Achieving overnight success: Tom Preston-Werner(joel.is)
joel.is
Achieving overnight success: Tom Preston-Werner
http://joel.is/post/27696148578/achieving-overnight-success-tom-preston-werner
6 comments
I'm impressed with the premise of these articles and want to see more of them -- removing the glitz and glamour added by the media to entrepreneurial stories is an important service.
I must have been out of the loop -- I never knew that Tom Preston-Werner founded Gravatar[1] or that he worked at Powerset.
He mentioned in his blog post[2], as he was labelled a "flight risk", he was offered quite a sum of money to stay at Powerset/Microsoft. Money is quite sticky and to pull away from it requires both guts and determination. Even though I'm early in my career I've already come across the "flight risk" pot of gold and avoided it -- though as opposed to Tom I don't yet know if I made the right decision or not ;)
[1]: http://tom.preston-werner.com/2008/10/27/looking-back-on-sel...
[2]: http://tom.preston-werner.com/2008/10/18/how-i-turned-down-3...
I must have been out of the loop -- I never knew that Tom Preston-Werner founded Gravatar[1] or that he worked at Powerset.
He mentioned in his blog post[2], as he was labelled a "flight risk", he was offered quite a sum of money to stay at Powerset/Microsoft. Money is quite sticky and to pull away from it requires both guts and determination. Even though I'm early in my career I've already come across the "flight risk" pot of gold and avoided it -- though as opposed to Tom I don't yet know if I made the right decision or not ;)
[1]: http://tom.preston-werner.com/2008/10/27/looking-back-on-sel...
[2]: http://tom.preston-werner.com/2008/10/18/how-i-turned-down-3...
> though as opposed to Tom I don't yet know if I made the
> right decision or not ;)
NB, this doesn't mean one shouldn't try. But you know what I'd be interested in? A series on utter failures. People leaving safe jobs for a half-baked idea that simply doesn't take off. Companies folding after a couple of months without much publicity. Desperate hunts for "acquihires" that go nowhere.
I agree, the survivor bias in the startup world is intense. We're always focusing on the success stories and replicating what they did. But, like you say, for every "toiled away and finally made it" story, there are probably 5? 10? 100? "toiled away and still got nowhere" stories.
As someone who has written a little about trying and failing[1][2], I'll say that the community doesn't exactly embrace such stories. Instead, everyone piles on to armchair quarterback and tell you what you did wrong.
But, to anyone who is serious about succeeding, you need to listen and learn from both the successes and the failures. Otherwise, you're operating on far less than half the story.
[1] http://blog.aisleten.com/2009/04/06/what-we-did-to-not-get-i...
[2] http://peachshake.com/2011/07/20/entrepreneurship-stumbling-... (go about 10 minutes in to hear about failure)
As someone who has written a little about trying and failing[1][2], I'll say that the community doesn't exactly embrace such stories. Instead, everyone piles on to armchair quarterback and tell you what you did wrong.
But, to anyone who is serious about succeeding, you need to listen and learn from both the successes and the failures. Otherwise, you're operating on far less than half the story.
[1] http://blog.aisleten.com/2009/04/06/what-we-did-to-not-get-i...
[2] http://peachshake.com/2011/07/20/entrepreneurship-stumbling-... (go about 10 minutes in to hear about failure)
Context is everything, mate, so I strongly disagree about who you are not being a factor. Decisions are driven by many factors and none of mine relied on "overnight success" for example.
Control of your working hours was something I wasn't willing to trade, not even for a large sum of money. I'm still happy with my decision -- but I'm well aware of the fact that if the company I refused goes on to become enormous I will be kicking myself =]
Control of your working hours was something I wasn't willing to trade, not even for a large sum of money. I'm still happy with my decision -- but I'm well aware of the fact that if the company I refused goes on to become enormous I will be kicking myself =]
The praise for Github bootstrapping to over 100 employees always strikes me as odd. I have the impression that using venture capital to accelerate a company marks a more modern approach to business, relative to the last ~30 years. Along these lines, Github's seeming delay in accepting venture capital signals to me that its core business plan strongly builds value without a "warp-tunnel" of venture capital, and that its current valuation comes from patience rather than a VC's gamble. Therefore, I see such public investments of VC more as a mark of impatience caused by a society that thrives so much on near-instant communication.
