FAW #11: Arthur van Hoff of Marimba
Why they ran in stealth mode initially
Marimba was another company that started based on a team and not an idea. Much like the Excite guys, on day one they had zero idea of what they wanted to do. It was four people that had left the Java development team of Sun in 1996 to go do something of their own. They went and secured office space before they had any idea of what they were going to build.
Given the high profile of the people on this team (including Kim Polese, a knockout female CEO who drew a ton of press), they didn’t even have to say what they were working on. They claimed to be running in stealth but in truth, they still didn’t have a plan and were getting media attention regardless so they continued to play the stealth card and get attention mostly via Kim. The first idea the materialized was essentially the technology that was later developed by another group and became the Java Swing interface builder toolkit. So again- another instance of a company that started building the wrong thing. Van Hoff said: “Over the years, I’ve learned that the first idea you have is irrelevant. It’s just a catalyst for you to get started. Then you figure out what’s wrong with it and you go through phases of denial, panic, regret. And then you finally have a better idea and the second idea is always the important one.”
The company that developed the Swing toolkit (Netcode) was acquired by Netscape and though Marimba had a working prototype of essentially the same thing, they made the decision to cut bait and move on. The next idea that emerged was the concept of subscription software that would update itself over time. This is common stuff now with the Windows OS automatically grabbing updates but back then it was not yet being done and was considered very forward-thinking. The company grew quickly and had forty people by the end of its first year. It appeared that Kim while in her element in the early days, was not as effective in running a larger company. Van Hoff said, “Managing people and motivating teams requires a very different skill; it’s not something that you can do by the seat of the pants. So the lack of experience eventually begins to show if you don’t have somebody who can make decisions, for example…as a founder;, you have the skills to start companies from scratch, but it doesn’t necessarily mean that you have the skill to grwo it ’till they’re larger.”
The controversial espresso machine
Marimba raised $4MM in VC from Kleiner Perkins and immediately felt the pressures of how they were to spend the money. Van Hoff had intended to buy a really nice espresso machine for the coffee room once they landed funding but when he announced this intention to the VC’s they all shot down this plan and said the money was to grow the company. It became a sore spot for them and the company went through a rough period where morale was low and it was difficult to hire people. Van Hoff eventually said “screw it” and purchased a $15k deluxe espresso machine on a credit card and expensed it. Once their CFO got over the shock, they realized “it was the best money we ever spent. Every morning, people would meet and crowd around it. This thing was just it, the bee’s knees, people loved it, they couldn’t stop talking about it. A month later the CFO came and said, ‘I’m sorry, we should have done this years ago.’ And that tells you something about where you spend your money and what you spend your money on. It’s not just business-related expenses. You also have to create an environment that you like so that people are happy and feel they are valued.
At iTOOL we had a $2k Foosball table that was hub of interaction for developers. They probably saw a 100x return on that table in terms of the value of the interaction between employees and stress relief that the foos table afforded the company. We have the same Tornado table in our office at JumpBox now. I agree with Van Hoff that there’s not always a rational line item to explain every expenditure- sometimes it’s just about having a kickass foos table for the office.
Morphing into an enterprise offering
Marimba began targeted as a consumer product and eventually was morphed into an enterprise software distribution product. What’s funny is we went the other direction with JumpBox setting out to build an enterprise offering and retooling it as a consumer product selling appliances to end users.
On trusting your instincts
When asked if he had any regrets from Marimba, Van Hoff responded: “When it’s your first startup, there are a lot of people involved. You take advice from a lot of people, and that advice as not always the best advice. Very often, your intuition tells you to do something different, but then you go with the advice from the experienced guys anyway. And there were a few occasions where I look back and think, “If only I had gone with my intuition, things might have been different.” So I might rely more on my intuition if I were to do it again.”
This sentiment was a common thread that running across many of the stories, the idea that entrepreneurs should resist the tendency to capitulate to the advice of people that are supposedly more experienced. Nine times out of ten the entrepreneur is in the best position to make a decision and would be better served by trusting his/her own instincts.
Keeping things pristine to prevent an IP claim from a former employer
The parting advice given by Van Hoff is that if you’re going to do a startup, take nothing with you when you leave your former employer. If your startup is a failure, nobody will come after you because there’s no deep pockets to sue. But if you achieve wild success the employer has something to gain and probably the resources to pursue it so you want to keep things very pristine. “So really what you’ve got to do is: don’t plan anything, don’t write anything down. Talk about it over a beer and then leave. And then you start. Don’t use an office equipment or email.”
Marimba IPO’d in 1999 and was acquired by BMC Software in 2004 for $239 million.