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take off. “People were just awakening to the possibilities,” he said. In 1996, Lilienthal founded Nascent Technologies to develop a Web-based e-mail system. Nascent gained traction but was caught off guard when Hotmail launched a similar Web system for free. Lilienthal deftly switched gears and began working on a PC-based version, and the company recovered.

By 1999, at age twenty-six, Lilienthal had sold eighteen-employee Nascent to CMGI, the Boston Internet holding company in the process of spending billions of dollars acquiring everything from the AltaVista search engine to the naming rights to the New England Patriots’ football stadium. He was looking for something new when the phone rang. “Sean Parker called me up out of the blue and said, ‘My friend and I are about to launch a really cool service for sharing online music,’” Lilienthal said. When Parker asked Lilienthal if he would help, Lilienthal asked a few more questions. He didn’t get many answers. “You guys need a lot,” Lilienthal told him. “You need a business plan, and you need investors.” Don’t worry, Parker told him. “We’re working on it.”

Lilienthal was intrigued, and he wondered if he should sign up to run Napster. “There was no question in my mind it was going to be huge,” Lilienthal said. “There was just a question of was it going to be legitimate.” He soon called a college friend who had been one of his early backers at Nascent, New York investor Jason Grosfeld, and told him what he knew. Grosfeld had analyzed investments for Black Rock Financial Management and then specialized in technology stakes for a hedge fund. He had just started his own fund and was looking for ways to take advantage of the trends toward broadband connections and increased desktop processing power. If Lilienthal believed in Napster enough to run it and everything else checked out, Grosfeld was willing to put up the seed money as an angel investor. (Angel investors usually invest less than $1 million of their own money in early stage companies, while venture-capital firms come in later and can put in tens of millions of dollars supplied by pension funds, endowments, and wealthy individuals.)

Within a week, Lilienthal and Grosfeld arranged a visit to the Napster office in Hull. Lilienthal came over from Martha’s Vineyard, where he had been vacationing, and Grosfeld flew up from New York. A strange scene greeted them. The office was in what appeared to be a dilapidated

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