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

It's easy to determine if Tony Perkins is making a rare appearance at the offices of the Red Herring, the glossy monthly guide to Silicon Valley finance that he launched in 1993. Simply check the sidewalk outside the magazine's headquarters in the refurbished Hamms Brewery Building on Bryant and 15th streets. Rather than lose precious time hunting for a spot in the dusty, condom-littered parking lots out back, Perkins just parks his red Toyota 4Runner -- outfitted with "RED HERNG" vanity plates -- on any available stretch of sidewalk.

Parking tickets aren't a liability for this editor/publisher who rubs elbows with ambitious entrepreneurs and the wealthy venture capitalists who bankroll their high-tech projects; they're assets, announcing to everyone that Perkins is a risk taker whose time is much more valuable than a $25 fine. In fact, Perkins' time is so precious that it's a waste of company resources for him to supervise layout, assign photos, enforce deadlines, or tend to the other mundane concerns of running a magazine.

"It's very important for Tony to be the outside guy establishing relationships, building our image, and pursuing the vision of the company," explains Red Herring co-founder and Managing Editor Chris Alden. "He can't do that if he's in the office all day."

A visionary like Perkins belongs in the air, where he has interviewed software titan Bill Gates during an international flight. Or in New York, where he has discussed the publishing business with Norman Pearlstine, the editor in chief of Time Warner. Or in Cambridge, Mass., where he has chatted up futurist George Gilder. Or on the airwaves, where each Friday he fulfills his role as the "high-tech stock guru" on Digital Jam, a live show on CNN's financial network.

"Publishing is very addictive," says Perkins, who lists his age as 37 and resembles a softer, less intimidating version of actor Tom Berenger. "The thrill is living out a dream you write about every day."

Like any entrepreneur, Perkins never passes up a chance to promote his own creation. When he describes Silicon Valley as the "Athens of the Information Age" and claims that historians are likely to plumb the Red Herring as a reference 200 years hence, Perkins does it with a straight face. He's remarkably buoyant for someone whose first foray into publishing -- at Upside magazine, an earlier glossy guide to Silicon Valley lucre -- was a personal and professional disaster. That same upbeat optimism is reflected in the Red Herring, which celebrates Silicon Valley as an example of everything that's great about capitalism.

Designer Bart Nagel, who masterminded the look behind Mondo 2000, gave the Herring a futuristic sheen when he redesigned it in January. But while the Herring may look like a cutting-edge insider's guide, it reads more like an ingratiating alumni magazine for the University of High Tech. Each issue is planned months in advance around a particular aspect of the computer industry. This month it's "networking" and next month it's "multimedia hardware." Name-dropping columnists keep regular tabs on everything from venture capital to European markets. Friendly Q&A interviews with leading industry figures are often splashed on the cover. Company profiles fill page after page. Read the Red Herring, and one dominant trait quickly emerges -- the issues seem less important than the individuals discussing them.

"The Red Herring is the Rolling Stone of Silicon Valley," offers Anne Russell, editor of Folio, a trade publication for the magazine industry. "Every industry needs its personality-oriented magazine. In a glamour industry like tech, where personalities are such a big part of the mix, people like to see their name in print."

It's an approach that seems to be working. Wired gushes that reading the Herring "is like having a smart, if narrowly focused, investment adviser on your desk every month." Adweek dubs it "a slick yet substantive magazine that caters to the digerati." Responding to a list of e-mailed questions, John Doerr, the best-known venture capitalist in Silicon Valley and a partner at the powerful firm of Kleiner Perkins Caufield & Byers, calls the Herring a "must read."

Not bad for a magazine where the line between editorial and advertising is often blurred, if not erased. The venture capitalist who is the subject of a February profile may become a guest writer with a byline in March. Herring Events, another Perkins brainchild under the corporate rubric of Flipside Communications, presents a series of popular business conferences sponsored by Red Herring and dozens of companies regularly written about in the magazine. And then there's herring.com, the newly launched Website that contains Red Herring archives, company profiles, conference information, and more. Perkins invites entrepreneurs and companies to purchase links to their Web pages directly from herring.com. The magazine's "Editorial Advisory Board," prominently placed in the masthead, is composed of Silicon Valley business types who've purchased the requisite number of ads to qualify. Although none has taken him up on the offer, Perkins even allows young companies to pay off advertising and sponsorship fees with stock, which would give the Herring equity in some of the companies it covers.

