THERESIA
As part of her couch-surfing routine, Theresia sometimes stayed with Greg and Sarah Sands, who had been her Stanford business school classmates. Greg had gone on to become the first product manager at Netscape. He’d written the initial business plan and even coined the company name. Other nights Theresia stayed with Angela Tucci, another business school friend. Competition for second bedrooms in Silicon Valley was fierce, given employees at start-ups were often paid in stock instead of cash. On the eve of an important meeting for her start-up Release, Theresia ended up at Tucci’s place. After a few fitful hours of sleep, she gathered her things and hopped back in her car, where her belongings were all neatly packed. She was nothing if not organized. As a girl, she had kept her Barbie dolls in Ziploc bags, with clothes in one, accessories in another. She gunned her car onto Highway 101, heading toward the offices of the software giant Symantec, one of the places she would be giving a pitch to.
On the drive, Theresia listened to syndicated sports talk radio host Jim Rome, who had famously baited Rams quarterback Jim Everett into on-air fisticuffs by repeatedly calling him “Chris Evert,” a reference to the female tennis legend. Everett should have taken it as a compliment, Theresia thought as she flipped stations. She looked at the clock on her dashboard and switched to AM radio for news.
The host was talking about the 1995 bombing of the Federal Building in Oklahoma City, which had killed 168 people, including 19 children, and injured more than 500 others. She turned up the volume. No matter how many times she heard the bomber’s name—Timothy McVeigh—she couldn’t bring together what she heard with what she knew about McVeigh from high school.
Back home in western New York, Theresia and McVeigh had worked together at Burger King. They both had run track in high school, been huge Buffalo Bills fans, and graduated in 1986. McVeigh wore camouflage and loved guns. He had been raised by a dad who went to church, belonged to the autoworkers’ union, and worked the night shift in the Harrison Radiator factory in Lockport, where Theresia interned one summer. What struck her whenever she thought about McVeigh was that there had been nothing unique about him growing up. He was indistinguishable from everyone else in town.
She turned off the radio when she heard a commentator ask whether the bombing—and its homegrown “all American” terrorist—represented the end of the American dream. She didn’t want to hear about the end of any dreams today. She had plenty of her own to fulfill.
Theresia arrived at Symantec early. She spotted Release founder Matthew Klein, and the two headed inside. Klein was wearing white gym socks with his dark suit, but she decided not to say anything. She appreciated him for what he was—a geek’s geek, guileless, smart, and exuding a sort of utopian optimism. She wasn’t sure he even noticed that Theresia was a she. The only time gender came up was at outside meetings with venture capitalists, bankers, and corporate executives, where Theresia was often mistaken for an intern, a secretary, or a girlfriend. She was asked, “Where’s the coffee?” and “Are you going to take notes?”
Only months before, while working for Bain in San Francisco, Theresia had a client in Los Angeles who apparently thought he could kiss the women who worked for him. He first made suggestive comments to a junior female colleague of Theresia’s, then tried to kiss her. The woman told Theresia about his comments and behavior, and the two decided the client had been more inappropriate than threatening, that their work with him was wrapping up and he was too important to lose. When Theresia was in the client’s office at the completion of their work, the man shook Theresia’s hand, pulled her close, and tried to kiss her. She deflected by laughing it off and pretending he had been going for a European double kiss.
Release felt gender neutral and horizontal, not hierarchical. No one had power over anyone else. Every day was both fraught and full of potential. Every day it was about rolling up your sleeves and getting stuff done.
The meeting began on time, with an unsmiling Susanne Brey, a Symantec executive, running the show. Her efficiency intimidated Matthew. She was clearly not going to coax the pitch out of him.
Matthew, using the coaching that Theresia had given him, began, “We developed an ability to take any program, any executable program, and wrap it in our payment shell.” Theresia nodded encouragingly. He continued, “Look, you don’t have to bother your developers. You don’t need to do any integration, or learn any API, or change even a single line of your source code. Just give us your final gold master .exe file—the same thing you send to the factory that manufactures your CD-ROMs. We can wrap it up for you and put it in an online store for people to download, and you collect the money.”
