A Day at the Movies

saw three (no four!) movies yesterday. my friend elizabeth and i went to kips bay and movie hopped through Kill Bill, Lost in Translation, and Matrix Revolution. Later that evening i also watched Blade Runner again, after having just finished the novel it was based on by Philip Dick.

i found Kill Bill relatively empty and annoyingly unfinished, albeit with some nice camera angles and interesting stylized details. Lost in Translation was airy, moody, and slow, but very enjoyable as a brief vicarious sojourn to Tokyo. and surprisingly, i really enjoyed Matrix, even after getting a 30/100 on rotten tomatoes. although it wasn't breaking any new ground, transcending the level of discourse previously achieved, or offering any real tangible existential answers, i felt it was still a relatively fitting end to the trilogy. which makes me wonder why the reviews were so visceral in their criticism. anyway, i'd see it again. i definitely will.

China's Factories Aim to Fill the World's Garages

China's Factories Aim to Fill the World's Garages
By KEITH BRADSHER
http://www.nytimes.com/2003/11/02/automobiles/02CARS.html

SHANGHAI — China, long a nation of pedestrians, cyclists and buses, is undergoing an automobile revolution. Sales of cars, vans, pickup trucks and sport utility vehicles here overtook similar sales in Germany this year, and production surpassed South Korea's.

For now, most of the cars and light trucks made here are sold here. But China — already the world's dominant manufacturer of products from toys to facsimile machines to furniture — is laying plans to become a big exporter of cars. Automakers are producing cars here to the same designs that they use in the United States, with Honda making Accords in Guangzhou that are identical to those it manufactures in Ohio.

China's auto industry, mainly local companies in joint ventures with multinationals, is not internationally competitive because of quality problems and startlingly inefficient parts factories. Workers at Dickensian foundries filled with acrid green fumes still ladle chemical additives into buckets of molten steel, then tip the buckets by hand to pour the steel into molds for auto parts.

China's auto exports to the United States mostly consist now of replacement parts shipped to repair garages, because automakers have been reluctant to make their assembly plants reliant on Chinese suppliers. But with broad support from Beijing and foreign investors, manufacturers in China are quickly improving operations — and staffing them with workers earning as little as 50 cents an hour. In a few years, they are likely to be building high-quality cars and parts for as little as, or less than, anyone else in the world. Analysts say that China could surpass Germany as the world's No. 3 carmaking country in four years.

Executives at each major automaker say the combination of low costs and strong demand gives them no choice but to invest heavily here or risk being left behind. "Our competitors have reached the same conclusion," said Frederick A. Henderson, the president of G.M.'s Asian and Pacific operations.

The growth of auto manufacturing in China — the number of cars and light trucks produced has jumped to 3.8 million from 1.8 million over the last three years, compared with 12 million now in the United States, 10 million in Japan and 4.8 million in Germany — has enormous implications not only for this country but for economies around the world.

In China, where about four million families own cars and about one million more buy cars each year, this means that millions of citizens can travel more widely, somewhat eroding the political and social controls that the Communist Party has long imposed. Rising auto production, for sale to state-owned enterprises as well as families, has fostered the rapid expansion of a long list of other industries that mainly rely on sales to automakers, including steel producers. It is helping to create a consumer credit industry.

But putting China on wheels has also created terrible traffic jams, a rising death rate in a country with an atrocious traffic safety record, and severe air pollution in a country that already has 7 of the world's 10 most polluted cities.

Worldwide Worries The automaking boom in China worries many businesses and workers in many nations. International companies that build factories in China as they expand do not need to hire as many workers in their home markets, and may lay off some. The Cooper Tire & Rubber Company, for example, said last month that it would ship tire making equipment from its factory in Albany, Ga., to a company in in Hangzhou and buy as many as 300,000 truck tires a year from the Chinese company. At the same time, Cooper said it would expand production in Georgia of higher-performance tires, but would not expand its labor force to do so.

China's success is also a threat to other countries, mostly close American allies, where auto parts are made, including Mexico, South Korea, Thailand and the Philippines.

Union leaders in industrialized countries are making low-wage competition from China a political issue. Competing on wages "is a race to the bottom," said Ron Gettelfinger, president of the United Auto Workers. "And no one wins a race to the bottom."

Auto sales in China have jumped in the last two years as two decades of some of the world's fastest economic growth have finally lifted millions of city dwellers to nearly Western standards of living.

The domestic market alone is giving automakers and auto parts makers the economies of scale they need to compete internationally.

Automakers here should be ready to export cars to other Asian markets in several years, and later to industrialized markets like the United States and the European Union.

Bernd Leissner, the president of Volkswagen Asia-Pacific, the foreign automaker with the biggest share of the Chinese market, estimates that it still costs 18 percent more to produce a car in China than in an industrialized country like Germany. But with new steel mills and parts factories opening at a brisk pace, that gap will disappear by 2006, he said. "Our target is to become export ready as soon as possible," he said.

Problems With Production Visits to auto assembly plants and auto factories across China show why it will be a few more years before this country poses a serious threat to Detroit or Stuttgart, Germany, even though a few parts are already exported and General Motors plans to start shipping Chinese-made engines to a Canadian assembly plant this year.

At Honda's plant in Guangzhou, in southeastern China, 90 percent of the steel for the new Accord sedans and Odyssey minivans must be imported from Japan despite steep shipping costs. Chinese mills cannot make corrosion-resistant steel that meets Honda's standards.

In Harbin, in northernmost China, Hafei, a Chinese manufacturer, has erected a factory with the latest Swedish and Japanese robots. But deliveries of steel are so irregular, because of shortages and the decrepit railroad system, that the factory must absorb the considerable cost of keeping steel for two months on hand — enough for 50,000 cars.

In Chongqing, in western China, Ford has built a modern assembly plant. But Ford has found that many of the auto parts to build the cars must be imported by ship to Shanghai and then brought up the Yangtze River by barge.

And at an Asimco foundry in Langfang, in northeastern China, Fan Dong-bo, 37, still ladles chemical additives into a bucket of molten steel, then turns a wheel on the side of the bucket to tip the red-hot steel into molds for auto parts. Foundries like this one are beginning to ship castings to the United States, where foundries are closing because of environmental regulations.

Recent quality improvements have come with extra costs, too. Volkswagen has been able to reach international quality standards for cars made in China, Mr. Leissner said, but only because suppliers sometimes must discard large numbers of substandard parts, which drives up costs. Volkswagen also uses many imported parts.

