If you’re just wondering what happens when a software CEO attends an all-girls camp, start at :45.

The idea for the talk came from The Matrix, where the guru Morpheus tells a young software developer to “take the red pill” that will return him to the real world, which he is of course expected to save.

Unsurprisingly, software people love this movie. We all want to believe we can save the world. But almost none of us wants to take the red pill.

Why not? If you’re a software entrepreneur who invents a new way to animate movies, isn’t it more fun to be Pixar than to sell software to Pixar? You can ask the same question about  Tesla and cars, Climate Corporation and farmer’s insurance, Uber and a transportation system, Simple and banks, Xoom and money transfers, Redfin and Realtors.

This presentation makes the case that software entrepreneurs can do anything in the real world: we can build better schools and  hospitals, for example, so long as we start working with teachers and doctors. By the same token, the next generation of airplane manufacturers, oil exploration companies and pharmaceutical laboratories will all be hybrid companies, started, led or powered by software entrepreneurs.

The world, not just the web, will get better as a result.

Many thanks to Pivotal Productions and all the Tedx Windy City folks for asking us to participate!

The post Redfin’s Tedx Talk: Take the Red Pill appeared first on Redfin Real Estate Blog.

“Well,” I said, expecting the conversation to take a better turn, “I like to think I know a good egg when I see one.”

“That just means you have no idea what you’re looking for,” Sean said. “Nobody can tell just like that if someone’s going to be a good hire. You have to work at it.”

It’s a problem I think about all the time, since I interview someone almost every day of my life. Google is famous for systematically tracking which interviewers are better at predicting the candidates who will thrive but a friend there told me the company concluded no one is much better than anyone else.

This conundrum came to mind at a TechStars talk last week when an engineer asked me how she could hire good marketers without knowing much about marketing herself.

All of us start from one area of expertise, but our first challenge as an entrepreneur is to hire folks from the other areas. Engineers worry their hard work will be overlooked because a marketing guru can’t deliver the buzz. Business folks entrust overseas coders to bring their million-dollar idea to life.

It’s a crapshoot, but you can raise your odds if you treat everyone the same, using the interview to dig into her work. The problem is, most engineers and business people interview one another like the Europeans in “Barcelona.” As one American in the movie gleefully reports to another, it never occurs to a Spaniard that an American is just being an ass; instead they just assume “it’s some national characteristic.”

That kind of deference in an interview is your enemy. Once you hire someone, you have to defer to her expertise, which means that before you hire someone you can’t. Engineers who can’t explain ideas clearly in the interview usually don’t code clearly. Marketing folks who seem slick in the interview won’t represent what you stand for in a genuine way. Fortune-500 guys who only talk about the big picture won’t get nitty-gritty about the work you need done.

Be Stupid
I used to nod knowingly at candidates slinging the most outrageous baloney, just so I didn’t look stupid. Now, if I don’t know what Node.JS is, or why someone would buy Windows Live Mesh, or how ad re-targeting works, I say, “I’m sorry, can you explain that to me?” And then, rather than accepting an explanation I still don’t understand, I usually ask a follow-up question: “Can you explain it to me like I’m a four year-old?”

Being stupid gives the candidate a chance to be smart: the candidate has to understand an idea down to its bones to explain it in the simplest terms. My first manager, David Lichtblau, saw on my resume that I liked physics and so asked me in my interview to explain special relativity to him, handing me a marker as if I were going to jot out the math, or depict a Fitzgerald contraction graphically. He told me the last candidate had done general relativity.

Halfway through, I realized with a flood of relief that he himself hadn’t brushed up on relativity, so I could tell him anything. But he was too tenacious for that. By the end, I found myself trying to account for the shape of the universe using the new bogus law of physics I had concocted on his white board. It took a long time, and I tried to avoid it at all costs, but what that finally forced me to do was think.

Hire Smart People Everywhere
What’s most impressive about Dave’s tenacity is what he was using it for: to hire someone to document and test a programming interface no outsider ever had, or ever would, use. Someone at that first startup had a saying, “Hire smart people everywhere,” to which my new boss gleefully added, “even for your job.”

In reality, deference can be a form of hopelessness, based on the premise that someone in a role other than yours doesn’t need to be smart, or couldn’t possibly be smart. Wrong. You can expect a human resources professional, an accountant, a salesman, a publicist, an engineer to be brilliant, and brilliance in any field is self-evident. More important, you can always judge the quality of someone’s energy, whether she has soul, how she makes other people feel. If you’re not excited about someone, regardless of her role, pass.

But most hiring managers think they have to settle for the stereotypes: a pretty face for PR, an accountant who lost his sense of curiosity in a tragic medical accident, an HR bureaucrat. These are the atoms of your being as a company, and if they are mediocre, the company will be mediocre.

