Tales Of The New Gold Rush

Every day when Steve Brotman goes to the office, he hopes the business plan for the next Yahoo! or Microsoft-killer will be waiting in an envelope on his desk. Unfortunately, today is not that day.

To Whom It May Concern:

Justdivorced.com is much more than just an idea or a concept to me. It is my dream!

Brotman receives at least twenty business plans a week. Usually, they come through the mail, though occasionally they arrive by messenger, FedEx, or – bip! – even e-mail, as this one just did.

It’s rather ironic that a single guy who’s never been married, and comes from a family of parents who have been together for 40 years should come up with an idea like this!

Last weekend, when Brotman came into the office to catch up on some paperwork, he actually slipped on an I-business proposal some guy had shoved under his door.

But I’ve talked to many people. And have especially seen the effect of divorce on children. (Its quite possible that you are reading this letter and have yourself been effected by divorce!) It’s everywhere!

Brotman, an edgy, prematurely graying young man, is laughing now – cackling, actually – and the sound of it rattles off the bare walls of his new office, a bunker the size of a magazine kiosk, furnished in what could charitably be described as late-twentieth-century Staples: “This is great.” He prints out the business proposal and reads the tag line from the cover sheet aloud: Because with every ending there comes a new beginning. He sticks his finger down his throat. This is personal and confidential. He looks up. “A blast e-mail is personal and confidential?” We are fully aware that our project is in need of more development. “Well, thank goodness.” If you would like to see the hard copied version of the plan … Brotman throws the pitch on his desk. “This is so weird,” he says. “They don’t even tell me what they do.”

“Anyone with money wants to invest in the Internet. I could pick up the phone – honestly, this is true – and in 30 minutes finance a company.”

Actually, that’s not an uncommon problem with business plans, especially when they’re written by kids barely old enough to shave. It doesn’t matter. Brotman is still willing to slog through almost every subliterate, bizarre, and undercooked scheme that flies in over the transom – there’s a big Big Deal lurking in those piles.

Silicon Alley these days is a two-ring circus of money chasing ideas and ideas chasing money, and venture capitalist Steve Brotman has placed himself at ground zero of this frenzy. Just about every day, Wall Street types offer him more money than he knows what to do with. For now, he’s keeping his fund at $14 million, which seems like small change until you consider that Brotman aims for his investments to increase by a factor of a thousand. And who’s to say, given what’s been happening in the past few years, that he won’t get it?

Brotman and venture capitalists like him have become what Hollywood producers were in the overheated eighties, when every guy who could type was shopping around a screenplay. They’re the sifters, the sorters, the gatekeepers, and the truffle hunters, the self-styled visionaries who speak with great authority about what will tank and what will sell.

It wasn’t always this way, of course. Once upon a time – say, five years ago – New York venture capitalists were an insular, conservative enclave of flinty gray eminences with farms out in Bedford and extensive investments in biotechnology, medical companies, and concerns in Eastern Europe. Alan Patricof, the man who practically invented the warrior art of venture capitalism, at least had the prescience to invest in America Online in 1985 – and then pulled out in 1992, before he made any real money.

Now Patricof’s eldest son runs a venture fund specializing in creating media and entertainment companies on the Net. In 1999, for the first time ever, more people from the graduating class of Harvard Business School became venture capitalists than investment bankers. In fact, the New York venture-capitalism world is already spilling over with kids who tear through money like popcorn and think IPO is an acronym for instant paper opulence. (Or is it I’ve profited outlandishly? Income painlessly obtained? I’ve pocketed oodles?). And more are on the way.

“Not a day goes by, literally, when I don’t get an e-mail from a soon-to-be business-school graduate looking to get into the business,” says Jerry Colonna, co-founder of Flatiron Partners, the highest-profile Internet venture-capital fund in the city. “It’s today’s equivalent of investment banking.”

