book-notes

Founders at Work

by Jessica Livingston

I, Michael Parker, own this book and took these notes to further my own learning. If you enjoy these notes, please purchase the book!

Chapter 1: Max Levchin (Cofounder, Paypal)

• pg 7: Part of having a CEO is that you can respectfully disagree, but you can resign if you don’t like it that much.
• pg 12: Invites to sign up work better if they grant access to something valuable left by a friend who invited them.
• pg 16: Your company shouldn’t have clarity on what it does until whatever it’s doing is working.

Chapter 2: Sabeer Bhatia (Cofounder, Hotmail)

• pg 20: Giving right of first refusal to the VC allows them to enter every funding round while scaring away others.
• pg 27: A subscriber base is an unassailable lead, and good leverage when negotiating an acquisition price.
• pg 28: You don’t need to monetize customers immediately; eventually you will be able to.
• pg 29: A business plan should try to answer every possible question that a person could raise.

Chapter 3: Steve Wozniak (Cofounder, Apple Computer)

• pg 56: Don’t be a prima donna; hack away until you can figure out how to get something tested and working.

Chapter 4: Joe Kraus (Cofounder, Excite)

• pg 68: When a new medium emerges, it adopts the business models of the old medium, and that always fails.
• pg 68: Existing companies’ biggest problem is legacy; they can’t focus on new businesses while managing old ones.
• pg 70: Great people don’t look for jobs, they’re sold on them; they’ll say no, and then you must win them over.
• pg 71: Great teams are better than great ideas, for they can turn a bad idea into a better one.

Chapter 5: Dan Bricklin (Cofounder, Software Arts)

• pg 78: Most can’t apply a general purpose tool to their problems; instead, they adapt a solution close to their problem.
• pg 85: Lawsuits are expensive and distracting; unless you’re a very big business, find other ways to solve things.
• pg 86: Selling at the peak is optimal, but don’t be greedy: you can make money at the rise or fall of your business.
• pg 87: Arguing about something is just the way some people learn; they test your understanding of it.

Chapter 6: Mitchell Kapor (Cofounder, Lotus Development)

• pg 96: After launch, a technologist founder has to find a board and grow the company; this requires connections.
• pg 97: Being a software designer in your own company is about control, like directors who are in their own studio.
• pg 101: If you’re a first-time entrepreneur, be wary of VCs – it’s been called “vulture capital” for a reason.

Chapter 7: Ray Ozzie (Founder, Iris Associates, Groove Networks)

• pg 104: Project technology and market roadmaps several years out; it will take that long to build anything worthwhile.
• pg 105: By hiring friends, you avoid the trust issue involved in understanding what they’re actually good at.
• pg 107: Taking VC money will give you connections, but now your focus is on an exit event, not organic growth.
• pg 109: Changing people’s habits is difficult, so building a market around something new is very difficult.
• pg 110: You must be comfortable with the team and financiers having joint custody over your product.

Chapter 8: Evan Williams (Cofounder, Pyra Labs / Blogger.com)

• pg 112: Funding is about networking; whether in good times or bad, you need to know the right people.
• pg 118: The enterprise may have money, but then you have to sell and service companies, which may be alien.
• pg 124: If you see something someone else doesn’t see, it could be powerful; if everyone agrees, it could be unoriginal.
• pg 125: Resist the temptation to add more to your product; simplicity is powerful.

Chapter 9: Tim Brady (First Non-Founding Employee, Yahoo)

• pg 131: Interim management put in place by VCs may not be fully invested in making your company thrive.
• pg 132: When you talk to Microsoft, their mindset is either to partner with you, or do it themselves.
• pg 135: Offering links to your competitors when you product fails sends the message to your users that you care.
• pg 137: If you want to appear and act big, you can’t just work hard, but need a professional look and feel.
• pg 138: Ponder at what point you’d quit before you start; answering this under pressure leads to irrational actions.

Chapter 10: Mike Lazaridis (Cofounder, Research in Motion)

• pg 149: If no one’s ready for your product, start by dumbing it down and offering an improvement over something they know.
• pg 151: Only first or second year co-op students will join a startup; beyond that you’ve lost them to other companies.

Chapter 11: Arthur van Hoff (Cofounder, Marimba)

• pg 153: In Silicon Valley, every other company you rely on is geared toward getting you started, then you pay.
• pg 155: Not saying what your company does adds mystique, but no customer comes demanding what you have.
• pg 156: Anyone can run a company up to 100 people; beyond that, you need a CEO who can make hard decisions.
• pg 156: The business plan is just a tool to sell the idea to VCs; add a few extra zeros everywhere, and no one notices.
• pg 157: Be frugal, but spend some money to create an environment where employees feel happy and valued.
• pg 159: You’ll take a lot of advice from people, but it might not be the best; don’t be afraid to go with your gut.
• pg 160: Only plan anything or write anything down until you’ve left your job; your employer could be litigious otherwise.

