Where Second Place Means 'Loser'
When a bunch of venture capitalists put on a soapbox derby, get off the road
By JOAN O'C. HAMILTON, Businessweek on-line, 14 October 1999
© Copyright 1999 The McGraw-Hill Companies Inc.
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It's high noon on the crest of Sand Hill Road. Well, actually it's about
high 10 a.m. this September Sunday, but it's already 90F or so, thousands of
people are milling around, the festivities are an hour behind schedule, and
tempers and patience are wearing thin. Ordinarily, this four-lane stretch of
Menlo Park (Calif.) highway is best known as the murderer's row of venture
capital--the headquarters of such well-known outfits as Kleiner Perkins
Caufield & Byers, Mayfield Fund, and Benchmark Capital.
But today, the road is blocked off and lined with hay bales: It's the third
annual Sand Hill Challenge day, a modern soapbox derby in which Silicon
Valley's Type A-pluses are trying to pull off the impossible. They're
attempting to appear laid-back and good-humored as, ostensibly for charity,
they see who can strap a scared, hot, skinny driver to a high-tech-looking
thing with four wheels, give it a shove, and cross the finish line before
another intense, overly competitive team does the same. Very weird. But very
Silicon Valley. The Sand Hill Challenge was dreamed up by Jamis H. MacNiven,
owner of Buck's Restaurant in nearby Woodside A gregarious showman, MacNiven
wanted to recreate the nostalgia of soapbox derbies. By alternately pleading
with and pitting his VC customers against each other, he got them to agree
to enter cars and pay a fee to charity--predominantly Safe Rides, a
volunteer program that gives free rides home to teenagers who have been
drinking.
A VALLEY MICROCOSM. Competition? Did somebody say competition? The firms
went nuts right out of the gate. Sand Hill mavens Mohr, Davidow Ventures won
the speed division the first two years running with sleek, highly engineered
carbon-fiber-and-titanium marvels crafted by the Valley's top product-design
team, IDEO. It would all be a lot more fun if the philanthropic math added
up better: Although it has raised almost half a million dollars in three
years, it's no secret the contenders have spent several times that on the
vehicles, themselves. Proceeds so far have funded about 800 hours of rides
for kids, which is great, except winning cars routinely exceed 1,000 hours
each to design and build. ''This is a microcosm of the Valley,'' says David
C. Nagel, who heads AT&T Research Lab's Menlo Park office. ''It's fun on the
surface, but there's a deep streak of competitiveness. It's exactly the way
the VCs see things: The first place trophy says 'winner' and the second
place says 'loser.''' Literally. Organizers have been working on smoothing
some of those rough edges. Jayne M. Williams, a local real estate agent
tapped by MacNiven to run the event while he mingles--this year he showed up
on a camel--has tripled the entrance fee to $3,000 and talked major sponsors
into donating much more money to the charities. Teams are quietly urged not
to spend more on their cars than the amount they donate.
I walk over to the starting line where the ''speed'' category is just
getting under way. ''Man, have you seen the Kleiner dudes?'' a teenage boy
asks his friends as the first of the corporate cars lines up at the start.
''They are BIG.''
RINGERS ABOUND. That kind of talk has got to warm the hearts of the KP
partners. Of course, the kid's not talking about them, he's talking about
the ringers they've hired to push their entry car. Ringers are another
ritual for this race, and have included former National Football League
players and Olympic bobsled team members. After spending an hour or so in
the KP tent just perspiring and looking intimidating, the trio came out and
stretched in front of a chorus line of onlooker Valley guys visibly sucking
in their stomachs and speculating aloud about steroid usage--the male
version of the facelift and tummy-tuck surveys we girls conduct. Delicious,
really. Despite that, KP is now three years into a perennial struggle for
victory in the speed category, which it clearly wants so much to win but,
alas, lost again this year. ''That's what makes victory so intensely
satisfying,'' says Nagel, whose AT&T car ended up beating all the VCs. ''To
have them get those big guys and spend a huge amount of money and get their
butts kicked anyway.''
The actual race is sort of mesmerizing and a little frightening. The speeds
of these delicate vehicles approach 50 mph. There were no major crashes or
injuries, although this year's announcer had a macabre sense of humor.
''Well, these look a lot like high-tech coffins,'' she observed brightly as
two nervous drivers were packed into their racers. This year, Mohr Davidow's
partners may have come up with the perfect three-peat by simply strolling
the sidelines of the speed race with amused, above-it-all airs. They've been
telling folks they couldn't bear to see the pain their victories inflicted
on rivals like Kleiner Perkins, and so they only entered the ''whimsy''
division--which they won with a vibrant red dragon car.
Even ''whimsy'' entrants look for every edge. Tim Draper is with a team from
his Redwood City venture-capital firm Draper Fisher Jurvetson. He's
scurrying around a, well, incredibly ugly ''Trojan Horse'' entry. It bears a
big sign saying ''RULES'' with a red slash through it. Draper bounds over,
hand out. ''I should warn you,'' he says, as we shake. ''I just touched a
sheep with this hand.'' ''Where?'' I ask, pulling my hand back. ''Over
there,'' he gestures, grinning. ''Not really what I meant,'' I mumble, but
sure enough, there's a miserable looking little black sheep tied to a fire
hydrant behind him. Draper lays out his tale of woe: Last year, his team
almost got thrown out for toting a 10-foot-high ramp to the Hill to give
their car a starting boost in the speed race. (An elaborate package of rules
forbids motors, demands four wheels, and probably keeps one retainer
attorney per firm busy for at least a week looking for loopholes). They
finally let them race--the car lost anyway.
BLACK SHEEP. So, this year, chanting the ''no rules'' mantra, DFJ decided to
do ''whimsy'' with a twist. Draper is using the race to further stick it to
his Sand Hill Road competitors by hyping DFJ's new satellite offices around
the country. When it's DFJ's turn at the starting line, a ramp comes down
and a bunch of little go-carts peel out sporting the names of cities for the
new offices, and ''black sheep'' Draper walks out with his little friend on
a leash. ''Beware of geeks bearing gifts,'' his team crows.
Perhaps the spirit of the soapbox derby is a guy thing that is destined to
elude me. I found the number of swearing pit crew members still making
design changes minutes before the race eerily similar to other examples of
inscrutable masculine behavior. Say, for example, my husband's tendency to
change the oil in our car half an hour before 10 dinner guests are due to
arrive. Our photographer, on the other hand, tried to explain to me how the
race brought back rich childhood memories of heisting baby carriage wheels
and hammering them to a crate with his buddies. ''Look, that one has a real
suspension,'' he says, as some kindred soul looked up from his labors,
''Mmm, suspension,'' I said. ''Boy, it's hot.''