Founders at Work.pdf

156 Founders at Work
Livingston: Did you ever suggest to Kim that she stop talking to the press?
van Hoff: Yes, we did, but she ignored it. Kim was a good CEO in the startup
phase, but as startups grow it can get more difficult. Marimba went from 0 to
40 people in the first year and grew to 300 people during the IPO. Anybody can
run a company up to 100 people. You just have to be intelligent and have good
intuition. There’s a lot of tedious work you need to do, but it’s not that hard. But
there’s a point when the company gets bigger that it just becomes a management
problem; it becomes something that you have to have experience in.
Managing people and motivating teams requires a very different skill; it’s
not something that you can do by the seat of the pants. So the lack of experience
eventually begins to show if you don’t have somebody who can make decisions,
for example.
We had this really funky power balance in our company where we had a
really strong VP of sales and a really strong CFO and a really inexperienced
CEO. And whenever there was a decision to be made, she couldn’t break the
tie. And what do you do? Once Kim got replaced by John Olsen, he was completely
different. John had run big companies and it was really easy for him to
make decisions that were very hard for us to make. And that tells you that as a
founder, you have the skills to start companies from scratch, but it doesn’t necessarily
mean that you have the skill to grow it till they’re larger.
Livingston: Did you have a plan in the beginning to get that big and take it
public?
van Hoff: Well, every business plan has an exit strategy and ours was IPO. That
was the right choice at that time. Right now, you’d aim for an acquisition.
Everybody that joins a startup hopes to get rich. They also do it because it’s fun,
but you’re taking a bet on winning a lot of money. But the odds are skewed
against you because not a lot of startups actually succeed in fulfilling that bet.
We exceeded our own expectations in the end. But a business plan is a tool
that you use to sell the idea to VCs. The VCs look at it and say, “There’re no
spelling mistakes and the math seems right. But I like the people so let’s invest.”
A lot of the decision-making is very emotional. There’s no formula that identifies
good business plans versus bad business plans. So I think it’s not really a fair
question to ask “Did you execute on your business plan?” because every business
plan is just a wild guess, right? You could easily add a couple of zeros
everywhere and sell the same thing to people. Instead of 10 percent market
growth you make 20 percent market growth, and suddenly you make $200 million
more in the fifth year, but so what? They’re marketing tools.
Livingston: What big turning points occurred in the first year?
van Hoff: We did a first release of the software, which was a really important
thing. We hired some executives and lots of great people. We hired some really
bad people too—we had to fire somebody in the first year. We had our first lawsuit
filed.
Livingston: Was there any time when you wanted to quit?