Without Their Permission: How the 21st Century Will Be Made, Not Managed
Page 4
The previous year, I’d spent a formative summer in Singapore, competing on behalf of UVA at an international technopreneurship conference (oh, bless the Singaporeans and their technopreneurship conferences). One of my favorite teachers, Professor Mark White, had invited me to go on this all-expenses-paid trip. I’d even turned down an internship at Ogilvy because I like free travel even more than I like unpaid internships in the most expensive city in America. It was there in Singapore on our first night that I pitched Mark the idea Steve and I had cooked up. Mark’s was the first unbiased feedback I’d gotten on the idea (my parents had always been ludicrously supportive of whatever I told them I was up to), and he thought we’d be able to pull it off.
His optimism may’ve just been a combination of the jet lag and the Singapore slings, but I was thrilled.
I wrote Steve this e-mail the very next morning. It’s in its original form for authenticity. Please forgive all the typos; those keyboards in Singapore aren’t QWERTY. Apparently there’s also a button on those keyboards that keeps inserting “bro” everywhere—sorry about that. In fact, imagine a great big [sic] around this whole thing:
hey bro, i’m in singapore at this technepreneurial seminar, and am basically spending a week learning how to create a tech startup. i spoke to Mark White (a professor in the comm school, the guy who took me to South Africa, and who recruited me to come here, as well as a generally good guy and technophile) over some drinks last nite, and pitched him on our idea… from his feedback—and let me remind you that he gets pitches every couple of months from students, and was very candid and honest with his thoughts, but basically said it was one of the best he’s heard, period. Not only that, but he wants to be on the board of directors, and already knows some people to hit up for starting capital… I’ve got plenty of more details, but I am seriously considering putting off law school for this, but i need you, and we’ll both need to be doing this full time for about a year to get it off the ground… but the potential he saw was in the millions my friend… we need to talkseriously.i am coming back the 20th so if we could have lunch around 1pm i could meet you whereever you’d like… let me know.honestly, this is the kind of thing that could change our lives—and his motivation has really spurred me.but i need you and the same kind of commitment.
How could he say no? Well, he didn’t quite say yes, but I was starting to wear Steve down.
I asked my commercial law professor (the same one who praised me for always taking the initiative) to recommend a lawyer in town, and we got our first company, Redbrick Solutions, LLC, registered in the commonwealth of Virginia with Steve and me as co-founders. Then I set up a bank account with the Bank of America branch that four years earlier had given me my first ATM card. It was around this time I realized I’d better sign up for the well-known entrepreneurship class (COMM 468) that the McIntire School of Commerce offered only in the spring to fourth-year students.
The Time I Wasn’t Allowed into the Entrepreneurship Class
That was a bit of a spoiler, I know, but you’ll want to hear why.
COMM 468: Entrepreneurship was a popular class, and the best I could do was secure a spot on the waiting list posted outside the professor’s door. I wasn’t exactly first on the list, but I figured I had a pretty good case, given that I was already committed to entrepreneurship—after all, I’d already incorporated with my co-founder and established a bank account. I think I’d even designed business cards.
In short: this wasn’t going to be a classroom hypothetical; this was my life.
Unfortunately, I learned from Professor Brockett, who’d be teaching the class that semester, that we were required to work on our “business plan” with another pair of students. If only I’d known then what a recipe for failure four co-founders usually is, I could’ve said something at that point, but the bigger issue to me and Steve back then was that we weren’t in a position to add two random co-founders to our very real business.
From: Alexis Ohanian
Sent: Tue 1/25/2005 7:46 a.m.
To: Brockett, Tanya
Subject: Interested in auditing COMM 468 for this spring
Professor Brockett,
[…] I do hope you consider allowing me to audit this class, because I know how much I’ll be referring to my notes and thinking back on lectures when May comes around. We plan on hitting the ground running once the semester ends, but despite all the administrative tasks I
However, Steve and I had our weekly progress meeting last night, and we really wouldn’t feel too comfortable with developing a business plan with a pair of other students. Firstly because we’ve already made one, but secondly because we still haven’t finished the software and therefore can’t protect it.
Despite the fact that I need 3 credits of a 400-level management class to graduate (and that I’m already taking 18 this semester)—I feel confident that I can course action into another management class, assuming I audited this one. I can assure you my presence will only add value to the class, and if there is any question to whether or not I could handle 21 credit hours—I took 22 last spring.
Thanks for taking my request into consideration,
Alexis
That e-mail was way longer than it needed to be, but I figured it would do the trick. At least I cut down on the “bro’s” this time.1
Here’s what Professor Brockett told me, with my thoughts in italics:
Alexis,
Your position on the waitlist did allow you to win a seat in class.
HUZZAH! It worked. I knew she’d see the importance of this class for me….
However, you have not yet been added because we need to clarify the expectations given your last email.
Ugh. My great-aunt is paying out-of-state tuition for this?
Please contact me during office hours (4:00–5:30; I already have a 3:30 appt) on Wednesday the 26th so we can discuss this.
