Startup: A Silicon Valley Adventure

by S. Jerrold Kaplan

  I launched into my talk. It was the performance of my life, eloquent and passionate yet pragmatic. But the New York partner looked unconvinced.

  “Now let me get this straight. This thing doesn’t use a keyboard?” He stared at the plastic mockup in silence for several seconds. “We have to run to the airport,” he said abruptly.

  That was his way of ending the meeting. As the partners filed out, Furneaux promised to call me at home the following morning. I caught an evening flight back to San Francisco.

  When I awoke the next morning, the sheets were damp with sweat. I carried the cordless phone into the bathroom as I brushed my teeth, for fear of missing his call. At last the phone rang.

  “Jerry?” It was Furneaux. “Thanks for coming to New York. You gave an excellent presentation.”

  “Thank you.” I wanted to get to the point, but didn’t want to be rude. “So, can I have your firm’s commitment?”

  He exhaled for what seemed like a full minute. Then he spoke. “Your presentation has raised a number of questions that we believe deserve some further study . . .”

  Beyond that, I wasn’t listening. I was thinking about how to arrange an orderly shutdown of the company. Naturally, as soon as I hung up I called John Doerr, to deliver the bad news. He took it stoically.

  Then I said, “John, we have just enough money to give everyone two weeks’ severance.”

  He ignored this. “My partners meeting goes until five on Monday. Can you be there with Robert and Kevin at that time?”

  “Of course.”

  When the three of us arrived at Kleiner Perkins, a thick San Francisco fog enveloped the building. We waited in John’s office, staring silently out the windows. There is nothing quite like looking out a picture window at fog—the experience cannot be captured on canvas or film. Your eyes have no fixed point to focus on, and so the tableau has no discernible depth. It is the essence of gazing into a void.

  John strode in without saying hello. He picked up his multiline office phone and set it down with a sharp crack on the small coffee table between us. Its internal bell objected with a single ding.

  He turned to me. “What did Scott Sperling say?”

  “Huh?” I was still enveloped in fog.

  “Scott Sperling of Aneas.”

  “Oh. You mean the guy from Harvard. That was a long time ago. I think he said he thought the price was too high.”

  “What price does he think isn’t too high?” John had a way of tossing out pointed questions that made you think you should know the answer. Robert, Kevin, and I glanced at one another quizzically, but we weren’t really looking for an answer. We were too busy wondering what John was up to.

  “I’m not sure,” I said.

  John punched the speaker button on his phone and started dialing. “Let’s call him and ask.”

  “John, it’s after eight o’clock in Boston,” I protested. “He’s probably gone home.”

  John looked me in the eye, expressionless. On the speaker phone we heard ringing, then Sperling’s wife answered. There were baby noises in the background.

  “Hi, can I talk to Scott, please?”

  “Just a minute. He’s got the baby on his lap.”

  A pause. Then, “Hello?” It was Sperling.

  “Scott, this is John Doerr. I’ve got the GO management team here in the room with me.”

  “Hi guys.” Sperling didn’t sound at all bothered about being called at home.

  “Scott, we need to close up this financing and we don’t have a lead. Where do you stand?”

  “We did a lot of work on this and we like the concept. There’s a big market if you can make it work, but we feel the deal is overpriced at twelve million.”

  “At what price would you be willing to lead?”

  We could hear Sperling gently chiding the baby as it grabbed for the receiver.

  “Eight million pre,” he said.

  I whipped my calculator out of its holster like a six-shooter.

  “And how much would you be willing to commit at that level?” John asked.

  “Up to two million.”

  John pressed the phone’s mute button. It began to flash red, like a warning light on a game show counting down to the buzzer. “What is that per share?” he asked me.

  I was ready for his question. “Looks like about seventy-five cents. A twenty-five percent markup over the last round.”

  On the other end, it sounded as if the baby was gaining possession of the phone and might slam down the receiver at any moment.

  John turned to Robert and Kevin, whose faces were white with fear. “Are you guys willing to do it?”

