Founders at Work: Stories of Startups' Early Days

by Jessica Livingston

It's the whole sausage and sausage factory problem: when you're outside and you only see the sausage coming out you think, "That's pretty tasty." When you're on the inside and you know how it's made, it's terrifying. That's the feeling. You just don't ever feel like the progress is smooth. It's never, "We set out this well-orchestrated plan, we're executing it, it's going exactly according to plan. We're getting bigger by the day and it's just as I thought."

It's hard to identify talent, but great people don't look for jobs, great people are sold on jobs. And if they're sold they're going to say no at first. You have to win them over.

"Success is 50 percent luck and 50 percent preparedness for that luck." I think that's a lot of it. It's being ready to take advantage of opportunities when they arise.

Venture capitalists, with the exception of people like Don Valentine, would tell you that they'd rather fund a great team than a great idea. The reason is that if they have a bad idea, great teams can figure out a better one. Mediocre people even with a great idea can screw it up in its execution. Or if they have a bad idea, then they aren't going to be in a position to think about how to change it. They're just going to pursue it blindly.

People who saw it, who needed it, got it. Sorry, no—some of the people who needed it got it. You have to be a person who is able to look at a general-purpose tool and be able to think, "How would I use that to solve my problem?" Most people are not that way. They look for a tool that is being used already for something close to their problem and then understand what it is.

At any given time, you've got to have a technology roadmap in your mind and a market roadmap as to where things are headed—broadband is getting increasingly pervasive or wireless is getting increasingly pervasive, or something is going on—and trying to project out several years, because it will take you several years to build anything that's worth building. So you don't want to fill today's needs, but try to capture some window that will happen in the future.

Everyone knows that one reason you go to work and do what you do is the hope that ultimately you'll be compensated. But you don't have to say it, and it doesn't have to come through. It should be about the mission. It should be about changing the world. It should be about how you can impact the lives of users, partners, and the employees themselves. It's not just about this big payday. The more you focus on the things that matter when you are talking to people who want to believe in you, the more they will believe in you and the more it will be a sustainable entity.

Getting good grades at a good school is one filter of brains, but it might also suggest you like following rules.

Through that whole experience that's one of the biggest things that I've taken away: if you have some plan and it doesn't go that way, roll with it. There's no way to know if it's good or bad until later, if ever.

"If we're going to appear big, we'd better act big,

Being everywhere all the time made us look bigger than we were; "Oh yeah, we'll be in New York, we'll be there." I'd say, "Jeff, I have all these things on my plate," and he always responded, "No, we're going." It was someone who had come from a big company who knew how to act like a big company, even though behind the scenes it was startup.

You call it vision, but it's a combination of vision and faith that 1) it's going to happen someday, and 2) it has value, and 3) you can actually accomplish it in an economic way and promote it so that you can fund the development and growth of the business. That's pretty tricky stuff.

Because you'll go through so many changes, I don't think it pays off to overanalyze the first business plan, for example. The first business plan is there to make sure you can use Microsoft Word.

The other thing is that there's kind of an attitude here that people should try things, and, if they fail, if they understand why they failed, they may actually be a better investment in the next round than somebody who quickly succeeded just by sheer luck.

We didn't seem very businesslike for the same reason we didn't seem very well dressed. We just didn't bother with that stuff. But we did concentrate on the stuff that really mattered, which was making users happy.

What is the most important piece of advice? Graham: What Y Combinator prints on our T-shirts: make something people want. If you make something users want, they will be happy, and you can translate that happiness into money.

So if you are someone who can't execute and all you can do is come up with ideas, how do you know if they are any good? You don't really know if it's a good idea until you've executed it. You need to understand the cost of execution and so on.

What surprised you most about having your own startup? Schachter: It's a combination of sudden freedom to run things as you please and crushing responsibility in which you know you have to do certain things in a certain way at a certain time. That eradicates all of that freedom. You become a robot on rails. You know what you have to do and you are working in a certain direction.

knew one founder who seemed to get more money every time one of his companies failed than the last time! You fail and people figure that you won't make that set of mistakes the next time.

Much better to figure out where the marketplace is going to be in a few years, focus on providing a solution to that, and let the market forces catch up to you.

We also understood that, if you are in the hammer business, you can't require that a person who buys a hammer be a good carpenter, so we opened up our tools to a much larger community.

The programmers were in the corner doing what they were told. That's one reason they were so easy to outsource. If a programmer really never talks to the customer, never thinks, just solves little puzzles, well, that's a perfect candidate for something to offshore.

Best way to secure a good professional outlook or entrepreneurial future: acquire a blend of technical, people, marketing and communication skills. Become irreplaceable, a pillar of the team, not an overly specialised, outsourceable cog. Specialisation built this world, but the future is in the hands of the flexible, adaptable self learners.

When they're young, people need to work pretty long hours to build experience and get things done. But the benefit was that then they get a big chunk of the project, and they are able to say, "I built half of the site for the customer." They put their name on something, instead of their résumé just saying that they were part of a 20-person team.

The difference between a startup and a big biz

the end, the project was a failure because the industry trends moved away from that. People don't want programmers to be professionals; they want programmers to be cheap.

The guys on my Board had been employees all of their lives. You can't turn an employee into a businessman. The employee only cares about making his boss happy. The customer might be unhappy and the shareholders are taking a beating, but if the boss is happy, the employee gets a raise. By contrast, the businessman cares about getting a customer, taking his money, not spending too much serving that customer, and then selling something more to the same customer. These are totally different psychologies.

people remember how you made them feel more than what you said.

In other words, why listen to our customers indirectly through what our competitors do when we can just talk to our customers? So my mantra has always been, "Listen to your customers, not your competitors."

Don't start a company unless you can convince one other person to go along with you. If you don't have two people (or I would even say three) that you've convinced to devote their lives to doing this, it's just going to be a different thing.

But because they never really take the leap and quit their job, they can give up their dream at any time. And 99.9 percent of them will actually give up their dream. If they take the leap, quit their job, go do it full-time—no matter how much it sucks—and convince one other person to do the same thing with them, they're going to have a much, much higher chance of actually getting somewhere.

Happiness is reality compared to expectations. If I have low expectations for material things in my life, then I'll be happy. If I get used to fancy meals all the time, not only will it ruin McDonald's for me, but even the fancy food would become normal, and then it's not meaningful. So I've been careful not to change my lifestyle too much.

You've got to say you are a step ahead of where you actually are to move to the step that you want to be at.

To move to step two, people have to believe that you're already at step two so there's no risk for them.

One thing I didn't know was how tightly connected everyone is in the Valley. We'll meet someone, and then we'll meet someone who I would never expect to even know that person, and they'll say, "I heard you met Tony last week." It's such a small industry, and so much business is done through the network circuit, which is kind of upsetting, because I'd rather the good companies get the good deals and the bad ones don't get deals at all. Instead, it's more like, "Who do you know?"