Tuesday, February 13, 2001

The Cyber Scene in Denver ~ by Suzanne Lainson

On February 13 I headed to Denver for the Rockies Venture Club at
the Marriott City Center. I caught up with Susan Thevenet and Mark
Weakley of law firm Holme Roberts & Owen and we shared a drink at
the bar before heading down to dinner. Susan and I discovered we
were both military brats (Army for her, Navy for me) so we
reminisced about officers' clubs, frequent moves, and the spit-and-
polish lifestyle.

Approximately two hundred and forty people were already seated by
the time we got to the event. I spotted Kristen Johnston, director
of corporate and media communications for GETGO, Brad Spirrison,
managing editor of eMileHigh, Drew Bolin, deputy director of
domestic and international business development in Colorado’s
Office of Economic Development & International Trade, and Erika
Brown, founder/principal of NetGoddess. Among those sitting at my
table were David Van Bussum, director of strategic accounts at
Nortel Networks, Lee Sterling, VP-general counsel at Alin Q, George
Sexton, CEO/president of MH Software, and Tony Parker, senior
producer/marketing manager of Bandwidth Communications. I spent
most of dinner talking to Allan Roth, who runs a consulting firm
specializing in financial strategy. We compared notes about
Colorado Springs. He moved there from Aspen earlier this year and I
lived there most of the 1980s. The Springs now has its own version
of Rockies Venture, Peak Venture Group.

The three entrepreneurs making five minute pitches were David
Howard, president/CEO of 1Vision Software, Eli Williams, CTO of
DigitalCCTV.com, and Gene Jackson, president of Power Energy Fuels.
I learned about data storage, electronic surveillance, and
alcohol-based fuels generated from manure, wood, and garbage.

The featured speaker was Steve Leatherman, president of private
equity firm Quest International Management and chairman of the
advisory board for the Bard Center of Entrepreneurship Development
at the University of Colorado-Denver. (He’s also been president of
Hanifen, Imhoff Investments.) Quest has invested in a variety of
deals, about 50% of them tech-based. Partners have to co-invest in
every deal.

Among the insights he shared were:

*Entrepreneurship involves (1) bold goals which stretch beyond what
is believed possible, (2) a high degree of opportunity, and (3)
substantial financial risk and reward.

*Good ideas are only 5 -10% of the equation. The ability to execute
is more important. VCs look for entrepreneurs who are passionate,
which means differentiating between kooks and visionaries.
Valuation is not that important. A business plan is nothing more
than a screening tool, but it is more persuasive than an in-person
pitch. At the same time, VCs don’t trust what you say and will
check out everything for themselves. Assume they will find out what
you don’t want them to find out.

*If a VC spends 20 hours reviewing your company, he feels he’s
invested a million dollars of his time. Eighty percent of the VCs
who go this far will follow up with money.

*We’re in for a hard landing. There is an overcapacity of IT.
Venture capital investment is down 80-90%.

The next day I attended a lunch at the Mediterranean on Pearl
Street in Boulder, hosted by the Council of Growing Companies. The
restaurant was packed, as always. CGC is a national organization
for peer-to-peer exchanges among CEOs. Greg Fine, director of
chapter relations and development, was in from CGC’s headquarters
in McLean, Virginia. During our meal Patricia Glora, VP of
operations for Tango Technologies, Bob Williams, president of
Aviation Everything, and Dick Sirbu, chairman/CEO of Sirbu
Enterprises and former president of AmeriTrade Clearing and OnMoney
Financial Services Corporation, had high praise for the usefulness
of CGC’s monthly CEO roundtables. We talked about the value in
bringing together old economy and new economy corporate execs now
that economic conditions are forcing many dot-coms to look beyond
their own sector for contacts and advice.

This week I also had a chance to talk to Richard Smith, CTO of the
Privacy Foundation, based in Denver and started by Peter Barton,
former president of Liberty Media. Richard lives in Boston,
telecommutes, and comes into Colorado every month or two. I asked
him to tell me more about what he does. “I’ve been involved with
privacy issues for about two years. I was in the computer software
business for about 25 years and had my own company. When it was
sold, I had some time to investigate security and privacy on the
Internet. I made lots of discoveries about the products out there
and the privacy problems with them. The press picked up on what I
found and then I joined the Privacy Foundation last summer.”

“I take apart products, see how they work and impact on privacy,
and then publicize what I find. Our main goal is to educate people
on how the computerized systems such as the Internet, cell phones,
and digital cable TV are different from what we had to deal with
before. They communicate information about us. To some degree they
act as surveillance devices. It has become extremely inexpensive to
accumulate data. This enables companies to watch online behavior,
record it, and then use it to market in the off-line world. Since
the Internet is having trouble making money, I think there will be
a push to use that data to sell us stuff through telemarketers and
junk mail. The online banner ad networks like DoubleClick and
Engage are in the monitoring business and they are going to try to
profile people. Intuitively we think profiling works, but there has
been no demonstration so far that is does. It’s not been proven
that this has any value in predicting buying patterns.”

I asked him if he had a message he wanted to get out. “I think the
industry has made a mistake in not being more forthcoming about
data collection and what they are doing with it. The more they do,
the more groups like us can monitor them. They can be watched, just
as consumers can be watched.”