Letter From Silicon Valley

Inc doesn't normally publish wedding announcements, but it's so hard to get space in the New York Times. So here goes.

Hear ye, hear ye: In the spring of 2002, Qbiquity Corp., a developer of viral-marketing software, was joined in corporate matrimony to Collabrys Inc., a purveyor of consumer-intelligence applications. Four-year-old Qbiquity is a graduate of the dot-com boom and a pioneer of Internet-based tell-a-friend marketing campaigns. The couple plans to live in a shiny office on San Francisco Bay and has already been blessed with a new round of funding. In lieu of gifts, donations may be sent to Qbiquity's founders -- Andrew Raskin, Zen Ohashi, and Shanti Bergel -- who didn't get much of a dowry.

Pardon me while I wipe a tear from the merger documents.

I have not been actively involved with Qbiquity -- nÉe Gazooba -- since the fall of 2000, when a "professional" CEO replaced me. Still, I have assiduously chronicled the company's upbringing in the pages of this magazine, and it seems only fitting that I describe its recent walk down the aisle.

The courtship began last fall. At the time, Qbiquity was operating on-line marketing campaigns for, among others, a large hotel chain and a major credit-card company, but cash was running low. With another round of funding unlikely, the venture capitalists were looking for a buyer. After making a small investment that amounted to life support, they laid off most of the staff (including my successor) to reduce the burn. And they charged Eileen Gittins, a noninvestor board member I had recruited early on, with chatting up potential suitors.

The parents, of course, are always the last to know. I first heard about the impending acquisition in December, when I received an E-mail message from Scott Swimley, the executive-search guy who had introduced me to Eileen. "Sounds like Gazooba (better name) is going to find a home," he wrote. "I'm pleased that you will see some financial return on all of your blood, sweat, and tears. What [sic] up for the holidays?"

It was nice that someone noticed how freely I had given of my bodily fluids, but I knew there would be little return on them. Follow-on rounds had diluted my percentage, and the exercise deadline on my options had come and gone. (In October 2001 it hadn't looked as though the investment would pay off.) In the end, Qbiquity's mail-room attendants (was there still a mail room?) probably owned more shares than I did. What up for the holidays? Hitting myself over the head with the Yule log, that's what up.

Still, I did have some founder's stock. Eager to confirm the rumor, I called Eileen. "It's true," she said. "We're having some discussions with a company called Collabrys." I'd never heard of Collabrys, so naturally I was curious. Though Qbiquity and I had parted ways, my first-born company retained a part of me, and I wanted to know where that part was going. Besides, Eileen said these guys were about to do a private round. Anyone who could pull that off these days was worth meeting.

When I called the number on Collabrys's Web site, the CEO picked up the phone. Somewhat to my surprise, he knew exactly who I was and invited me over for a chat. It was a little unsettling, the idea of talking to these conquerors. "I feel like a Roman invited for tea at the home of the Visigoths," I told a friend.

It was a little unsettling, the idea of talking to these conquerors. I felt like a Roman invited for tea at the home of the Visigoths.

The Rome analogy turned out to be prescient. Upon arriving at Collabrys's South San Francisco headquarters, I was ushered into a conference room labeled Romulus. (The other conference room, of course, was Remus. "We're building an empire," the CEO explained.) A basketball net mounted on a pole provided entertainment for 30 or so cubicle-bound employees, and a Coke-branded refrigerator supplied them with free drinks. But the atmosphere wasn't the only reminder of headier times.

In Romulus, I was greeted by CEO Benjamin Wayne, a bubbly Harvard B-school grad with tightly curled blond hair. With him was vice-president of marketing Ann Villapando-Ibalio and director of business development Lindy Fishburne, whom I recognized immediately. In early 2000, when Lindy worked for group-buying site Accompany (later renamed MobShop), she was on the receiving end of one of my first Gazooba sales pitches. I told her I must have done a good job because she wasn't only buying the software, she was buying the company. "Yeah," she said, laughing, "but you've got to work on shortening your sales cycle."

I asked Benjamin about his intentions for Qbiquity's assets. He fired up a PowerPoint presentation, and through a barrage of bullet points I learned that Collabrys -- which stands for collaborative branding and research systems -- creates Web newsletters for consumer-packaged-goods manufacturers, financial-services firms, and health-care companies. Collabrys software then builds "psychographic" profiles of consumers based on what they read. An interest in preventing wrinkles, for example, suggests that a consumer is of a certain age and may have related concerns about his or her health and appearance. "We measure 100,000 lifestyle indicators to come up with the unique consumer fingerprint," said Benjamin.

Collabrys's clients also want to measure "consumer advocacy," the likelihood that a person will pass along a commercial message. Benjamin planned to use Qbiquity's technology to put "tell a friend" buttons on newsletters and then track their spread, which would help his clients gauge the effectiveness of pass-along incentives.

Benjamin said Johnson & Johnson was issuing Collabrys-tracked newsletters to customers of one of its skin-care lines and showed me E-magazines his company had produced for a couple of major manufacturers of skin- and hair-care products. He told me the names of those companies but later recalled that he lacked permission to disclose them and asked me to take them off the record. As a journalist I didn't have to do that. But I realized that Benjamin looked past my frantic note taking to see me as a new member of the family, so I swore myself to secrecy. Besides, there was something about the guy I liked.

Perhaps it was his unwavering conviction. As I rose to depart, a detail from our conversation swam back into my mind, and I decided to challenge him. "A hundred thousand lifestyle indicators?" I asked, staring him in the eye.

"That's right," he said without blinking. " A hundred thousand."

A few days after my visit, I received a letter from Qbiquity's law firm asking me to vote my shares in favor of the merger. I needn't have been so hard on myself about not exercising my options. The price Collabrys was paying wasn't far above the liquidation preference -- the amount that Qbiquity's VCs got to skim off the top in a buyout. It's standard VC practice to set a liquidation preference in every deal -- usually the value of the investment, although I hear that lately they're asking two or three times that. The implication for me, my cofounders, and other common shareholders was that there wouldn't be much left after the skimming.

It was a raw deal but probably the best Eileen and the VCs could have done. The other option would have been to liquidate without a buyer. This way at least the technology we created will live on after us. Our hypothesis that marketers can harness word of mouth will continue to be tested. And a few Qbiquity employees will get jobs at the new company. After reading through the merger documents one last time, I voted my shares in favor. Since I own such a small percentage of the company, my vote wouldn't affect the outcome much, but the feeling of closure was worth a few pennies a share.

Later, thumbing through the numbers on my cell phone, I noticed the speed-dial entry for Qbiquity. I hesitated for a moment, remembering all the times I'd called the company -- and all the times the company had called on me. Then, with the push of a button, I erased the number from memory.

Andrew Raskin is the cofounder and former CEO of Gazooba Corp., more recently called Qbiquity, which is now part of Collabrys and ... oh, the hell with it: Andrew Raskin is a contributing writer at Inc. This is the final Letter From Silicon Valley column that will appear in Inc.

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