June 29, 2005
It’s a great time to be an entrepreneur
There’s never been a better time to be an entrepreneur because it’s never been cheaper to be one. Here’s one example.
Excite.com took $3,000,000 to get from idea to launch. JotSpot took $100,000.
Why on earth is there a 30X difference? There’s probably a lot of reasons, but here are my top four. I’m interested in hearing about what other people think are factors as well.
Hardware is 100X cheaper
In the 10 years between Excite and JotSpot, hardware has literally become 100X cheaper. It’s two factors – Moore’s law and the rise of Linux as an operating system designed to run on generic hardware. Back in the Excite days, we had to buy proprietary Sun hardware and Sun hard drive arrays. Believe me, none of it was cheap.
Today, we buy generic Intel boxes provided by one of a million different suppliers.
Infrastructure software is free
Back in 1993 we had to buy and continue to pay for maintenance on everything we needed just to build our service -- operating systems, compilers, web servers, application servers, databases. You name it. If it was infrastructure, we paid for it. And, not only was it costly, the need to negotiate licenses took time and energy. I remember having a deadline at Excite that required me to buy a Sun compiler through their Japanese office because it was the only office open at the time (probably midnight) and we needed that compiler NOW.
Compare that to today. Free, open source infrastructure is the norm. Get it anytime and anywhere. At JotSpot, and startups everywhere you see Linux, Tomcat, Apache, MySQL, etc. No license cost, no maintenance.
Access to Global Labor Markets
Startups today have unprecedented access to global labor markets. Back in 1993, IBM had access to technical people in India, but little Excite.com did not. Today, with rent-a-coder, elance.com and just plain email, we have access to a world-wide talent pool of experts on a temporary or permanent basis.
SEM changes everything
Ten years ago to reach the market, we had to do expensive distribution deals. We advertised on television and radio and print. We spent a crap-load of money. There’s an old adage in television advertising “I know half my money is wasted. Trouble is, I don’t know what half”. That was us.
It’s an obvious statement to say that search engine marketing changes everything. But the real revolution is the ability to affordably reach small markets. You can know what works and what doesn’t. And, search not only allows niche marketing, it’s global popularity allows mass marketing as well (if you can buy enough keywords).
It’s nice that it’s cheaper, but what does it mean to entrepreneuring?
More people can and will be entrepreneurs than ever before
A lot more people can raise $100,000 than raise $3,000,000.
Funding sources explode which enables more entrepreneurs
The sources of funding capable of writing $100,000 checks are a lot more plentiful than those capable of writing $3,000,000 checks. It’s a great time to be an angel investor because there are real possibilities of substantial company progress on so little money.
More bootstrapping to profitability
With costs so low, I think you’ll see many more companies raise angel money and take it all the way to profitability.
Higher valuations for VCs.
And, for those that do raise venture capital, I think it means better valuations because you can get far more mature on your $100,000 before you go for the bigger round.
All in all, it’s a great time to be an entrepreneur.
June 23, 2005
Personal - Joining the EFF Board
Well, normally this isn't a forum for personal announcements, but I thought this one worth making an exception for.
I've joined the board of the Electronic Frontier Foundation (EFF).
For those of you not familiar with the EFF, they are a non-profit digital civil liberties group. Put simply, if you like the internet and the freedoms you currently enjoy to create content and new technologies without having to ask permission, this is a group you should know about and support.
I've been passionate about digital copyright reform for a long period of time and even started DigitalConsumer.org, which was a 50,000 member strong non-profit lobbying group in Washington to fight for consumer technology rights.
Now, I'm honored to be a part of an organization that is making a huge difference in this debate. Thanks for inviting me, EFF!
June 21, 2005
Engineer Interview Triage?
A while ago (actually, any post I've done is now "a while ago...") I wrote about Sabermetrics for Startups. I wondered if there was data you could collect in an interview process that would allow you to more accurately determine if someone, particularly an engineer, would be successful in your company.
I don't think I have all the answers, but over the last few months, I've honed in on three questions that I believe have a correlation with three key skills.
I'm not talking about technical skills. There are a lot more people far better than me to judge whether or not someone is technically qualified as a great coder.
