Halsey Minor

Before CNET, Minor, 32, worked for Russell Reynolds Jr., founder and CEO of the executive search firm Russell Reynolds Associates Inc. He also founded Global Publishing Corp., a multimedia business training applications firm, and worked as an investment banker for Merrill Lynch Capital Markets in New York.

BW: Can you give us a sense of what the expectation was when you first went public, how much pressure you're getting now, and how long you think you can withstand that pressure?

MINOR: I think that, over the last two years, there's been a huge pendulum swing in the expectation of investors. Because when a lot of venture capital firms were investing in companies privately, it was "enormous potential, write me a business plan, I don't care about the revenue numbers, just good idea. Done."

So it went from "good idea, you get lots of money," to "show me the profits tomorrow." And I think what's going to happen is, for the media-related companies on the Internet, they will turn profitable much faster than any traditional media properties that have been launched over the last, you know, 15 or 20 years. I mean, far faster than Entertainment Weekly, far faster than any cable network, far faster than any new newspaper, far faster than any new television network.

And they may have the same kinds of upsides, you know. Maybe they'll have greater upsides, because all of us are building international businesses as opposed to just domestic businesses.

And I heard Entertainment Weekly, after seven years, just kind of turned the corner. And we all know how long it took for USA Today, if they're even profitable now.

BW: Ten years.

MINOR: Ten years. MTV was five. ESPN was like seven. People [magazine] was like seven. It took Sports Illustrated forever, I've forgotten how many years it was, but a long time. But, I mean, big media properties have very long gestation periods.

And we don't know what will change that. But the question is, will everyone do it in a year, or will they do it in two years?

I think there are a lot of us who could do it relatively quickly, and it would be very shortsighted of us to do it. And this is sort of the whole thing about us launching this new service, Snap! Online. And I think that business would go just great and we would have a pretty short time line to turn the corner. And I think investors would love that, right? Because there would be validation that we're smart managers and that we're not just spending money like we're just living rich capital and that we can actually make money.

However, the downside of it is that you cut yourself off from investing in other potential businesses at a time when the cost of playing on the Internet is, on a relative basis, low. [But it's] escalating all the time. I mean, to replicate our business would be fantastically expensive now between building a brand and just building all the services. I would bet we have half a million lines to a million lines of code that just run our different services.

So just between hiring all the people, finding the expertise, building the code base, developing the way for the advertiser, and building the brand, you know, I think is virtually impossible to do it. And I think more and more segments are going to get closed off over time. And everyone thought, oh, well, you know, there are no barriers to entry into this business; anyone can come in. And now they find out that it costs a lot of money to do stuff on the Web. And it's going to cost a lot more five years from now, and there are going to be a lot more players.

And so part of the reason that we went ahead and launched the [Snap! Online] service now, without having proved that we can build a profitable company with CNET -- which is a little bit risky from a market point of view -- is that we actually said six months ago or nine months ago when we started, when we hired people, if we don't do this now, we'll never be able to do this.

And there are a limited number of companies who can play in this place. Now, we saw clearly from working with a whole bunch of Internet service providers and the partnership of 30, that those guys are never going to be able to be competitive with AOL alone. They have to have somebody who helps them, and that we're in a really good position to do it. Both because we have existing relationships and we have a skill set that's fairly rare on the Internet.

And so we said, look, let's do it.

And I think that -- you know, there's sort of one group of people out there who don't understand why our investors give us as much credit as they do. And there's another set of investors out there who totally understands why we're doing what we're doing.

But sometimes I run into people and they say, "God, your investors must be groupies." And then there are other people out there who I think are more in tune with what's going on with the Internet space and think that it's a good idea. Yes, it's risky. But I think we have always felt, and most of the senior people in the company, that our goal is not to build something and sell it. Because we could have actually done that a couple of times, you know, a long time ago. We want to build a big company.

BW: So basically, you think it's a good thing, or actually it's not a bad thing, that companies are going public at an earlier stage. But couldn't that come back to haunt everyone, if you get a couple of companies, or a couple of high-profile companies, that are going public early and then they don't do well?

