Fish Story

Red Herring Editor Tony Perkins is a self-described maverick, a stylish fast-talker with a knack for making friends and influencing people in the high-tech world. Not bad traits for a Silicon Valley entrepreneur, but are they what it takes to publish a "m

"The Red Herring is somewhere between a trade journal and a legitimate consumer magazine," says the University of Mississippi's Samir Husni, who publishes an annual guide to new magazines. "What I call 'prostitution journalism' is acceptable in trade journals, but it doesn't go over well in the consumer market. The Red Herring hasn't quite made the transition."

The magazine has made the transition to profitability, according to Perkins, attracting full-page color consumer ads from Stolichnaya vodka and trade ads from the likes of KMPG and Prudential Securities. Perkins boasts that paid circulation is at 35,000 and climbing. Managing Editor Alden corrects Perkins, saying circulation is 35,000, but paid circ is closer to 24,000.

"Look, to be honest with you, I don't know what the circulation is," Perkins says when told Alden's numbers.

Later, he faxes a note providing a total breakdown of circulation: 24,000 subscribers and 3,000 newsstand sales; and as many as 15,000 copies are dispatched for free to heavyweights.

Since the Red Herring's circulation isn't audited by an outside firm, as most magazines' circ figures are, who knows? Indeed, separating Red Herring hype from Red Herring reality is no easy task, and the likable, soft-spoken Perkins doesn't provide much help. His former colleagues at Upside, few of whom passed up the opportunity to get in a few digs, say that he wasn't above overstating that magazine's circulation and financial health to attract advertisers and investors.

So is Silicon Valley really hooked on the Red Herring, as Tony Perkins would have you believe, or is he telling a fish story? Perkins might argue you can't get one without the other.

"The Red Herring is always trying to project an image," Perkins says in a rare moment of candor. "At Red Herring, there's a whole effort to create an image that the company is slightly bigger than it really is. You have to have the courage to break the rules once in a while if you want to succeed."

Tony Perkins grew up in Menlo Park just a few miles away from the Silicon Valley venture capital firms now clustered on Sand Hill Road near I-280. The youngest son of a well-off physician who counted David Packard as a patient, he recalls that as a child he played in the orchard-covered hills where many of the companies mentioned in the Herring now call home.

Apricot trees soon gave way to venture capitalists -- or VCs -- that rapacious breed of investor who scours the land for entrepreneurs with ideas. In exchange for their capital and management skills, the venture capitalists demand a large stake in the companies they back, prompting many a disillusioned entrepreneur to label them "vulture capitalists."

"Venture capitalists can change the name of the company, alter the product, throw out the management -- anything they want," says Richard Shaffer, publisher of VentureFinance, a New York-based trade publication. "They almost always have absolute control. The entrepreneur may eventually end up out of a job."

If a start-up fails, as they often do, the venture firm loses its investment. But VCs can reap gargantuan profits if a company they've financed survives long enough to get bought out or issue stock in a successful initial public offering (IPO). According to VentureOne, which tracks financial activity in the high-tech industry, VCs are scrambling to invest money pouring in from institutional investors. The top venture capital firms made 791 deals with entrepreneurs in 1991, investing $3.3 billion in the process. Last year, 1,091 deals were made and $7.4 billion was invested. The top 20 U.S. venture firms earned $9.8 billion in paper profits on IPOs in 1995, which is more than the entire U.S. venture capital industry dropped in more than 1,000 start-ups last year. Kleiner Perkins was the biggest winner: Its stake in 13 companies that went public was worth $1.1 billion, with its 8.8 million shares of Netscape accounting for more than half that figure.

With that sort of money coursing through the streets of Menlo Park, an enterprising publisher could make a dandy living on just a few drops.

The VC business is ritualized around Monday morning meetings, in which entrepreneurs troop to Sand Hill Road and meet with the firms' partners in search of backing. There's no such thing as overselling at a partners' meeting -- entrepreneurs pitch their ideas with an exuberance that would make Barnum blush.

"To be a successful entrepreneur," Perkins says through a half smile, "you need a little larceny in your blood."

Perkins may talk like a varsity player, but he's really a cheerleader, rooting for the VCs and their clients on the sidelines. The athletic metaphor is apt. As a teen-ager, Perkins would regularly pass himself off as a ball boy at Stanford University football and basketball games by draping a white cotton towel around his neck as a prop. When Stanford's football team was racking up wins on its way to the 1971 Rose Bowl, Perkins was patrolling the sideline handing out orange slices to the players. Perkins' brother Michael, a Red Herring senior editor, remembers that when Bill Walton and the unstoppable UCLA Bruins traveled to Palo Alto in 1972, Perkins was under the basket feeding passes to the outmatched Stanford players in pre-game warm-ups. Perkins naturally took a seat on the end of the bench as the game started. Stanford football great Jim Plunket, searching for a place to sit in the sold-out gym, wandered by and asked Perkins if he could have the empty chair next to him. No problem, Perkins told him. "You can't be afraid to push the envelope to get what you want," Perkins says. "Obviously, the fine art of sneaking into football and basketball games is pushing the envelope."

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