Frank Addante's FounderBlog:
Starting startups by a serial entrepreneur.

Since Google's announcement of their decision to acquire DoubleClick for $3.1 billion on Friday, I have received a flood of emails asking for my thoughts on the topic. So, I am going to interrupt my previous series/postings on product development to share my thoughts.

Back in 1998, DoubleClick was my #1 competitor at L90. Our product, adMonitor, was a direct competitor to DoubleClick's ad serving technology. When we started, we were the 7th horse in a 7 horse race. DoubleClick, like other competitors, had already underwent a successful IPO and their market cap was in the billions and their resources were virtually unlimited. Against the odds, within a few years, adMonitor had become one of the most dominant advertising networks on the Internet, serving billions of ads each month for over 3,000 companies such as Microsoft, AT&T and Visa. Ultimately, we gave DoubleClick a run for their money and shortly after we took L90 public, DoubleClick acquired adMonitor to take us out of the market. A move very similar to what Google is doing with DoubleClick today.

Recently, I have been looking very closely at the online advertising market. I was shocked to see how little has changed in the past 7 years. The online advertising market was hot 7 years ago, it tanked during the dot-com fall out and recently (a few years ago, along with Google's IPO) has become hot again. Google is clearly the driving force behind its success. And, it has become clear to me why. Google was the only real technology innovation in the online advertising market. Google made it simple. (see my posting on "Keep it Simple")

Google has cornered the online advertising market. Prior to Google, the online advertising market ran like the stock market without a NASDAQ computer. Everything was manual (shifting around excel spreadsheets) and there was little visibility available to advertisers and little exposure available for publishers. Google simply came in and automated it.

Most of the online advertising space today is made up of broker-dealers. I believe this to be the case because there is still a lack of technology in the space. There is some new technology, but mostly very specific, niche technology solutions such as video ad-servers, behavioral targeting, etc. Aside from these micro-innovations, the only other real innovation in the space are the advertising marketplaces where advertisers can purchase advertising from mid-tier publishers through an automated system.

Google is the dominant player because they have technology. Drawing an analogy from the online advertising business to the coffee business... It's like Coffee Bean, Peet's Coffee and other competitors leasing their cash registers and coffee machines from Starbucks. Many of Google's closest competitors are using Google's adserving technology to drive advertising revenue. Great for Google, bad for everyone else.

I am not the least bit surprised that DoubleClick sold for $3.1 billion. Personally, I think it was the smartest decision Google could have made. What's the cost of not having it? What if there was another competitive cash register on the market? DoubleClick's technology, while old and antiquated, was the only other decent "cash register" with any traction. Sure, there's a wave of new technology solutions that have come into the market that are competitive with DoubleClick, but, they are unproven. Most of these new companies have been started by "newbies" to the advertising space and it's going to take them a while to learn the advertising business. Most of the veterans from the first online advertising revolution 7-10 years ago are likely sitting on yachts counting their payouts.

So, now the large networks are revolting against the GoogleClick deal. They are challenging the deal with the government on anti-trust claims, saying that it gives Google too much power and they will have an unfair advantage. I think this is a bunch of nonsense. Sure, Google has a significant advantage, but I don't believe they have an unfair one. They just happen to be the main supplier of cash registers and coffee machines. Anyway, come on, Google's mantra is "don't be evil", right? How could they abuse their power? Besides, with Google trying to launch satellites, building mobile phones, trying to replace Microsoft Office, scanning libraries of books, who has time for advertising technology anyway?

However, make no mistake about it, Google is very much a competitor to any publisher. They have one of the largest websites on the Internet and that is their main business. They keep 100% of the revenue from their own website and only a fraction when selling advertising on other sites. There needs to be another supplier of cash registers and coffee machines and there is nothing preventing another supplier from entering the market. However, the problem with it is that it is damn hard to build advertising technology. It took us years at L90/adMonitor, hundreds of billions of ad impressions worth of learning, millions of dollars and hundreds of people to get it right... It's not impossible, it's just hard, time consuming and expensive. The GoogleClick deal doesn't prevent anyone from competing, it just sets everyone else back another 12-18 months further than they were before.

Smart move on Google's part and congratulations to the geniuses at the private equity firms (Hellman & Friedman and JMI Equity) that identified this hole in the market and bought DoubleClick for a fraction of what they sold it for. But, if I were a publisher or a major network using anything from GoogleClick, I'd want to find another supplier of cash registers and coffee machines before someone drives up my rental fee or takes my cash register away (with my customer list and cash still in the drawer). Ahh, maybe I'm just being paranoid... If I'm a publisher using Google, they already have my customer list, advertising data and revenue information anyway...


After writing this, I think I smell something... I can't tell if it's a fresh pot of coffee or Startup 6.0 brewing...


(For the record, I don't drink coffee.)

Labels: adMonitor, GoogleClick, internet advertising, L90

(Part 4 of a 5 part series: "So, you need to develop a product?")

Any entrepreneur, CEO or CTO should always have a development SWAT team on hand. This team should be outside of the core development team and outside of the company's critical path. This team can be made up of employees, a virtual group of employees (borrowed from their core team/job) or an outside development shop. It doesn't matter as long as they are super "scrappy" (see Scrappy versus Steady), have great vision, move extremely fast and require little direction or management.

I have had to call on my SWAT teams many times in the past. Sometimes in emergency situations, and other times to take advantage of market opportunities that quickly arise. Sometimes I have had to trash what they produced, other times it became a major turning point in a company's growth.

At L90 (Startup 3.0), we were sued by DoubleClick on the eve of our IPO for alleged patent-infrindgement. They tried to sue us in Virginia. We were scheduled to launch a new data center (of over 300+ servers) in Virginia the following week. With hundreds of millions of dollars in shareholder value at stake, I had to call on my SWAT team to do two things. First, they needed to reroute millions of dollars in computing equipment from Virginia to Texas and setup a new datacenter in less than 2 weeks. And second, they needed to architect and deploy an alternative to our core ad-serving software (which was delivering billions of ads for the Internet's top web sites at the time), because DoubleClick was trying to get an injunction to shut us down. The SWAT team was able to pull-off both of these seemlingly-impossible objectives within weeks and it gave us a lot of leverage in settling the bogus lawsuit in our favor.

At StrongMail (Startup 5.0), in the beginning, our biggest selling challenge was that it was difficult for us to visually demonstrate the value of our infrastructure solution. We had developed the world's best engine, but it didn't have a steering wheel (our strategy was to rely on other companies' steering wheels). Our internal development team was busy focused on developing our core product, but I needed to develop an application with an attractive, easy to use web user interface. I called on one of my outside SWAT teams and within months they were able to create an application on top of the StrongMail infrastructure that made it easy to demonstrate the value of the core infrastructure and it made the selling process magnitudes easier. It turned out to be a catapult for the company, and sales have been booming since then. The application is now being used by some of the world's most successful companies. After the initial product was developed, it was folded back into our internal engineering team and became part of our core product offering.

