Book Review – Founders at Work (Part 2)

Today I continue the review of one of my favorite startup books, “Founders at Work” by Jessica Livingston. Each chapter is a story of a famous startup and a tell-all about those startup stories. Yesterday, I shared notes I took from the first 10 stories in the book as Part 1. Today I share 10 more stories as Part 2:

Arthur van Hoff, Cofounder of Marimba

4-co-founder startup, initially shared equity equally among co-founders
Lot’s of press upfront showered them with good deals
Lawsuit on the backside killed their ability to sell their shares after their IPO
First business plan is mostly worthless since it’ll change so much

Paul Buchheit, Creator of Gmail

Started Gmail alone within Google
Key features: auto-complete of email addresses, 1GB disk storage, invitation-only, and conversation view for email
Had worked at Intel before Google

Paul Graham, Cofounder of Viaweb

Make something people want
Took several rounds of financing
Lost a $3M acquisition deal early on, but ended up much better off
Had over 10 acquisition bids
Telling customers the truth worked well
Interesting story of founders taking off for an internship
Interesting story of IP negotiations with a company that had paid the tuition for one of the founders

Joshua Schachter, Founder of del.icio.us

Worked for Morgan Stanley while developing website
Constraints breed creativity; since he only had little time to work on the side, he had to build something lightweight
Kept it as a project for a long time before forming a company

Mark Fletcher, Founder of ONElist and Bloglines

Tons of initial press really helped
You don’t need hardcore MBAs in a startup
The biggest question is, “When to sell?”
Recommends eLance for contracting software work
Started the company on the side while still working for Sun. Left Sun when they got $4M in funding.

Craig Newmark, Founder of craigslist

Company stays really small at about 20 employees
Makes money off of Job listings and NYC real estate
eBay owns 25%, but doesn’t affect any decisions
Customer service is his key “gig”
Took very little money to get it to work
Craig is a weird dude

Caterina Fake, Cofounder of Flickr

Flickr emerged as the result of a feature for a video game they were developing
Very smooth sailing
Beat the competition because their model was unique
Only took small angel funding

David Heinemeier, Partner of 37signals

Talks about converting a service company to a product company
Minimalist approach is powerful
- Ruby on Rails was only 1,000 lines when first released
- Basecamp was only 5,000 lines when first released
Need to focus while developing; use IM to communicate
Don’t take unneeded VC dollars

James Hong, Cofounder of HOT or NOT

Came up with the idea while drinking
Site took off like wildfire
Still have not sold the site
They had a tough time handling pornographic submissions; using his own parents for a time to manually filter it out (awkward!)

James Currier, Founder of Tickle

The people around the founder want to know where you are now and want to see you take another step along the path so that they can feel more confident
Getting one term sheet invites the interest of more VCs, which invites the interest of acquirers; their first term sheet led to an acquisition offer by Women.com for $32M; they turned it down
Story of how he arranged for a marshal to be present when they were firing a particularly volatile employee
Story of how the head of HR crafted the maternity leave policy and got naive buy-in from founder for a policy of 5-months fulltime pay. Then a few weeks later she announced she would be taking off for maternity leave. While she was getting 5-months of fulltime pay, the company was in dire financial straights and had to take several people off salary.
Advocates saying you are 1-step ahead of where you actually are to get ahead
Acquired by Monster for $100M in 2004

What are your favorite famous startup stories?

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