Can Silicon Valley keep its dotcom crown?

Source: Technology Digital

Date :11/16/2007 9:31:34 AM

John O’Hanlon talks to Brett Bullington about funding start-up companies and whether his native San Francisco can hold its position as the dotcom center of the universe

Silicon Valley, it seems to me, is as much an idea as a location these days. I am mildly astonished it hasn’t attracted the attention of movie makers more than it has because if anything was ever multi-layered then surely it’s the national park that used to be called the Valley of Heart's Delight. If you’re looking for a scriptwriter, Stephen, call me.

By John O'Hanlon

It may be easier to appreciate the Valley’s mythic and symbolic qualities from afar, but I soon realized that for Brett Bullington, a Californian born and bred, it still looks like a very special place: a place where the laws of the universe are suspended and alchemy is possible. I really don’t want to get too fey about this, but I can’t help being attracted by the image of a city frequented by angels whose touch changes lives.

For Brett Bullington is an angel, of the business variety. One of those fortunate, detached people who have made enough money to be able to give up the corporate life, the uniforms and routines that go with having a ‘day job’, and organize his life according to priorities. These seem to be clear – at the top his family; then the multitude of businesses in which he is an investor, board member, advisor; then of course the next idea, the next investment, the next passion.

Funding and futbol

Like Carolina for Kibera, a charity founded in 2001with the object of preventing ethnic and religious violence in the deprived Kibera quarter of Nairobi, Kenya, through a community-based sports program and improving healthcare, sanitation and the quality of life there.

Three Fs came together for Brett when he was planning a trip to Africa last summer, family, football and funding. “Whenever we travel, somehow a futbol, or soccer ball, is involved,” he confesses. In getting ready for this trip he came across this particular charity, met its founder Rye Barcott (a former UNC undergraduate).

Soon he was out there, seeing its work for himself, interviewing staff (you can see his interview with pharmacist Frederick Ocheng here - and learn more about CFK) and watching his 15 year old son Kyle play soccer with the local lads. “Now I am an advisor to CFK and helping them to raise some capital for their programs,”

Does having values make Brett an atypical internet entrepreneur? At any rate it shows that you don’t have to be a complete weirdo. Brett did a political science degree at UC Santa Barbara, then moved to Berkeley California. Like many of us his first thought was that he should make practical use of his qualification, so moved on to an internship with the US Congress.

That was when the maverick in him came out and the deity who laughs at our careful plans took over. “While I was figuring out what I really wanted to do, I did some temporary work, so I worked as a tool die operator, and a drill press operator and a machine tool operator.”

He enjoyed this hands-on stuff, so when a manufacturer of electronics needed someone to help design some tools to finish sheet metal components; he found the challenge “right up my alley”.

It was only a six week project, but during that time he got to know the founders of the company, who invited him to stick around, just until he worked out what he really wanted to do next. It wasn’t a firm commitment on either side, which is probably one reason he was sucked in, as he puts it.

That was a hardware company. The next jump was over to software, though there wasn’t as much of a difference as you might think. “A lot of the processes were similar, but then this was expensive business software. It was a long way from the internet business proposition, and in any case the forecasts around software companies are very different from the device business I started in,” he admits

The company was sold to Computer Associates (where Brett later worked as Vice President), upon which he worked in a couple of small companies that developed service based software application and, as he puts it, “fell into the internet.”

Exciting times

Falling into the internet happened at Architext Software Inc, founded in 1994 by another political scientist Joe Kraus together with Graham Spencer, a Stanford Computer Science graduate. With Brett’s guidance as executive VP, Architext evolved into Excite, a multi-source portal site that became one of the most recognized brands on the internet during the dotcom boom of the 1990s, valued at over $6 billion at its peak around 1998.

When Kraus and Spencer set up JotSpot, subsequently sold to Google, the former was able to say: “I like balancing experience with new ways of seeing the world. At Excite we got very lucky in hiring Brett Bullington. He could imagine other ways of seeing the world, and he could spot that talent in others.”

What is popularly called the dotcom bust was in reality nothing of the sort, he insists. “Basically, I don’t think in reality we had a business bust, but we did have a user bust. It’s like the housing crash today; you don’t have enough buyers to sustain the market. In the internet bust the traffic grew, so that people continued to use the internet in increasing numbers.

But suddenly a lot of people questioned the business model and the value that was being put on these companies, and it put a lot of pressure on them to perform like traditional companies. But the customer base grew dramatically. In fact it probably was the best time to buy an internet company because you could buy them very cheaply at that time!”

Unnatural thinkers

13 years at the executive directorial level prompted Brett to reconsider, once again, what he really wanted to do. “I decided I wanted to be around my home a lot more, so I started working on a different way of doing things. I became an angel investment advisor working with venture capitalists and new businesses entering the first round of funding.”