MINOR: There are a lot of big companies that don't do well, too. I think the story everyone writes is the negative story about companies going public really young like it's violating some sort of universal truth. I mean, no one ever said at what stage you have to make yourself available to individual investors.

And so it just happened to be that the only way you could play as an individual investor was to buy a more mature company. And you've now got a lot of different people who play the public equity markets, virtually everybody.

And I personally think that it's a really good thing that investors now have the ability to get a whole broad spectrum of companies from which to choose from. They don't just have to buy IBM, AT&T, and others. They can actually play in higher-beta, more volatile, riskier companies that have higher rewards.

And it's really almost a democratization of the capital markets, because before, you could only play these if you were a large media company or other large company in that industry who could invest themselves and build something. Or if you were a wealthy individual who participated in a VC firm.

So I think there's a lot more upside for individual investors. But the problem is that there's also going to be a lot more companies that kind of crash and burn. I mean, that's the nature of investing. And I hope that it isn't ultimately a huge backlash against that, because I think it's a good thing. I think that investors just have to learn that they have to be cautious. And always just playing momentum is a very dangerous thing to do, and a lot of people do that.

BW: What about in your own company? When you started the company, was your goal to go public? Did you say when you first began, "This is where I'm headed and I want to do it in this timeframe"?

MINOR: I never thought about that as an end goal. You're thinking about building a company, and I think that's what kind of drives you. I mean, we went [public] because it was really clear to us at the time that you had to be public; that so many other companies were public and that there are a lot of benefits that come from it. We probably wouldn't be sitting around here talking if we weren't a public company, if we were still a private company.

And your profile goes up. I think your profile goes up significantly when you're publicly traded. And there are bad aspects and there are good aspects. And I think the good aspects outweigh the bad aspects.

And so you had every one of the major Internet content search engines sort of lining up to go, and it was a good way of getting a lot of capital quickly, which we all knew we'd need. And the other great thing was it's a great way of getting PR. And PR drives traffic on your Web sites.

So, we virtually had to do it. And I would do it all over again. Even with the negatives.

BW: Did you come out too early? Would you rather have been much later?

MINOR: Given my choice, I would have come out about three months later. Which is a pretty long time. [But if we waited], we probably wouldn't have gone public. I mean, the door slammed behind us the day we went public, literally. That was when Hewlett-Packard and Motorola and all those companies' earnings, they all blew up that summer. And the market was in free fall. And actually, we only got out because there was one up day, which was the day we priced...but then the door just shut.

So, yeah, I might have preferred another three to six months. But I think, given that the window was there and you have to be opportunistic,l that we did the right thing at the right time.

BW: Were you pushed by your investors?

MINOR: No, we pushed it ourselves, I think.

BW: What was the role of venture capital in the development of your company? Was it a positive experience or not?

MINOR: My experience was actually very negative. Well, I won't use names. But I had one of those classic VC sort of horror stories when I first started out in '92, when I was trying to raise money. I had lined up a whole bunch of private investors who were willing to put money in. And I went and talked to a VC firm just for advice in New York. And the firm, they said, well, "Wait a second, we kind of like this idea, maybe we'll invest."

And then I went in and I pitched the partnership, and [they said], "This is really interesting, would you write us another business plan, would you do this and do that?" And they also told me not to bring in money from the individuals because they wanted to do it themselves.

And so they strung out the process for four months, telling me the whole time that they were going to invest, but they just needed to do a little more due diligence. Meanwhile, I'm, you know, racking up bills on my credit cards and everything else trying to keep the thing afloat.

And then Glenn Jones, who owns Jones Cable Networks, launched the Jones Computer Network, or announced that he was going to do that. And it was, me and one very smart woman I'd hired who just graduated from Stanford Business School, and a little office vs. the eighth-largest cable operator doing television programming in this space. And even though we had a unique vision to tie it to online, I think it became a less interesting story when there was a big competitor out there. And they sort of, you know, they never said "no" to me, to this day, they've never said "no."

