The Launching Fad

A next-generation start-up plays the fortune game

INVESTOR RELATIONS

In the bathroom, a lawyer from a nearby office approached O'Shea. "I see all the computer boxes. It seems like you're doing well," he said. "Do you need a patent lawyer?" Another offered to write the business plan.

One friend of RedFilter—and these days friends seem to be coming out of the urinals—brought around a seventysomething financier we'll call Oscar. Oscar had experience taking companies public—in fact, he had one poised to IPO any day—and was interested in having RedFilter in his offices for a longer conversation.

O'Shea decided to take him up on the offer, accompanied by Weiss and RedFilter's 24-year-old Russian CFO, Ilya Gertsberg. Gertsberg, who works full-time at a major investment bank in mergers and acquisitions, drew up the company's seven-page executive summary. "Ilya is sick with finance," Weiss says.

Gertsberg would later describe this meeting with Oscar as "their first take-over offer." Oscar didn't want to sign the nondisclosure agreement about RedFilter's technology, so they spoke in broad strokes. Oscar also didn't want to speak in broad strokes, so he cut to the chase. He told them not to talk to any more investors; he'd give them $500,000 right then. Oscar proposed that RedFilter go public immediately—without even knowing just what the company did.

RedFilter walked. "We have $500,000 available to us whenever we need it" from one of the company's first "angel" investors, says O'Shea. Angels are wealthy entrepreneurs, some having gone the start-up route themselves, who can take a company from five-or six-digit financing to seven or eight digits. RedFilter's big supporter is a dentist who got in on 1-800-DENTIST, and now he wants to "get an eye on a start-up company," says O'Shea. "He doesn't really care whether we succeed or fail. He's interested in the dynamic."

PLANT LIFE II

"I think that they are trying to start a business and they are interested in making some money. Listen, I spent a lot of time on the Web over Christmas and I didn't do very well. I tried to buy something and I couldn't check out. It was pretty frustrating. I tell William and he just chuckles." —Gwen O'Shea, William's mother, on what RedFilter does

"He was always very tenacious. I think that was his teacher's description of him in kindergarten. In high school, he was the editor of the opinion journal. There was a lot of responsibility there." —Bill O'Shea, his father, on William's previous management experience

"We started out at 24 years old with our own business, a retail floral shop, and it's something that we've always done. It's lasted us 30 years and been very good to us. Bill is only 23, so he has a jump on us there." —Gwen

"I love the office. I love seeing young people striving and looking for something good to come out of it. We brought in a big snake plant and a Draceana—we wanted some plants for the low light, ones that were capable of withstanding office situations where you have a dry, central heating situation. We tried to pick the hardy plants." —Bill

"I hope the plants are still alive." —Gwen

"You know, by the way, we have our own Web site, flowers-gifts.com." —Bill

RECORD OF ACTION

The RedFilter team hops the J train and heads up to Tonic, where they're meeting with Gary Hustwit, who runs Incommunicado, the bookstore in the front of the club. Hustwit has a new Internet venture, a site for spoken word readings and "books on tape" in the MP3 format, called MP3Lit.com. RedFilter is looking for a site "partner," which is basically their way of getting in the door.

Weiss set up the meeting with a cold call. "The real reason behind the visit is so that when we go in to pitch VCs, we can show a record of action: that we've written 5000 site reviews, developed this technology, and got the following partners," he says. As it stands, they have about 3000 sites in the database, no technology yet, and two partners. Just what exactly the partners are for is not yet clear.

Hustwit takes them downstairs. The meeting begins inside a giant wine cask bathed in red light, like a fashionably retrofitted Disneyland teacup. What becomes immediately apparent is that this is less of a business meeting than the consultation of an oracle. Hustwit has a fully functional site. Hustwit turned a wine cask into a little cave of style. Hustwit is talking about bringing in an outside CEO because VCs are looking for a CEO "who is not just the founder." O'Shea nods along. At some point, the words "30 percent of a 30 billion dollar company" are spoken. The two companies decide not to decide anything, but to "let the conversation continue."

As they leave, Hustwit tells them, "I think RedFilter is a great idea. You guys are not going to have any trouble getting a lot of money." This is coming from a guy who is a maestro of hip—he launched an alternative press, a bookstore, and now a new company—and he's telling them they have a great idea? Can he possibly know how much that means to this company, the consequences of a compliment?

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