Riding the dot.com roller coaster.
Venture capitalist Conway raised funds for hundreds of dot.coms

The Godfather of Silicon Valley: Ron Conway and the fall of the dot.coms
By Gary Rivlin, AtRandom.com Books, 104 pages, $23.00 paperback, ($14.95 e-book)

Friday the 13th, November 1998, was one of those days when the stock market seemed to lose all sense of rationality. That's when Theglobe.com, one of those Internet "concept companies," - whose mandate was to build an online community any way they could, --through chat rooms, repackaged news, stock quotes and so on -- went public.

Within 24 hours, its price promptly leapt tenfold from U.S. $9.00 to U.S. $97.00 a share. The next month, Silicon Valley veteran Ron Conway, who author Gary Rivlin, calls The Godfather of Silicon Valley, in his book of the same name, started to amass a prestigious bunch of technology industry insiders and a slew of Hollywood celebrities to participate in his Angel Investors fund.

The fund's goal was to seek out and invest in pre-IPO startups at discount rates before the public could get in on the action. Numerous big names participated in the fund and its sister Angel-II, which between them eventually raised close to US $180 million. These included Compaq chairman Cohen, eBay founder XXXX and Netscape alumnus Mark Andreessen, at least three investors connected to each of Yahoo!, AOL, Microsoft, and a slew of celebrities including Shaquille O'Neal and Goldie Hawn.

The book is a chronicle of the wild ride taken by Conway, his investors, the companies he sponsored, and Silicon Valley in general, over the next two and a half years. During that wild ride, during which Rivlin introduces a host of Silicon Valley players, the technology-laced NASDAQ vaulted from under 2000, to more than 5000, and then back down to where it started.

An "angle" is the traditional name used to describe investors who stake risky Broadway productions, but in recent years its use has broadened in use to encompass anyone who invests early in fledgling companies.

The name of the game in Silicon Valley in the late 1990s was finding the good deals early, -- in the A and B rounds of financing, before the herd filed in - when the company valuations were low. But as the dot.com IPOs became more successful, huge pools of venture capital began to accumulate, and getting access to these deals got progressively harder.

Conway's idea was that by attracting a lot of high profile valley insiders to his fund, -- the people who knew the people with the best ideas -- they would steer the best deals to him first. And in fact the Angel Investors did get in relatively early on a lot of high profile startups including Loudcloud, Napster and Google, as well as literally hundreds of others.

But their process for analyzing deals - in a time where nobody had any reliable visibility - often amounted to Conway authorizing $500,000 checks to pairs of twenty-something MBAs, based on his gut feeling.

Rivlin takes us through Conway's frantic business and networking practices, and he successfully portrays a world - which we all now see clearly in hindsight -was almost completely divorced from reality.

The Godfather of Silicon Valley, is being put out by AtRandom.com Books, a new imprint within the Random empire that offers books to specialized audiences, in either the e-book or trade paperback formats, bypassing the hard cover stage.

The format is perfect for this book, since though at 104 pages it may be short, it deals with a lot of the inside names and stories that geeks who are big stars to the smallish community of those who have been following the valley for years.

And Rivlin, a journalist with The Industry Standard, -- a red-hot publication that vaulted to instant success as one of a pack of magazines covering the emerging technologies, -- is the perfect person to write the story.

In fact the Industry Standard provides an interesting footnote to Rivlin's book, which comes to a close in the Spring of 2001, just as the NASDAQ has crashed back to below 2000, where it was when the story began.

Because just last week, The Industry Standard, -- which in three years went from startup publication, to breaking an all-time record for total number of advertising pages sold in a year, according to the Publishers Information Bureau - filed for Chapter 11 bankruptcy.

Everyone working for the publication was let go, including Rivlin. It's a perfect epilogue to a story of how a bunch of greedy people - ultimately including the author - tried to profit from the dot.com phenomenon.

 

Peter Diekmeyer is a Montreal-based business writer. He can be reached at peter@peterdiekmeyer.com

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