And so what happened was then I went to back to all of my original investors, having strung them along for four months...and they also vanished.

BW: These were individuals?

MINOR: Yeah. So here I am left with.... I mean, I walked away from a bunch of money that I could have gotten easily up front, in the hopes of attracting this firm that just stretched me out. I think that's the way they operate. They just stretch you out and stretch you out until they absolutely have to invest, 'cause they'll just watch your development. They have nothing to lose. And they just don't tell you "no," and they don't tell you "yes." But they keep stringing you along. They keep implying that they are there, just one more thing.

And so it almost killed the company. And this is a true story. I was probably about $40,000 in debt, moving around on credit cards, kind of classic story. And Shelby Bonnie, who's our COO, was one of the people who was going to invest, who'd been strung on. I'd strung him along, as well.

And so finally on a Thursday, I was ready to quit. Actually, on a Friday, I was going to quit. I couldn't move money, and I had no more credit cards, and no one would give me any more credit cards to do it.

And so Shelby Bonnie actually wired $25,000 into my account from a boat in the Caribbean. I took some of that money and paid down some of the bills and used a little bit to pay the rent and the office and whatever and kind of kept going. And then I, you know, coaxed another $25,000 out of him and another $25,000. And that's how we got up.

But I was literally one day away. And we would have died. I would have been fine if I had just taken the money, you know, right up front. But I think that there's enormous risk in going the VC route.

I think the other really important story was that the VC firm also would have killed my company because they would have made me go the wrong direction.

BW: How's that?

MINOR: One of the things that may have scared them, when I went in, I pitched my plan for how I was going to do this. They said, O.K., where is the first $350,000 going? So I said, well, "I'm going to do a video tape. It's going to explain what the whole vision of what the company is.... And I'm going to go out and do cards."

And so they all kind of looked at me like, why are you going to spend all this money, it's just crazy. You should just go out and you should meet with the marketers and all these computer companies, and you should sell them on the idea and get them behind you. It doesn't take a lot of money, and you just got to plan and go out and do it.

So I walked away, and I'm like no.... I had this crisis of confidence.

And once I knew it wasn't going to happen, when I was getting money from Shelby, I went out and I got the video tape and the big media kit and the cards. And the thing that I realized was, I was nobody. Why would any of these people meet with me if I couldn't at least be able to paint the vision for what the company was and show them that there was something behind it?

Even if it was simply a video tape and a media kit and, at least, nice cards. I mean, it sounds really trite, but, we attracted a lot of people like Time-Warner and Viacom and those simply to talk to us because we had a really good tape and a really good media kit. I mean, these are image-driven companies.

And we would never in a million years -- I mean, why would the head of marketing at IBM want to talk to a 27-year-old kid who's got an idea for a cable channel type of online service who can't even afford a business card?

And, you know, it's a nice notion that you can do it all for free, but the reality is you can't. And so you have to kind of break the rules. And I think venture funding can be a little formulaic.

BW: It sounds like you're a big fan of angel investors, though.

MINOR: I am, I am. VCs do bring something to the table. I think there are negative sides. But people like John Doerr can be extraordinarily helpful in connecting people -- connecting startups with other companies that can help them and other people. And angels can do that, too. But I think ... their job is not only to invest but also to connect you with other people who can help your business.

I think where VCs are successful is where they not only add money but they also add value in helping to bring partnerships and other relationships to the table.

BW: What does Intel do for you?

MINOR: Well, I wouldn't really consider them a VC investor. I would consider them a strategic investor. And, you know, I think they're part of the business model for our news service Snap! Online, which they knew when we went public we were considering doing. Our conversations with them go back to before we went public.

You know, part of the business model is to try to help PC manufacturers deliver more complete experience out of the box for getting on the Internet. That includes turning the PC into more of a television-like experience that explains the Internet and the technology. We do that. We explain technology to consumers and we use video.

