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Read an Excerpt
The Dinner Club
(Courtesy The Free Press)
Book Excerpt
Shannon Henry's The Download
TechNews.com

Ordering Info: The Dinner Club


The Download Live: Shannon Henry
Thursday, Nov. 7, 2002, Noon ET

Shannon Henry
Shannon Henry
(The Post)

During the late 1990s technology boom, a group of wealthy investors from the Washington region joined together to invest in the next generation of tech start-ups. The Capital Investors, as the group called itself, was much more than another set of successful executives looking to grow their fortunes. The group was, in many ways, the center of the New Economy storm that transformed a highly government-focused region into one of the top tech centers in the world.

Shannon Henry, a Washington Post reporter who detailed the region's technology growth in her weekly column, The Download, gained complete access to the group's regular dinner meetings, where new investments, politics, market pressures and more were discussed. She was there with the group during the Nasdaq's long slide from tech boom to bust, and she details it in "The Dinner Club: How the Masters of the Internet Universe Rode the Rise and Fall of the Greatest Boom in History." Read an excerpt from the book.

Submit Your Questions and Comments: Shannon will be live online to discuss her book starting at Noon EST on Thursday, Nov. 7. And don't miss the weekly Tech Thursday feature in the newspaper and online.

About Henry

Washington Post columnist Shannon Henry has been covering the local technology scene since 1995, documenting the successes and failures of local tech companies, and the culture and ideas of local business personalities. Her column appears on Thursdays in the Business section of the newspaper, and she regularly hosts The Download Live on TechNews.com, The Washington Post Web site dedicated to covering technology news. Her book, "The Dinner Club," is being published by The Free Press.

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.

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washingtonpost.com: Good afternoon and welcome to washingtonpost.com's Live Online discussion with Shannon Henry, author of the Post's weekly column "The Download." Shannon today is talking about her book "The Dinner Club." We'll take your questions and comments on the book and on the dot-com phenomenon during the next hour. Shannon, welcome to the show, and let's go straight to some questions!


Haddonfield, N.J.: Who among this motley crew was the most difficult to cover? Were you the target of any hostility from the investors while you were shadowing them?

Shannon Henry: Even though I've interviewed him many times, Steve Case was by far the most reticent of the 26 members to be part of this book. I think Case actually saw before most people that Internet CEOs would inevitably be seen as arrogant. And Case is certainly now working on his legacy. The entire group kicked me out partway through my reporting because the stock market was crashing, some of their companies were failing and they wondered why they'd let me hang around in the first place. Ever-changeable, however, they voted me back in at the next meeting.


Silver Spring, Md.: I find it interesting that, as far as I can tell, only once in the book do you explicitly state that not one of the club's investments ever made any money. How important were these guys if they actually failed to pick any winners?

Shannon Henry: There's actually a whole chapter on the group's portfolio, and a chart that shows which companies had gone out of business by the time the book went to print. But it's a great point. These are supposed to be some of the smartest technologists and they have a pretty lousy investment track record -- their deals have so far not returned a penny. They're embarrassed about this. But to be fair, professional venture capitalists investing in startups at the same time haven't done much better.

The Capital Investors have been way, way more successful helping each other through fundraising, votes and personal relationships than in discovering or funding any great new startup.


Alexandria, Va.: Did any of the Dinner Club members read your book before it went to press? Did any of them press you to read it in advance?

Shannon Henry: Such a good question! No, none of them read the book before it went to press. Some of them wanted to, but they probably weren't surprised at my answer because they're used to Washington Post policies of never showing stories to sources before publication. There were no agreements about off-limit subjects, so the members really had little idea exactly how the book would turn out. After the book went to press (when it would be too late to change even the most egregious errors) I did send galleys to several who had asked to read the book before the general public.


Pensacola, Fla.: Hi Shannon. I read the book and think you did a great job capturing the essence of this exclusive club. Which investor from the group was the most difficult to cover? And how did you get them to open up beyond what was said in the dinner meetings?

Shannon Henry: Thanks. Glad you enjoyed it. Case again on the first question. On the second, it was strangely easier after the fall to get people to open up in one-on-one interviews. I think many of the group were trying to understand just what was happening and why they were struggling, and talking about it was almost cathartic. It also helped them a lot to talk to each other -- the club became like a support group.


Tysons Corner, Va.: Of course I have not read the book and I am sure that you have done an infinite amount of research, but do believe anyone outside of the Metro area will want to read this book? Local players such as Russ Ramsey and Raul Fernandez do not carry the weight of "Titans" on a national platform. I think we in D.C. like to think that we are much more of a "player" on a national scale than we actually are.

Shannon Henry: We'll see! My publisher certainly hopes it will have national reach, and the book is being reviewed in national and regional publications. A friend in L.A. just told me the book was sold out in her local Barnes & Noble, so that gives me hope. In the past few days I've done radio interviews in Phoenix, Toledo, Kansas City, San Francisco. I'm not saying in the book that Ramsey and Fernandez run the universe, but that they are representative of the best and worst of this time.


Annandale, Va.: What most surprised you about writing this book? What do you hope people will take away from reading it?

Shannon Henry: How people with years of business experience let the craziness make them do things they knew weren't smart. The massive collision of two major motivations of this time: the goal of changing the world through technology and the greed of making more millions, almost at any cost. When those two motivations collided, fortunes were lost as quickly as they were built.


