Bad Times for Broadband Office - Company Financial Information

Industry Standard, The, April 23, 2001 by Lark Park

BBO's leadership remains shaky. The company says it's close to bringing in a CEO to replace Chu, who drew up the BBO business plan as a Kleiner associate and who has stood in as chief executive from the beginning. Khosla says putting an associate in charge of a project isn't uncommon at Kleiner. But others say Chu's inexperience -- he received an MBA from Stanford in 1997 and previously worked as a financial analyst, consultant and applications developer -- helped hobble an ambitious project. "Kleiner Perkins' biggest problem is they didn't watch the store," says a former BBO employee. "They put Dan in charge and he didn't have the experience."

Chu no longer handles day-to-day operations, although he retains his acting CEO title. The reins have been handed over to the VP of sales, Marshall Bauer, and the VP of marketing, Scott Langmack. Neither could be reached for comment.

Many still believe BBO will succeed. Khosla says the company is close to announcing a new round of financing. Zephion, meanwhile, has been separately financed by Kleiner Perkins. Somewhere, BBO and Zephion have a valuable business proposition for customers. As information technology needs become more complex, IT professionals are harder to find. There has to be a better way to deliver IT services than what currently exists, says Jim Andrew, a VP at telecom consultancy Adventis. If BBO can bundle telephony services and applications seamlessly, it just might thrive.

But even VCs who backed rival companies have given up. "It's impossible to raise money' says Gary Rieschel, a Softbank Venture Capital partner who last month shut down Urban Media, a competitor to BBO. If BBO doesn't secure more funding soon, Kleiner Perkins will have to decide whether to throw in more money -- or the towel. Khosla, one of the most powerful VCs around, isn't one to abandon his projects. "I haven't shut down a single one of my companies' he declares.

If BBO comes up empty-handed, it will be a serious blemish on Kleiner's reputation. If BBO gets financed, it'll have a second shot at success, which is one more chance than most companies get. Maybe that pedigree will be worth something after all.