Intel is obviously a big push behind the multimedia PC and this hybrid application connected to the Internet. You know, that was our vision: The PC experience becomes a lot richer for explaining this very complicated thing. And then it allows you to connect to an online service with the added twist that we do it in a way that helps the PC manufacturers themselves because they can essentially deliver their own kind of co-branded online service, which a lot of these guys really want.

BW: Can you just talk about, since you are a new media company, why not locate in New York, why here?

MINOR: I was located in New York.

BW: So why are you here now?

MINOR: Well, there are two reasons. One is specific to our company, and that is we cover computers and technology. I don't think we would have ever gotten the credibility for doing that out of New York City, because so much of the industry is here.

And so many of the reporters are here, and so many of the companies are here they want to report on. And I thought that everything I was trying to do early on was to build credibility. When you have no credibility because you're totally unknown, you try to do things to give you credibility. Even like locating in a city, in an area that's known for technology, because that's what you want to report on.

And, in fact, I think...it was a big selling point in [Paul Allen's] investment in us that we were located in San Francisco.

Actually, Kevin Wendle, who's our head of programming and still on our board, really was sort of adamant about us being in Los Angeles because the TV infrastructure's there. And I said, yeah, but it's very hard for us to be a credible source of reporting technology out of Los Angeles. I mean, I was adamant about being here. So that's the first thing.

The second thing, which is serendipitous, is that so much of the industry that we're in, the online industry, is located here. And so many deals get done because we are co-located with one another.

You know, you would think that because we're all part of this highly connected industry, that we could be located anywhere. But there's a tremendous amount of value in face-to-face contact among the different companies.

BW: When we talked [earlier], you gave us some examples of that, how you see certain individuals at meetings, you see them three times a week or something, and then it gives you an opportunity to talk shop. Can you give some examples of that?

MINOR: I'm part of this group that John Doerr put together for meeting with Vice-President Al Gore and it's now called TechNet. And so I hosted Gore about three weeks ago. So it was me and [Yahoo! co-founder] Jerry Yang, Karl Jacob from Dimension X, Joe Kraus from Excite, Deb Triant, who runs a Check Point [Software Technologies Ltd.], John Gage [chief of Sun Microsystems Inc.'s science office]. Andrew Anker from HotWired, and the general counsel from Netscape.

If you look at just the amount of Internet traffic that was located in this group -- between Excite and Yahoo and CNET and Netscape -- I mean, it's an extraordinary percentage of the people who are going online every day.

And so, you know, it's just another opportunity for all of us to kind of get together and talk about things. Although we're going to be competing with Excite and Yahoo, we still do stuff together, too, certainly on the CNET side. So there are still partnerships.

BW: Do you think that ability or willingness to do both...partner and compete with people at the same time is a cultural phenomena maybe that's unique to this area?

MINOR: I don't think that [many] companies have learned that skill yet. And I think that it's going to be really interesting to see because we're going to be kind of an interesting litmus test because we have two separate divisions of our company. One is CNET, and it makes really good content, and lot of the networks are going to get the content kind of pulled into their channels, the people who program their channels. And we should be a natural choice because we do well.

On the other side, we're going to compete -- and this is really typical for somebody like TCI and Time-Warner to understand. I mean, in some areas, they go head-to-head and in some areas, they work together. And it's just different divisions of the company. And they just understand that, right? So they're going to, you know, try to beat each other's brains out two days a week and try to be friends three days a week.

And the question is whether companies are going to be as facile or not at it? It will be interesting.

I've found, so far, that I think we're going to be very good at it. I think we understand that we're going to compete with people, and I think we're going to partner with people. And I think we'll have no problem with it.

I think Yahoo! will probably be pretty good at it. But I think that it's going to be really interesting to see how companies -- how successful companies are in realizing that.

BW: Not to get off on a tangent, but do you think Microsoft will be able to do this?

MINOR: I think they're extraordinarily good at it. I think they've always been extraordinarily good at it.

BW: Yeah, but they're bumping up against newspapers...

MINOR: Yeah, but, look at the number of conflicting businesses that they have running under their roof and how well they do, and they still partner with people. I think they are probably the single best example of a company that knows how to compete and partner. They worked with Lotus to help them develop their applications and they compete with them in the spreadsheet business. And they are, you know, very good at that. In fact, I think that's one of their core strengths.

