In the ad, the company was seeking agents to sell its software. Sonja went over the D&B report more closely. She took notes: “Hot co; anti-virus products; 2.5mm users; shareware; $7mm 1990 with $6mm pretax; 4,000 major corp users; excellent prospect; doing due diligence.”
Sonja picked up the phone again, eventually reaching a man named Jim Lynch in Santa Clara, California, who was creating a network of international agents to sell the antivirus software. She introduced herself, described TA Associates, and said she had money to invest. To her surprise, Lynch gave her the car phone number of the company founder.
She looked at her watch. It was midmorning in California. She reviewed her notes one more time and dialed.
“John McAfee,” the man answered.
Sonja again introduced herself and began her pitch. McAfee listened for a moment before saying, “I’m sorry, but I’ve just agreed to sell my company to Symantec.” Symantec was a $460 million company that was the largest supplier of packaged utility software. It had been unsuccessful so far in taking over the antivirus market.
“How much did they offer?” Sonja asked.
“Twenty million,” McAfee replied.
Sonja ran the numbers in her head. Over a few years, starting with a handful of employees working out of a home office, McAfee Associates had captured more than 60 percent of the antivirus market. The personal computer revolution of the 1980s and the dominance of the open system IBM personal computer had created the perfect environment for viruses to thrive. McAfee, a programmer who had worked at NASA and Lockheed, had seized the opportunity and developed VirusScan, a product that countered a virus’s basic replication techniques.
Drawing on her sales experience, Sonja kept McAfee engaged on the phone. He mentioned that he wanted to hire a new president and move with his wife to three hundred acres in the shadows of Pikes Peak, Colorado. Sonja told herself, Go after it like a bird dog.
So she laid out an alternative deal: “We’ll value your company at twenty million dollars, and you keep half. You sell half the company for the same valuation, hold on to the upside, and still get money up front.”
McAfee said, “I’d love that. I hadn’t even thought of it.”
It was a gutsy move. Sonja, as a $28,000-a-year analyst, didn’t have the authority to offer $20, much less $20 million. She quickly called Jeff Chambers, a managing director who had been with TA Associates for almost two decades and had opened the firm’s Silicon Valley office. She left him a voice mail, saying, “Jeff, you have to look at this business. Its forecasted revenue growth rate is more than ninety percent, and its pre-tax margins run between eighty and ninety percent of sales. The problem is that John is seriously considering selling McAfee to Symantec.”
Jeff Chambers wasted no time in scheduling a meeting with McAfee and working through the due diligence. He pulled in another firm, Summit Partners, and the two jointly offered first-round funding of $10 million ($5 million each) to buy half of McAfee Associates, which had seven employees. McAfee went public a year later, raising $42 million. It grew from there, licensing its antivirus software to more than fifteen thousand corporations and boasting an astounding after-tax profit margin of about 45 percent, far higher than the industry average.
But by that time, Sonja was ensconced at Harvard Business School, studying hard and networking even harder. She had become president of Harvard’s venture capital club, which gave her access to industry pioneers. She flew to California for in-person meetings and invited the legends of venture to Harvard to talk to students, including John Doerr, who had left Intel to join the venerable venture firm Kleiner Perkins Caufield & Byers; Reid Dennis of IVP; and MJ Elmore, who worked closely with Dennis.
* * *
After graduating from Harvard, Sonja, at twenty-seven, was hired at Menlo Ventures, whose firm had offices adjacent to the Reid Dennis–founded IVP on Sand Hill Road. While Sonja could have remained on the East Coast, Sand Hill was her yellow brick road. It was here that the “traitorous eight” had left the manic but brilliant William Shockley to start Fairchild Semiconductor and later Intel. Here a marijuana- and hot-tub-loving Nolan Bushnell had met Sequoia Capital founder Don Valentine to fund Atari. Here Arthur Rock, at first reluctantly, had provided funds and advice to a scruffy and “very unappealing” Steve Jobs to build Apple. Here venture capitalist Tom Perkins and scientist Bob Swanson had started Genentech. It was on Sand Hill Road that Dave Marquardt’s early investment in Microsoft had yielded a bonus of a new red Ferrari, and where Larry Ellison incubated a start-up called Oracle, getting a loan from VC Don Lucas to keep the relational database company going. It was here that Arthur Rock had defined venture capital as “taking adventures with capital.”
