Founders at Work.pdf

96 Founders at Work
Livingston: What went wrong?
Kapor: A number of things went wrong or almost went wrong. I almost ran out
of money. Lotus 1-2-3 wasn’t the only idea that we had. I had done this thing
with some other people called Executive Briefing System for the Apple II that
was like a precursor to PowerPoint. We did some other projects; I had hired
another group of people and basically had spent down the $300,000 that I’d
allocated. It was almost gone and we were nowhere near product, because of
doing all these other things and not having done this before.
I had $600,000 after taxes and paying my partner, and I divided it into two
piles. I took half and said I’m going to buy a house. It was $89,000, the least
expensive house in Cambridge—this was in 1981. I said that I could live on
$40,000 for at least 5 years. So I had the other $300,000 that was my own seed
money, but I almost ran out.
I got lucky in that Ben Rosen at Sevin Rosen decided to invest. He was the
only VC that I pitched (I didn’t understand anything about venture capital).
And that was fortunate, because without him, I don’t know what we would have
done.
Most of my mistakes came after we launched the product, not before—after
we started shipping in January of ’83. I had no significant experience in building
an organization or building a management team. And I intuitively did well
when I was leading the whole team, but once we got past 25 people, you can’t
do that. And so I made a series of classic mistakes in hiring. And not building a
good middle management structure. And not recruiting a board that could help
me build the company. Big mistakes in picking a successor, big mistakes in having
an undisciplined product strategy—I was much more interested in having
distinctive, innovative products and thinking about what would make sense for
a product line for our business overall—and big mistakes in expanding too fast
and not having discipline about what we were doing. So I give myself a C or C–
on all that stuff.
Livingston: You guys grew to 1,000 employees before you went public. Did you
know you were going to go public when you started?
Kapor: I didn’t know when, but this was what I’d learned from my time in
Silicon Valley. To be honest, here’s what I was driven by: I wanted to do really a
great product. Almost from day one I understood that I was passionate about
the applications themselves, that they’d be integrated, easier to use and be
powerful. They’d help make people more productive and I cared a lot about
that. The other thing I wanted was financial independence. I had an enormous
desire not to be dependent on other people, or to have to have a job. I wanted
to dictate the terms. So I knew if you had an IPO, then you had a liquid currency
and you had the ability to cash in and get that.
So I actually pushed for an early IPO, which we did successfully. But that
brought all the usual problems. The main problem we had as a very young public
company was that people did not understand the industry or its dynamics
and therefore they consistently misvalued the stock and misunderstood what it
was about. Because it was new and it was different. Eventually, people figured
it out, but I was very impatient.