Some aspects of this industry expansion are predictable. Almost all Manhattan investment-banking firms are rolling out or expanding their own venture-capital arms, hoping to spawn another Flatiron, the child of Chase Capital Partners. And bankers themselves, tired of the sickening sensation that the real action is happening elsewhere, are quitting their jobs on Wall Street and heading north for Silicon Alley like prospectors racing for the Yukon.

Even the Californians are coming east. Draper, Fisher, Jurvetson, the Redwood City behemoth that funded GoTo.com and Hotmail, just established a Manhattan outpost this winter. “Silicon Valley, Boston, and northern Virginia have built a canvas to paint on,” says Tim Draper, founder of the firm. “But the painting is done by the people in New York and Los Angeles, who come from the creative industries.”

The most telling activity, though, is happening on the fringes of the industry. Itty-bitty venture-capital firms with quaint local names like Hudson Ventures, Atlantic Venture Partners, Grand Central Holdings, and Silicon Alley Venture Partners (that’s Brotman’s) have popped up all over the city, most with only $10 million to $100 million to play with (or “put to work,” in venturese). At one time, those sums would have been as dismissable as a Canadian quarter. Not anymore.

All Internet companies, from Yahoo! to Kozmo, are funded in stages. First there’s the “angel” round, which covers the start-up essentials. Then there’s a real first round (“series A”), then a second (“series B”), and possibly a third and a fourth, and then, assuming the company is still generating sufficient buzz, a “mezzanine” round, before it either is bought or goes public. But because the market is on such a champagne high right now, funding a hot company after the angel or first round is extremely competitive – and often prohibitively expensive. HomeGrocer, for example, just secured $52.5 million for its third round even though its better-known competitor, Webvan, was on the verge of going public. (And what does Webvan do, by the way? Deliver groceries.)

So the real time to start venture-capitalizing – right now, in New York – is during the seedling stages of a company’s life, when getting in is still affordable. “Are public companies overvalued?” asks Brotman, throwing back his thick, broad shoulders in a shrug. “Yes. Do I care?” He smirks. “No. This is where I invest – at the seed stage, where valuations are reasonable.” If the Internet is a pyramid scheme, in other words, the only time to get in is at the start. Anyone who doesn’t is shopping at Saks instead of Loehmann’s.

Seed-stage venture capitalists, unlike later-stage ones, are also highly accessible people. They attend forums, press flesh, pound the pavement, return phone calls, open all their mail. One could even say they perform a vital function in the ecosystem of this strange world, because they act as filters: They find small, worthy companies, provide them with a modest amount of money, then bring them to the attention of larger firms later on.

Brotman was once the CEO of a small, worthy company himself. In 1995, at 26, he started AdOne, an online distributor of classified ads. Last year, he sold it to a consortium of newspaper chains for somewhere north of $20 million and walked away with 40 percent of the profits. He says he decided to become a venture capitalist because he knew he’d be good at it. “And besides,” he says, “why spend time with one company when you can spend time with eight or nine?”

Right now, Brotman is looking for those eight or nine. It isn’t very pretty. He rips open an envelope. Something referred to him by an investment banker. He doesn’t even check to see what it is. “Ugh, they get a fee.” He flips it over his shoulder.

He opens another envelope and starts to read aloud: An international network of online city guides. He starts to laugh. “Uh, have you heard of Citysearch? Or the failed Sidewalk project Microsoft did? I know it’s cool, but I think this is too 1996.” Over the shoulder. Splat.

Another envelope: First interactive national insurance agency on the Internet … Brotman shakes his head. “They’re competing with Quotesmith, which is already public, and insWeb, which is already public, too.” He raises his voice, like a Munchkin from the Lollipop Guild. “Hasta la vista, dude.” Over the shoulder again.

He once again picks up the business plan for justdivorced.com and slaloms his way through the exclamation points (For kids caught in the middle … there will be counseling as well as chat rooms available!) until he finally spots the mission statement: To create an online community for people who’ve just gotten a divorce. It would include chat rooms, personal ads, and referrals for therapy and legal aid.

