Alpha Girls

by Julian Guthrie

  Kevin worked with Breyer and Accel’s in-house lawyer on the terms of the offer. Standing by the printer, Theresia and Kevin talked about the best approach. Kevin was thinking about a term sheet that mirrored Don Graham’s offer.

  Theresia had a different idea.

  “Look, the whole partnership believes we should win this deal,” she said. “I think you should bring multiple term sheets.” Accel had a $450 million investment fund to draw from. “The most we can lose is ten million dollars. That’s if we’re all wrong on this.” She believed they needed to offer $10 million for a $100 million post-money valuation. “Mark is a student of technology,” she said. “Google’s valuation was a hundred million. Mark is going to want at least that.”

  She added, “If you offer six million and they want ten million, we lose potentially a hundred-million deal over a four-million dollar difference. If we don’t get the deal, we make nothing.”

  Kevin agreed with Theresia’s strategy and went with two term sheets. That afternoon Kevin, Theresia, and Ping Li headed the six blocks down University Avenue to Emerson Street. “Strength in numbers,” said Theresia, who had cast off the androgynous and unflattering VC uniform of khaki pants and blue button-down shirt in favor of a dress and high heels. “If you want to show love for a deal,” she said, “grab your people and go to their office.”

  She glanced at Kevin, his body seemingly pulled along by his thoughts. Theresia admired his determination. He had a bachelor’s degree in engineering and an MBA from Stanford. And his first child was born three months after her daughter, Sarah.

  Kevin, too, had been impressed with Theresia. She had established credibility in the world of cybersecurity, not an easy thing, and had developed relationships with key industry leaders, such as Shlomo Kramer. And she had helped mentor Kevin. She told him to dive into new fields of interest without overthinking the subject or its challenges, and not to worry about his first investment in a new space, as it sometimes took a second or third investment to pay off. She urged Kevin to pursue a company, even if everyone was saying no. He had followed her advice, staying close to Facebook when all leads went cold.

  “This is it,” Kevin said, standing outside the Facebook office. It was located above a sushi restaurant. After being buzzed in, the Accel team headed upstairs. At the top of the stairs was a graffiti-inspired mural of a buxom woman in lingerie riding a fire-breathing animal. The walls of the office were covered with similarly edgy and arresting murals, most depicting women’s faces and scantily clad bodies. Theresia did her best to ignore the sexual undertones. But it was clearly a company run by men, and not particularly enlightened men at that.

  Theresia, Kevin, and Ping headed into the conference room. Theresia looked at the offerings on the side table. Where most companies stocked bottled water or Power Bars for visitors, Facebook had a two-liter bottle of Jolt Cola and a half-empty plastic gallon of Popov Vodka. As they waited, Kevin and Ping urged Theresia to check out the women’s bathroom and report back on the murals. The images in the men’s room were apparently explicit. Theresia, who had spent her fair share of time in frat houses at Brown, thought the Facebook office had a fraternity feel.

  “I’m not going to the bathroom to look at the murals,” she protested. “Besides, the meeting is about to start!” Distractions aside, Accel needed this deal. Facebook, while run primarily by college students and open only to college students, was viral. Theresia and the team had come to present their offer in person to show their love for Facebook.

  A few minutes later Parker and Zuckerberg joined them at the table. Kevin opened by talking about the unanimous enthusiasm on the part of the Accel partners, the impressive usage numbers, and the company-building expertise and contacts that Accel could bring to the deal. He had two term sheets and handed over the first, which valued Facebook at $60 million post (after Accel’s $10 million investment). Theresia could see that offer was going nowhere. Kevin kept talking, and slid the second term sheet across the table, this one giving Facebook a post-money valuation of $85 million. The reaction from Zuckerberg and Parker was warmer. After some discussion, they said they needed to talk it over and would get back to Kevin.

  Returning to Accel, Kevin was relieved he had brought more than one term sheet, as Theresia had suggested. Negotiations had begun.

