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some mistakes. Hell, I did Pets.com with them. But their greed and their drive for notoriety caused them to make bigger mistakes."

More than his peers, former basketball center John Hummer took obvious relish in big battles in front of the crowd. "I am the record companies' worst nightmare," he proclaimed in July 2000. "The fireworks are just beginning. Before they close Napster, they'll have to pry it from my cold, dead fingers." In his case, the revolutionary fervor penetrated to a remarkable level, considering that his primary duty was to return profits to his investors. As he told Fortune, "When I decided I was willing to lose my whole $13 million investment rather than change Napster, a wonderful feeling of peace came over me."

Hummer Winblad's limited partners can be forgiven if they didn't get the same rush of well-being. In the fall of 2000, about five months after the Napster deal, Hummer was forced to write what must have been one of the most painful letters of his life, explaining how badly the latest fund had fared through the quarter ended in September. By then, Gazoontite and Pets.com were gone, and the $25 million in post-IPO losses in the latter "were the biggest losses we have ever taken," Hummer wrote. "In fact, they are larger than all of our losses ever, in the aggregate. It is an understatement to say how bad we feel about this." Other IPO shares that had not yet been distributed to limited partners included the Knot and HomeGrocer.com, which had racked up another $29 million in losses for the firm's third and fourth funds. While most business-to-consumer Internet stocks were trading at fractions of their earlier values, Hummer said that was no excuse. The firm's performance was truly extraordinary—it was a well-positioned venture operation in Silicon Valley that hadn't been able to cash in on the biggest investment extravaganza of the century.

Hummer concluded his letter by saying that the firm needed to focus on execution by its surviving companies "as well as manage valuation risk in the follow-on financings." Even better, it would seek bailouts through acquisition. The effect on Napster was subtle but unmistakable. Instead of injecting new money as needed, fighting the record industry to the end, and aiming to cash out in an epic IPO, Hummer Winblad was already looking for help.

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