Hmmm. He pauses. “One in two families? That is pretty good.” He keeps reading. “The problem is, divorce only happens once in your lifetime, hopefully. If they’re spending 200 bucks to get divorcée No. 27, what’s the lifetime value of that customer, unless they’re divorcing three or four times?”

He reads a few minutes more, then reconsiders: Legal battles from divorce can drag on for years. Divorcées remain single for years. Therapy drags on for years. Maybe this idea isn’t so cuckoo after all.

Again, Brotman pauses. “I haven’t heard of a site that focuses on divorced people,” he says. “It is pretty cool.” He stares at the plan. “But the thing about it is,” he slowly says, “from an investor standpoint, I have 300 plans sitting here. Do I want to focus on all the aspects of divorce for three months of my life? No! I don’t! It’s … depressing.”

He tosses the plan over his shoulder. “There are more fun things to do.”

If you’re a budding young venture capitalist here in New York, getting money for your brand-new fund is the easiest part. This city is awash in money searching for a project. Among Wall Street bankers, it has become fashionable to invest in dot-com start-ups. Wealthy individuals who’ve made a lot of money elsewhere (like … the Internet) are eager to toss in a million here, a million there, just for sport. Investment-banking firms are throwing money at venture capitalists like rice at a blushing bride. “Anyone with money wants to invest in the Internet,” says Mark Patricof, Alan’s son and the head of , which put up the money for the just-launched Beauty.com. “I could pick up my phone – honestly, this is true – and in 30 minutes finance a company.”

In fact, promising companies often find themselves being offered more – much more – money than they can use. When Doug Platt completed the first round of funding for Prefer.com, a shopping site specializing in products for 45-to-65-year-olds, he had to turn down $12 million; all he needed was $4 million. And Davinder Sethi, chairman of iPing.com (an online “notification service” – it reminds you to do things via your computer, cell phone, or pager), jumped through hoops to allow Sands Brothers & Co., a boutique investment-banking firm, to take a mere $100,000 stake. “To turn down people who are throwing money at you – it’s very political,” he says. “You just never know when you’ll come back to them.”

The problem, essentially, is that there aren’t enough companies like Platt’s or Sethi’s. New York investors are discovering the Internet at a time when it is already a terribly crowded colony. There are at least three online services that will furnish your son’s dorm room (dormfurniture.com, durabull.com, ecoloft.com), at least six that will help plan your daughter’s wedding (wedding.com, weddings.com, weddingchannel.com, theweddinglady.com, weddingnet.com, theknot.com), and at least two that will assist in making arrangements to bury your aunt Martha (funeral.com, Funeralstodiefor.com). Any venture capitalist in this city will tell you that the majority of proposals floating around this city are retreads, if not worse. “Without a doubt,” sighs Colonna, “there is more capital out there than there are quality deals.”

This puts venture capitalists in a bind. The money keeps pouring in from all directions, and they are obliged to put it to work in order to satisfy their limited partners. Yet 90 percent of the business plans they see are the equivalent of spam.

“In the seed space, it’s standard for nine out of ten deals to just completely wipe out,” says Brotman. “We’re three for three. It’s like shooting a bull’s-eye from 10,000 feet away in high winds.”

What do they do?

They hunt. Some even call it that: “elephant hunting.” The hope is to find an entrepreneur with some germ of a seed of a new New Thing so they can be “the first mover in the field.” (Short of that, they’ll settle for the most qualified entrepreneur in a field, or the most aggressive, or the most connected, so that they can be “the No. 1 category-killer in the space.”)

One of the places where venture capitalists hunt, or at least schmooze, is Super CyberSuds, the annual networking hoo-ha thrown by the New York New Media Association. And one of the typical attendees at such a function is Chip Austin.