Is my impression off?
Is my impression off?
Whilst VC can certainly accelerate a company's growth, it can also be risky.
When you take on funding you also take on obligations. One could imagine that VC partners early on may take issue with the idea of Github offering free services for open source projects for example. Before the network effect steps in, it'd just look like a foolish and idealistic idea. Essentially, VC funding may well accelerate your company but it's so early you have no clue if you're accelerating in the right direction.
By bootstrapping to such a successful point and then taking VC funding they're in far more control over how much money they receive and what percentage of equity they give up. The worst position to be bargaining from is a position of weakness -- having a self sufficient company puts them in control.
Bootstrapping lead to what appears to be very competitive terms from well known and respected VC partners[1]. Whilst they could have raised funding earlier, they would have been parting with much more equity.
[1]: http://go.bloomberg.com/tech-deals/2012-07-09-github-takes-1...
When you take on funding you also take on obligations. One could imagine that VC partners early on may take issue with the idea of Github offering free services for open source projects for example. Before the network effect steps in, it'd just look like a foolish and idealistic idea. Essentially, VC funding may well accelerate your company but it's so early you have no clue if you're accelerating in the right direction.
By bootstrapping to such a successful point and then taking VC funding they're in far more control over how much money they receive and what percentage of equity they give up. The worst position to be bargaining from is a position of weakness -- having a self sufficient company puts them in control.
Bootstrapping lead to what appears to be very competitive terms from well known and respected VC partners[1]. Whilst they could have raised funding earlier, they would have been parting with much more equity.
[1]: http://go.bloomberg.com/tech-deals/2012-07-09-github-takes-1...
It's not just obligations.
I'll take an example from my own career: One of my first startups was a vanity domain hosted e-mail service. We bought about 60.000 domain names. Originally this came out of the realization that myself and one of my co-founders were in effect both "blocking" a surname for everyone else with our own domains - him for a fairly common one. We figured we'd add some services and value and create the opportunity for effectively sharing domains. We figured since we, and quite a few other people) as we found out by checking which common last names where available on .com) were willing to pay for a domain, chances were a decent number of people would be willing to pay for a service like this as well - particularly non-technical users. And anyway, it was possible to buy ourselves artificial scarcity fairly cheaply.
Then came the discussion of bringing in VC's, and as this was '99, once the discussion turned to what a VC might be interested in, switching to a free, ad supported model to boost user numbers came up early on the basis of the ridiculous per-user valuations of the time. And the VC's took that bait hook line and sinker.
So it's not just obligations: Deciding to targeting the VC's when you're starting from a weak position (not existing, profitable product) has the potential of warping your thinking as you try to make your idea into something that is attractive to them. I'm not going to blame the VC's here - we did this entirely voluntarily, and of course were also seduced by the potential for a much larger exit (but didn't think through the increased risks that came with growing the company so rapidly)
The problem is that since the VC's want out fast and have diversified their risks significantly, they are willing to 1) take significant risks on building businesses where there's no known long term prospect if there's decent shots at exits. In this case, there was a steady stream of acquisitions based largely on per-user valuations without much revenue. In this case it was openly acknowledged that while everything thought it was possible to break even, the hope for a big exit lay in this. 2) they're willing to make some really high risk bets if the potential payout is a large enough multiple.
These makes sense for them, but much less so for founders that has a much lower limit on how many shots we effectively have at a successful startup through our careers. And so it is important to keep that in mind when considering what changes are acceptable to make in order to get VC funding - some changes might get you lots of money, but might severely impact your odds of getting an exit that you might be perfectly happy with.
In the end we acquired a decent number of users (1.5 million or so) in very little time, didn't see a way of getting the money, the bubble had burst and the investors got skittish, and so we pivoted. Twice. In the end the company survived, at least. But the assets of the e-mail service was sold off, and the new owner made a profit on that acquisition in no-time by returning to our original idea (and were later acquired - I don't know what valuation they got, but I'm willing to bet their ROI was substantially better than ours...).