“Show Your Work, Please”
Deference also prevents you from seeing someone’s work. There’s a tendency for interviews to be about someone’s work: you talk about the passion rather than showing actual passion. The first lesson I learned in interviewing was to focus on specific examples rather than generalities. You can’t ask someone if she’ll work really hard, but you can ask her to tell you about a time she did: how long ago was it, how long did it last, what did she get done, how does she feel about it now?

But even more important is to ask the candidate to do the work, not just talk about it. Ask a publicist to write the first paragraph of a press release, or a product manager to develop a feature idea, an agent to write a contract, or a salesman to pitch you on his last product. Coding challenges are widely accepted in engineering interviews – we’ve had engineers turn us down because our coding challenges weren’t hard enough — but are often viewed as cruel and unusual elsewhere.

Our chairman, Paul Goodrich, asks would-be executives at Redfin to present their point of view to the entire board. I apologize to big-shot candidates when asking them to do this, but really I love it. You want an interview loop to be as close as possible to someone’s first four hours on the job.

For a candidate who loves her work, this request won’t be onerous or off-putting; it will be exhilarating. At one nadir of my professional life, I interviewed for a job as a bicycle messenger. I showed up in my good outfit. The hiring manager, a large 50-something with a gigantic ash-tray in front of her, was the dispatcher, routing messengers to pick up packages. To start the interview, she leaned back and looked me over with an appraising eye. Then she said, “Can you run in place?

“Here?” I said. “Now?” She nodded gravely. I began to run in place. She returned her attention to her black-and-white portable TV, looking up after two minutes to see that I was still enthusiastically hopping around. “You’ve got the job,” she said.

Best interview ever.

The post All You Have to Do Is Ask: How to Hire Smart People Everywhere appeared first on Redfin Real Estate Blog.

He was in flip-flops and a t-shirt. The CEO was wearing slacks and a button-down shirt. The chairman looked at me once to say “excuse me,” then laid flat on the table a notebook of product sketches.

I gathered that an experimental change to the website had lifted revenue and so now the change would become permanent. “All is well!” I thought. But the co-founder wanted to know why the change wasn’t being expanded, so that its effect was five times bigger.

Challenging one another to grow faster is an essential dynamic. When Redfin was first raising money from Greylock, Reid Hoffman’s only question was about why we couldn’t grow faster. I bristled at the question until Redfin’s Sasha Aickin explained that it wasn’t a statement of dissatisfaction so much as a genuine question.

Once a company has figured out who its customers are and where to find them, what will be the factor constraining its growth? When a retail business first becomes a hit, for example, it can still only grow 30% per year because it can’t open stores fast enough. Redfin is, in some ways, like that because we have to hire local agents; in other ways we’re not.

But mostly in the virtual, venture-funded world, a major constraining factor for mid-stage companies is audacity: no one even asks Reid Hoffman’s question because the company is already moving so fast. At many companies, the designers would say it was enough simply to accept the website change, not to take it to its logical extreme.

With any big group, there is a tendency to compromise, to consolidate gains, to revert to the mean, to be like everybody else. In Greek tragedy, the chorus is the conservative voice of the community, and the chorus is always right.

But a startup isn’t always a tragedy, so as a CEO you’re always trying to figure out when you should be listening to that chorus, and when you should be listening to yourself. A co-founder can come between those two voices, walking into the coffee-shop of your mind to tell you that your crazy convictions should be crazier, or that they should be set aside.

I have read many times that any equity split between partners is fine except 50-50, just because of the power struggles 50-50 creates. This is often wise advice, particularly when a founder has pitch-perfect instincts and a dominant personality. But what most CEOs really lack for when running a new company is a partner, not a subordinate. And the result of a partnership at its best is not less conviction, but more.

Just look at the co-founders of Atlassian, a massively profitable pre-IPO company with over $100 million in revenues. In the baloney-gorged world of enterprise software, only Atlassian has always refused to hire any salespeople, instead driving revenue just by making its product easier and cheaper to buy. Its corporate motto, printed in the lobby of every office, is “Don’t f*** the customer.”

Where else did the co-founders get the conviction to be different, if not from each other? I recently had dinner with the two of them, equal partners after 10 years in the business, and at 9 p.m. stood up to catch a flight. What surprised me most about our night together was that they didn’t want it to end: “we’ll just stay here,” one said. “We have a lot to catch up on.” It was like watching an old couple steal second base in the back of a movie theater. They were so engrossed in talking to one another that they didn’t notice Francis Ford Coppola in the booth four feet away.

The beauty of a true partnership is why I actually love to see a co-founder with the same stake as the CEO. Redfin has at times been lonely, mostly because I pushed so hard that others could only push back. Redfin is much, much better off because it isn’t that way now.