But new equipment and new production processes in assembly plants are starting to address these problems. A factory complex built here by a General Motors joint venture with the Shanghai Automotive Industry Corporation looks very much like G.M. factories in the United States.

Capitalism in Action The rise of the Chinese auto industry is a remarkable story of capitalism, as China's dismantling of trade barriers as part of its entry into the World Trade Organization in 2001 has prompted a ruthless struggle by companies to become efficient enough to fend off any imports.

Automakers and parts makers in China appear to have been successful, as imports have risen only slowly while production costs have plunged. The sticker price of a Honda Accord, for example, has tumbled from $50,000 to $27,000 in four years.

For all its strengths, the Chinese auto industry, like the Chinese economy as a whole and perhaps like China's political system and even society, is a mountain created on a very narrow and possibly wobbly base. Aggressive lending by government-owned banks has been stimulating the economy for years — even though many debts are never repaid, to the point that Chinese banks now have portfolios of bad loans rivaling those of Japanese banks, but in an economy that is one-seventh the size.

If economic growth ever falters significantly and banks stop collecting their current flood of deposits from China's ever more prosperous people, a financial crisis could ensue that would cripple China's auto industry and many other industries. If such a crisis were to happen soon, before China's auto industry brings its costs down to international levels, then automakers could be discouraged from making further investments. But if China can keep growing for a few more years and become competitive, a downturn in domestic sales could unleash a flood of Chinese cars onto world markets.

Another potential difficulty lies in China's rigid political system. It is hard for any outsider to judge how stable China really is, as ill-organized protests and riots appear to occur frequently in smaller cities, even as the Communist Party prevents these disturbances from becoming coordinated to an extent that might threaten its legal monopoly on political power. Large-scale social unrest could seriously disrupt China's auto industry and economy as a whole.

The biggest question these days in the Chinese auto industry is how much longer domestic sales will continue to grow at their recent, rapid pace. Some warning signs are already apparent that automobile ownership remains restricted to a very small but wealthy urban elite and not a broadening middle class.

Henry Ford won worldwide fame nine decades ago by doubling factory workers' wages, a step that allowed to buy cars if they saved enough. But workers like Bi Hong-jian, 20, who leads a team of employees installing seat tracks in Honda Odyssey minivans in Guangzhou, earn just $240 monthly, while autoworkers in cities farther west, like Chongqing, earn even less.

"Everyone wants a car, it's a dream, but to me it is difficult, it's too expensive," Mr. Bi said during a break from his work on the line.

Car dealerships have had few repeat customers. In the King Full Motor Sales dealership in Zhanjiang, in southernmost China, fully 70 percent of the buyers here had never owned a car, a figure in line with the national pattern. The sales staff spends more time explaining the cars than selling them.

Automakers are erecting factories on the assumption that repeat customers will become more common and that new buyers will continue entering the market. If anything, the biggest fear now among executives is not having enough capacity.

Like many automakers facing worried union leaders at home, G.M. insists it only plans to serve the domestic market here, and does not plan to ship cars to the United States.

The only automaker with explicit plans to export assembled cars to industrialized countries is Honda. Koji Kadowaki, the president of Honda's Guangzhou operations, said Honda would export cars to Europe from an assembly plant Honda has begun building in Guangzhou, although he declined to identify which countries would get the cars.

Honda is a special case, however, because it has a shortage of assembly plant capacity in Europe and faces European trade barriers to increased exports from Japan. Exports from China, even if costly, could avoid those barriers.

Yet China has a long way to go. Even seemingly simple parts like rubber sealings can prove hard to make. The experience of Steven Zhao, the general manager of an Asimco brake assembly factory in Guangzhou, shows the obstacles and potential of China's parts industry.

To make brakes for cars that are built and sold in China by General Motors, Ford, Peugeot, Renault and Nissan, his workers rely mostly on bolting together imported parts. Even a small spring is imported because Chinese suppliers are too likely to weaken the steel in bending it into shape, said Mr. Zhao, a former Alcoa manager.

But such hurdles are not discouraging anyone. "The market has always outraced our ability to keep up with it," said Phil Murtaugh, the chairman of G.M. China.

Toxins Are Part of Cost of Boom in China's Exports

Toxins Are Part of Cost of Boom in China's Exports
By JOSEPH KAHN
http://www.nytimes.com/2003/11/04/international/asia/04CHIN.html

TAIZHOU, China — The first thing that struck Shen Yunxiang when he descended into the bowels of Hisun Pharmaceutical was the smell, or rather the lack of it. It was as if the sewage system had been scrubbed with ammonia, he said, leaving only a sickly sweet aroma strong enough to overpower the stench of human waste.

In less than a minute, though, he realized that the company had exposed him to something far more noxious than feces. He had been sent, unwittingly, to release chemical runoff that Hisun had collected haphazardly beneath the factory, possibly to avoid paying fees to dispose of toxic waste.

Mr. Shen's chest constricted. His breathing grew labored, his head faint. Then Feng Huaping, his brother-in-law and fellow migrant worker, who had climbed down first, gasped, "Grab my hand, get me out," before collapsing in a puddle of muck.

Mr. Shen was the lucky one. He emerged with migraines and lung congestion, and doctors are still trying to diagnose the illness that is causing them. Mr. Feng died that night. A third migrant worker, Tang Dejun, also died in Hisun's fetid plumbing after he was sent down to finish the job the next day.

Hisun is one of China's leading exporters of pharmaceutical products, certified by the United States Food and Drug Administration and the European drug commission to sell lifesaving antitumor and cardiovascular medications for prices Western manufacturers cannot match.

But the company may pay more attention to fighting cancer in America than to protecting the health of its own workers and neighbors in Taizhou, a seaside industrial city where the air and water bear Hisun's inky signature.

Hisun declined to answer detailed written questions about the incident, as did the police in Taizhou. But a local government official confirmed the deaths, which occurred in August, and said they were the subject of an ongoing criminal investigation. The official said he did not know the cause of the deaths.

Hisun has sprouted quickly, growing from a tiny state-owned drug maker to a pharmaceutical and chemical conglomerate, with shares listed on the Shanghai Stock Exchange and some powerful foreign partners. But company employees and local residents say that it has never stopped dumping untreated chemical waste around Taizhou, and that it has minimized or ignored the harmful effects of poisonous substances on its own workers.

"They were reckless to send us down there without protection," said Mr. Shen, now recuperating in a nearby hospital. "To send another guy down the next day is beyond belief. They have no regard for human life."

