Author: Glenn Kelman
Recent posts
February 2, 2012
The first month of every year for Redfin is like the first five minutes of a blind date: it doesn’t take long to figure out how the whole thing will go. We track every customer activity in a big database so it’s easy for us to see whether demand is strong right out of the gate.
And it is. While January and February closings will likely be weak, recent charts of early-stage Redfin demand suggest that in a few months sales volume will be just fine. From January to December, visits to our website increased 35%. Customers touring homes increased 26%. Customers writing offers increased 35%.
We aren’t in a tizzy about such growth, because most of it is seasonal. We get big jumps like this every year.
But we are seeing one trend this season that isn’t normal. And it could really crimp sales volume and, by extension, the whole economy. Inventory, which normally starts climbing steeply in January, has just kept dropping. In our wildly popular home-buying classes, which are mostly sold out, the most common complaint is that there’s nothing good to buy.
In some of the biggest counties, there were 30% – 40% fewer homes for sale this January compared to last January, and most counties saw the problem only get worse in the past month:
And the same is true of smaller counties, too; only Chicago has seen an uptick:
We see why this is happening in listing consultations across the country. We sit in people’s living rooms, explaining what they can likely sell their home for, and they just decide to wait a year instead, either because they want more money for their home, or they flat-out need more money just to pay off the mortgage.
The banks have an enormous number of mortgages in default, but, after the robo-signing scandal, foreclosures have been at or near three-year lows because it takes nearly a year to foreclose a property. In Atlanta last year, there was a 13-month supply of bank-owned homes; now there’s a two-month supply.
As a result, the limit on sales volume, which has long been demand, is increasingly now supply. American real estate is, in some places, like a giant store, the shelves half-full, often with damaged goods. Fixing this problem will be hard because it requires a fundamental re-structuring of debt, whereas stimulating demand is often a simple matter of lowering interest rates.
What this means for the individual home-seller is that Tim Ellis was right. Tim, Redfin’s real estate analyst, prepared a comprehensive analysis showing that homes listed in winter sell for more money, faster, with less risk, than homes listed in summer. The findings were so surprising that I delayed their publication for nearly a month, insisting that Tim look at possible confounding factors. After I ran out of reasons to block the report, we published it, but I still didn’t believe it.
But anyone who listened to Tim, and hung a sign in their yard this winter, is probably glad she did. Good listings have very little competition just now in most markets, and plenty of demand. Just this weekend, we sold a Portland home in 48 hours, with four offers coming in all over asking price.
This may change, as many sellers who took their homes off the market before Thanksgiving will be back on the market in February or March, after waiting the requisite 90 days for brokers to market the property as new again. But in many places now, we see a lot of demand, and not much to buy. It would be interesting to hear from real estate consumers and agents alike if your experience has been different or the same.
February 1, 2012
The great venture capitalist Ben Horowitz wrote last night about how the investors in his own startup once told him they wanted a real CEO. What struck me about the essay, which was mostly about how Andressen Horowitz helps founding entrepreneurs develop into great leaders, was Ben’s striking response to the insult: he acknowledged the investor was right, that he didn’t have the resources or skills of an experienced CEO.
None of us do, but it’s hard to admit. When, as a founder of Plumtree, I was told by our investors that they wanted a “real executive,” I thought they were simply wrong, discriminating against me because I was young, because my suits didn’t fit, because I never belonged to a fraternity. I thought about what they owed me for the past two years of blood, sweat and tears, not the performance I had to deliver over the next two years.
The difference between my reaction and Ben’s got me thinking what a miracle it was that I survived at Plumtree, and now how I’ve managed to last this long as a first-time CEO of Redfin, which I joined when it was only a few people in an apartment.
It certainly wasn’t because I knew what I was doing. And this is true of Redfin’s entire executive team. Almost all of the executives I work with today have been at Redfin for five years or more. And none of us five years ago had the skills to do the job we were hired to do.
