Tag Archives: Andrew Raskin

Where Have All the Dot-Commers Gone?

Letter From Silicon Valley About once a week I go out with the Pro Leisure Tour, a bunch of Bay Area ex-dot-commers who get together for coffee, movies, and other poor substitutes for a full and rewarding workday. The Tour started out as an elite club for newly free and empowered individuals. Now that all the work is gone, it’s an excuse for people to get out of their pajamas. Sometimes we meet for 11 a.m. poker at the Grove — the Marina’s sorority-girl salad hangout — although the highest ante anyone can afford is about four Jujubes. One recent Wednesday I was running late for a Tour event at the Embarcadero — a matinee of Hedwig and the Angry Inch — so I hailed a cab. En route I asked my driver how business was going, since I’d heard that San Francisco cab revenues were down 50% from last year’s. The cabbie, it turned out, wasn’t in a position to make any comparisons. The year before he had been working as a contract recruiter for HearMe, a provider of live-voice technology for the Internet, which announced in July that it would cease operations and sell its assets. But he did hold forth at some length about the hiring process at high-tech start-ups, of which he had a poor opinion. “I used to work in financial services, which was a lot easier because they would have one supreme being making hiring decisions,” he said. “At these high-tech companies, they have a committee make the call, but six people can make the same dumb decision that one person can.” When I was CEO of online-marketing company Gazooba Corp. (now called Qbiquity Corp.), I used to grovel before people like that cabbie, showering them with $100-an-hour fees plus stock options in the desperate hope of landing a database architect, say. Still, I respected the guy for picking up the pieces and finding a way to put some money in his pocket. As I paid my fare, he told me that he expected the job market to improve in a year or so and hoped one day to return to recruiting. “I don’t know that driving a taxi has a great future,” he said. “I made a nice chunk of change before, without a lot of aggravation.” The self-reinvention theme surfaced again during the film, which was about a transsexual singer who overcomes a broken heart, copyright infringement, and other challenges (it wasn’t always an inch) to find true love and stardom. Chatting with my fellow Tourists after the show, I learned that Hedwig and the cabbie weren’t the only ones remaking themselves in the face of adversity. One woman brought up the example of a former high-tech-magazine writer who was training to be a dominatrix. “She was going to a place in San Mateo or someplace Silicon Valley like that,” the woman said. “I don’t know if it’s all whips and chains, but it’s some kind of dominant work.” My friend Carla, a onetime consultant to the dot-com stars, is researching a new product idea with the help of a career-life coach in Boulder, Colo., whom she phones once a week. As old habits die hard, Carla was in stealth mode with the project. But when I told her I was interested in professional reincarnations, she didn’t hesitate. “You should talk to my friend the Doggie Dentist,” she said. The Doggie Dentist, it turned out, was 33-year-old Kimberly Testa. Kimberly used to work at Alexa Internet, a software company that Amazon.com acquired in 1999 for more than $250 million in stock. Kimberly had gotten laid off in March. “I spent two months licking my wounds from the torture,” Kimberly told me when I reached her by phone. “And by torture I don’t mean the layoff. I mean the dot-com-in-general torture. I went from salesperson to project manager to media buyer to trade-show coordinator, with a different job every month. I’d work eight days a week to get something done, and then I’d find out it was irrelevant because the company had changed strategy again.” Kimberly had longed for a career that would “put a smile on my face — where I would know at the end of the day that I’d accomplished something that mattered to someone.” One day she brought her cat, Rufus, to the vet, where she met a woman doing anesthesia-free teeth cleaning. Intrigued, Kimberly struck a licensing deal with the woman, who was based in San Diego. The teeth cleaner would train Kimberly to whiten up those Old Yellers, and Kimberly would pay the woman a percentage of her business for five years. Having mastered the art of holding an animal in a towel and saying “Sit,” “Stay,” and “Good doggie” as if she meant business, Kimberly posted a sign-up sheet for her services at Alpha Dog, a pet store in Mill Valley. By the end of the first day she had a day’s worth of appointments and was soon booked solid two months out. “It’s all word-of-mouth marketing,” said Kimberly. “People don’t want to put their pets to sleep during the cleaning, but I don’t know a lot of people who like their dog’s breath. So there’s a lot of demand.” At $75 a cleaning (or more if the need for a doggie mint is severe), Kimberly projects annual revenues of more than $80,000 — and that’s for scraping tartar just three days a week. To grow the business, she wants to offer her services in pet-grooming shops. Kimberly finds her new customers easier to deal with than her former colleagues. At Alexa, “nobody knew what they were doing, especially with the direction changing so much,” she says. “With these animals, I clean their teeth, I give them a doggie treat, and they wag their tails. The relationship is very clear.” Not every apple has fallen as far from the dot-com tree as Kimberly has. Former Qbiquity marketing director Paul Allen (loyal readers of this column will recall that, no, he’s not that Paul Allen) remains part of the tech start-up scene, albeit in a very different role. When I hired Paul as employee number five, back in 1999, I didn’t know that he had already achieved some local prominence by throwing Jewish networking parties: so-called Jewcrew events. He also operates a message board (www.Jewniverse.com) that is a kind of Craig’s List for the Jewish community, publishing listings of jobs, apartments, and things for sale, as well as book, movie, and restaurant reviews. At the height of the dot-com frenzy, friends and people who knew Paul through his Jewcrew and Jewniverse activities began E-mailing their business plans to him. “They considered me the master networker,” he says. After leaving Qbiquity, in December, Paul announced to his Jewcrew and Jewniverse comrades that he was launching something called the Tribe of Angels, a group for accredited investors, entrepreneurs, and vendors with an interest in the Jewish community. Within a week 50 investors and 30 entrepreneurs had joined the Tribe. Paul held the first Tribe of Angels party at the San Francisco Park Hyatt in January. He has since held four Tribe events, and word has gotten back to him that investors and entrepreneurs are indeed hooking up at the shindigs. Entrance fees from the events and advertising revenues from his E-mail newsletter, TribeWire, cover the Tribe of Angels’ operating costs. But Paul wants to get more involved in the deal flow he’s generating and to work closely with both sides of the funding equation. Paul’s idea is to hold private angel-investor briefings in which he’d present companies that are seeking funding to investors, Ã la Silicon Valley’s famous Band of Angels. After doing some research, however, Paul has found that with only a master’s degree in social work, he isn’t yet qualified to take finder’s fees on deals. “There were some SEC requirements about that,” he says. As Paul studies for his Series 7 exam, Kimberly massages the gums of a basenji, and a former tech writer whips something other than hyperbolic verbiage into submission, I find myself feeling strangely hopeful. Perhaps — like a California redwood sapling that sprouts up through fire-scorched earth — a (dare I say it?) new economy is rising from the ashes in Silicon Valley. An economy where the Internet is just another medium. Where not everything is about stock options. Where Kimberly Testa — not to mention her customers — can smile at the end of the day. Andrew Raskin is the cofounder and former CEO of Gazooba Corp. (now Qbiquity Corp.) and a contributing writer for Inc. Though he is not a dog, he could get used to the idea of being held in a towel while someone brushes his teeth. Please e-mail your comments to editors@inc.com.

