Boing! Whiz! Bang! Dunk!

Dancing chefs and blue martinis -- iLounge sounds like a rowdy day of fun and games. But despite its hilarity, iLounge offers some hard-core business lessons for the San Diego start-ups that strut their stuff before local CEOs and investors.

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Start-ups in the San Diego area strutted their stuff at a rowdy day of fun and games -- and lessons -- organized by local CEOs and investors

Onstage, the contestants wear hospital gowns and sit in wheel-chairs. One's head is wrapped in bandages. Another has a charred face and singed hair. "Keep your legs closed!" bellows someone from the audience. So begins the five-minute skit by the founders of SafetyVillage.com. Behind them, two bodacious nurses in too-tight uniforms belt out their version of the theme song from The Flintstones: "Village! Safety Village! We're your health and safety com-pa-ny! Help you! Let us help you! And most accidents won't come to be!" The entrepreneurs-cum-actors then drill through the SafetyVillage.com business plan, hoping not to get "gonged" by the judges who share the stage with them.

What in the world is going on? A play at a halfway house for runaway entrepreneurs? An overdose of dot-com Kool-Aid? Actually, the takeoff on the old Gong Show is part of iLounge, a first-ever gathering led by San Diego entrepreneur Bob Bingham, who is hell-bent on promoting new area businesses -- and who's having a heck of a good time doing it. "This is all Bob," says Stephen Tomlin, a private investor and one of the three "gongers." "It's an extension of Bob's personality."

Since he sold his Web-hosting business, Simple Network Communications Inc., to Broadcast.com in a December 1998 stock deal with a current value of about $200 million, Bingham has become a darling of San Diego's burgeoning Internet start-up community. The 33-year-old has devoted himself to promoting the work of other entrepreneurs. An active angel, Bingham assumed the role of iLounge's "chief kahuna" in early 1999, and he spent the better part of a year pulling together a production reminiscent of Rowan & Martin's Laugh-In. Speakers -- such as San Diego star starter-upper Michael Robertson of MP3.com Inc. -- leaped onto the stage accompanied by zany string music. The emcee, professional performer Anthony Bollotta, sported a pale blue tuxedo and a beehive Afro. And the 550 entrepreneurs and investors in the audience -- 59 of whom bid up to $1,600 apiece for seats in 15 front-row La-Z-Boy recliners -- soaked it all up.

"We wanted to have a lot of audience participation and camaraderie," says Carrie Stone, a partner at La Jolla's Enterprise Partners Venture Capital, who coproduced the program with Bingham and who moderated a panel on funding from a semireclined position in a leopard-print hammock chair. "Our vision was to make this conference more 'edutainment' than anything else."

To be sure, for all its hilarity, iLounge also served up some hard-core lessons. MP3.com's Robertson revealed how he succeeded in holding on to a whopping 40% of his company's equity: by steadfastly going it alone and proving his model in the marketplace, he was able to skip seed-stage financing rounds and hold out for an initial investment of $6 million from Sequoia Capital, which (no joke) approached him. Bingham shared how he bootstrapped his Web-hosting business with a combination of debt and leasing. "You can lease anything," he said. "I found out I could lease the grass in front of my house." And when this reporter asked the funding panel to identify the most persuasive factor for an entrepreneur to cite when trying to get a desired deal valuation, the answer was -- again -- both funny and frank: "The best way to get a valuation from a VC is to have a second VC."

The humor not only kept the audience in stitches but also tempered some brutal honesty. That was most evident during the "gong show," when executives from seven start-ups, including SafetyVillage.com, put themselves through all kinds of foolishness to compete for $10,000 in real prize money. Selected from a field of 21 applicants by the Entrepreneurial Management Center at San Diego State University, the contestants had been informed that they would be judged on the content and the commercial value, as well as the style, of their presentation. Or, as the emcee put it: "Each contestant will have five minutes to convince our judges that their model Internet start-up plan is more than just a smoke screen."

"Each start-up gets five minutes to convince us their plan is more than a smoke screen."

First up was a trio of dancing chefs who wielded enormous barbecue spatulas and regaled the audience with a promotion for Dine Out Discounts. Dine Out Discounts' CEO, chief technology officer, and chief operating officer bounced around the stage (sidestepping the four-foot-tall gong) and invoked every cooking clichÉ in the book as they described "a one-stop shop for restaurants and restaurant patrons." Dine Out would feature online menus, reviews, and an electronic reservation and mapping service.

The soothing strum of harp strings in the background signaled that the chefs had made it through their pitch and were ready to move on to the Q&A. That's when Dine Out Discounts' prospects soured. The contestants explained that they intended to market their service to restaurants by hiring "a massive sales force," which provoked big-time boos from the audience. Indeed, gonger Tomlin -- who in 1998 sold the start-up he'd cofounded, PersonaLogic Inc., to America Online Inc. -- subsequently drubbed Dine Out with a meager score of 2 (out of 10). The monumental effort required to sign up restaurants would take too big a bite out of profits, Tomlin explained. "My stomach turned when I heard the sales-and-distribution model."

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