A Deal Is Done; Trippy Web 2.0 Party at Temple
In late April 2008, I sign a Letter of Intent to sell ReadWriteWeb. Also, I attend a Web 2.0 party in San Francisco where everyone seems high but me.
Early on Thursday morning, after a phone call with Bernard on the East Coast, I sent my email ultimatum to CMP/TechWeb. “I’ve given this a lot of thought over the past 12 hours or so,” I wrote, “and it really is time for me to make a decision.” I asked for “a firm, signed, LOI” [Letter of Intent] before 9:00 a.m. on Friday, or I would “need to withdraw from these negotiations.” I proposed a number equal to ZDE’s in their LOI, with half on closing and the other half on a maximum two-year earn-out. I added, “It is simply not viable for me to follow the timetable we discussed yesterday” (in the end I opted for subtlety and did not mention the restaurant incident).
I forwarded the email to Sean Ammirati and gave him my blessing to have a private word with Bob or Fritz if he wanted to, although I said there was “certainly no pressure from me to do it.” I knew he enjoyed being a part of these negotiations, though, so I was pretty sure he would talk to Bob. He emailed back and confirmed my hunch. He also asked if I was intending to sign with ZDE if CMP didn’t match. I confirmed that yes, I would sign with ZDE if CMP wouldn’t “come to the party.”
After I’d sent the email, I felt like a small part of the pressure had been relieved. I couldn’t do any more. It was now CMP’s move.
That evening there were a couple of parties to go to. The first, by invitation of CMP, was their “VIP party” at the trendy Temple nightclub in San Francisco, which was “exclusive to a select 200 people” (mostly Web 2.0 Expo speakers and sponsors). The other party, held at the same time, was hosted by Netvibes at Minna Gallery and would be attended by many of the conference attendees.
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Sean and I went to the VIP party. Sean told me there was a good chance we’d talk to Bob and the CMP team privately tonight. Frankly, I didn’t think there was any point in yet another meeting—I just needed a firm offer on paper the following morning. I wasn’t in the mood for more feel-good discussions about the synergies of our partnership. However, I recognized the need to keep schmoozing for one more night.
When we entered Temple, a DJ was playing an up-tempo electronica set. It was, as advertised, a smaller, more intimate crowd than the usual Web 2.0 conference parties I’d attended to that point. We saw Tim O’Reilly talking with a group of his people near the bar, and Sean indicated we should go say hi.
It seemed to me that Tim was rather high. As we shook hands, he said that seeing me was like looking in a mirror. I wondered if he was referring to the ambition I’d voiced to Tony, Bob, and Fritz during the negotiations, to be Tim’s sidekick in the Web 2.0 conferences. He was almost certainly aware that I was in talks with TechWeb. Otherwise, it could be a comment on my being a kind of poor man’s O’Reilly in some of my blog posts—the theorizing about Web 2.0 and the trendspotting I was known for. Either way, I was flattered that Tim O’Reilly had compared me to himself, however obliquely.
We didn’t stay chatting for long, as everyone around us was on a high and just wanted to party. Maybe it was simply Web 2.0 exuberance? In any case, we soon saw Tim and his friends on the dance floor. Tim had shown off his hippie dancing at the Lou Reed concert during the 2006 Web 2.0 Summit, and I recognized similar moves happening now.
Sean and I looked at each other with bemused expressions. The vibe at this VIP party was odd—it felt like we had missed out on a substance secretly handed out at the door or over the bar. Most of the people here seemed to be tripping out on something. I was beginning to think we didn’t belong here, at this exclusive insider event in the heart of San Francisco. Yes, we were technically VIPs, but only because of the unconsummated deal with CMP—we wouldn’t have been invited otherwise. I felt like an impostor, a “straight” wallflower looking on while blissed-out Tim O’Reilly let loose on the dance floor.
We soon spotted Bob and Fritz, who steered us to a private booth so that we could chat. As expected, there was no news to report from UBM, their head office in London. The only new detail I gleaned from Fritz was that the upfront offer would definitely be no more than $1 million and they hadn’t yet arrived at a figure for the earn-out. On hearing this, I couldn’t help but let my exasperation show. I told them that my expectations coming into this week were that I’d have a decision by the end of the week, and yet we had made zero progress on numbers—in fact, it had gone backward! Fritz gave me a helpless look, but he promised to send an official offer by tomorrow morning, as per my request this morning. I just nodded. Inside, I knew this wasn’t going to happen with TechWeb.
I didn’t think there was any point hanging around at the VIP party any longer. Whatever drug the true insiders were on, it had put them on a different wavelength for the evening. Sean and I made our way to the Netvibes party. There would probably be RWW readers and sponsors there, I said to Sean, so it’d be good to show my face. Plus, I wanted to have a beer or two and relax a bit before the big decision day tomorrow.
