In the end, Theresia joined Accel as a partner-track associate. She was eager to work with several start-ups rather than just one, and to learn from industry leaders Breyer and Peter Wagner and from Accel founders Arthur Patterson and Jim Swartz. Before her first day at Accel, she went shopping at Banana Republic for the VC uniform of the day: khaki pants and a light-blue button-down shirt. The look was terrible for women, but she had a secret source of solace—designer shoes. She loved combing through sales racks at Neiman Marcus for discounted designer heels. She would wear the uniform, but she wouldn’t give up her shoes.
Theresia’s job as an associate at Accel was to manage and create “deal flow.” Every day partners forwarded dozens of e-mails to her, most without a single word of explanation. She had to read down the e-mail chain and figure out what was being proposed and whether it was worth a partner’s time. It was a heady blend of triage—where she could not afford to miss something critical—and methodical analysis and research. At the same time that she was assessing which ideas had merit, she was encouraged to find her own deals and develop her own areas of specialty.
Shortly after starting, Theresia was told of a meeting coming up with two Stanford PhD students who had created a new algorithm for search. It was her job to meet the students, Sergey Brin and Larry Page, and visit with them before they pitched the partners on their new page-rank algorithm. It was called Google.
SONJA
Sonja treated Kim Davis, her partner in the F5 deal, to a trip to the Four Seasons on the Big Island to celebrate their lucrative triumph. It was Sonja’s way of thanking her friend for showing her the deal. The women, both single, both in their early thirties, spent their days lounging by the pool, watching waves, and snorkeling in the nearby lagoon. They talked about work, men, family, and money, and why women had a hard time admitting they liked money. Men could be unapologetic in their pursuit of it, while women were steered away from the relentless drive for wealth. Men used philanthropy to advance themselves, while women used it to advance others. In other words, money was complex for women, one more thing to skillfully navigate.
“Women have to be careful about money,” Sonja said. “If a woman marries a man who is wealthy, she is a gold digger. If a woman works to make a lot of money, that doesn’t look good. I like money because it gives me options: to be single, to be married, to help my parents and others. My mother’s stepfather wouldn’t let her go to college. She didn’t have options.”
Sonja added with a smile, “I may only have the chance to get rich once. I’m not going to blow it.”
Kim had similar discussions with other friends and role models, including the early VC Ann Winblad and entrepreneur-turned-VC Heidi Roizen, both well known and respected in the Valley. Heidi had shared advice on money and on dealing with oafish comments and bad behavior by men in the industry. As co-founder of the software company T/Maker, Heidi had gone to dinner with the senior VP of a major PC manufacturer, to sign a deal critical to her start-up. Just as wine was served and toasts were made to their great future together, the man told Heidi he had also brought a present for her, but it was under the table. He took her hand and placed it on his unzipped pants. Heidi left the restaurant, the deal fell apart, and she went on to find other backers—notably Ann Winblad.
* * *
“The tables of power are always filled with white men, but I’ve latched on to amazing women,” Kim said, raising her drink.
Sonja had been fortunate enough to have an important female role model, too. At TA Associates in Boston, she’d learned the trade from Jacqui Morby, one of the first women to make partner at a venture capital firm. Morby worked out of TA’s Pittsburgh office and came to Boston every few weeks, wearing pastel-hued suits that reminded Sonja of Easter eggs. Morby and Sonja would hop on planes to visit interesting companies and meet executives and entrepreneurs. Morby taught her the importance of visiting good companies even if they weren’t raising money. She believed the venture business was more about the people than the transaction. Morby had been the first at TA to find companies with potential by studying computer magazines, trade publications, and Dun & Bradstreet reports, cold-calling the companies, and refusing to take no for no. It was Morby, too, who had told Sonja to go after a deal “like a bird dog,” the phrase that had echoed in Sonja’s mind when she tracked down John McAfee in his car.