I am talking about the intangibles. In particular, I'm talking about three key intangibles -- communicating, tinkering and passion for coding. In my experience, these things make a huge difference in someone being a great contributor to your startup.
So, here are the questions. They're simple and they aren't pass/fail. But, I think certain answers are more correlated with success. So, pretend you're in the hot seat, bright lights, uncomfortable chair... you get the idea. Here goes
1. Do you have a blog?
It was Joel Spolsky who wrote a great piece about great engineers being defined not only by their h4x0r skillz, but by their ability to communicate. Here's what the man himself had to say
The difference between a tolerable programmer and a great programmer is not how many programming languages they know, and it's not whether they prefer Python or Java. It's whether they can communicate their ideas.By persuading other people, they get leverage. By writing clear comments and technical specs, they let other programmers understand their code, which means other programmers can use and work with their code instead of rewriting it. Absent this, their code is worthless.
If someone has a blog, you know that they are starting to make communications and writing part of a basic set of habits. You know they value those habits enough to make time for them. A public blog improves the odds that the person sitting across from you (who has great coding skills) can also effectively advocate their ideas both inside and outside the company.
2. What's your home page?
Great engineers make their own homepages. When they hit the "home" icon on their browsers, you're not likely to see My Yahoo or Amazon. They're disatisfied with their other choices out there and they take matters into their own hands (usually just a large list of links of favorite places to go, laid out "just right"). My friend, Marc Hedlund put it this way, "Jedi Knights make their own lightsabers and great engineers make their own homepages." How true.
I think the trait indicated by making your own home pages is that the person is a "tinkerer". Tinkerers are great inside companies. They're curious. They're often not quite satisfied with the status quo and doing things the way others do. They're the ones that aren't often satisfied with the way your company is doing something. But, rather than complaining or asking, they go ahead and just fix the problem.
It's hard to know if the person sitting across from you is a tinkerer, but if they make their own home page, it's more likely that they are.
3. Do you contribute to an open source project?
One thing you're looking for in a great engineer is a person who is passionate about coding. Passionate doesn't mean all-consumed-and-working-24-7, but it does mean curious, deeply interested and committed. Besides the obvious benefits of being able to review someone's open source code for quality, design patters and architecture decisions, contributing to an open source project has a strong correlation to the person being passionate about code. They're less likely to just be about code-for-cash (not that there is anything wrong about that, it's just not usually right for a very small startup). That intangible, code-as-passion, can make a huge difference to a startup.
So, that's what I think. It's only been a few months of thought. If you've got other ideas, I'm all ears.
May 09, 2005
Keeping Innovation Alive - The Hackathon
It's May 9th... Must be time for my freakin' every-two-months blog post :-)
Startups have many disadvantages over established companies -- they have fewer people, they have fewer customers and they have a whole lot less money. They are supposed to have two advantages -- speed and innovation. But, do most startups really have either of those?
I know at the startups I've been involved with, because the company is short staffed and the company is trying to get customers in as many ways as possible that it's very easy to squeeze innovation out of the system and instead get focused exclusively on customer-driven development. You go from a company with a lot of great ideas and big visions, to a company with a year-long roadmap and no real sense of "I-came-up-with-this-great-idea-which-I-built-over-the-weekend-and-look-how-cool-it-is".
My sense is that innovation can, in reality, get quickly lost in a start up -- especially once that startup is launched.
I mention all of this because at JotSpot, we've been experimenting with ways to continue to bring in breaths of fresh air (e.g. innovation) into the normal process of getting a company off the ground.
After a bunch of different attempts, I think we finally found one that works and I honestly believe that every company could benefit from it (hence this blog post).
We call it a "hackathon" and we got inspiration from the good folks at Atlassian. The idea is that you make a day-long event (at whatever frequency you want) where everyone works on something that is:
- valuable to the company
- but not what they're "supposed" to be working on and
- that can be taken from idea to working prototype in one day
We started our hackathon at 9:00am and ended at 8:00pm. From 8:00-10:00pm we did presentations where each team member or group showed their work.
We did our first hackathon last Thursday and the results were amazing. It's unbelievable what you can get done in a day with a focused, motivated and creative team.When you give people the time to do the thing that always seems "just out of reach" people's creativity cracks wide open. Check out the specific results here.