Until last February, Austin was president and CEO of Bertelsmann Online. Then the venture-capitalizing bug bit him. With two partners, one a friend from Harvard Business School and the other a friend from McKinsey & Company, he decided to launch i-Hatch Ventures, a firm specializing in seed-stage funding for Internet start-ups. Lots of aspiring entrepreneurs recognize Austin. He always dresses in all black – black blazer, black slacks, black turtleneck – and he speaks at I-business breakfasts all around town. They like him, too. He speaks unhurriedly, almost languorously. His manner is mild. He has a sense of humor. His presence soothes.

Austin hasn’t even made it into the main hall of the Metropolitan Pavilion – to be more precise, he hasn’t even made it to the registration desk – when Fritz Desir, a handsome, strapping 29-year-old and one of the few African-Americans at CyberSuds, marches up to him and starts talking about his idea: Biguse.com.

It’s not a bad idea. Desir wants to create the equivalent of an online houseboy – a local one-stop service that will deliver your groceries, pick up your dry cleaning, fill your prescriptions, pay your bills. But his presentation doesn’t inspire confidence in his would-be patrons. That’s where Brad Farkas – former software developer, Alexander’s department-store heir, and one of Austin’s two partners – comes in. Farkas plays bad cop. Actually, he’s a nice guy, but with entrepreneurs, he has a ruthless, third-degree style and a gaze that would skin a cat.

The two men talk in the lobby for fifteen minutes. Farkas never gives an inch. A typical example:

Farkas: “So I’m a dry cleaner. One question I would probably ask would be, ‘What concentration of customers do you have in a three-block radius of my store?’ “

Desir: “Right. Our answer to that would basically be based on traffic questions and to really work with them – “

Farkas (shaking his head): “I’m a dry cleaner. What’s your response?”

Desir: “What we’re doing right now is trying to bring this online and do the promotions and see before we charge any money up front – “

Farkas: “So the answer is, you don’t really have a demographic profile of how many people are in my market.”

Just five years ago, Super CyberSuds amounted to a few hundred guys in a film-and-television studio in Queens, nibbling cheese squares; this October, 4,200 people have shown up, and it’s a full-blown Turkish bazaar for nerds. A tall guy in red satin shorts and a checkered white-and-lime-green cape is standing by the door, handing out black eyeglasses with masking tape wrapped around the frames. “Booth two – check us out,” he instructs the i-Hatch team. “Techies.com!” A fellow from corporategear.com, dressed like Austin Powers and speaking in some species of a British accent, presses red stubs of paper into Farkas’s hand. “Free movie tickets, baby, yeah!” he shouts and runs off.

“Let’s find a lucky aisle,” Austin suggests. He tries weaving his way through the crowd, but we can barely move. I ask him why he bothers coming to these events. “To support the companies we’ve invested in,” he says. Every few minutes or so, he shakes hands with someone he knows or gives out a business card. “And some of our co-investors are here, so we learn about some of the things they’re investing in that might make sense for us,” he says. “Also” – he’s rounding a corner now – “there’s the off chance you’ll see something that you may not have given as much merit to on paper, but when you meet the team, and you actually see it … that happens more than you might imagine.”

He takes a breather at the Mondera booth. “There’s a bit of a herd mentality among venture capitalists,” he admits. “The latest is that everyone has to have an Internet jewelry client.”

And what else?

“Oh, It’s a big list. Broadband. Pets. Drugs. Next-generation network equipment. Browserware. Digital currency.”

We round another corner and discover a trio of men in bright orange, all of whom look like they should be handling hazardous waste. There’s no banner in their booth. Farkas stares. “I’m always amazed,” he says, “at how many of these things you go to, and you pause in front of one of these booths for twenty seconds, look at them, examine them, and have absolutely no idea what the company does.”

He scans the room. He doesn’t look happy. But he insists he wouldn’t be a venture capitalist if he didn’t enjoy these events. “A big part of this job,” Farkas explains, “is walking the street, knowing what’s out there, so when you’re pitched an idea, you know if it’s been done.”

As we leave, a lone man, quite young, is standing at the doorway, holding up a handwritten sign: I NEED AN ANGEL.

