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Inc., the e-mail-management company. Mohr, Davidow partner George Zachary heard Richardson out and was intrigued despite the legal risks. Then something strange happened: After Richardson’s presentation, he got a call from John Fanning, who asked to come in and make his own case. Fanning went in and told Zachary that Napster was worth $1 billion, a staggering claim for a company with no revenue defending against an epic lawsuit. But Zachary would be lucky to be allowed a piece, Fanning said. What’s more, Napster was just part of a broader plan. Fanning was starting his own incubator, NetCapital. Mohr, Davidow should invest in that as well, he said.

Since Fanning had the power to veto a Mohr, Davidow investment in Napster, the double pitch implied an audacious swapping of favors that once more called into question Fanning’s loyalty to Napster shareholders. “He was superaggressive,” Zachary said. “It was an ‘I am CMGI’ type of pitch,” referring to the holding company with stakes in more than a dozen firms. Mohr, Davidow passed on NetCapital, but it did offer to invest in Napster. A term sheet dated March 23 called for an infusion of $20 million for a fifth of the company. Like Kleiner Perkins, Mohr, Davidow wanted Fanning dropped as a Napster director. At a Napster board meeting with Richardson and Amram, Fanning again voted no, saying this offer too didn’t value Napster highly enough.

Other firms also got mixed messages. At Benchmark Capital, which had launched eBay, the partners were interested enough in Napster to talk price before the negotiations ended without a deal. Along the way, the partners were informed that Fanning would part with the technology for swapping music, but wanted to keep the rights for swapping video and other content. “It was insane,” a Benchmark partner said. “But that’s greed for you.” Fanning also kept the rights to the unused Napster.net domain name, which he has to this day.

Richardson gathered herself to make still more calls. As she did, the stock market reached its historic high and began sliding down. Venture-capital firms, while outwardly calm and even welcoming of a modest correction, began recalculating. The further the market fell, the less chance companies had for a lucrative IPO. The less chance for an IPO, the less money venture capitalists wanted to put in new companies. Nap-