What was particularly cool was the energy it brought to the team. People felt envigorated and recharged. In fact, one of our engineers was so excited he exclaimed (during the presentations) "Dude, I just want to crawl into my hole [his cube], grow a beard, a build shit!". I couldn't have put it any better myself.
Google does something like this with their "20% of people's time is supposed to be on projects that aren't related to what they're working on" but for us, in a startup, we found that allocating time is not the same as taking it. Essentially, we would allocate time but it would get taken up by something urgent that came up at the last minute. Making an event out of it added enthusiasm, anticipation and stupid antics that make this kind of thing fun (air-horns, stupid hats, lots of pez, etc)
So, in short -- do a hackathon. It will do you good.
Next time (late may), we're going to take the idea a step further and involve our community of interested JotSpot users (consider it like the game show "home game"). We're going to see if hackathon's aren't only a great way to stoke innovation but to also tie in customers and community.
March 09, 2005
The long tail of software. Millions of Markets of Dozens.
Hello blogging, my old friend…
You know you’ve been constipated in getting a post out the door when you start it with three caveats:
- This post is WAY long. For that I’m sorry. Some things just take a while to say.
- This post is not so much about entrepreneurship as it is about where I see opportunities for entrepreneurs to create new businesses and describing the general direction of my new company, JotSpot.
- This post is based on a presentation I’ve been giving for the last five months. If you want a copy of it, you can download it here. Download jotspot_long_tail_sw.ppt
Excite and the Long Tail.
In Excite’s heyday, we were handling millions of searches a day. If you graphed the frequency of those searches (the Y axis being the number of times a query was asked per day and the X axis being the actual query listed in order of frequency) you got a power law curve that looked something like this (excuse my lame-ass powerpoint graphing...).
The most popular searches (things like Sex, MP3, and the bare midriff female singer du jour) were vastly more popular than the 1000th most popular search. For example, “sex” was on the order of 100,000 times more popular than the 1000th most popular search (whatever that was). Said another way, there were a handful of extraordinarily common queries and millions of far less popular queries.
In fact, the frequency of the average query was 1.2. That means if you wrote each of the millions of queries on a slip of paper, put them all in a fish bowl and grabbed one at random, there was a high likelihood that this query was asked only once during the day. Of ten-plus million queries a day, the average search was nearly unique.
The most interesting statistic however, was that while the top 10 searches were thousands of times more popular than the average search, these top-10 searches represented only 3% of our total volume. 97% of our traffic came from the “long tail” – queries asked a little over once a day.
Down the tubes
You know the real reason Excite went out of business? We couldn’t figure out how to make money from 97% of our traffic. We couldn’t figure out how to make money from the long tail – from those queries asked only once a day.
Overture figured it out, Google perfected it and we all know what happened from there. Those guys figured out something revolutionary -- the long tail of search was a advertising marketplace. But it wasn’t a traditional advertising marketplace like television, where a handful of large advertisers reached out to a handful of very large markets. It was a special kind of marketplace where small advertisers could reach small markets efficiently. It was and is a revolution to the traditional economics of advertising (where the cost of producing and distributing advertising requires large markets to justify the expenditure).
Search is a long tail business and that is the source of its power and profit.
Other Long Tail Businesses
Here was the first set of charts Chris showed.
Let’s look at the Amazon example. This graph shows that Amazon sells roughly 2.3M books and that the average Barnes and Noble retail store stocks 139,000 books. So, Amazon stocks roughly 2.2M more books that Barnes and Noble.
No surprise here. That’s the benefit of an online storefront. Massive inventories housed in ultra-low-rent areas that are fronted electronically.
The astonishing figure is the percent of sales that comes from the “long tail” of books (books that Amazon carries but that Barnes and Noble doesn’t).
57% of Amazon’s sales come from books you can’t even buy at a Barnes and Noble (to be fair, there is some skepticism around this number voiced here). This runs totally counter to the traditional 80/20 rule in retailing – that 80% of your sales come from 20% of your inventory. In Amazon’s case, 57% of their book revenue comes from 0% of Barnes and Nobles inventory.
To quote Gary Coleman, I can hear retailers across the globe saying, “What you talking about Willis!?”
