Chapter 3 of Furboy: Inside the greatest Silicon Valley startup (6-9 months).

Our Story to Now:All I wanted to do when I mated a Furby with a Game Boy, was to impress my son. Instead, I found myself in control of the biggest killer app to hit Silicon Valley since the World Wide Web. The venture vultures were going crazy. (Click here for Chapter 1 of my saga and here for Chapter 2.)

All of a sudden, things got really crazy. Furboy.com was getting 10 million unique visitors an hour. Tons of people were looking to buy a Furboy, which we were no longer selling, of course, and even more were looking to buy the service, since they had rigged up their own Furboy.

Fearful that Microsoft would steal our market by upgrading its pathetic talking Barney, we rolled out Version 2.0: Using a single-chip Bluetooth transceiver—a new wireless standard for cell phones and laptops—we emulated the Game Boy command set. With a simple $44.99 card, available at Fry's and Toys 'R' Us, users control their Furboy via a Nokia PCS phone hooked to the Internet, instead of a PC. The cost to consumers was dropping to almost nothing.

The logistics of tracking hundreds of thousands (and soon millions) of Furboys became a real pain in the cache. What IP address they had, who was using them, what unique profile of the user, where they were located, etc. I gave John Carmack—the king of Quake—a call at id software. His shop had solved the problem of tracking thousands of interactive users playing on Quake III Arena servers, each trying to track down and kill the other. We ported his Arena engine to work on Furboy.com and were set to scale to the big time.

Furboys have those big, lashy eyes. Sure enough, the media guys, who live to pitch to eyeballs, began calling. The first to get it was Rupert Murdoch. His engineers had rigged up a Furboy as a mini Bart Simpson. With all the snideness and mannerisms, it was so cool. I licensed him on the spot but put off letting him invest. Who wants to be mixed up with tabloids? After the millionth Furboy was activated, we got written up in "Boomtown" in the Wall Street Journal, where reporter Kara Swisher's only criticism was that Furboy was not mean enough.

Eisner called from Disney. He offered Minnie Mouse but was saving Mickey for some secret project. Thanks, but no thanks. He just doesn't get it.

Barry Diller wanted me to dispense instant Home Shopping Network coupons. From your lips to Furboy's ears, as the expression goes, and a special coupon orifice is invoked. Gave me the creeps thinking about it.

I definitely needed more money, and the big guys started calling. Guys that have been in the venture business for 10 minutes clogged my phone: Kravis at KKR; the guys from Hick Muse; folks at Texas Pacific; Soros from a cell phone in Buggehrglobb, Yugoslavia; Shaheen-less Andersen Consulting; and on and on.

My favorite call was from Jim Clark. He desperately needed to make a few more billion, because, he whispered to me in secret, he never told Michael Lewis this, but he wants to buy a space shuttle of his own. He even offered me one of the first rides. So he saved a newer new thing for the sequel, what a guy.

I met with Paul Allen. He has watched Star Wars: Episode I a few too many times. People at other startups say that if he likes your demo, he does his best Darth Vader impression and bellows out, "Immmm-pressive." With me, he launched into the "Luke, I am your father" stuff, and I gathered up my belongings and ran away fast.