📸

the payout could be massive. And Hummer Winblad wanted a home run very, very badly. While the firm had garnered a reasonable share of respect and press since its founding in 1989, Hummer Winblad was well on its way to becoming the venture-capital joke of Silicon Valley.

The first partner on the nameplate, six-foot-nine John Hummer, had gone from Princeton University to the NBA, playing six years before retiring and collecting a Stanford M.B.A. From there he went straight to venture capital without running a company himself. His partner, Ann Winblad, had a more traditional VC background, building software firm Open Systems Inc. from nothing and then selling it for $15 million. She consulted for IBM Corp., Microsoft, and others. But she was best known in the Valley for having dated the bête noire of the Valley, Bill Gates, who was revealed as a Hummer Winblad limited-partner investor in 1999.

At first, the firm focused on software companies, producing decent results. But Hummer Winblad missed the early Internet revolution while lesser-known firms racked up hundreds of millions or even billions of dollars in profits from start-ups. Hummer's third fund, raised in 1997 ahead of the big boom, had returned only 42 percent of the $99 million invested by October 2000, according to Steve Lisson of InsiderVC.com. (By the end of 2001, the fund showed a 10 percent total gain, making each dollar invested worth $1.10; similar funds raised by three other firms in 1997 by 2001 showed 180 percent, 400 percent, and 660 percent gains.) If John Hummer and Ann Winblad had come to the Internet religion late, their conversion made them die-hard proselytizers. Their fourth fund, worth $315 million, went almost entirely to Internet start-ups. "It's like the entire portfolio was made up of dot-com, swing-for-the-fences deals," said one Hummer Winblad limited partner.

Hummer Winblad's debacle would soon be memorialized in one of the best-read magazine articles in the Valley, a snarky January 2001 piece in eCompany Now entitled "Bonehead Safari: My Hunt for America's Dumbest VC." The winner, by a nose, was Ann Winblad. For a venture fund, IPOs were the ultimate goal—a sudden infusion of liquid money that could be distributed back to the limited partners, who could hold on or sell if they chose. Acquisition by another company, also a "liquidation event," was choice number two. There really wasn't much of a third choice. In the two boom years ending in the fall of 2000, Hummer Win-

📸