Without having a SWAT team on hand, it could have taken 10X as long to build a team, product specs, an architecture and a roadmap. The SWAT team helped us kick-start the project and get it to market in less time that it would have taken us to interview and hire a small team.

A solid SWAT team is invaluable, and to me, it is essential.


Next... Outsourcing (Part 5 of a 5 part series: "So, you need to develop a product?")

Labels: CEO, CTO, L90, product development, StrongMail, team building

(Part 3 of a 5 part series: "So, you need to develop a product?")

Good engineers are hard to find. In today's highly competitive job marketplace, it is becoming increasingly more difficult. My solution: cast a wider net. Focus on the best talent, regardless of their location.

I've built development teams in Chicago, Los Angeles, Silicon Valley and India. I've also hired engineers scattered in random locations around the world. I've built companies and teams where 100% of the development team was located at the company headquarters and other companies where none of the developers were at headquarters. I've realized that it doesn't really matter where they are, if they are the right people. There are many pros and cons to having your engineering team outside of the company headquarters (and/or in multiple locations), but I think the pros end up balancing out the cons. The main benefit to having your engineering team all in one place, at the company headquarters, is certainly communication. The con is that the developers can become 'tainted' or distracted by all the other business happenings and it can skew their thinking and creativity.

There are also geographical workforce talent pool advantages and disadvantages. Chicago was the easiest place to find engineers; they were cost efficient, hard working and very loyal. Los Angeles was a bit more difficult to find engineers; they were the most creative but more expensive than Chicago. Silicon Valley has a lot of engineers with a lot of experience, but also lot of competition, which makes it the most expensive place to hire engineers and loyalty can be a challenge. I will talk more about outsourcing in point #5, but India has terrific intellectual capital, is less expensive (however, costs have been quickly rising), but, it is very difficult to find "Scrappy" engineers (see point #1) and communication can also be a challenge.

At StrongMail Systems (Startup 5.0), our first three developers were in India. It was a challenge in the beginning, but ultimately, I attribute much of our success to making the model work. We started with three extremely talented, creative and innovative engineers. They were able to attract other talented engineers in India as we grew. There were many communication challenges in the beginning, but once we overcame them, we were able to leverage a full 24 hour development cycle between the U.S. and India and, as a result, we were able to develop product much faster than the competition. At L90 (Startup 3.0), our engineering team was based primarily in Chicago while our headquarters was in Los Angeles. As we evolved our business plan and tweaked our marketing messaging, our engineering team was shielded from a lot of the distraction (being in a different location, they didn't get sucked into the "water cooler" conversation or hallway chatter) and they always remained 100% focused on building innovative products driven by customer need. Of all of my companies, communication was probably the strongest at L90, even though the engineering and design team were completely separated from sales, marketing, business development and customer service.

Focus on the best people, not the best location... By casting a wider net, you can find better talent, better manage your costs and gain many other tangible and intangible benefits (e.g. loyalty, development and support expanded across multiple time zones, multiple geographical talent pools for growth, new and fresh perspectives, etc.) Fortunately, we live in a world where virtual locations are not only possible, but advantageous.


Next... Build a SWAT team (Part 4 of a 5 part series: "So, you need to develop a product?")

Labels: hiring, L90, product development, StrongMail, team building

In today's high-tech, highly competitive world, more and more companies are describing their products or services using too many fancy, jargon words. This is particularly a problem in crowded markets where they are trying hard to differentiate themselves from their competition. Particularly with startup companies, they think that they have to use fancy words or names to make their products sound more sophisticated. Unfortunately, they wordsmith themselves so far away from describing what it actually is that they sell, that their customers or users need a jargon-decoder ring to understand what they do.

I'll take a simple example and "jargon it up" to illustrate my point. Let's take a bicycle. What if I were to describe a bicycle as:

"A multi-wheel personal transportation device"

If I were a motorcycle manufacturer trying to differentiate myself from a bike, I would say something like:

"A multi-wheel next-generation, high performance engine-driven transportation device"

Oh wait, that could also be a car, so if I wanted to differentiate the car, I would say:

"A quad-wheel, next-generation, high performance engine-driven quad-seat transportation vehicle"

Oh no, that could be an SUV, too... Well, you get the point. Describing something using a) jargon and b) competitive comparison could spiral out of control, quickly.

I was fortunate enough to learn this lesson years ago. My third startup, L90 (Startup 3.0), was in a very crowded, highly competitive online advertising market. We tried many different jargon-driven ways of describing ourselves. The more jargon our competitors used, the more we used, the more we used, then the more they used... What worked best was when we very simply described ourselves "The Premium Advertising Network". It was simple, to the point and it worked. Customers immediately knew what we did and we established a supreme perspective by adding one descriptive word, "Premium".

Ever since then, I've constantly used what I call the bicycle test: "We build bicycles". Anytime I think of ways to describe a new business, product or service I use this statement as a foundation/test to ground my thinking. The closer I can get to this statement, the better...

Because, if you can't simply say what it is, than what it is won't matter.

Throw away the thesaurus!

Labels: branding, internet advertising, L90, startup

I had written a posting on how to rapidly develop high quality products. As I was uploading it, I remembered that I had put together guidelines for our product development team at L90 (Startup 3.0). I dug up the document and re-read it.

I think our team at L90 was one of the most efficient and customer-focused development teams ever to be assembled. They accomplished a lot with a little. The team developed adMonitor^(TM), one of the Internet's largest and most successful ad-serving networks at the time. adMonitor delivered over 8 Billion advertisements per month for over 3,000 customers with 99.9% reliability in less than 3 milliseconds per transaction and reached over 65% of the worldwide Internet population. All of this, with a development team of less than 30 engineers. Speed was their mindset.

So, given that, I decided to scrap the post that I was going to upload and, instead, publish this document exactly as I wrote it back in 1999:


12 Guidelines for Rapid Product Development

Make Speed Your Mindset

Always be focused on moving the product forward. It's easy to get caught up in the weeds. Software code, by its nature, is very much like weeds. Focus on the finish line and the next two steps at all times. Do a mini-release everyday, it will force you to develop something "useable" each day and you'll get to the finish line much faster.


Functionality First

The #1 objective should always be to develop the product in such a way that user-facing functionality is built first. Then proceed with building the backend to support the front-end functionality. This will allow you to solicit feedback and will make your backend development efforts much more efficient.