The day Sonja arrived in California, in July 1994, Time magazine hit the stands with a cover story titled “The Strange New World of the Internet.” The Internet was moving out of the hands of the military and academia and into civilian life. The cover story raised a question that was on the minds of VCs and entrepreneurs alike: “The world’s largest computer network, once the playground of scientists, hackers and gearheads, is being overrun by lawyers, merchants and millions of new users. Is there room for everyone?”
Sonja thought there certainly was room for her. With her mother by her side, she set out in search of an apartment, driving from neighborhood to neighborhood looking for FOR RENT signs on buildings. But this being the Bay Area, housing was difficult to find.
With Sonja’s start date at Menlo Ventures fast approaching, one of the partners at Menlo stepped in and offered her his guesthouse; Sonja could stay there while she searched for a flat. There was one caveat. The partner and his wife, an ob-gyn, had just had triplets; they would need Sonja home at five—to babysit.
Sonja didn’t pause to consider whether a man with her credentials—a Harvard MBA, deals at TA that had netted the firm tens of millions of dollars—would have been asked to babysit. She was just thrilled to have a place to stay. If she had to babysit the triplets, as well as the couple’s two other young children, that’s what she would do. It was a small price to pay on her path to success. And as she constantly reminded herself, obstacles were her allies.
PART
TWO
Getting in the Game
1994–1999
MAGDALENA
Magdalena thought she was onto something big, a revolution that was about to pay off in a huge way. But there was a problem: What seemed obvious to her came across as fantastical to everyone else.
It was 1994, and Magdalena had been working for several years without a steady income. She’d devoted most of her time to co-founding a start-up called CyberCash, one of the first secure payment systems for online shopping. At the time, though, the Internet barely existed. It consisted of modems that cacophonously—and slowly—sent data over telephone lines. Buying things online would require a seismic cultural shift in everyday life.
Only three years earlier, when the Internet was first opened to commercial uses, it had been illegal to sell things online. Today Pizza Hut was making a big deal of selling its very first pizza online. The time to move, Magdalena knew, was now. She believed with every fiber of her being that e-commerce was the wave of the future.
* * *
Her career after graduating from Stanford, more than a decade before, had started off so promising, and then she took a detour.
Even before she finished her master’s degree, Magdalena had gone to seven job interviews and received seven offers. Her first interview had been with Steve Jobs and Steve Wozniak of Apple. The founders invited double-e students to the LOTS computer center to hear a pitch about their three-year-old company. If the students liked what they heard, they could stay and be interviewed. Jobs, wearing wire-rimmed glasses and jeans, told Magdalena and the other double-e students that working for Apple would be like “an extension of college.”
; Magdalena was one of sixteen students who showed up for the interview. She loved the idea of working for Apple. Jobs had dropped out of college and spent time studying Hinduism and Buddhism in India. He was a technologist but also a student of the mind. Magdalena had a window opened to her own mind through her love of technology. Five of the sixteen students interviewed that day received job offers—including Magdalena.
When Magdalena told her adviser the exciting news, however, he said, “Why would you go to work for a company that has a fruit for its name?” He urged her to look for something “stable and solvent” and suggested the ten-year-old semiconductor company Advanced Micro Devices. AMD had recently listed shares on the New York Stock Exchange, had extraordinary growth, and was becoming a recognized leader in research and development. On his advice, she took the AMD job.
AMD’s co-founder, Jerry Sanders, kept a poster on his office wall that read, “Yea, though I walk through the valley of the shadow of death, I shall fear no evil—for I am the meanest son of a bitch in the valley.” At AMD, Magdalena was responsible for getting local area networking chip sets designed into computers.