This was mostly because anyone who had those skills would never have worked for Redfin in its early days: Redfin’s website was a Flash-based application that used its own hand-stitched map rather than Google’s, it was fully available in only one market, we had a few hundred thousand dollars in capital, and we were competing for people’s attention with national, richly funded businesses run on open platforms by some of the best entrepreneurs I’ve ever met, at Zillow and Trulia.
Naturally, seasoned executives ran in terror from us. But the Redfin team prospered because of two basic traits:
The second trait is most important. When I was nearly fired at Plumtree, I was working very, very hard. But mostly I worked hard at proving that I already knew what I was doing. This convinced everyone that I wasn’t interested in learning, and it often made me feel like a fraud; whenever I learned something, I pretended I knew it all along. Our chairman, the great investor Pierre Lamond, liked to say that “I didn’t even know what I didn’t know.”
And this is what he told me when he said I was fired.
I begged Pierre for mercy even though I knew he had a reputation for being Ming the Merciless. And the begging embarrassed him so much he looked away. Somewhere in my blubbering, I said “I’ll learn.” For the first and perhaps the last time in his life, Pierre relented. If I hadn’t got a second chance, I’d probably be a mid-level systems consultant sleeping in a Milwaukee Holiday Inn right now.
These days, it’s very fashionable to keep entrepreneurs around as executives. That’s a good thing. But what’s even better is that this has allowed entrepreneurs to be open about what they want from investors, which is the time and space to learn. If you want to learn, you can learn. And if you work 16 hours a day rather than eight, you can learn twice as fast.
Just make sure you’ve got a Pierre, or a Ben, behind you, and maybe a mentor like John Kunze or Bill Campbell too.
January 26, 2012
Just before I joined Redfin, I’d wanted to start a company but my brother got sick and I fell in love and soon I was in Seattle. What I never forgot was the lawyer who was going to help us incorporate that business, Ilan Lovinsky, a partner at Gunderson Dettmer, and brother of the great Noam Lovinsky.
Ilan may be the savviest mofo I’ve ever met, and yet he’s got soul too, which is just another way of saying he’s not a lawyer so much as the consigliere every CEO hopes her lawyer will be. He’s also a Redfin hound-dog, casing the site daily for listings.
And now today at noon Ilan’s giving a talk at Redfin in San Francisco, as part of a series we’re hosting for Redfin employees on how to run your own startup. Our goal is to attract the kind of people who will one day found a business, to keep them as long as we can, then to launch them into careers of rap-star wealth and profligacy.
You’re invited, to come in person or to dial in.
So far, the series has been one hit after another.
We’ve had Roy Gilbert — former nuclear submarine officer and head of Gmail, Google India and Grockit – come by to talk about management best practices; he explained how a Twinkie once out-rowed an NCAA Division-I oarsman.
And James Slavet from Greylock gave a five-step tutorial for dazzling a venture partners’ meeting. I went over everything you’d ever need to know about financial statements, in 45 minutes flat. And TellApart’s Mark Ayzenshtat took us deep into the science of customer profiling and re-targeting.
Now Ilan is going to hit the legal ins and outs. This may sound dry to you. But I’ve heard this talk before. In a Sand Hill-road parking lot Ilan once gave me his 15-minute guide on “how not to get f—-ed” and it was like the Businessman’s Book of Revelations.
You can come by in person, to 88 Kearny, 13th floor, in downtown San Francisco. Or you can just dial-in to a web conference:
Web: https://redfin.webex.com/redfin/onstage/g.php?t=a&d=662069306
Password: redfin
Call: 1.866.625.9936
Code: 6223346
If you’re coming by in person, please sign up here by 10:30 a.m. today so we can order lunch for you. I’ll be there with a Music-Man baton and a top-hat to introduce Ilan and slurp from his boob of wisdom. If you have a great idea for Redfin, we can chat before or after.