  That night Jim Breyer was at home when he got a call and an e-mail from Zuckerberg and Parker. Accel’s best offer was “unacceptable.” Breyer was used to such negotiations and set up a dinner for the next night at the Village Pub to talk strategy.

  Negotiations continued for several days, as Efrusy and Breyer worked their angles to cement the deal. Theresia supported them both. She had learned a lot from Breyer about the consumer side of the business and respected him enormously. When she joined Accel in 1999, Breyer had been negotiating a deal with Wal-Mart to spin out Wal-Mart.com. Theresia was made Breyer’s second on the deal and attended the board meetings as an observer. She’d met Don Graham through Breyer as well; he and Graham were both on the board of BrassRing, a job listing site.

  Everything looked promising for Accel to land the Facebook deal. But Theresia knew from experience that a deal wasn’t done until the contracts were signed. Peter Fenton had thought he had a deal to invest in the photo-sharing site Flickr, only to see it snatched at the last minute by Yahoo! And Breyer had recently got close to an investment in the social network Tickle, until Monster.com swooped in and acquired it. And of course, Bruce Golden was sure he had had a deal with Skype, only to be repeatedly disappointed.

  On Thursday, Zuckerberg walked alone from the Facebook office to Accel. He and Breyer met one-on-one in Breyer’s office, with the door closed. The negotiations lasted for two hours. As Theresia had predicted, Zuckerberg was looking for a $10 million minimum investment that would value Facebook at $100 million. The sticking point in the closed-door meeting was in the ownership stake. Accel wanted to own 20 percent of Facebook for its $10 million investment. Zuckerberg flatly refused. He countered with 10 percent ownership of Facebook shares. Breyer then proposed a compromise: that Facebook give up 15 percent ownership if Accel put in another $2.7 million. Terms of the dilution of the shares were negotiated, with complex stipulations by each side. Breyer, determined to close the deal that afternoon, said he would also invest $1 million of his own money. Zuckerberg had a final stipulation: that Breyer join the Facebook board. Otherwise the deal was off.

  The men shook hands on the final details that afternoon, and the news soon hit the street: Accel would invest $12.7 million in Facebook, giving Facebook a valuation of slightly less than $100 million. It would own roughly 15 percent of the company.

  Jim Breyer took his seat on the board and began a routine of weekly walks with Zuckerberg. Kevin Efrusy, the principal who had brushed aside rejection and kept after the elusive Parker and Zuckerberg, had landed his first major deal. And Theresia had played a hands-on role. If the original term sheet hadn’t been upped—if Efrusy had gone to Facebook with only one term sheet—the conversation could have ended in the Facebook conference room.

  Not long after the announcement, Theresia was in a meeting when a visiting VC said to her, “We hear you valued Facebook at a hundred million, and they have only two million users? What were you guys thinking!”

  Theresia knew exactly what she was thinking. Maybe, just maybe, Accel finally found its Picasso.

  MAGDALENA

  Magdalena noticed something wrong with her: her feet and hands tingled with numbness. Initially she dismissed it as a weird anomaly, until it happened again and again. She went to see her doctor, who didn’t have an answer for what was going on. He referred her to a specialist. As she made the rounds of specialists, her condition worsened. She would lose consciousness at times without warning.

  A number of neurologists misdiagnosed her. It became clear that no one was sure what was going on. The only cons
ensus was that what was good for the heart was good for the brain. She was advised to focus on her health, to exercise more and eat better. Magdalena had always loved food and enjoyed walking, hiking, swimming, and sailing. She had a fast metabolism and was never overweight, but she was aware that she spent too many hours sitting at her desk and in meetings. She also enjoyed USVP’s catered lunches and ubiquitous cookies, a huge treat for her boys when she brought them with her on weekends.

  As someone who thrived on solving problems, she was desperate to find an explanation. Fixing a computer was a matter of replacing the part that was broken. Fixing a nervous system wasn’t so straightforward.

