SEATTLE About 1,200 people showed up recently for Garage.com Inc.’s version of “Who Wants to Be a Millionaire.”
The contestants, in this case entrepreneurs, paid $895 apiece to attend the two-day conference. Garage.com, which matches entrepreneurs and investors over the Internet, billed it as a “boot camp for startups.”
Attendees heard venture capitalists, bankers and role models who have struck it rich, attending seminars with titles such as “The Gorilla Game” and “Rules for Revolutionaries.”
The experts weren’t always encouraging. Last year, 240 Internet companies made it to an initial public offering, out of thousands of companies that got venture capital financing. Venture capital spending rose 150 percent to $48.3 billion in 1999, according to the National Venture Capital Association and Venture Economics.
It’s still whom you know that counts. Warren Packard, a partner at Silicon Valley venture capital firm Draper Fisher Jurvetson, said that of 80 active investments, only one or two came without a referral from someone who knew or worked with one of the firm’s partners. For other firms, the ratio was zero.
And money, investors said, wasn’t as easy to come by as the Internet boom might suggest. Out of 12,000 business plans Draper Fisher Jurvetson received last year, it financed 20.
For its part, Garage.com helped fund 40 out of roughly 9,500 companies that sent it a business plan. “It’s still not that easy to get funded,” said Guy Kawasaki, chief executive of Garage.com.
Hip hop
Those words of warning, the small odds of success and the promise of 18-hour workdays weren’t enough to deter folks like Nathan Webb, who left his job as a Seattle attorney to start UrbanEarth.com. His site focuses on consumers of hip-hop music, news and fashion that he said were ignored by “the homogenous” sites such as Landsend.com and Gap.com.
Webb persuaded two of his colleagues to join him, figuring they could always go back to being lawyers if things didn’t work out. “If we didn’t do it, we would definitely have regretted it,” Webb said. He hopes to raise $500,000 to $3 million in the next two to three months to fund a marketing campaign.
Sometimes the transplants land on their feet and never have to raise a penny.
Michael Stanek quit his job as an analyst covering Microsoft Corp. for Lehman Brothers Holdings Inc. to become vice president of entrepreneur development for Garage.com.
His colleagues’ reaction when he told them he was leaving for a Silicon Valley startup: “They thought I was crazy,” said Stanek.
He arrived just in time to help manage Garage.com’s fourth boot camp at the Meydenbauer Center in Bellevue, across the lake from Seattle. The first one, last year, drew 500 people.
Garage.com plans to hold eight boot camps this year, including one in London as venture capital heats up in Europe.
Armed with nametags and bright yellow “schmooze codes” signaling whether attendees ran business-to-consumer or business-to-business outfits, the faithful sat rapt or typed away on laptops until the breaks, when they filed out to gab on cell phones. Lunch was a cellophane-wrapped sandwich, an apple and a bag of chips.
‘Flakes in California’
Some advice handed out was just common sense: keep business plans short, build a management team and a network of advisers, check out the competition and consult professionals, “not Uncle Joe the divorce lawyer,” on matters of valuation.
Some advice, though, was more sophisticated, such as how to motivate longtime employees who can afford to “call in rich” and how to avoid forming partnerships in name only.
Kawasaki, a former Apple Computer Inc. executive, said a data communications alliance between Apple and Digital Equipment Corp. foundered because of the cultural gap and lack of employee exchange between the companies.
“We thought they were a bunch of bozos in Massachusetts doing dumb minicomputers, and they thought we were a bunch of flakes in California sitting in beanbag chairs,” Kawasaki said.
Another message coming through loud and clear for would-be successes: there’s no time to waste. “Capital markets are rewarding momentum more than anything else, and you can’t lose sight of that,” said Steve Baloff, general partner at Advanced Technology Ventures.
Garage.com, the conference host, has already heeded that advice: It filed on Feb. 11 for an initial public offering to raise $68.4 million. “Everyone wants to be a venture capitalist,” said Geoff Baum, director of marketing for the Palo Alto company. Or, at any rate, a millionaire.