When the Red Herring picks a journalistic fight, it's usually with megafirms like IBM, for whom a negative mention in the magazine is less than a gnat bite, or with a company like Apple that is already on the slide.

"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."

Perkins went on to become student body president at Hillview Junior High, he says as he rattles off his administration's accomplishments: He successfully lobbied for a stoplight in front of the school; paid for a student patio with profits from a Popsicle sale; and left the treasury with a $2,000 surplus.

"There are two kinds of leaders in school," Perkins says. "The rah-rah, straight-A students and me, the renegade who got by more on charisma than intellect."

Perkins routinely marries braggadocio to self-deprecation, making his conceited points in such a backhanded way that it's hard not to like him. Not a bad trait for someone treading in Silicon Valley, where selling yourself and your ideas often go hand in hand.

Perkins proved that it's never too early to start networking. His closest childhood friend was Tim Draper, the grandson of Gen. William H. Draper, considered the first professional venture capitalist on the West Coast. Tim's father, Bill, founded the highly successful Sutter Hill Ventures before going on to serve as chairman of the Export-Import Bank for five years during the Reagan administration. Tim, who started a venture capital firm of his own, was Upside's first and biggest financial backer and is now a loyal Red Herring advertiser and event sponsor.

"Tony and I used to ride our Sting-Rays up at 3000 Sand Hill when it was just a big hump of dirt," Draper says. "We got into a lot of trouble together."

Perkins quarterbacked his junior high football team, but switched his focus from athletics to money when he entered Menlo-Atherton High School, getting a job at Safeway because it offered union wages. He brags that he was breaking child labor laws by working from 2:30 a.m. to 7:30 a.m. during his senior year.

"I just had an incredible will to be independent," Perkins says. "Having your own money is the best way to be independent when you're a kid."

He also adds that the best way to get girls was to ingratiate himself with their mothers while he bagged their groceries. "Why don't you date that nice Perkins boy, dear?" he says in a mocking falsetto, imitating the suburban matrons he charmed at Safeway. "It was a gold mine."

Surrounded by the sons and daughters of millionaires, Perkins made up for his middle-class roots with style. He bought a Mercury Capri with his paychecks and invested in personalized license plates reading "TPERK" -- a luxury unknown to most teen-agers in the '70s. He had more of a strut than a walk, according to his old classmates. With the help of Grant Gunderson, a friend whose father was the chief executive officer at Bay Meadows, Perkins organized trips to the racetrack where he talked adults into placing bets for him.

"If Tony wanted something, he got it," remembers Kim Young, who dated Perkins in high school and now runs an Atherton advertising agency. "When we went to the prom, he was the one who rented a hotel room and served cocktails before the dance. He had a knack for turning ordinary circumstances into an event."

Menlo-Atherton High was fraught with racial tension in the '70s, erupting in riots on more than one occasion. Poor minorities from East Palo Alto mixed uncomfortably with wealthy white kids living west of the Bayshore Freeway. Scores of whites fled to private schools, but Perkins stayed and honed his ability to get just about anyone to like him. "The black kids set the pace for cool in high school," Young says. "And Tony had some black friends who were very cool."

Perkins also stood out in the classroom, but not necessarily for his grades. "Unlike the typical 17-year-old, he was very fo-cused on economic issues," says Richard Weaver, who taught Perkins U.S. history. "He was definitely interested in saving, investing, and planning for the future. It was very unusual for a student his age."

While many of his friends headed east for Harvard or Dartmouth after graduation, Perkins enrolled at UC-Davis, and he continued to work at Safeway. During his sophomore year in 1978, he became the Democratic Party's statewide student campaign manager for California, and he keeps a photo on his desk of him with Jerry Brown at an Election Day rally in Davis. (It's a curious memento for a present-day Republican and supporter of Steve Forbes.)

