Stunned and saddened, Rao took one last look around the office. A large monitor on the wall featured Eve’s familiar homepage with all the latest makeup, tips, perfumes, fashion shots, and stories. She posted a message saying, “We hope that shopping with us has been a beautiful experience.” Visitors to Eve.com were redirected to Sephora.com.
Sonja looked at the positives of the deal. She admired Bill Gross for keeping his word. “It could’ve gone the other way,” she told Naficy and Rao. “For me, it’s nice to know Eve will live on in Sephora.”
MJ
MJ couldn’t stop thinking about the Redpoint and IVP split, even as she left IVP on Sand Hill Road late one afternoon to make it to her son Will’s baseball game. She then headed to her daughter Kate’s science competition. At home, she comforted her youngest daughter, Hanna. Their golden lab, Cindy, had a heart tumor and wasn’t going to live much longer. Then her dad called. MJ had moved her parents out from Terre Haute years earlier, buying them a home in nearby Santa Clara. Her dad was calling to say he wanted to go to the store to return the soap he didn’t like. He wanted his $1.50 back. A few minutes later she received a call from the mommy network, as MJ called it, asking MJ to co-chair the harvest carnival. Finally her husband, Bill, walked in; he needed to do some work from home, he said.
Heading to the bedroom to change into more comfortable clothes, MJ caught her reflection in the mirror. She barely recognized herself. She now had short hair and wore a dark suit with a white blouse tucked into her pants and belt, and sensible heels. When she’d started at IVP, she had been told she looked like a young Jaclyn Smith, one of the stars of the hit TV show Charlie’s Angels. She’d had long brown hair, a beautiful figure, and a smile as sweet as her demeanor. When she’d driven west in her Pinto to California, her CB radio handle had been Too Hot to Handle.
But she’d realized quickly that her looks generated the wrong kind of attention. The “you look pretty” or “nice dress” remarks that came when she walked into a conference room full of men made her increasingly uncomfortable. No one complimented a man on what he was wearing. So MJ changed her look. She cut her hair, stopped smiling in work photos, and adopted the boxy suit. She did all this with one goal: to be able to walk into a meeting as an equal, without a single man commenting on her appearance. And she succeeded. As her partner Norm Fogelsong said fondly, “MJ is one of the guys.”
She had reduced her hours at IVP to spend more time with her kids: Kate, who was thirteen, Will, ten, and Hanna, six. But she also wanted to improve her marriage. The Bill she had known at Purdue was an optimist and adventurer, a competitive swimmer with a lean body and the deep tan of a California lifeguard. The Bill of today seemed more negative than positive, at least when it came to their marriage. He still boasted about her job in public but lamented in private that she didn’t have time or energy for him. While he wanted to spend some weekends away, just the two of them, she wanted to stay home, to do things with the kids as a family, and to get the house in order. When she was finally at home, she found herself compensating for being away so much because of her job.
That night, with everyone off to bed, MJ sat on the sofa in the living room and reached for her cinnamon Gummi Bears. Some people turned to alcohol; MJ turned to sugar.
She was more harried working part-time than full-time, trying to cram a week’s worth of work into three days. When she started volunteering at her kids’ schools, she was stunned by the amount of volunteer work done by the mommy network. She signed up to be a room mother and now, apparently, was co-chair of the school harvest carnival. She always felt like she was coming up short. She wondered why men did not experience the same familial pressures, even when both spouses worked. Bill never offered to help run the household. But MJ never asked for his help, either. She was an overachiever who enabled underachievement. That’s exactly what my mom did, she thought, eating more Gummi Bears. On the wall hung a framed caricature done for her recent forty-fifth birthday. It was titled “MJ Multitasks!” and showed her in a suit and pearls juggling five balls, each with a name: Kate, Will, Hanna, Bill, IVP. The thought bubble read, “It maximizes my dexterity.” Maybe that’s true, she told herself. Clarify, after all, had been a home run, bigger than any investment by the full-time VCs.
