A Time Capsule of Startup Interviews
“Founders at Work” by Jessica Livingston is a chronicle of startup stories, mostly from startups in the 80s and 90s. The book consists of a series of interviews between Livingston and the founders or early employees of various startups. It feels similar to tuning into a podcast from a decade or two ago, reminiscent of modern equivalents like “How I Built This” or “The SaaS Podcast”. With 32 interviews, the book offers a fascinating peek into the early days of several notable startups. Livingston, as one of the founders of the famous startup incubator Y Combinator, is well-suited to act as the interviewer.
The Allure of Hard Problems
In the realm of startups, hard problems possess a peculiar charm. They attract the best minds, acting as a beacon for those who dare to challenge the status quo. TiVo, a company that dared to redefined how we watch TV, or Apple, where Steve Wozniak’s passion for designing elegant and simple computers led to the birth of one of the most influential tech companies. Brewster Kahle of Alexa Internet advises, “Pick a big, difficult project that will take years; otherwise, once you make money, you’ll run out of things to work on.” Similarly, Charles Geschke of Adobe Systems suggests it is wise (but risky) to develop a solution for where the market will be in a few years and wait for it to catch up, instead of just solving today’s problems.
Understand your Customer
The book emphasizes the importance of understanding your customers. Joel Spolsky, co-founder of Fog Creek Software, advises founders to engage with their customers, understand their needs, and disregard the competition. Sabeer Bhatia, co-founder of Hotmail, and Mark Fletcher, founder of ONElist and Bloglines, stress the value of a large user base, which provides a competitive advantage that is difficult to replicate and aids in potential acquisition negotiations.
Ideally, you are your own customer and can adapt your product to meet your own needs that other companies also happen to have. A great example of this is Basecamp, which 37signals used to manage the Basecamp project itself. Designing a product for someone who is not you is difficult, so usability testing and customer interviews become even more important. A great product is often the best form of marketing, since your customers themselves will market the product if they love it and have the tools to do so.
Remain Flexible
Many startups initially set out to solve one problem, but ended up finding success in a different area. For example, PayPal began as a payments solution for PalmPilots, Hotmail started as a database, and Flickr started by designing a video game. Some companies even started as consulting businesses and then ended up creating products. Like unhappy families, all successful startups seem to find success in their own way.
Ultimately, great teams are more important than great ideas. They can pivot and adapt as requirements change, leading to success even in unexpected areas.
Venture Capitalists: A Double-Edged Sword
Throughout the book, Venture Capitalists (VCs) are frequently mentioned and often portrayed unfavorably. Paul Graham, co-founder of Viaweb, warns that money raised from VCs “will literally be pulled out of your ass”. ArsDigita, a company that accepted VC funding to expedite the IPO process, ended up ousting its founder and replacing management, leading to its downfall. (Although Joel Spolsky later notes that its lucrative consulting business was also drying up.) Steve Perlman of WebTV had another blunt take, saying VCs might see your company as carrion to sell for parts if it seems to be running out of money. VCs, driven by the need for exponential growth, may turn a successful company in the eyes of its founders into a “zombie.” The general consensus leans towards avoiding raising money if possible, and many founders highlight the importance of frugality.
Startup Failures
The book avoids the common pitfall of only highlighting successful startups, which can lead to survivorship bias. Instead, it openly discusses failures, such as ArsDigita and Alexa Internet, providing a balanced perspective on the startup journey. The book offers contradictory advice, acknowledging that there is no one-size-fits-all approach to building a successful startup. As Arthur van Hoff, co-founder of Marimba, wisely advises, “Don’t be afraid to listen to your gut instead of taking advice.”
Critique
I didn’t realize that Livingston was one of the founders of Y Combinator until the end of the book. This information would have been helpful earlier on to provide context. Additionally, I was expecting the book to be more prescriptive about how to work as a founder, but instead it was in an interview format.
Despite this, the book provides a lens into startup culture during a unique time in Silicon Valley. Many of the companies mentioned were unfamiliar to me, and the technologies discussed are primitive compared to what we have today. However, much of the advice remains relevant since it mostly has to do with human nature.
Overall, I would recommend this as entertaining light reading to anyone interested in startups, entrepreneurship, or the tech industry.
My rating: 4/5