Such disregard appears all too common as China booms. The country's economy is growing faster than any other. But the air and water in many of its leading cities rank as the dirtiest in the world, and the number of people who die at work, 11,500 through the first nine months of this year, is far disproportionate to workplace fatalities in other countries.

Much of China's economic boom has stemmed from foreign investment and international partnership. Hisun itself has become partners with the Drug Source Company, a distributor of generic drugs based in Westchester, Ill.

The American company helped Hisun gain regulatory approval to make ingredients for a range of drugs, including the top-selling antitumor medication doxorubicin, used to treat cancer patients. The drugs sold in the United States are Hisun's most profitable product lines and are its fastest growing source of revenue, according to reports it has filed as a publicly listed company.

Drug Source did not answer phone and e-mail messages seeking comment about its relations with the company.

Hisun has undergone seven inspections by the Food and Drug Administration in recent years. They were intended to ensure that the company meets American standards for product safety. Hisun passed the inspections, and it is now certified to sell ingredients for at least eight medicines to the United States, all distributed by Drug Source.

Eli Lilly & Company has also joined with Hisun to produce Lilly's drug capreomycin, used to fight resistant strains of tuberculosis. Similar alliances have helped Hisun crack the European market for pravastatin sodium, which lowers cholesterol levels in heart patients.

A spokesman for Eli Lilly said the company had no knowledge of environmental or safety problems at Hisun. The F.D.A. declined to answer questions about its inspections of Hisun or its certification process.

Hisun's case suggests that the enormous human and environmental toll of China's rapid development is not just an unintended side effect but also an explicit choice of business executives and officials who tolerate deaths and degradation as the inevitable price of progress.

Taizhou's main industrial area, Yantou, where the Jiaojiang River meets the East China Sea, was historically popular among fishermen, who used the river as a sheltered harbor.

In the mid-1980's, the local government renamed the area the Yantou Pharmaceutical Chemical Industry Zone, with state-owned Hisun as the anchor tenant. Authorities built concrete barricades along the beach to protect factories from the tides, rendering parts of the seashore inaccessible.

Hisun initially focused on the Chinese market and produced antiparasite medicines used by veterinarians to treat farm animals. But during the past several years, it has ventured into foreign markets with the help of its North American allies.

Powered by exports, Hisun's sales are on track to hit $150 million this year, and its campus of white-and-blue tiled factories and offices has expanded to cover dozens of acres along the waterfront.

Yet one of Hisun's comparative advantages seems to be that it does not spend much money to treat toxic chemicals that are byproducts of producing these drugs.

Internal reports by local and national environmental investigators have found that each year, Hisun and other nearby companies release 3.6 million tons of water laden with organic and inorganic compounds that receive little or no processing.

Yantou's shoreline is edged with sludge. Inland, the air is sulfureous. Fishermen say river water and seawater causes their hands and legs to become ulcerated, in some extreme cases requiring amputation.

Some 1,700 villagers have left the area around Yantou in recent years, according to one national environmental report, which also showed elevated rates of cancer and respiratory disease among residents.

The effect on some of Hisun's own employees has also been severe.

Until recently Cao Hongshai was a Hisun assembly-line worker who made a deworming medicine that the F.D.A. approved for sale in the United States.

Ms. Cao said she used toluene, a toxic solvent, to produce the active ingredient in the drug. But she wore only a blue cotton uniform and worked in a room that had no special ventilation.

Ms. Cao says she has not suffered health problems except for irregular periods. But two years ago she gave birth to a girl who had stubs where eight of her fingers should have been.

Ms. Cao and her husband, Lin Jianyong, sued Hisun for damages. A report submitted to the court by the government-run Medical Information Institute in Zhejiang Province found a "clear correlation" between the child's defects and the chemicals used at Hisun.

But local courts have consistently supported Hisun, and Mr. Lin and Ms. Cao have nearly exhausted the family's savings fighting the company.

Ms. Cao and Mr. Lin included "Hisun" in their daughter's name, so their daughter would always know that her deformity was the company's fault.

Local government officials have recently taken steps to clean up Yantou. Authorities opened a waste-water treatment facility just a short walk from Hisun's campus, and local companies are now required to channel their runoff there and pay for it to be processed.

Beijing has also expressed alarm. After two reporters for the New China News Agency wrote an unpublished internal report revealing Yantou's environment woes, Prime Minister Wen Jiabao ordered environmental and safety agencies to investigate, according to people who say they were told of the prime minister's intervention.

But by the accounts of Hisun employees and some local officials, the company became adept at fending off such inquiries.

On Aug. 14, word spread at Hisun that a central government inspection team was to arrive from Beijing. Employees said their managers became unusually active in seeking to clean up the facility.

Mr. Shen, the migrant worker who handled construction jobs for Hisun, noticed people bustling about the factory that day. But it was not until night that he and Mr. Feng were recruited to help the company prepare for inspections.

A boss came looking for Mr. Feng at the temporary shacks where he and Mr. Shen lived, together with their wives and young children, all of them migrants from southwestern Sichuan Province. Hisun's plant is nearby, across a foul-smelling canal that provides shipping passage to the sea.

The boss explained that Hisun had a problem that needed immediate attention. Mr. Feng, who led his own construction brigade, was told to pick a colleague and bring flashlights, a sledgehammer and a drill. Mr. Feng roused Mr. Shen, his brother-in-law.

Mr. Shen said the boss told them what to do. They were to knock down barricades that had been built inside Hisun's sewage system to redirect the flow of liquid waste. He did not explain why.

It seems quite likely, some other employees and local residents said, that the company had diverted waste water to avoid paying fees to have it processed, and that pending inspections prompted the company to restore the flow.

Mr. Feng stripped off his shirt and climbed down a manhole. Mr. Shen followed a few steps behind. He said he expected to smell human waste, but instead encountered the light chemical odor. He felt dizzy.

Mr. Feng had just begun working below when he cried out and reached for help. Mr. Shen grabbed his bare arm, wet and slippery, and pulled with all his strength. He tugged so hard that he bit off the tip of his tongue. The shot of pain in his mouth is his last memory that night.

When Mr. Shen regained consciousness two days later, blurry and disoriented in the hospital, he asked for Mr. Feng. He was told his brother-in-law was dead.

So were Mr. Tang, the other migrant construction worker who followed them into the drainage pipes the second night, and a security guard involved in a rescue attempt.

A local government official, Mr. Wang, who declined to provide his full name or have his title used, said a deputy general manager of Hisun and a lower level official in charge of the drainage system were under investigation.

Hisun itself was fined the equivalent of $5,400 for the incident, this official said. Relatives of Mr. Feng said Hisun paid them $20,500 compensation.