  The only thing Magdalena knew for certain was that her health was in decline. Faced with uncertainty, she began to withdraw from work, friends, and even her time at Salesforce. She didn’t tell anyone except her husband, Jim, because she didn’t have a clear diagnosis. She didn’t want to be perceived as weak.

  Privately, she worried about who she was without work. She didn’t read books, go to movies, visit museums, or watch television. She had attended operas with her mother, who knew every opera by heart, but it was hardly a passion. To Magdalena, work was her life.

  Her mother, Selma, had found fulfillment at age sixty-three working in the bakery of a new Whole Foods store in Palo Alto. Up to that point, Selma had played a support role in her family: supporting her husband, her mother-in-law, her children. Magdalena’s decisions in her life had been in part a response to her mother. Selma had been a good mother, but she wasn’t happy. When Selma landed a job and began receiving a paycheck for the first time, her life had been transformed. She showed up at work so early every day that the manager gave her the keys and suggested she open the store. When Magdalena and Selma walked around town, everyone seemed to know Selma.

  Magdalena’s symptoms waxed and waned but didn’t go away. To get better, she believed she needed to turn her attention to just one project: herself. Over a difficult breakfast with Marc Benioff, Magdalena, without going into details, told him she had health concerns and would need to resign from the Salesforce board. She told him that she would be fine, but the concern in his eyes was clear. They’d come a long way together, and Magdalena was determined to exit on a high note.

  As she returned home, she did have one regret in her professional life—and she wasn’t one for regrets. She regretted that she had set aside her own needs the day Salesforce went public. She should have gone to New York for the IPO, she realized. Yes, her son had been sick that day, but he would have been fine without her. She should have stood next to Marc during that historic moment when he rang the bell on the New York Stock Exchange. She should have been there to celebrate the company she had helped build and bring to life in that apartment on San Francisco’s Telegraph Hill. An IPO, like a birth, happens only once. Big mistake, she said as she drove home. No man in his right mind would have made that decision.

  Magdalena continued to appear confident in public. But in private, the undaunted girl who loved her hammer and nails, the intrepid young woman in her flamboyant costumes at the Stanford computer center, the competent builder of companies, was scared.

  THERESIA

  In the spring of 2005, the Stanford business school students were still developing their business plan in stealth mode when Theresia met with them as part of her quest to find transformative new vertical search companies. The graduate students were trying to keep a low profile, knowing that their start-up was going to rankle the second most powerful lobbying group in America—the National Association of Realtors.

  Sami Inkinen and Pete Flint had spent most of their second year of business school learning everything they could about the real estate industry. Flint, who had an undergraduate and a master’s degree from Oxford University and had co-founded a leading European online travel site, had been dismayed by how little information was available online when he began to look for off-campus housing. The process of finding a place to live felt medieval.

  There was no consumer-focused site that aggregated data and listings. Searching for a home required scouring individual real estate broker websites, calling the brokers, and scanning newspaper listings. Something called an MLS—a Multiple Listing Service—provided access to residential listings, but its information was available only to agents. Home buyers were not permitted to search the MLS, and the realtors’ association held the information closely, working with one aggregator, Realtor.com, in exchange for revenue sharing. But the walls were coming down around real estate listings and housing data. Some agents and brokers were beginning to share the information on their own websites.

  Inkinen, who grew up on a farm in Finland, had a master’s degree in engineering physics. He had co-founded a software development company in Europe and was an elite cyclist. Their idea for a vertical search site started with the basics, featuring homes for sale online. Flint told Theresia, “We feel that when a consumer searches for information on a property for sale, they should end up on the listing broker’s website. That’s where there are the most pictures, information, and virtual tools. That’s where the contact info is. That’s where I would want to go as a consumer.”

  Inkinen and Flint grew their site layer by layer with user-supplied content, photos, maps, and much more. They believed that making this information readily available to everyone free of charge would modernize an industry that was fundamental to American life and to the American dream. “We will offer the best user experience for home seekers,” Inkinen said. They had raised seed money from family and friends and were just starting to look for venture funding for their site, tentatively called RealWide.com.

