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eBoys: How Venture Capitalists Really Work
by By Randall Stross—Review by Martha J. Retallick, September 2000 TCS Tucson Computer Society , infor@lrpdesigns.com - December 18, 2000 at 19:11:37:
First of all, please don’t call them “VCs.” If you’re going to use any sort of informal means of addressing the six partners at Benchmark, the Menlo Park, California venture capital firm profiled in eBoys, they prefer to be called “venture guys.”eBoys: How Venture Capitalists Really Work came about as a result of a friendship that developed between author Randall Stross, a business historian who teaches at San Jose State University in California, and Benchmark partner Bruce Dunlevie.
The two men were co-coaches of their sons’ third grade basketball team As Stross recalls, “in ‘that championship season,’ our sons’ team was winless; the experience tested the mettle of all of us.”
From that friendship came a book that tells how venture capitalists really work. You’ll learn that the best way to get a venture capitalist interested in your business plan is by knowing the venture capitalist.
Yes, that old adage, “you gotta know somebody,” rears its head again. And, although the quality of your business plan presentation does count, the venture guys are much more interested in your knowledge of the business you’d like them to fund.
In other words, if you’re hoping to gain funding for an online bicycle store, you’d better know the bicycle business very well.
One of the company founders profiled in eBoys is Pierre Omidyar of eBay. Omidyar wasn’t intending to start a company when he first set up an auction site in the personal web space offered by his Internet service provider. Instead, Stross says that Omidyar “conceived of it as a public service, offered free to whoever wished to use it.”
That was back in 1995—an eternity ago in Internet time. Auction Web proved to be so popular that the ISP demanded that Omidyar move it to a business server, which raised his monthly account charge from $30 to $250. So he started asking Auction Web sellers to pay a small fee for items sold.
Send him money, they did. Checks arrived by the sackful. In fact, five months after Omidyar instituted the sales fee, he received $10,000 from successful Auction Web sellers. Time to quit the day job.
That was back in 1996—still an eternity ago in Internet Time. Bruce Dunlevie had backed an earlier venture of Omidyar’s, so he wasn’t a stranger to Benchmark when he approached the firm for funding. The value of eBay grew from $20 million to more than $21 billion within two years of Benchmark’s $6.7 million investment. That’s an increase of 100,000 percent.
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