Chapter 12: Paul Buchheit (Creator, Gmail)

• pg 166: When operating a big service, it takes a lot of work just to deal with growth and improvements.
• pg 167: Starting a service as invitation-only makes it easier to control the quality of service, and any abuse.
• pg 168: Be judicious when deciding that an existing solution or technology doesn’t apply, and you roll your own.
• pg 170: People are uncomfortable with and will attack things that are different, but not necessarily bad.

Chapter 13: Steve Perlman (Cofounder, WebTV)

• pg 175: Cofounders have to agree on where the product is going to go; otherwise you’re just locking horns all the time.
• pg 176: Print up a company letterhead, and you can get free samples from chip companies.
• pg 180: Tell employees when you hit a wall, but telling them you’re just running low on cash may scare them.
• pg 181: If you’re about to run out of money, VCs may not invest but see you as carrion ready for the taking.
• pg 185: Designing for someone who’s not you is hard; do a lot of usability testing to know their point of view.

Chapter 14: Mike Ramsay (Cofounder, TiVo)

• pg 195: To hire great engineers, convince them that you’re working on a difficult problem, and get their imagination going.
• pg 199: The technology press might say your product isn’t “techie” enough, but what matters is consumer opinion.
• pg 201: If you’re afraid that a company might try to compete with you, a licensing deal with them might avert this.

Chapter 15: Paul Graham (Cofounder, Viaweb)

• pg 209: Adding features may delay your release, but will also distance you from any competitors at release.
• pg 210: If writing software for end-users, you’re writing for an audience that has been traumatized by bad experiences.
• pg 212: Its never a deal until the money’s in the bank; so many things can go wrong with them.
• pg 213: Find someone wiling to be the COO and do the business stuff and let the engineers handle technical matters.
• pg 214: Investors may need to be bossed around; it reassures them that you’re in control.
• pg 217: It’s bad when an acquirer plays hardball, since you’ll get squeezed and then have to work for them afterward.
• pg 218: You don’t need to be eloquent, just tell the truth; then you’ll never have to remember what you’ve said.
• pg 221: Avoid taking money as long as you can, not only because you relinquish control but because it’s a painful process.

Chapter 16: Joshua Schaechter (Founder, del.icio.us)

• pg 226: Outsource things that have to be executed better than competently but is of no value for you to do yourself.
• pg 229: Plan for things to go wrong, because they will; just do your best to mitigate the disaster.
• pg 230: Consumers are the best marketers; if they love your product and give you marketing tools, they’ll do it.
• pg 231: A VC will never call you to tell you no; they don’t want to close the door in case they want to open it again later.
• pg 232: Do as little as possible to get what you have to get done; don’t add features or add stuff.

Chapter 17: Mark Fletcher (Founder, ONElist, Bloglines)

• pg 234: Solve a problem that you have, first and foremost, and chances are other people may have the same problem.
• pg 237: Ay technology can be copied, any concept can be copied, but the users make a company valuable.
• pg 238: Because the company in your life, it can be jarring if the VC wants to replace you as CEO.
• pg 240: Ship and then iterate, because shipping itself is this huge hurdle; it’s a web app, so shortcomings can be fixed.
• pg 241: Shipping your first version with few features can elicit feature requests; implementing them will improve customer loyalty.
• pg 242: Boutique investment bankers can serve as middlemen in an acquisition; they’ll drive up the price, then take a cut.
• pg 243: When entertaining acquisition offers, figure out what you want to do with your startup and your life.
• pg 244: Don’t set yourself up as an LLC; VCs only want to deal with a C-corp because that’s what they understand.

Chapter 18: Craig Newmark (Founder, craigslist)

• pg 251: For the most part, people are good; if you incorporate something like flagging, it works.
• pg 253: Forcing people to pay for some service can deter spammers and eliminate “sleazy” customers.

Chapter 19: Caterina Fake (Cofounder, Flickr)

• pg 258: It’s okay to have rockstars working remotely, but for the most part, everyone being in the same place is important.
• pg 260: Social networking itself is pointless, but only if not using it to connect people with a core interest.
• pg 263: If a company tries to acquire you, it’s a good sign that they’re not trying to copy you.

Chapter 20: Brewster Kahle (Founder, WAIS, Internet Archive, Alexa Internet)

• pg 286: Pick your office setting carefully, so you can go for long walks when stuck, for example.
• pg 270: Having clients that are best of class is a luxury; they know what they want because they’re pushing the envelope.
• pg 272: Businesspeople just want to make money; lay out a path of how they can make more, and they’re on board.
• pg 274: Running a company means you need a positive outlook every day, because employees always look to you.
• pg 277: Pick a big, difficult project that will take years; otherwise once you make money, you’ll run out of thing to work on.
• pg 278: When a company has 20-40 employees, each can specialize and concentrate on what they’re good at.

Chapter 21: Charles Geschke (Cofounder, Adobe Systems)

• pg 284: If you fail, VCs can assume that you won’t make that set of mistakes the next time.
• pg 285: The first business plan is to please VCs; if your customers demand something different, rewrite it.
• pg 289: It’s risky to develop a solution for where the market will be in a few years and wait for it to catch up, but advantageous.
• pg 292: Treat your customer as you’d like to be treated; if you fail, you may cause their business to fail.
• pg 296: Work smart and not long, because you need to preserve all of your life, not just your work life.