Avoid Over-Engineering

The #1 challenge that engineers face is their own natural sense of perfection. Over-engineering will slow down product releases.


Start from the Middle: Well-Balanced Engineering

Start from the middle of your product and build out from there, keeping the front-end and the back-end in balance at all times. For every back-end function developed, there should be a front-end function built before moving on to the next piece of back-end functionality in the system.


Reduce, Re-Use, Recycle

Create re-useable code and functionality, this will reduce the amount of engineering needed later – try to recycle existing code into new functions. Don't get in the habit of "re-writing" code (a natural tendency of engineers), it's dangerous.


Keep It Simple

Software is intended to simplify an end-user’s tasks by using technology to assist them. Every step of the way, you should remind yourself that end-user simplicity is the #1 goal of the project’s outcome.


Keep it Ready

Your application should be presentation ready at all times, this includes:
- Demo Applications
- Demo Data
- Test/QA Applications
- Test/QA Data
- Documentation


Solicit Feedback

Don't build technology in a bubble. Show it to people as often as possible throughout the developing process, get their feedback and adapt as necessary.


90% Baked Rule

Build 90% of the finished product – then let the customer define what the remaining 10%
should look like. This will accelerate the development process and set a development discipline to create products that are molded by the market.


Build for Tomorrow, Engineer for Today

Always keep the immediate needs in mind and engineer to meet those needs as quickly
as possible. Keep in mind that technology can and will change later. Your product requirements will change and new (faster, better, richer, cheaper) software and hardware development infrastructure technologies are being created every day.


Leverage Hardware

Don't get too hung up on performance. Hardware is less expensive than people. People get more expensive while hardware becomes cheaper and faster every day. Good people are hard to find, good hardware is a commodity. Leverage hardware whenever possible to scale the performance of your application and don't spend too much time "fine-tuning" code, at some point it becomes diminishing returns.


Consistency

As the company grows and products grow, the engineering team and objectives become
much more complex. It is important to maintain consistency in development, speed and administration to efficiently grow the company and the products. Get in the habit of developing quickly, but maintaining a high level of quality. Go fast, but don't hurry.

Labels: engineering, functionality, L90, product development

Often times, companies get distracted by all the things that they -could- do, and don't focus enough on what they do best. This is especially true, and very tempting, for startup companies who can seemingly do "anything" because they are so flexible and agile. This is dangerous behavior. It results in a lack of focus and diluted brand equity.

You want to pick the #1 problem that you solve and be the absolute best at solving it. This way, when someone says "I have X problem" the default company everyone thinks of is yours.

Here are some examples:

"I have a database problem" = go to Oracle
"I have a networking problem" = go to Cisco
"I need to sell something on the Internet" = go to eBay
"My cell phone is dropping calls" = go to Verizon
"I need a portable music device" = iPod
"I need a photocopier" = Xerox (this worked for them years ago, then they started to dilute their core message and competitors quickly stepped in with a vengeance)

Sure, all of these companies do a lot of other things... But, each have positioned themselves as the "default" or "defacto" standard for solving a problem.

With startups, it is difficult to commit to just one thing that you are best at because:

a) You don't know if that one thing is always the right thing
b) You aren't confident that you truly are "best" at solving it yet
c) You try to cast a wide net so you don't miss out on any opportunities

Bottom line is that you have to do it. Pick something, stick to it and be best. Period.

My first company, Starting Point (Startup 1.0), was an Internet search engine and directory. We were simply the best metasearch engine on the Internet. When people wanted to "search the search engines", we were the place to come. At the time, finding stuff using search engines was difficult. You had to go to multiple sources before finding the results you were looking for. (It seems as though this trend is starting to repeat itself with today's search engine results). Starting Point was best at searching the search engines and, as a result, we quickly became the 7th most popular site on the Internet.

L90 (Startup 3.0), my third company, was the "premium advertising network". When companies wanted first class advertising placement and high-end marketing technology, we were the place to come. Sure, we lost out on some of the low end business, but in the end, that actually helped the business survive the dot-com bubble burst.

At Zondigo (Startup 4.0), my fourth company, we never really answered the question "what do we do best?". So, what we became best at was changing our business plan. As a result, we ended up doing a lot of one-off custom work for clients and never really gained traction in any particular area. The company eventually failed.

At my current company, StrongMail (Startup 5.0), we struggled with trying to stick to only one core message. We can solve so many different problems with email delivery ranging from performance to reliable email delivery to dynamic content. As a result, we weren't the default answer for companies when they said "we have X problem". So, we put a stake in the ground. We focused on proving that StrongMail is the best way to get email reliably delivered to the Inbox. We went out with the message that we are like "FedEx for email delivery" and now, when people have email delivery problems, we are their first call.

It takes confidence and discipline, but it is very important to be best at something. It will help your company stay focused, it will build confidence in your entire organization (especially your sales/marketing team) and most importantly, your customers/users will think to go to you first.

Labels: internet, L90, problem solving, product development, Starting Point, startup, StrongMail, Zondigo

No, this posting is not intended for your IT department.

I'm not a big fan of secrets, NDAs or the term "stealth mode". I've noticed that a lot of people are afraid of getting their ideas out into the public. They are afraid of their competition finding out about the idea, a bigger company trying to steal it or some other entrepreneur doing it first. So, as a way to protect themselves, they keep it a secret.

Well, my philosophy is that if you keep it from your competition, you're also keeping it from potential users or customers. In trying to hide it from the 5-10 would-be competitors you're also hiding it from thousands or millions of users and customers.

Sure, you need to take the proper precautions to protect your idea first (patents, copyrights, etc.), particularly with international patent laws. However, I say throw away the NDAs and get your ideas out there! Solicit feedback, see what users think... Maybe you'll attract partners you never thought of or maybe you'll learn that no one cares about it and you won't waste your time.

If you are so concerned that someone is going to move faster than you, then that is the first problem you need to solve. Whether it be now or later, it's an issue you'll need to address before someone else comes along to crush you. Why not figure it out early before you invest a lot of time, money and energy into a new product or business idea?

Up until my current company, StrongMail (Startup 5.0), I never had people sign NDAs. At L90 (Startup 3.0), we threw our new ideas out into the public while they were still in the planning phases. We saved a ton of time in development because we allowed our customers, prospects and even our competition to provide us feedback before we built anything. Yes, I did say competition. We were able to see how they were going to react, far in advance, and we were always able to one-up them in the end.