ITunes and the Long Tail
iTunes has over one million songs in it’s catalog. You know how many have been bought at least once?
Completely counter to the traditional 80/20 rule, every iTunes song has been purchased at least once.
What this says to me is that the tradition 80/20 “rule” is more a function of consumers having their expectations set by the limits of physical inventory in retail stores than it is about real human nature. Amazon and iTunes are great examples.
What all these data points mean to me (and to most folks who are interested in long-tail stuff) is that the most interesting, transformative businesses that have been built over the last decade and that will be built over the next one are going to operate in and make money from the long tail.
Google, eBay, Amazon, Rhapsody, Netflix, iTunes. What do they all have in common? They all work the long tail and they’re all radically changing the dynamics of their more traditional businesses.
The Long Tail of Software
The long tail doesn’t just apply to music and movies. There’s a long tail for software as well. Here’s why.
The purpose of software in business is to support the way a business does business – from the way a business runs it’s hiring and firing to the way it orders materials to the way it tracks sales. In the market-speak that surrounds the technology business, the purpose of software in business is to support these “business processes”.
Let’s do some simple math. First, every business has multiple processes. Things like hiring, firing, selling, ordering, etc. Second, while some of these are pretty common in name from business to business (recruiting, for example), in practice, they are usually highly customized. Finally, there are simply a large number of processes that are either unique or that are common to millions of very small markets and therefore not traditionally worth the effort to buy software for (for example, the process by which an architecture firm communicates between it’s clients and the city planning office).
These three facts
- every business has multiple processes
- processes that are similar in name between businesses are actually often highly customized
- there exist a large number of processes unique to millions of small clusters of industries.
means that there is a combinatorial explosion of process problems to solve and, it turns out, little software to actually support them.
Said another way, there is a long tail of very custom process problems that software is supposed to help businesses solve.
In the past, software’s long tail has been generally inaccessible because software has been
- Too difficult to write
- Too expensive to write and distribute
- Too brittle or expensive to customize once deployed.
It just hasn’t been economical for someone to create a custom software company to help architecture firms.
That’s why, in the software business, the traditional focus has been on dozens of markets of millions instead of millions of markets of dozens. The traditional software model is to make software have enough features and address enough of a homogeneous market that you can sell millions of copies of the same software. In the past, that’s been the only way to make money.
How the software tail gets address today
The market doesn’t like a vacuum and people do solve their software needs in the long tail. They do it using two basic tools: Microsoft Excel and email. I’ve seen so many business that run on Excel+email. People build structured lists in Excel and then send them out over email for comments and updates – a list of people to hire, a list of deals they want to do with action items included, a list of features for the next product. Something like this
Doing better (warning, personal plug for JotSpot coming…)
Excel and email are the wrong tools for software in the tail and we all know it. It’s really easy to start with, which is fantastic, but it suffers from.
- Versionitis. We all know what happens with spreadsheets like these. You create it, you mail it to 10 people. One of them changes and mails it back out. Rinse, lather, repeat until everyone’s inbox is full of this thing and no one knows who has the latest version.
- Updates. You only know the sheet has changed is when someone emails it to you.
- No integration. What about the stuff that doesn’t fit in the grid? – the email and documents that go along with these spreadsheets?
That’s where JotSpot comes in. JotSpot is a company that is building a platform to make it easy and affordable to build long-tail software applications. To take those Excel spreadsheets and turn them into real web-based applications where you don’t have versionitis, where updates find you instead of you looking for them and where you can integrate data in your hard drive with data from the web, email and other applications.
Please, really Joe, wrap it up…
So, my tip for entrepreneurs? It’s all about the long tail. Whatever business your starting, think about how to serve millions of markets of dozens instead of dozens of markets of millions. Serving the head isn’t a bad strategy. You can build a great business. But, figure out how to serve the tail of your market efficiently and you’ve got a blockbuster.
January 06, 2005
Startups and the Stockdale Paradox
Why on earth can I only seem to post about once every two months? Note to self: startup, new family and blog posts don’t mix well. Sheesh.
It is possible that I'm the last person to read Good To Great. But, if you haven’t read it, you’ve got to. The central question the book addresses is: how is it that some companies putter along for years and years and then suddenly transform themselves into great companies which deliver tremendous returns for shareholders?