Menu Driven

Letter From Silicon Valley “What separates us from other competitors is passion.” – CEO of a now-defunct online natural-products retailer, October 1999 “I have learned from those mistakes, and I am passionate about the need for campaign-finance reform.” – Al Gore, speaking about campaign-finance legislation, March 2000 “I am passionate about delivering B2B E-commerce solutions to my clients.” – Web consultant who once dated my friend Ellen, December 2000 Passion. A lot of people have been throwing that word around the past few years, and not all of them live in Silicon Valley. Needless to say, the three passionate gentlemen quoted above were all looking for new objects of affection in 2001. So I was skeptical when I received an E-mail from Jim Leff telling me about his community Web site for food lovers, Chowhound.com. The E-mail included a review from the Boston Phoenix newspaper that said that Chowhound exhibited “a burning passion rarely seen outside of the Middle East or the Napster controversy.” Jim was writing to say that he enjoyed my column and that my references to sushi, sand dabs, and other seafood consumed at various milestones in the history of my former company, Gazooba, made him think I might be a closet chowhound. Jim also noted that we played the same musical instrument. “I have really clever and ambitious biz plans but could use some trombone-brotherhood commiseration,” he wrote. Since I was heading to Long Island to see my family at the time, I cleared one afternoon to meet with Jim, who lives in Queens. Before leaving San Francisco, I visited the Chowhound site ( www.chowhound.com), where I learned the difference between a chowhound and a foodie. As Jim had suspected, the chowhound label fit me like a lobster bib. “Foodies fuss endlessly about ingredients, a fixation which strikes chowhounds as sheer culinary materialism,” the site explained. “Chowhounds can be spotted at Lespinasse insouciantly swirling their merlot but, unlike foodies, we have not the slightest compunction about stopping for a really great slice on the way home.” We met in Manhattan, and over large bowls of Korean beef soup, Jim told me that he wanted to make money from the site and was growing desperate for either a bright idea that would pull in revenues or an investor with deep pockets. Chowhound was attracting about 16,000 regulars worldwide (plus another 100,000 occasional visitors), and Jim was shelling out $600 a month for Web hosting. He was funding the payments and his apartment rent with money he was making as a food writer and jazz trombonist. Jim said that when he founded Chowhound with a tech-savvy buddy, in 1996, a revenue model was the furthest thing from his mind. Already a professional food writer, Jim knew there were others who wanted to pool grassroots restaurant knowledge rather than rely solely on professional critics or Zagat. “For years I had met fellow chowhounds in furtive circumstances, whispering tips at bagel counters,” Jim said. Now, in the spring of 2001, just when the Web was at its least welcoming, he wanted to turn his hobby into a business. Jim was hopeful about an upcoming trip to San Francisco, and not just because he’d be able to score his favorite potato chips at La Palma Mexicatessan in the Mission. A Chowhound regular who also happened to be a recent hire at a famous Silicon Valley law firm had signed up Chowhound as his first client, then egged Jim on to create a business plan and get venture capital. Another Bay Area fan was offering to write the business plan, and two chowhound rock-star programmers were going to “semidonate” their services. With the Nasdaq in tatters, I was doubtful about Chowhound’s ability to do an equity round, but Jim remained confident. “Andy, I know you’re connected enough to know that there’s about to be a huge wave of investment in consumer-oriented content sites,” he told me. I wasn’t sure whether he was kidding or whether I was just really unconnected. Jim flew out here a few weeks later. He reserved a banquet table at R&G Lounge, his favorite Cantonese place in San Francisco, renowned for its chicken, and invited 10 people who had offered to help, guide, support, counsel, and connect him. The woman who had volunteered to help with the business plan was there and turned out to be a fellow Wharton alum whom I had met once at a party. Other entrepreneurs who were present were either chowhounds or friends of chowhounds. The chicken was everything Jim had promised. And things were so bad on the dot-com scene that nobody wanted to talk about anything except the food. Some of my fellow diners had been laid off or were about to be. No one was encouraging about the possibility of Chowhound’s getting funded. For Jim, his guests’ frankness was a harsh-tasting morsel he was loath to swallow. “As anybody will say, the hardest thing in business is when you’re in relentless mode,” Jim explained later. “You’re pursuing an end in spite of everything, and people are saying it can’t be done. I’m thinking of those Japanese guys in the jungle thinking they’re fighting World War II in 1975. Now I understand those guys so well. It doesn’t just switch off.” Later, over beers, I did my best to drag Jim out of the jungle. I told him that venture money might not be the best thing for Chowhound anyway. I recounted the time at Gazooba when our VCs rejected a buyout offer that they had deemed insufficient. “They want a home run, a billion-dollar company, and they want it quickly,” I said. “They’re OK if 9 out of their 10 companies strike out trying to get there.” Jim dreamed of building Chowhound into an international brand for restaurant and food information, but I suggested he throttle back. He finally allowed that if he put a business plan together, he could probably round up a few hundred thousand in angel money, enough to hire some people and print Chowhound-branded restaurant guides. Jim seemed deflated but thankful for the straight talk. When I checked in with Jim again a few months later, he was still using trombone and freelance-writing money to pay Chowhound’s bills — now $800 a month to support 20,000 regular users and 3 million page views. One minor bit of progress was that he had identified a personal weakness of his that was impeding any major bits of progress where the site was concerned. “Here’s the deal, Andy,” said Jim. “I hate asking for money, and I’m bad at it. I’m proud of what I did with the site. But I’m like one of those weight lifters who forgot to work on his legs. I can’t spend the next six months of my life just schmoozing investors and trying to get checks from them. It’s just not what I do.” Like a battle-scarred soldier watching a new recruit struggling in the field, I want to help Jim write his business plan. But if and when Jim wants help, he’ll ask for it. Meanwhile, a generous chowhound has offered to front him a couple thousand dollars to produce Chowhound merchandise, which Jim hopes will recoup the $18,000 he’s spent on the site so far. Chowhound buttons will read, “No, I would NOT like some freshly ground black pepper on that.” And Chowhound “passports,” with sayings such as “Thai equals spicy, spicy equals Thai. I love spicy real Thai food!” written in 10 languages, for example, will let the waiter know that “you mean business and want the real shit,” says Jim. Jim was also working on the pilot episode of a Chowhound television show. “It’s going to be a game show for savvy diners, sort of a reality-TV thing,” he says. He plans to shop the show around to cable networks and hopes the exposure will do for the Chowhound brand what he once thought a big investment would. “My model, strangely enough, is Martha Stewart,” Jim says. “We are the anti-Martha Stewart in terms of what our content is and who our audience is. But the business model is the same. Get people who are disenfranchised — who have never had a voice in the media speaking to them — make them superloyal, and give them content across all media. It’s about focusing this community of people who are always tirelessly searching for something better. And the only reason it works is because I’m one of those people.” Time will tell if Chowhound will make it as a business. If it does, look no further than Jim Leff’s passion for the reason why. I told him to keep in touch and mentioned that I’d be in New York soon. Could we get together and catch up on how things were progressing? “Yeah, we could do that,” Jim said. “But will you have time to eat?” Andrew Raskin is the cofounder and former CEO of Gazooba Corp. (now Qbiquity Corp.) and a contributing writer for Inc. He will drive a long way for good fatty tuna. Please e-mail your comments to editors@inc.com.