In the early days he focused on companies that were looking for the first capital injection needed to get their product off the drawing board and, hopefully, in front of their primary market. Later he moved on to help some of those companies that had survived the first round and were looking to take the next step toward expansion. “When a company is on a growth curve, it needs the experience of somebody who has been in that growth curve himself, to help them through that stage in their development,” he says.

Brett has sat on the boards of many such companies, including Cameraworld which was sold to Ritz Camera, Music Match and Flickr, both sold to Yahoo! Homegain, sold to Classified Ventures and the aforesaid JotSpot.

All of this can be researched. It’s enough to say that Bullington is a man with his finger on the elusive pulse of Silicon Valley, so what I really wanted to do was to put it to him that Bob Metcalfe’s dictum to the effect that Silicon Valley is the only place on earth not trying to figure out how to become Silicon Valley – is outdated because its virtual dimension, its mystique if you like, can now be re-created anywhere in the world.

Where anything can happen

But he still thinks that the Valley’s culture is unique, though it is no longer about, crudely, critical mass of a certain kind of expertise. “I think it’s true to say that in Silicon Valley you get a lot of people who have e-business experience, but it’s also true to say that there are a lot of unnaturally large thinkers around here. That is to say that Silicon Valley is a place anybody can come to, from anywhere in the world, and have an impact. I think that may not be true of a lot of other places. You don’t have to have any formal education.

“There are very few places on earth where someone will give you $5 million to develop a company and a product when you’re not sure what the customers’ habits will be, and you’re definitely not sure how you are going to make money out of it. It takes a certain leap of faith from investors to start a company like that, and I think this is one of a small number of places where that can occur.”

There’s something about this part of California, he believes, that accommodates the kind of person who will leave a successful job and go to a startup company. Maybe he is motivated by the hope that he can make more money this way, but just as often, Brett thinks, it is because he or she simply wants to run his or her own show. “I would say that’s fairly common. It’s takes a certain kind of personality to jump into a startup that’s ready to take risks, that might not have enough infrastructure, and that does a lot of stuff on its own.”

Back in the 1990s, there was no business model to apply to the internet, he says, and the accountants were looking to display advertising as the only revenue stream they could understand.

The success of Silicon Valley seems to boil down to the toleration of disruption. In fact, it has often seemed to me that the corporate world has to find a way of coping with disruption if it is ever to embrace systematic innovation – and that’s not really in its DNA. Certainly, Brett feel’s that he is safe from headhunters these days. “They think I’m too disruptive.

I’d never survive. There are certain people who can work in big companies, and there are certain people who can’t. These are the entrepreneurial, doer types who want to get involved. People like these generally tend not to thrive in a large corporation. Each business has certain habits of behavior, and it’s hard to change those behaviors in companies that have been around for a long time.”

A time to dream

Pointing to the way the internet has disrupted retail, music, television, news organizations, telecommunications, banking and almost anything else you can think of, Brett Bullington seems to be saying that times have never been better for visionary thinkers and even dreamers.

“Sometimes they don’t even know what their unique selling point is. Some of these guys start with an idea, and the only response is to get behind them and see where they are going with this. Oftentimes companies are funded to do one thing and end up doing something completely different because the marketplace morphs or gets bigger or the technology changes.

Google itself is an example of that. In their original model they didn’t take advertising into account at all, and now it’s one of the largest advertising companies in the world. That wasn’t inevitable though. If it hadn’t been picked up by AOL and Yahoo for its search capability, I don’t think Google would be in the position it’s in today. And in the end Google figured out the search business model that better than anyone else, executed against it very well, and of course it turned into a phenomenally great company.”

From the angel’s vantage point it is a question of working with the founders – the ideas people – to develop the idea into a business model, and work out how much capital they need, he says. “From there you have to decide whether it’s a company that can be funded to the tune of $500,000 or $2 million to get started.

Then we try to help them to raise the money to do that and then try to get the right venture capital company together with them. Our goal is to get them into a position where they can effectively get the product to market and iterate on that to make sure they have the ability to build a big company.”

It is hard to build a successful medium size company, he admits – by which he means one that can be sold commercially for the relatively modest sum of $30 or $40 million. That is a success. Most startups fail; the ability to put them behind one and start again is one of the unique strengths of Silicon Valley.

The place has a lot going for it, and he thinks it will still be able to offer his kids, now two and 15, plenty of opportunities. “California has a huge network of people from China India, Europe, all over the world. That kind of cosmopolitanism is an opportunity in itself, which is why one of my kids is learning Spanish in school, and the other Mandarin.

“The world will be a different place for the next generation of kids. They are going to be using public networks much more. They will be able to make use of 24/7 mobile devices not just to connect with their friends in real time.

They can go into the city and say to the network, ‘I’m here, and I want to get there’ and it will show them where they are and where they need to be. And of course they pay their way to do all that. I think that the ubiquity of technology is already defining the structure of their lives.”

Come to think of it, having Brett Bullington as your dad must be rather like being the child of a record producer in my day – it must be hard not to be cooler than your parents.