BW: It's not just done out of fear?

MINOR: Well, I think they do it out of fear, too. I think they fear companies. And I think they try to co-opt them. And I think that's a smart thing.

But we're kind of working with Microsoft to develop versions of all of our services to support [Microsoft's latest browser] Internet Explorer 4.0, and, at the same time how Snap! Online can work with them, for instance, and all their other services. And yet, it's becoming competitive, in a sense. But they're really good at that, they really are.

BW: Who's not good at it?

MINOR: I don't know. Because -- well, I'm going to find out, because some of the people who we would normally have partnered with on the CNET side may be scared off by the Snap! Online side. And so I think it's a little too early to tell now.

But I think people who do that are really short-sighted that they cut themselves off from one side of our business simply because there's another side that's competitive. Because, you know, the CNET side thinks probably what's best for CNET, and they don't give a damn about what's happened to Snap! And the Snap! side cares what's best for Snap! and they don't give a damn about the CNET side.

So, I mean, we've got it pretty well -- and so I just don't know whether other people will see that or not.

BW: You're located in San Francisco. Does that make any difference, not being located in the Valley itself?

MINOR: I don't think so. I think if we were a software company, I think we would be better off being down in the Valley. I think as a media company, it's easier to hire people being in the city.... And then we're right in the middle of all the ad agencies, which is very convenient. And then there are also just like all sorts of video-production facilities and other places directly around us. So where we are it's very convenient.

BW: Can you give us just a really quick update of the status of the non-Internet parts of the business? What are you actually doing today with cable?

MINOR: O.K. We have four TV shows right now. We have three that appear on either USA [Network] or Sci-Fi [Channel] or both. It's CNET Central, which is a one-hour show about the Web. CNET Central is kind of our showcase show. And a show called the New Edge, which is about future technology. And a little broader than just computer technology.

And then we have a show in syndication called TV.com, which is in about 120 markets. It's in 80% of the country.

Some people always thought that our business plan was really kind of crazy to do television programming -- why not just do online? We're a new media company, but we're a new media company by combining traditional media with the Internet.... And the idea behind Snap is really to have a network aggregation point here, to help people who want to distribute Internet access pull together best of breed from each of these categories, you know, and to use our experience to do it.

I don't want to go into news or sports here, because there's no way I could ever be successful. We will eventually be [successful] online because we have a known brand and television program.

BW: So the one exception, then, has been your investment in news. Developing your own news...

MINOR: Technology news. All technology news. It's part of our franchise on computer technology in the Internet, which will we do on television. We do news on CNET Central, our TV show. And at that end of it, we say, for world news, go to News.com.

Being able to do that and reach, you know, a million and a half or 2 million people, is a very powerful vehicle. And I think it would be hard for us to be as successful as we've been on the Web if we didn't have that, at least initially, to build a large brand presence.

So I think our space is really unique. Computers and technology is a very unique space on the Internet. Because the commonality of everyone of those people is that at some point they're going to buy a new PC, at some point they're going to download a new browser, at some point they're going to download or buy some software. We serve that.

So it's content, but it has certainly universality on most of the navigation hub.

BW: All those former search engines are now calling themselves networks. What do you think?

MINOR: I think that's what they're trying to be I mean, that's what I think they all know they have to be that.

I think Yahoo has done the best job. Yahoo figured out a lot longer ago than a lot of the other ones that they're an online service. And so they started looking at what AOL does and started building those pieces.

BW: On a somewhat more prosaic note, what do you think is the most misunderstood thing about how the Valley really works? What makes some companies be successful and others fall by the wayside?

MINOR: I used to be totally intimidated by Silicon Valley before I moved out here.

BW: What do you mean?

MINOR: I don't know. I was very intimidated by it.

BW: Do you mean by the micro-technical knowledge?

