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The Internet's promises haven't wooed all venture capitalists
Friday, August 13, 1999
By JOHN COOK
At a time when most Seattle venture capitalists are chasing the latest Internet technology or ".com" startup, Artie Buerk has decided to look in the other direction.
Buerk, the 63-year-old former president of Shurgard Storage, has formed a new venture capital firm in Seattle that will look primarily at non-technology deals.
"We are taking after Warren Buffett's philosophy," said Buerk, referring to the legendary investor who has shied away from technology investments.
The new firm, called Buerk Craig Victor LLC after the three founding partners, has a wealth of business experience.
Roger Victor is the former president of Olympic Stain, a 350-person paint manufacturer that was sold to Clorox Corp. in 1980. Gary Craig is a Seattle investment banker known for putting together the financing deals for Tully's Coffee and Primus Knowledge Solutions.
Buerk also knows a thing or two about raising money and running businesses. From 1968 to 1977, the Harvard MBA served as the chief fund-raiser for the University of Washington. Under his direction, private donations soared from $40,000 to $15 million. Buerk then spent the next 15 years at Shurgard where he helped fuel the storage company's national expansion.
Why would Buerk Craig Victor focus on non-tech deals in technology rich Seattle?
Buerk believes that Internet investments -- much like former hot industry sectors such as biotechnology and medical devices -- are coming to the end of their high-flying grace period.
"The bloom appears to be coming off the rose," he said.
Competition is another factor. There are so many venture capitalists competing for Internet deals that local manufacturing, medical device and biotechnology companies are being passed over.
AtomFilms, a Seattle startup that broadcasts short films and animated programs over the Internet, has linked up with yet another big-time media executive.
Warren Littlefield, the former president of NBC Entertainment who created the "Must See TV" concept, has joined the advisory board of the year-old company. Littlefield will help AtomFilms with programming, syndication and strategic alliances.
In May, Frank Biondi Jr., the former chairman and chief executive of Universal Studios, took an investment in AtomFilms and was named to the company's board of directors. Craig Hunegs, executive vice president at Warner Brothers Television, also recently joined the advisory board of the new media company.
AtomFilms, which webcasts short films in nine categories, was founded by Mika Salmi the former director of business development at Getty Images and RealNetworks. The 38-person company recently raised $4.8 million in venture capital, including an investment from Warner Brothers Online.
AtomFilms could use the Hollywood muscle. Digital Entertainment Network -- a streaming media company based in Santa Monica, Calif., and backed with $26 million from Microsoft, Dell Computer and other marquee investors -- is currently developing 30 interactive Web programs for kids between the ages of 14 and 24.
Both AtomFilms and Digital Entertainment Network are hoping to build new media companies that grab the attention of young Web surfers.
Yesterday, DEN (as the company is known) made Greg Carpenter its chief technology officer. Carpenter is a six-year veteran of Microsoft who recently served as director of marketing for Windows Media Technologies. Carpenter, 37, joins a powerful management team at DEN, which includes the former president of Disney/Touchstone and the former chief executive of Capitol Records. The 200-person company launched the first of its Internet programs in May.
DEN's programming is much more dynamic than AtomFilms, said Carpenter, adding that it combines instant messaging, interactive games and chat boards into a giant community site.
"(AtomFilms) is just taking an existing video and posting it on the Web," Carpenter said. "DEN actually produces all of the shows with the Internet in mind."
Moving right along from Internet films to Internet radio. TheDial.com, a Salt Lake City, Utah, company that develops private label radio shows for Web sites, is moving its headquarters to Seattle. Todd Herman, chief executive officer of TheDial.com, said he wanted to be closer to Seattle's budding streaming media community, which includes RealNetworks and Microsoft.
"There is a tremendous amount of creative flow in Seattle and the mass of talent, both technical and non-technical, is unbelievable," he said.
Herman, a former DJ at KSBN in Spokane and KCNR in Salt Lake City, said current Internet sites are much like silent movies in the early 1900s.
But with the rapid adoption of streaming media technology, Herman believes "every Web site in America will have to react to audio on the Web."
The 14-person company, which plans to launch its online DJ service next month, raised just over $1 million from Wasatch Ventures and Utah Ventures earlier this week. The company's clients include Women.com and HomeStead Technologies.
P-I reporter John Cook can be reached at 206-448-8075 or johncook@seattle-pi.com.
For more venture capital news, visit www.seattlep-i.com/venture.
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