Sonja told Kim the bits and pieces she’d learned about Morby during their business trips together. Morby had been married to a successful banker and had two children when she decided she wanted more out of life. At forty, Morby enrolled in the all-women’s Simmons College Management School, taking classes at night. A few months shy of graduation, she interviewed with an investment banker from Paine Webber in Boston for an unpaid internship. After a lengthy talk that seemed to be going well, the banker leaned in and told Morby, “We think you’d be great, but you have two small children.” Before Morby could reply, he went on, “Your husband works at the Bank of Boston. He needs you at home.” The banker added, “My wife couldn’t do this.”
Kim rolled her eyes at the story.
* * *
Morby had started at TA Associates as an unpaid intern in the late 1970s, when The Mary Tyler Moore Show had caused a stir with its touching depiction of a single, independent, and empowered working woman. Morby made partner in 1982, a year before MJ Elmore. She met with the young Bill Gates and Larry Ellison and landed deals with the earliest software companies, including Digital Research, McCormack & Dodge, Capex, and many more, at a time when investing in software was considered risky.
Sonja told Kim a story Morby had shared with her about meeting Microsoft co-founder Bill Gates. Arriving at Microsoft in Seattle for an early-morning meeting, Morby was told that Gates was on his way from the airport. She studied the office environment of the companies she visited—and Microsoft HQ was a mess. Computer boxes and empty Coke cans were scattered about. After an hour of waiting, she finally spotted a harried young man with large glasses. He was shaking his head and talking to himself, clearly furious about something. It was Gates, she realized.
He had just flown in from Texas, where his meeting “couldn’t have been worse.” He’d lost a deal he thought he’d won, got no sleep, and had been pulled over for speeding on his way to the office. He apparently was fuming that Tandy—one of the earliest personal computer manufacturers, marketed through Radio Shack—had made a deal with a company other than Microsoft. Tandy needed a software programming language called a COBOL (Common Business-Oriented Language) compiler for its TR-1000 computer. Gates had been working to convince Tandy to contract with Microsoft, even though he didn’t yet have the compiler they needed.
Morby asked Gates about his operating system, MS-DOS, due to be released in August. Gates said he had a local guy, Tim Patterson, working on the programming. It would allow users to open, navigate, and manipulate files on their computer. The discussion continued for another hour, and the two agreed to meet again within two weeks.
Morby didn’t get the Microsoft deal, but after her meeting with Gates, she met with computer scientist Gary Kildall, who had written the very first operating system, CP/M (for Control Program/Monitor), to connect computers. Kildall wrote the software from scratch, beating Microsoft to the market. His company was Digital Research, Inc.
Sonja continued, “Jacqui and Kildall actually sat in a restaurant called the Buckhorn Barbecue near the Nut Tree complex, and Kildall grabbed a bunch of napkins and began to draw a diagram.” Kildall showed Morby how the operating system, which he had written and controlled, was the basis for everything. “Applications fit around that,” he said as he added to his diagram. He kept drawing as he talked, explaining the three basic layers of any computer system: the hardware, the operating system, and the applications (which at this time were not yet bundled together). He told Morby, “He who controls the operating system controls the computer indust
ry.” Morby became an investor in Digital Research, Sonja said, and watched a battle escalate between Digital Research and Microsoft—which Microsoft won.
* * *
As Sonja admired the gorgeous Hawaiian sunset, she felt, more than ever, that she was following in Morby’s footsteps. Kim was inspired by Morby’s story and admired Sonja’s work ethic and her hustle. For her part, Kim had called two other venture capitalists the day she called Sonja to tell her about F5. One had been Geoff Yang, the partner at IVP with Reid Dennis and MJ.
“You moved faster,” Kim told Sonja. When Sonja and Kim returned to Silicon Valley, there would be two women on the board of the multibillion-dollar F5.
As their extended weekend getaway in Hawaii wound down, the women went shopping. They had a tradition of buying “deal baubles” to commemorate a great deal. As they surveyed the jewelry in the hotel shop, a saleslady looked at them dismissively and asked, “Do you work at the hotel?”