December 22, 2011
Well, now I feel silly. Earlier this evening, I wrote a blog post about the boycott against the pro-SOPA crowd; SOPA is the bill to stop piracy on the Internet. I said that the boycott was a form of censorship when in fact a boycott is an exercise in free speech. I was 100% wrong, moreso because I’ve argued in favor of mass movements before.
The commenters on my post, namely Mary Hinge, Chris Dixon and Sasha Aickin, are 100% right.
Why did I say something wrong? Well the whole boycott just reminded me of my days in college, when I saw very strident people make it very difficult for someone to express an opposing view. Even though I was sort of a wanna-be hippie myself, I always empathized with the guy being shouted down by the other hippies.
The issue back then was political correctness. Yes, I am one of those people who believe that the words we use to describe people of different races and sexual orientation matter, but still I’ve never been comfy with the idea of political correctness. The pressure back then somehow felt to me like a violation of free speech, when really the pressure itself was a part of free speech.
And now it sometimes feels to me that we are using far more powerful levers, on Facebook and Twitter, to shout down the pro-SOPA people. It is totally legit, especially since they have pretty big levers too. I still think we’ll regret that we didn’t engage in a more civil way. Something should be done about piracy. No one who built the Internet seems to have serious intentions of doing it. Any action the government takes will be despised.
But businesses and financiers have the right to organize together to crush a bill, just as today’s Internet companies and venture firms are now doing, alongside the studios and producers on the other side.
I apologize for being stupid, but I wasn’t trying to be provocative. I was sincere in my stupidity, if that makes any sense. I have posted many, many times about Internet piracy because it bothers me more than most people, and posted even more often arguing for moderation generally, because I’ve lately been feeling like the whole world has gone mad.
But I was still wrong about whether the boycott was a violation or a shining example of free speech. It’s a shining example. If you have ever gotten into an argument in which you hoped your unassailable logic would slay the will to live of the other side, please print this blog post out. My will to live has been slain for the moment, and I can’t delete it so I just have to eat it.
December 22, 2011
UPDATE: I was wrong in this post in saying that a boycott stifles free speech. A boycott is a form of free speech. I retracted that argument in a subsequent post a few hours later. *sigh*
The opposition to the Stop Online Piracy Act (SOPA), the bill before Congress to punish websites that publish pirated songs, movies and essays, has united behind the theme of free speech.
But now in a turn worthy of the pigs in Animal Farm, Paul Graham, Chris Dixon, Fred Wilson and others are organizing a campaign to intimidate and silence those who support the bill, retaliating against law firms, journalists and investors alike.
Who knows who was the first to sharpen a stick at both ends, but many were clearly eager to join the fray. Joyce Kim encouraged entrepreneurs to fire lawyers who support SOPA. Chris Dixon wondered aloud if journalists from pro-SOPA newspapers should be excluded from press events (update: Chris in the comments has made clear that he wasn’t saying he was in favor of excluding journalists from anything). Paul Graham just joined the mob, immediately agreeing to block pro-SOPA investors from getting access to the startups he advises.
To which I can only say: please add me to the black-list. Not because I support the bill. As I’ve written before, it is flawed in exactly the way most democratic legislation is: it’s a dog’s breakfast of competing interests, force-fed to the innocent and guilty alike.
I just don’t like bullies. Especially hypocritical bullies. If you actually believe in free speech, and not simply the free distribution of other people’s intellectual property, you should let journalists, law firms and investors exercise their rights to it alongside your own. And yes, working on a bill in an open, democratic process is a valid expression of speech.
Instead, we are threatening anyone who disagrees with us. Like all ideologues, we have convinced ourselves that the other side is a wealthy special interest as if we are not very wealthy, very special and very interested. We imagine that we are trying to protect the Internet only for noble purposes, but it’s also true that we stand to make billions of dollars from the Internet staying just the way it is.
And like all violent ideologues, we have convinced ourselves that the issue is so pressing it demands extreme action. The stakes in this case are usually described as “breaking the Internet,” when in fact it’s already broken: not for the folks profiting today from the Internet, but for all the folks who create the beautiful books, articles, movies and music that the Internet is so often used to steal.
