Venturing under the influence
By Rafe Needleman [email protected], Editor, Redherring.com
September 7, 1999
Copyright © 1999 Red Herring Communications.
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The majority of the meetings I take are with CEOs from startup companies
with giddy business models. And while, yes, there is some rationale to being
exuberant, especially if you're building an Internet company, lately things
have been getting out of hand. Oddball businesses get funded, go public,
make zillionaires of their founders. Who's responsible? All of us. But the
giddiness starts with the venture funds. Peter Ziebelman, general partner at
21st Century Internet Venture Partners, calls it "venture under the
influence" -- VUI.
Perhaps you recognize these symptoms of VUI:
1. Loss of judgment: Funding a company with a bad business model -- or none
at all.
2. Lack of taste: Being attracted to a business that's completely unoriginal
or has no barriers to entry.
3. Drunken buddy syndrome, a.k.a. "Due diligence is for wimps": Investing in
companies you'd never dream of investing in by yourself, but what the heck,
the other VCs are, so you might as well, too.
Please, for the sake of yourself and the economy, invest wisely.
VUI: venturing under the influence
By Paul McNamara, Network World, 09/13/99
© Copyright Network World, Inc. 1999
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They are, in effect, the drunken drivers of Internet investing and Peter
Ziebelman has just the phrase to describe their "crime": VUI.
As in "venturing under the influence."
A partner at 21st Century Internet Venture Partners, Ziebelman has taken to
using VUI to describe a range of sins among his venture capitalist brethren.
The misdeeds include swallowing bad business models; ignoring red flags,
such as an absence of barriers to entry; and succumbing to the kind of peer
pressure that leads to ill-conceived pack investing. "There's no 12-step
program here," Ziebelman says. "Only a massive price correction for public
Internet stocks" will "cure" those who are afflicted. So what are the best
examples of VUI? Ziebelman would rather not drop a dime on specific
investments - honor among venture capitalist thieves, he says. Fortunately,
columnists have no such qualms about kicking drunks who are headed for the
gutter. Internet police looking to make a VUI pinch have many suspects to
target, but they might start with auction sites not named eBay,
medical-advice "communities" such as drkoop.com and any online pet store.
Take Pets.com, for example, the so-called market leader. Perhaps you've seen
their brilliant new TV ads featuring that hilarious handpuppet dog and the
catchy slogan: "Because pets can't drive." The spot is bound to win one of
those advertising awards that only advertising professionals care about.
The business itself? Pure bow-wow.
Why? Because pet owners can drive and the corner grocery store carries most
everything my Siamese and 6-month-old Corgi pup need, except perhaps advice
on how those two can get along.