Founders at Work.pdf

Brewster Kahle 279
You can grow it instantly. You can hire 40 people in an afternoon, but they
won’t necessarily work together well; they won’t understand what’s going on. It
takes a while. So 6 months, 9 months goes by often just putting together all the
pieces of infrastructure. With Alexa, it took a year to build the company to
the extent where we could do our first real product release. WAIS was the same
way. The first product release came a year after the start. It always seems like it
should be much quicker than that.
Livingston: What can big corporations do to preserve the startuppyness of the
companies they acquire?
Kahle: My first company was bought by AOL, and what AOL wanted to do was
inject the Internet into its veins. So they went around and bought a bunch of
companies. And I’d say what they’d bought the company for, if I had been more
worldly, they actually achieved. It just wasn’t what I was looking for. I had built
a little company. It made something like $3 million a year, which I thought was
pretty great. I wanted it to get to $10 million or $20 million, but that was a
rounding error for AOL—it was noise. They needed us to help on the big
issues. So I worked on strategy for the company for 12 months—to get the company
going in the Internet direction. And that’s really what they wanted. It just
wasn’t something that I knew how to do. I really liked running something that I
knew how to run.
When I did the startup that was bought by Amazon, I said, “Leave us on our
own. We’re smart and independent enough to be able to do good work that will
inject things from the side into your other organization.” The thing that Jeff
Bezos did that I thought was very smart was that he ran us through his organization
and others through ours. He used us, at least for the first few years, as a
think tank in some sense—a live and breathing example of how else they could
do things.
Alexa’s major value in the first year of its being acquired by Amazon was to
take some of the lessons that we had learned of how to do things much cheaper
than they had. They had gone through an explosive growth phase, and they
were spending $100 million a year on hardware. We couldn’t believe it. Here
was this little company that had been living its whole life, and we hadn’t spent
$10 million.
So Jeff said, “OK, Brewster, you know how to do this stuff cheaply. What
should we do?” I said, “You should stop buying hardware. You’ve bought
plenty.” He said, “OK, we’re going to stop buying hardware.” It caused enormous
pain to their organization, but it was the right thing to do. They needed to
become profitable. They learned a lot of lessons from this. They could use an
outsider that was still inside. We were not as independent as a Bain Consultants
or something like that, but we knew what we were talking about because we
had actually built stuff. We dropped the cost of their Internet connections by
90 percent just by saying that you can go and negotiate deals in this and this
way. So we paid for the acquisition of our company in the first year just by the
capital costs that they saved.