  They were too shocked to speak. They both knew that for months we had cultivated Sperling, along with everyone else in sight, to no avail. Now, in one phone call, John had him ready to commit. Robert came to his senses and nodded his head vigorously.

  “OK with us,” I said.

  John pressed the mute button again. “Scott, it’s a deal. Jerry’ll call you in the morning to get the paperwork started.”

  “Great, talk to you then,” Sperling said. The baby seemed to be winning the fight for the phone.

  “Scott, thanks. You won’t regret it,” I said.

  John pressed the disconnect button, turned toward us, and said, “Congratulations, gentlemen, you have your lead.” Then he left the room to attend to his next emergency.

  Robert and Kevin were still staring at the phone, as though the governor had called with a full pardon just before our execution. The color returned to their faces so fast it looked like they were blushing.

  “All that time—all that time—and it was only a matter of dropping the price!” Robert rubbed his face with his hands as he spoke. “I don’t know whether to laugh or cry.”

  “Tell you what,” Kevin said. “You laugh, I’ll cry.”

  “Now that’s teamwork,” I said, replacing the phone on John’s desk.

  The rest of the week was a perpetual game of Dialing for Dollars. We raised over $6 million—more than our target of $5 million—in a matter of days. Suddenly the VPs were enthusiastic about project-planning meetings. Hiring plans were fired back up. As a joke, for Halloween the entire staff came in dressed as me—blue jeans, tie, sweater vest, and graying hair. The office hummed with energy again.

  Rasha Božinović arrived from Yugoslavia excited but penniless, with his worldly belongings packed in a small trunk. He needed a place to crash, and a friend of mine kindly consented to let him use the guest suite at her newly renovated Pacific Heights Victorian house. His eyes went wide when she showed him his private bathroom, gleaming with marble and gold.

  Within days, he had discovered reruns of a TV show called Lifestyles of the Rich and Famous, hosted by Robin Leach, a portly, money-culture sycophant with an English accent. Rasha would wander around the office imitating Leach’s accent, moaning and fawning over everything from the office dishwasher to Todd Agulnick’s Mustang convertible.

  We closed the financing just in time to make our mid-November payroll. Once we had a lead and a realistic price, just about everyone fell into line. Except Bessemer, which still couldn’t make up its mind.

  5

  The Customer

  EVERY INDUSTRY has a trade show, a conference, an awards ceremony that marks its pace. Hollywood has the Academy Awards, publishing has the Pulitzers, and the computer industry has COMDEX. Every November, the COMDEX crowd invades Las Vegas, the only city in the country with facilities large enough to host the conference. It is inadequate to say that the conference is held in Las Vegas; for an entire week, the conference is Las Vegas.

  Every hotel room within a hundred miles is occupied by a nerdy engineer or a computer salesman who used to sell cars. For the show, daily newspapers and round-the-clock television stations spring into existence with an efficiency that would be the envy of any military commander. All available convention facilities, hotel lobbies, and exhibition halls are crammed with booths where company repr
esentatives employ ever more outrageous tactics to attract attention. Walking at a normal pace for eight hours a day, it is not possible to traverse the miles of aisles during the conference week. Enormous pools of humanity shuffle along in streams that grow into waves that broaden into floods. At certain hours, there are long waiting lines for food, transportation, and that most critical modern resource, telephones. COMDEX is the Woodstock of the computer industry.

  To celebrate closing the financing, I had taken the entire weekend off. On Monday morning, I flew out to Las Vegas for the fall 1989 COMDEX.

  After checking into my hotel—no small logistical feat—I made the strategic blunder of remaining in the main exhibit hall of the convention center until it closed for the evening. When a hidden array of loudspeakers announced the end of the business day, everyone in the building—a cavernous structure the size of several football fields—poured out toward a waiting fleet of buses. Before me was a choppy sea of heads at a near standstill. Off in the distance, through the main lobby and beyond the entrance, I could see an army of crowd-control personnel in bright orange vests fighting a losing battle to channel the throng onto the buses. “Just take any one that goes near your destination,” an exasperated marshal called with his bullhorn. I didn’t think I’d ever make it to the buses and began looking around me, desperate to find another way out. It was then that I saw John Doerr, not too far away, waiting to leave too. This seemed an incredible coincidence—but then John had a way of bucking the odds.