Big mistake, Kim thought of the woman’s snub. Obviously, the saleslady wasn’t aware of all the baubles the two women could have bought there. Sonja and Kim exited the shop, arm in arm.
PART
THREE
The Outsiders Inside
1997–2000
MAGDALENA
Wearing dark sunglasses and a Hermès head scarf, Magdalena eased her 1958 red convertible Corvette into the parking lot of US Venture Partners. The Corvette had been a gift from her husband when she finally became an American citizen. The Corvette was quintessentially American, and a reminder that dreams do come true, even for a Turkish girl who had been an outsider in her own homeland.
The late 1990s had been very good to Magdalena. CyberCash had gone public in 1996, and she had recently built and quickly sold another company, MarketPay, that offered embedded point-of-sale software. In just a few years, she had evolved from an online shopping evangelist—with more detractors than followers—to an e-commerce guru. In 1997 Red Herring magazine named her Entrepreneur of the Year.
Now, as one of the hottest new business figures in Silicon Valley, Magdalena was being courted by top venture capital firms, including USVP, to make the leap from serial entrepreneur to financier. It was a far cry from her days of struggling to raise funds on Sand Hill Road.
Magdalena was greeted inside by one of USVP’s partners, Steve Krausz. USVP had wanted to invest in MarketPay when MarketPay was little more than a prototype, but the acquisition offers had come in quickly.
“Come join us,” Krausz said to Magdalena. USVP had been founded in 1981 by venture pioneer Bill Bowes, a friend and contemporary of Reid Dennis, and the founding shareholder of Amgen.
Magdalena removed her glasses and scarf and took a seat. She wore a dark suit and a pink Gap T-shirt. “I know you invest money, but I don’t really have any idea what a venture partner does,” she said. She had turned down VC funding for CyberCash, opting instead to forge partnerships with existing companies, including Intel and Cisco. (Her stock in UUNet had also paid off when MFS Communications acquired the company for more than $2 billion.)
Krausz, who like Magdalena had a degree in electrical engineering from Stanford, talked about the role of a venture capitalist as both coach and mentor to CEOs; as someone who built great leadership out of untested mettle; and who helped disrupt the status quo by using new technologies to solve old problems. He talked about building companies that could make the world a better place.
As an entrepreneur, Magdalena had seen how the scale of power was tipped heavily to the VC side. She looked at the job of a VC as fairly cushy, given that VCs invested other people’s money. She wasn’t sure she was ready to shake her entrepreneurial fervor: “At some point, I’d like to start another company.”
Then in her typical no-nonsense manner, she said, “The job is really all about making money, right? That’s the goal. No one is paying you to change the world. Your duty is to return more money to the limited partners than they gave you.”
Krausz smiled. Magdalena was right, he said, but so was he. Yes, being a venture capitalist was about figuring out how to earn consistently superior returns from investments in inherently risky and adolescent business ventures. But it was also about improving the world at large, and that’s what made it worthwhile.
After meeting with the rest of the USVP team, Magdalena returned home to weigh the pros and cons. She considered other offers from start-ups and venture firms, but in the end she decided to give USVP a try. It felt like a good fit.
Once on the job, she sat in on meetings and talked about the business with partners, assistants, and entrepreneurs. She quickly bonded with USVP’s general partner and guiding force, Irwin Federman, finding him more Jewish rabbi than Silicon Valley VC. (Bill Bowes had stepped away from day-to-day operations of USVP but remained a vital figurehead.) Federman, tall, with a stentorian voice, was full of big-hearted emotions and the pursuit of eternal truths. He wore a suit and tie, was punctual to the second, opened doors for others, and always picked up the tab. Magdalena felt she could learn the business from this wonderful man.
