All you hear about in tech today is entrepreneurs and VCs and money changing the world. I was an entrepreneur and I met a lot of VCs and I asked for some of their money. Changing the world is not the business that you think it is.
At the turn of the century I spent about a year raising money from VCs for a dot-com company I'd co-founded. Popula was like a mini-eBay, but for vintage and rare goods, and for rare books. In early 2001, after four years building the business, we finally managed to wrestle down a term sheet from a small venture firm for $8 million. Alas (or maybe not, as we shall see), the crash of April 2001 arrived before the money did. But during that year, I learned a lot about VCs and how they think.
The erstwhile homepage of Popula
The memories of that period will forever boggle. The darting eyes of hundreds or thousands of hungry/crazy opportunists. The horror of hearing the phrase "monetizing eyeballs" for the first time, and the well-nigh uncontrollable desire to leap across the table and plunge my fork into the speaker's chest. Taking a seat in the opulent offices of a "Biz Dev" VP at a dot-com entertainment company funded to the tune of $60 million, and finding myself across from a squirt so young that I couldn't help blurting out, "Um, can I talk to your dad?" Seizure-inducingly horrible, ostentatiously expensive furniture and artwork by the truckload, a never-ending cascade of floor-to-ceiling glass walls, a blur of huge, self-important conference tables.
Also: the thrill of watching our beloved project come to life. The shared pleasure and excitement of colleagues, programmers and customers, experiencing this extraordinary moment together. Knowing that you were watching the birth of a medium that was about to change the world. That you were part of it.
We learned that they liked to be taken to lunch at the movie studios, the VCs, because that is one of the few places you can't just buy your way in. They could be a lot of fun, loved to party, loved good food, good wine. Also, loved Ayn Rand (both Atlas Shrugged and The Fountainhead) but no other novels at all. They said the most unbelievable things. "We won't look at a company without a potential market of at least $100 billion." "We're not looking at profits, we're looking at revenues."
To be fair, the development side was just as surreal. One afternoon I found myself in the galley of this podgy network guy's boat, this bizarre guy who ran a gang of Oracle geniuses, when suddenly he emerged from the cabin in his underwear. In Florida, a network security specialist met me while brandishing a lightsaber of his own design. He turned out to be totally useless: Our servers were decimated by a virus that was nothing by today's standards, a tiny little bug that anyone could clear up in five minutes on his own nowadays.
So why even invest all this time and effort in trying to raise outside money? In those days eBay, our principal competitor, did not dominate to the extent it does now. We'd put a lot of our own money in, hundreds of thousands by the end, but that was no match for the avalanche of money being spent by eBay and their top-tier competitors, Amazon and Yahoo, both of which had launched competing auction sites in an attempt to wrestle that explosively-growing business away from eBay. In order for us to establish a permanent foothold, even to make ourselves heard above the din of our half-dozen or so competitors in the second tier — most of whom were venture funded — it would be necessary to spend at comparable levels on development, advertising and marketing.
So: Pitching, pitching, pitching. Lots of airplanes, lots of talking. There was a truly scarring event put on by the Forum for Women Entrepreneurs, at which it was suddenly announced that the first five to reach the podium would get to pitch. A physical race between women in business gear. Those in heels were courting trouble. Many were like myself, transfixed with fifty kinds of horror and dread and rooted to the spot.
Finally, we signed a deal. Champagne all around.
One of our VCs arrived at our ramshackle Hollywood Boulevard warehouse offices in a huge white stretch limousine. "Jesus who have you got in there, Van Halen?" I exclaimed, injudiciously. We showed her inside.
"Wow," she said as she examined the musty, book-stuffed interior. We trembled inwardly. "Some of our companies have paid, like, hundreds of thousands of dollars to look like this."
