Founders at Work: Yahoo, del.icio.us

Take-aways from Tim Brady, 1st non-founding employee of Yahoo:

• Directory button on Netscape linked to Yahoo (for free)--"That was big. It sent our traffic through the roof."
• (Echos of Reid Hoffman's talk: in consumer web, it's distribution, distribution, distribution)
• (Distribution was how Excite got big)
• Thought of themselves as a media company, believed they could outsource search because "it was going to be a leapfrogging game. No one is ever going to be able to get so far ahead that we'd ever be in strategic risk of kingmaking a full-text search engine."
• Advice to someone founding a startup: "Know yourself. Try to do as much thinking up front as to what your breaking points are... Before I joined, I knew where the line was, when I would quit, at what point, and so when I was in the game, it never crossed my mind. I also knew why I was involved, what motivated me, and I didn't spend a lot of time perseverating on that stuff."

Take aways from Paul Graham, founder of Viaweb

• 2nd start-up after 1st one went nowhere: "We spent a lot of time trying to convince these people to use something they didn't want."
• 1st web-based software--"I was excited, because it meant we could start a company without having to learn Windows."
• Started Viaweb in July '95, had first demo in early August.
• "We felt like we had to have five or six customers to launch. And for these first customers, we basically would do whatever they said in order to get them as customers. We gave them the software for free for as long as they wanted. We built their sites ourselves."
• "If you're writing applications for end users, you have to remember that you're writing for an audience that has been traumatized by bad experiences. We worked hard to make Viaweb as easy as it could possibly be, and we had this confidence-building online demo where we walked people through using the software. That was what got us all the users... The other thing was, we had good graphic design. Our secret weapon was that we know that e-commerce was really about graphic design, not transaction processing."
• "It's never a deal till the money's in the bank... Before we ultimately got bought by Yahoo, we probably had nine or ten different acquirers that we were talking to, and things always went wrong for one reason or another."
• On raising money: "The advice I would give is to avoid it. I would say spend as little as you can, because every dollar of the investors' money you get will be taken out of your ass... The way not to have to raise money is not to spend money. Do everything as cheaply as you can."
• Advice for startup founder: "Make something people want. If you make something users want, they will be happy, and you can translate that happiness into money."

Take-aways from Joshua Schachter, founder of del.icio.us

• del.icio.us began as something Schachter built for himself--he needed a way to organize his collection of 20,000 bookmarks, and he hit on the idea of "tagging" them with brief text phrases to help him find links later
• For the first several years, Schachter worked on del.icio.us and other projects, like Memepool and GeoURL, while working as a quantitative analyst at Morgan Stanley. But all the while, del.icio.us was growing. By November 2004, a year after its release, it had 30,000 users
• Tried several different start-up ideas before del.icio.us worked
• Chose not to leave Morgan Stanley for a while because "the economics didn't make sense. It still made sense to keep the day job."
• Worked in many small increments: "I could be done for the day in 15 minutes. So if I could get one thing done a day, I was happy... So it moved pretty slowly. I worked on it for years."
• Why did del.icio.us succeed when many previous others failed: "First of all, because it was not a venture to start. I was building a product and that's it... I think in general being overcapitalized is a path to failure. The VCs want you to spend... I think the competitors had disappeared by then. The tagging thing was probably essential."
• On the invention of tagging: "There was no point at which I said, 'I'm inventing this wonderful new thing.' I just sort of realized that I had evolved my own filing system, and it worked for me. I'd used it for a long time before del.icio.us even showed up. This was the codification of that practice."
• On designing new features: "I think people ask for features--they want to do something, but they don't say, 'I want to do that something.' They translate it into some feature that typically they've seen somewhere else and ask for that instead... It turns out there's some better way to do that. So, stuff that people ask for, I tend to try and dig to the root cause, before reducing to practice."
• "Constraints breed creativity." (referring to having only 15 minutes/day to work on del.icio.us)