What we need is a discussion about how to make the Internet work for artists, software companies and regular folks alike. No one in software seems interested in that conversation: more than a month ago, we asked everyone opposed to the bill to suggest a better way to prevent piracy, and still no one has.
Now, we have taken this a step further. Not only are we refusing to engage in a constructive way, we are threatening anyone who engages in a way that is disagreeable to us. When no conversation is possible and no action from us is forthcoming, we can hardly blame the Luddites, bureaucrats, idiots and meddlers for being ill-informed or hasty.
Over the holidays especially, we need to stand down from the crazed ideological stances and self-interested politics that are ruining this country, and work together with people we don’t always like to figure out how the Internet — and everything else — can be made better, not worse.
November 15, 2011
Fred Wilson, Brad Feld, Reid Hoffman, Evan Williams and Dennis Crowley are launching a campaign this Wednesday to stop the Protect IP bill recently introduced in the Senate. They’re some of the smartest people thinking about the Internet today. But sometimes I think they’re part of the problem, not the solution.
The bill would make it illegal for Google, Bing or possibly even Facebook and Twitter to host links to websites like PirateBay that have “no significant use beyond copyright infringement.” And the bill would remove these pirate websites from Domain Name System (DNS) servers, so you couldn’t visit the sites directly without knowing their numeric Internet Protocol (IP) address.
The purpose of the bill is to make it more difficult to download music, movies and other intellectual property without paying for it. The opposition has decided this is censorship, and is launching a “Stop Censorship” campaign on “Stop Censorship Day,” which is tomorrow.
To be clear, I don’t like the bill either. The Electronic Frontier Foundation has outlined some of the main issues: it could limit innovation around content-sharing and social sites, which would have to develop ways to identify stolen content. It doesn’t protect companies that make reasonable efforts to remove stolen content. It needs to ensure a due process for removing a website from DNS servers, which otherwise sets a dangerous precedent.
But this bill, however flawed, isn’t censorship. Censorship is when governments or corporations prevent someone from expressing her own ideas. Theft is when someone takes someone else’s work. Copyright laws exist to prevent theft of someone else’s work. If a thief stole my bicycle, or even copied Redfin’s website wholesale, and then claimed her act as a protected form of self-expression, I would punch him in the nose. With or without this bill, you can say whatever you want on a website as long as you don’t play someone else’s song or movie without permission.
Reid and Fred understand the difference between free expression of your own ideas and theft of someone else’s ideas, and they’re intelligent enough to think about more constructive ways than the current bill to stop musicians, writers and movie-makers from getting ripped off. I wish that was their focus. But protecting artists hasn’t been their primary concern, or really the concern of anyone involved with creating the Internet.
Every since I downloaded the Anarchists’ Cookbook from an online bulletin board at the age of 11, the Internet has had a culture of theft. The difference is that now our most respected thinkers have given the grown-ups among us permission to steal. Friends of mine who would never take a Star Wars DVD from Target routinely download movies without paying, and they cite people like Mike Arrington for his approval.
Fred Wilson, to his credit, has invested in Kickstarter, which helps artists get funded through old-fashioned patronage. In return for providing a few hundred dollars, you can get early access to a new song or be acknowledged in the first edition of a new book.
This is a wonderful concept, but it isn’t going to give artists access to large-scale commercial markets so that they can thrive on their own. Anyone who has studied medieval patronage knows how twisted and kow-towing the patronage system can be. It gave us great churches, but also the image on the Sistine Chapel of Michelangelo’s soul being hung out to dry.
Michael Arrington has suggested that musicians tour endlessly, selling t-shirts at their shows. Endless touring is what killed the money-desperate Charles Dickens, who never forgave America for refusing to enact copyright laws in the years when most English writers lived in England. It was decided at the time that the printing-press business was more important to America than the novel-writing business. As now, the rationale was jobs rather than justice.
