau says.
Katz grew bitter over his mother’s interference in his affairs. Eventually, he stopped talking to her altogether. The end came one day in 1995.
Hildegard received a fax informing her that her son planned a hostile buyout of her 25% equity stake. He had fired his own mother.
“It was like a funeral the day it happened,” Kiehnau recalls. “It was his product, but it was her business. (Kiehnau’s former wife) Cindi and I got called over to her house and she was crying and crying, ‘Why would Phil do this?’ ”
That same year, Katz hired Robert Gorman as director of marketing and sales. Gorman had previously worked in sales for Frontier Technologies, a Milwaukee-based developer of Internet software.
Gorman maintains that Katz continued to manage the company, but others close to the situation say Katz’s day-to-day role was minimal. Although he signed off on major decisions and worked on product upgrades, the company was run by PKWare management, they say.
Despite the turmoil, PKWare’s business remained strong through the 1990s, says Richard Holler, executive director of the Association of Shareware Professionals in Greenwood, Ind.
It is difficult to measure the company’s market share because not all shareware users end up licensing the product. But even as Windows-based “zip” products nibbled into PKWare’s sales, the company’s business held up, he says.
“They are still a big player in the commercial marketplace. They have a lot of ongoing relationships with other software developers that use the PKZip compression algorithm within their own products,” Holler says.
At the time of his death, Phil Katz was remembered among the world’s elite programmers for writing a truly revolutionary piece of software. But that single accomplishment, as significant and profitable as it was, couldn’t save Katz’s life.
Alcohol Takes its Toll
Katz talked freer, laughed harder, stayed up longer and dreamed bigger when he had a drink in his hand, friends say. Drinking brought a painfully shy man out of his shell.
“As soon as he started drinking, you could see a little smile on his face. That’s when he could talk to people, or tell a joke. When he didn’t drink, he would pick jokes apart. He would think really deep and wouldn’t have as much fun,” says Fischer, the dancer who met Katz in 1994 and grew fond of him.
But the alcohol was ripping his life from its moorings.
On May 7, 1991, as he was driving his 1990 Nissan 300ZX with plates that read PKWARE, a police officer ordered Katz to pull over. Katz was sitting in the driver’s seat, his glassy eyes nearly closed, according to the police report. He was convicted of operating under the influence of an intoxicant.
It was the first in a torrent of legal troubles.
About a year later, Katz was again convicted of drunken driving. Between 1994 and September 1999, Katz was arrested five times for operating after suspension or revocation of his license. Records show that courts issued six warrants related to his driving, including two for bail jumping.
Once the authorities starting looking for him, Katz started showing up at work a lot less often.
“He just disappeared,” Hay says. “Sometimes you would see him at trade shows, but that was about it.”
When Katz did go to work, the strain was evident, former employees say.
“He lived in a state of paranoia,” says one former employee, who asked not to be identified. “He thought that (WITI-TV Channel 6) across the street from us was watching him.”
Katz knew that if authorities were looking for him at PKWare, they probably were also trying to find him at the handsome, brown-brick luxury condominium he owned near Mequon Country Club.
His neighbors, unaware of his legal problems, were baffled by Katz’s reclusive nature. Many say they had never seen or met Katz even though he supposedly had lived there for almost five years.
“I never saw a light on, I never saw tire tracks in his driveway, and I live across the street. It was almost spooky,” says Peter Picus, a neighbor.
The condominium was in the eye of a publicity storm in August 1997 after neighbors complained about a stench emanating from the home and mice and insects scurrying near the unit.
Mequon authorities obtained a search warrant to enter the condominium, after neighbors and inspectors were unable to locate Katz. They found a stinking mass of garbage, sex magazines, videos and sex toys like whips and chains, according to Kenneth Metzger, former general sanitarian for the City of Mequon.
“It was a mess. I had been in the business for more than 40 years, and it was one of the worst that I had seen,” Metzger says. “It was knee deep in garbage. There were bottles, cans and rotting fast-food stuff all over the place. Whatever happened to that man, he went off the deep end.”
Though Metzger and his crew knew little about the evasive Katz, they could tell that he was wealthy. Among all the rubbish, they found credit cards, money, a laptop computer and jewelry that had never been opened.