MJ pondered the Redpoint-IVP divorce. She wasn’t angry at Geoff Yang for creating Redpoint. She liked him and considered him a VC rock star. He’d had a strong idea, and he was running with it. What irritated her about Yang was how he insisted on introducing her: “This is my older partner, MJ.” For a smart guy, it was an insensitive way to introduce a woman.
In the past when MJ hit a wall, she found a way around it. She was in the business of solving problems, and she’d learned that the best solutions often came from the simplest ideas. With the house now quiet, an idea came to her. The answer was obvious. She felt like she had landed on a simple solution to the problem of IVP and Redpoint.
MJ stashed her Gummi Bears where no one could find them and headed to bed.
THERESIA
Looking for water in the desert that was the U.S. economy, Theresia started to nose around in cybersecurity, calling the contacts she’d made through Arthur Patterson and her colleague and friend Jim Goetz. She reached out to her previous contacts and made a point to attend industry conferences. She found that being the only woman in the room was a plus. If she could establish credibility, she could successfully stand out. She handed over business cards knowing that the name Theresia was an exception. At Accel, which had more Jims (Breyer, Goetz, and Swartz) than women investors, she grabbed any advantage she could. Cybersecurity was hardly a hot market, but Theresia saw potential in this relative backwater.
Since starting in venture capital, Theresia had heard all the sports metaphors applied to the VC world: being “down for the count,” swinging for the fences, making a slam dunk. There were the constant analogies between batting averages and investment returns. But to her, the more nuanced question was: Are you a home run hitter who also strikes out a lot? Or are you a Cal Ripkin, who consistently gets on base, hitting singles and doubles? The best hitters knew how to adjust to the pitches they were thrown. In 1999 and early 2000, everyone was swinging hard for the fences and hitting a lot of home runs. Now was a time to ease up and be more conservative. It was a time to hit singles and doubles.
* * *
She hoped that one of those base hits would include a group of Israeli former military guys and academics who had a new idea for protecting computers against hackers. Their first investor was Israeli. When they put out feelers for a top investor in Silicon Valley, they were told about Accel. Theresia’s partners Jim Goetz and Peter Fenton suggested she take a look at the company, called ForeScout.
In a meeting at the Accel offices, ForeScout co-founder Hezy Yeshurun said, “Our basic idea is deception.” He likened their strategy to the Israeli Defense Forces’ approach, exploiting weaknesses and using surprise to gain tactical advantages. “We are different in that we assume that a determined hacker will always succeed in penetrating a network. So we will specialize in deceiving attackers and creating a smokescreen of data.”
ForeScout had software that could see the number of endpoint devices on an organization’s network. The sensors listened to raw information to discover every connected device.
“We can do all this without installing anything on the device,” Yeshurun said. “Because of this, we can be more deceptive, as we are harder to find.”
Theresia understood the potential of “agentless” security, which didn’t require a company or an employee to put software on all the tech being protected. First-generation antivirus software, by contrast, had worked by identifying a digital footprint left in malware. Once the signature was found, the cybersecurity company could then send details of that signature in software updates. The problem with that model was that something bad had to happen before a fix could b
e generated. And the software had to be updated on every connected device.
After several weeks of due diligence and research, Theresia decided to invest in ForeScout. She figured that if all went according to plan, ForeScout would be bought in a few years. The big guys of cybersecurity were highly acquisitive. Yeshurun soon introduced Theresia to another Israeli, Shlomo Kramer, considered by most to be the godfather of cybersecurity. In the early 1990s, Kramer had co-founded Check Point Software Technologies in his grandmother’s Tel Aviv apartment. Check Point became the market’s first commercial firewall and grew into a billion-dollar company. Kramer was now an adviser to ForeScout.
As Theresia saw it, Kramer was still young. Eventually, he would get bored with investing and want to start another company. And she intended to be there when he was ready.
Yeshurun, a serial entrepreneur and professor of computer science at Tel Aviv University, was dismayed by how few women he met in finance and cybersecurity. It made him all the more delighted with his ForeScout investors. His first Israeli investor was a woman, Sharon Gelbaum-Shpan of Pitango Ventures, and now his first U.S. investment had been made by a woman.
