Founders at Work.pdf

108 Founders at Work
who win when you win. Being on the East Coast, I believed that it was very
important to establish a good network in Silicon Valley, where I didn’t have a
presence.
I’d worked with Mitch for many years, and I felt that he could make the
right introductions. So I first took money from Mitch, then he made some
introductions to VCs. One of them was Accel, and I took money from them. I
ended up spending quite a bit of time in the Bay Area, meeting a lot of people,
and ultimately that network helped a lot.
Iris was a corporate partnership with Lotus. I was 27 years old and didn’t
have the money to fund it then. Getting the product built was an amazingly positive
experience. We had structured a great contract that funded the product—
it was a unique partnership, a corporate startup kind of R&D partnership. But
that brings its own challenges. When you have an alliance with a major corporation
from an early stage, what you build really has to relate to the other, larger
goals of that corporation. You may not be completely tied up, you still can
accomplish your vision, but it would make no sense to be funded by a company
and be completely aligning yourself with their competitors’ offerings.
In a startup environment, it’s much rougher in terms of making your numbers.
There’s much less patience. Once you start down the treadmill of taking
venture capital, it’s “how many rounds before people give up on you or you have
a positive exit event?” So you’re really setting yourself up. The best by far is to
structure it such that you don’t have to take money.
Livingston: You also took money from Microsoft. I know they thought very
highly of you, but do you think they also invested to keep an eye on what you
were doing?
Ozzie: That’s exactly why they did. They were a straight investor, meaning
there was no technology sharing or anything like that as part of the investment.
I think Notes probably got a little bit out of control from Microsoft’s perspective.
They didn’t really track its market very closely while it was emerging, and,
had they watched what was going on, perhaps they might have been able to
respond a bit more quickly.
So I think with Groove, it was essentially buying a look at what kinds of customers
found this technology attractive. More than anything else it was market
tracking. They knew enough about the technology, because once we came out
of our stealth phase we were very open with everyone about the kind of technology
that it was built on. And we were very confident about that because we
knew how hard it was to build.
At both Iris and Groove, we believed Microsoft was our prime competitor.
Livingston: Even at Groove? But Microsoft seems so ambivalent about the
Internet . . .
Ozzie: If there’s going to be a trend that’s largely horizontal, Microsoft cares.
Because Microsoft’s bread and butter is serving the masses—whether it’s consumers
or enterprises—with low-cost technology that solves many problems.
And other people layer upon it more vertical solutions.