  Theresia, believing real estate was going to be disrupted the way travel had been, met with a dozen start-ups in pursuit of next-generation search in real estate before meeting Flint and Inkinen. Taking ad revenue that traditionally went to print newspapers and magazines and moving it online, the way Craig Newmark had done to classifieds with his online market Craigslist, had huge moneymaking potential, she realized. She thought Inkinen and Flint had the best grasp of how to build a product, set up distribution, move content from brokers to their site, monetize, and brand. She liked everything about their start-up except the name, RealWide.com, which sounded like a motor home. It would need to change.

  While being hit with cease-and-desist letters from the realtors’ association, Inkinen and Flint had made a key discovery. No longer able to deflect the National Association of Realtors by saying they were Stanford students working on a school project—a line they’d used with success in the past—they researched legalities and loopholes in search and copyright. They discovered that they had the right to use thumbnail photos of homes on their search site if they linked back to the copyright holder. This constituted “transformative fair use.” Theresia saw that this was the breakthrough they needed, and that she needed to feel secure as an investor. Inkinen and Flint began meeting with real estate professionals and organizations to convince them of the advantages of promoting their business online rather than in print and on their site rather than on individual broker sites. After prototyping ideas, Inkinen and Flint officially launched in late 2005, with a $5.7 million investment from Theresia at Accel.

  Early on Theresia’s partners were concerned that Inkinen and Flint were “too much alike,” with physics degrees, MBAs, and international backgrounds. They even looked a bit alike. The Accel partners also worried that neither had a computer science background. But the two founders quickly figured out their roles, with Flint as CEO and Inkinen as COO. They dealt with the lack of coding experience by hiring Stanford computer science student Louis Eisenberg. And they came up with a new name aligned with their desire to provide truthful and accurate information: The company would be called Trulia.

  As Theresia drove back to the Accel office in her silver XK series Jaguar convertible, she gunned it, luxuriating in the 370-horsepower engine and t
he XK series’ 4.0-liter aluminum cast AJ-V8 engine, forcing 11.6 psi of boost through twin liquid-cooled intercoolers. Just as Theresia knew sports better than a lot of guys, she also knew cars better than most. She grew up with guys who fixed American muscle cars. She had worked at Harrison Radiator the summer after her sophomore year at Brown, and she had watched and learned. She knew how to replace a fan belt with pantyhose, fix a radiator hose clamp with a swimming pool hose clamp, and reattach her car muffler with a coat hanger.

  Accelerating down the highway, she cranked up the radio to Gwen Stefani’s “Hollaback Girl.” It had been ten years since Netscape went public, the seminal event marking the start of the dot-com boom. She had started at Accel at the peak of the bubble. And then the tech bubble had burst; the next three years, from 2000 to 2003, were an extended dry spell.

  But now that the economy had rebounded, it was a different ballgame in Silicon Valley. She had received her first million-dollar bonus, allowing her to buy her parents a home nearby—a big deal for the child of immigrants. She also had a financial windfall when two Accel companies went public. Theresia’s once-moribund dot-com company, PeopleSupport, which provided online outsourcing and had moved its operations to the Philippines, had gone from burning $1 million a month in cash to generating more than $1 million a quarter in cash, six months later. PeopleSupport founder Lance Rosenzweig took the company public in September 2004—a month after Google’s IPO—raising $48 million. It was Theresia’s first IPO and a lesson in the importance of a founder’s determination. The turnaround by Rosenzweig taught Theresia that a good founder who cares enough about his or her company can make the tough decisions needed to get through a crisis. The IPO payouts allowed Theresia and Tim to take care of all future college expenses for their daughter and for the sixteen children in the extended family. And Theresia bought a second home on the Hawaiian island of Lanai. Looking back, she realized that the dot-com bust had been tough, but she was that much the wiser—and richer—for having lived through it.