I don’t really care whether the Internet industry is more important to the American economy than the movie or music business. I care about what’s fair. As capitalists, our goal should be to create a fair market, which lets artists prosper from selling their work; this is what Apple and Amazon are doing. And as creators ourselves, our sympathies should be with the artists. We can support freedom of expression and stop theft but only if we try to solve this problem in a thoughtful, urgent way.
Otherwise, we’re just like the industrialists criticizing indiscriminate government action on pollution when we ourselves have refused to engage, all the while profiting from each year’s delay. Do you think the government has any idea how efficient a coal plant or an automobile can be? Neither does it understand how the Internet works. It’s impossible to make an industrial product without harming the environment, and it’s impossible to make a social or search website without creating the possibility of online theft. But together we can make things better than they are now.
We just have to try. I hope when folks post their protest on Wednesday that we also propose a way to protect intellectual property as well as innovation and genuine self-expression at the same time. Otherwise, it’s hard to blame the government, after years of standing aside, for acting in less informed, thoughtful ways.
November 13, 2011
Some of the best entrepreneurs are engineers. If you can design and build new products, all you really need is an idea.
But many engineers believe that you need much more: the business skills to read a P&L, file articles of incorporation, raise money, get press, meet customers, manage employees, and all that other jazz.
I tend to think that’s the easy stuff. You can pick up some of it as you go, and hire other people to help you with the rest.
To convince you this is so, Redfin has put together a Startup Skillz program in San Francisco for our own folks to learn the tricks of the trade when starting a company, with lunchtime speakers talking candidly about what has and hasn’t worked for them.
And now we’re inviting folks from outside Redfin to attend these talks, too. The speakers we’ve scheduled so far include:
- This Tuesday, November 15, 2011: James Slavet, Greylock Partners, “How to Pitch a Partners’ Meeting, The Best and the Worst of What I’ve Seen“
- Wednesday, December 14, 2011: Paul Willard, Chief Marketing Officer at Practice Fusion, “Moneyball Marketing: Customer Acquisition At Scale“
- Tuesday, January 10, 2012: Roy Gilbert, CEO of Grockit, “The Great Exhilirator: Going From Engineer to Executive“
- Thursday, January 26, 2012: Ilan Lovinsky, Law Partner at Gunderson Dettmer, “Law & Order, Special Victims Unit: How Not to Get F***ed When Starting a Company“
Each talk runs from noon – 1. To sign up, just click the link. We’ll also rig up a dial-in for our Seattle team.
Earlier this year, we offered a more extensive curriculum on the same theme in Seattle, and we’ll schedule more San Francisco talks next year based on what worked before.
The reason we’re doing this is because it’s important for us to be the best place in the world for an engineer to work, so we can have the best engineering team.
We especially want to make Redfin a good place for entrepreneurial engineers to work: these are the folks with the creativity and confidence to pursue their own idea, with the poetry to make it beautiful, and with the passion to rally a whole team to get it out there fast.
The talks could of course backfire. If making Redfin a better place for entrepreneurial engineers to work also means making Redfin a good place for those folks to one day leave, too, so be it.
As Augustine once said in his prayer for chastity, give us Redfin spinouts, but not yet! To sign up for the talks, just click the links.
November 7, 2011
At last Thursday’s SIC conference, Tricia Duryee asked why online real estate companies have prospered in Seattle. One panelist cited low home prices, which let young entrepreneurs buy homes they could never afford in Silicon Valley, and from there begin to wonder how real estate could be better. Another suggestion was that HouseValues’ roaring 2004 IPO drew the rest of us into the game.
I said one factor had to be that Redfin invented map-based listing search, which rocked Seattle for a few years before we raised capital to expand. Another panelist cited the theory that industries clump together because the industry’s craftspeople clump together. Even though this panelist himself recognized that building an online real estate website requires nothing more specialized than general website-building skills, it got me thinking about the skills Seattle has that no one else does.
