But this same investor also says he’s happy with Elevation’s progress. While the most recent performance figures, made public by a state pension fund, show Elevation’s holdings to be worth less than the capital invested so far, with a negative 8.3 percent internal rate of return, that’s largely due to two things: the fee structure of private equity (general partners take their fees annually, before any returns on investments are realized) and timing (the figure predates the Bioware/Pandemic sale). Once the Bioware sale is accounted for, the fund’s return to date should jump. But even then it will be years before Elevation’s performance can be accurately measured.

At a media conference in New York in October, McNamee said that he had no idea where the online-media world was headed—a surprising admission for someone whose firm had recently made a quarter-billion-dollar wager on a content company with big digital dreams. 

At Forbes Media, which the Forbes family still controls, about two-thirds of Elevation’s investment is aimed at improving Forbes.com. Though McNamee says he believes the print world will never go extinct (“Magazines are a low-power, lightweight thing you can read on the toilet,” he likes to say), he thinks business journalism is particularly well suited to the Web because consumers hunger for information that can help them take control of their financial lives.

That perceived hunger has prompted McNamee to push Forbes to make acquisitions to beef up the personal-finance functions of Forbes.com, which has been criticized for goosing traffic with lists of the world’s most expensive homes and best topless beaches. One such acquisition was Investopedia, the leading online portal for investment-related research, which Forbes bought in April 2007. Another was Clipmarks, a small company that lets users tag, store, organize, and share snippets of webpages, acquired in November 2007. (McNamee’s musical passions aided in the brokering of that deal—he’d met Clipmarks’ founder through the young man’s father, a lawyer who represents the rock band Phish.)

Forbes Media’s rank and file have reacted to McNamee and Elevation with cautious optimism, mainly because the investment has allowed the company to add staff—an uncommon thing at a news organization these days. And while McNamee is characteristically hands-on as a board member, he is not perceived as a meddler in the newsroom—at least not yet. Carl Lavin, formerly a top editor at the Philadelphia Inquirer, became Forbes.com’s managing editor in October. Six weeks later, he still hadn’t met or spoken to McNamee.

There has been much speculation that Elevation’s investment in Forbes will lead either to the sale of the company or an initial public offering. Tim Forbes, the company’s chief operating officer, confirms only that a liquidity event is coming, saying that “it will be in the window defined in the agreement—anywhere from five to 10 years.” He also says the Forbes family has the right of first refusal to buy Elevation’s stake if the firm decides to sell it. “They have the right to put, we have the right to call,” he says.

Elevation has an estimated $850 million left to play with, and it plans to make two to four more investments over the next three years. McNamee rejects the “strategy drift” charge, countering that Elevation’s lack of entertainment investments is due to economic considerations, not strategic ones. When Elevation first began shopping for companies in 2005, the credit market was still strong, emboldening other suitors for the entertainment properties Elevation was looking at and driving prices higher than the firm was willing to pay.

Sources confirm that it stepped away from a potential deal with Take Two Interactive, the videogame developer behind the controversial (and lucrative) Grand Theft Auto franchise, deeming the price too high. Elevation has also tried to get into music publishing but has been stymied, McNamee says, by the industry’s resistance to change. There is one potential music investment that Elevation has “worked on continuously since the beginning,” he says, “and I don’t think we’re any closer to it today than we were then.” And when Priscilla Presley contacted Bono and floated the idea of selling the Elvis estate, Elevation investigated but took a pass. (Presley later sold to entrepreneur Bob Sillerman, who paid $100 million for 85 percent of the estate.)

“That was a very good sign,” says one Elevation investor, who calls that sum “ridiculous.” Elevation, he continued, has “not lowered the bar in order to fill the fund with high-profile, sexy stuff. Private equity people usually do the opposite, because they want to raise the next fund and layer the next fees on top.”

Elevation prides itself, of course, on doing things private equity people don’t usually do. At times, this can make you wince. When Elevation announced its Forbes investment in 2006, some observers questioned both the whopping price tag and how “a magazine that celebrates wealth and consumption,” as the New York Times put it, jibed with the firm’s investment goals. More than a year later, some still cite McNamee’s response—he was quoted, in reference to plans to bolster Forbes.com, as saying, “The way you solve poverty is giving people the tools to overcome it”—as evidence of Elevation’s preciousness. (Said one skeptic, “Does he really believe Forbes.com is addressing the suffering in sub-Saharan Africa?”)