Brotman is picky about selecting his investments – so picky, in fact, that when he first hung out his shingle as a venture capitalist, he passed on Kozmo.com. (“In retrospect,” he admits, “I should have trusted my gut about the CEO and invested in them.”) He has thus far invested in only four businesses: LivePerson, which enables e-commerce sites to provide real-time customer service; Flooz, a form of Internet currency, so that kids and other creatures without credit cards won’t be robbed of the pleasures of impulse-purchasing online; Bla-Bla, an irresistibly named portal people can use to juice up their own Websites with chat and postcards; and BoxerJam, an online game show by the creators of Jeopardy!

Brotman didn’t invest in BoxerJam until it was already well off the ground. But he invested in the others at the seed stage, and all three of them have managed to generate a lot of buzz – a remarkable feat in this staticky world. One (Flooz) has even managed to recruit Whoopi Goldberg to flack for it. But none has gone public yet.

Still, Brotman gloats. “In the seed space, it’s standard for nine out of ten deals to just completely wipe out,” he says. “We’re three for three. It’s like shooting a bull’s-eye from 10,000 feet away in high winds.”

I-Hatch, on the other hand, has decided to spread its risk around. It has 23 investments in its portfolio, including the FeedRoom, a customized local-news site started by Jon Klein, a former vice-president of CBS News; Faith.com, an online community for the spiritually inclined; and PlanetOutdoors.com, whose television commercials were done by the directors of The Blair Witch Project.

Brotman’s not impressed. “That’s not rifle shooting,” he says. “That’s machine-gun spraying.” He pauses. “If I was comfortable with 10x,” he says, referring the standard return on an investment most venture capitalists look for, “maybe I’d just throw half a million here, half a million there. But these companies need my time to become effective. I think that I can make the difference between 10x and 1,000x.”

But i-Hatch, Austin reminds, has $150 million to spend and three partners to look after its investments, while Brotman is a one-man, $14 million show. “Also, a variety of investments diversifies the risk,” shrugs Austin. “And we’d like to work with as many young teams as possible – that’s our passion.”

A few days after CyberSuds, Austin and Farkas are sitting in the big, windowless conference room of i-Hatch’s temporary headquarters in the MetLife building, listening to a pitch from a team of young entrepreneurs. Austin has cherry-picked this crew; he’s very interested in what they have to say.

“The pitch” in the high-tech world is a funny thing. It has become as slickly produced as a Hollywood film, though the content is often better suited to dinner theater. There’s a narrative. There are computer-generated visuals, piped in from a high-speed Pentium III processor and projected onto a big screen. And there are stars. (“Tommy Hilfiger sits on our board of advisers!”)

This presentation isn’t dinner theater. It isn’t Broadway, either, but it’s fairly engaging. The CEO, Wayne Chavez, is running the show. He’s 29 but looks much younger. “What we’ve identified,” he says, starting to tippity-tap on a sleek little laptop, “is the corporate-casual revolution in America.” A series of statistics pop up on the screen. Ninety percent of all American men in corporate settings go casual on Friday. Online-apparel sales reached $300 million last year. Men’s business-casual-wear is a $22 billion market.

“We believe that the male consumer is somewhere between Heaven and hell,” Chavez continues. “Heaven is tennis shoes, jeans, a sweatshirt. Hell is his starched white shirt, dark suit, black wing tips. And now that the corporate-casual revolution has come of age, he finds himself in a very confused state. He doesn’t know how casual he should go or how formal. If he goes too formal, he looks too uptight. If he goes too casual, he’s not serious enough.”

Chavez looks confidently at the group. He is wearing a suit. They’re dressed in slacks. “He also hates to shop,” he notes. “About 30 percent of all men feel shopping for new apparel is a necessary evil. An additional 22 percent dislike the shopping experience. An additional 8 dislike it more than they did before. So well over half dislike the shopping experience.”

Chavez came up with the idea for his company at Harvard Business School just over a year ago. Since July, it has been running on a small fund of angel money.