The local official said Bai Hua, Hisun's chief executive, was also assessed a personal fine. But neither Mr. Bai nor his company have said anything publicly about the incident.

In October Mr. Bai headed his company's delegation to a major pharmaceutical convention in Frankfurt, where it promoted its line of drugs to fight heart disease, certified safe by the European Union.

Microsoft and Google: Partners or Rivals?

Microsoft and Google: Partners or Rivals?
By JOHN MARKOFF and ANDREW ROSS SORKIN
http://www.nytimes.com/2003/10/31/technology/31net.html

SAN FRANCISCO, Oct. 30 - Wall Street is not the only one wooing Google. Microsoft is as well.

Google, the highflying Silicon Valley Web search company, recently began holding meetings with bankers in preparation for its highly anticipated initial public offering as it was still engaged in meetings of another kind: exploring a partnership or even a merger with Microsoft.

According to company executives and others briefed on the discussions, Microsoft - desperate to capture a slice of the popular and ad-generating search business - approached Google within the last two months to discuss options, including the possibility of a takeover.

While the overture appears to have gained little traction - Google indicated that it preferred the initial offering route, the executives said - it demonstrates the enormous importance that Google represents as both a competitive threat to Microsoft and as Silicon Valley's latest hope for a new financial boom.

Though seemingly spurned, Microsoft may still be interested in pursuing Google at a later date, according to an executive briefed on the discussions.

Both Google and Microsoft executives refused to comment.

Google, which was founded by two Stanford computer science graduate students in 1998 and quickly became one of the most popular Web sites in the world, has in recent weeks become the subject of intense speculation since it indicated to Wall Street that it hoped to sell shares of itself to the public sometime in the first half of next year.

Google's ability to stir Silicon Valley into a frenzy has also brought back memories here of Netscape, another start-up firm whose own initial public offering in 1995 helped touch off the dot-com explosion. Netscape once threatened Microsoft with a software browser that promised to be an alternative to its overwhelmingly dominant computer operating system.

Microsoft responded by significantly altering its business and adding its own browser as a free component of its Windows operating system, ultimately undercutting Netscape's business.

Google recently started wheedling down a long list of investment banks it approached earlier this month about underwriting the offering, which could be worth from $15 billion to $25 billion, the executives said. The company, which maintains tens of thousands of computers to help locate information on the Web almost instantly, has also explored the idea of a so-called Dutch auction, bypassing Wall Street and selling shares directly to investors. Such an approach could give it distance from scandal-plagued investment banking deals of the dot-com era as well as create a huge base of small shareholders.

The auction route is said to appeal to Google's founders, Sergey Brin and Larry Page, who are known for their fascination in pursing technical solutions to many different kinds of problems.

But it appears that Google is more likely to take the traditional path of using Wall Street to sell its initial offering. It is still toying with the idea, executives said, of using an online auction for a possible secondary offering as a way to allow its millions of users to have a better opportunity to buy its shares.

The company is considering selling about a 10 to 15 percent stake to the public, which is expected to raise more than $2 billion to be used to invest in the business and generate wealth for its employees, venture capitalists and early investors. Among the banks still competing for the business are Goldman Sachs, Morgan Stanley, Credit Suisse First Boston, Citigroup, J. P. Morgan Chase and Thomas Weisel Partners, the executives said.

Morgan Stanley is viewed as the frontrunner, the executives said, though Google may choose two banks to lead the underwriting effort. Goldman Sachs is also viewed as a contender, the executives said, but Google's management has shown some concern about Goldman's close relationship with Microsoft and Yahoo, another major competitor.

Google has a clearly dominant position in Internet searching, which has served as the foundation of a fast-growing and highly profitable advertising business built around placing specific text ads close to Web queries on similar subjects. Its rapid revenue growth, however, has begun attracting large competitors like Yahoo, which has acquired Overture, a leading search ad provider. While Microsoft and Amazon.com are both considering getting into the business, the growth in Google's Adwords keyword business has, at least for now, started to slow, according to a person with knowledge of the company's business.

Microsoft as a search competitor could change the market's assessment of Google's value. Moreover, if Microsoft attempts to integrate Web search features directly into its coming Longhorn operating system, it could restart the bitter feud that led to the government antitrust case that grew out of Netscape's failure.

Partly in response, Google continues to explore new businesses to extend its reach into new markets and to find new sources of revenue. One such effort included approaching Friendster, a Silicon Valley social networking company that has recently grown rapidly, according to an executive briefed on the talks. Friendster has instead received a $13 million investment from a group of venture capitalists led by Kleiner Perkins and Benchmark Capital, an action that was first disclosed in The Wall Street Journal.

In Silicon Valley, executives and venture capitalists remain divided over the consequence of Google going public. Several people close to the two venture capital firms that are the major Google investors - Sequoia Capital and Kleiner Perkins Caufield & Byers - said that partners at the firms had been focusing closely on the timing of the Google offering, hoping to help jump-start a rebirth of the technology market of the 1990's.

But many other venture capitalists here say that Google is such a unique company that its offering, if and when it comes, is not likely to set off a similar train of events.

"There was a time we were all looking forward to Google," one venture capitalist said on Thursday. "But it's become such an unbelievable event that it is a juggernaut. I no longer believe that it will open up the I.P.O. market broadly."

John Markoff reported from San Francisco; Andrew Ross Sorkin from New York.

A Franchise Fantasy

A Franchise Fantasy
By LAURA M. HOLSON
http://www.nytimes.com/2003/11/09/movies/09PROCESS.html

My Precious

First-class passengers on Air New Zealand's Friday afternoon flight from Wellington to Los Angeles may have seen a bleary-eyed, anxious-looking American and wondered, perhaps with some trepidation, what he was up to. Upon sliding into an aisle seat, the man slipped a videotape into a backpack, strapped the pack to his chest and draped an airline blanket over his torso, tucking the ends under his thighs for good measure before tightening the seat belt across his lap. Throughout the 14-hour flight, he frequently peered into the bundle on his chest, as if assuring himself that the tape was still there.

The man was Mark Ordesky, an executive at New Line Cinema, and the videotape he guarded contained working footage of the ''Lord of the Rings'' trilogy. On more than a dozen trips from Wellington to Los Angeles to New York and back again, starting in 2000 and continuing throughout the films' production, Ordesky played courier between the director, Peter Jackson, who was hunkered down at his New Zealand compound, and New Line's co-chief executives, Bob Shaye and Michael Lynne.