Matthew couldn’t tell whether Susanne Brey disliked him or the idea. He hoped Theresia would take over. She had mastered this kind of strategic corporate dance—the language, the pauses, the eye contact, and the pacing. It was Theresia who had landed the meeting in the first place, making the case to Symantec that its Norton antivirus software required regular updates that could be done electronically rather than in boxed software.
Matthew’s heart sank when he saw Brey checking her watch. That was Theresia’s cue to take over. She covered as much territory as she could, as efficiently and quickly as possible. Then Brey stood. Their time was up. The meeting was over. Walking out, Matthew was deflated, sure it had been a disaster. Theresia shook her head. “Nope, it went great,” she said, steering him back to his car. And she was right. They got the deal with Symantec and were soon landing deals with other major companies, including Netscape and the bookseller Barnes & Noble.
Their next stop that day was San Francisco, where they would present their business plan to investors who, along with a general tech audience, moved from room to room to hear pitches from start-ups that interested them. Matthew was pleased when he walked into their room and saw a big crowd. He and Theresia had done a few of these speed-dating, dialing-for-dollars events, and this was their biggest audience by far. But as he and Theresia set up, the crowd suddenly vanished. Disappointed, Matthew was told that the crowd had been there to listen to a pitch from the bookseller Amazon. Matthew looked at Theresia: “An online bookseller? How stupid!” Theresia, for her part, thought it was a great idea and planned to try to land Amazon as a client.
Release had more wins than losses in its meetings with companies and investors—though the start-up was always desperate for cash. Eventually it prepared to go public, with Merrill Lynch as the underwriter. The investing world had changed since Netscape’s IPO in 1995. The fervor over Netscape’s dramatic upward valuation had ushered in new economy companies that were born, funded, acquired, or went public in record time. Suddenly, making money—actual revenue and profits—was far less important than capturing clicks and eyeballs. Tens of billions of dollars were pouring into venture capital funds, and almost any company with a “dot-com” after its title was attracting suitors. For every $100 invested in businesses across the United States during this period, more than $40 went to Internet-related companies. Never had so much money been created so quickly by so few people. Jokes were made about the virgins of the valley—those rare souls who had yet to take a company public. Porsche Boxters were as common as the iMac, offered in a slate of colors.
In 1998, Theresia and the Release team had almost finished their S-1 initial SEC registration form, required to take the start-up public. They had close to $15 million in subscription revenues. They brought in a new CFO, Carolyn Rogers, to help pre-IPO. But in a surprise move, Rogers won the support of the board and became CEO herself, replacing Matthew.
The board told Matthew that at this stage, the Silicon Valley game required “adult supervision”—someone with experience running a company. Alternating between sadness and anger, he couldn’t help but admit to himself: What do I know about running a company? Hell, what do I know about anything? I’ve been a student for most of my life. My business experience consists of
writing computer code in my pajamas.
In another surprise, Rogers decided that Release was too small to go public at this stage and told the board to put everything on hold. Theresia had a feeling Rogers wasn’t going to stick around for long, and she felt the time to go public was now. As Theresia told Matthew and the board members, “I’ve really enjoyed this, but I’ve seen this movie before. I think I know how it ends. I hope I’m wrong. I’ll stay for as long as you want me, but…”
To Theresia, this was the end of the Release she knew and believed in. It was time to start something new.
MJ
MJ parked in her usual spot in the back lot at the IVP offices and walked past the sprawling oak tree. It reminded her of a tai chi practitioner, its limbs long and purposeful in their reach. She had finally got rid of her Ford Pinto, selling it on Craigslist. On rare occasions when she spotted an old Pinto in the land of German sports cars, she was reminded of what it was like to first drive up Sand Hill Road, looking down through the rusted-out floorboards.
MJ headed into the lobby of Building 2, graced by a large artwork depicting a slightly torn and burned thousand-dollar bill, titled Burn Rate. MJ, one of the first women in history to make investing partner at a VC firm, had been at IVP for more than a decade now. She had come of age professionally in the 1980s, a boom time for venture capital. The growth began in earnest when IVP founder Reid Dennis—along with fellow VCs Pitch Johnson, Tom Perkins, and Bill Draper—successfully pushed Washington lawmakers to lower the taxation on profits from sales of investments. Some of the biggest companies to go public during this time were Genentech, Compaq, Apple, Oracle, and Microsoft.
