Beginner's Luck

But not the timing seemed right. While Rosmarin was looking for a way out of his job, Landress had already struck out on his own. Now 38, the investment banker had relocated from New York City to San Francisco in 1997, taking a lucrative job as managing director of Bank of America's investment-banking group. But an unexpected corporate merger with NationsBank led him to cash in on a generous golden parachute in March 1999. And although he'd received a flood of calls from headhunters, he'd become captivated with the growing Internet frenzy and decided to take time off to develop his own ideas for starting a company.

So when the two met up at a party in April 1999, Rosmarin sprung his brainchild on his friend. "I know this guy who's got this great idea," Rosmarin said as he proceeded to explain the online-appraisals concept. "But he needs someone with your expertise to take the helm. What do you think? Do you want to meet him?"

"Definitely," Landress replied.

"Great," said Rosmarin. "You're talking to him."

The more they vetted the idea, the more excited Rosmarin became. Within a week, he had plunked down $70 to secure an Internet domain name -- eppraisals.com. Landress, meanwhile, was having some doubts. While he liked the online-appraisals idea and thought that the moniker was as good as any, he questioned whether the business could deliver the fat financial upside that he was looking for. "If this was going to be our big swing for the fence, I figured we should each have some reasonable chance of landing a $10 million payday," says Landress, who guessed that their chances of reaching that lofty goal were, perhaps, one in 10.

He had done the math. Unlike this friend, who would merely be giving up a moderate salary at a flailing company, Landress would have to turn down job offers with salaries that neared seven figures. "I approximated my opportunity coast at somewhere around $1 million a year," he says. "So if I was going to do this for three or four years, while betting on a 10% likelihood that it would fly, then the payday had to be big." In other words, if venture capitalists, investment bankers, and the litany of others who'd likely get their fingers in the equity pie left him with, say, a 10% piece, then the company's stock would have to be worth at least $100 million for him to achieve his goal. And, says Landress, "It was hard to imagine having an online-appraisals company that was worth that kind of money."

Poring over anything that he could find that might yield a clue as to how he could make the most out of his friend's idea, Landress picked up a copy of Bloomberg by Bloomberg (John Wiley, 1997), an account of how Michael Bloomberg turned his Web site, Bloomberg.com, a niche provide of real-time stock-market news, into one of the nation's biggest financial-news organizations. "That's when the lightbulb went off," Landress says. Bloomberg's story, he realized, could serve as a blueprint for his own business. "If he could build a multibillion-dollar business providing stock-market information, why couldn't we do the same in the online-trading world? We could be the Bloomberg of the personal-trading market."

Landress soon formulated a business plan -- one that expanded Rosmarin's online-appraisals business into a broad news service that would track online auctions in the same way that Bloomberg tracked the stock market, providing detailed charts, graphs, and news reports on everything from used computers to Beanie Babies. Estimating that the online trading market would soon swell to more than 10% of the $180 billion person-to-person trading market, Landress compared the company's potential to that of established financial-news services such as Bloomberg and Reuters and came up with an estimate of what eppraisals.com's market capitalization could one day be worth: upwards of $1 billion.

Convinced that the company's core business had now outgrown Rosmarin's original idea, the partners renamed their endeavor OOMA.com (an acronym for "objects of my affection") and set about putting the finishing touches on a 50-page business plan. Landress then set up meetings with more than a dozen investment-banking, venture-capital, and dotcom colleagues back in New York City. "The response that we got was amazing," he says of the five days that he spent delivering the OOMA pitch last July. "At one point, one of the investors who had read the plan called my parents' house and said to my mom, 'Your son is going to make $100 million!' That was incredibly validating."

Yet the validation, which included commitments for nearly $3 million in seed funding, could hardly guarantee the company's success. A spate of new sites that aggregated auction listings and combined them with market news had popped up on the Web, and several had announced multimillion-dollar venture-capital investments. Although none of those sites offered the detailed pricing analysis that would distinguish OOMA's service, it seemed only a matter of time before they caught on to the idea.