Before taking on J.R.R. Tolkien, New Line had been known mostly for making teen horror films like ''A Nightmare on Elm Street'' and offbeat comedies like ''Hairspray'' and ''House Party.'' ''Rings'' was an altogether different bet. New Line had put up $80 million and risked an additional $200 million of its international-distribution partners' money to finance an astonishingly ambitious special-effects-laden three-part epic about hobbits. All of those involved, Ordesky not the least among them, realized the price of failure. If the first picture bombed on opening weekend, the whole trilogy would go down as one of the biggest fiascos in Hollywood history.

Ordesky's part in preventing a debacle was to both protect the footage and act as a translator between his bosses and Jackson. ''I was so paranoid when I had the videotape,'' he says now. His biggest fear was that he would lose the tape and that the film's images would end up in a competitor's hands or, worse, on the Internet. Upon arriving at Los Angeles International Airport around 9:30 a.m., a private car would be waiting to ferry him directly -- no nap, no shower -- to New Line's office in Beverly Hills. Shaye would review the footage as Ordesky took notes to deliver to Jackson. He would then catch an early evening flight to New York, where Lynne is based, and the next morning show him the tape. By 6:45 p.m., Ordesky would be on another plane, headed back to New Zealand, arriving at Jackson's production compound just two days after the journey began, notes and videotape in hand.

Much of Ordesky's anxiety disappeared, of course, after the 2001 release of ''The Lord of the Rings: The Fellowship of the Ring,'' a huge hit that brought in more than $860 million at the box office worldwide. The sequel, ''The Two Towers,'' surpassed the first film when it made its debut a year later, earning $921 million in worldwide receipts. Already there are predictions that the much anticipated final film, ''The Return of the King,'' due in theaters Dec. 17, could earn $1 billion and is expected to be the front-runner in the best-picture race for this year's Academy Awards.

There were certainly moments during the filming when New Line executives wondered if they had made the right bet. The costs, after all, were astronomical. Jackson created a virtual company town in Miramar, a district of Wellington. At the height of production, ''The Lord of the Rings'' employed as many as 2,400 people -- 400 toiling on special effects alone. Jackson's workshop produced 48,000 swords, scabbards, axes and shields; 900 suits of armor; 300 handmade wigs and 200 molded-plastic orc masks. He even built a foundry to create 100 hand-forged and -inlaid metal weapons. No detail was insignificant. More than 250,000 silk leaves were applied by hand to just one tree in Hobbiton. Even the menu boggles the mind. One morning the crew consumed 1,460 eggs in a sitting. But by taking a huge risk on Jackson, New Line executives got something hard to come by in Hollywood: a bona fide cultural happening. Paul Dergarabedian, president of Exhibitor Relations, a company that tracks box-office attendance, says, ''This put New Line on the map forever.''

An Unexpected Outcome

In June 1998, Peter Jackson's idea of bringing Tolkien's saga to the big screen was all but dead. Harvey Weinstein, Miramax's co-founder, had secured the rights to the movies -- at the time, Jackson planned to make two installments for the company. But Miramax is a division of the Walt Disney Company, and Weinstein could not get permission from Disney to make two films at the proposed $140 million budget. Weinstein was a great admirer of Jackson's 1994 Academy Award-nominated ''Heavenly Creatures'' but also a tough negotiator. He gave Jackson four weeks to come up with another studio to produce the movies. If Jackson failed, Weinstein said, he would hire his own director and make one film himself for less money.

With $50,000 of his own cash, Jackson created a 35-minute pitch tape to show prospective studios. Ken Kamins, Jackson's longtime agent, sent the script to eight studios, but only two responded: the film division of Polygram and New Line. But in late July, around the same time Jackson planned to see New Line, Polygram dropped out (and its film division was closed not long after). ''We were essentially damaged goods,'' says Jackson, taking a break from editing ''Return of the King'' in mid-October. ''I have to be honest and say I didn't think New Line would be interested.''

Jackson's first moments with Shaye didn't do much to dispel his sense of gloom. Shaye told him that with the exception of franchises like ''Austin Powers'' and ''Rush Hour,'' New Line's development team had had little success turning blockbusters into franchised sequels. He told Jackson that if New Line agreed to finance the ''Lord of the Rings'' movies, the studio would be placing ''an incredible amount of good faith'' in him. Jackson says that he felt deflated: ''I figured I'd been graciously told it was not going to happen even if he saw the tape.''

Shaye watched Jackson's pitch tape in stony silence, as Jackson and Kamins searched his face for the slightest interest. When it was finished, Shaye asked, ''Aren't there three books?''

''Yes,'' Jackson answered nervously.

''Why are you making two films?'' Shaye asked. ''Why not three?''

Jackson didn't know how to answer: ''We were trying to work out the code. Was he interested in making three movies, or was he just asking, Why not three movies? No one knew what to say.''

Of Budgets and Financing

It took about a month for New Line to secure the film rights from Miramax (a deal that allowed Weinstein and his brother, Bob, to retain a 2.5 percent stake in the films; Disney also got 2.5 percent). New Line then turned to its international film distributors to help finance the production; those distributors ultimately bore 60 percent of the costs. If the movies were a hit, the distributors would receive a percentage of the movies' revenue from their territory, which would be split with New Line. That revenue included earnings at the movie theater, DVD sales and future network and cable broadcasts. Another 10 percent of the budget was raised by selling rights to video games, toys and merchandise to companies like the video-game maker Electronic Arts; tax incentives, primarily from New Zealand, also helped.

But even as money was coming in, costs started to soar. Shaye and Lynne had initially agreed to a proposed $210 million budget for the three movies, knowing it would certainly be somewhat more. But the special effects were proving both time-consuming and complicated to create. As a result, the budget ballooned to $330 million, not including $210 million in marketing costs.

Shaye recalls an uncomfortable conversation on a cross-country flight in June 1999 from Los Angeles to New York with Gerald Levin, then Time Warner's chief executive, and Richard Parsons, the company's president. Time Warner owns New Line, as well as Warner Brothers Pictures, and Levin asked Shaye how much the ''Rings'' movies cost.

''About $90 million to $100 million each,'' Shaye replied.

The three sat in silence. Parsons thumbed quietly through a magazine.

''We just had a meeting with Warner Brothers and told them we shouldn't be making $100 million movies,'' Shaye says that Levin told him.

A Visit to Middle Earth

Shaye is not the type to play it safe. The founder and co-chief executive officer of New Line began his career in the late 60's hawking movies on college campuses, including films that would become cult classics, like the 1930's ''Reefer Madness.'' In the 80's, he was an eager supporter of eclectic directors like John Waters, maker of camp classics, and Wes Craven, who redefined horror with ''A Nightmare on Elm Street.'' But even Shaye says that he was a little apprehensive when he visited the New Zealand set of the trilogy during its fifth month of filming in March 2000.