Tragedy Tomorrow, Dot-Comedy Tonight

E-diaries This summer’s hot documentary tells the riches-to-rags story of an Internet start-up. Steven Soderbergh, can we talk? In January I received an excited e-mail from my friend Corey, who was attending the Sundance Film Festival, in Park City, Utah, and had just seen a movie called Startup.com. “It’s your E-Diaries column on film!” she wrote. Intrigued, I poked around the Sundance Web site and learned that Startup.com is a documentary that chronicles the rise and fall of an Internet company called GovWorks. The film was produced by some of the same people who worked on The War Room, the documentary in which James “Ragin’ Cajun” Carville spin-doctors Bill Clinton to the presidency. This was exciting stuff! Were Internet entrepreneurs, so recently spurned by the media and the investment community, poised to become Hollywood darlings? If so, what could I get for the film rights to The Gazooba Story, that roller-coaster thrill ride of passion, intrigue, and viral marketing? And who would play me? Brad? Ethan? Keanu? I quickly settled on Chow Yun-Fat to play the part of my Japanese cofounder, Zen. I could picture Chow whipping out the Green Destiny sword whenever a board member pushed back on our expense projections. Startup.com wasn’t in general release yet, but I couldn’t wait to see it. So I called the distributor and requested a screening. “Will you be rating it on a star system or writing a feature about it?” asked the distribution woman. I hesitated for a moment, unsure if having written a college paper applying Freudian theory to Hitchcock qualified me to wield my very own star system. “Feature,” I replied reluctantly. She said she’d mail me a press copy. It arrived, Zen came over, and we fired up the VCR. The action of Startup.com takes place between May 1999 and December 2000. GovWorks founders Kaleil Isaza Tuzman and Tom Herman are high school buddies who, as adults, decide that putting municipal-government processes like parking-ticket collections on the Internet represents a bigger opportunity than online tombstones. So Kaleil quits his job at Goldman Sachs and becomes GovWorks’ CEO. Tom is chief technology officer, something never actually stated but easily deduced from the fact that his subordinates carry Nerf guns. The cofounders set up shop in a loft in Manhattan: very Silicon Alley. Kaleil is the front man, the pitchmeister. Since one of the film’s directors was Kaleil’s roommate, Zen and I were treated to an intimate shot of Kaleil getting up late for a VC meeting and running to the shower in his underwear. (Note to self: If asked to star in The Gazooba Story, insist on a body double for scenes in which the word Jockey is legible.) We watched Kaleil score an appointment with Kleiner Perkins, and Zen’s eyes clouded over. At Gazooba we had gotten money from Kleiner’s Sand Hill Road neighbors but never saw the inside of the Valley’s most prestigious firm. As we listened to Kaleil talk about getting skewered by the Kleiner guy for having the gall to locate GovWorks in New York, Zen looked like a kamikaze pilot who had pulled up at the last moment. “I would have loved to have been rejected by those guys,” he said wistfully. Other incidents made us squirm. In Startup.com, the founders’ friendship is tested when, in front of a potential lead investor, Tom challenges Kaleil’s explanation of the business plan. Back at the office Kaleil is incensed. “We should all trust that any one of us will represent a vision of the business that will be seconded and thirded and fourthed and fifthed by other members of the team,” he rages, after kicking around some furniture. The scene rang so true to our own epic confrontations that Zen and I couldn’t look at each other. It was like being at a Chicago White Sox reunion and watching Eight Men Out. Then came the Citizen Kane stuff. Kaleil and Tom raise $60 million. Kaleil appears on CNBC. The company hires more than 200 people. Kaleil’s girlfriend asks for a commitment or a dog. As our heroes’ fortunes rose higher and higher, I could imagine an audience full of people who owned tech stocks a year ago sitting on the edge of their seats, hungrily anticipating the fall. Things start to unravel when competition heats up and the market cools. Like the adults in a “Peanuts” cartoon, Startup.com‘s VCs don’t appear on camera much. But when GovWorks fails to meet revenue targets, you don’t have to hear wha-wha-wha-wha-wha to know the investors are getting restless. “I’ve had some pretty ugly conversations with board members,” Kaleil tells Tom. “This is a serious crisis.” I won’t give away what happens next. But for a film with no explosions or special effects, Startup.com delivers more than its share of carnage. The saddest victim is Kaleil and Tom’s friendship, which, by film’s end, looks as though it’s been through the woodchipper in Fargo. Long after the credits rolled, the founders’ story stayed with me. Tom and Kaleil’s experience was so personal that I wondered how they felt about seeing it made so public. So I decided to ask them about it. Tracking down Kaleil on his cell phone in a Manhattan taxicab, I asked him what it was like to be the Gordon Gecko of dot-com entrepreneurs. “My visceral reaction was I’m mortified,” he said, multitasking between talking to me and offering directions to the cabbie. “Because it’s not fiction; it’s my life. It shows parts of ourselves that are not the parts we’re always proudest of.” Kaleil told me that the idea for a movie about GovWorks was originally his and Tom’s. “We thought it would be useful for business schools or people starting companies,” he explained. But Kaleil said his most valuable lessons weren’t captured by the documentary, because they came to him after the bulk of the filming was done. “It doesn’t just end with, you can’t do a financing, so you pack up your things and go home,” he said. “You care an enormous amount about the employees and the clients that you’ve promised things to and the relationships around the company.” According to a note at the end of the film, Kaleil went on to form Recognition Group, a company that brings turnaround specialists into distressed start-ups. What it doesn’t say — but what Kaleil told me — is that Tom Herman is once again his partner. I called Tom. “My first reaction was that it was hard to imagine I would want to do that again,” he told me. “What convinced me is that I wanted another chance to work with Kaleil. Also, I found what he was planning exceedingly interesting.” Asked for his reaction to Startup.com, Tom said that he wished it had fleshed out more of his professional strengths, like building a technology team and leading employees. “The movie was very one-dimensional in its portrayal of both Kaleil and myself,” he said. But it did teach him some brutal lessons about personal grooming. “I was so disappointed in my ability to dress well,” said Tom. “You realize the way you dress has an impact on people’s perception of you. I had such a bad shave through much of the movie.” You can judge Tom’s business and fashion sense for yourself, since the film should now be in theaters. Startup.com has been given an “R” rating, and entrepreneurs are strongly cautioned: it contains disturbing buzzword usage, explicit depictions of obscene valuations, and scenes of graphic cash squandering. Some material may not be suitable for people who still have a dot-com business plan on their hard drive. Andrew Raskin, founder and former CEO of Gazooba.com — now Qbiquity — can be seen in San Francisco-area theaters clutching a medium buttered popcorn and a cherry Icee. More E-Diaries. Please e-mail your comments to editors@inc.com.

I Really Must Be Going

E-Diaries An Internet entrepreneur bids farewell to his firstborn Although I’ve never been very religious, lately I’ve been thinking a lot about Moses. The guy leads his people out of Egypt, parts the Red Sea, hands over the reins to someone else, glimpses the Promised Land, and goes off to die. All of which was necessary in the greater scheme of things, I suppose. But hard cheese on Moses, all the same. Readers of my last column will have some idea why I’ve got Moses on the brain. In July, about a year after founding a marketing-services Internet company called Gazooba with my buddies Zen and Shanti, I stepped down as CEO to make room for a been-there-done-that executive named Colin Campbell. Venture capitalists had been telling me they’d invest only in a CEO with a track record of hiring and managing dozens — if not hundreds — of people. And, in fact, Colin almost immediately secured a handsome round of financing for the company. I harbor no doubts that passing the crown was the right move. Clearly, I wasn’t the man for this particular job. But that begged the question, Having hired Colin to be Gazooba’s CEO, what job was I the man for? Not long after coming on board, Colin asked me to propose a new role for myself. In an effort to come up with something, I spent one Sunday morning at a Starbucks on Polk Street, comparing my skills and passions with Gazooba’s hiring needs. Sipping a tall chai tea latte, I composed a list of things I’d learned to do — and loved doing — as a CEO and an entrepreneur. Here it is: 1. Persuaded a bunch of venture capitalists to back my half-baked idea. 2. Persuaded a bunch of smart people to leave cushy jobs to work for a company based on a half-baked idea and run by people with names like Zen and Shanti. 3. Chose for my company’s moniker a word that didn’t even exist but that we thought would make people smile. 4. Offered options to half the service population of northern California. 5. Presented my half-baked idea to big scary audiences at high-profile industry conferences. 6. Bribed real estate agents with T-shirts in order to secure prime San Francisco office space. 7. Made payroll by creatively cutting expenses, finagling bridge loans, and prostrating myself before vendors. 8. Persuaded big Web companies and even a major telecommunications company to pay money — money! — for my half-baked idea. 9. Chronicled the whole experience for a national business magazine whose editors kept warning me not to make anything up. I read over the list, and my eyes welled with tears as I recalled the thrills, chills, spills, and other nonrhyming but no less dramatic and emotionally charged events of the past year. Only then did I realize three things. First, no matter how much I loved working at Gazooba, I’d be bored silly with a job as vice-president of one thing or chief of another. Second, I was thoroughly addicted to whatever chemical is released by the brain upon the successful transformation of a half-baked idea into reality. And third, everyone in Starbucks was staring at me because I was sobbing like a schoolgirl. The next day Colin and I had lunch at the Tadich Grill, a venerable San Francisco seafood house around the corner from our office. Over sautÃ©ed sand dabs, I told Colin that I wasn’t sure there was a place for me in the new Gazooba or, more to the point, that there was a place for the new Gazooba in me. “Why don’t you give it some tame?” Colin said, his Scottish accent no longer impenetrable to me. “Next week we’re having some off-sites. I think they might give you a different perspayctive. Let’s feigned out how yer feeling in two weeks.” I was in no rush, especially if a fulfilling life at Gazooba was still possible. We set the clock ticking, and I promised to keep our conversation on the q.t. For many of my coworkers, my announcement was akin to the Jolly Green Giant’s declaring that he could no longer envision playing out his personal destiny among the sweet peas and pearl onions. But I soon discovered that my future happiness at Gazooba was not to be, chiefly because there was to be no Gazooba. It happened on a Friday morning. Colin called about 10 of us into the conference room and introduced a couple of gents from Idiom, a naming consultancy. “Great,” I thought. “We’re going to discuss some names for our new product extensions.” But no. “The reason we’re here,” said one of the Idiom guys, “is that now that your company has repositioned itself as a business-to-business provider” — a decision I had made prior to Colin’s arrival, partly at the urging of our board — “the name Gazooba doesn’t work anymore. We’re here to pick a new name.” My heart sank. Gazooba was emblazoned on my soul and my license plate. I couldn’t bear to see it die. I fully understood the rationale: we were selling to marketing managers at big corporations now, and our clients, perhaps understandably, weren’t comfortable cutting $100,000 checks to an outfit whose name was chosen, in part, because it sounded Dr. Seuss-ish. Suddenly, I realized that it wasn’t just the name change that was bringing me down. It was the whole concept of selling to marketing managers at big corporations. My company’s new direction was smart and strategic, and it left me absolutely cold. My feelings must have shown, because Colin didn’t invite me to any of the follow-up meetings. I felt left out, of course, and maybe a little resentful. But mostly I was relieved at not having to take part in the relegation of Gazooba to the dustbin of Internet history. In the end, the management team narrowed down the choices to two names: Qbiquity and Metafinity. Qbiquity and Metafinity. Qbiquity and Metafinity. I said the two words over and over, but they just weren’t … well, they just weren’t Gazooba. [Editor's note: the company ultimately settled on Qbiquity.] On the day of the off-site, my mind was already made up, although I don’t think I knew it yet. The event took place in a conference room at the nearby Hyatt Regency; the facilitator was Dan Foxx, a consultant who assists executive teams with goal setting. Dan led us through a series of visualization exercises. First, we were to imagine in great detail an initial public offering for Gazooba (or not-Gazooba). Dan then asked employees to calculate how much money they’d make on their options and what they’d do with their windfalls. Most replied that they would buy things for their families. I said I’d donate a hefty chunk to my old summer camp. After each person spoke, Dan smiled and said, “Wow. Thank you for sharing that.” Now that our dreams were on the table, Dan took one step back. “OK,” he said, “we know where we want to be. Now, what do we have to do to get there? To reach this stock price, how much revenue and profit would we need? How many customers? How many analysts covering the company? By when would we have to do all this?” While my colleagues responded to Dan’s questions, I stayed silent. I felt as though I were an oarsman headed someplace I didn’t want to go on a boat I had once steered. Dan, who had been writing on the board, paused and called a time-out. “I’ve run this exercise with a lot of other companies,” he said, looking out at us, “and there’s always a lot more excitement than there is here. Is there a dead moose in the room?” I knew what Dan meant. I was the moose. Looking over at Colin, I asked him with my eyes for permission to break my promise of confidentiality. He nodded. “Dan,” I said, “there is a moose here. I’ve been talking with Colin about what my role will be at Gazooba, and we’ve agreed that there isn’t one that will both fulfill me and benefit the company. So I’ll be leaving at the end of September.” My coworkers sat there, stunned. For many of them, I had become synonymous with Gazooba, and my announcement was akin to the Jolly Green Giant’s declaring that he could no longer envision playing out his personal destiny among the sweet peas and pearl onions. Dan broke the silence. “Andy,” he said, “I can see from your face that you are truly committed to Gazooba, and that this is a decision made out of commitment. Is there any message you’d like to leave the session with today?” I hadn’t prepared anything, but I blurted out: “Of all the things I’ve accomplished, I’m most proud of the people I’ve hired at Gazooba. This is an amazing group that will go on to achieve great things. I’ve worked for companies where people talk behind one another’s backs, where you have to assume people are talking about you behind your back. At Gazooba I never felt that, and I’m proud to call everyone here my friend.” By the end, I was choking back tears. In the preceding weeks I had discovered that one of my cofounders, Zen, had been traveling a similar path and had arrived at the identical destination. Now, seeing me bathed in the spotlight of emotional catharsis, Zen sought to steer some attention his way by announcing that he, too, would be leaving, as soon as someone could be found to assume his role of chief technology officer. Of the founding triumvirate, only Shanti — who had matured into a kick-ass product manager — would stay on. On my way out of the hotel, Doug Gross, our sales manager, stopped me in the hallway. “I just want you to know, Andy, that I joined Gazooba because of you, because of your vision and your enthusiasm,” he told me. I was enormously gratified, especially considering that Doug’s first impression of me was formed at our launch event, where I was acting as a mime. The fact that I could barely summon words to answer him seemed somehow fitting. So I didn’t reach the promised land with Gazooba after all. But I still own a chunk of it, and my severance package is nothing to sneeze at. What’s next for me? Well, since I seem unable to shed my entrepreneurial skin, I’ll stay out here in Silicon Valley looking for the next big thing and chronicling the search in my Inc. column. (Incidentally, readers who know of any next big things are invited to contact me at the E-mail address below.) But first I’m taking some time off to scuba dive, snowboard, windsurf, and participate in assorted other activities that don’t require a consultant. Zen has suggested that we rent a small office near our favorite windsurfing spot and use it to develop new business ideas. And I expect I’ll be wallowing — just a little — in nostalgia. Last night I reread the first installment of E-Diaries, which I wrote exactly a year ago. In what amounted to Gazooba’s birth legend, I described giving up the pleasant certainties of life in Manhattan for the shimmering question mark that is Silicon Valley. “It’s going to be hell out there,” whined the Andy of a year ago to Zen, “working 24 hours a day, beholden to a bunch of VCs.” “Yes,” Zen had replied. “And you’ll love it.” He was right. Andrew Raskin, the cofounder and former CEO of Gazooba Corp., is now a full-time seeker of opportunities in Silicon Valley and beyond. E-Diaries: Episode 1: A New Beginning The Game of the Name Take My Job Offer, Please. Pretty Please There’s No Such Thing as a Free Launch Gimme Shelter Bridge Financing over the River Scared Let the Good Times Roll There’s a New Man in Town I Really Must Be Going Please e-mail your comments to editors@inc.com.