I'm all for taking VC cash for the right opportunity, but anyone going that route should think long and hard about if and how changing the business to "fit".
I'll take an example from my own career: One of my first startups was a vanity domain hosted e-mail service. We bought about 60.000 domain names. Originally this came out of the realization that myself and one of my co-founders were in effect both "blocking" a surname for everyone else with our own domains - him for a fairly common one. We figured we'd add some services and value and create the opportunity for effectively sharing domains. We figured since we, and quite a few other people) as we found out by checking which common last names where available on .com) were willing to pay for a domain, chances were a decent number of people would be willing to pay for a service like this as well - particularly non-technical users. And anyway, it was possible to buy ourselves artificial scarcity fairly cheaply.
Then came the discussion of bringing in VC's, and as this was '99, once the discussion turned to what a VC might be interested in, switching to a free, ad supported model to boost user numbers came up early on the basis of the ridiculous per-user valuations of the time. And the VC's took that bait hook line and sinker.
So it's not just obligations: Deciding to targeting the VC's when you're starting from a weak position (not existing, profitable product) has the potential of warping your thinking as you try to make your idea into something that is attractive to them. I'm not going to blame the VC's here - we did this entirely voluntarily, and of course were also seduced by the potential for a much larger exit (but didn't think through the increased risks that came with growing the company so rapidly)
The problem is that since the VC's want out fast and have diversified their risks significantly, they are willing to 1) take significant risks on building businesses where there's no known long term prospect if there's decent shots at exits. In this case, there was a steady stream of acquisitions based largely on per-user valuations without much revenue. In this case it was openly acknowledged that while everything thought it was possible to break even, the hope for a big exit lay in this. 2) they're willing to make some really high risk bets if the potential payout is a large enough multiple.
These makes sense for them, but much less so for founders that has a much lower limit on how many shots we effectively have at a successful startup through our careers. And so it is important to keep that in mind when considering what changes are acceptable to make in order to get VC funding - some changes might get you lots of money, but might severely impact your odds of getting an exit that you might be perfectly happy with.
In the end we acquired a decent number of users (1.5 million or so) in very little time, didn't see a way of getting the money, the bubble had burst and the investors got skittish, and so we pivoted. Twice. In the end the company survived, at least. But the assets of the e-mail service was sold off, and the new owner made a profit on that acquisition in no-time by returning to our original idea (and were later acquired - I don't know what valuation they got, but I'm willing to bet their ROI was substantially better than ours...).
I'm all for taking VC cash for the right opportunity, but anyone going that route should think long and hard about if and how changing the business to "fit".
VC money is generally for businesses that need to accelerate growth rapidly (ie have a big first mover advantage etc) and have a huge upside at the end of it.
The site seems to be down due to traffic overload - here is a cached version:
http://webcache.googleusercontent.com/search?q=cache:7f0lqf7...
http://webcache.googleusercontent.com/search?q=cache:7f0lqf7...
Wow, never knew Tom created Gravatar. Really like these sort of posts but maybe the title of 'overnight success' is wrong? Great article though!
Why does this site always take 10 attempts to load?
I wrote this post for that exact reason http://blog.picplum.com/startups-dont-host-your-blog-on-tumb...
edit: re link not loading - anyone else having Zerigo DNS issues right now?
edit2: yeah, lots https://twitter.com/#!/search/zerigo
edit: re link not loading - anyone else having Zerigo DNS issues right now?
edit2: yeah, lots https://twitter.com/#!/search/zerigo
My connection to Tumblr is always being interrupted. I brushed it off as an edge case, since I live in a pretty remote area in Europe. This makes me think the issue more wide spread.
If you can't read this blog post, it suggests hosting your blog because Tumblr's uptime is atrocious.
Kinda ironic, I get "Oops! Google Chrome could not find blog.picplum.com" :)
....while I can see all tumblr blogs, I can't see yours.
Oops.
Oops.
Source: https://gist.github.com/6443
Discussion: http://news.ycombinator.com/item?id=282158