Publicity about the discoveries hurt Katz deeply, friends say, and some say it marked the beginning oftheend.
“When they raided his house, they exploited it and told everybody at his company about his fetish. His mother found out, everybody found out,” Fischer says.
“He knew people would jump to conclusions about him,” she says. “He felt really violated. That’s the day he completely stopped going into PKWare. He didn’t want his personal life mixed in with his employees. Nobody really does.”
By this time, Katz’s closest acquaintances were the dancers at the strip bars he frequented.
Fischer says Katz showered her and other dancers with gifts, often taking groups of them with him to Las Vegas. Several of them accompanied him to the 1998 Comdex computer show there.
“I would sleep with him in the same bed. He never would touch or sneak a peek or anything like that,” she says. “Sometimes he would cry and be like, ‘Hold me, Chastity.’ You’d just have to hold him all night long.”
“There was never anything dirty about him,” she says. “He was not a pervert. I swear on my Bible. He was the most harmless, most generous, unselfish guy I have ever known.”
Some of his stripper friends took advantage of his generosity, stealing his credit card numbers and buying things for themselves. It intensified his paranoia. Katz began to keep any receipt or piece of mail bearing his name or account numbers. He piled it all into the back of his 1991 Nissan Pathfinder.
“That Pathfinder was so disgusting. It literally had no back seat,” Fischer says. “It was papers from the ground up.”
Fearful of the arrest warrants, Katz kept on the move. In addition to the drunken-driving convictions, he had a half-dozen judgments against him from financial institutions totaling more than $30,000, court records show.
Katz hopscotched along a strip of hotels near Mitchell International Airport, staying at one for three or four days, then moving to the next, usually less than a few hundred yards away.
“You know what he did? He sat in his hotel room every single day,” Fischer says. “The only time he got out of the hotel room was maybe to go have dinner.”
Fischer says Katz sometimes called her answering machine late at night, pleading with her to join him. During their conversations, he sometimes spoke candidly about his family, his company, and his childhood, Fischer says.
He said that his separation from his mother and sister was difficult, and that he continued to send Hildegard flowers and e-mails, even though they hadn’t talked since he fired her from the company.
Through it all, Katz drank heavily.
Fischer says he drank at least a liter of Rumple minze and two bottles of Bacardi rum a day.
“He would drink until he’d puke. We’d have to see this. I never was with an alcoholic where you’d have to see it. After a while it was starting to make us sick,” Fischer says. “We’d say Phil, you know, this is sickening. You’re killing yourself, and we’re watching you do it.”
Hildegard Katz says her son underwent treatment for alcohol abuse. “We all tried to help. As with almost any alcoholic, the more you tell them to get some help, they begin to isolate themselves because they don’t want to hear it,” Hildegard says.
“I guess we really thought he turned the corner after he went through rehab.”
But he had not turned the corner.
Fischer says she realized Katz was near the end when she visited him at a south side hotel a few weeks before his death. Clad in nothing but underwear, he was suffering from uncontrollable hiccups and burdened by a horribly swollen stomach.
“He took some Valium so he could sleep. That was the only time he could sleep,” she says. “Then he would have the alcohol shakes. I’d try to play computer games with him, but he’d run to the bathroom all the time.”
“He was so bad to the point where he would start (urinating) in his pants involuntarily. His liver was just going. He was puking up blood,” she says.
After helping Katz change his pants, Fischer left Katz’s hotel room.
She never saw him again.
Katz had been dead for two days before his body was found. PKWare employees learned of his death almost a week later.
In the days that followed, the company was flooded with hundreds of e-mails offering condolences from software junkies around the world. Most had never met Katz but were aware of what he had done. Stories of his death were printed in such far-flung media as theLondon Times, the New York Times and abcnews.com.
But the sadness was deepest for those who had suffered the longest as Phil Katz’s life came unglued. Hildegard had to make the sad trip to identify the son she hadn’t seen in five years.
Later, she reflected on the loss.
“I get the e-mails people are sending, and it is amazing how many people say that even though they never met him or talked to him they are ever grateful for what he did. One man said he saved my butt many times. Phil was concerned with helping people.
“It is a tragic waste of such a very vital person, and of his energy and abilities.”