Founders at Work.pdf

226 Founders at Work
Livingston: Union Square Ventures was your VC, right?
Schachter: They were Union Square and Amazon.
Livingston: Did they come to you?
Schachter: I had met Jeff Bezos at Foo Camp, and he was very interested.
Livingston: How much did they put in?
Schachter: We never announced the amount, but it was not a huge amount of
capital.
Livingston: And that’s because you didn’t want to take a huge amount of
capital?
Schachter: Well, there was a lot of risk. It was sort of hard to justify a large
valuation and so on, so we sold a small chunk for enough money to work for a
while and see if it turned into something. That was the plan: see where this
goes.
Livingston: Did you hire anyone?
Schachter: We did. There were eight employees total at the end.
Livingston: Were most of them shareholders?
Schachter: We gave shares to everybody.
Livingston: Did you have vesting?
Schachter: Yes. Even I vested.
Livingston: What were some of the first things that you did once you were officially
a startup?
Schachter: One of the most challenging things was getting payroll going. PEOs
typically don’t want to do less than five employees.
Union Square introduced me to this guy, Albert Wenger, who had some
operations experience. He helped a lot. I lucked out in that he’s a smart guy
who knew how to do not just the corporate operations stuff, but he had a good
product sense and ended up doing a great deal of product work as well. The
first version of the Firefox toolbar, he dealt with, for example.
Livingston: What were some of the biggest technical problems that you
encountered?
Schachter: Scaling, inevitably. Scaling, dealing with bandwidth, dealing with
routing, networks. This is for consumer Internet kind of stuff, but there’s a
great deal of stuff that you have to flawlessly execute on. It has to be done well,
but everybody does it well, so it doesn’t differentiate at all. Like your connection
has to be up. Your office needs to have DSL. There’s a great deal of crap
that has to be executed better than competently that is no value for you to actually
do yourself. So outsource that.
For example, the payroll. I was capable of going 2 to 3 months without
salary, but other employees certainly were not. So that kind of stuff.