Lessons from Founders at Work: Stories of Startups’ Early Days

Jessica Livingston’s Founders at Work: Stories of Startups’ Early Days is a first-hand account of the creation of 32 of the world’s most influential tech companies. Each chapter is an interview with a different company’s founder, averaging 14 pages a piece. This gives the reader a lot of freedom to read one story at a time whenever he or she needs a little inspiration – and boy is it inspirational! Much of the time I thought, “That could totally be me!” so I took frequent pauses to blast out ideas into my Website Concepts log. The stories are often laugh-out-loud funny, and will make you wonder how the world could have possibly doubted today’s most useful technologies.

It’s interesting how much the founders have in common. For example they almost all started on a project completely different from what they ended up succeeding with. Many of them were forced to make major life sacrifices to dedicate themselves to a concept with no funding or revenue. Almost every story includes a paragraph about the time the founder had stayed awake for 4 days straight, working tirelessly on the product before launch. And rarely were their ideas embraced with open arms; instead investors, coworkers, friends, and competitors balked at them. As computing pioneer Howard Aiken once said, “Don’t worry about people stealing your ideas. If your ideas are any good, you’ll have to ram them down people’s throats.”

All of the founders convey great lessons learned in entrepreneurship. I will focus on a few of my favorite stories and some of the most valuable advice I picked up from their great achievements. However, I highly recommend reading it for yourself, as I consider this book highly inspirational. I will definitely flip back to one of these stories when I need a little encouragement in my own startup in the future.

Like many of the founders, PayPal’s Max Levchin is clearly a brilliant programmer and engineer, which makes it a little hard for me to relate at times. But he’s also a great entrepreneur, with valuable insight into startup success recipes. PayPal had changed its business plan six times before getting it right, which is fine because a good entrepreneur is not tied to any one specific plan. He also welcomes the challenge of being a novice in a field of experts because rather than conforming to the norm, you’re inspired to invent something. For example, Citibank competed with PayPal but, adhering to the banking norm, held tight restrictions over which users and transactions it would service in order to prevent fraud. PayPal let everyone use the system because “new users learning about a new system really don’t want to be restricted.” Instead PayPal became “a security company pretending to be a financial services company.” It judges the risk of a transaction to help it decide whether to block it or take it on. He attributes its tremendous growth rate to the world’s most powerful viral driver: money waiting for you when you sign up. Some sellers refused to accept PayPal but a buyer could still send them money through it. The seller receives an email informing him that money awaits him and naturally he registers an account. Finally, Levchin attributes his success to having a great cofounder, warning that it’s very hard to start a company completely alone.

Evan Williams founded Pyra Labs, which created Blogger.com. Initially it was a web-based project management tool for intranets, which he likens to today’s Basecamp. One of the products called Stuff enabled quick, disorganized sharing within the company. While the Pyra team considered it very useful to them, they thought it was too simple and trivial to be the product in and of itself. While there were other blogs on the internet, they weren’t taken seriously for a long time. At one point after releasing Blogger.com to the public, Pyra ran out of money and everyone except Williams quit or got laid off. This prompted the Server Fund Drive, in which Blogger’s website requested donations to keep the website live. Surprisingly $17,000 came in and saved the company. During 2001 Williams considered quitting many times but remained “hallucinogenically optimistic,” his most valuable advice. Don’t let people talk you out of your gut feelings or force you to compromise on your ideas. “If everyone agrees, it’s probably because you’re not doing anything original.” He also warns an entrepreneur to roll with the punches, because if things don’t go according to plan, you never know whether it’s good or bad until later, if ever. Deals that didn’t work out were a bummer at the time but turned out to be very lucky. Williams concludes that it’s amazing how far you can go with a simple idea.

Tim Brady was the 3rd employee at Yahoo, after the two cofounders. He left Harvard Business School in his last semester to join Yahoo, not knowing whether they would graduate him. Originally Jerry and Dave used Yahoo to keep track of the technical papers they used in doing their PhD theses. All major EE graduate programs found out about it and send them emails asking them to add papers to the list. Suddenly they went from doing their graduate work to adding websites to their list for 8 hours a day for 8 months, and traffic grew exponentially, so they called Brady asking for help. They were offered money by the LA Times, AOL & Microsoft early on but decided to do it themselves because they had so much confidence in what they were doing. Concerning competition, Brady reflects, “Although we thought it was crazy, AOL’s walled garden was bigger than the Internet for a handful of months there, which made our strategy impossible. That was definitely a threat” Employees experienced 16- to 18-hour work days but the group of people was great so the hours were never dreaded. An embarrassing reflection was when the Yahoo team met the Hotmail founders for lunch and rejected the idea, unable to see how it could get big. Brady argues that doing business with friends was a good idea in his case, in spite of the common contradictory words of caution.

Paul Buchheit was the 23rd employee at Google. He started companies within Google and enjoyed the benefits and minimal risk as opposed to starting them by himself. For example, he was able to learn from successful techniques in other divisions, brainstorm with very smart people around him, access expensive infrastructure for free, and receive a warm welcoming to his “crazy ideas.” He brags that he built the first version of Gmail in a single day and, by the way, also built AdSense in less than a day. One reflection involves Buchheit pulling a malfunctioning hard drive from a PC and transplanting the electronics from another drive to salvage the data. Like many other founders interviewed, he stayed up for 3 days straight prior to launch, furiously assembling and testing; and he considered normal working hours noon until 3:00 am. It’s interesting that he doesn’t know whether he would have earned any less money if he had not created Gmail and AdSense, but I get the impression he’s earned enough not to be concerned. Buchheit recalls that he left Intel for a little startup not knowing whether it would succeed because he considered it a learning experience, admitting, “Honestly, I was pretty sure AltaVista was going to destroy Google.”