Already there was much speculation that the project was in trouble. The studio had no partner to distribute the movie in Japan, one of the most important markets outside the United States. There were concerns that the special effects would delay the first movie's release. Corporate matters also cast a shadow over the studio. Time Warner announced two months earlier that it would merge with America Online. Rumors spread that if the first movie failed, New Line would be forced to merge with Warner Brothers.

Shaye says that his discomfort increased when he walked into a warehouse-size studio at Jackson's compound where the director was readying a reel of film to show him for the first time. Shaye surveyed the concrete walls where a row of movie posters chronicled Jackson's previous low-budget cult horror films like ''Bad Taste'' and ''Braindead'' and dark comedies like ''Meet the Feebles.'' He was reminded of something he knew but hadn't quite digested until coming to New Zealand: Jackson had not only never made an epic blockbuster, he had also never made a mainstream film of any kind.

''I hope this guy has advanced beyond this,'' Shaye said, turning to his co-C.E.O., Lynne. ''I mean, this is a $300 million project.''

To Shaye's great relief, Jackson had indeed advanced. Shaye was so pleased with the cut that he asked Jackson to show the footage to the international distributors, who were visiting the set for three days. Jackson was pleased, too. ''When Michael Lynne saw the footage, his comment was he was surprised at the quality of the drama,'' he says. ''I felt really good, because the drama was important. We didn't think we were just making a special-effects or fantasy movie.''

Fog on the Studio

That reel may have been the best thing New Line did in all of 2000. Its releases that year included Adam Sandler's ''Little Nicky,'' which cost about $80 million but earned just $39 million domestically, and ''Thirteen Days,'' with Kevin Costner, which brought in a paltry $34.5 million. (New Line was also struggling to finish the $90 million ''Town and Country,'' starring Warren Beatty, which crashed and burned when it was released the next year with only $6.7 million in domestic-box-office receipts.)

After Time Warner's merger with America Online in early 2000, every division was under increased scrutiny, including New Line. In an extreme act of contrition, Shaye even apologized for ''Little Nicky'' at a Time Warner executive meeting in New York in late December.

New Line's troubles made Shaye more determined than ever to hit the December 2001 release date for the first ''Rings'' movie, and he pushed Kamins, Jackson's agent, to light a fire under his client. One afternoon at the 2000 Cannes Film Festival, Kamins recalls: ''Bob came to me and said: 'You need to convey to your client that these movies need to work. While you need to be Peter's agent, you need to be our agent too. If the movies don't work, it will be bad for the company.'''

''It was a little bit like wartime,'' Shaye says. ''There was a lot of pressure to deliver the goods.''

And not only for ''Rings.'' By early 2001, says Parsons, who is now chief executive of Time Warner, New Line was required to ask executives at the parent company for permission to make any movie that cost more than $50 million. The studio laid off 20 percent of its staff, and the president of production and development, Michael De Luca, who had worked with Shaye for 16 years, was replaced.

The Release of the 'Rings'

On May 13, 2001, at the Cannes Film Festival, New Line assembled a mini hobbit house on the lush green lawn of a castle high above the city. A wood swan boat floated in the swimming pool while performers dressed as Middle Earthlings wandered around the grounds. The cast, including Liv Tyler, Elijah Wood and Ian McKellen, mingled with more than 800 guests (many of them journalists) who had seen a 26-minute preview. New Line spent about $2.5 million on the party, which took six months to plan. Jackson and company worried that if reviewers hated the preview, the party would turn out to be an expensive public-relations disaster.

But in the end it paid off. ''From that moment, there was a buzz that lasted the whole year,'' Jackson says. The buzz never really stopped.

With the release of the third movie in December comes the inevitable question: What's next for New Line? The studio is relying once again on comedies and teen horror films, including the recently released remake of ''The Texas Chainsaw Massacre,'' to fill the company's coffers.

And it continues to have its share of flops, including ''Willard,'' another horror remake, this time in the rat genre, and the teen reality bomb ''The Real Cancun.''

These losers, and persistent financial woes at Time Warner, have some in Hollywood wondering whether New Line is ready for another executive reshuffling in its production department, a notion Shaye says is not being considered. Rather, Shaye suggests that he is seeking another serial epic to produce, but like the much sought after ring of the fellowship, it is eluding his grasp.

''I mean, how many things can you really franchise except the Bible?'' he says. After considering it a moment, he adds, ''Although that's a good idea.''

Laura M. Holson covers Hollywood for The New York Times.

Hawaiian Surfer Brought Down by a Shark

Surfer on Her Way Up, Brought Down by a Shark
By PATRICIA LEIGH BROWN
http://www.nytimes.com/2003/11/04/national/04SURF.html

HANALEI, Hawaii, Nov. 3 — She was a member of the "dawn patrol." Every morning before sunrise, Bethany Hamilton, a 13-year-old and one of the country's top female amateur surfers, would follow the pull of the turquoise water and head to a favorite reef, to defy gravity on a wave.

"She's aggressive and a really good surfer," said Alana Blanchard, also 13, her best friend and fellow champion. "She pushes me and I push her."

But on Friday, while the two girls were surfing with friends at Tunnels Reef, a legendary surfing spot, Ms. Hamilton was bitten by a shark. She lost her left arm in the attack, believed to have been from a 14- to 15-foot tiger shark, the most dangerous species in Hawaii. Ms. Blanchard's father, Holt, 49, who was surfing with them, swam Ms. Hamilton to shore and fashioned a tourniquet out of his rubber surfboard leash. Ms. Hamilton is in stable condition at a local hospital. It was the fourth shark attack in Hawaii this year.

In this rainy, out-of-the-way town, Bethany Hamilton's trauma is an attack on a communal daughter. Since the early 1960's, when surfers and hippies fled here from the crowded waves of California and Oahu, the stunning reefs and bays of Kauai's north shore have nurtured some of the world's top surfers.

This is a ragtag, bohemian place where surfing is basketball, football, baseball and soccer rolled into one, where toddlers in water wings surf tandem on their parents' boards, and some schools signal the end of classes not with a bell but with surfing music piped through loudspeakers.

