Cofounder of and partner at Hummer Winblad Venture Partners, in San Francisco, which has more than $500 million in funds under management today

We raised our first fund -- $35 million -- in 1989. In 1990 we invested $400,000 in a company that had developed software for pen-based computing. It was called Slate, and everybody was seduced by the idea. Even Kleiner Perkins invested in Slate with us. Although we had a great team and a great idea, the timing was wrong. PalmPilots are popular today, but back then people didn't understand the technology or the concept.

We quickly realized that the market wasn't ready. Consumers needed to go through the "we should all think about this" phase, the cost of the devices was high, and embedded operating systems weren't advanced yet.

By 1993 we had invested an additional $700,000 in Slate, but it was clear that it would still take years and millions more in funding for the market to jell. Remember, in 1993 the aggregate invested in all software companies was $500 million or less. In contrast, this year there was $5 billion invested in software and Internet companies in the second quarter alone.

The wait was not worth it. We sold the assets of the company to Compaq for a price that didn't even cover the money we put in. Of course, the pricing of these devices really changed within five years, making PalmPilots possible. The pioneers in the field all popped up in the early 1990s -- and Slate was one of the best. But they all took arrows in the chest. Pen-based computing was the last big field of carnage in software.

Even when you're revolutionizing a whole industry, you want to make sure the market's there. Slate was a great idea with absolutely no market.