Private Equity News & Analysis

Friends of Bill

Former employees of Microsoft continue to be key players in the operations of the venture capital world. By David Rapp.

By
David Rapp
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Former employees of Microsoft continue to be key players in the operations of the venture capital world. By David Rapp.

This past July, the Seattle company Zillow.com closed a second round of venture capital funding to the tune of $25 million, bringing its total funding to $57 million—and it just launched its website, that estimates home values, in February 2006. Among its investors are PAR Capital Management, Technology Crossover Ventures, and Benchmark Capital.

One person who’s very happy about the deal is Zillow.com chief executive Rich Barton, one of the venture partners of Benchmark Capital. Barton used to head up Expedia, the most successful online travel website, and before that, he worked at Microsoft.

Gates: Ex-Microsoft employees have been behind several venture-backed start-ups

Barton’s not alone. Ex-Microsoft employees have been behind several venture-backed startups. Also in July, for example, the online music startup Garageband.com, headed by ex-Microsoft Internet Explorer program manager Hadi Partovi, received $2.5 million in venture financing. And just recently, high-profile ex-Microsoft blogger Robert Scoble jumped ship to work for venture-backed website PodTech.net.

The VC-Microsoft connection may have something to do with the similarities of the cultures. After all, business doesn’t get more high-intensity and marketing-centered than Bill Gates’ Redmond, Washington-based giant. And such a hothouse environment clearly breeds driven businesspeople.

Partovi, for example, previously co-founded telephone information service Tellme Networks, which itself scooped up millions in venture funding from the likes of Kleiner Perkins Caufield & Byers during the late-1990’s dot-com boom. Also in the midst of the dot-com bubble, Microsoft VP Peter Neupert left to lead Drugstore.com—though he returned to the Microsoft fold in 2005.

Indeed, entrepreneurs like Rich Barton are highly sought-after, because they know what it takes to operate in the big leagues. “There are great entrepreneurs and great executives, and Rich is one of those rare individuals who is both,” said Bill Gurley, general partner at Benchmark Capital, when Barton joined Benchmark last year. “Rich had an unprecedented run at Expedia, taking it from an idea to a $10 billion company in only eight years.” And just this month, San Francisco-based Atom Entertainment, of which Barton is a director, was sold to MTV Networks for $200 million.

With numbers like that, it’s no wonder that the name “Microsoft” on a résumé attracts VC dollars.