Gunny Walker

Yesterday I heard a scientist being interviewed on CNN. The scientist was showing the kind of rocks that NASA is looking for on Mars. They would be rocks that might show that there was water on Mars. The interviewer asked, "So these are rocks from Mars?" You don't have to be a rocket scientist to know they weren't.

Anyway, here's a passage from the book I'm reading. All The Rave: The Rise and Fall of Shawn Fanning's Napster. The first paragraph is from page 66 about a potential investor named Jason Grosfeld. The second is from page 114 and sounds like a classic "pump and dump" tactic being pulled by Ron Conway, a funds manager for Angel Investors, an investment company that he started.

The more Grosfeld thought about what was happening inside Napster, the worse it looked. Not only were the employees aware of "facts" and "circumstances" suggesting copyright infringement, by itself enough to ruin the second safe harbor, they were aware of the infringement itself. Napsters few workers "weren't anything like a service provider," Grosfeld concluded. "They were not in reality closing their eyes to the copyright infringement going on there- they bragged about it. My lawyer thought it was insane."

The dot-coms as a whole were little more than a publicly supported pyramid scheme, built on the long-true presumption that an even dumber investor was just down the road. With more finesse, Kleiner Perkins' John Doerr called the process "the largest legal creation of wealth in the history of the planet." And Ron Conway had the perfect strategy for taking advantage of the situation. At the height of the boom, as professional investors saw it, the entrepreneurs held all the high cards. If you asked too many questions or dawdled too long, they could walk down the block and get cash from someone else. Conway didn't dawdle. He used his prodigious network, always pressing for the latest gossip on what wass hot and then investing his funds quickly. Then he worked the all-to-receptive media to hype his finds. Sometimes, he tried both tacks at the same place. one of Conway's investments was in Red Herring, a San Francisco magazine covering the venture industry. Conway would give editorial director Chris Alden, who was an Angel Investors limited partner, an update on the funds new investments. Then he would walk down the hall and pitch the magazine's news staff on his new start ups.

What is "pump and dump"? About one step away from the above action.