Tag Archives: Gazooba Corp.

About 4219 days ago E-Commerce

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, à 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.

About 4737 days ago E-Commerce

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 tête-à-tête-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.

About 4858 days ago E-Commerce

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. Seuss­ish.” 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 & Byers­funded 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