Fail sauce.
I called Professor Brockett, who told me that I could work on a new business plan with three other students. So I asked about auditing the class, but she told me no.
And that’s how I was thwarted from taking COMM 468: Entrepreneurship. I opted to just be an entrepreneur instead.
Acceptance, Rejection, and Reacceptance; or Places to Drink in Harvard Square
I continued “entrepreneuring” during my senior year. Steve and I pushed on with our idea, and I began talking to local restaurateurs about their point-of-sale systems and experiences using online ordering, which back then was basically a glorified fax service. I was learning a lot, and all indications were that we’d stay in Charlottesville after we graduated to build our company: My Mobile Menu (MMM!).
Our lives changed with a fateful trip to Cambridge that spring of our senior year. One of Steve’s idols, Paul Graham, announced he’d be speaking at Harvard, and Steve’s girlfriend suggested he go. When he sent me the link, I responded with gusto (despite not really knowing who Graham was) because I’d never been to Boston and the theme sounded perfect for us: “How to Start a Startup.”
Granted, it was during our spring break, but it’s not like we were going to the beach anyway. The sun makes using a laptop nearly impossible, the screen glare is terrible, and besides, there’s all that sand.
Graham had started a company called Viaweb—the first online store—during the first dot-com bubble. He sold it for fifty million dollars to Yahoo!, which gave him the financial security to focus on his art and publish essays online about all things having to do with startups and programming. By the early aughts, he’d become a pundit in the tech community with a significant following of programmers, including Steve.
I didn’t expect there to be so much snow. We’d taken an
agonizingly long train ride up from Virginia, spent our first night at a friend’s apartment, and prepared for the talk. Actually, Steve leveled up his priest in World of Warcraft.2
But then we were off to Harvard! The lecture room was packed, and Paul read from his notes for about forty-five minutes and graciously answered questions. At one moment he described the perfect angel investors as “people who themselves got rich from technology.” As he said this, he must’ve noticed the roomful of aspiring founders all widen their eyes with hopefulness. He abruptly clarified: “Oh, not me!”
The rumble of one hundred simultaneously disappointed nerds echoed through the room.
Graham would look back on this moment as the instant he realized a little money could go a long way for the right founders. After all, he’d just told them, “You need three things to create a successful startup: to start with good people, to make something customers actually want, and to spend as little money as possible. Most startups that fail do it because they fail at one of these. A startup that does all three will probably succeed.”3
After he finished, Steve made a beeline for him to get an autograph, and I followed. When it was my turn, I informed him that we’d come all the way from Virginia and said (rather boldly), “It’d totally be worth the cost of buying you a drink to get your opinion of our startup.”
He agreed, probably impressed by our pilgrimage, set a time for the meeting, and asked if I knew “the kiosk.” We’d meet there.
I was so excited that I nodded without thinking. Of course, I had no idea where “the kiosk” was, but that didn’t stop me from dancing a quick jig in the hallway. After asking a good half dozen strangers, we learned it was, in fact, just a kiosk in the middle of Harvard Square. There’s one more reason I didn’t go to Harvard.
We met Paul that night as planned and sat down for coffee at Café Algiers to discuss our idea. The plan had been that Steve would impress him with his programming acumen and, once we’d established our competence, I’d slide in with the pitch. Instead, Paul just looked at me and said, “Let’s hear it.” I didn’t get more than a few sentences in.
Paul loved it. Steve still fondly remembers this as an awesome moment of validation. Here was one of his heroes saying that the idea we’d had to start a company wasn’t awful. In fact, he said we had a pretty good shot at making it work. I don’t remember the odds he gave us, but they reinforced our belief that we’d made the right choice. I know I was relieved, since it was me who was dragging Steve away from a well-paying job at a company he liked. I didn’t want to deal with the wrath of his mom if things went poorly, either. We left behind our frozen geeky spring break and returned to Charlottesville enthusiastic about our prospects. I asked Steve to send a follow-up e-mail to Paul, since he was his idol, after all, and it seemed prudent to at least thank him for his time.
A day or so passed, and Steve still hadn’t written it, so I literally stood behind him as he typed out a quick e-mail thanking Paul. Steve reminded him that we were “those college students from Virginia.” Paul responded within a couple of hours. This was a very good sign. He noted that he was thinking of starting a program to invest in early-stage founders like us and that since he’d already met us, we had a pretty good shot at getting in.
Then, a few weeks later, Paul announced Y Combinator, an experiment in seed-stage investing. The premise was simple: a little bit of money, guidance, and three intensive months of writing code and talking to users could one day result in a billion-dollar company. Granted, at the end of three months, the goal was just to have gotten far enough to raise another round of funding—an angel investment, typically a few hundred thousand dollars. The angels, or backers, would invest in unproven Internet entrepreneurs because so little money is required to start a website—especially compared to how expensive it was when Paul Graham did it. If the founders could feed and house themselves and pay for laptops and Internet, they could launch a startup.