The political savvy he picked up that year proved no assistance when he ran for student body president later in his sophomore year. Perkins says he thought the Safeway job would help him win as "a man of the people," but it wasn't enough. It was the first time he ever lost an election, and Perkins' can't help hinting that he would have done a better job than his victorious opponent.

"The guy who won went on to run up a big deficit," he says with a raised eyebrow. "I was disappointed. But I like to think I've continued to grow since then, while a lot of guys my age have peaked long ago."

Shortly after graduating from UC-Davis in 1981, Perkins landed a job at Silicon Valley Bank, the well-known sugar daddy for many high-tech firms. Perkins likes to brag that he made more than 200 "deals" during the five years he spent as an investment banker. These deals, however, were fairly prosaic. He established credit lines for technology companies that already had venture capital backing; he collected regular payments from the companies he handled, much like a banker in Chico or Chicago would collect from the owner of a pizza joint with a credit line. Perkins earned a good salary, but he wasn't happy.

"I went through a sort of early midlife crisis," Perkins says. "I had to ask myself if I wanted to be a middleman for the rest of my life, or if I wanted to branch out and start my own company. That crisis ultimately led to the idea for a magazine."

Working in the bastion of free-market capitalism, Perkins quickly abandoned his college flirtation with Democratic politics. It wasn't long before he was raising money for Republican politicians in his spare time. While organizing a fund-raiser for California Rep. Ed Zschau's 1984 re-election campaign, Perkins got to know Rich Karlgaard, an acquaintance whose wife worked at the bank.

"We both discovered that we were not only Republicans, but we both read publications like the National Review and American Spectator," says Karlgaard, who was a technical writer dabbling in desktop publishing at the time. "We were both ideological conservatives."

The pair decided that Silicon Valley needed the equivalent of San Francisco's Commonwealth Club -- a forum where the business, political, and academic communities could discuss vital issues. And make business deals, of course. The Churchill Club was born in 1985. It wasn't long before the Orator, the club's four-page newsletter, became a hot item in Silicon Valley.

"A light bulb went off in Tony's head," Karlgaard says. " 'If this little newsletter is so popular, why not start a magazine?' "

At the time, computer trade magazines were devoted to gushing accounts of the latest software or PC development, and business magazines like Forbes and Business Week treated the emerging Silicon Valley computer companies like an intriguing niche market. The business sections of the local dailies were valued more as kindling in the fireplaces of high-tech players than as viable sources of information.

Perkins and Karlgaard envisioned a magazine "for Silicon Valley about Silicon Valley," with Karlgaard handling the editorial side and Perkins doing the publishing.

"Tony is good at selling things that don't exist, like ideas, abstractions, and visions," Karlgaard says. "And that's what being an entrepreneur is all about."

Perkins hit up the investors. Perkins' childhood pal turned VC, Tim Draper, got in the game early. He became the project's biggest backer, investing the first $30,000 so Tony could quit his job at the bank and devote himself to what would become Upside -- a name that came to Perkins while he was stopped at a traffic light. Other early investors included Roger Smith, the founder of Silicon Valley Bank, who threw a $5,000 bone to his former employee, and Gary Lauder, the grandson of EstŽe Lauder.

The cover story in Upside's inaugural issue in July 1989 had Silicon Valley buzzing. Then-Managing Editor Nancy Rudder, whom Karlgaard describes as a "journalist with a real taste for blood," wrote an exhaustive profile of Kleiner Perkins Caufield & Byers. It wasn't a particularly incendiary piece, but the very fact that someone was covering the Byzantine world of venture capital captured notice.

"It scared the crap out of Kleiner Perkins," Karlgaard says with more than a hint of pride. "For several weeks [they] called us every Monday and threatened to bury us. That just made us more eager to keep going."

Investment bank Hambrecht & Quist was soon called on the carpet in the pages of Upside for its business practices. Another issue blamed the influx of M.B.A.s for Silicon Valley "turning pussy." Stylish caricatures graced Upside covers portraying industry moguls in a less-than-flattering light. Case in point: Oracle CEO and megalomaniacal billionaire Larry Ellison was depicted as Humpty Dumpty.