  “Long time no see!” I shouted.

  “We’re trapped like rats.” He peered over the crowd, then added, “Follow me.” We snaked around the mountainous multistory exhibits toward the west wall of the hall. “I believe there’s a door behind those curtains.”

  Sure enough, there was. The door led to a private parking lot full of air-conditioned trailers, which served as makeshift conference rooms for executives of the major exhibitors. However, the exit was protected by a uniformed security guard.

  “IBM,” John said authoritatively. “Our tags are in H-Three.” The guard waved us through.

  “H-Three?” I whispered as soon as we were out of earshot. John just shrugged. We jumped a fence, and were free.

  “We’ve been so focused on the financing, we haven’t talked about what’s next,” I said, struggling to keep up with his brisk pace. “I’d really rather not go through that mill again if we can avoid it. That was too close for comfort.”

  “What do you have in mind?”

  “We expect to have a prototype working by June. Then we’ll need to start raising money, because we’ll be running out again around next December. I’d like to approach some potential customers that might also be interested in investing later next year.”

  “Sounds like a good approach,” John said. “Are you going to the Dvorak party tomorrow night? We can talk about it there.”

  “Sure.”

  After dark, COMDEX really comes alive. Every night there are lavish parties, often in sports arenas with big-name entertainment, and plenty of free eats. Between these affairs and the platters of cold cuts in the courtesy suites of hotels, only the forsaken or the foolish ever pay for food. The Dvorak party, an annual event, was legendary. Hosted by the computer columnist and commentator John Dvorak, it was supposed to be a secret, but everyone knew about it. It was usually held in Will Hearst’s suite at the Desert Inn.

  The next night around nine, I knocked on the door of the suite. “Who is it?” said a voice from the other side. This was followed by uproarious laughter, and the door swung open. Although the hallway had been quiet, the spacious two-story living room was packed, as was the indoor balcony overhead. The jokester was Stewart Alsop, an influential industry analyst and at that time the publisher of a widely read biweekly newsletter. Stewart was a towering man with a pot belly, a jolly face, and a semicircle of curly brown hair. No matter how elegantly dressed, he had the remarkable talent of looking like Fred Flintstone.

  “It’s Jerry Kaplan!” he announced, sounding like a talk-show host. Playing along with the drama, everyone in the room burst into exaggerated applause. “Uh-oh,” he said, “better hide the food!”

  “Food? Where?” I held out my arms as though to steady myself for a sudden start, in the style of Ralph Kramden.

  John Doerr caught up with me at the buffet table. In the interest of increased efficiency, both Stewart and I had dispensed with the nicety of using plates and forks. We were exploring the multicultural spread with the evenhandedness of ambidextrous diplomats.

  John selected a slice of cucumber cut in the shape of a heart, garnished with pimiento and a twist of lemon. “I put in a call to Naomi Seligman.”

  “Who on earth is that?” For once, I wasn’t in the mood to do business.

  “Ah, Naomi!” Stewart raised his glass of champagne as though making a toast. In his frame of mind, I couldn’t tell for sure whether he really knew her or not.

  John wasn’t fazed. He clicked Stewart’s glass with his bottle of Calistoga water. “Naomi runs the Research Board. A super-secret organization of the top CIOs in the country.” At Fortune 500 companies, CIOs—chief information officers—were in charge of computers and information systems.

  Stewart was now giving a running commentary. “An audience with the queen.”

  “She can see you December first,” John said.

  “Great,” I said.

  “In New York.”

  “Jesus, not again!” I said. “Sometimes I think you secretly work for the airlines.”

  “Hey, keep running up those frequent flier miles,” Stewart said, “and soon they’ll send you your own personalized barf bag.”

  “How come it’s always Florida in July and New York in December?”