Getting a Life

FYI: From the editor I doubt if there has ever been a time when company builders have confronted a choice starker than the one they face now: they can have a business, or they can have a life. They can’t have both. The level of competition is so intense these days that it’s just assumed the top people at a company will devote their lives to it. If that’s not what they want, says the conventional wisdom, they shouldn’t be in business at all. So what happens when an experienced executive decides to launch a company — a real company — with the express goal of creating for himself the kind of life he’s always wanted but has never been able to find in business? What happens when he starts making decisions based not just on considerations of growth potential and market positioning but on achieving things like balance, peace of mind, and happiness? Can he pull it off? Can the company be successful without reverting to more conventional ways of operating? And if so, what will it look like? How will it be different from other businesses? Paul Eichen is determined to have a business and a life. Those were some of the questions I had when I first heard about Paul Eichen’s radical plan for the Rokenbok Toy Co. While the company is still a work in progress, it is already challenging some widely held assumptions about what’s required to be successful in the new economy, as you will see from reading this month’s cover story by executive editor Michael Hopkins, ” The Pursuit of Happiness (in an Internet-Clocked, Overnight-Billionaired, 500-Times-Earnings World).” The free lunch There’s a refrain we’ve heard over the years from company founders as diverse as Steve Jobs of Apple Computer, Don Burr of People Express Airlines, and Jack Stack of Springfield ReManufacturing Corp. When asked why they decided to share equity with their employees, they’ve said it was just common sense: you make more money in the long run by having a small piece of a large pie than by having a large piece of a small pie. That’s a concept many business owners still find hard to swallow. The majority opinion has been that existing shareholders must be picking up the tab by allowing their returns to be reduced through dilution. As Bo Burlingham reports in this issue, a new study provides the first substantial and credible evidence that broad-based stock-option plans appear to pay for themselves. When companies institute them, performance improves enough that the effects of dilution are neutralized, and the existing shareholders wind up doing as well as, or better than, they did before the issuance of the options. Those findings could well accelerate the already rapid spread of stock options as a form of employee compensation. To get a sense of how far this trend might go, check out this month’s Face to Face with Corey Rosen of the National Center for Employee Ownership. Not so fast, Kowalski How many times have you heard that speed is everything in the new economy? The Internet is a digital land rush, we are told. And the company that “gits thar fustest with the mostest” always wins. It’s supposedly a new rule of business, and a popular one at that. It’s also wrong, and Built to Last coauthor Jim Collins returns this month to demolish it. Not only does he show that an old rule — best beats first — is still valid, but he argues that it will eventually prove even more applicable to Internet businesses than to other companies. Why? Because the barriers to entry are so low on the Web. The ultimate E-winners, he suggests, will be the businesses that learn from the mistakes of the first movers — just as in the old economy. Fun, fun, fun I have to admit that strictly as a reader, I’ve come to look forward to each new installment of Andrew Raskin’s E-Diaries. Somehow he manages to put every aspect of Internet life into a wonderfully human, delightfully humorous context. This month he writes about fun — specifically, the efforts of Internet businesses to create environments in which people can have some. It’s amazing to me how hard these companies work at fun, but I guess they have no choice. In the Internet space, fun is an employee benefit, more or less like stock options: every business has to offer it. In any case don’t miss Raskin’s story about his company’s encounter with an Uzbekistani hot-dog vendor who served up some advice about viral marketing. Thinking like Norm Among Norm Brodsky’s many gifts is an ability to take something that seems hopelessly complex and make it breathtakingly clear. He does just that in this month’s Street Smarts, in which he addresses the period of confusion that often characterizes the earliest stage of start-up activity. I myself find it energizing, even inspiring, to observe his thought process in this type of situation. While the rest of us may never achieve his level of analytical mastery, we can at least appreciate the discipline it’s based on — a discipline that we can all develop to some degree if we try. Please e-mail your comments to editors@inc.com.