We applied for the very first round of Y Combinator funding and were invited up to Boston for an interview on Saturday, April 9, 2005. Jessica Livingston, partner at YC, described the interview process in an e-mail:
At this stage we believe you are technically capable, so we plan to spend the allotted 40 minutes4 discussing your idea. We don’t want you to give a presentation, but please come prepared to talk about:
1) Why your idea is something that people will want
2) How you will sell it to customers
3) How you will do this better than your competitors
This was a tremendous change from most tech-related interviews. There were no thought exercises like “Why are manholes round?” or stress tests with yelling and “big swinging dicks”5—they wanted to see us at our best, not flustered. Jessica greeted us at the door with a smile. When our time came, we had a lively discussion with Paul and his partners at the table: Jessica, Robert Morris, and Trevor Blackwell. Once it was all done, we still felt pretty good about our odds. He’d been so excited for our startup just a month earlier.
Getting the rejection call from Paul that night wasn’t easy. Steve and I dealt with it as best as we could, telling one another we’d prove Y Combinator wrong.
Fortunately, there was a cure for our disappointment: beer.
After doing some damage at the Border Cafe in Harvard Square, we went out with the pal who was putting us up. He was a Harvard graduate and took us to one of the scenes frequented by final club members (read: Harvard frat guys). I distinctly remember being introduced to some successful alums who were talking about finance jobs. They asked what we were doing with our lives. Drunkenly, I said something about how we were in town fund-raising for our startup and had just gotten funding from this new firm called Y Combinator.
Ugh. I felt so dirty when the words came out of my mouth, but I was so ashamed I couldn’t bring myself to admit our failure out loud. They weren’t even impressed; for some reason I thought they would be. Never again. The conversation had drifted back to something else, probably the girls in the bar they were eyeing, and I staggered outside for some air. I love being outside at night—maybe it’s the lack of sunlight, but I was really disappointed with myself. (Hey, if you Harvard alums from that night are reading this, I was lying because I was so embarrassed about being rejected by Y Combinator—I grew up in the generation of kids who got trophies for everything, so the first big rejection in my life really, really sucked.)
I had to accept it. We were rejected. And I was going to do everything I could to prove them wrong. Steve and I would show them that we didn’t need to be in their summer camp for startups. We’d go back down to Charlottesville and work with renewed vigor on an idea that would change the world—once we recovered from our hangovers.
Then everything changed with a phone call. Don’t worry; it’s much better than the calls I got in chapter 1.
Somewhere in the middle of Connecticut, on an exceptionally long train ride back to Virginia, my cell phone rang. It was Paul Graham. He wanted us back, but only if we changed our idea to something else.6 So much for proving them wrong. We got off at the very next stop, but not before I got Paul to buy us a pair of tickets to fly back to Charlottesville that night so we could return to Boston for an hour to join him in brainstorming a better idea than mobile food ordering. The big problem with the concept was that not only did we have to persuade customers to use the product, but because this was a time before app stores, the only way to get our software on people’s phones was to make deals with mobile carriers first. That alone would’ve been an impressive feat for a brand-new company of two, but we’d also need to get restaurateurs—notoriously late adopters—on board as well. Yikes.
We got back to the Y Combinator office and met with Paul Graham alone, without his partners. He told us to forget mobile for a moment and consider building something for the browser. Long before most people realized the power of online software, he knew the Internet offered tremendous potential for an idea to spread as never before. When a
customer only needs a browser and an Internet connection to access your product, unprecedented growth is possible. He asked us about frustrations we had using the Internet, which had just recently seen the launch of a college-only site called TheFacebook.com. Steve was an avid reader of Slashdot, a news website with editorial oversight and a robust community of commenters as well as a moderation system. I had too many tabs open every day—they showed me a range of news websites, but I had no way to filter signal from noise. At the time, a website called del.icio.us (pronounced “delicious”; ignore the dots) let people bookmark websites online, so if you hopped between computers, your reference material followed you. An interesting by-product of this was del.icio.us/popular, which aggregated the most popular bookmarked URLs at any given time. There was something here that del.icio.us wasn’t quite getting, but we saw the potential for something bigger, which would sort not the most popular links for bookmarking but the most popular links for sharing.
We hadn’t figured out functionality, but we knew the old model for news aggregation, when it was printed on a dead tree, wasn’t suited for the Internet age. In fact, the vision was best crystallized by Paul Graham in that very meeting: “That’s it! You should build the front page of the web.”
Early Decisions
Once we were accepted into Y Combinator, we got back to studying for finals and enjoying our last weeks of college.
On 4/14/05, Steve Huffman wrote:
Paul said it would be nice to whip up a prototype. We don’t need to make anything work, but a quick page to show what our site might look like could be cool. Do you have any time this weekend?
Steve
To which I responded:
yeah man,
sat afternoon or sunday—all day sunday would work well. i have some ideas, but i’ll need to sit down and sketch some things out with ya.