Founders at Work.pdf

194 Founders at Work
the model for venture capital was—and it is still to some extent this way today,
but certainly was 10 years ago—their ideal companies are ones where people
come in and say, “We have this idea. Here’s the market. Here’s the size. I want
$5 million, and I’ll be profitable from day one. And I’ll give you half my
company.”
We came in and said, “It’s not like that in our case.” First of all, it was a consumer
play, and that was new. Second, it was a service company—because early
on we had really wanted to do that. At that time, VCs generally didn’t invest in
service companies. Number three, we said, “It’s going to be capital intensive.
It’s going to require a lot of money. You can give us a little bit of money right
now, but it’s going to require a lot more.” So we had three things going against
us, and they all kind of freaked out. The only two people that didn’t freak out
were Stewart Alsop of NEA and Geoff Yang of Redpoint.
Livingston: Why do you think they thought differently?
Ramsay: Geoff told me that he was fascinated by this space and wanted to do
something, but he hadn’t seen too many companies with any ideas. We kind of
wafted in, and he thought, “Great. Suddenly we’ve got a couple people who
could probably run a company and who’ve got a creative idea and can make it
happen.” So he was all fired up about that.
Stewart is a visionary. He’s way out there. So this was a natural for him. He
looks for companies that are trying to push the envelope and do something radically
different. It kind of fit him emotionally. Neither of these guys were thinking
about, “How much money do we make? Is the market ready?” They
certainly weren’t thinking about, “Are they going to violate copyrights or get
sued?” or all that stuff that we got threatened with. They just thought, “Here’s a
couple of people that have got a fascinating idea. Who knows if it’s going to
work or not, but we’ll give them some money and see what happens.”
Livingston: Your original idea was not just a DVR, right?
Ramsay: It wasn’t. It was this flamboyant, home server network thing. And we
actually got funded based on that. When we got into the technology, we realized,
“Hey, network technology isn’t quite there yet. The idea of a server is fine,
but how do you explain it to the average consumer?” We learned very quickly
that this was going to be a hard sell and a hard thing technologically.
At the time, this server had a ton of apps that we thought up, one of which
was DVR. We said, “Look, you can’t do everything, so let’s design a simple
server based on very low-cost technology. Let’s decide on one app that we think
is the killer app to run on it, and let’s do that. If that’s successful, then we’ll
branch out. Forget the network thing and forget the massive amounts of storage
and high cost and hardware models and all that.”
We thought the DVR idea—we called it PVR at the time, personalized television
or something like that—we thought this was a cool idea. It fascinated us
because, once you looked under the covers, you realized it was a very difficult
technical problem. The fact that it was a consumer product and it had to be
television meant that it had to be completely reliable and bulletproof. Jim