Among the many girl "groms" here, as child surfers are called, people talk about Ms. Hamilton as a shoo-in for stardom. She and Ms. Blanchard, on the same competitive surf team, have already earned sponsorships from surfwear companies. Like practically all young surfers here, many of them preorthodontia and prepubescent, Ms. Hamilton is the child of surfers. Most important, perhaps, she represents a new generation of powerful young women who joyfully meet the challenge of taking on huge, barreling waves on a little bits of foam and fiberglass. When she surfed, friends say, she squealed with delight.

"The personality expresses itself inside the wave, and hers was just blossoming," said Suzanne Bollin, 55, summing up the feelings of many who came here on a lark in the early 1970's and stayed. "That girl has saltwater in her veins."

In a sense, Hanalei is a company town in the business of surfing. Although Kauai, the northernmost of the eight major Hawaiian islands, is less famous for its surfing beaches than Oahu, it is known among die-hard surfers for its wide variety of waves, from sand-bottomed beginners' breaks like Pine Trees to more fearsome ones like the Tunnels and Cannons.

Ms. Hamilton, who is a "goofy-foot" surfer — the surfing equivalent of being left-handed, pivoting with her left foot and leading with her right — could tackle them all.

She took second place this year in the National Scholastic Surfing Association's national championships in San Clemente, Calif., beating women up to twice her age and following an impressive wave of homegrown world-famous surfers.

In the last decade, Kauai has become "a hotbed of surfing talent," said Sam George, the editor of Surfer magazine. Among the local stars are Titus Kinimaka, one of the most respected all-around surfers; Keala Kennelly, 25, known for her fearlessness; and especially Andy Irons, 25, the reigning world champion. To children in and around Hanalei, Andy Irons is the hero next door, whose presence is akin to having Michael Jordan to shoot hoops with after school. Among Ms. Hamilton's teammates, half of whom are still in elementary school, Mr. Irons is the target of a game they gigglingly call DDD, for "Ding-Dong Ditch," in which they ring the doorbell and then quickly run away, only to return five minutes later to ring again.

To Ms. Hamilton's teammates, who wear two-toned glue-on fingernails and puka-shell necklaces, becoming professional, while admittedly a dreamy prospect, is less important than the role surfing plays in their lives day to day, especially on this small island where the one bowling alley and two movie theaters are at least an hour away.

"You get to be with your friends and catch really good waves," said Nagé Melamed, 9, a fifth grader at Hanalei Elementary school. "The water is really cool, and you don't hear your teachers telling you to do your homework."

Like parents everywhere in America, those here follow their children's sporting exploits with video cameras. Unlike most soccer moms, however, surfing moms and dads here excel at their children's sports — sometimes instantly replaying moves that need work.

"The ocean is different every time you get into it," said Joi Bonaparte, 45, the girls' coach on the Hanalei Surf Team and mother of a professional surfer, Dustin Barca, 21.

"It's such a thrill when you drop into a barrel, deep in a wave, as it comes over you in a cylinder," Ms. Bonaparte said. "Our whole community feels that way."

Ms. Hamilton's own precocious trajectory, including coveted and potentially lucrative sponsorships from Rip Curl USA and four other companies, mirrors the growth of the sport among young women and the marketing of its accouterments, a subculture portrayed last year in the film "Blue Crush."

Surfing is now a billion-dollar-a-year industry, Mr. George said, fueled in part by female role models like Lisa Anderson, a four-time world champion. The X Games featured surfing this year for the first time.

Professional female surfers remain few — only about 25 worldwide, compared with several hundred men — and when promising young stars like Ms. Hamilton and Ms. Blanchard emerge, surfwear companies eagerly supply them with clothes, surfboards and travel expenses for competitions on other islands and on the mainland.

"Bethany represented a new generation of young women who never had to fight a stigma," Mr. George said. "Girls Bethany's age have been empowered by the whole women's surfing movement."

Ms. Hamilton's second-place National Championship trophy is prominently displayed in her hospital room in Lihue. Speaking by telephone from the hospital, Bethany's father, Tom, who is a waiter at the Princeville Resort hotel, said his daughter's spirits were high, bolstered by visits from her teammates and her North Shore Community Church youth group.

On Friday, Ms. Hamilton, Ms. Blanchard and their friends were about 1,000 yards off the beach, in calm water on the far side of the reef. The shark broke through the surface without warning and vanished, taking Ms. Hamilton's arm just below her left shoulder and creating a 16-inch-wide bite in her red, white and blue board.

When the shark struck, Mr. Blanchard recalled, Ms. Hamilton calmly said, "I got attacked by a shark," and started paddling. "It was strange, she just made a statement," he said. "She was the only one who saw the shark."

Mr. Blanchard bound the wound with his Lycra T-shirt, and Ms. Hamilton, who was conscious throughout the ordeal, held on to his leg until they reached the beach, where he fashioned the surf-leash tourniquet.

Dr. David Rovinsky, the orthopedic surgeon who has been treating Ms. Hamilton, said that had Holt Blanchard "not had the presence of mind to make the tourniquet, she wouldn't be alive." She has about a four-inch section of upper arm bone remaining.

Losing an upper extremity is more complicated than losing a lower one, or an arm below the elbow, Dr. Rovinsky said, and it is too early to tell what the options are, although that will become clearer in the coming months.

"It will be an ongoing process," he said. "She'll figure out for herself what she can do."

Which could involve surfing. On Sunday, for the first time since the attack, Ms. Hamilton talked about wanting to surf again. Her best friend expects no less.

"We're going to get her back on a short board," Ms. Blanchard said.

Dr. Rovinsky said that surfboards and prosthetic devices could be modified for Ms. Hamilton, and that "she'll be able to do 95 percent of what she wants to do."

"She's an extremely strong woman," he added. "Knowing Bethany, it's not going to slow her down too much."

Chris Dixon contributed reporting for this article.

Dysfunctional Leadership

[from the Egon Zehnder executive news service. full PDF article requires sign-in at INSEAD...]

Dysfunctional Leadership
Manfred Kets de Vries
INSEAD, Fontainebleau, France, 2003
http://knowledge.insead.edu/article.cfm?id=595&uncat=148

Leaders do not get to where they are out of pure chance. There are certain personality traits that make one stand out and encourage others to follow. Yet many of these traits, such as self-aggrandisement and a sense of entitlement, thrive on narcissism, self-deceit, and the abuse of power. In this Working Paper, Manfred Kets de Vries, the Raoul de Vitry d’Avaucourt Chaired Clinical Professor of Leadership Development, looks at the psychopathology of leadership and concludes that that combination of neurotic personality and personal power can create social and business disasters.