Bridge Financing over the River Scared

E-Diaries Good things come to those who wait. If you can’t wait, get a loan It’s been six months since I began writing this column about Gazooba Corp., my own personal juggling act in the three-ring circus that is the Internet economy. Just before the first installment appeared, I was in Boston with the usual crowd of analysts, doing some serious tÃªte-Ã -tÃªte-ing about our company’s outsourced viral-marketing model. Between appointments I swung by the cozy offices of Inc. magazine to meet with the editors for whom I was chronicling my adventures. As I sat in a conference room overlooking the silvery swells of Boston Harbor, the Inc. staff plied me with sandwiches, solicited the skinny on the more hyperbolic tales pouring forth from Silicon Valley, and told me how much they were looking forward to my next column. “I can’t wait to start writing it!” I replied through a mouthful of chicken Caesar wrap. Bravado, thy name is Andy. In truth, I wasn’t sure that in a month’s time there would be a company to write about. But before I proceed, I’d like to take a moment and apologize to those readers who seek out these pages each month in search of a humorous respite. I did try to make this column, like all my columns, amusing. But since it concerns (a) a dark night of the soul and (b) some pretty arid financial lingo, there aren’t a lot of monkeys in this particular barrel. Take it as a lesson: building a dot-com company is not always the glorious funfest it’s cracked up to be. The clouds on my horizon that particular day were, not surprisingly, of the financial variety. In June 1999 my cofounders, Shanti and Zen, and I had closed Gazooba’s first round of investment, selling Series A preferred shares to a group of venture-capital funds and angels. We planned to follow up with a larger Series B round at the end of the year, by which time we expected a slew of Web companies to have pounced on the Gazooba model. And, in fact, by December we had built a large customer base composed of small and midsize sites. What we didn’t have in our corner of the ring was the heavyweights: the big-name customers that would help our valuation in the B round. A number of large companies told us they liked our program, which lets Web businesses reward visitors who refer friends to their sites. The reward is Gazooba points, which are redeemable for cash, electronics, even charitable contributions. But the sticking point was those companies’ demand for a private-label version of the service. One major telecom company, for example, wanted to offer its customers free minutes instead of our beloved Gazooba points. Well, if the market demanded a business-to-business provider of customer-referral programs, then dagnabit, Gazooba would become a business-to-business provider of customer-referral programs. But there was a problem. While popular wisdom holds that Internet companies can change business models on a dime, that’s not strictly true. On a quarter, maybe. On a Susan B. Anthony, 80% of the time. The point is, this was going to take a while, and a while was something we didn’t have. Our cash was almost gone. Finding takers for our Series B would be nearly impossible until we’d proved the new business model. And Gazooba’s board meeting was rapidly approaching. Needing a quick infusion of wisdom, I got on the phone to Brian Goncher, our part-time chief financial officer. In the vernacular of Regis Philbin, Brian is Gazooba’s lifeline. When we started the company, he got us an account at Silicon Valley Bank (SVB and Imperial Bank are where all the really cool start-ups do their banking) and helped secure an equipment-lease line for about a third of our capitalization, even though we were track-record-less. I asked Brian about my options for getting more cash into our coffers. “Well, you could go out for a second round now,” said the CFO doubtfully, like a gardener trying to dissuade some fool who wants to plant grass seed in January. “But it’ll probably take you a few months to develop the new platform. So why don’t you ask the investors for a bridge?” I briefly considered the old “Interesting … but tell me why you’d go with that particular strategy” bluff. Instead I decided to come clean. “What’s a bridge?” I asked. A bridge, Brian explained, is a loan designed for companies that are so close to some value-hiking milestone they can taste it and consequently don’t want to sell shares on the cheap. In financial terms it’s a convertible note in which the principal and interest convert to stock upon the completion of the next round of financing. In metaphorical terms (and who doesn’t prefer a metaphor when one is available?), a bridge loan is to a cash-poor start-up on the verge of a breakthrough as a PowerBar is to a marathon runner about to bonk at the 20-mile mark. It’s the last ounce of fuel that propels you toward the finish line. I needn’t have been embarrassed by my lack of knowledge, it turns out. Since bridge loans sometimes signal that a company isn’t performing well enough to raise a full round, they tend to be closely held family secrets, like the uncle who lives in the basement and thinks he’s Teddy Roosevelt. In the dot-com world there are 672 separate occasions when companies put out press releases. Asking for a bridge loan is one of maybe three occasions when they don’t. It seems as if every time someone persuades me to do anything — hire an employee, rent space from a landlord, retain a professional-services contractor — the next sentence out of that person’s mouth begins with “You realize they’ll want …” This was no exception. “You realize they’ll want warrant coverage,” said Brian, explaining that the lenders — our investors — would expect to be rewarded for their additional risk. They get interest, of course, but the more tantalizing carrots are warrants: rights to buy additional stock at an attractive price. That meant that the founders’ ownership — my ownership — would be diluted, a prospect that didn’t exactly turn my frown upside down. Zen, as usual, put things in perspective. “We have to unclimb the mountain,” he said, sounding wise beyond his years but in fact shamelessly stealing from a piece in Wired about how the Internet economy requires companies to constantly abandon old peaks in order to reach new heights. For the good of Gazooba, I straightened my shoulders and donned my rappelling gear. With Brian’s help, I built a spreadsheet showing how much money we’d need over the next four months to make over the business model and land some heavy fish. This is not a process for the squeamish: the resulting figure was almost as much as we’d raised in the first round. Before presenting the number to the board, I tried it out on our lead investor. “Well, what do the other investors think?” he asked. “Are they planning to participate?” “I’ll get back to you,” I replied, and called someone else. “Is the lead investor going to do this?” she asked. I went though several more of these chicken-and-egg conversations before getting the reassurance I craved. I presented the plan for the bridge loan at our December meeting. Our board members showed amazing support for our new direction and signed off on the plan. And yes, they asked for a lot of warrants as compensation. But Brian, our trusty reality check, assured me that their demands were in line with those he’d seen at other companies. We did the deal. As I write this in March, Gazooba has signed up several large corporate customers and is about to go live with the first. Investors are calling our board members asking how they can get a piece of us. As a result of that success, I am now confident enough to bring our own batty uncle out into the sunlight. No, a bridge loan isn’t something to be ashamed of. But don’t go looking for our press release. Andrew Raskin is the cofounder and CEO of Gazooba Corp., based in San Francisco. E-Diaries: Episode 1: A New Beginning The Game of the Name Take My Job Offer, Please. Pretty Please There’s No Such Thing as a Free Launch Gimme Shelter Bridge Financing over the River Scared Let the Good Times Roll There’s a New Man in Town I Really Must Be Going Editor’s note: E-Diaries will appear every other month beginning in August in order to give Raskin more time to run his company. Please e-mail your comments to editors@inc.com.

