A Curious Discovery: An Entrepreneur's Story

by John S. Hendricks

As the company’s business began its growth explosion, and as we launched our in-house production initiative, it also became evident to me that the board was dividing into two equal camps—and that I was the swing vote between them. On one side were the four cable operators: Bob Miron, representing Newhouse Cable; John Sie, representing TCI; Nimrod Kovacs, representing United Cable; and Ajit Dalvi, representing Cox Cable. On the other side were the four venture capitalists: Dick Crooks, representing Allen & Company; David Glickstein, representing New York Life Insurance Company; Dan Moore, representing Venture America; and Harlan Rosenzweig, representing Group W, a supplier that had converted receivables to venture equity. In terms of equity holdings in Discovery, the venture capital group held 53 percent, the cable operator group 40 percent. After the full $25 million of financing had been raised, I had still managed to hang on to 7 percent. While at that point there had been no formal valuation of the company, we all generally believed that Discovery was worth between $200 million and $250 million. But we were also growing fast—and if our earnings kept pace with our revenues, then we would surely be worth $300 million or more in an initial public offering (IPO) of our shares.