"By about the third issue, people in Silicon Valley really knew who we were, and everyone started returning our calls for stories," Karlgaard says. "No other magazine was doing what we were doing."

It was Upside's misfortune to launch itself in the midst of a publishing recession. Advertisers, especially financial-service firms that backed high-tech companies, slashed their ad budgets for the next two years. Upside lost nearly $3 million between mid-1989 and 1992, according to Ed Ring, Upside's current chief financial officer.

Perkins, Karlgaard, and Draper were all publishing novices, and their mistakes exacerbated the magazine's early financial woes. By setting the price of Upside stock too high in the early fund-raising stages, the valuation of the company quickly climbed too high. This meant that later investors would be forced to sink a large sum of money into Upside if they wanted to control a significant portion of the company's stock.

"Most of the Upside investors were rich folks who where doing it as a hobby rather than a professional investment," Karlgaard says. "The deal was too rich for venture capitalists or serious investors who weren't interested in the emotion or the fun of it."

Perkins scrambled to raise funds seven days a week, knowing that the magazine was often dangerously close to missing payroll. Money trickled in, but no one was willing to make a big commitment. Meanwhile, every new investor gained diluted the value of Perkins and company.

"It was a complete fund-raising treadmill," Ring explains. "We were burning through $50,000 to $100,000 a month. I'm talking deficits. There was tremendous pressure on Tony to keep the whole thing afloat."

Many investors liked the idea, but not well enough. "VCs are looking for explosive growth," says Ring. "They want something that will pay 100-to-1 in a few years. You can't put that together in a publishing deal unless you're very lucky or you lie."

Sources at Upside say that Perkins inflated circulation numbers in the pursuit of advertising, an allegation he categorically denies.

"There was a whole brat pack of rich kids from Silicon Valley who grew up to become venture capitalists," says former Managing Editor Rudder. "It was a whole lifestyle, and Tony wanted to be part of it. He liked the role. As a result, Upside suffered from a total lack of understanding about what you could and could not say to people buying ads. All the rules were being broken, and everyone thought it was fine."

Upside morale was lower than the magazine's profit margin. Perkins' life was further complicated by the death of his father and the collapse of his marriage. He acknowledges a romantic relationship with an Upside employee that resulted in a child out of wedlock. He and Karlgaard were openly feuding, and staffers feared the magazine might fold at any minute.

In mid-1990, Rudder called it quits after just nine months on the job.
"The atmosphere at Upside was unbearable," she says. "I've worked at a lot of different publications that were dysfunctional in one way or another, but none of them topped Upside. It was the only job I ever quit without having another one lined up. It was that bad."

Upside limped along, and the Karlgaard/Perkins relationship continued to decline. Karlgaard maintains his partner turned into a "total flake" -- disappearing from the office and fighting on the phone for hours with his estranged wife. "He got up every morning of his life for three years and had a giant anvil hanging over him to raise more money or miss payroll," Karlgaard says. "The pressure was certainly affecting his performance."

Karlgaard asked the Upside board of directors that Perkins be "taken out of the line of fire." A source at Upside, who asked not to be identified, says Karlgaard was much more demanding: "Karlgaard told the board, 'Either Tony goes or I go!' "

The board members, whom Perkins had recruited as investors, removed him as the publisher and CEO of Upside on May 2, 1992, eliminating him from the day-to-day operations of the company. He remained on the board until the summer of 1993, helping Upside raise one last round of financing before he left.

"The only constraints the board ever put on Tony were ethical," says Upside board member David Bunnell, who has founded several magazines of his own, including PC World and New Media. "We insisted that he represent the company in an ethical manner and tell the truth about our circulation, our business, and where we were headed."

Karlgaard left Upside less than a month later to take a job with Forbes as editor of its quarterly supplement on high tech, Forbes ASAP. The deal angered the Upside forces, because the original agreement called for Upside to produce the supplement for Forbes.

"Forbes basically stole our editor and the deal we had signed to produce Forbes ASAP," contends Bunnell. "We never pursued legal action because Forbes has such deep pockets. They would have spent us into the ground."