Gimme Shelter

E-Diaries How I cracked the San Francisco real estate market in six weeks and lived to tell the tale. The San Francisco Bay Area has its own urban myth: that of a dot-com CEO who finds a killer loft for his company in the South of Market neighborhood and pays monthly rent of just a dollar per square foot. This CEO is a bit like the Loch Ness monster or Sasquatch: lots of people claim to know someone who knows someone who’s seen him. If you believe he exists, you might want to buy the bridge I’m selling in Brooklyn. And, yes, I’m asking for options as part of the deal. My cofounders and I lucked out a year ago when we started Gazooba, a company that allows Web businesses to reward visitors who refer friends to their sites. The three of us had been working in the New York office of a Web-consulting company called Netyear Group, which also has digs on the West Coast. Netyear agreed to sublet some of its space to us, and since we were young and poor and shining with virtue (and since Netyear owned some of our stock), it also threw in the use of a few computers and nobly renounced a security deposit. Sweet. That 1,500 square feet was acceptable when the company consisted of just me and my cofounders, Zen and Shanti. But by last December our ranks had swelled to 14 people. It had reached the point that every time we added a desk for a new employee, we had to throw out some other piece of furniture. We’d already dumped three couches, and I feared for the conference-room table. Having read in The Industry Standard that office space in the Bay Area is harder to find than venture-capital money, I hoped to gain some look-around time by extending our lease, which was due to run out in February. Netyear was moving out, so I would have to appeal directly to the company from which it leased space: Japanese-owned Trans Cosmos USA. Both Trans Cosmos USA and Netyear began life as U.S. subsidiaries of Japanese companies, so I thought we’d get good treatment. Confident of a warm familial reception, I made an appointment to speak by phone with Kohara-san, the man in Trans Cosmos USA’s Seattle office who holds sway over these matters. I dialed Kohara-san’s number, blissfully unaware that our fate had already been sealed. The previous month some representatives from a Japanese company called Hikari Tsushin had visited Gazooba to discuss a possible investment. Nothing came of it (we weren’t ready to expand to Japan), and we innocently bid them good-bye. Who knew that Hikari Tsushin and Trans Cosmos are Japanese rivals, competing with each other to invest in U.S. start-ups? Somehow the news reached Trans Cosmos’s top dogs in Tokyo that Hikari folk had been in their building at our invitation, which sent their corporate girdles into a collective twist. Having lived in Japan myself, I understood the significance of Kohara-san’s gently sucking air through his teeth throughout our phone conversation. We were screwed. With just a month and a half left before we were out in the street, I sought advice from our board. One member, a former CEO, called in a favor and hooked me up with her favorite commercial real estate agent, a British gentleman named Paul Middle who normally works with much bigger fish. I told Paul we were looking for 6,000 square feet in either the financial district or SoMa — South of Market — the neighborhood that is to dot-com companies what dropped gelato is to ants. As we walked to our first appointment, Paul asked me what I expected to spend. I told him that our current space cost us $3.80 per square foot, and I hoped to get that down to $3. He stopped dead in his tracks and stared at me as though I’d suggested building an office for ourselves out of twigs and straw. “Andy,” he said, “before we go any further, we need to educate you about this market. First, you will not get anything for $3 per square foot. Four dollars is in the realm of possibility, but it’s a pretty small realm as realms go. Second, since you’re a start-up, be prepared to pay up to 12 months’ rent up front. While you’re at it, be prepared to pay up to 24 months’ rent as an enhanced security deposit in the form of cash or a letter of credit. And while you’re at that, understand that you’ll be competing with five or six dot-coms for every space you see. Oh, and you realize they’ll want stock options, yes?” My expectations now six feet under, I followed Paul to the first vacant space, a nothing-to-write-home-about office building South of Market. Paul acknowledged that the space lacked distinction but assured me of the building’s pedigree. (“Microsoft is a tenant,” he said in hushed tones, “but there are a bunch of dot-coms, too.”) Recognizing that choosiness was not an option, I put in a bid at the asking price: $4 per square foot. Wonder of wonders, the company that was subletting the space sounded ready to accept it. Back at the office, I strutted around like the ant who moved the rubber-tree plant. “Vacancy rate, schmacency rate,” I said dismissively, regaling Zen and Shanti with my accomplishment. “What’s everyone making such a big deal about?” Then the phone rang. It was Paul, telling me the deal was dead. The sublessor had been pressured by one of its investors to give preference to a dot-com in the investor’s portfolio. Once more, the abyss loomed. I had promised Paul an exclusive, but with only a week to go before our deadline, I told him I’d need to enlist more help. That help came in the form of Charles, recommended by our benefits consultant as “an out-of-the-box thinker.” I wasn’t entirely sure what that meant as it applied to real estate, but I found out when Charles led me to a half-empty women’s clothing store, a kind of downscale Merry-Go-Round where the floor was strewn with dress racks, curtains still hung in the dressing-room stalls, and the ubiquitous mirrors reflected my dismay. “All this place needs is a few alterations,” said Charles, gesturing toward the large storefront window. “To me it says Internet.” Our next stop appeared to be a former mechanic’s garage. The room was dark and cold, with oil stains on the concrete floor. Charles looked surprised when I asked to move on. “Andy,” he pleaded, his arms spread wide, “you’ve got to imagine this place with carpeting!” As the end of January drew near, I began to wish I was driving something larger than my new Volkswagen Beetle, since it looked as though I’d shortly be working out of the front seat. Then Paul called me with a new lead: a law firm in the financial district was looking to sublet 6,000 feet. The call came during a marketing meeting. I hightailed it out of there so fast my chair spun. The law firm was asking $45 per square foot per year. Two bids were already in, so I offered $50. Paul prepared the bid package and informed me that, of course, the prospective landlords would want to review Gazooba’s financials and our business plan. I offered to send my dental records if it would help. Dazzled by either our Web strategy or my lack of cavities, the law firm offered us a six-month lease followed by monthly extensions. It wasn’t great, but at least the lawyers didn’t ask for stock. They also wanted five months’ rent up front — about $120,000 — and promised just 60 days’ notice in the event they wanted us to scram. Those last two conditions seemed out of line to me; I was determined to gain at least some concession. In the property manager’s office, Paul and I met with the law firm’s office manager and real estate agent. Drawing on my business-school negotiations training, I disguised my plea as an offer. “I would prefer 90 days’ notice of the need to vacate,” I told the agent, “but if you can’t manage that, we would accept a reduction in the up-front rent to four months.” The agent smiled back. “Sixty days is the best we can do,” she replied. “And since you want to discuss it, we’ll be asking for six months’ rent in advance.” “Thank you,” I said. “Would you like a Gazooba T-shirt?” Andrew Raskin is the CEO of Gazooba, which is headquartered in (drumroll please) SAN FRANCISCO. E-Diaries: Episode 1: A New Beginning The Game of the Name Take My Job Offer, Please. Pretty Please There’s No Such Thing as a Free Launch Gimme Shelter Bridge Financing over the River Scared Let the Good Times Roll There’s a New Man in Town I Really Must Be Going Please e-mail your comments to editors@inc.com.

There’s No Such Thing as a Free Launch

E-Diaries How I introduced my company to the world at the cost of my personal dignity A ship has a christening. A debutante has a ball. A Silicon Valley start-up has a launch. Technically, a launch means a company is rolling out of beta. Symbolically, it’s a cry to the world: I’m loud, I’m proud, and I’m ready to be bookmarked! You can consider a dot-com company launched when it discards its stealth name and strips the word preview from its site. If you come across the VP of mar- keting parked by the side of Highway 101 staring dreamily up at billboard ad space, that’s a sure sign, too. The minimum requirement for launching a dot-com business is to issue a press release on PR Newswire that says, “Hey, I’m launching a dot-com business.” But a press release is to a launch what a marriage license is to a wedding. Yeah, it’s official. But Mom’s been dreaming of a big blowout all her life, and you’d be a lout not to indulge her. When we launched Gazooba, the role of Mom was played by our PR guy, Shel Israel of Sipr. Sitting me down in our conference room last September, Shel set forth our options. ” Some companies,” he explained, his voice portentous, “launch with a press tour.” A press tour, Shel went on, meant cold-calling editors on both coasts. Many would not return our calls. Others would agree to see us for half an hour, during which they would sit cleaning their fingernails with our business card. I began to suspect Shel had a bias. The other option, Shel explained, looking suddenly like sunshine made flesh, was to launch at a conference. Launching at a conference had two advantages. First, it would allow us to tie our launch to an event. For example, “Attendees at Billionaire 2000 thronged to Booth #321, where Andy Raskin, the smokin’ young CEO of smokin’ young company Gazooba, was showing off a software product that’s low in fat and promises to revolutionize E-business as we know it!” Second, a conference would let us trot down the runway in front of A-list venture capitalists, who might be persuaded to make good on their wolf whistles during our next round of funding. According to Shel, only four or five industry powwows — such as Technologic Partners’ Internet Outlook, IDG’s Demo, and Red Herring Communications’ NDA – were worthy of us. Of those, only NDA remained on the 1999 calendar. But more than 500 companies had applied for 20 slots, and the submission deadline was history. Still, Shel thought NDA was worth a try. He E-mailed a short note about Gazooba to Red Herring Events’ staff. The news was good. The Herring staff had not made its final decisions yet. And John Mecklenburg, Red Herring Events’ managing editor, wanted to meet us. Mecklenburg is Red Herring’s Saint Peter. Hopeful dot-com entrepreneurs show up at the company’s pearly gates, and Mecklenburg determines who will be admitted to the presence of such venture deities as Ann Winblad, Vinod Khosla, and Steve Jurvetson. On a sunny day last September my new vice-president of business development, Jennifer Kaplan, and I offered up to this keeper of the keys a demo of our service, which allows Web companies to reward visitors who refer friends to their sites. Meck (as his friends, among whom we desperately hoped to number, know him) was intrigued. “This friend-to-friend thing,” he said. “It seems sort of … Japanese. Does that have anything to do with the fact that you lived in Japan?” I had never connected my time in Tokyo with Gazooba’s business model, but in the interest of kissing some Herring butt I assumed my best “You know us better than we know ourselves” look. “Let’s just say,” I replied, my voice heavy with implication, “it’s no coincidence that Zen, one of our cofounders, is Japanese.” Meck nodded knowingly. Soon the E-mail arrived. “Congratulations! The editors at Red Herring have selected your company to present at NDA 99. … NDA 99 gives 20 CEOs six minutes each to discuss their business strategies in front of an audience that includes only the best and brightest minds in the technology industry.” That night I lay in bed trying to imagine what possible configuration of PowerPoint slides could captivate so many of the best and brightest minds in a mere six minutes. I could just picture the best and brightest fingers scratching the best and brightest heads — or worse, those heads lolling on the best and brightest necks — as a succession of CEOs took the stage to jabber on about eyeballs, bandwidth, and the underserved b-to-b marketplace. Despair laid its head on my pillow. But then some part of my subconscious spoke up. I had the solution! The next morning I met with Shel at my office. “I want to do a mime,” I told him.” “Fine,” he said. Assuming correctly that I wasn’t the kind of guy who had spent his formative years trying to get on Star Search, Shel arranged for some help. It arrived in the form of Chris Melching and Chuck Eudy of Got Moxie Presents Inc., a presentation-coaching company in San Francisco. Chris asked me to tell her about Gazooba. I obliged, with an energy and eloquence that left her barely sentient. “Remember, Andy,” Chris exhorted, “as an Internet-company CEO, you are always onstage. Life’s a pitch!” Chuck, who hails from Texas, found my hand movements equally uninspiring. “Why don’t we begin by practicing some jay-a-stures,” he drawled. During the next two weeks, Jennifer and I learned to sit, shake hands, walk, and talk: invaluable skills we navely thought we already possessed. We rehearsed the mime next to the man-made duck pond behind our office building. Maggie Essman, the account rep Shel had assigned us, doubled as a member of the troupe. I also wrote a brilliant spoken epilogue guaranteed to bring the audience to its feet. At Chris and Chuck’s urging, Jennifer and I growled the epilogue like bears, purred it like cats, and screamed it at the top of our lungs. “Must be another dot-com launch,” passersby muttered to one another. On November 1 the grand ballroom of the Four Seasons Resort in Carlsbad, Calif., was crammed with 800 of the best and brightest minds in the technology industry. Meck began announcing the presenters. Company number one took the stage. PowerPoint presentation. Company number two followed. PowerPoint presentation. Company number three. PowerPoint. We were number six. The lights came up. I walked onto the stage like some cyberage Norma Rae, holding a big sign that read “New Web Site.” Jennifer and Maggie walked by. Maggie immediately came over to me. Jennifer kept walking. Like the sites that would become our customers, I tried everything to attract her. I flashed a giant “Click Here” sign. I put a target on her back (suggesting that I was, you know, targeting my message to her). I offered her money. No response. Then I pleaded with Maggie — silently of course — to ask her friend to come over. She did, and lo and behold, Jennifer responded! I rewarded Maggie with a box tied with a bow. There you had it: the power of personal recommendation. A business model we’d labored over for six months clocked in at under six minutes. Now, depending on whom you talk to, that skit was either the greatest presentation in the history of presentations or the worst idea since the PCjr. Dot-com CEOs swarmed us afterward, and most of them eventually became customers. About a dozen VCs invited me to send along our business plan. Others merely looked confused. Some were clearly cheesed at being denied that 20th PowerPoint presentation. After the conference we packed our props and flew back to Northern California. As we drove along Highway 101 from the airport, Jennifer leaned out of the car window. “How about that one?” she asked, pointing to a billboard that loomed at the side of the road. “Let’s go for it,” I mimed. Andrew Raskin is the cofounder and CEO of Gazooba Corp., based in Redwood City, Calif. E-Diaries: Episode 1: A New Beginning The Game of the Name Take My Job Offer, Please. Pretty Please There’s No Such Thing as a Free Launch Gimme Shelter Bridge Financing over the River Scared Let the Good Times Roll There’s a New Man in Town I Really Must Be Going Please e-mail your comments to editors@inc.com.