When MJ was hired in 1982, one of the first deals she and Dennis landed was a start-up called Sequent Computers. MJ knew Sequent co-founder Scott Gibson from her Intel days. When she briefed Dennis on the deal and mentioned “there are a lot of venture guys after them,” Dennis looked at his watch, made a few calls to rearrange his schedule, and said, “Let’s pay them a visit.” So they flew in his twin-engine Cessna to Beaverton, Oregon. Hours later MJ and Dennis left Oregon with a deal: IVP would invest $5.2 million, giving Sequent a pre-money valuation of $15 million. (Pre-money is the value of a company or asset prior to the investment.) They had nothing in writing, but Gibson trusted MJ from their days at Intel and knew Dennis’s reputation. His handshake was considered golden. Now in 1996, Sequent had more than $800 million in annual revenues and partnerships with Oracle, Boeing, and Siemens AG, among others.
IVP now had more than $187 million under management in its seventh fund. The VC firm had helped finance, build, and take public eighty companies, collectively employing more than one hundred thousand people, generating $10 billion in annual revenue, with a market capitalization of more than $20 billion. MJ and Dennis hired all the new partners. They established three areas of investment expertise: early-stage info tech, late-stage info tech, and life sciences. MJ’s focus was primarily on the fields of software, communications, and computer-aided engineering. She had invested IVP funds in Applied Digital Access, Aspect Communications, Bridge Communications, Frequency Software, Netrix, Red Pepper Software, SuperMac, SynOptics, Unify, and Weitek.
Entering the IVP offices, MJ greeted her secretary, Andi Heintz, grabbed coffee, and closed her door. Sipping coffee in silence was her tai chi, her Zen moment. Work was the only place where she could finish a cup of coffee. Here challenges came at her one at a time.
Finishing her coffee, MJ welcomed Heintz in for a quick debrief before the partners’ eight-thirty pitch meeting. Heintz had started at IVP in 1984; MJ had been her first female boss. MJ was also the only partner who kept her own schedule and got her own coffee.
Silicon Valley was in the middle of another economic boom, this one whipped up by the potential of the Internet. And like a computer chip, MJ’s mind would process the divergent pieces of her typical day, from pancakes to pitches to lights-out. Her former Intel boss, Gordon Moore, had famously predicted that computing power—the number of components that could be packed onto a Silicon chip—would double every year. (He later adjusted that to every two years.) His prediction became known as Moore’s Law. The same exponential growth was taking place in Silicon Valley. The Valley had started with two guys, William Hewlett and David Packard, founding HP in a garage, and it was now the epicenter of start-ups with billions of dollars of venture capital.
“Just keep things moving,” MJ said to Heintz before the partners’ meeting began. The pitches would often run late, and the partners tended to get comfy. MJ was the only one in the room with a working spouse and children. With an endless stream of people and deals to consider, it was possible to work around the clock. When other partners wanted to spend more time considering a deal, MJ was often a quick no. When the men juggled six to eight start-up deals, MJ focused on a few propitious ones. Good judgment and time management became her secret weapons. When it came time to fire a CEO or the founder of a nascent company for persistent problems—when the problems had long been agonizingly obvious—she wasn’t afraid to drop the ax. VCs had a reputation for being quick to fire, but MJ had found the opposite—they always waited too long. Venture capitalists wanted their entrepreneurs to succeed.
MJ had already waited too long when she met with one of her entrepreneurs who had founded an electronic design automation company. Only twenty-eight at the time, MJ had been named a partner at IVP and she was the lead investor in the company. She had summoned the forty-something founder to her office to discuss the company’s problems, including certain, to put it delicately, personnel issues. There sat the founder, who was always impeccably dressed and spoke with a thick and mellifluous accent. His eyes had a habit of wandering south.