Karlgaard denies that his departure destroyed the Forbes ASAP deal: "They had real reservations about dealing with such a financially shaky institution. There will still be people who will say I ran away from my child, my creation. But they didn't go through what I did for three years. They didn't have a partner who began as a fundamentally good, competent person turn into a basket case because of the enormous pressure he was under."

Sitting in Buck's, a Woodside diner where VCs and entrepreneurs often come to hammer out deals, Perkins' cheery outlook evaporates as he listens to the litany of complaints leveled against him by his former Upside associates.

"I was throwing up in the shower every morning because of the pressure at Upside," Perkins says. "I'll admit that I hated going to work every morning and having to look at Rich Karlgaard's face and deal with David Bunnell. It was a bad situation."

The Silicon Valley culture that Perkins worshipped had mauled him.
"Some venture capitalists seem to forget that financial gain is really what motivates the entrepreneur," he says, his white coffee cup trembling slightly in his hands. "What really grates on you is that it's really your ideas, not the VCs', that are creating the revenues. I woke up at Upside one day and realized I had this great vision for the company, but suddenly I was only 3 percent owner of those ideas."

He pauses and gestures at the tables where groups of men in expensive suits talk intently. "A lot of venture capitalists have entrepreneur-envy. They like to come to a greasy spoon like this to feel more like men of the people or something."

Then he catches himself, a smile returns to his face, and he's back to the old Tony Perkins just like that. The tension is gone. Like a politician doing damage control, he takes the high road.

"I was loyal to Upside and its investors to the end," he says. "I even stayed on and raised another $500,000 after I was removed as publisher. I never abandoned Upside. I feel like I made a lot of mistakes because I was new to publishing and it was a very difficult time for me. But I won't sit here and agree that I was some sort of battered lunatic. It's just not true."

Tony Perkins understands the importance of myth in Silicon Valley and the fabrications it often takes to create it. In The Red Herring Guide to the Digital Universe -- a reference book soon to be published by Warner Books -- Flipside Communications is described as "a fully-bootstrapped (i.e. no investors) Silicon Valley startup founded in early 1993 in a garage." The image of Red Herring editorial meetings taking place with editors sitting on old tires surrounded by half-empty bags of garden fertilizer artfully links the magazine with Apple and Hewlett-Packard, two Silicon Valley institutions with equally humble beginnings. But Red Herring didn't actually start in a garage. It began in a spare room above a garage. The garage just happened to be attached to a million-dollar Woodside home owned by co-founder Chris Alden's parents. In fact, the Alden family maid used to come up and tell the partners that dinner was served. Perkins explains that the room was part of the garage before being remodeled. That, apparently, is close enough for him.

Alden met Perkins in the summer of 1992. Although Perkins was still on the Upside board, he was formulating plans for a new publication of his own. The 22-year-old Alden was eager to fulfill his childhood dream of becoming an entrepreneur just like his father, Ellis, who owns a string of lucrative hotels.

"One of the things that gave me an advantage was growing up with my father, who is a very strong visionary," Alden says as he strokes his de rigueur goatee. "He took me to all his business meetings as a kid. I saw how he made decisions and stood by them. That's the key to being an entrepreneur."

Alden and his best friend, Zak Herlick, made plans to go into business together as early as seventh grade while playing bas-ketball during recess at the private Crys-tal Springs Uplands School in Hillsborough. Herlick soon left for prep school at Andover before returning to Stanford. Alden headed to Dartmouth, but the pair stayed in touch. Their senior year they started a small computer consulting business on the Peninsula that they continued after graduation. They were soon pulling in $75 an hour, but that wasn't good enough.

"Zak and I are pretty damn ambitious people," Alden says. "We had to ask ourselves how we were going to become millionaires making 75 bucks an hour. We wanted to go out there and start a company, so we began a very deliberate process of meeting anyone and everyone in Silicon Valley. We knew we had a lot to bring to a venture because we were smart, energetic, and technologically savvy."