What great companies have been built here? Any list would have to include Amazon, Starbucks, Costco and Nordstrom. All are still run by their founders or founding families. And all of those people are great merchants, with a fanatical commitment to perfecting the customer experience in every last detail. This is a very specialized skill indeed.
It’s amazing, when you think about it, how many of the world’s greatest merchants live within two miles of where I’m typing this note. Jim Sinegal is notorious for stalking the Costco floor, correcting his staff on the price history and sales volume for a key lime pie, dismissing banners and other marketing sass with the refrain, “we don’t need that sh** here.” This mentality has made Costco grow revenues faster even than Microsoft, but whom do Seattleites talk about more?
The Nordstrom family is famous for happily accepting a customer’s return of car-tire snow chains when the store doesn’t even sell chains. This is the reason that Nordstrom is perhaps the only great retailer to remain relevant and revered during the e-commerce revolution.
And then there is Howard Schultz, who was the first to figure out that the reason a mom would load three kids into the car for a coffee-shop trip wasn’t just the coffee, but how the shop made her feel when she met her friends there. To this day, whenever Starbucks executives go into the field they carefully inventory every detail about each store: its parking lot, its sign, its bathrooms.
I don’t even have time to talk about Mark Vadon, the co-founder of Blue Nile, who is a beautiful beast of a merchant. But we have to account for Jeff Bezos, the “giant-brained alien” with “a tangential interest in human affairs” who runs Amazon. No one has been more relentlessly focused on perfecting a website or an entire operation than Bezos, the Captain Ahab of customer experience. The result is an army of engineers with an unusual passion for understanding the customer themselves, who could start their own Amazons if there weren’t making so much money at Amazon itself.
I have learned from chance encounters with folks at all of these companies; a lunch with a Nordstrom bra salesperson gave me a way to think about field bonus plans that put the customer first. An hour with Costco’s CFO convinced me to focus on maximizing customers and profits, not profits per customer.
Thirty minutes each with Blue Nile’s two co-founders were what first woke me up to the idea that even a website-company should answer the phone on the first ring. Coffee with Starbucks’ COO reminded me to focus on how the experience felt, not just what the company did. None of these meetings would have occurred outside of Seattle.
Consider the common attributes of these businesses, and ask yourself if this could become the DNA of 100 new Seattle-based startups:
- culture-based service, where everyone from engineers to accountants takes the customer’s point of view
- value-driven, where disruptive economics, relentless cost-discipline and scale save consumers money
- commerce-oriented, with an instinct for getting consumers to whip out their wallet, not just spend time on a website
- operationally-intensive: unafraid to have cars, call centers, distribution points, employees in many cities
The reason this can be our thing, the thing that we put into the water from which everyone here drinks — is that many places don’t even want it to be their thing. A new vogue for customer-service notwithstanding, Silicon Valley has long preferred high-margin media businesses that scale as easily as you can spin up new servers. Manhattan and LA are even less likely to get down and dirty with the customer.
And yet we still wonder how Seattle can become more like Silicon Valley. Having started a Silicon Valley company, I can promise you it will be a long struggle to keep up with the hyper-kinetic restlessness, the elaborate network of ideas that draw companies like Box.net from Seattle to the Valley.
But the Valley will never have the blue-collar commitment to customer service that Seattle does, or our best companies’ niggling attention to detail. If you don’t believe me, just ask Tony Hsieh, who had to move Zappos from the Bay Area to create the service-driven culture that made Zappos famous. “Anyone in San Francisco who took a job in customer service,” he once explained to me, “just saw it as a stop-gap until he could find something supposedly ‘better.’” It isn’t a coincidence that many Zappos folks now work in Seattle too; it is a law of gravity.