Akron, Ohio: How hard was it to stay "invisible" while following this group? Did you ever feel as though your presence skewed the behavior of the investors?

Shannon Henry: I thought about that all the time and worried how my presence was affecting the atmosphere, what was said, everything. I'll never know how much it did, of course. But I spent so much time (a year of the dinners) with them that I do think most of them forgot about me after a while. I was pretty much silent during the dinners, taking notes and studying the interactions. I would love to be a fly on the wall at a dinner sometime to see if anything major was different.


Reston, Va.: Shannon, great book! Why do you think the women in Washington have never achieved the same acclaim? WomenAngels.net does not seem to have captured the same energy and neither does RPW. What gives with the women?

Shannon Henry: I've said to several people that after writing a book about an all male group my next one needs to be about women! WomenAngels and RPW have very different missions, but I did go to several of them to see the way women interact and compare it to the Capital Investors. The conversations are completely different. There are some strong women in local tech, including Mary MacPherson, April Young and Esther Smith. But there is still much more work to be done to get women to the highest levels of tech and business...


Washington, D.C.: What has the reaction been from the investors you chronicled? There were certainly a lot of big egos involved of those that were highlighted in the book.

Shannon Henry: It's been mixed. I've heard some like it, some don't like it. Some won't talk to me. I think it all depends on how they personally think they are portrayed.


Arlington, Va.: Let's get right to the point: Did you like these guys? Some of them come of as normal people, but most come off as obnoxious frat boys who managed to get lucky during the biggest boom in American history.

Shannon Henry: Many of them are very much like frat boys. They throw food, they're mean to the entrepreneurs, etc. But these are 26 different people with 26 different personalities. Some of them I like very much and admire what they have accomplished, and some of them, uh, not so much. The personality of the group as a whole can be the most obnoxious of all -- they do feed on each other.


Alexandria, Va.: Having spent time in Austin, Tex., during the boom, I see great analogies (so maybe your book will indeed sell in other markets).

My question is, it seems like the vibrancy has just died insofar as what occurred in the late 1990s in our area, with the shift back again toward traditional occupations, Washington politics, etc. From your interviews do you have a sense of how these people view the current environment, and is there any hope for at least some revival of "the good old days" down the road?

Shannon Henry: Thanks! Hope!

That era certainly is over. Many of those who peaked during that time are indeed looking around, trying to figure out what to do next. I've heard from many of them "What now?" It's still a big question mark, but a much easier road for those who made it big than those who lost their jobs.


Virginia: Any disclosure -- like you got personal with any of them, dating, etc?

Shannon Henry: That would be good gossip. But no, I'm happily married. Reporters tend to be friendly with sources but not friends -- it would make it much tougher when we have to write the bad stories.


San Luis Obispo, Calif.: How would you advise young people to prepare for this 10-minute seachange in their entrepreneurial lives?

I quote from your new book:

Members of the group acknowledge, proudly, that they're a tough audience. "Everyone has already had dinner, these young people come in, and we torture them," admits John Sidgmore. "Their whole life is up or down in ten minutes."

Shannon Henry: I'd advise them to know what they're talking about and know to whom they're talking. The group can be a tough audience. But I was also surprised when presenting entrepreneurs seemed to not know their own competitors, budgets or plans for management structure. And several talked down to the group -- as if these guys had never heard of the Internet. Those presenters fared less well.


San Francisco, Calif.: I knew only one person in your book. Is this a D.C. thing or what? Also, I know you want to carve a piece of history, but that seems like a defensive opinion, because you clearly wanted to show a up-and-coming club. Instead it looks like a bunch of Beltway fools who never made a cent off of investments, plus the book is three years too late. I think you need to do what startup.com did and admit you tried for one thing and come out with something different. It's OK for us to laugh at these fools, right?

Shannon Henry: I don't think it matters if you know the people or not. This book could have been written about a group in New York or Austin or wherever, with a different slant. Contrary to some people's belief, the whole tech rise and fall did not happen in California. Still, sorry you didn't like the book.


Harrisburg, Pa.: Did the people you interview hear the warning signs prior to the recent decline in prices in technology stocks? It is always easier to examine events in retrospect, yet there was an obvious speculative flurry with abnormally high price earnings ratios and great uncertainty over future earnings and the level of new competition. What was the general thinking before the prices finally fell?

Shannon Henry: Some of them did see early signs and began to sell of their stock, particularly if all their holdings were in one company. Others had everything tied up in one basket...and lost it all. They of course look back and think they should have known better. One of the many lessons learned.


Washington, D.C.: What did you think of the investor's plans as they were making them?

Shannon Henry: If you mean plans to invest in a company, honestly, I could not guess what they would choose. It really depended on the mood, the moment, and who was present that night. The one common denominator I found was that if someone spoke out as the first voice after a presentation strongly for or against a company, the group would usually sway that way.


Washington, D.C.: For the question from California. What would the book be three years too late for? History is history recent or not.

Shannon Henry: Well, thanks. I should also say D.C. is not the center of the tech universe either, but one of many regions that saw the good and the bad.


Shannon Henry: Hey, we're all out of time. Thanks so much for the thoughtful questions, and sorry I couldn't get to all of them. Thanks for reading.

Shannon


washingtonpost.com: Thanks to everyone for joining us today. And thanks, Shannon, for the discussion.


© Copyright 2002 The Washington Post Company