BOOK
For all the coverage they get, venture capitalists may be the least understood characters in the Silicon Valley morality play. Who are these guys? What is it, exactly, that they do all day in their spiffy offices on Sand Hill Road? Those are among the questions Randall Stross, who teaches business at San Jose State University, tries to answer ineBoys, his exclusive behind-the-scenes look at two years in the life of Benchmark Capital.
Boiled down, venture capitalists get rich by giving someone else's money - raised from institutions and very wealthy individuals - to an entrepreneur with an idea for a new business, then taking a slice when the company is sold or goes public. Stross couldn't ask for a more colorful set of VCs than those on the aggressive, outspoken Benchmark team. Between 1997 and 1999, when Stross was the writer-in-residence at Benchmark, the firm's investments in companies like Scient, Webvan, and most of all eBay turned it into the hottest fund in the Valley.
Stross also has the right instinct when he focuses a big chunk of his narrative on Dave Beirne, the onetime headhunter who was Benchmark's newest partner at the time. As the hypercompetitive Beirne tries to learn the VC business, the reader follows along. Stross has his tape recorder running and his notebook out during Benchmark's weekly partners meeting, where he witnesses high-fives and fratboy banter. He captures moments of tension while Beirne unsuccessfully attempts to convince his peers to invest in priceline.com.
But Stross too rarely probes for deeper stuff as he veers from anecdote to anecdote. When Benchmark's Robert Kagle recommends against investing in an LA-based home delivery company called Pink Dot, Stross reports that Kagle "told his partners that he could not 'get comfortable with the entrepreneur,' one of his inviolate prerequisites for doing a deal, and the discussions ended." And that's all we hear, leaving the reader with plenty of questions: What does it take to make Kagle comfortable? And why didn't the Pink Dot founder fit in?
A greater flaw is the author's failure to explore fully the competitive tension between Benchmark and Kleiner Perkins Caufield & Byers, the most famous firm on Sand Hill Road. Setting up Beirne's decision to join Benchmark, Stross writes, "If you were willing to abide complacency for security, Kleiner Perkins was the place to go." But it's just one of several disparaging comments about the rival VC left hanging.
There's a great story buried inside eBoys. Stross hasn't told it.
eBoys: The First Inside Account of Venture Capitalists at Work by Randall E. Stross: $25.95. Times Business: (800) 733 3000,www.randomhouse.com.
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