Besides having a wealthy father with connections, Alden was an avid reader of Upside. One morning he mentioned the magazine to his father: That afternoon, Chris was having lunch with Perkins in the Palm Cafe at the Stanford Park Hotel, which is owned by Alden's dad. Herlick was introduced a short time later, and a partnership was formed. The name they picked for their company was an obvious slap at Upside, which in the post-Karlgaard/Perkins era is now profitable: Flipside Communications.

"Tony was willing to take risks," says the 25-year-old Herlick, who has since left the day-to-day workings of Red Herring to pursue a joint J.D./M.B.A. at Stanford. "He wouldn't tolerate working for someone else. That's what attracted me to him."

In the eyes of his two young sidekicks, Perkins was a Silicon Valley veteran, giving him the status of a mentor. Herlick even jokes that he calls his partner "Uncle Tony" on occasion. The youth brigade rules at the Red Herring, where the average age of the 40-some-odd staffers is around 25.

At a post-mortem of the April Herring in the Noe Valley flat of his associate editor, Perkins is the only adult supervision present as the editorial staff meets to critique the magazine over pizza and microbrews. Perkins exhorts the troops to focus on getting more new companies into the magazine. But the hottest topic of discussion isn't the coming shakeout in the bloated world of venture capital but a squabble over the relationship between headlines and the table of contents. Perkins settles the problem the best way he knows how, producing copies of the New Yorker and the Economist to see how they do it. It is all vaguely reminiscent of a journalism school seminar hosted by the professor everyone likes because he grades easy.

Perkins' initial brainstorm was a 12-page newsletter about the industry that would be so packed with vital information and ads that readers would pay $700 for a subscription. Alden shared that inspiration with an investment banker with whom he shared a chairlift at Aspen: The banker liked the concept but balked at the price. By the time of the June 1993 launch, the Red Herring was a slick monthly with a more reasonable yearly subscription price of $180 and a newsstand price of $9.50. Recently, the price dipped to $108 for a subscription and $8.95 for a single issue.

Perkins was determined to launch the magazine without outsider funding, which is odd considering the fealty the magazine pays to venture capitalists; he persuaded advertisers to pay in advance for each issue, an arrangement that most advertising reps only dream about.

"It was incredible," Alden exclaims. "With no start-up money and without ever going into debt, we were able to build a company that now has 40 employees. From a business standpoint, we're the envy of a lot of entrepreneurs. I look at our advertisers as our venture capitalists. I'm extremely grateful to our advertisers."

The gratitude is revealed in the Herring's editorial thrust. The magazine maps out the theme of each issue up to a year in advance, like a fashion mag. It's a great way to sell ads, but it hobbles the publication that fancies itself as a "racing form for the entrepreneur." Who's to say 12 months in advance that May is the month of a broad topic like "semiconductors" rather than "Internet services"?

"People are aware of the Red Herring, but to say it's hopping and everybody's reading it is kind of a reach," says Lee Gomes, a business reporter at the San Jose Mercury News. "There's such a glut of information out there that it's hard for one publication to distinguish itself."

But for Examiner computer columnist Gina Smith, the Herring manages to stand out in a crowd. "I'm a big fan of the Red Herring," Smith says. "As a reporter, I need all that information. I go through it and look for story ideas."

With a "grateful" eye on its advertisers, the Red Herring swims away from stories with conflict like a guppy in a shark tank. And that's just the way Perkins wants it.

"We're not out to dig up dirt on anybody," he says. "We view ourselves as arms dealers for the entrepreneur. Our goal is to fuel the entrepreneurial community with information in a format they can act on and profit from. I believe we can all win with the free-market system."

Perkins practices what he preaches in the leadoff Angler column he pens every month. In one column, he urges readers to pick up a copy of George -- John F. Kennedy Jr.'s magazine of pop politics -- because "it is the first publication dedicating itself to a new beat." In another, Perkins confesses to keeping a photo of Joe Montana handy for inspiration. Another calls on President Bill Clinton to appoint William Draper, the father of Perkins' friend Tim Draper, as secretary of commerce. A slew of other Angler columns do little more than provide the context for Perkins' mild-mannered interviews with industry notables printed in the issue.

