Beginner's Luck

Within weeks of his move, Rothman was hired to help Ericsson and Visa International develop their Web strategies. Soon a venture-capital friend engaged him to write a business plan for Protozoa Inc., a 3-D animation company that produces the technology used by the BBC, Disney, and MTV to make television cartoons. While the company was succeeding in the broadcast industry, it needed an Internet strategy. So Rothman crafted a plan to marry the company's software with a data-streaming player that would allow animated cartoons to be played on the Web.

The plan called for the company to establish a new division -- which Rothman dubbed DotComix -- that would produce cartoons, and license and distribute them to entertainment Web sites, thus creating an entirely new revenue stream for the company. Devoting a mere two-and-a-half days a week to the project, Rothman soon put his plan in motion by securing an investment from Intel Corp., whose soon-to-be released Pentium III chips really showed off the power of the DotComix animation. He then forged distribution agreements with such companies as Excite, Snap.com, and Time Warner's Entertaindom.

Protozoa's board of directors was thrilled. And although Rothman's per diem contract had called only for cash payments, the board soon announced that it would grant the fledgling consultant a package of stock options. "That changed everything," Rothman says of the day, in the fall of 1998, when the company's founder informed him of his first-ever equity stake. "I realized then that I could have a big impact on a company without having to sign on full-time. And I saw an incredible opportunity in working for venture-backed startups that could give me a piece of the action. I never worked for a big company again."

Since that day, Rothman has received six more consulting-for-equity stakes in early-stage e-commerce, wireless, and business-to-business startups, steadily refining a strategy not unlike that of the venture capitalists who have brought him many of his clients. Says Rothman: "What I look for is what they look for: a terrific concept that has enough revenue potential to give the company a billion-dollar market cap, an intelligent team that can go out and execute that idea, and smart money willing to bankroll it."

Rothman believed that he found most of those qualities when Robert Goldman approached him last spring about GetMedia, the music-buying service. "Here was a very smart guy with a very elegant e-commerce solution that had lots of revenue opportunity," says Rothman. "He already had some seed-round money, but it was obvious that he was going to need more funding -- and fast."

Rather than impeding things, Goldman's lack of financing presented Rothman with a timely opportunity. Convinced that he could sway his venture-capitalist colleagues to back GetMedia, Rothman proposed a consulting contract that would exchange half of his $2,000 daily fee for shares that would immediately become vested. Goldman was happy to oblige. "Paying him partly in equity was a way to make sure that our interests were totally in sync," Goldman says. "Now he's playing the odds with the rest of us, and he's betting his own money on the quality of his results."

Rothman quickly embarked on a two-pronged plan to ensure that his bet would pay off. First, he refocused Goldman's pitch, turning it from one that featured GetMedia's whiz-bang technology to a more market-driven approach that showed why the consolidating radio industry needed revenue sources like GetMedia's buy button. Then, while he and Goldman arranged meetings with venture-fund managers, Rothman made a hit list of the nation's biggest radio stations and began forging marketing deals that would give each station a portion of the buy-button profits. "Every time that we'd sign another marketing agreement, we'd up the number of radio stations in the investor pitch," Goldman recalls of the marketing list, which soon ballooned to more than 1,000 radio stations. "The more stations we had, the better we looked to the investors."

Then, last August, they inked the Microsoft deal. And suddenly, GetMedia's founders were in a position to pick and choose among more than a dozen eager-to-invest venture-capital firms. Flush with $10 million in funding from leading VC firms, GetMedia's first-round venture funding closed a month later. Thanks in part to the marketing deals that Rothman had spearheaded, the backers now valued the company at $34 million, tripling the worth of his shares after only four months of work.

With swarms of equity offers from other companies eager to receive his help, Rothman has continued to add to his portfolio. While only one of Rothman's investments has yet to yield an IPO payout, the cash portions of his consulting contracts have kept food on his table. And, because his schedule is flexible and part-time, Rothman has ample time for kayaking -- and none of the anxiety that comes with putting all of your IPO chips on one number. "I'm pretty confident that at least one more of my holdings is going to pop," he says. "And if none of them do, then I can always go back to having a real job."

But he doesn't expect to do that anytime soon. Strategically positioned in what he calls the "equity economy," Rothman believes that the opportunity cost of taking a full-time job has never been greater: "If I invest all of my time in one company, a lot of factors that are beyond my control could wash me out. So why gamble everything on one company when I can spread my risk with a mutual fund?"