Founders at Work.pdf

Paul Graham 215
Graham: We started to seem more real then. By that point, we were starting to
get mentioned in the press a lot. Early on, people found out about us through
word of mouth. We were the underdogs—the guys who have better technology
but nobody’s ever heard of. This was the point where we stopped seeming like
total underdogs and people started to know about us.
Part of the reason was that we hired a fabulous PR firm with this money,
Schwartz Communications. We told them, “When people talk about e-commerce
and they have to mention a few examples of companies, we want to be one of
the companies they mention.” The most valuable sort of press is not articles
about you, it’s when people mention you in passing as a matter of course. That’s
what you really want—whenever anybody talks about e-commerce, for them to
say, “companies including . . . and Viaweb.” Schwartz got us that within a couple
months.
Incidentally, it was one of the guys at Schwartz who came up with the term
“web-based software.” Up till that point we’d called it “server-based.”
Livingston: Were you still getting acquisition offers at this time?
Graham: There were always people trying to buy us. There was another one
just at the point where we found Fred Egan—a Japanese company that later
made an imitation of our software and went on to become a big success in
Japan. Rakuten, they were called.
Livingston: They copied you?
Graham: Not very well. It’s sort of like if you copied a dog by taking a photograph
of a dog and sticking it onto a cardboard cutout. From certain angles it
would look like a dog, but if you threw a stick and yelled “fetch” it wouldn’t do
anything. The Japanese market wasn’t as far along then, so in their market, this
was pretty advanced. But the entire time, there were always people trying to
buy us, of various levels of seriousness.
Livingston: Did you have to take any more funding?
Graham: We did have at least one more funding round, under the most disastrous
circumstances. One of these companies that tried to buy us—actually the
second to last one; we were almost done—was a big Internet portal. We had a
handshake deal with them and in the process of the due diligence for the deal,
it was discovered that one of our programmers had signed a piece of paper with
the company who had paid for him to go to graduate school, saying that everything
he thought of belonged to them.
Livingston: So they owned the intellectual property?
Graham: They might have. What it said on the piece of paper was that they
owned ideas relating to their business. But this was a huge company and
arguably just about anything you could do with software related to their business.
So we had to go and get a release from them and that took a long time,
during which the acquirer welched on the deal.
It turned out to be good in the end, but we had to raise our last round of
funding while this was happening. You want to raise a round of funding with an