When I get to the empty basement of our parking garage for the start of my bicycle ride home from work, I always feel a little blue that I didn’t get more done. But in the earliest years, I felt something else too: a strange, flooding feeling. For a long time I didn’t know what it was, but recently I realized it was relief, that I wasn’t a center of attention, someone always trying to sway others or being swayed.

Now as I pedal out of the basement and into the sudden sun of a Seattle summer, I often think about the co-founders in their own, private coffee shop, two people who had created their own solitude. The French say that newlyweds are “seulement a deux,” alone just the two of them. It’s probably a way that only true partners can be.

The post Alone, Just the Two of Us appeared first on Redfin Real Estate Blog.

I thought of him recently because some folks from Mayor Mike McGinn’s office recently invited entrepreneurs from around Seattle to contribute ideas to a threaded discussion on how to nurture Seattle’s technology scene. We’re getting together Tuesday.

Some of the best ideas have been about education, especially Amy Bohutinsky’s proposal to create a technology-focused university campus at Magnuson Park. But others focus on lowering taxes for startups, or providing free office space and Internet access. Further south in San Francisco, Twitter, Zynga, Square, Uber and AirBnB have been asking for special tax breaks and rule concessions.

I for one am glad to see government and business working together. I don’t have much patience with folks who simply view business as evil, or, for that matter, who view government as evil. And I agree that Seattle’s taxes on revenues rather than profits aren’t especially helpful to new businesses of all stripes.

But I’m always surprised when high-tech companies lobby for tax-breaks or special treatment, a new phenomenon in an industry long remarkable for its spirit of self-reliance.

After all, Mark Zuckerberg flew over 30 states with lower taxes than California to locate Facebook’s headquarters in Silicon Valley — a decision now costing Facebook and its employees $1.5 billion in taxes. If he had to do it all over again, Mr. Zuckerberg has said he’d stay in Massachusetts, another notoriously high-tax state.

The reason of course that Mr. Zuckerberg prefers states like Massachusetts and California is mostly because of their abundance of educated citizens. When local governments and universities fail, Taco Bell gets more employees. When they succeed, Twitter gets more employees. Tax breaks and rule concessions don’t have much to do with it.

And venture-funded startups can afford the taxes. We don’t need special treatment from the government, because we’ve already already got it from computers and investors. A thousand years from now, historians will marvel that the cost of capital hit historic lows sometime around 2012.

This is why I have a hard time with the usual line: that startups deserve special treatment because we play a special role in creating jobs. If AirBnB is such a great deal – and let’s face it, it really, really is – then the people using it to rent rooms should be able to pay the tax that San Francisco levies on tourists who stay in every other type of bed & breakfast or hotel.

If one of my favorite online services, Uber, believes the rules that govern taxi medallions are twisted and wrong – I’ve met dozens of immigrants who have saved their whole lives to buy one, and dozens more running the most desperate gypsy cab outfits without the benefit of a beautiful iPhone app — then let’s dispense with medallions entirely. When anyone, not just Uber, can offer door-to-door service without a license, believe me, consumers will benefit.

And if Amazon is going to become the world’s largest retailer, it’s going to have to charge its customers sales tax, just like all the bookstores and Best Buys it has put out of business. I will happily pay it.

The idea of fairness, which studies have shown even a dog can understand, is so powerful that most writers sidestep it entirely, arguing instead that hot startups can make the rules, even unfair rules, because they’re the ones with the money. This is the take-our-toys-and-go-home argument that the great Sarah Lacy has, with her usual panache, perfected:

You want to say companies [like Twitter and Zynga] are greedy and just not “paying their share”? Fine. Then if you believe they are greedy, believe they’ll move. Do you want the jobs or not? Because a neighboring city will take them. Any city in the country would take them.

The problem with Ms. Lacy’s tough talk is that startups aren’t actually that tough. As the co-founder of one of the first-generation San Francisco startups that went public, and the CEO of another company with a big San Francisco office, I know the costs and benefits of staying in San Francisco as well as anyone. Yes, Ms. Lacy is right that half of San Francisco’s Kafkaesque laws should be thrown out; but even if they aren’t, I am certain that Twitter, Redfin and other growing startups won’t move.

No founder considers the tax climate when deciding where to start a company, only where he and his fellow engineers and product managers want to work. And once a company is up and running, no one except Eduardo Saverin would move the team just to save on taxes. If Twitter absconded to Burlingame or Pleasanton, half the company would quit rather than commute.

A business-friendly government like those of mayors Ed Lee and Mike McGinn can certainly make cities more business-friendly, but the trend today is already their friend. Now that so few technology companies actually manufacture chips, wafers or gadgets — and now that money is cheap, recruiting is paramount, and rent is a tiny fraction of a startup’s overall costs — we are entering the age of startups and the city, not the suburb.

