Apparently, after it became known that Kleiner Perkins Caufield & Byers was interested in investing in the outfit, another venture capital firm, the chief executive said, chartered a private jet to come visit the company to get in on the funding round. "A private jet," he repeated.
The 1990s are back, or at least a shade of them, if you judge by the chatter at thehere. (PC Forum is owned by CNET Networks, publisher of News.com.)
Two years ago, two young guys with an idea could have more easily raised funds by standing on a bucket and pretending to be robots. Now, investors will fly across the country to discuss doling out cash on the strength of a hunch.
Pitching your company, whether to investors or to a crowd at a conference, still takes finesse and drama, though. So here are a few rules to go by:
Doctors are the new consumers. Why? For one thing, selling a product that the end consumer can get without spending a lot of money remains the best path toward encouraging investor interest. In the late '90s, advertisers were supposed to pick up the tab for cheap consumers. Now the idea is to pitch products to and let drug companies and HMOs pay for the software and content.
San Mateo, Calif.-based Epocrates sends health alerts, articles from medical journals and paid content from pharmaceutical companies to the handhelds of physicians. Physicians pay $29 a year for the service, but drug companies pay $128 a year to Epocrates to deliver their messages to doctors, bringing the total subscription fees Epocrates receives per physician to $157. Last year, drug companies only paid $86 per subscription. So far, 200,000 doctors have signed up.
"We're working with the top 10 pharmaceutical companies," CEO Kirk Loevner said.
Pharmaceutical companies pay the fees because a slight change in market share can bring in millions of dollars, and it's cheaper to send out subsidized content than to hire drug reps in a Ford Taurus to visit doctors (who only get to see the doctor 43 percent of the time), Loevner said.
Another company, New York-based ActiveHealth Management, which remotely monitors patients' vital signs, will likely file documents for an IPO later this year, CEO Lonny Reisman said.
Make the show of hands easy.
Speakers at conferences invariably ask the audience to participate in an informal hand vote. But ambiguous or complex questions--"Raise your hand if you believe that man is born free but everywhere in chains"--cause the audience to waver. Hence, only get them to vote on things that you know will guarantee a "yes." CEO Jon von Tetzchner sets the example here.
"How many of you own a phone?"asked his listeners. "OK. Now how many of you have cable TV? OK. Now how many of you have an Internet connection at home?" Every hand stayed up the entire time.
Be willing to intellectualize about China at the drop of a hat. John Seely Brown, with the USC Annenberg School for Communication, and John Hagel, of John Hagel and Associates, gave a presentation on how Chinese motorcycle manufacturers have marginalized Honda in the market by making knockoff bikes for $200 each.
"You can do a lot more incremental innovation without fear of ripple effects," Hagel said.
Added Seely: "The concrete implementation was an implicit coordination structure for thousands of people to swarm around it."
The great part about this is that it captures the natural speech rhythms of Chinese mechanics, as so often evidenced in language guides.
"Basically, we can go up or down the fractal scale, Lin," says one co-worker to another. "Can I borrow your blowtorch to light my cigarette?"
The audience ate it up.
Use the most current buzzwords. In your pitch, mention "the long tail" at least three times, even if it is to say "The albino opossum of Australia can be identified by a musky scent and the long tail."
Other catchphrases that seem to attract money include "personalization," "presence" and "discovery is the new search." Using "convergence" will typecast you as a poser.
Get a good name. Rearden Commerce presented at the show, but the main question in the conference hallways was whether the company had any relationship to, the set-top box outfit started years ago by WebTV founder Steve Perlman. It doesn't, but the association made many wiggy.
"," the name of an RFID company, looks like it contains a typo. "Endeca" sounded like a diet supplement to some. The best name, at least in my opinion, was "Send Word Now," which. It's beefy and direct. Even Australopithecus could understand it.
Have a good tale from the dot-com days. Silicon Valley loves disaster movies.
Case in point: Pando Networks is working on a way to deliver large files easily over the Internet, but the best part about the company is that the CEO, Robert Levitan, started iVillage and Flooz.
Remember? It sold dollars that could be exchanged for gifts. Whoopi Goldberg stumped for it. Flooz survived the implosion of 2000. Then in 2001, one of its biggest customers, Cisco Systems, wanted to renegotiate a multimillion-dollar contract. Flooz survived that.
Then the company noticed that gift buying didn't slow down after the Mother's Day/Father's Day/graduation season. The FBI informed Levitan that the Russian mobsters were buying Flooz credit as a way to launder stolen credit card purchases. Flooz survived that, too. Then the large credit card companies decided to withhold payments, in part, says Levitan, because Flooz was able to garner a higher percentage of each transaction than they were.
The company was forced to file for Chapter 7 bankruptcy protection. It had 325,000 creditors, the largest number of creditors ever. The court allowed it to notify creditors via e-mail, a first. Levitan expected to face a hostile audience of several angry consumers at the first court hearing.
"No one showed up," he said. The company called it quits on Sept. 10. On his first day of unemployment in years, Levitan decided to go to his Manhattan gym, where he saw the disaster of Sept. 11, 2001, unfold.
Whatever the merits of Pando, the story sets them apart from the pack.