Venture Adventure Part 3 or Image is everthing

When you work with venture guys you learn quickly there is
no room for maneuver. Flexibility does not exist. They have rods of steel
shoved up their ass when they sign on, makes for an interesting initiation,
wouldn’t you agree? The reason? Venture guys are not business people. Most have

NEVER been involved in a day to day operating situation, never managed people,

never made a budget and never soldanything, much less created a viable product.

Venture guys get their start out of business school by going to work for a consulting firm or a bank and I don’t mean a little bank or consulting firm or a start up!

They start with the big guys, they are trained from the get go, that they know more about every
business than the people who run them.

Most of these guys went to top flight high schools or prep schools, had supportive families, got into top flight colleges, went on to graduate school and then were recruited by consulting firms and banks. They have never done anything from the bottom up, they get fed at least once a day by the company, they stay in expensive hotels, they drink the best wine, travel first class. Spend a few years living like that and you begin to think you are a Master of the Universe, even when you’re not. Out of touch with the real world, ah, yah!

Remember when my MBA told me staying at the Red Roof Inn was bad for image?

He didn’t give a shit that the cost differential was 300 hundred dollars a day or the same Jack Daniels I was drinking at Flanagan’s dive sports bar across the street from the Red Roof for $3.50 would have cost $9.00 or more at the 4 Seasons.

Here’s an example, the Big Guy and my MBA flew up to New Hampshire to look at some plant they were going to finance, at the last minute, maybe because it was late in the day or something, they called me and said they wanted to get together that night at the 4 Seasons.
These guys love image. I was ordered to meet them at the bar
at 7pm. I walked over and arrived about 6:45. My sales guy at Filene’s basement
had called the week before and sold me a new Italian all wool suit, a Armani
top coat, a couple of great ties and I got them all at a drastic discount of
around 65%, I looked good. (The venture guys had tailors come to their offices
because they were too damned busy, according to them, to shop. Big Guy had a
personal shopper and got his haircut at work, too!) I walked into the hotel and
ran into Robin Brown, the high powered GM of the 4 Seasons. Robin was and is a
good guy. He had been on the board of the Boston ballet when I was on the
marketing committee. We had known each other for years. Robin suggested we have
a drink and we chatted about my latest mission in life. The two venture guys
walked into the bar, they spot me. I introduced them to Robin and he spends 10
minutes stunning them with the names of all the big money guys he knows from
New York and Boston. He asks the Big Guy “how are your rooms”? Big Guy says
that the stay was planned at the last minute and they have to go over to the
Ritz Carlton. Robin says, “oh, don’t do that” he gets the phone from the
bartender and calls the front desk talks for a minute and turns to the venture
guys and says, “If you gentleman don’t mind sharing a two bedroom suite, I can
have your bags taken up immediately and one of the ladies is coming over from
the front desk with the registration forms and I’m charging you the same rate
as two singles.” Robin told them whenever they were coming to town, to please call
him first and he would take care of them, handed them his card, shook their
hands, turned to me and said, “Susan and I will meet you and Jan at the Isabel
Stewart Gardner Museum reception tomorrow night and we’ll leave early and go to
Figs for dinner, Todd owes me one!” Robin shook my hand and hugged me whispered
in my ear, “Fuck these assholes, I’ll bet you don’t spend more than 5 minutes
on business tonight.” With that, he told the bartender the balance of the evening
was on the house, waved goodbye and walked out. Oh, by the way, there was no
reception at the Gardiner. He just pulled it out of his ass! We did meet at
Figs and it was on the owner Todd English. Robin was right. We didn’t spend more than 5 minutes on business. I told them I had some ideas I was working on to improve our site
negotiations and they spent their time talking about their day in New Hampshire
at the fucking factory. While they talked, I watched the Bruins game on the bar
TV. I wondered while watching the Bruins get their asses kicked by Montreal, if
these guys knew as much about factories as they did about radio.

I left them at the bar at 10 after they ordered a 3rd bottle of high priced wine. As I walked up quiet and snowy Commonwealth Avenue, I called Jan to meet me at on the corner of Hereford and Comm and we’d let the dog run for a while in the doggie park. She did, he did and I stood with my arm around Jan thinking about my weird evening. The only thing I knew for sure was,
I now had huge Image with my masters, thanks to Robin.

A sidebar, while they were drinking massive amounts of high
priced wine, I was drinking bourbon. Big Guy noticed I had ordered, Basil
Hayden (the 4 Seasons is one of the few bars in the country who carry it) he
launched into a long discussion of single batch bourbon vs. the scotch he
had sampled while playing the great golf courses of Scotland, this sidetracked
the conversation I was trying to have about the resistance we were getting from
the neighbors around the transmitter site, like I said, they could give a shit!
I knew then that we weren’t in this together.

My suspicions increased the next time I talked with Sorry Ass Ed. I told him that despite

loving not having the money guys looking over my shoulder all the time I had two real

problems I needed help with, the firstwas the increasing resistance by the neighbors to the planned improvements on the tower site and the other was the deteriorating relationship with one of the partners on the site. Sorry Ass said, “Don’t make any waves about the deal, leave it

as it stands!” He went on to tell me that the firm didn’t care about the problems,
my job was to solve the problems and get it done the way I said it was going to
happen. I told Sorry Ass, that there was a better way to do this and in long
run it would increase the value of the property and be cheaper. He looked me
straight in the eye and said “they don’t care, they just want the fees, the
interest and then get out, and that’s it. Any changes make them look bad to
their investors.” Image-again!