MINOR: No, I had a lot of technical knowledge. By the culture, I think. I thought -- and I think it's true -- that it was a relatively clubby place. And that I would be a total outsider, and how do you penetrate it? And it is a very clubby place. Not in like the East Coast kind of clubbiness. But it has its own brand of clubbiness.

BW: Such as what?

MINOR: Well, I think it turns on relationships, like any other place. To the degree that you get to know the various different people, it makes it easier to get things done. And that's not dissimilar from New York. It doesn't have the sort of ostentatiousness of New York, but it has the same -- it isn't outwardly exclusive like, you know, say, New York is. But it has that same sort of clubbiness.

BW: Is there anything about the Valley that makes it so successful as a place for kind of continuing innovation? It's gone through all these busts,

but it keeps coming back.

MINOR: Very fluid work force, which is its greatest asset and its greatest drawback because the companies kind of come together and they disband. Employees are very fluid. You can build a large company very quickly If you fall on hard times, you lose employees just as fast you got them, good employees.

So momentum changes are sort of magnified out here. And I think that's real easy. I mean, there was a story about that -- where [former Apple Computer Chairman] John Sculley was walking the halls and right in front of him were two people who were talking about leaving Apple and going to start a company. And he just kind of walked by them and they just kept right on talking about doing it. And he was in shock. And then somebody pointed out to him that that was a really good thing because all these people went out and built companies that supported the Mac platform.

And so I think, culturally, that's very different from, say, the East Coast. People also work really hard out here; not that they don't in New York, because they do. But I think software developers probably work a lot harder out here than in New York. And the finance people work harder in New York than they do out here.

BW: You talked before about how important it is to be in the club. I think a lot of entrepreneurs have been invited into the club by their VC. So how did you get into the club?

MINOR: It was really hard. It was very hard for me to get credibility in this community. It took a long time. What was a big help for us was that Paul Allen invested.

BW: How did the Paul Allen investment help you, specifically?

MINOR: Well, [it gave us] some credibility. But I think staying power also accounts for something. So if people think you're going to be around for more than a week, they're much more likely talk to you.

BW: Has the Valley's own success become a real impediment to expansion or growth?

MINOR: Yes. It's harder to hire people. It's harder to hire because the economy soaked up so many. I mean, there are something like 60,000 open technology job requisitions in the Bay area. Everyone's having a hard time. You should get the number from Oracle, like how many people they're trying to hire. It's extraordinary.

BW: Do you have any hiring horror stories of your own?

MINOR: Yeah, I had one senior executive I wanted to hire, and he was very interested. He came out here and decided that there was no way of getting anything [in housing] comparable to what he had in New York.

BW: So you ultimately didn't get that person?

MINOR: No.

BW: Have you had to give more options and things to pry people out of companies?

MINOR: Well, here you always give options.

BW: Right, but do you have to bid up?

MINOR: Well, it's harder to say, because you tend to find yourself some good people in competition with lots of other companies. So I'm sure that there's a natural escalation there.

BW: Are you hiring concept employees? If the pool of experienced managers is depleted, who do you hire?

MINOR: Oh, I call them "best athletes." And we try to hire those people anyway.

BW: People who aren't necessarily trained?

MINOR: Yeah. Now, you wouldn't do that for ad sales or technology, because you own the best athlete writing code on your Web sites. But I think that in businesses that change a lot, you need best-athlete types.

That's what Microsoft tried to do in their own way. Which I think is a really smart thing. Hire smart people. Hire smart, flexible people and that way if you have to move them around, they don't mind.

BW: And maybe less experienced, just overall?

MINOR: Yeah. I think for our industry, less experience is better, in some ways. Because they don't bring too many preconceived notions. And preconceived notions are a very dangerous thing when you're doing Internet.

BW: Have the obstacles gotten to be to a point where something has to give? Is there any kind of threat to the kind of explosion we're seeing here in the Valley?

MINOR: I think we're going to see an explosion of development. And we may see decline of the quality of life when more people are out here. But I don't think it's critical. And I think you're going to see a lot more development happen, as much as can happen. And people with longer commutes than in New York City.

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