"Why do you love Netscape?" Perkins asked Steve Jobs in January, doing his best Barbara Walters impression. "What's your vision?" he queried George Gilder in February. "What other reforms catch your fancy?" he requested of Steve Forbes in March, the same issue in which he endorsed the presidential candidate in his Angler column.

Such fawning permeates the rest of the magazine, as features and columns do little more than frame the words of industry sources, seldom questioning the merits of their arguments. A Heard in the Valley column by Senior Editor Jonathan Burke in the February issue was typical of this approach. Burke parroted the views of Oscar Castro of Montgomery Securities on global telecommunications for nearly two pages with nary an insight or an observation of his own. The monthly VC Whispers column by Senior Editor Alex Gove frequently follows a similar pattern. Gove has an impressive array of sources -- he obviously knows whom to call -- but he never questions what he hears. And much of the insider dope he gleans from high-powered VCs is of the no-duh variety. In a January column on Internet software tools, one anonymous VC revealed: "We have a view of the Internet as being important, but we would like some comfort on exactly how people are going to make money." Not exactly Deep Throat material.

Sometimes the Red Herring cuts out the middleman and treats industry figures like Intel's Avram Miller and Hambrecht & Quist's Rakesh Sood to their own bylines.

"I just don't think Tony gets it," says former Upside Managing Editor Nancy Rudder, who now works for Rich Karlgaard at Forbes ASAP. "He gets free editorials from people he's supposed to be covering and he thinks that's fine. Someone like John Doerr gets to write stories about his new investments instead of having a reporter pick on him. And for some reason, there's enough people around here who think it's interesting to read that BS. All these financiers really get caught up in it."

But Doerr, King of the Venture Capitalists, finds the Red Herring a definite improvement over Upside, which he calls a "rag."

"My impression is that Red Herring is a must read, and not just for VCs," Doerr e-mailed in response to a set of questions. "It has wide appeal, from entrepreneurs to CEOs to corporate strategists to lawyers to bankers."

Inadvertently hitting on the young media company's formula, Doerr writes: "The Red Herring is not a monthly rag. It's a community. It's a service." Or more to the point, it's a traveling trade show. Perkins crows that Flipside Communications is making money, but it's the conference business -- not the Herring -- that's bringing in most of the revenue. Herring Events now organizes five conferences in the United States and one in Europe each year. At Venture Market West, for example, the CEOs of handpicked private technology companies mingle with members of the finance and investment community. Every participant pays at least $675 for the privilege of attending, and a few companies shell out up to $30,000 to sponsor an event. No wonder the Herring often reads like a souvenir program for the lucrative conferences thrown by Herring Events.

"The one thing that makes me a little queasy about the Red Herring is the way they sell their expertise in more ways than just on the printed page," says Folio's Russell. "You have to ask yourself if this is a business or a vehicle for another business."

But where others spot a potential conflict, Perkins sees another improvement over his unsettling days at Upside.

"I never gave up on my vision to create a media company and not just a magazine," Perkins says. "That was one of the biggest departures I had with the board at Upside. I wanted to do a lot of things, but the business-school philosophy is focus, focus, focus. The Herring philosophy is to open as many revenue streams as possible."

But for a publisher who claims his magazine has no real competition, he's determined to erase the ghost of his Upside failure, to prove that he's part of Silicon Valley culture and not just a pretender. "The people at Upside are just jealous because the Red Herring is kicking their butts editorially and in terms of ad revenue," says Perkins.

At the core of any business strategy is deception -- putting one over on the competition. The magazine pays tribute to the importance of deception in the front of every issue with "The Lore of the Red Herring," 200 words that explain both the origin of the term and the reason Perkins named his magazine after a fish. As it turns out, British fugitives of the 1800s made a practice of rubbing stinky herrings across the trail to "divert the bloodhounds hot in their pursuit," as the magazine puts it. "Later, in debate and detective mysteries, the 'red herring' described any clever device used to distract people from the main issue." In the 1920s, American investment bankers began referring to preliminary investment prospectuses, which have covers printed in red, as red herrings to warn investors that they are not final or complete.

A ruse. A feint. A dodge. An artifice. When you think about it, the Red Herring is an obvious name for a magazine created by Tony Perkins.

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