At Starting Point (Startup 1.0), an Internet search engine, I would put links up on the site to announce new ideas. They would go to pages that said "Coming Soon..." with a "Feedback/Comments" button. I tracked the pages to see how many people clicked on it and would read all of the feedback. That is how I decided how popular an idea would be. If it was popular, I got a lot of good user feedback. If it wasn't, I didn't waste any time planning or building it. Funny thing, though, is that I found our competitors running out and building features that were never used (likely because they saw it on our site). While they were wasting time building unpopular features, I was able to develop and grow faster with far less resources. This ultimately lead to Starting Point being the 7th most popular site on the Internet with zero outside venture investment and a tiny staff.

At my current company, StrongMail (Startup 5.0), we started off signing NDAs with everyone we talked to. I thought we needed to do things differently because we were an enterprise software company. Well, the result was that we just made it more difficult for people to learn about our products and it slowed everything down. We spent a lot of time shoving paperwork back and forth and negotiating NDAs with lawyers. All this before we even got to talk about our value proposition. Well, one day, I decided to push everything to the opposite side of the spectrum. We took our software and put it on the Internet free to everyone for viewing and download. It was a dramatic shift in philosophy internally. Within weeks, we shortened our sales cycle. In fact, we had deals closed in less than 48 hours (which formerly could have taken weeks) because we had prospects that were able to find and evaluate our product while our sales reps were asleep. Intangibly, I think it also exuded a sense of confidence and also gave prospects the perception that our product is easy to use. Even further, a former competitor evaluated our software online and was so impressed that they contacted us to strike an OEM deal, leading to a very successful partnership. Probably would have never happened, had all of our information been behind our "information firewall".

So, I say, tear down your firewalls and let the world know what you're doing! You'll be able to move faster, increase agility, reach more people and, if you're smart, stay a step ahead of your competition. If not for any other reason, but because once you put your idea out there it will force you to run like hell to stay ahead of the pack.

Labels: L90, NDAs, partners, Starting Point, startup, StrongMail

Is it safe to hire entrepreneurs?

Last week I attended the ad:Tech conference in my hometown, Chicago. My company, StrongMail Systems (Startup 5.0), was exhibiting. While at our booth, I ran into many of my former teammates from L90 (Startup 3.0). We exchanged stories about where our other former teammates ventured off to after L90. I was happily amazed to learn about how many of them went on to start their own, successful companies.

I've written in the past about how powerful our team was, and how little experience (if measured in years) that they had. But, they all had a certain rare fire in them that drove them to learn and grow faster than others. They were problem solvers, visionaries, hard-workers, over-achievers, evangelists; they continually thought outside of the box and had tremendous pride in their work. These are all prerequisites for a good entrepreneur. When we hired, we always said that we were looking for entrepreneurs to join our team. I’m sure to many that sounded like a gimmick, but it turned out that we actually attracted a lot of very talented entrepreneurs.

So, it was no surprise to me that many of them would go on to start their own companies. They range from technology companies to marketing companies to apparel companies to real estate investments and non-profits... If I were to take a rough guess, I'd say that about 40-50% of the team (we had hundreds of employees) either started their own company or joined a startup company founded by one of their former L90 teammates. Personally, I think that is an outstanding ratio.

I’ve talked to many people about this topic and the most common objection that I hear is “If I hire someone who wants to start their own company, I run the risk of them leaving someday.” My response: “So what?” You stand that chance no matter who you hire. Why not harness the entrepreneurial spirit and use it to grow your business as long as you can? It will be rewarding for both of you. Chances are, as long as they feel like they are contributing and playing an important role in the business, and they are being rewarded and recognized appropriately, that you will both have a very long-lasting relationship. Entrepreneurs, by nature, are loyal and extremely dedicated.

Almost all of the L90 entrepreneurs were dedicated to the company long after the IPO and until the company was acquired by DoubleClick and Focus Interactive (Ask Jeeves.) Funny enough, as I was (proudly) discussing this fact with one of my former teammates, they chuckled and were quick to point out that of all of the former L90 team members who went on to start a new company, the first one to leave was me…

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My visit to Chicago re-enforced a very important lesson for me: Hire entrepreneurs! Treat them as entrepreneurs; empower them, challenge them, inspire them and reward them.

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Labels: entrepeneurs, hiring, L90, StrongMail

I realize that I have not made a new posting in a few weeks. My apologies for the sporadic activity… I am in the process of relocating back from the Bay Area to Los Angeles, so things are a bit hectic at the moment. I hope to resume my weekly posting schedule as soon as possible.

I had some time to put together this post over the weekend… This is probably one of the biggest lessons I have learned throughout my past 5 companies.


Move Fast. Be Agile. Stay Focused.

I believe that a startup's biggest assets are speed and agility. The ability to execute at faster speeds and to rapidly adapt their course is what enables them to compete and to protect themselves from the big companies.

This can be both a strength and a weakness. Moving fast without focus can be dangerous. It can quickly move you off course.

"Getting Big"
Some of my companies have moved faster as they grow, some have moved slower. The tendancy is for companies to move slower as they get bigger; they add more processes, they have to keep more people "on the same page," there is less tolerance for "scrapiness" and real-time, active communication is a great challenge.

It all comes down to company culture and the team that you build. Moving fast definitely requires a team that has the "entrepreneurial spirit." The team must be empowered, must have flexibility to experiment and it should be "OK" to make mistakes. A culture where it is not "OK" to make mistakes puts everyone in CYA (cover your a**) mode, limiting their potential and speed of execution. I've found that people will allocate bigger buffers for setting expectations, they over-hire to make sure they have more then enough resources, they over-perfect things, they have more frequent and longer time-wasting meetings, they concentrate too much on the methods instead of the results and they over-process things. I always say if you aren't making mistakes, you aren't moving fast enough.

"If you want to double your rate of success, quadruple your rate of failure" (-- Thomas Watson, IBM Founder )

As a leader, encouraging this kind of behavior requires a lot of discipline and extreme trust in your team.

At L90 (Startup 3.0), an online advertising technology company, we moved faster and became more agile as we grew in size. The team was like lightning. Our meetings were quick and infrequent (if we were in meetings, we weren't producing). I would describe them better as "touchpoints" and "rallies" as opposed to "meetings." The focus was so clear that there was never a question as to what it was. It didn't require a detailed definition or a plan. In fact, I don't even think anyone ever had to ask what it was, it was just ingrained in our culture. There wasn't a new-hire orientation or weekly staff meetings that said L90's focus was X. Everyone was just running so fast towards it that it was hard to avoid the focus or the momentum heading towards it. It was an amazing thing to be caught in the middle of.