My plan to buy another AM station with tower site included. (In the perfect location) Build our station there and move the other station to our site was now in the shitter. All I could do

is crank up the pressure and try to bring our existing plan across the finish line. Through the

months of March and April of ’99 I was shuttling from Boston to Providence,

to my lawyer’s office in Wellesley to the North End and back. I spent hours every day

on the phone with engineers, lawyers, vendors and my two feuding partners on the

tower site.

I was nervous, tired and stressed. I felt like I was the only sane person
in the mix. One day, driving 80 mph on Route 128, I went blind in my right eye.
I made my way over to the break down lane and sat there until my vision slowly
came back. I then went to a contentious 2 hour meeting about the site. When it
was over I thought to myself, what the fuck happened to me on 128? I called my
Doctor and by 6pm I was in the hospital, I’d had a god damned stroke!

Next: Doing business, against Doctor’s orders,
from a bed on the neurology ward at Mass General Hospital and why Blue Cross
and Blue Shield’s Platinum Plan is horse shit insurance

Part 2 Venture Adventure by Jager, CEO of New England Wireless

Over the Holidays in ’98, I discovered that venture firms
don’t work from around the 15th of December to the end

of the first week in January, other than the assistants in the

office in New York there wasn’t anyone around. They put in

long hours when they do work, but with long weekends and

numerous vacations they seemed to be around about 20 weeks

out of the last 26 and were seldom working on Friday after

12 noon unless they were putting together a deal.

We’d had our first round of zoning hearings and now we faced
a series of neighborhood meetings, nice little Q and A’s from the

tin foil hat crowd. I’d been through those meetings before and

felt confident we could get through them with only minor bumps

and bruises.

So like my masters in New York, I had some time during the holidays

to think about the last 6 months. What had I learned?

First thing I learned was my 22 million deal was chump change to these guys.

In retrospect they bumped the 19 I quoted to 22 million so they could justify

doing the deal to their investors. Yes, the principals in New York had three

guys they reported to. Those 3 really big guys had financed my smaller guys

with 500 million in cash plus expenses. That 500 million, under the rules in

force in 98 could be leveraged to just over a billion dollars. The going rate at

the time for venture money was a 25-28% return or 250 bucks or more on a
thousand loaned. Venture firms borrow money at market rates or below from
banks, then invest (loan) it at usury level rates. They never touch the principal,

ever!

My guy, Brett the MBA, was 29 years old, his MBA was from
Wharton and he was a small fish at the firm. His boss was 36, a

whiz kid hired away from Morgan Stanley by the really big guys to

run the company. My relationship with Brett was thin, I knew he was

married, had a little kid and his wife was a big deal VP of marketing

with a Fortune 500 company, he did send me a Christmas card.

Didn’t know much about the boss other than his taste in wine and

food was very high end.

Sorry ass Ed and I were the only broadcast deals they had.
Ed had used their money to buy a VHF TV station and it was losing its ass. (Although
his lifestyle wasn’t dented, I mean he lived in Greenwich and had a house in
Sag Harbor.) This was a good thing, because the venture firms that specialize
in broadcasting are filled with frustrated program directors and bean counters.
Our guys could have given a shit.

In my rush to become an owner, I conveniently
compartmentalized the reality that I was going to have to do one of two things,
buy the station in 3 years for a 27% premium, much like buying it on a Visa
with a really big credit limit and usurious rates. Then hopefully finance the
purchase at a reasonable rate for 10 years, probably at bank rate plus 2, meaning
I would have paid around 35% interest over a period of 13 years on this deal, 5.9
million on the original 22 and then another 2 million the refinanced 27.9.
Funny how the reality of those numbers just fade from one’s mind, isn’t it?
Somebody told me a long time ago that when you do a deal with venture groups,
you are really just buying yourself a job with a cool title. But, I didn’t want
to deal with that ugly piece of information. The other scenario was in three
years, we’d have a viable station making a buck or two and the venture guys
would sell it. At that point if we sold it for 30 million, the venture guys
would take back the original 22, plus the 5.9 million in interest and my 11%
would come from the balance of 2.1 million less the brokerage, legal fees and
any other costs of the sale. Kind of a quandary to be in…but I just put my head
down and kept on truckin’! I just didn’t want to think about it. Every once in
a while I’d snap awake at 3am and sweat for an hour or so, but that was ony 3-4
times a week.

Part 3 coming soon to a radio near you.

"Our Sources Say" by Jager Lee Bain

Clear Channel is discussing the following scenarios with their in house legal staff:


1. Sending a "cease and desist" letter with threat of lawsuit to all broadcasters, manufacturers, Internet platforms and satellite operators from using the word "radio" in any activity up to and including sales presentations, correspondence, internal communications, logos and any and all usage of what had been, at one time, considered a generic name for terrestial and satellite electronic communication.


2. A similar letter will be sent to Howard Stern demanding he cease using the term "King of All Media" as that term will be, in the future, used by Clear Channel to designate the chief executive position at CC.



3. A petition to the FCC to redefine "radio" in the current FCC statutes to "audio only devices operated by corporations other than Clear Channel". CC is also requesting that the FCC and other agencies allow licensing by CC to other broadcasters and other interested groups to use the term "radio" by paying a yearly licensing fee to CC for its usage. Our sources say the FCC petition was accompanied by a copy of a 4.9 million dollar check to the US Chamber of Commerce to be used (under the Citizens United rule) to back political candidates who will see things the CC way.


Our sources also said NPR has already changed their name to "National Public Audio Only Device" to deflect any further conservative criticism. NPAOD acted based solely on the rumored actions of Clear Channel.