Beginner's Luck

Chasing big money and even bigger odds, thousands of would-be millionaires have pinned their hopes on a job at a startup. They have poured their souls -- not to mention countless hours -- into making sure that the Internet roulette wheel delivers their number. And while it surely has hit for a lucky few, many people who take full-time jobs with Internet startups end up with little more than a worthless stock-option ticket and a rueful career hangover.

But placing an all-or-nothing career bet isn't the only way to play the Internet startup game. At a time when equity is replacing cash as a currency with which to fund the growth of young companies, free agents such as Rothman are simultaneously getting a piece of the action and spreading their bets among multiple early-stage ventures. Dubbed "venture catalysts," these venture-capitalist-management-consultant hybrids use time (instead of money) as risk capital, negotiating with startup founders who are desperate for marketing, management, and technical expertise, and for whom equity is often the only currency available to buy the help that they need in order to grow fast.

"Having Matt [Rothman] around is like hitting the accelerator," says Peter Mansfield, chief executive at Brand3 Inc., a Los Angeles-based Internet startup that recently gave Rothman a chunk of shares in exchange for his help. "He's got contacts and ideas that we could probably stumble upon on our own if we had the time. But we have a limited window of opportunity." And while Mansfield says that he'd happily pay Rothman's day rate, "the reality these days is that people like Matt want a slice of the action."

In June 1998, when Rothman turned to consulting after a maddening stint leading Sony's online effort, it hadn't occurred to him that such arrangements were possible. The onetime Business Week reporter had joined Sony's New Technologies group as business-development director in 1993. After convincing Sony's Japanese executives to fund the company's first Web site, he drafted a business plan to create sony.com, an informational site that the company launched in 1994. Later, to meet the new demand for e-commerce, Rothman expanded his business plan to create the [ADDRESS], an e-commerce megasite that would pull together Sony's labyrinthine bureaucracy to peddle all of its electronics, music, video, and computer-game products from a single Web address. But just as his 150-person team neared the project's launch, a corporate reshuffling created new leaders -- leaders who were dubious of the security of e-commerce. "I couldn't convince them that it was safe," Rothman says. "They just didn't get it." At the last minute, the retail divisions decided to pull out of the project.

Launched with only video and game sales in 1997, the Station nonetheless grew to become one of the Internet's most trafficked Web sites, with 4.5 million registered users and 500 million pages viewed every month. "But I was a mess," Rothman recalls of his final months at the company's New York City headquarters. "At the height of the launch, I broke out with a terrible rash and was experiencing pain in my shoulders."

Regardless, Rothman's Internet experience had made him a hot property among venture capitalists, who increasingly pestered him with job offers from such promising startups as Bertelsmann's Books-Online, Encompass Inc., and Junglee Corp. Laden with equity, the offers marked an enticing contrast to Rothman's Sony contract, which, despite its six-figure salary, came without stock options. Yet friends in the business advised him to hold out. "Don't knee-jerk out of Sony and take the first brand-name job offer that comes your way," counseled Peter Sealy, a Coca-Cola executive turned venture capitalist who urged Rothman to take a similar path. "You can create your own brand: Matt Rothman Inc."

For a man who had long defined himself by the name-brand business cards that he carried, the prospect of leaving Sony to strike out on his own was unnerving. "All my life, I'd been trained to move from one job to the next and to base my identity on the company that I worked for," Rothman says of his 18-year career in journalism and business development. "I was worried that people would think that I'd fallen off the face of the earth."

While his Sony job was pushing him toward the brink of physical and emotional collapse, the thought of diving into another 80-hour-a-week Internet job was equally chilling. What he needed was a career break. So, after quitting his job in March 1998, he moved to San Francisco, bought a kayak, and began paddling around the San Francisco Bay. "I figured that I'd work part-time and paddle part-time," Rothman says. "But as time went on, my transitional period was increasingly becoming a permanent lifestyle."