Chapter 22: Amy Winblad (Cofounder, Open Systems, Hummer Winblad)

• pg 302: Don’t let any one of your founders make all the calls; you need to work as an ensemble in the beginning.
• pg 305: Be smart and maximize your time; when you’re young, you may be superhuman, but you’re not efficient.
• pg 306: Leading a company is not about you; it’s about fending for shareholders, employees, customers, and your mission.

Chapter 23: David Heinemeier Hansson (Partner, 37signals)

• pg 310: Set a humble goal, err toward simplicity, and people will be impressed by what your product doesn’t do.
• pg 311: Making a product more focused can exclude unexpected customers who would use it in unexpected ways.
• pg 312: Offering a shallow upgrade curve and allowing customers to cancel easily is a powerful marketing tool.
• pg 314: Giving a major update of a product within 30 days of launching reinforces customers’ feelings about the project.
• pg 315: Having too little money is a great way of getting great product, because it’s a way to get focused.
• pg 316: Distributing a team allows each member to have alone time with no interruptions by coworkers.

Chapter 24: Philip Greenspun (Cofounder, ArsDigita)

• pg 322: Each company has one class of rockstars; leverage that class in making a value proposition to customers.
• pg 327: Bigger companies with more cash can use it to recover from mistakes, so choose your management wisely.
• pg 328: Some potential employees may not want to work for you unless you have backing from VCs that dazzle them.
• pg 330: An employee only wants to make his boss happy; don’t put him in a businessman’s role with profit-and-loss responsibility.
• pg 337: If you’re a for-profit organization, your job is to make money; if you don’t, you’re not doing a good job.
• pg 341: People remember how you made them feel more than what you said.
• pg 342: Business people don’t have any basic ethics; simply possessing them is an operational advantage.

Chapter 25: Joel Spolsky (Cofounder, Fog Creek Software)

• pg 346: A limitation of consulting is that your revenue is simply a multiple of the number of people you can hire.
• pg 349: Raising the price of your product can increase sales because it seems “more legitimate.”
• pg 354: Developer time dedicated to implementing wild marketing ideas is better spent on improving your product.
• pg 354: Talk to your customers and find out what they need; don’t pay any attention to the competition.
• pg 360: If you don’t take the leap and quit your job, it’s easy to give up the dream at any time.

Chapter 26: Stephen Kaufer (Cofounder, TripAdvisor)

• pg 368: If your business is fledging, don’t do something rash or act too quickly simply to raise capital to survive.
• pg 372: Spend time thinking through the roles and responsibilities between the founders before starting.
• pg 373: Do whatever the hell it takes to get your first customers; when you’re growing, become independent and risk-taking.
• pg 374: A recruiter as part of your first half-dozen employees can help you get the right next dozen employees.

Chapter 27: James Hong (Cofounder, HOT or NOT)

• pg 379: Outsource whatever services you can to other companies if it reduces your costs.
• pg 383: The biggest roadblock to the entrepreneur are your liabilities in your life, so do it while you’re young.
• pg 384: Plans don’t mean much when you’re moving as fast as you can; don’t dwell on your plan when it’s not working.
• pg 385: If you raise money, spend it as if it’s your own and you have none.
• pg 385: Whether you cash out early depends on how tied you are to one concept being the legacy for your entire life.

Chapter 28: James Currier (Founder, Tickle)

• pg 388: To build a successful company, you should have low to zero cost for acquiring users.
• pg 391: Hire people who are nice, communicative, smart, and capable.

Chapter 29: Blake Ross (Creator, Firefox)

• pg 401: Marketing is just making a good product that people spread, and giving them the tools to do that.
• pg 403: Constantly communicate with people who will eventually use your product.

Chapter 30: Mena Trott (Cofounder, Six Apart)

• pg 407: Working out of the home is the hardest thing to do, because you can never leave work.
• pg 409: The more money you spend, the more you need, and the less ownership you have.
• pg 412: Charging for services is fine, but never charge for something that was once free.
• pg 416: If you’re getting picked on, that can be a good thing; no one picks on the underdog.

Chapter 31: Bob Davis (Founder, Lycos)

• pg 421: Until your product becomes sexy and admired, hiring good people will be hard.
• pg 424: PR is the cheapest form of advertising and the most effective way to spread word to customers.

Chapter 32: Ron Gruner (Cofounder, Alliant Computer Systems; Founder, Shareholder.com)

• pg 428: When looking for money, you want a sense of exclusivity, and a sense of urgency.
• pg 431: VCs fear “the living dead,” or companies that don’t hit it big or die quickly, but grow organically and slowly.
• pg 438: Get a candidate psyched about your project, but don’t misrepresent it, or they won’t work hard for you.
• pg 441: Almost any negative situation can be turned into a good one if you work hard enough; karma exists.
• pg 444: Being self-funded makes you proud, but take a little money if you need to grow quicker, not organically.