Hot Topics: The World of Internet Venture Capital

— -- During the high-tech frenzy of the last few years, many otherwise sane people, bitten by the start-up bug, left the mundane security of their jobs in search of the “next great idea” to enrich them behind their wildest dreams.

But the power and means to turn those entrepreneurial dreams into something real came from another source — venture capitalists.

Now, author Randall Stross has provided a detailed account of the inner workings of one such group of venture capitalists. With his new book eBoys, Stross tracks two years in the life of Benchmark Capital, which, with investments in enterprises like eBay, Webvan and Ariba, has been at the forefront of the high-tech start-up boom since it was founded in 1995.

Stross, a business history teacher at San Jose State University and author of books on Microsoft and Steve Jobs, gained his fly-on-the-wall view by convincing the Benchmark partners to give him unfettered access to the firm and some of its clients from the fall of 1997 to the fall of 1999.

And the result is a fascinating account of the ups and downs of the high-flying world of venture capital in the late ’90’s.

All For One

Unlike the rigid hierarchies that many venture capital firms embrace, Benchmark prided itself on its egalitarian power structure. The firm was a partnership of equals where the profits of each venture was divided equally among the partners, no matter who was responsible for bringing the business in.

Ironically, that share-and-share-alike approach prompted the partners to strive even harder to make their respective ventures fly.

And fly some of them did. The book chronicles Benchmark’s investment in online auction site eBay, which hit the public market at $18 a share and climbed to over $300 within months of the company’s initial public offering.

‘Now I Get It’

Started in as an experiment out of 29-year-old founder Pierre Omidyar’s apartment, eBay flourished under Benchmark’s tutelage. The firm helped eBay lure Meg Whitman from her cushy, secure job as chief executive of Hasbro to sign on as the auction site’s CEO.