On the flip-side, at Zondigo (Startup 4.0), a wireless and voice applications company, we had a team of people that were running fast, however, we had a severe lack of focus. This was the first (and only) company that I had started with outside capital from day one. I believe this factor caused us to behave differently than my previous startups. It's like the clock started ticking from day one and we had to rush to find the "right" answer. Zondigo was an idea, a team and capital in search of a business plan. We were afraid to make mistakes. Meetings, meetings, more meetings... longer meetings... more debates... "what if..." "that won't work because..." We spent more time "talking" than "doing"... If something didn't work immediately the first time, we would try something new and switch our focus rather than staying the course and finding an alternative solution. It seemed as though we decided to change our focus every other week. Part of this was due to rapidly changing market dynamics (2001, dot-com crash), however, most of it was due to lack of confidence in our own plan. Interestingly enough, if we had stuck with our original plan, I believe we would have been much more successful. This lack of focus was my fault, I was not an effective leader for my team and we did not start the business on a solid foundation (vision, mission, goal, focus). Unfortunately, I didn't learn this lesson until years after Zondigo's exit.

There was a brief period of time at my current company, StrongMail Systems (Startup 5.0), that we went through a similar phase; lack of confidence in our plan, vision, focus. We had tried to change it multiple times and every time that we did, it would take us further and further away from our goals. Fortunately, this time I recognized the pattern and we were quick to correct it. We reverted back to our original business plan and it turns out that it has been, by far, the most successful for us.


So, what I have learned: Believe in your plan, let loose, stay confident and go go go!

Labels: internet advertising, L90, startup, StrongMail, Zondigo

- Background – The S:C (Simplicity to Complexity) Ratio
- 80/20 Rule for Products
- Less is More; More is Difficult
- Don't Think Too Much. Stop Chain-Thinking!


Background – S:C (Simplicity to Complexity) Ratio
Complexity drives me crazy. My philosophy has always been to move as quickly as possible and the only way to do that is to practice the art of keeping things simple.

I have found that if an idea is incredibly complex, it inherently requires more time to develop and is harder to explain to customers, users, partners, employees, etc. And if customers, users, partners and employees have a hard time understanding or explaining the idea, then it will eventually fail. So, don’t kill your idea with complexity.

This “keep it simple” discipline was easy to practice when I was younger. Because I was not tainted by previous experience, everything naturally started out simple. For example, Starting Point’s (Startup 1.0) user interface was very similar to Google’s user interface in the sense that it was a very simple, plain web page that had one search box and a button to search.

As I grow older, I find that it is more difficult to adhere to this discipline. The more I learn, the more I feel compelled to apply ALL of my learning to new projects. Whether it be product development, marketing, sales, negotiating or raising capital, I find myself trying harder to not get bogged down with unnecessary details. Instead, I try to forget everything I know, wipe the slate clean and take a fresh, clear approach to improving the S:C ratio (Simplicity to Complexity). Finding simple solutions for solving complex problems is increasingly more difficult as the complexity increases, but if you achieve a high S:C ratio, it will be exponentially rewarding.


"80/20 Rule for Products"
I believe that 80% of the market will only learn, understand and adopt 20% of the features and functionality in your offering. The remaining 80% of the functionality will address very specific needs for the remaining 20% of the market.

For example, how much of the total functionality of Microsoft Office do you know how to use? What about your friends? Your kids? Your parents?

In general, startup companies that are in emerging markets should be focused on the former -- and should worry about the advanced parts of their offering later, when the market matures. At L90 (Startup 3.0), we developed an online advertising product (called adMonitor) that delivered emails and digital advertisements for blue-chip customers such as Microsoft, Visa and AT&T. We developed the product, took it to market and acquired 3,000+ customers in less than 3 years. While our competitors had hundreds of engineers focused on developing more complex bells and whistles, we had a fast-moving, killer team of 12 engineers focused on simplifying our product. We were successful because our product had, by far, the highest S:C ratio. It was quick and easy to set up, had an extremely simple-looking user interface and was very easy to use. Our “keep it simple” strategy enabled us to move faster than our competition, and more importantly, enabled our customers to move faster than their competition.


"Less is More; More is Difficult"
Think about successful products and services such as the iPod, eBay or Google. Their strategy was to provide very minimalist, easy to use products and services. Many of their competitors tried to beat them by developing more feature-rich offerings. Apple, eBay and Google focused on perfecting the core functionality that 80% of the market experiences during every use, while their competitors simply confused their users with more clutter. More complex clutter can also be thought of as "more rope to hang yourself with."

At StrongMail (my current company, Startup 5.0), using those same principles, we recently launched a product called Message Studio which takes very manual, complex email integrations and workflows and simplifies them with an easy, point and click graphical user interface. The first thing people say when they see it is “wow, that looks so easy.” The reason being is because we took user interface styles that people are generally familiar with already (concepts similar to Microsoft or Apple products) and applied them to what used to be very complex email workflows. As a result, this kind of customer reaction has stimulated rapid growth for our company.

In today’s complex world of technology and buzzwords, simplicity puts the user's mind at ease, gives it a rest and makes them feel refreshed.


"Don't Think Too Much. Stop Chain-Thinking!"
Spending too much time over-thinking things will lead to complication. People often spend too much time on the methods and lose site of the results. If you find yourself saying things like "and, we can also..." or "but, what if..." -- these are common phrases involved in what I call "chain-thinking" -- just stop!

I found the perfect video illustration of what I am talking about. It is a video spoof on what the iPod packaging would look like if Microsoft designed it.

CLICK HERE TO WATCH THE VIDEO
(The video is less than 3 minutes long, I definitely encourage you to watch it.)

Get your offering in your customers' and users' hands as quickly as possible.

Try this:
1. Listen to yourself explain your offering to your user (pay attention to how you describe it – does it sound simple to you?)
2. Watch them use it (do they struggle without your help?)
3. When finished, ask them to explain it to you (does it sound simple when they describe it?)

In general, make sure that your offering is:

- Simple to Understand:
If they can’t understand it, they won’t use or buy it.

- Simple to Use:
The quicker they figure out how to use it, the quicker they'll buy it and the quicker they'll be able to show it to others.

- Simple to Promote:
It needs to be easy for other people to explain. You need other people talking about your offering to generate buzz, awareness and scale.

- Simple Looking:
Perception is everything -- if it looks easy, then it is. The marketing and the product itself should look simple. You should make it easy for your customers to buy (i.e. no complex contracts or pricing schemes) or adopt (i.e. no complex sign-up processes.)


For more information on this topic, a friend and colleague of mine, Peter Sealey, wrote a book called "Simplicity Marketing." Peter is an adjunct-professor at Berkeley and Stanford, was the former Chief Marketing Officer of Coca-Cola, President of Columbia Pictures and has been either on the board or has served as an advisor to my past three companies. Peter and I share very similar philosophies on "simplicity" and I believe that his book says it well.