Early in her job at AMD, Magdalena was invited to attend a sales conference at the Hilton Hawaiian Village in Honolulu. The conference kicked off with what was billed as a “breakfast eye-opener.” Magdalena settled in, anticipating a festive Hawaiian dance performance, but instead of a hula, she got a striptease. At eight A.M.! The women onstage shimmied around with their tops off. When the performance was over, Sanders and his top sales executive, Steve Zelencik, took to the stage to rally the troops. What is the message here? Magdalena wondered. That topless women are the reward for top sales? The next night’s entertainment was even more jaw-dropping. Before dinner was served, a coterie of dancers appeared, dancing and slowly stripping down to nothing. Then the women performed explicit sex acts on one another. Magdalena, who had seen her share of bare breasts and nude bodies on the beaches of Europe, was no prude. But the explicitness of the evening’s “entertainment,” in an official workplace function, left her speechless.
By the time the X-rated show ended, Magdalena was fuming. Bare breasts were one thing. Degrading porn at dinner was another. She stood up and headed straight to where Jerry Sanders was sitting. As she approached, she considered what to say and how to say it. She didn’t want to come across as emotional. She needed to make her point in a way that he would understand.
Kneeling beside Sanders, Magdalena looked him in the eye and said, “You and I need to talk.” Her heart was racing; this was her boss. “I am an engineer at your company. What just happened was unacceptable to me personally. This show of naked women made me feel like I’m not a respected employee. You say you want to make sure your employees are well treated, but is this how you treat your newly recruited engineer?” Her tone was even and strong. She forced a smile. She wanted him to know that her problem was his problem.
Sanders stared back, furrowing his brow as if she were telling him something in a language he didn’t understand. It was clear to Magdalena that the meanest son of a bitch in Silicon Valley had no idea what to do with the young woman in front of him.
Finally Sanders said, “Why don’t you sit at my table for dinner, where I’ll be entertaining our top distributors? I heard you’re a good engineer, and I know they’ll enjoy the company of a good-looking young woman.”
Magdalena let the last comment go. She had said enough for now, and she wanted to keep her job. In her work with computer designers at companies such as McDonnell Douglas and IBM, she was going to have to network with these men at bars, at parties, and over dinners. Not networking was not an option; these were her clients and potential clients. And they were all men.
Magdalena soon perfected the art of drinking without getting drunk, leaving the hotel bar or restaurant alone, and getting up early to give a data-laden morning presentation. She had been trained from her childhood in Turkey to be clear in the messages she sent to men. When she rode the ferry across the Bosporus, she knew not to make eye contact with men. She understood that the way she walked, talked, sat, dressed, tilted her head, aligned her body, and shook hands expressed her availability to men. For the first seventeen years of her life, she had been trained in how to avoid being raped—the worst possible fate for a woman in the Middle East. It was training that served her well in Silicon Valley.
* * *
After nearly three years at AMD, Magdalena left to join the very first Unix desktop company, Fortune Systems, which had fewer than fifty employees. Fortune had a wild ride, from its flashy IPO—the seventh biggest in history—to near bankruptcy. Despite its financial downfall, she loved the frenetic feel of the start-up. At Fortune, she had a huge job overseeing all the software systems that ran on the Fortune computer, the Unix operating system software, and all of the applications software including Oracle’s database and Lotus’s 1-2-3 spreadsheet.
After leaving Fortune, instead of staying in tech, she went to work for the management consulting firm Booz Allen, expecting to focus on the marketing of tech companies. It turned out to be one of those blind spots like she’d experienced while programming at Stanford. At Booz Allen, she found herself marketing cruise ships rather than computer chips. She was tasked with coming up with unbiased questionnaires and running focus groups with first-time customers on cruises to the Caribbean and through the Panama Canal. As she savored her Campari and orange drinks on deck and appreciated the view, she wondered what had happened to her career. She spent the next few years—her dark period—as a mirthless marketer. The time seemed to absorb its own light, like a black hole.
While her career faltered, her personal life flourished. She met attorney Jim Wickett, eight years her senior, who was as gentle and easygoing as she was driven and detail-oriented. Her first impression of him was that he talked a lot. He told her on their first dinner date that he intended to marry her. “You’ve just had too many espressos,” she replied, rolling her eyes. They went on to have two sons, Justin and Troy, now five and three. But Magdalena, at thirty-four, felt empty without a directed and challenging career. She needed something besides her consulting jobs and her children to fulfill her.