As is usually the case for business books, it’s more descriptive than predictive (it accurately describes what happened at these companies but it doesn’t necessarily mean that emulating those steps predicts your own success) and it profiles companies that have been in business 25 years or longer (not exactly startups).
But, the book is worth $27.50 for page 85 alone. Tape it to your wall.
Page 85 has what I believe to be the ultimate summarization of the required mindset for a startup. And, it doesn’t come from an entrepreneur. It comes from a sailor. Author Jim Collins calls it the “Stockdale Paradox”.
The Stockdale Paradox is named after Admiral Jim Stockdale who was the highest ranking US military officer imprisoned in Vietnam. He was held in the “Hanoi Hilton” and repeatedly tortured over 8 years.
Collins describes going to lunch with Stockdale (can you imagine?) and trying to understand how he survived 8 years as a POW while so many died after just months in captivity.
Here’s how Stockdale put it.
“I never lost faith in the end of the story. I never doubted not only that I would get out, but also that I would prevail in the end and turn the experience into the defining event of my life, which, in retrospect, I would not trade.”
Wow. 8 years of torture, all the while never losing faith in the end of the story?
“Who didn’t make it out”?
“The optimists. They were the ones who said ‘we’re going to be out by Christmas’. And, Christmas would come and Christmas would go. Then they’d say, ‘We’re going to be out by Easter.’ And Easter would come, and Easter would go. And then Thanksgiving, and then it would be Christmas again. Then they died of a broken heart.”
So, on the one hand it was about unswerving faith that one will ultimately prevail while on the other hand it’s about banishing all false hopes? As usual, the guy who lived it says it best.
“You must never confuse faith that you will prevail in the end – which you can never afford to lose – with the discipline to confront the most brutal facts of your current reality, whatever they might be.”
Holding those two seemingly contradictory notions in his head simultaneously was the key to Stockdale surviving, even thriving, in his experience. And, I believe, it is a perfect summary of the mindset you’ve got to have in starting a company.
You have to believe that your vision will come to pass. You’ve got to do everything you can to make it happen. But, you can never let your belief and faith cloud your confrontation with reality.
In the front of each notebook I write in, the first thing I put on the inside cover is “face reality”. I write it to remind myself that many startups fail because they don’t take a true accounting of the facts of the market (usually because they’re never as good as you want them to be and it sucks to look them in the face). Most startups are long on faith and short on reality.
Entrepreneurs are wired for optimism. But, in Stockdale’s story, it was the optimists who died. Don’t forget to balance optimism with fact and belief with reality. If that can get someone through 8 years of being a prisoner of war, it certainly can get anyone through a (trivially compared) startup.
November 14, 2004
Flossing and startups
I went to the dentist recently.
I'm always slightly embarrased at the dentist. It's as if I'm 11 years old all over again where I know I did something wrong and I'm just waiting to be caught.
I sat in the chair and after a few minutes of chit-chat the hygentist began her ritualistic socratic questioning.
"How often do you floss Joe?"
Of course, I don't floss. That's the problem. She knows I don't floss but she asks anyway. And, my trick of flossing the day before I come into the dentist's office never seems to fool anyone.
"Uh, not very often."
"That's ok" she said. "Just floss the teeth you want to keep."
Well if you put it that way...
Don't ask me why, but that line, "just floss the teeth you want to keep", got me thinking about goal-setting inside companies.
Goal-setting is everywhere. Everyone knows it's the right thing to do. I've got to focus. I've got to have goals and objectives. I've got to communicate these goals and objectives to those around me. We've got to get on that proverbial "same page" and goals are the way.
Problem is, most goals are never met. Goal setting quickly becomes overhead. It takes time with no rewards. People stop believing that goals are anything more than management requirements that have little effect on day to day behavior.
It may seem obvious, but in my opinion, the root of the problem is that people make two big mistakes around goals:
* they set soft goals that cannot be measured.
* if they measure, they measure without reference to competition.
"Just floss the teeth you want to keep."
"Just measure the goals you want to meet."
I see it all the time. "Improve customer support" or "Gain market share."
I always wonder, how do we know if we've done what we've set out to do.