“Keep it Simple” has been my #1 golden rule. I believe it has been the single greatest contributor to the success of all of my companies and their respective products. My next posting will be about the second greatest contributor: “The Kool-Aid Test.”

Next on Deck: The Kool-Aid Test: “Why do I need anything? Why do I need yours? Why do I need it now?”

Labels: L90, product development, simplicity, Starting Point, StrongMail

[Startup 4.0] Zondigo, Inc. – Wireless and Voice Application Development Software Company

Age: 24 - 25
Time Period: 2000 - 2001
My Role: CEO and Founder
High Point: Partnering with Intel and having Craig Barrett (Intel CEO) present Zondigo’s technology as “the future”

Wireless was going to be the "next big thing." I left my CTO position at L90 (Startup 3.0) to start a company called Zondigo (genesis of name: "its-on-the-go"), a wireless and voice technology company. We developed software to enable developers to quickly and easily create and deploy wireless and voice business applications.

So, I did what any other opportunistic entrepreneur does when they want to quickly build a company to capitalize on an opportunity. I immediately raised some venture capital and then recruited the most experienced team I could find. The individuals we recruited had very impressive backgrounds. However, they did not function well together as a “team.” I missed, perhaps, the single most important company building fundamental – I had failed to consider the dynamics of how everyone would work together. Nonetheless, though it was a bit of a struggle, the individuals eventually learned to work together as a team. We accomplished great things – we signed Intel as a customer and partner, developed a very strong product and generated a fair amount of awareness. But, there was always something “missing” in the teamwork category that prevented us from going full throttle.

Zondigo was the perfect example of why all good companies must be “right idea” AND “right time.” We missed out on the “right time” part. The company was about 5 years ahead of its time (starting this company today would be the right timing). Zondigo was creating the types of innovative wireless applications that you are seeing in use today. We were creating applications similar to the wireless phone/texting voting system used by American Idol or the rewards program that Coca-Cola recently launched (MyCokeRewards.com). As a matter of fact, we even pitched the idea to Coke about 5 years ago.

Again, like most opportunistic entrepreneurs, part of our growth plan was to raise venture capital. As CEO, I spent 6 months on the road, full-time, trying to raise our Series B funding. This was in 2001 when the market was tanking and all VCs were gun-shy. All of a sudden, wireless went from being the “next big thing” to being the last thing on people’s minds. As a result, like many entrepreneurs, we changed our business plan about 10 times to “fit” what the VCs were looking for so that we could fund the company and survive. Big mistake. Finally, we convinced a firm to invest.

After a small celebration, a few days later, I realized that two very bad things happened while I was out raising capital: a) the market opportunity disappeared and b) we had mangled our business plan so much that the plan no longer made any sense. But, the VCs liked it! So, for the first time at this company, I acted unlike other opportunistic entrepreneurs and I made a very unpopular decision – GIVE THE MONEY BACK!

So, we did just that. A couple of months later, we sold the technology and the rest was history.

An entrepreneur’s most valuable asset is time. You can always raise money, build things and find people – but you can never raise more time. Therefore, for true entrepreneurs, it is not about ROI, it is all about ROT (Return on Time).

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
SNAPSHOT:

Venture Capital Funding: $1.25M

Exit: Technology acquired

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
LESSON(S) LEARNED:

Teamwork is critical: A startup company, like a baby, is fragile and impressionable. It is important to bring in the right people at the right stages. Personally, in the very beginning stages of a company, I think it is important to find young-thinking, hungry, passionate, quick learners who are willing to make mistakes, work as a team and constantly learn and adapt. I’ve learned to put experience far behind the rest of these traits.

Believe in YOUR business plan: If VCs (or anyone else, for that matter) had all the right answers, they would be starting their own companies – they’d certainly make more money that way. At the end of the day, right or wrong, you need to believe in your business plan and execute it to its fullest potential.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
BIGGEST…

…reason for success: We did not let emotions cloud “market judgment.”

…mistake: Raising capital too early.

…challenge: Getting a bunch of smart, experienced individuals to learn to work together as a team.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
IF I WERE…

…smarter: I would have been more careful about how I built the team and adapted the business plan.

…dumber: Instead of giving the money back and moving on, I would have wasted a bunch of money and time.

…to do it all over again: I would have secured a customer first and validated the market timing before rushing to build a company.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Next on deck: Startup 5.0… ”I’m just going to chill out for a bit… (OK, for a month…)”

Labels: L90, product development, startup, voice application, wireless, Zondigo

[Startup 3.0] L90, Inc. – Premium Online Advertising Company

Age: 21 - 25
Time Period: 1997 - 2001
My Role: Chief Technology Officer, Technology Founder and Chairman, Advisory Board
High Point: $500 million market cap; 3,000+ customers; 8 billion transactions per month; 65% Internet reach

Warning, this will be a long posting. I am extremely passionate about what we accomplished at L90 in a short period of time with very little resources.

I can sum up three of the most action packed, exciting years of my life in 14 phrases:

1. Bootstrap
2. 7th Horse in a 7 Horse Race
3. All-Star Team
4. Rapid Growth and Dominance
5. Patent Lawsuit
6. IPO
7. Global Expansion
8. Acquirer
9. Leaving
10. Personal Lawsuit and Litigation
11. Acquired
12. SEC Investigation and Securities Fraud
13. Jail
14. Liquidation

After developing one of the most popular sites on the Internet and inventing a technology platform that enabled companies to grow their user base and generate revenue through online advertising, I felt it was time to take these experiences to market on a much larger scale. The next company was an Internet advertising and technology company called L90, Inc. L90 was the premier advertising network on the Internet. We had over 3,000 customers, delivered over 8 billion e-mails and online advertisements per month and reached over 65% of the Internet population through our technology (adMonitor). We focused on Global 2000, blue-chip customers such as Microsoft, Visa, Disney and Proctor and Gamble. At its peak, the company had hundreds of employees, offices around the world, and produced over $100M in total revenue. All of this was supported by the technology platform (adMonitor) that I invented at ReaXions, Inc. (Startup 2.0). We eventually took the company public, raising $112M in an IPO led by SG Cowen.

1: “Bootstrap”
A handful of desks, a handful of passionate people and the “money machine” (a.k.a. the fax machine); that’s how it all started. Our top priority was always clear: get the next order. The very first version of our ad-server software (adMonitor) was being run on my personal desktop computer and plugged into my ISDN line at home. One of the very first ads that our software delivered was promoting the launch of a brand new product from Microsoft called “Outlook” and it was placed on a very small website called eBay. A few months later, eBay called us to say that they were pulling all of the advertisements from their site because they were distracting and they didn’t want people to leave their site. I said “I don’t understand… that doesn’t make any sense… how will you make money?” I guess they found another way… Starting with companies like eBay and Microsoft, we built our business one customer at a time.