“Men concede that they need to dress well,” he says. “But they have no time.” A new slide pops up. men have no time, the heading says. Beneath is a picture of a man slumped at his desk, face buried in his hands, surrounded by bulging files.

“So you take a look at our customer,” concludes Chavez, gesturing at the screen. “He’s confused; he hates to shop; he concedes he needs to shop, because he needs to look good, but he has no time to do so. That’s where smartcasual.com comes in. How do we solve this pain?

Another slide. smartcasual is not just another dot.com, it says.

“There’s a bit of a herd mentality among venture capitalists,” says Austin. “Everyone has to have an Internet jewelry client.” Also broadband and pets.

They will be the first movers in the space, Chavez declares. They will develop relationships with high-end clothing suppliers. Then he looks over at my tape recorder, politely asks me to shut it off, and explains the rest of his business strategy. (Suffice it to say that the customer will have to buy retail, but he’ll be catered to better than most.)

Austin asks a question: How will smartcasual.com become a brand name and destination site?

Sixty percent of its marketing budget will go toward offline advertising, answers Jesse Stein, a former online journalist and the chief marketing officer of the company. “We want to make smartcasual what Kleenex is to tissue,” he says.

Derek Reisfield, a partner at i-Hatch, politely asks why anyone would buy retail when Brooks Brothers has sales on a regular basis. Ah, says Stein. Because these are whole ensembles. None of the pain of mix-and-match. “It’s like Garanimals for men!”

Austin gives advice as much as he asks questions, scribbling in tiny letters on a legal pad. “What’s your burn rate?” he asks. (Translation: “How much cash are you tearing through per month?”) Forty thousand, says Stein. “Where are you, and where do you want to be?” asks Austin. They have $80,000 left, says Stein, and they’re looking for $500,000 more.

One month later, i-Hatch becomes the lead investor in smartcasual.com.

It’s hard to tell whether all, or any, of the seed firms now blooming will make it past the tulip stage. Many of them, in Colonna’s view, don’t have the faintest idea what they’re doing. “There’s shit getting funded that shouldn’t get funded,” he grouses. “Shit where there’s not a snowball’s chance in hell that there’s going to be a successful exit.”

The more established venture-capital firms in the city will also argue, with some justification, that they add more than just a lot of money. They add cachet. Choosing an upstart is like choosing Hofstra over Harvard. “Just because you have $2 million doesn’t make you a venture capitalist,” sniffs Eddie Ryeom, a partner at Prospect Street Ventures. “I can honestly say, if an entrepreneur comes to us and he’s partnered with someone who doesn’t bring value, it’s a bad sign for us, because you are judged as much by your partners as you are by yourself.”

Small firms deflect this criticism by saying that their size is what makes them so attractive – they have the ability to give their clients hands-on care. They’ll draft and redraft business models with them. Help them find a chief technology officer and the right designer for their site. “It’s a different approach,” says Brotman. “It’s spending 300 to 400 hours with the company. It’s like having a puppy or a kid. You need to spend quality time with it.”

Seed-stage funding is an inherently risky business, depending on large, better-endowed venture-capital firms to finance future rounds of a company’s life. If these firms don’t like Chip Austin’s or Steve Brotman’s taste, or if the market slips because Alan Greenspan declares that the emperor of cyberspace is wearing no clothes, the i-Hatches and Silicon Alley Venture Partners of this world may implode.

“Most people today are working on a formula where they finance the first stage and three months later, it’s public,” says Alan Patricof. “But if those companies don’t make it, it’s going to eat up a lot of capital. So a lot of these small firms – I hope they pace themselves. Otherwise you’re going to see a lot of failures that in the old days would have been private.”

“If the market starts dropping overnight,” he continues, “and all those little companies they’re funding start running into trouble, I think their assumption is that they’re going to come to larger firms, like us. Well, we won’t do anything. We’ll have our own companies to worry about.”