And that’s why Magdalena came back to technology, the world of circuits and logic that had always moored her, and reinvented herself as an expert in the Internet. Now all she had to do was convince some venture capitalists that she was right—that e-commerce was about to change the world.
THERESIA
“Are you kidding me? Joining a start-up is riskier than starting a restaurant!”
That was the reaction that Theresia got from her boss when she announced that she was leaving her corporate post at Bain consulting in San Francisco to work for Release Software, a new start-up in Silicon Valley. In the past, Theresia had always done everything by the book, but now she was sure she had seen the future—and it was digital.
At Release, with her meager start-up wages, Theresia had to make some adjustments, notably in where and how she lived. She soon joined the ranks of couch-surfing entrepreneurs. From a privacy standpoint, living night to night on someone else’s sofa wasn’t so different from living in a dorm at Brown. And she was thrilled to be entering the rough-and-tumble world of Internet entrepreneurs. Her parents and grandparents had taken huge risks in moving from China to Indonesia and later from Indonesia to the United States. Maybe her immigrant past had paved the way for her entrepreneurial future.
Release had been founded to enable companies to distribute software electronically, rather than as disks packaged in boxes and sold in retail chains. The start-up was the brainchild of Matthew Klein, a self-described “hacker and nincompoop” who at six foot seven was so consumed with his thoughts that he often ran smack into low branches and doorjambs. He had gone to Yale and Stanford, where he programmed a payment mechanism into Shareware, a proprietary software that was free but asked users to pay by the honor sy
stem. Klein, who didn’t have faith in the honor system, had landed $1 million in funding for Release from venture capitalists Steve Jurvetson and Tim Draper.
Klein found Theresia through another Stanford business school classmate and Release employee, Mark Benning, a former star hockey player at Harvard. The company’s fourth employee was Li An, a Chinese immigrant who spoke limited English but was fluent in engineering. An had responded to a flyer that Klein taped to a lamppost on the Stanford campus. The other founding member of the team was Chip Hall, who became vice president of marketing.
Of the five employees, Matthew Klein viewed Theresia as the blue-chip, most together member of the team: Brown engineering, Bain in Boston, Stanford business school, Bain in San Francisco. She knew technology and business strategy and was a fast learner in sales and marketing. She cold-called dozens of companies, e-mailed executives at all levels, and sped from meeting to meeting in her cherry-red Acura. And she had something the other awkward founders lacked: social skills. She knew how to present to a group and do basic things like get a good seat on a plane and rent a car. She taught Matthew that he shouldn’t wear white gym socks with dark suits. She told him about the elaborate protocol when exchanging business cards with the Japanese. She told him how to do expense reports and get a good deal on business travel.
Theresia agreed to join Release because of Matthew’s self-deprecating brilliance and because of the allure of an Internet start-up. She had been at Stanford when Jerry Yang and David Filo started Yahoo! as a graduate school project. The two had raised $3.3 million from Sequoia Capital. When Yahoo! went public a year later, it had a market capitalization of $848 million. Theresia had been in the computer center at Stanford when she first downloaded Mosaic (a precursor to Netscape, the pioneering Internet browsing software). She interned one summer of business school at Silicon Graphics, founded by Netscape co-founder Jim Clark. (One of her jobs at a Silicon Graphics sales kickoff event was to sit inside a hollowed-out server the size of a refrigerator and respond as if she were a computer as people typed commands.) She had been at Bain—which had offered to reimburse her business school tuition if she worked there for two years—when Netscape went public in August 1995. The sixteen-month-old company, which had never posted a profit, was suddenly valued at more than $2 billion. That same year Elon Musk enrolled at Stanford to study applied physics. Two days after arriving, he applied for a deferment, convinced that the start-up zeitgeist wouldn’t come around again anytime soon. He started Zip2 to help the media industry move from print models to an electronic model.
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