Founders at Work

Founders at Work shows you how to start a successful business based on the principles of the founders of some of the world’s most famous and accomplished startups.

In 1993 Joe Kraus, the co-founder of the early web search tool Excite, teamed up with five of his friends from Stanford University. They demonstrated that having a good team proved more important than having a good plan. Kraus and his friends weren’t even sure what their business was going to be, only that they were all passionate and intelligent individuals. All they needed was a goal.

It came together at a taco stand, where Kraus and his friends began brainstorming a solution to search all of the new information in digital formats. They knew that people would need a new means to search and narrow down the information they were looking for.

Their attention soon turned to the web. After showing that their technology could scale to search massive databases, they got $3 million in financing. Their new company, Excite, became the primary search tool for Netscape, the prominent web browser at the time. Instead of starting by fixating on a single idea, it is better to have a team that is flexible and fluid enough to run with the best way forward when it comes to the surface.

Investor money often comes with strings attached. This can come in various forms, from the addition of investor-approved executives, relinquishing shares in the company, or a percentage of the profits. Joel Spolsky, the founder of Fog Creek Software, made it his aim to avoid using investor capital. Joel’s vision was to start a consulting firm that would attract great programmers. He did this by creating an attractive working environment instead of a set-up that the typical investor might envision. Rather than having programmers work in an open row of desks like a sweatshop, Spolsky gave his programmers their own office space with comfortable chairs. They flew first class and got four weeks of vacation time every year. Potential investors may have seen all this as unnecessary extravagance. They’d prefer to observe an operation like this run on a shoestring with few frills. Spolsky’s other plan to make sure he didn’t need venture capital was raising the price from $199 to $999 per unit. He discovered that the higher cost made customers perceive the product as being of more value and sold more units. Paul Graham, the co-founder of Viaweb, Y Combinator, and other companies, has another approach to avoid taking venture capital. His vision is to stay cheap, which a lot of startup founders advise. For every penny of investor money you take, you have less autonomy, and you’ll be at the…