Founders at Work.pdf

Arthur van Hoff 159
Livingston: What do you remember as being the most frustrating things
early on?
van Hoff: The thing that was most frustrating for us very early on was that we
got a lawsuit that just kept dragging on and on, and it took so much time and
attention, and that became a real pain in the ass.
Livingston: What was it about?
van Hoff: It was a patent infringement case, without merit. Patents are pretty
frivolous overall anyway. But if you’re at the receiving end of a lawsuit, it can
make things difficult.
One of the problems for the founders, after the IPO, is that you can’t sell for
a certain period of time and, after that, every time you sell and the stock goes
down, you’ll get personally sued—shareholder lawsuits. So every time there
was an opportunity for us to sell, our lawyers would say, “You better not because
if you lose the lawsuit then you’ll get sued. You’ll replace one lawsuit with the
other.”
So we had to see the stock go down from $75 to almost nothing and we
weren’t able to sell. We were legally able to sell, but you kind of talk yourself out
of it because you think the risk is too high. If you do a startup and the company
goes bankrupt, the shareholders lose their money, but you don’t personally lose
your house. But a shareholder lawsuit is a personal lawsuit—if you lose, they
take your house, so it’s a totally different ball game.
There’re all sorts of crazy schemes that people use to get around this stuff.
But at the time, we were pretty naïve about these things. You don’t want the
employees to focus on that, so you take the burden and deal with it.
There’s a lot to be learned from doing a startup. It’s much broader than you
think. Although I was the CTO, I wrote a lot of code, I did a lot of depositions,
interviewing, selling, traveling, moving furniture. That’s the great thing about it;
it’s not a regular job. I like that, and that’s why I’ve done a couple more since
then.
Livingston: Was there anything you found you were better at?
van Hoff: You grow into it a little bit. We had just received the President’s
Award at Sun, which is a really prestigious award that they gave out every year,
and it’s a whole bunch of stock options. And we were going to walk away from
that. It’s sort of ironic, because the Sun stock split three times since we left, and
if we had sold at the peak, we would have made about as much money as we did
with Marimba, personally. But would I do it differently? No, I had a great time
at Marimba.
Livingston: Did you have regrets?
van Hoff: When it’s your first startup, there are a lot of people involved. You
take advice from a lot of people, and that advice is not always the best advice.
Very often, your intuition tells you to do something different, but then you go
with the advice from the experienced guys anyway. And there were a few occasions
where I look back and think, “If only I had gone with my intuition, things