The Game of the Name

E-Diaries A start-up builds an identity from a car horn, Sir Edmund Hillary, and an irate father-in-law If you’re a character in a spaghetti western or a Kafka novel, you can get by without a name. Dot-com start-ups don’t have that luxury. Not only do you need a name, but you need one powerful enough to etch itself into the gray matter of consumers hard-pressed to remember anything beyond Amazon.com and “the one that sounds like yodeling.” My partners and I spent much of last summer in search of such a name. We already had a business plan, venture money, and subleased space in Redwood Shores, that Silicon Valley community-cum-office-park-on-a-landfill dominated by the shimmering cylindrical towers of Oracle Corp. But we couldn’t go much further until we fixed on who “we” were going to be. After all, a Web-based company doesn’t have a business till it launches a site. It can’t launch a site till it determines that site’s look and feel. It can’t determine the look and feel till it creates a logo. And it can’t create a logo until it has a name. Dot-com coinage is even more of a hassle than it used to be, thanks to Bigstep.com, a company that builds and hosts E-commerce sites. Before its launch as Bigstep.com, last June, the company’s founders decided to keep the nature of their business under wraps by masquerading as “the Springfield Project,” presumably on the assumption that if they used the name “Bigstep,” everyone would instantly think, “Oh, yes, they must build and host E-commerce sites.” Of course, the less people know about something, the more they talk about it; soon, knowledge of the Springfield Project’s true identity became a Silicon Valley status symbol. The buzz reached a crescendo when Red Herring magazine included the Springfield Project on its list of 10 private companies to watch in 1999. What you would see it doing was still unclear. The Springfield Project was the first popular example of a so-called stealth name, and soon hordes of company owners were waltzing around town with the corporate-identity equivalent of bags over their heads. Our venture capitalists urged us to adopt a stealth name too, but we decided it was a trend worth bucking. Devising a brand that is wildly intriguing, wholly misleading, and ultimately disposable just seemed like a waste of time. Anyway, we were having enough trouble coming up with a real name. For the first few months of our company’s existence, we had referred to ourselves as “SendToFriend.com,” a bland summary of the business plan. (We help companies set up Web-based referral programs that reward site users for getting friends to visit, register, or make a purchase.) “SendToFriend.com” lacked pizzazz, so we were not surprised when the subject of a new name came up at the first operating meeting with our VCs. When I suggested that we name the company ourselves, the investors reacted as if a bunch of kids with plastic stethoscopes were proposing to perform real brain surgery. “I’ll give you the number of a good consultant,” one of them told me kindly. We decided to interview two consultants, one representing a high-profile corporate-identity firm, the other a tiny independent. The big-name namer showed up at our office wearing a suit and carrying a fat loose-leaf binder. His portfolio was full of appellations such as “Tecra,” “AXP,” and “Fortiva,” words that conjured up images of synthetic fabrics and microprocessors. It wasn’t us. Then we met Mya Kramer. Mya dresses like someone who works in a hip San Francisco design firm, which in fact she does. An 18-year veteran of the design business, she told us she had gotten fed up with “constantly doing design work for brands that sucked” and had turned to naming as a creative alternative. Her portfolio, sent by E-mail before she arrived, bristled with funky monikers like “Zeum,” “BabyCiao,” and “CampSix.” The high-profile guy wanted six figures. Mya would do the job for one-tenth that price. I told her to start naming names. To kick off the process, Mya asked me and my two cofounders, Zen and Shanti, to look through magazines for pictures evocative of the brand we wanted to create. We soon had a pile of 30 images, including Sir Edmund Hillary drinking tea after his 1953 ascent of Everest, a teenager getting into a new CD, and a champion female windsurfer. They were people with experiences worth sharing, people whose recommendations you’d trust. Armed with these stimulants, Mya returned to her office to brainstorm with her design team, which includes a science writer and a TV producer. In short order she sent us 500 possibilities. A few days later our naming committee, composed of the founding team plus two investors, convened in our conference room to discuss the list. Mya asked us all to pick our 10 favorite names. A few of us were hot for “BigVine,” but Zen objected because the v sound is hard to pronounce in Japanese. I voted for “Zamza,” but one investor had had a bad experience with a similarly named start-up. “Don’t go there,” advised our part-time chief financial officer. No name tickled all our fancies, but we agreed that a nonsense word was the way to go. We sent Mya back to the drawing board with a mandate to come up with something “Dr. SeussÂish.” The next week brought another 70 names, and we repeated the exercise. This time one of our investors seized on “Gazooba,” which Mya told us was inspired by the ah-ooga sound made by an old car horn. It didn’t do much for the rest of us at first. Then Zen stood up. “If we want to be reasonable about this, we’ll pick a serious name,” he said. “But ‘Gazooba’ would really piss off my father-in-law.” Zen’s father-in-law is an elderly, conservative gentleman living just south of Tokyo; Zen figured a name that got under his skin would have the same effect on others. And if old Soma-san went into a tizzy about his daughter’s being married to a guy who worked for something called “Gazooba” — well, as far as Zen was concerned, that was pure gravy. Being amused by a name is one thing; living with it every day is another. Like a clerk in a shoe store, Mya insisted we try walking around in “Gazooba” to see how it felt. We began by introducing ourselves to one another. I extended my hand to Mya: “Hi, I’m Andy Raskin, CEO of Gazooba!” We pretended to answer our phones: “Gazooba, how can I help you?” We envisioned the ultimate sign of branding success — our company’s name transformed into a verb: “Hey, can you gazooba that site to me?” We were in love. Further confirmation that we’d made the right choice came when a customer told me that Mork, of Mork & Mindy fame, had once owned a gazooba, which he defined as “a crawling, hairless form of Orkan animal life, considered more advanced than human beings.” So if we ever need a mascot. … A few weeks after Gazooba Corp. was born, Zen’s phone rang. The caller identified himself as an employee of a nearby start-up. He offered us $4,000 for one of the names that we had considered earlier and reserved as a domain just in case. Zen brought the proposal to me, and I made him an offer that no chief technology officer could refuse: anything over $20,000 that he could negotiate would go straight to his engineering budget. Bidding for domain names usually starts around $100 when small fry are involved. I figured someone opening with a few thousand would probably agree to pay more. Zen, who loves a good haggle, got the phone guy up to $32,000. I took that figure to our VCs for approval, and they passed along an interesting tidbit: our suitor’s company was a Kleiner Perkins Caufield & ByersÂfunded start-up. That meant pockets. Deep ones. The phone guy insisted that he couldn’t go higher. What a shame, we said. Good-bye and Gazooba. A few days later the company’s CEO called. Would I be willing to meet him at Jamba Juice to discuss a price? As I walked in the door of the smoothie chain, I knew we were about to make a killing. What’s in a name? As it turned out, a month’s operating cash. Andrew Raskin is cofounder and CEO of Gazooba Corp., based in Redwood City, Calif. E-Diaries: Episode 1: A New Beginning The Game of the Name Take My Job Offer, Please. Pretty Please There’s No Such Thing as a Free Launch Gimme Shelter Bridge Financing over the River Scared Let the Good Times Roll There’s a New Man in Town I Really Must Be Going