2: “7th Horse in a 7 Horse Race”
We were not the first to build an ad-serving technology platform. In fact, we probably had hundreds of competitors including seven that were either very well funded with significant venture capital or publicly held (e.g. DoubleClick, 24/7 Media, AdForce, Engage, Flycast). They had products that were already in the market, piles of cash, tons of customers and revenue, seemingly endless resources and lots of employees. We had customers and revenue. I remember meeting one of our larger competitors. They were interested in acquiring us, so I flew up to Silicon Valley with our CEO. I was 21 years old at the time. I walked into a big, flashy, modern office with tons of people running around (it seemed like they had a “money machine” on every desk). I walked past a large glass window that housed hundreds of computer servers with glowing, flashing lights; which ran their ad-serving technology software. Their server room was larger than our entire office and our entire ad network was being run on the exact same type of computer that their receptionist used as her desktop computer.

I sat in a meeting with the two guys that ran their technology teams (they were old enough to be my dad). One guy was the creator of Microsoft Excel and the other created the first network for IBM. (No, that’s not intimidating for a 21-year old on their first trip to Silicon Valley) They proceeded to tell me how they had an engineering staff of over 50 people (and rapidly growing) and millions of dollars invested into infrastructure. I had zero engineers, zero infrastructure, zero venture capital and a desktop computer running our ad-serving software on an ISDN line.

On the flight back, our CEO asked me what I thought. I said “we’ll beat them.” To be honest, I don’t know where my response came from because the truth was that I was very intimidated and had no idea how we would beat them. Either the pressurization in the plane was off or my gut was trumping logic.

Two years later, we were unstoppable, taking their customers and everyone else’s. They ended up going out of business shortly after our IPO. DoubleClick was the only one in front of us and we were stopping at nothing to beat them. And, we were very quickly chipping away at their customer base, too.

3: “All-Star Team”
We won because we had the best team. Period. Every person on my team was A-class. We didn’t hire resumes and experience, we hired smart, good people who wanted to be entrepreneurs. Everyone was a “friend of a friend of an L90 employee” and it made all the difference in the world. In fact, many people had no prior experience at all in the jobs that they were hired to do. But, every one of them rose to the challenge and ended up mastering their jobs. No one wanted to be the first person to leave the office, everyone took an enormous amount of pride in their work and no one wanted to let their “friends” (co-workers) down so they always jumped in to lend a hand.

Sometimes people tell me that this was the “dot-com days” and everyone was just trying to get rich. I refuse to believe that. I think our team was second to none and it showed in everything that we did. I think it is evidenced by the fact that many people from our team went on to be very successful; some are successful entrepreneurs, some are holding very high level executive positions at successful companies and some started non-profit/charity organizations.

A team like that is addictive, I have been in rehab, dealing with withdrawal ever since.

I’m proud of all of them. We had fun; worked hard and played hard.

4: “Rapid Growth and Dominance”
We refused to lose. We took it personally. We grew from a handful of employees to hundreds of employees worldwide in just a few years and the winning attitude was never diluted. There were a lot of growing pains, but there was no obstacle too big for us to conquer. In fact, the bigger the obstacle, the more pumped up everyone got. The interesting thing is that we never looked at our competition, we never did any kind of competitive analysis on the products --- we wanted to be leaders, so we acted like leaders – we focused on our customers, not our competition.

5. “Patent Lawsuit”
We were on the IPO track and our #1 competitor (DoubleClick) filed a bogus patent-infringement lawsuit right before our IPO. They were trying to block the success of our IPO. It was ugly. We had lawyers everywhere; digging through files, reviewing all of our emails and mounds of paperwork. This was a multi-million dollar lawsuit and it could have crushed our business. But, we never let it phase us. We did what we needed to do, adjusted and moved on. In fact, we were so agile that we were able to readjust major plans, literally overnight. We thought that DoubleClick was going to file the lawsuit in Virginia because we were planning to open a new data center there. One night, we hopped on a red-eye flight to Virginia and moved millions of dollars of heavy, high-end computing equipment out of Virginia in less than 24 hours and redeployed it to Austin, Texas. In the end, we settled the bogus lawsuit in our favor.

6: “IPO”
Business as usual... While the prospect of an IPO was exciting, we never let it consume our minds or let it affect our behavior. It was just another step towards conquering our market. There were a lot challenges leading up to it (e.g. raising capital, underwriters backing out, extreme criticism, patent lawsuit from our competitor, etc.) In fact, we even had to change our name (original name was Latitude90) because Latitude Communications was going to sue us because our names were too similar. So, almost overnight, we became “L90.” To top it all off, on the day of the IPO, the market took a big dip (January 21, 2000). Even through all that, we had a very successful IPO - the offering share price went from $8 per share to $15 per share and we raised $112 million. The market capitalization eventually peaked at almost $500 million (half a billion dollars!)

The IPO came and went, we had parties, we celebrated and took a deep breath. Then, we went back to work – harder and faster than ever. I believe our entire team bought their friends and family stock. I have yet to talk to anyone who did not hang on to it well-after the IPO. That either shows extreme passion for the potential of the company or poor investment advice – I like to believe it is the former.

7: “Global Expansion”
We had offices everywhere in every major city in U.S. (Chicago, New York, Miami, Detroit, San Francisco, Los Angeles, etc.) I spent a lot of my time traveling amongst all of the offices. We were also expanding overseas which were exciting times. The most important thing that I learned as we were expanding was that it is extremely important to learn the nuances of the different cultures in different cities in order to hire the right people. New Yorkers (i.e. aggressive) are very different than people from Los Angeles (i.e. laid back) – if you hire a laid back person in New York, they’ll get run over…

8: “Acquirer”
There was a period of time where I had a stack of business plans on my desk of companies we were considering acquiring. I was 23 years old, I barely knew what a business plan was… yet, I found myself evaluating business plans put together by experts, investment bankers and lawyers. What the hell did I know? To me, it was simple, does this move our business forward? If so, buy them (at a reasonable price, of course). Funny thing, we were moving so fast that there were few companies that fit this very simple criterion.

9: “Leaving”
During our IPO process, one of the common questions was “What if Frank gets hit by a bus?” While many told me that I should have been flattered, I took this as an extreme insult. How could we be a real company if it is perceived that one individual is so critical and such a risk to its ongoing operations? I viewed that perception as personal failure. From that point forward, my #1 goal was to eliminate that perception and make it so that the company did not need me. I succeeded. I was satisfied that I achieved my goal, then, there was a period of extreme sadness. At that point, I knew that I needed to move on. My job was done.

