FAW #4: Joe Kraus of Excite
With the right people the idea doesn’t matter
This was the first vignette that crossed into the personal realm - we had the opportunity to see Joe Kraus speak at a Churchill Club Startup Event in Palo Alto in August of last year (excellent talk and worth watching). Joe founded the spreadsheet wiki service called JotSpot which was later acquired by Google for an undisclosed sum and is now what you know as Google Spreadsheets. Joe was the best speaker on that panel and had many words of wisdom for the audience, most of which was echoed in his FAW interview.
The main advice he stresses is that it’s all about the people. They started Excite (originally called Architext) with a group of five buddies from Stanford and had zero idea what they wanted to do- they only knew they had the right team. While the Paypal and Hotmail guys started off building the wrong thing, they at least had a direction. Joe’s team on day one didn’t even have an idea. But they knew they’d figure it out.
The lemonade stand phenomenon
Over and over you see evidence across entrepreneurs that from a very early age, the type of people that later become entrepreneurs had the bug early on. Joe had a catalyzing experience after having a nightmare job for his first summer job and he wound up starting a T-shirt company of his own and became hooked on entrepreneurship from then on. This “lemonade stand phenomenon” as I call it is apparent across the stories in this book and I’ve witnessed it first-hand from the people I know. It’s likely that if as a kid you had the initiative to go make your own “lemonade stand” you’ll end up wanting to run your own business later in life. Personally, at a young age I was “diving for coins” on Martha’s Vineyard and by age twelve I had started a part-time business recording school plays and selling video tapes to the parents of my elementary school. Whether this indicates a gene for entrepreneurship or an environmentally-learned behavior acquired early in life, the trait seems to be cemented early on.
On starting a company with friends
While the old adage is “don’t mix business with pleasure,” Joe thinks had they not all been friends from the get-go, the trust issues would have crippled the company and they probably wouldn’t have survived. This is echoed in many of the stories- the idea that while there are some downsides to founding with friends (can’t act objectively and fire a friend as easily), those are outweighed by the advantages of having a high level of trust early on. They had a tense moment (what Joe refers to as a “couch moment” where they pull the couches face to face and have an important talk) after taking VC money in which they had to redistribute stock and it altered the equity equation for the original founders. They worked through it though and attributed the ability to stay cohesive to their prior friendships.
The sausage factory problem
Joe said: “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.” I can 100% attest to this idea from a startup in which I was involved in 1999- from the outside everything looks slick but under the hood you’re just barely managing to duct tape things together while you grow.
The pivotal deal and the importance of persistence
Excite had bid for the search button on the Netscape browser and lost the deal to another company. But their VC at the time coaxed them to not give up and instead continue pursuing Netscape even after they had lost the deal to MCI. This advice paid off when MCI bailed last minute and Netscape came back and did the deal with Excite. Joe: “I see way too many people give up in the startup world. They just five up too easily. Recruiting is a classic example. I don’t even hear the first ‘no’ that somebody says. When they say, ‘No, I’m not interested,’ I think, ‘Now it’s a real challenge. Now’s when the tough part begins.’”
The fallacy of adopting business models of earlier media
This is the idea that TV tried to copy radio, and Internet tried to copy print There is a tendency to constrain the thinking to traditional models of existing media with new technologies. Excite adopted the CPM model of advertising but never figured out cost-per-click.
Hire slow, hire right
Like attracts like and people want to work with other smart people. This is advice Joe repeated in his Churchill talk- that even if you feel you’re moving too slowly, it’s worth waiting for the exceptional candidate that you want on your team rather than just filling a role with someone who can satisfy the job. Once you taint a stellar team with a few “mediocre apples” it’s a slippery slope because it becomes increasingly difficult to attract stellar talent. Conversely, if you can keep it “A list players,” it’s way easier to bring in the next A-lister.
May 11th, 2007 at 8:32 pm
[…] 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. […]
May 26th, 2007 at 4:06 pm
[…] Kaufer esentially echoes Joe Kraus’ advice on hiring: “”Getting the right people - especially in that first dozen - is so much more important than getting the req filled. Unfortunately that slows down the hiring process a lot, which slows your growth a lot, which is how I circle back to say, ‘In the next company, I’d hope to have a recruiter on board within the first half a dozen people to help get the right next 12 people… [hiring the best] actually makes recruiting a little easier, because you come in, you meet the people, ‘Man, you’ve got a bunch of sharp people here.’” […]