Yeshurun and the all-male founders of ForeScout proudly came up with a nickname for themselves: The Babes Security Co. It was said with reverence. Theresia couldn’t help but smile.
MJ
In her meeting with fellow IVP partner Norm Fogelsong, MJ quickly got to the point. “We should not let IVP die,” she said. “This is not right. We should raise our own funds and keep IVP going.”
The polite, buttoned-down Fogelsong, who loved venture capital for its equal parts engineering and market analysis, felt like cheering. He too had been pained by the idea that IVP could come to an end. The two talked it over a bit more before heading to Reid Dennis’s office.
Dennis had been in the industry from the beginning, with the likes of Tommy Davis, Arthur Rock, Bill Draper, Tom Perkins, Eugene Kleiner, Bill Bowes, Dick Kramlich, Don Lucas, and Pitch Johnson. He had started out putting $15,000 of his own money into a little company called Ampex, which invented a magnetic tape for storing computer data. The tape would become a consumer product called a videotape. Dennis turned his $15,000 investment into $1 million.
MJ didn’t need to be reminded that Dennis had been hurt before by shifting alliances. He had started IVP as Institutional Venture Associates in 1974 with Burt McMurtry and Burgess Jamieson. The three raised $19 million. One of their first home runs was an investment in ROLM, an early entrant in the digital telephone business. Then McMurtry decided he wanted to start his own fund; Jamieson wanted to do his own thing as well. The two men didn’t want Dennis to continue to use the International Venture Associates name, so Dennis said, “Fine, I’ll change it. We’ll call it IVP,” for Institutional Venture Partners.
In recent weeks, Geoff Yang had solidified his dream of creating his own venture capital firm. IVP’s offices on Sand Hill Road had become Redpoint’s offices. Dennis, who had originally thought he would continue at Redpoint, could see that it wasn’t going to work out. He, MJ, and Fogelsong were being phased out. He told his wife, Peggy, “I don’t want to get out of the business. And I don’t want IVP submerged in Redpoint.”
So when MJ and Fogelsong entered his office and presented their idea to keep IVP going, his eyes grew watery. “I’m thrilled,” he said softly.
MJ knew at that moment that she would have to make personal sacrifices as well as let go of her school volunteer duties. She would have to focus her complete attention on rescuing IVP.
Dennis had given her a chance when others said women didn’t belong in venture capital. He trusted her. She often wondered if it was because he had been raised by two strong women: his mother, after his father died when he was seven, and their Irish cook, Mary O’Brien. He had met and married Peggy when he was a sophomore at Stanford and she was a student at the College of Marin. They had had three boys and a daughter together. IVP was his family’s legacy, too.
But MJ, Fogelsong, and Dennis would be challenged in raising money for a new fund. The economy was one of the bleakest in U.S. history. And they needed to hire a new team and find new offices.
MJ was up for the challenge. She recited her own favorite Top Gun quote: “Too close for missiles, I’m switching to guns.”
MAGDALENA
It was lunch hour at Ken Preminger’s Fitness Power gym on Sand Hill Road. Magdalena was dreading the ten minutes of abdominal exercises that would follow her twenty minutes of cardio. Her trainer, an Olympic rower, was a slave driver. She looked around the small gym, wondering who she would run into today.
She spotted a familiar face, an exceedingly fit man with blond hair and blue eyes. She struggled to remember his name. Was he an entrepreneur who had come to USVP to make a pitch?
“I know this guy,” Magdalena said to her trainer, nodding at the man. For some reason he was allowed to work out without a trainer, one of the stipulations of membership. “Isn’t he an entrepreneur?”
“You think he pitched you?” her trainer said, dumbfounded.
Magdalena nodded uncertainly.
“That’s Joe Montana. The Forty-Niners quarterback? The guy who led the team to four Super Bowl championships?” Montana was also a VC at the time, at Champion Ventures.
Magdalena laughed at her mistake.