I wanted to stay very close to the company, so L90 invested in my next venture (Startup 4.0: Zondigo) and I became Chairman of the Advisory Board, found my replacement and moved on. This was one of the most difficult things that I’ve ever had to do. My team felt like I was letting them down, they were nervous, scared and confused. During that time, some of them had very sour feelings over my leaving – I think they felt that I abandoned them. I believed that I was doing what was best for them and what was best for the company – they needed to grow and they all stepped up to the challenge. It turns out that they saw something that I didn’t. As you’ll come to learn in the next few paragraphs, everything changed after my departure. I doubt it had anything to do with my leaving, I certainly wasn’t anything special. I think it was just bad timing, but I still often wonder what would have happened if I stuck around. It is, perhaps, the only decision I’ve ever gone back and questioned.

10: “Personal Lawsuit / Litigation”
One day, everything got weird. I was planning to sell my stock in the company and I came to learn that there was a problem with my stock. After getting the run around from the CEO, I was advised to take action to remedy the situation. I ended up having to file a lawsuit against the CEO and the company. This was the first and only personal lawsuit that I had been involved in. How could I sue the company that I was so passionate about building? It didn’t make any sense to me – I was very confused, the Board was very confused… I was planning my wedding at the same time that we were in litigation. It got to the point that I was worried that a process-server would show up on my wedding day with a counter-lawsuit. It turned out that the CEO wasn’t honest with anyone, including myself and the Board. He was trying to hide something. He is now in jail (details to come in the next few paragraphs). After he was fired, I ended up settling the lawsuit with the company and now have great relationships with the people who were once “sitting on the other side of the table”. Funny how things can change so quickly...

11: “Acquired”
After my departure, L90 sold the technology platform (adMonitor) to DoubleClick. It was a dumb move and it did not make any sense. How can you run an ad-network without an ad-serving technology? Turned out that the CEO had his own agenda and he was able to convince the Board that this was the right thing to do. There were later suspicions that he pushed to sell the technology so that he could cover-up some of his wrong-doings. I brought my concerns to the Board; however, we were in litigation over my personal lawsuit, so I did not have much influence with them. The acquisition went through and that was the start of a terrible chain of events.

12: “SEC Investigation and Securities Fraud”
I met the CEO for lunch at Jerry’s Deli in Marina Del Rey, CA, across the street from L90’s headquarters. My purpose for the lunch was to confront him on the things that “didn’t seem right.” Halfway into lunch, he said “Are you wearing a wire?” I said “No, what are you talking about?” he said “lift up your shirt, I want to see that you aren’t wearing a wire.” I was so confused... The guy that I used to go surfing with on weekends, considered a friend for years and someone that I had an enormous of respect for, had turned into a completely different person right in front of my eyes. Huh?

One week later the SEC announced that they were investigating him for securities fraud. What the hell happened? Who was this guy? It all started making sense. To this day, I am not angry with him (even though everything that we had all worked hard for was being destroyed) and I don’t think he was a bad person, I think he simply made some very poor decisions. He was fired and a few others resigned from the company. I think there were some very good people that were caught in the cross-fire and now the CEO and a few others are in jail.

I helped the company’s Board to clear the company from the mess and cooperated with the SEC. Testifying at the SEC, even when you are one of the “good guys”, is not a good feeling and I hope it is something that I never have to experience again. All I can say is that walking into a dark room with gray walls and sitting in front of a bunch of government officials and a team of lawyers firing questions at you for hours is not a comforting experience.

13: “Jail”
It is sad to see good people go to jail, even though some of them made some very bad decisions. Maybe they truly are bad people and I am just the ultimate optimist, but I have trouble accepting that. I understand why it needs to happen. Many people lost a lot of money, including myself and many of the hard-working, passionate people on my team. I just simply wouldn’t wish that on anyone, and I feel especially bad for their families. I’ll probably never know the whole story on who did what, why and to whom --- but I still have a lot of respect for some of the people that had to go to jail over the whole fiasco. I hope, for them, that they are able to bounce back and when they get out that they do something good for the world.

14: “Liquidation”
The SEC investigation and the acquisition of L90’s technology by DoubleClick destroyed the future growth potential of a very good company. This was the opposite of your typical “dot-com bubble bursting” story. L90 was a great company with a good business model (profitable before any venture-capital funding and the IPO), it had a lot of money in the bank and it ended up being shut down (by choice). The advertising services group was sold to AskJeeves and then the company began a liquidation process to give tens of millions of dollars in capital back to its shareholders. The story is still not over yet. The company is still technically in business, awaiting the final stage of the liquidation.

Wow. I don’t know what to say… I am not happy with the way things ended, as I don’t think it reflects what a great company we had created, but I wouldn’t trade anything for all of the positive experiences that came from it.

Today, at my current company, StrongMail Systems (Startup 5.0), I am still working with some of the superstars from L90. In fact, my co-founder (one of my greatest friends), Tim McQuillen, and I met at L90 (more on this later...).

I will never forget my experiences at L90 – I was inspired every day by the team that we had created. It was unfortunate that, for many of them, their hard work was tarnished and their dream was destroyed. Sometimes I still feel that I let them down by leaving when I did – had I not left, I could have potentially prevented the mess that was created after my departure.

Today, a company like L90 would be thriving with the success of online advertising.

To the team at L90, you were all superstars and I hope that you all go on to achieve your dreams in the future!

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
SNAPSHOT:

Venture Capital Funding: $2M angel (Initial), $12M (total)

Exit: $112M IPO, led by SG Cowen; technology acquired by DoubleClick; advertising services group acquired by AskJeeves

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
LESSON(S) LEARNED:

Think big. Be scrappy: The bigger we got, the scrappier we became. Just because a company gets big, ideas get bigger and the employee and customer count grows – it doesn’t mean that things need to become more complex. We were developing a new feature or product a week with an engineering team of less than 20.

No shortcuts!: What goes around comes around. Shortcuts always come back to bite you. In the case of L90, a select few took some short cuts and they are now paying for it with some of the best years of their lives.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
BIGGEST…

…reason for success: The Team

…mistake: Leaving

…challenge: We were the 7th horse in a 7 horse race when we started. There were a number of companies (DoubleClick, AdForce, LinkExchange, 24/7 Media) that were either public or well-funded before we even got started. We were late to the game and had a fraction of the resources that they did – beating them was one hell of a challenge.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
IF I WERE…

…smarter: I would have better protected my financial interest in the company.

…dumber: I would not have hired a good lawyer to “right the wrong.”

…to do it all over again: I would not have left when I did and could have potentially protected the company from the mess that a few people caused after my departure.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Next on deck: Startup 4.0… “Wireless is the next big thing – hurry!”

Labels: internet advertising, IPO, L90, SEC, startup