Founders at Work.pdf

Livingston: You worked at Sun before the startup, right?
Mark Fletcher 239
Fletcher: I got to Sun via the acquisition of a startup I was working at, called
Diba.
Livingston: So you had some startup experience.
Fletcher: I had worked at a couple of startups as an engineer before.
Livingston: But you didn’t have any mentors?
Fletcher: No. My parents are a fantastic resource; they were both managers at
IBM. But, we were all flying blind. You look at a term sheet and it talks about
vesting schedules for founders stock, and you have no idea what you should
expect and what you should negotiate for.
Livingston: How did you feel when the VCs said they wanted to replace you as
CEO?
Fletcher: It was jarring. I think there was bad behavior on all sides. During the
whole funding process they said, “We’re interested in you guys because of your
management team; we think you’re fantastic.” I’m on the phone with David
Wetherell, head of CMGI, and he’s saying, “We’re making the investment
because we believe in the management team.” Two weeks later they pull me
into the office—before even the first board meeting—and say, “We want to
replace you as CEO.”
Looking back, I can absolutely see why they would want to do that, because
I was not a good negotiator with the term sheet and I’m sure they could see
that. But I was so wrapped up in it at the time, it was very difficult. The good
news is that we did bring in a new CEO, he did get us acquired by Yahoo, and
things turned out wonderfully. So there are no complaints.
Livingston: But maybe there should be more open discussions between management
teams and VCs?
Fletcher: Well, always. I’ve been dinged as having poor communication skills,
which I’m certainly guilty of. But what nerd isn’t?
The whole VC process in general has been very closed and oftentimes by
design by the VCs. Because they don’t want to be negotiating against other VCs,
they don’t want terms of the deal to get out, so it’s in their best interest to keep
things secret. But it is very nice that things are starting to open up now, whether
they like it or not.
With VCs, it’s all about power. It’s great that that’s changing. It’s changing
because more people are talking about it because it’s so much cheaper to start
companies these days. At least these kinds of companies. There will always be
the need to raise $10 to $50 million for some companies, but for most userfocused
Internet startups, you just don’t need a lot of money.
Livingston: Do you remember some surprising features that your users
wanted?
Fletcher: Not features, but the stickiness of the site. I thought I was a freak
because I would go back to Bloglines all the time—10, 20 times a day. But then,