* * *
Abs and core work completed, Magdalena and her trainer headed to the next station—thirty minutes of weights. Her mind was consumed with her afternoon schedule: meetings with her USVP partners, preparation for a board meeting, and most important, a scheduled call with Marc Benioff to talk about a situation that had surfaced with their start-up, Salesforce.
As she thought about the call, Larry Ellison, the CEO of Oracle, approached, followed by his trainer, gym owner Ken Preminger.
Magdalena and Ellison, the first and second outside investors in Salesforce, were normally on good terms, tending to chat about camping, hiking, and Yosemite. She found him easy to talk to, though she also knew that he could go from charming to demanding in a nanosecond. Ellison, who had co-founded Oracle in 1977 and built it into the world’s second-largest software company, was now the world’s second-wealthiest individual, after Microsoft’s Bill Gates.
But on this day, there would be no comparing notes on the great outdoors.
Magdalena looked Ellison straight in the eye and said, “You need to leave the board and stop copying us.” Ellison had become a board member of Salesforce after investing $2 million.
As their trainers fidgeted in awkward silence, Magdalena went on, “This is a clear example of conflict of interest, of learning what we are doing at Salesforce and then copying us.” The database giant Oracle had launched a CRM service that directly competed with Salesforce. Not only that, Magdalena noted in exasperation—the guy Ellison had sent to the Salesforce board meeting in his place was now running the new group at Oracle.
Magdalena had no problem speaking up about something she felt strongly about. Her father had taught her to stand on her own two feet as a child.
The friction between Salesforce and Oracle, a sort of David versus Goliath scenario, had generated a media frenzy. Ellison accused Benioff, a skilled salesman, of using the controversy to generate media attention for his company. As Ellison noted, dismissing any notion of copying Salesforce, Oracle was evolving from a database company to an online provider of software services. But the situation was also deeply personal. Ellison had been Benioff’s mentor and friend. At six foot five, Benioff was sometimes called an Ellison “Mini Me.” Ellison had supported Benioff when he took his sabbatical and launched Salesforce; he had invested millions and given Benioff flex time to get the company started. When Benioff announced he was leaving, Ellison told him not to poach more than three employees from Oracle. Ellison had gone out of his way to support his friend.
Be
nioff had already asked Ellison to resign from the board. Now Magdalena reiterated the message. Ellison, who had a way of sizing others up by narrowing his eyes, like a predatory bird, said, “No.”
THERESIA
Theresia was in the all-glass conference room at Accel when the smell of food hit her. Her sense of smell was in overdrive. She could feel herself start to sweat as her stomach turned over. She eyed the corner wastebasket, the white carpet, and the white furniture. Throwing up was never a good option in an all-glass office. She hit mute on the phone and ran like the track star she had once been to the bathroom.
She was in the first trimester of her pregnancy and was not ready to announce the news. It had been nearly ten years since she and Tim were married. She’d held off on having children for as long as she could, wanting to be at a secure place in her career. She was still in the early stages of her VC career and was determined to become general partner, managing partner, and ultimately, equal partner.
Accel had never had a woman investor before, so she had no road map to follow. Her two peers in the venture business who had children were Jennifer Fonstad, her colleague from Bain who was a general partner at Draper Fisher Jurvetson and a mother, and Robin Richards Donohoe, a partner with Bill Draper. But Donohoe was already firmly established in her career; she had arrived, fortunate to work with a dream partner who was an advocate for women. Fonstad, like Theresia, was still climbing the ladder. She intended to have a talk with Fonstad about being pregnant while working in a firm made up almost entirely of men.
Theresia had been asked in early job interviews whether she planned on having children. What she was really being asked was whether she would invest the necessary time to be successful. Answering yes or no about children was perilous. If she said she preferred not to discuss her private life, she might be seen as combative. The Americans with Disabilities Act, which had become law in 1990, protected women against such questions, as well as others related to nationality, gender, race, and religion. But the questions were still slipped into interviews. She had been advised by older women to sidestep the question, if possible, with an answer such as “I have a strong work ethic no matter what is going on in my personal life.”
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