  John ignored my protest. “If she gives you the nod, you can hit the forty top decision makers in one shot. This is how Jobs established the Mac.”

  Stewart disagreed. “John, none of those guys bought the Mac.”

  “Well, they should have.” John started eyeing the miniature seafood burritos.

  Inspired by the champagne, I had an urge to personally thank our host. “By the way, Stewart, where’s Dvorak?”

  “He never shows up.”

  “But it’s his party!”

  “That’s nothing,” John said. “Will Hearst isn’t even in Las Vegas.”

  For me, traveling to New York City was like an immigrant going back to visit the old country. People there live in a dirty, dangerous environment, bound to the land by some misplaced sense of heritage or tradition, unaware that the key to a better life is simply to get the hell out of town. Yet certain things are singularly authentic to the city and cannot exist anywhere else. One of them is Naomi Seligman. I flew to New York two weeks later to meet with her, as planned.

  The cabby drove slowly down East Sixty-first Street, past a row of brownstones housing the gentry of the Upper East Side. I strained to read the numbers on the tarnished brass plaques above the doorbells. This wasn’t the sort of place to put an office.

  “This looks like it,” the cabby said, rolling to a stop in midblock.

  I got out, climbed the stoop, and rang the bell, not knowing what to expect.

  An unintelligible voice crackled over the intercom, its speaker choked with urban dust. I figured I’d just announce myself. “This is Jerry Kaplan. I’m here to see Naomi Seligman.” The speaker barked back and the door buzzed open. I entered and walked up a narrow stairway. A woman dressed in a business suit appeared to greet me.

  “Mrs. Seligman?”

  “No, I’m her assistant. She’s running late. She apologizes, and asks that you wait in her office.” I felt as if I were talking to a U.N. interpreter. She ushered me up yet another flight of stairs and into a large, elegant room at the rear of the building. The back wall was mainly a series of tall, shuttered windows looking out on a barren tree straining upward for sunlight from its cement cell two stories below. In summer, the tree would no doubt appear green a
nd prosperous, but at this time of year it looked like the frightened victim of a mugging, limbs raised and trembling. A massive rosewood table sat in the center of the cavernous room. I took a seat in one of four imposing armchairs that ringed the table and reviewed my presentation while an antique wall clock marked each second with a loud, stern click.

  Suddenly the door flew open, vibrating when it struck its doorstop, and a woman entered.

  “Sorry I’m so late. The traffic was a nightmare.” She dropped her packages and attempted to gesture with her wrist as she removed her glove. “If you wait past Thanksgiving, you might as well be shopping at the Central Park Zoo.” I didn’t have to ask who this was. She struggled to shed layer after layer of clothing—fur hat, long coat with matching fur trim, scarf, leather boots. She stopped at a cardigan and somber brown skirt, and walked over to extend a limp hand in welcome. After checking for messages, she took a seat next to me at the table.

  This was my first chance to get a good look at Naomi Seligman, who had been in constant motion since her arrival. She had that look of youthful beauty shrouded by years of heavy responsibility. Her voice was a bit raspy and her tone was tinged with cynicism. “I’m sorry, but I have a dinner appointment tonight, so I can’t stay long. What have you got?”

  If I hadn’t seen her New York style a hundred times before among my mother’s friends, I might have been intimidated. But I knew that it was just her way of being friendly, and that the proper reaction was deference. Besides, it all felt vaguely familiar, as though I were visiting a long-lost relative.

  “Mrs. Seligman—”

  “Call me Naomi.”

  “Naomi, I’ll try to be brief.” I pulled out the booklet that contained my presentation. “We’re building a new kind of computer that works with a pen. I’d like to start by explaining who is going to use this new computer, and why they would want to.” I turned to my first slide. “This pie chart shows the number of deskbound versus mobile workers in the U.S. population.” Though only a few seconds had passed, I could see that she had instantly become impatient. She picked up her copy of the presentation and started paging through it. I gently reached out and turned it back to the first page. “I really think the best way to approach this is to understand the context of what we’re trying to accomplish.”