The cure is to never set a goal you can't measure. Sounds draconian and simplistic, but it's the best cure to "squishiness" around. Cultures in companies are really nothing more than a shared set of behvaiors and if you let "squishy" behavior in early through soft goal setting, it's really hard to stamp out later.
An ancillary mistake people make is that they set absolute goals as opposed to goals relative to competition.
At Excite, we made this mistake in the IM space. The whole category was exploding and Excite's IM product (called Excite PAL for those historians out there) was getting a lot of downloads. Of course, it was being outpaced by ICQ and Yahoo Messenger, but we were measuring it's progress relative to internal targets. We probably knew it wasn't right, but we were letting our excitement over our internal growth cloud our judgement.
We didn't feel dumb, we were just acting dumb.
You know what happened?
We explosively grew our way to irrelvence in the IM market.
So, floss your teeth, set measurable goals, measure relative to competition, and be kind to your hygenist. There's no telling what wisdom she can provide.
October 20, 2004
I was trying to recruit someone recently for my new company. Despite hours of pushing by me and the team, they ultimately concluded that they needed to take time off before deciding what to do next.
There was a time, five years ago maybe, where I would have tried to push through their reasoning.
"You'll miss an incredible opportunity"
"There will always be time to take off but not always a time to have a huge impact like this"
You get the idea.
This time I let it go and wished them well. Why?
Four years ago I met Peter Ueberroth at a venture capital event. Now I had never met Peter before, but I knew that he had made a tremendous and varied career for himself: an entrepreneur and millionaire in the travel industry, organizing the Los Angeles Olympics, named Time Magazine's Man of the Year in 1984, running all of baseball as its commissioner, spearheading the "rebuilding Los Angeles" campaign after the 1992 riots, investing in and building companies as a venture capitalist, and running for governor in the California recall election.
I was fascinated by this guy and I had to know how he did it. So, I asked the cliched "how have you accomplished so many amazing things in your life" question.
He paused for a moment and I'll never forget what he said.
"I pot plants."
Um... I sat on that one for a moment.
Saving me from the embarassing "I have no freakin' clue what that means", Peter said that every time a job has run its course and he decides to move on, he makes it a point not to do anything right away. He goes into his back yard and he gardens.
He literally pots plants.
His idea is to put himself into a quieted state over as long as it takes, so that he can listen to that little voice in his head that tells him what's next.
He gets himself bored and quiet and calm.
Then he goes on to his next greatness.
I've never forgotten that lesson. It's why my wife and I put backpacks on and traveled to Nepal, Vietnam, Cambodia and many other way-too-hot places when I left Excite.
It's why I no longer push when people say they need to decompress.
It's a huge luxury. But if you can, take Peter's advice. Pot some plants.
October 13, 2004
Moons Over My Hammy
I've been absent for a while. Sorry. My new company just launched and it took all my time away.
Now, like Chucky in Child's Play 2, I'm back...
When Vinod Khosla stepped up to the plate to fund Excite (born Architext), a funny thing happened. Suddenly, there was a lot of interest by a lot of people in the company. Nothing creates interest like interest.
One of those people was a guy named Phillipe Courtout. Phillipe ran a search technology company called Verity. What I remember most about Philippe was his French accent and this bad-ass Mercedes he drove.
Phillipe didn't want to fund Architext, he wanted to buy it. Price? $3 million bucks plus some nice cubes at Verity and perhaps an Aeron chair to boot.
So there it was. Phillipe's offer of cash now vs. Vinod's offer of investment and potential.
Those were some high-class problems.
In those days, the tried-and-true way to solve complicated issues was to take the two couches we had "liberated" from the trash bin at our local self-storage locker and drag them together, face to face, in the middle of the living room. Then, with three of us on one side, and three of us on another, we hashed things out.
At midnight, this meeting started with a roll-call vote.
3 to 3.
Three people wanted to take the Verity deal. Three of us wanted to take the risk with Vinod.
Everybody spoke for a while, making their plea. By 1am, we broke the huddle and split up.
A few of us walked the neighborhood, others chucked the nerf football in the street. We re-congregated at 1:45.
We looked at one another and I remember this big pause. Then someone, I don't remember who, said "we've thought about it more and we're willing to take the KP deal." It was done.