He begins the paper with a discussion of the psychological pressures of leadership:

Loneliness of command Once a man or woman reaches a top position in an organization, stress and frustration often develop, as old relationships and support networks change and former colleagues become distant.
Addiction to power The fear of losing what has been so difficult to gain—a top leadership position—sometimes encourages people to engage in malevolent acts.
Fear of envy Some people find being the subject of envy very disturbing. That fear can reach the point where dysfunctional self-destructive behavior “snatches defeat out of the jaws of victory.”
The experience of “What now?” After achieving a lifetime’s ambition, leaders sometimes suffer from a sense of depression, feeling that they have little left to strive for.

The problem does not stem so much from the pressures themselves, says Kets de Vries, but how a leader manages these pressures. Often leaders hesitate to look inside themselves, and when they do, they refuse to acknowledge their weaknesses; they are unwilling to face up to how their defensive structures and character traits can negatively affect their organizations. They are all too quick to deny that these pressures can contribute to dysfunctional behavior and decisions.

While these behaviours manifest themselves in the here and now, says Kets de Vries, they are in fact linked to our earliest experiences as infants.

“How the major caretakers react to the child’s struggle to deal with the paradoxical quandary of infancy—how to resolve the tension between childhood helplessness and the ‘grandiose sense of self’ found in almost all children—is paramount to the child’s psychological health,” he explains. “The resolution of that tension is what determines a person’s feelings of potency versus impotency. Inadequate resolution often produces feelings of rage, a desire for vengeance, and a hunger for personal power. If that hunger is not properly resolved in the various stages of childhood, it may be acted out in highly destructive ways in adulthood.”

Kets de Vries has traced these behaviours to five types of neurotic organizations: dramatic/cyclothymic, suspicious, detached, depressive, and compulsive. He says that each of the five patterns has strengths as well as weaknesses. In many cases a solid strength (for example, a leader’s careful attention to the actions of rivals) becomes a weakness over time (as when healthy wariness becomes unmitigated suspicion), polluting the atmosphere of the organization. When that happens, change is needed if the organization is going to survive.

Given that leadership styles are deeply rooted in history and personality, change never comes easily. A first step, says Kets de Vries, is recognition of the danger signs of dysfunctional leadership and dysfunctional organizations. Leaders must be willing to look within themselves and make an honest appraisal. If they cannot do that, says Kets de Vries, they would do well to ask for help from trained outsiders, who can offer guidance in this process.

Sprout Group cuts back fund

[Sprout was DLJ's VC division...]

Sprout Group cuts back fund
by Katherine Goncharoff Posted 04:58 EST, 3, Nov 2003
http://www.thedeal.com/

Sprout Group of New York, a venture capital firm affiliated with Credit Suisse First Boston, announced on Monday, Nov. 3, it is slashing its $1.44 billion Sprout IX fund by $360 million, or 25%, reducing the capital managed by the fund to $1.08 billion.

CSFB and Sprout Group also announced the spinout of Sprout's healthcare-focused investment unit into a new entity, Sprout Healthcare Ventures. SHV will manage the existing Sprout Group healthcare portfolio and will be managed by the former Sprout Group healthcare investment team, including general partners Philippe Chambon, Jeani Delagardelle and Kathy LaPorte.

The changes at Sprout come as venture capital firms grapple with new disclosures of their investment performance. Over the past several months, the internal rates of return of venture capital firms such as Sprout have come under scrutiny. Due to lawsuits and public record requests, a number of public institutional investors including the University of Texas Investment Management Co. and the California Public Employees' Retirement System have begun to release such numbers.

Some funds managed by Sprout have appeared to be in negative territory. For Sprout IX, a fund that closed in 2000, the numbers reveal a -25.1% IRR as of March 31 of this year, while for Sprout VIII, a fund that closed in 1999, the numbers show a return of -21.9% as of March 31.

SHV plans to raise a healthcare-focused fund in mid-2004, targeting $350 million to $400 million.

In a statement on Monday, CSFB said: "This reorganization will have absolutely no impact on Sprout's ability to support its existing portfolio companies' follow-on financing needs. The vast majority of those companies will have the same Sprout professional responsible for monitoring it or serving on its board of directors before and after the reorganization."

CSFB also said in the statement that it had informed all limited partners of Sprout of the proposed reorganization and that the proposed terms would be subject to their approval.

Sprout Group general partner Chambon explained the reduction as a response to the firm's "strategic review" of its business over the past few months, at a time when the venture capital industry is undergoing change and evolving. "We think that, over time, we will continue to see much more focus on specialized funds, and that has led us to make some changes," Chambon said.

In addition, he said, the management fee of a prior fund, Sprout VIII, will be reduced by half, from 2% to 1%.

The firm also announced that Keith Geeslin, Sprout Group's senior founder and head of information technology investments, will retire by the end of the year, though he will continue as a consultant and will still manage his portfolio investments as a member of the board of directors.

Other IT investment professionals expected to leave the Sprout Group at the end of this year include general partners Stephen Diamond, Robert Finzi and Alex Rosen.

The changes at Sprout come as venture capital firms grapple with new disclosures of their investment performance. Over the past several months, the internal rates of return of venture capital firms such as Sprout have come under scrutiny. Due to lawsuits and public record requests, a number of public institutional investors including the University of Texas Investment Management Co. and the California Public Employees' Retirement System have begun to release such numbers.

Some funds managed by Sprout have appeared to be in negative territory. For Sprout IX, a fund that closed in 2000, the numbers reveal a -25.1% IRR as of March 31 of this year, while for Sprout VIII, a fund that closed in 1999, the numbers show a return of -21.9% as of March 31.

Chambon said the release of IRR numbers had no bearing on Sprout's decision to reduce the size of its current fund or to create a spinout VC fund focused on health care investments.

"Our thinking was driven by historical number and, frankly, at the end of the day, those numbers have little relevance in terms of showing the true results of these funds, which have a 10-year life," he said.

BEFORE THE FAT LADY SINGS

BEFORE THE FAT LADY SINGS (c1990)
by Raymond Joe (b.1964)

It was like when a glass slips,
the moment, just before it falls,
and you watch, motionless, as it leaves your hand.

That moment before a final exam,
when you don't want it to start,
but you know it will, now, in a second,
two seconds, three seconds...

Like those times when you're already late, but
you stop the car anyway,
and you look at the view you know
you may not see again,
all the time hoping, you will see it again.

Like the last week of classes
and there's no time to sleep,
but you want to spend it with __ .

It's like the moment the seagulls hover
on wind currents high overhead
before dipping and diving, right before
they stop playing--

It was like that,
it was that,
and it was grand.