about it. But that was really the moment McCaw had finally put together this deal with LIN Broadcasting, so it suddenly had New York, L.A., Dallas, and Houston markets in addition to Seattle and others. I was there until we sold it in 1995 to AT&T. Craig [McCaw] left, I left, some people stayed. We didn’t really want to work for AT&T.
X: So how did Madrona get started?
TA: In 1995, I joined together with Bill Ruckelshaus, Jerry Grinstein, and Paul Goodrich, all of whom I’d known. Jerry and Bill were coming back to Seattle. Bill had been CEO of Browning-Ferris, and Jerry had been CEO of Burlington Northern Railroad. It was just coincidence that they were coming back to Seattle. Paul Goodrich had been working as a venture capitalist at an environmental fund out of Chicago, but he was in Seattle. So we opened an office and said, “Let’s figure out what to do.” We didn’t have a clear vision we were going to start a venture capital fund. We decided we were going to invest our own money, and we’d invest it in early-stage technology companies and also look for private equity—bigger deals, things that were in families that wanted to diversify, bigger traditional companies.
Between ’95 and ’99, we added Greg Gottesman. It was really the four of us plus Greg. What we found was, every day some entrepreneur would walk in with an interesting company he was trying to raise money for. The explosion kind of started just about then. Aldus existed, there was Visio, RealNetworks, and of course, Microsoft by then was a real powerhouse. And people were starting to leave Microsoft. Jeff Bezos was moving to Seattle. Things were really starting to happen. We invested in 40-some companies, usually relatively small amounts—$50,000, $100,000. We’d join together with other angels and venture capitalists from the Bay Area. We did pretty good due diligence, so I used to call us “professional angels.”
X: How did you evolve into an early-stage venture firm?
TA: At the same time, we kept working on bigger deals, and none of them ever happened—literally, never did we do a bigger deal. Either we didn’t like the deal, or we’d talk to families and they’d go the auction route. So we never did a private equity deal. In ’99, we had a partnership with Oak Investment, and the managing partner over there said, ‘You guys seem to be OK on the venture capital side, but don’t seem to be making much progress on this other [private equity] side.’ So we decided then to go raise the fund—in September ’99, we raised our first fund.
The market was very hot then. We’d invested in Avenue A, which became aQuantive. We had something like 12 companies that had gone public. We had 15 companies where we more than doubled our money. On paper we looked great, but we didn’t have a very big team. So we quickly, in three months, raised $250 million.
X: Let’s back up for a minute. Amazon was one of your most famous early investments.
TA: Back around ’95, Jeff Bezos had walked into my office. He’d been referred by somebody else in town who thought I knew about the Internet. I actually did know a little bit, but I wasn’t an expert. I’d just left McCaw. Jeff was raising a million dollars, his family put in a fair amount of that, he’d moved to Seattle, he hadn’t launched the site yet. He was about to launch the site. It took him from then until December to raise his million dollars. It was this classic, go door-to-door, one referral leads you to another, and most people wouldn’t invest. There was a good venture capital firm that looked at it, did all kinds of due diligence, and concluded they would be killed by Barnes & Noble, who hadn’t yet launched a site, but would. Eventually, it took me several months. Jeff would call me and say, ‘We’ve launched now, and we’ve got orders from 10 different states.’ Then one day, it was, ‘We got our first order from Europe.’ Gradually, I thought this thing could go someplace, so I did invest.
You can never predict things—it’s partly luck, partly being open to ideas. Don’t pick one bet, make several. But fundamentally I believed in the Internet, I thought there was going to be big opportunity, and this one presented itself. Jeff was impressive. Jeff was also going to break even in the second year—that was the other attractive thing. [It didn’t quite work out that way, of course—Eds.]
A year later, we brought in Kleiner Perkins, and a few years later went public. In 2000, when everything collapsed, [Amazon] kind of turned the ship just in time. In terms of really focusing on