After the initial "are we sure about this?" wore off, it was time for celebration. I had a mission: Las Vegas. Now. Martin Reinfried remembered that his dad had one of those books that listed all scheduled flights from all airlines (yes, it was a book in 1994) so we called him and woke him up.
No flights to Vegas at 2:30am? You have no idea what a shock this is to the 22 year old mind.
"How about Denny's?"
That's right, Denny's. Someone floated Denny's as a viable alternative to Las Vegas and the funny thing was we couldn't think of anything else. So, you know where we celebrated the financing decision for Architext?
Can I get a shout out for "Moons Over My Hammy"! It never tasted so good.
For me, this story always reminds me about the nature of startups and about the value of celebrating your successes. Someone once told me that startups are like qualifying for the olympics. Every time you cross the finish line in first place, it represents a milestone and a victory. But, really all it does is qualify you to compete with companies at a higher level. You may think every milestone is a finsh line -- funding, first product ship, more funding, public offering, etc -- but the truth is that the competition never ends. Every finish line merely qualifies you to walk across the track, get back in the starting blocks and compete against even better competitors.
How's that for a VC sports-analogy?
The point for me is this: don't forget to celebrate your successes. It's way too easy to burn out by immediately focusing on the new race right after crossing a finish line. Don't. Take a moment and revel in it.
I never did this enough at Excite. I wish I had. We crossed a lot of finish lines in first and we never took enough time to celebrate.
So now that this new company is launched, it's time to celebrate. It's 10pm, and in my 20s perhaps I'd be in my Jeep on the way to Denny's. Now in my 30s, married, with a new baby, I can think of no greater luxury than going to bed...
Whatever happened to Las Vegas?
September 29, 2004
Warning: this post contains no educational material whatsoever. It's merely me, at the office late working on the new company and feeling punchy, telling a story about meeting Bill Gates at a urinal.
Microsoft made a buyout offer for Excite (corporate name: Architext) in December of 1995. That was two months after we had launched.
Cost of Excite in December 1995: $70 million.
Meeting Bill Gates at a urinal: priceless.
I said above that there was no valuable experience to draw upon here, but I was wrong. Here it is. Much of the early team was quite tempted to take the money. Others of us wanted to go for it on our own. It was Vinod who had some good perspective. He said that the hardest thing for a startup to do is get momentum. Gain some momentum and it becomes quite hard to stop the trajectory of the company. Said through an analogy, "once the rocket is off the pad and reaches escape velocity, it's very difficult to stop." Sure, but how do you know when you've hit escape velocity? That's the tricky question and while Vinod certainly maintained that we had (given the winning of the Netscape deal (see Persistence Pays, pt II)) I was uncertain.
So, off to Microsoft we went to negotiate.
Microsoft received us with the usual parade of good cops and bad cops. The good cops were tough but engaging. Yes, they wanted to buy the company. No, we're not paying more than $70 million. The bad cops were just plain hostile. I remember Nathan Myhrvold nearly yelling that search was not a business; that users would find their favorite site, bookmark them and then never go to search again. You honestly had to have that debate in 1995. Bookmarks? Sheesh.
During one of the negotiating sessions (with the good cops), Vinod and I took a break to hit the bathroom. Vinod pushes open the bathroom door and there, standing slightly hunched at the urinal, was a small man dressed in a sweater. "Holy shit" I said to myself. "It's Bill Gates."
Image you're facing three urinals. Bill taken the right-most. Vinod takes centerfield and I'm out in left.
Vinod looks over at Bill.
Bill looks back at Vinod "Hey Vinod, who are you here with today?" (today? now is that a telling question or what.).
"I'm here with the Architext guys. This is Joe Kraus".
Let me pause this dialog to say two things right now.
1. what is the appropriate bathroom etiquette? I had a massive internal struggle. Do I reach over the urinal barriers to extend a handshake to Bill? What would he do if I did?
2. I had complete urinal performance anxiety. I had not been able to pee up to this point. Nothing was happening in the presence of the man who brought us greatness like Microsoft Decathlon and the Blue Screen of Death.
What did I do? I said hello and then stood there silently not knowing what to do or say.
Shortly thereafter, Bill finished up, backed away from the urinal, washed his hands and left.
I should have shaken his hand.