McNamee can live with that.

“Not everybody likes my act. There are plenty of people who think I’m a windbag, and they may be right,” he admits. “I’ve said the stupidest thing that many of the smartest people in Silicon Valley have ever heard. In a few cases, more than once. I’m not afraid to look like a fool. I assert ideas energetically. Then people shred them. That’s how I learn.” 
 
McNamee likes to say he doesn’t court attention, but people who know him say he crafts his image carefully. He has long been a media favorite, known both for his wit and his accessibility. (In 1995, when Jerry Garcia died on the same day Netscape went public, the New York Times and USA Today quoted McNamee on both events.) Whether opining on CNBC or appearing at industry events, he has worked tirelessly to build himself into a brand.

“There are very few people in the business who you can mention their first name and people know who you are talking about,” says former boss Mathias. “When you say ‘Roger,’ people know.”

But having his own famous persona is no longer enough for McNamee. Today, he dearly wants to build a comparable identity for Moonalice, which plays what he calls ’60s-style music (think Creedence Clearwater Revival meets Barenaked Ladies). The group has a website, moonaliceband.com, where fans can download songs—mostly written by McNamee and his wife, who sings in the band—and read about the Moonalice Legend, which explains, among other things, that hemp (as Chubby Wombat calls marijuana) is “the foundation for the Moonalice culture.”

McNamee isn’t merely a nerd who’s trying to act cool. His goofy charm lies in the fact that he’s a nerd playing a cool guy who hasn’t forgotten he’s a nerd. Consider: He actually has a mathematical formula that he uses to calculate when Moonalice will become profitable (the end of 2009). “All it takes is playing 150 more shows,” he says, explaining that if you presume current audience levels and extrapolate the resulting ripple effect of good word of mouth, Moonalice should be consistently packing 500- to 1,000-seat venues after another 150 outings. To the extent that the possibility of bad word of mouth occurs to him, he chooses to ignore it.

Consider, also, his alter ego. Instead of opting for some kind of futuristic avatar, he has picked a cartoonish, nonthreatening marsupial, whose cuddly-looking photograph can be seen (gnawing on a carrot) in that most revealing of places: McNamee’s Facebook page.

To have cred onstage, McNamee believes, he must adopt an authentic rock-and-roll persona. This explains the hair. “In the business world, one shows respect by wearing a suit and tie. In rock and roll, one shows respect by adopting the sartorial conventions. You sound better when your hair is long,” he told investors at Elevation’s annual meeting. Bono, whose hair couldn’t have been shorter, looked on with amusement.

It also explains why he’s spending so heavily (he won’t reveal how much) on talent. He hired T Bone Burnett, the legendary record producer, to help with Moonalice’s upcoming debut album, and he’s paying salaries to Casady, Sanchez, Smith, and two other professional musicians—pedal-steel guitarist Barry Sless and keyboardist Pete Sears. Also on the payroll: Journey’s former road manager.

Finally, McNamee’s desire to be taken seriously as a rocker goes a long way—though perhaps not far enough—toward explaining the drug references Chubby Wombat works into every show. “If you’ve got any brown acid left over from Woodstock, this would be a good time to take it,” he told several thousand people at the Hardly Strictly Bluegrass Festival in San Francisco. In Las Vegas, he playfully offered to help the 150 or so audience members test the quality of their weed. And in Big Sky, Montana—elevation: 7,200 feet—he told the assembly, “The higher you are, the better we sound.” 

Though Chubby Wombat never mentions Elevation Partners, his shtick certainly gives new meaning to the firm’s name. McNamee calls it theater. “When you’re a performer, you have to entertain,” he says. “Our investors know what I’m like. If they ever tire of me, they can always fire me.”

So no dope smoking, then? “None of your business,” he scolds. “This is America.”

But as McNamee devotes more and more time to Moonalice—traveling from Skagway, Alaska, to Teaneck, New Jersey, playing as many as nine shows in 10 days—it seems fair to ask: Are his Elevation partners worried about the impact his night job might have on his day job? To a man, they say no. “Letting Roger be Roger,” Bodnick says, “has been a big part of our success.”