MJ wasted no time. He was dating a female application engineer who worked for him. She told him what she knew and touched on other problems at the company. Without further ado, she said, “You’re fired.”
The founder looked shocked, then indignant. “I’m not going to be fired by a woman,” he said.
MJ almost laughed. He was fine being funded by a woman but wouldn’t be fired by a woman. She glanced behind her and to the side. “Well, I don’t see anyone else here, do you?” she said. “You are fired.”
MJ eventually unloaded the company for $1.39 million, at a loss to IVP of more than $1.4 million. But no one was complaining.
Over the years, in fact, MJ’s quick dispatching of the founder had become the stuff of legend, often recounted in get-togethers among Heintz and her fellow secretaries at other firms. They called themselves the VVCAs—the Vivacious Venture Capital Assistants. Every few weeks, they would gather after work for drinks and to dish out gossip. They talked about partners at their respective firms, about the affairs, the houses, the exotic trips, the picky eaters, and the ones who needed their laundry retrieved. They rolled their eyes at the story of a VC who called from vacation to ask his assistant to clean the dog poop in his backyard.
* * *
MJ looked at her watch—it was time for the partners’ meeting to begin. She headed into the conference room, while Heintz returned to her perch in the hallway. Petite, blond, and outgoing, Heintz watched as everyone went in and took their seats. Reid Dennis wore his trademark suit and bow tie.
Heintz hadn’t immediately taken to MJ, who came across as an iron maiden in her gray, navy, and black suits, white blouse, nylons, and practical pumps. The purpose of the uniform, Heintz gradually came to understand, was less to look masculine than to avoid looking feminine. Heintz, who had once worked for the chief psychologist at the Langley Porter Psychiatric Hospital and Clinics in San Francisco, was intrigued by MJ and by the gender dynamics that played out at work. She had seen that women’s success and likability were often negatively correlated; as one factor went up, the other went down.
Heintz’s perception of MJ had really changed when she became a mom. Heintz had assumed that MJ
was too career-focused to have kids, so she was shocked the day MJ confided that she was pregnant. As the first woman partner at IVP, MJ had to establish a precedent of maternity leave, and she took three months off with each child. And through it all, her career continued to prosper.
By this time, Heintz knew MJ well enough to know that she was a sensitive woman wearing an impassive mask and a suit of armor. She had flourished in the Darwinian game of natural selection that played out every day on Sand Hill Road. As Heintz peeked into the conference room, she could feel herself rooting for her boss. She was a modern version of Melanie Griffith’s character in Working Girl, minus the industrial-strength teased hair.
SONJA
Sonja was running a different kind of race. After the skiing weekend, she had happily shelved her Patagonia jacket for her own suit of armor: a tailored jacket, blouse, pants, and pearl necklace. The companies around her were soaring to new heights. The NASDAQ—home to virtually all the dot-com stocks—had risen nearly 400 percent in the few years since Netscape’s IPO. The Internet was being lionized as the transformative technology of the twentieth century, on par with the advent of the automobile industry, electric power distribution systems, and nuclear energy. Entrepreneurs and VCs used words like gold rush and land grab to describe the once-in-a-lifetime opportunity to get rich. Turf battles escalated between banks vying for hot initial stock offerings and merger deals. VCs chased after fresh-faced, wide-eyed dot-com entrepreneurs. Companies such as At Home and Real Networks had impressive IPOs, as did Verisign, Exodus, CyberCash, UUNet, and Inktomi. Companies like Priceline, eToys, Pets.com, GoTo.com, and Webvan experienced dazzling growth—as measured by eyeballs, page use, and unique customers.
Sonja was at work when she got a call from her friend Kim Davis, a venture capitalist at IDG Ventures in San Francisco. Kim had earned her bachelor’s degree at Stanford and had been a year behind Sonja at Harvard Business School. The two women now lived a block from each other in San Francisco. Kim told Sonja that she had found a promising new Internet company in Seattle and needed an investing partner. “This is going to be a big company,” Kim said. IDG had an $80 million fund; its typical investment deal was between $1 million and $2 million. Menlo’s Fund VII was $250 million.
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