As commerce becomes popular again in mobile and web-based businesses, my hope is that more Seattle startups will follow in these great merchants’ foot-steps. Every region has to be true to itself. LA startups aren’t going to build new databases or web infrastructure; they’re going to build new entertainment companies like Hulu. Finance will probably be re-invented in Manhattan, not Menlo Park. And customer-service companies belong in Seattle. It isn’t our only heritage, but it’s certainly one we can recognize and embrace.
November 4, 2011
There has been over the past 18 months a Cambrian explosion of startup life, many incubated by angels and seed funds. And now the process of natural selection is beginning again.
I got back from the Valley Thursday and what I gathered from the people there is the same as what I’ve heard here: that many seed companies are having a hard time raising money.
Yes, second rounds are always hard, after you’ve built the product but before it has made much money. The difference is that today’s first-round investors are angels and seed funds, which sometimes aren’t even set up to participate in many follow-on rounds.
What’s made that worse is the market is becoming more cautious around post-seed deals. Everyone criticized the Wall Street Journal’s Pui-Wing Tam for being the first to notice a cash-crunch for seed-stage companies seeking follow-on rounds, but I think she nailed it.
Some early-stage entrepreneurs are now clawing at the walls, begging supporters for money and time. Many investors never promised more money or much time. The premise of some seed investments, especially from larger funds, is “optionality.”
Rather than making a serious commitment to a handful of seed-stage companies, larger funds are buying the right from many startups to lead a later round in the hope that one or two of them catches on with consumers.
One reason for this is that consumer internet investing has become a hit-driven business. Who could pick the next Twitter? When the question is one of tickling consumers’ fickle fancy, rather than a rational process of evaluating technology, it’s a crapshoot. So some investors play at the dollar tables, and roll the dice all night long.
This approach has led to the creation of more new businesses over the past 24 months than the Valley has likely ever seen. It has given entrepreneurs a shot at success many never would have otherwise gotten.
And some don’t need any more capital or advice beyond a seed round of financing. But I did, especially when I was first starting out.
I co-founded a company, Plumtree, that raised seed capital from Sequoia. Kirill, Joe and I closed the round, walked out to an ATM to check our balance, and began laughing hysterically.
Things went downhill from there. A co-founder left. Nobody bought the product. And we ran out of money. I felt like I was digging deeper and deeper into a hopelessly dark mine, looking for gold.
Then Pierre Lamond, the Sequoia partner on the deal, began working out of our office, acting as the virtual CEO. Pierre made a point of being there the day one of his other companies went public. We looked at a news photo of all the smiling people, who seemed to be living in a gated community, on a planet I would never visit. Then Pierre said “that company was once even more screwed up than you are.”
I clung to that statement through Plumtree’s early days, and returned to it again when Dave and I were working out of an apartment trying to figure out how to make Redfin work .
To find a new lead investor to join Sequoia on Plumtree’s board, Pierre drove me all over Palo Alto and Menlo Park in his car. It was the first time I’d visited the Promised Land of the Valley itself, and it was nice to see it through his windshield.
I cherished the conversations we had on those trips: about how Pierre founded National Semiconductor, or built the Cray supercomputer. He asked me what I enjoyed doing outside of Plumtree and I said “reading.” He saw what a little stress-monkey I was and said I should spend a few minutes reading a book every night; it’s advice I still try to follow.
At each stop, Pierre promised he would work closely with the new investor on Plumtree, and possibly on other deals too. I was then released by my nervous handler to perform in the conference room like a zoo animal on The Tonight Show.
You may think it wasn’t really a fiasco, but one detail should suffice to convince you it was: at one point, I lugged a full-sized server around because we couldn’t get the product to work on a laptop, or over the web. I tried to get the server going under the table before the partner came into the room but sooner or later he always asked, “What is that humming?” It was the sound of a thousand memory leaks spinning up the disk drive and every other internal gizmo into a panic.
That anyone gave us money was a miracle. But once we get the money, we prospered, eventually becoming one of only two technology companies to go public in 2002. I wondered why Sequoia went to such great lengths to get Plumtree funded when it would have been easier to write off the few hundred thousand dollars invested in our company.