Episode I: A New Beginning

E-Diaries In which an otherwise sane New York salaryman flings himself into the mad, mad world of Silicon Valley start-ups I hail from a long line of entrepreneurs. Max Raskin, my great-grandfather, converted horse-drawn carriages into trucks by soldering them onto Model-T chassis in his Harlem garage. Grandpa Walter Raskin’s patents for keeping ice-cream trucks cold were the foundation of a family-run factory in Brooklyn. And my dad left that business to become a real estate developer on Long Island. Conversations at family gatherings naturally gravitate toward those companies, which Grandpa refers to as “outfits,” as in “We once did a deal with that outfit outta Pittsburgh” or “Hey, Andrew, what outfit are you with these days?” I hear that one every Thanksgiving. Now I have my own outfit. It’s called Gazooba, and yes, it’s a venture-funded, dewily staffed, Silicon Valley-headquartered dot-com start-up with a business model — “outsourced viral marketing” — of unimpeachable buzzwordiness. Gazooba’s been around for nine months; I’ve been around for 34 years, and this is the first time I’ve done anything like this. What I’m going through is (I think, I hope) both entertainingly unique and instructively universal. So I’d like to share my experiences with you in real time, or what passes for real time in print. I thought about doing it in Internet time, but that would mean writing about things before they actually happen, and my editors tell me that that really pisses off the fact checkers. But first, some background. Before this whole entrepreneur thing started, I was a New York kinda guy with an apartment in Seinfeld Country and a technical job at a Web consulting company called Netyear Group. At Netyear I became chummy with this fellow, Zen (so named because he was born in Japan), and this other fellow, Shanti (so named because he was born in Berkeley). Zen and I, in particular, had a lot in common. We were the same age, worked on many of the same projects, and got hot and bothered at the thought of starting a company but never did anything about it. We were habitual — and habitually restless — salarymen. In early 1998, Zen and I were traveling to Tokyo once a month, setting up Web sites for Netyear’s big Japanese clients. We got to be really good at it, too: our rÃsumÃs include the first direct-sales Web site for automobiles in Japan and an intranet for a fast-food chain. Like everyone else in the industry, we whiled away a lot of airplane hours playing the “If we started an Internet company, what would it be?” game. We had as many ideas as we had frequent-flier miles, but we could never get past the Big Question: Without money for advertising, how would we get people to come to a site? We were pondering just that question in September 1998 while relaxing beneath the windblown divi-divi trees in Aruba. Aruba’s not an everyday destination for salarymen like us, but we’d gotten a bargain, thanks to a travel Web site that E-mails me updates on fares to Caribbean windsurfing spots. When New York-Aruba falls to $300, I’m there. Since Zen had wisely taken up the sport, I forwarded the E-mail to him. As we lounged Zen commented that it was a good thing I’d sent him the note, since he probably would have hit the delete key without reading it if it had come unsolicited from the airline. All of a sudden, a couple of those cartoon lightbulbs switched on over our heads. Friends listen to friends, right? So, what if we built traffic to our Web site by getting visitors to refer their friends? What if we rewarded them for those referrals? Wouldn’t that work for our company? The drawback was that we didn’t actually have a company. But then those cartoon lightbulbs burned brighter. What if we sold other people, people who did have companies, a rewards-for-referrals service that they could run on their Web sites? Thus did Gazooba burst forth upon the world. The next month, Zen moved with his wife and four-year-old daughter to Silicon Valley to be closer to some of Netyear’s subcontractors. But physical separation didn’t stop us. We wrote a business plan together, communicating by bleeding-edge collaborative technology: the phone. We showed the plan to our boss, who granted us the time — and the computers — to develop a prototype under Netyear’s auspices, the only condition being that he could invest. Because I needed help with the venture money, I next approached Shanti with an offer so tempting I knew he couldn’t refuse it: “Hey, are you ready to throw away your career?” He was in. My faith in Shanti’s sophisticated fund-raising techniques turned out to be well placed. One December morning while I was visiting Netyear’s West Coast office, Shanti came running through the room screaming, “We just had a real-time VC experience!” Shanti, it seemed, had E-mailed our business plan to a select group of investors he’d chosen from Vfinance.com, the unofficial venture-capital A-list. Which is to say he spammed the suckers. Five minutes after he hit “send,” the phone rang: on the other end was a live venture capitalist. A few hours later, the live venture capitalist was sitting in Netyear’s conference room listening to our pitch. “I think you guys are onto something,” he said, and he headed back to Menlo Park. It was encouraging, but talk is just that until the term sheet arrives. Term sheets are the much-coveted deal memos that VCs use to tell you that they’re serious about investing, how much they’re willing to put up, and how much of the company they want in return. As of January we still had no term sheet from the live VC, although negotiations continued. Then another VC called. This guy wasn’t just live, he was someone whose name we actually recognized! This was getting cool. The sorta famous VC got his own conference-room pitch, and at the end he said he was impressed. But not ready to invest. “You guys have a good team, but it’s World War III out there,” he said. “Draw me up a detailed execution plan, and tell me exactly what you’re going to do with the money. Make an appointment with my secretary for next week and knock my socks off.” Exhilarated, Zen and I returned to New York to prepare for some serious sock knocking. The following Monday we were back in San Francisco in the reception area of the sorta famous VC. With its trendy furnishings and exposed brick, it looked like Hollywood’s idea of a successful Silicon Valley investor’s office, if, in fact, Silicon Valley investors ever showed up as characters in Hollywood movies. The sorta famous VC appeared and invited us into the conference room. After we’d finished our pitch, he leaned back in his chair and carefully lifted both his legs onto the dull-metal conference table. The left foot was bare, liberated from the beige sock that the sorta famous VC held high in the air. The right foot, however, was still firmly ensconced in an expensive-looking black-leather loafer. His message was clear: we had knocked one sock off, but half the hosiery wouldn’t cut it. We showed ourselves the door. In April, after yet another reworking of the business plan, the live VC finally faxed a term sheet to my apartment. It wasn’t to die for. The live VC — along with some other investors he’d rounded up — wanted more of the company than we wanted to surrender, and our options would vest according to the Valley-standard four-year schedule (to keep us honest). The investors also wanted me to be the CEO, because I have an M.B.A. and because they can’t understand the Japanese-influenced English in Zen’s E-mail. That meant I would have to move. To Silicon Valley. On that other coast. The West one. My New York friends tried to console me, reminding me that I could always move back. “Manhattan isn’t falling off the face of the Earth,” a ski-house buddy said. No, I was. “It’s going to be hell out there,” I whined to Zen on the phone, “working 24 hours a day, beholden to a bunch of VCs.” “Yes,” Zen replied. “And you’ll love it.” He knows me too well. I took one last run around Central Park and booked my ticket to San Francisco. Andrew Raskin is the cofounder and CEO of Gazooba Corp., headquartered in Redwood City, Calif. E-Diaries: Episode 1: A New Beginning The Game of the Name Take My Job Offer, Please. Pretty Please There’s No Such Thing as a Free Launch Gimme Shelter Bridge Financing over the River Scared Let the Good Times Roll There’s a New Man in Town I Really Must Be Going

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