Magdalena was immediately fascinated by the behind-the-scenes drama of partners’ meetings. Though big-hearted, Federman could reduce a company’s pitch or a partner’s idea to rubble. There were six general partners, each with a distinct personality and way of presenting and arguing. This is just like a dysfunctional family, only with a ton of money, she said to herself, looking around the table. There was the heir apparent, the black sheep, the taciturn intellect, and the red-faced partner who had to have his way.
On the flip side, she was dazzled by the intellectual discourse. This is a debate society! she realized. The debates were a beautiful mix of art and science, emotion and intellect. As in electrical engineering, there was logic and there were blind spots. The partners had to do their homework, present ideas convincingly, defend every number and every bold statement, and win the rest of the group over. The VCs learned something new every week about fields as varied as retail, biotech, cyber-security, and more.
One day early in her VC tenure, about halfway through an afternoon of meetings, Magdalena looked around the conference room in search of food. Popping out of her seat, she headed to the side buffet and filled a plate with cookies, then proceeded to go around the table, offering a cookie to each partner. She did the same thing with the coffee. The room went silent. Even the assistants took notice from the other side of the glass. Magdalena knew that many professional women avoided doing anything too “secretarial.” But for Magdalena, pouring coffee and offering food was simply being polite; it was how she had been raised.
She knew she could be the girl from Istanbul with the frilly dresses and white gloves, and her father’s daughter who loved hammers and nails more than any toy or any doll. No one was going to be confused by what she had to offer.
THERESIA
Theresia was back at a foosball table, ready to crush the competition. She was a bit rusty from her college days at Brown. But as she focused on the table, her competitive instincts kicked in. She still had it: The spin shot! That surprise bank shot! Just as she was going in for the kill, she stopped herself.
She looked across the foosball table at her dark-haired opponent and silently cursed herself: What the f— am I doing? Sergey Brin was no inebriated frat boy or blue-collar hustler. The Russian-born math whiz and Stanford computer science graduate had come to Accel Partners to talk about his start-up, Google. His co-founder, Larry Page, the more introverted of the two, watched from the sidelines. Theresia wondered if Larry wasn’t talking to her because she was an associate, not a partner.
Theresia cooled it with the spin shot, and as much as it pained her, she curtailed her signature middle-rod pull shot. Her only job at the moment, as an associate, was to entertain the Google guys and develop a rapport with them. Everyone in the Valley wanted a piece of Google. In this case, playing to win meant making sure
she lost.
It was the spring of 1999. Brin and Page, who had met as PhD students in the computer science department at Stanford a few years before, had reportedly come up with an improved way to search the Web. The field was crowded with search companies, including Excite, Yahoo!, WebCrawler, Lycos, Ask Jeeves, and Alta Vista. But what had caught the attention of Accel partners Mitch Kapor and Jim Breyer were the well-placed endorsements of Google search by its early adopters, the engineers and software developers. “This thing Google is better than anything else,” Kapor and Breyer were told. “This is all we’re using.”
Google was growing fast—getting more than ten thousand searches a day. Brin and Page had moved the start-up from their Stanford dorm room to a garage rented to them by Susan Wojcicki, then to a small office above a bike shop here on University Avenue in Palo Alto. Theresia kept an eye on the time, aware that partners’ meetings often went late.
Accel occupied floors two through four of the building at 428 University Avenue, about three miles from the VCs of Sand Hill Road. They were on the second floor, with the foosball and Ping-Pong tables, a kitchenette, and a small patio overlooking the parking lot, which they shared with Union Bank. (Accel administrative assistants liked to track the Ferraris and Porsches parked in their visitor spots five and six.) The second floor also served as Accel’s “incubator,” where a handful of promising entrepreneurs were given free office space to hatch or develop new business ideas. The third- and fourth-floor offices were for venture partners and general partners, including Jim Breyer, Peter Wagner, Bud Colligan, Bruce Golden, and Mitch Kapor. Co-founders Arthur Patterson and Jim Swartz had offices on the fourth floor, where all the major deals took place. There the carpets and walls were white, the wood was a whitish blond, doors were of glass, paintings were modernist washes of color, and the tables were white marble.
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