And the simple answer was that Sequoia cared about its reputation and stood by its companies. Someone later told me that a Sequoia partner liked to say, “We don’t want you staggering around, with your fly down and a drink in your hand, telling the whole world ‘We’re a Sequoia company.’”
If Sequoia hadn’t saved us, I would have decided that my startup fling was folly. Plumtree would have just disappeared, and everyone would have thought it was a terrible idea. Redfin wouldn’t have the executives it has now, and neither would AdMob, Xoom, Atlassian, Zendesk, Piazza, The Climate Corporation or any of the other companies now being led, in part or in total, by Plumtree people.
It seems a shame to me that few of today’s seed-stage entrepreneurs will get the same support we did. I promise you, we were even more screwed up than you are.
October 31, 2011
The Occupy Wall Street protests once seemed so futile to me. You just can’t stop smart people from making money, and I’m not really sure why you’d want to. But it turns out you can persuade those people to make money by doing something useful beyond lining up on either side of a financial bet. They can instead build software, or reinvent real estate.
I’ve spent 15 years making that case, often to the Winklevoss types Wall Street loves to hire: folks from elite schools, with high grades, a history of leadership, strong math skills, a broad education. Every year Wall Street paid more, with Bridgewater now offering college graduates $130,000, and every year recruiting got harder.
The same starry-eyed idealists who spent the first third of their life digging wells in Tibet and marching for every crunchy cause would chuck it all after graduation to run numbers for a bank. But that is changing this year.
Redfin is interviewing at least a dozen Ivy-League students, many studying the disciplines of math, philosophy and economics that Wall Street loves, who refused even to consider finance. Many worked on Wall Street last summer, but recently decided that wherever their career takes them next spring, it won’t be to a hedge fund.
I’m sure New York-based start-ups, venture capitalists and even management consulting firms are seeing the same trend: recruiting against Wall Street got much easier this year.
What changed? Part of it may be “The Social Network,” which made a sort of poetry out of writing software alone. Part of it may be the beatification of Steve Jobs. But at least part of the reason has to be that Occupy Wall Street has stigmatized a career in finance. The first slide of Redfin’s standard talk for Ivy League campuses begins with the headline, “Consider the Alternatives,” and shows poor Lloyd Blankfein squirming before a Congressional lynch mob.
These are the images that matter. Previous critiques of Wall Street failed because they were rational: Tom Wolfe’s Bonfire of the Vanities, Oliver Stone’s “Wall Street” and Michael Lewis’s Liar’s Poker nominally deplored Wall Street’s excess while reveling in its glamour. Who after all would you rather be, the virile corporate raider Gordon Gekko or the aging union boss played by Martin Sheen? Believe me, no one at Yale in the ’80s seriously considered a life at Bluestar Airlines. But now many I’m sure want to be like Mark Zuckerberg in “The Social Network.”
The Occupy Wall Street protesters are finishing the job, re-casting Wall Street’s Masters of the Universe in a more disdainful light. Like the animal-rights activists who splatter fur-wearing women with blood, these protesters are people you just don’t want to walk by every day on your way to work. No matter how easily you can dismiss the logic of their arguments, their presence might make you feel dismayed, shamed, tainted, unsavory. How many 21-year-olds are ready to sign up for that?
Probably not as many. And this I think will be the most serious outcome of the Occupy Wall Street movement. It won’t result in any legislation that stymies Wall Street’s essential money-making powers, but it may in fact divert some of our best and brightest away from Wall Street and toward careers creating more useful products, and more jobs.
Though I respect the work that bankers do, and would far prefer that America rather than China or the United Kingdom dominate the financial services market, I think having more of our best and brightest work on Main Street rather than Wall Street is is a good direction for America, and I’m glad to see it happening now. You can’t fight the beast, and in many cases we shouldn’t try to anyway, but maybe we can starve it for a little talent.