Barring a miracle with CMP, I had decided I would sign with ZDE.
First thing Friday morning, I went to the Web 2.0 Expo and half-heartedly watched the keynotes. I was feeling like a zombie—the week had been long and (to this point) unfruitful on the business side. I had scheduled an interview with Sun Microsystems CEO Jonathan Schwartz at 9:55 a.m., after his onstage Q&A with Tim O’Reilly. I had my crowdsourced questions, and I made note of what he said to Tim, so I was prepared in that sense. But, of course, I had other things on my mind. I had not received anything in writing from CMP by the time I made my way to the meeting room backstage, where I’d be meeting Jonathan. So I was mentally preparing to contact ZDE and tell them I’d be signing with them.
The interview was not one of my best. Sun was known for its computer servers and workstations, the Java programming language, and various pieces of infrastructure software. None of this was of particular interest to me, so I stumbled my way through the interview. Jonathan humored me on a few of my web-related questions, but fortunately he had his own talking points that he wanted to hit—the phrase “the network as a social utility” was deployed—and so we got through it. But I was relieved when it was over. (I would discover a few days later that I had somehow forgotten to save the audio recording, so I never did write it up as a post.)
I was heading to the press room when I bumped into Fritz in the hallways. By now, it was midmorning, so I wasn’t expecting good news. But he said that CMP was going to email me an offer in the next ten or fifteen minutes. Their finance guy, Pat, was just checking the final details with Tony Uphoff. He patted me on the shoulder encouragingly and walked off.
I was a little dazed, but I went into the press room and immediately messaged Bernard. “It sounds like it could be a LOI, but we’ll see,” I wrote. I decided to go back to my hotel room so that I could focus on whatever CMP was sending me. I also needed to check out by midday.
The email arrived as I was packing. It was even more of a disappointment than I’d expected. The upfront was $1 million (half of what ZDE had offered) and the earn-out $2 million. So their $5 million email offer just a couple of weeks prior had turned into a $3 million email offer. To make matters worse, it still wasn’t an LOI! “We realize you need to make a decision soon and we hope you consider the proposed framework and we will communicate a more formal position as soon as possible but no later than Monday,” the email finished.
I messaged Bernard, expressing my disappointment with CMP. “I’m now going to move ahead with ZDE,” I wrote. “That’s a straightforward decision now. Can’t delay any longer.”
I had been keeping in touch by email with Kobi Levy from Insight Partners throughout the week. He hadn’t put any pressure on me to sign—in fact, on Thursday he’d told me that “if you need a few extra days to think then that is ok too.” However, now that CMP was out of the running, I just wanted to sign on the dotted line with ZDE.
I emailed Levy, Weitzner, and Azzara: “I’m very pleased to say that I’m now ready to sign the LOI and proceed to the due diligence stage! I am excited by the possibilities of our two companies working together and very much looking forward to closing this deal within the terms of the LOI.” I added that I would go home to New Zealand first, and then prepare for a visit to New York within “the next 2-3 weeks.”
But the drama for the week wasn’t quite over yet. My hotel for some reason didn’t have a printer, so I hadn’t been able to get a paper copy of the LOI. This was in the era before e-signatures, so printing and faxing were still a thing. In my email, I asked if Mike Azzara was still in town—if so, could he print out the LOI and meet me that afternoon?
I followed up with a phone call to Levy. His first idea was to fax a copy of the document to the hotel, but I told him I was about to check out. He then said he’d send someone to meet me in the afternoon. I had an evening flight back to New Zealand, so I had until the end of the afternoon to sign the LOI.
Once I’d checked out of my hotel, I went back to the Web 2.0 Expo and wandered around the exhibits for a while. All my RWW colleagues had left by this point, so I was on my own. I don’t think I stopped at any of the stalls to talk to the startups. I just needed something to do while I waited for the ZDE document to turn up, so I walked around the expo hall and tried not to make eye contact with anyone.
Eventually, Levy called and told me he was sending a guy to a café in the Metreon, a nearby food and movie-theater complex. I made my way over there and nursed a coffee until the delivery man came. I don’t remember anything about this person—whether he was a ZDE employee or someone connected to Insight Partners—but in any case, the transaction was quick. He handed me a folder with a printout of the LOI. I checked that it was the same as my electronic version, I saw the required signatures, and then I tiredly put pen to paper.
The deal was done.
Lead image: Invitation to the VIP party at Temple.
This post is part of my serialized book, Bubble Blog: From Outsider to Insider in Silicon Valley's Web 2.0 Revolution. View table of contents.
Next up: 031. Due Diligence Begins in NYC; RWW Gets a Media Award
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