One morning in his Menlo Park office, where a huge stuffed version of the rat from the film Ratatouille shares space with several Mr. Potato Heads, McNamee is talking about Palm—and, of course, his band. “Letting people download full CD-quality files of your music is not a common practice in the music business,” he says of Moonalice’s decision to do just that. “I don’t know if it’s going to work any more than I know if Palm is going to work.”

Currently, there are 2.7 billion cell-phone subscribers in the world, and more than a billion phones are sold each year. Only about 10 percent are in the smartphone, or mobile-computer, market, in which Palm is trying to compete. (The company’s market share has dwindled to about 19 percent, a precipitous tumble from its glory days in 1999, when the Palm Pilot was the gadget to beat.) But as handheld devices increasingly blur the lines between telecommunications, computing, and entertainment, smartphone sales are expected to more than double by 2011.

With a market that huge, Elevation believes, you don’t have to trounce your rivals to make a great deal of money. But you do have to carve out a niche. Even before the Elevation investment, Palm was replacing its aging software, which had been updated over the years with the tech equivalent of rubber bands and chewing gum. Now it’s focusing on hardware. At Elevation’s urging, Palm just hired Jonathan Rubinstein, a former Apple engineer who led the team that developed the iPod. McNamee believes that Palm can begin to differentiate itself with innovative designs and new types of devices that meet consumers’ various needs. BlackBerry may rule in the corporate market. Apple’s iPhone is mostly a media phone. (McNamee calls it “the coolest 1.0 product in memory.”) But there’s still plenty of room, he asserts, for both high-end toys and affordable ones (like Palm’s new $99 no-frills Centro phone). 

“Why shouldn’t cell phones be like shoes?” he says, imagining a day when people will own several phones—work phone, car phone, play phone—that all share the same number. “In the long run, everything that matters to people should be available to them on some sort of mobile device. Today, you can’t even come close to that. And that suggests enormous opportunity.”

Ask McNamee, and he’ll say that U2 is to Moonalice as “the Federal Reserve is to a Podunk credit union.”

Ask Bono, and he says Moonalice has potential. “T Bone has taken them away from the amateur and toward the auteur,” says the rock star, who introduced McNamee to Burnett. “They’ve got a mood.”

Ask Mickey Hart, the Grateful Dead’s former drummer, and he takes a different tack. “Just because you’re a billionaire doesn’t mean you can play music,” Hart says. “Roger is a good student, and someday he will be a really good musician. But Roger is about connections. That’s what Roger does. He’s electric. He’s magnetic. He has the ability to instill hope in people. He’s always trying to build something. He understands group mind.”

For the record, McNamee says he’s no billionaire—“far from it.” And while it’s true that he’s fascinated by the potential of groups—investment firms, bands—he likes it best when they see the wisdom of following his lead. “I definitely like to see my fingerprints on stuff,” he says.

What keeps him from being overbearing (though sometimes just barely) is that whatever McNamee directs himself to do—collecting children’s books or bankrolling a bunch of aging rockers, for example—he does with boundless enthusiasm. As G.E. Smith observes, “He’s obviously a pretty successful guy. He could be buying yachts and stuff for himself.” But he isn’t doing that. Yachts—like cars, or watches, or any number of toys favored by wealthy men in midlife—don’t turn him on. McNamee would rather use his money to pay a Bay Area artist named Chris Shaw to design expensively produced Moonalice posters to be distributed for free—a different poster for every gig.

Back in Denver, at the Cervantes, Chubby Wombat yanks open the backstage door and leads his bandmates into the dank, musty club. Minutes before, the house had numbered just half a dozen, give or take a few parents. Now, as his eyes grow accustomed to the darkened room, he sees not exactly a crowd, but a solid 40 people. Some have brought album covers for Pete Sears and Jack Casady to autograph. Others have brought hemp, which they freely ignite just feet from the stage.

Chubby Wombat remembers how his guitar teacher, Jorma Kaukonen of Jefferson Airplane and Hot Tuna, once told him that all bands begin and end in dive bars; the only question is the height of the curve in between. Now onstage, blinking under the lights, he looks out into this dive and chooses to believe that this is Moonalice’s beginning.