Most of the younger generation of venture capitalists agree: There will be a shakeout. It just won’t involve them. “For the average bear in this space, it’s very risky,” says Austin. “But we don’t view this as risky at all.”

For three months now, the Silicon Alley Breakfast Club, a kaffeeklatsch for the city’s aspiring dot-commandos, has been sponsoring something called “Touched by an Angel,” the ultimate pitchathon for would-be Silicon Alley entrepreneurs. Participants submit their business proposals by either e- or snail mail; a selection committee, in turn, culls through them, chooses five or six finalists, and gives each company five minutes to present its plans to real, live venture capitalists.

Both Austin and Brotman are on today’s panel, held in the ballroom of the Marriott Marquis. Brotman arrives early. He struts around and stares skeptically at the crowd, busily feasting on gummy bagels. Farkas and Austin straggle in late, exhausted from an evening of quarreling with a large institutional investor. They were trying to turn down its money. “We’d feel too much pressure to spend it all,” says Farkas. “We could raise a quarter-billion if we wanted to.”

At 8:30, both Austin and Brotman take seats at the podium. The games begin.

Jim Shaffer, the CEO of Clickshare, is up first. His company, he says, will allow consumers to consolidate credit-card numbers and passwords to create a single account on the Internet to purchase goods, services, and information.

Brotman speaks first. “There are 30 other competitors in that space,” he says.

Austin is more diplomatic. “What do you offer that others don’t?”


Phillip Seifert, a baby-faced 28-year-old with slicked-back hair and a silver tie, is the CEO of Enginenumber9.com. As rap music blares, he begins to shout: “What are we about? Commerce and content for Generation X – but with an edge! We’re not about Britney Spears! We’re about Brandi Chastain taking off her shirt at the World Cup! We’re not a Website! We’re a club! An exclusive club!”

He starts pacing back and forth, like Susan Powter on a rampage about fat.

“… These kids want to make money! These kids get it! These kids came out of the womb with an Internet connection and a T1 line …”

His voice has started to tax the sound system. The speakers emit a plaintive screech.

“… I’m not naïve! But give these kids a platform to change the world …”

The insanity stops.

Austin: “I feel your passion. I still have no idea what you do. Give me, in 30 seconds, what you’re trying to build.”

It isn’t much clearer five minutes later.


Paul Dell, from SportingAuction.com. His impulse-buying site for brand-name, bargain-priced new products is already up and running in Petersborough, New Hampshire, and has even managed to rake in $1 million in revenues over the past year. He says he’s looking for a second round of funding – somewhere between $5 million and $10 million.

The panelists, for the first time, are impressed, though each has questions. (Austin wants to know about how he’ll compete with eBay and other sporting-goods stores; Brotman wants to know how he’s planning to publicize his site – “Are you going to buy a commercial during the Super Bowl?”) But Dell’s answers are matter-of-fact and convincing; the way he tells it, anyway, he’s found a niche.

Hmmm. Bookmark that.

Two others follow: Chip Ruhnke, from iStreamTV, and Jeffrey Tannenbaum, of DreamFront.com. Ruhnke, though a lovely and obviously brainy fellow, needs a catalytic converter to translate his pitch from engineer into English. Tannenbaum, though also a lovely fellow, needs a catalytic converter to translate 24-year-old into English. (“We’re shooting for the stars!” he shouts at one point. “This is a revolution!”)

SportingAuction.com wins.

Afterward, dozens of aspirants approach the podium, eager to chat with Austin and drop him their business cards. A few hardy, brave souls line up to speak with Brotman, too, in spite of how flimsily he concealed his contempt for inane ideas.

Glenn Hauman, the ponytailed CEO of BiblioBytes, which enables users to read books online, watches with amusement. “Since when,” he asks, “do these guys get the rock-star treatment?”

Brotman, for his part, has a serious case of pitch fatigue – an occupational hazard, though there are worse ways to get rich.

“I wish,” he mutters, “that I’d had a gong.”

Tales Of The New Gold Rush