If you want to hire young, brilliant people, especially the designers now in shortest supply, you have to be in a city, or operate a private shuttle service to and from a city. We could dismiss San Francisco as a fluke, but just look at the startup scene in New York. Startups are in cities because that’s where the smart people are, and the startups are willing to pay for it.

My real issue with our demands of government, however modest those demands may be, is fundamentally aesthetic. At a time when some cities can’t pay to pick up the garbage and Facebook went public for over $100 billion — you hear charges that Occupy Wall Street is simple class warfare, but if it were, someone would be Occupying Facebook even as we speak — why ask for more? The whole reason I was drawn to Silicon Valley was that it seemed like an enclave from a culture of entitlement. Everyone else complained about something at the school I went to, U.C. Berkeley, but startups actually changed it.

Now we characterize anyone who opposes our request for special treatment as participants in a sinister lobby, and cast ourselves, the economy’s primary beneficiaries of state-subsidized education – and the controllers of the most powerful communication channel in world history — as powerless. It’s easy to get in the habit of nursing injuries and sticking your hand out, but we’ll be better off if we avoid it.

Some day, I hope technology companies can invite governments to a forum, asking not what our country can do for us, but what we can do for our country.

The post Since When Did We Become a Lobby? appeared first on Redfin Real Estate Blog.

Before even looking up, I responded: “WHY DON’T YOU GO F*** YOURSELF?” Then I saw my neighbor, still so stunned he hadn’t quite erased the jolly, just-joking expression from his face, sitting behind the wheel.

My wife later reminded me that since our street diverts cars one block to the north and two to the south, I didn’t even have to look up to know that the only possible target for my bizarre spasm of aggression was someone I’d see every week for the next decade.

When you think about it, your whole life is like that street, much shorter than you once imagined, almost entirely populated by people you’ll meet over and over again.

But for a long time, I didn’t think about it. Until I was 15, my twin brother and I began every fall term by apologizing to our assembled friends for the way we were the year before, as if the coming year could make everyone forget the fleas we occasionally picked up from our dogs, or our tendency to yank on one another’s headgear in tussles.

It wasn’t until I was a hiring manager who called job applicants’ references that I considered how long people would remember all the ways you act up as an adult. I began to reflect on my greatest hits. It was like hearing your own voice on an answering machine, except instead of taking 30 seconds it seemed to take 30 years.

I now see amazing job candidates, some better qualified to run a business than I am, dismissed with the slightest gesture by some dude we dug up from LinkedIn. “Can you send us a few thoughts about working with Jerry?” we ask in a note. The message back makes the rest a formality: “Can I call you instead?”

When you’re younger, you never wonder what would be said about you in such a phone call. The whole world is a vast frontier, a life without consequences. You rage through it like an instinctive animal. If you think you’re good at something, especially at a software start-up, you let everyone know it.

But then you get to the end of the street and have to double back again.

The post Life on a Short Street appeared first on Redfin Real Estate Blog.

We have, I told our investors, given away $100 million because of my irrational belief that

1. Redfin was put on this earth to make real estate better, and that
2. One of the simplest ways to make real estate better is to give consumers more value.

The problem with the refund is that it’s like the tooth fairy: nobody really believes in it until a gift shows up under the pillow. The first act of a rational CEO,  I said, would be to keep the service exactly the same and eliminate the refund entirely.

The line was silent. Then Austin Ligon, the founder and former CEO of CarMax, asked an unexpected question: “Can you name a great consumer brand that was built by someone completely rational?”

I thought about one of my heroes, Ted Turner, who once broke through a stalemate with stunned Japanese businessmen by removing his clothes one article at a time. He publicly described TimeWarner’s decision to shut down CNN’s cash-hemorrhaging foreign offices as a clitorectomy.

I remembered that Nike was so committed to its athletes that it paid for Tonya Harding’s legal defense after her goons clubbed a competing figure-skater in the knee. I thought about Whole Foods’s concupiscent piles of fruit, which are, like someone you fall in love with, so much better than they have to be.

Wouldn’t a more calculating business skimp on the strawberries?

The problem with rational decision-making is that you can’t ask consumers to have an emotional connection to your company if you yourself aren’t guided by emotions. When the only basis of your identity is an elaborate calculation of self-interest, you have no identity at all.

Nobody cared about Han Solo until he rode after Luke into a snow-storm yelling “Never tell me the odds!” And nobody will care about your company if you don’t take a similar stand. This is why Steve Jobs hated the word “brand,” because Apple’s identity was an authentic expression of himself, not a calculated construction of the marketing department.

What this cynical, jaded, spun-out, over-hyped world is still famished for after all these years is a reason to believe. Belief is such a deep need that we find ourselves developing tearful, fierce relationships with silly little products and then feeling like dupes when we find out how cynical their manufacturers can be.

Our need to believe is why investment bankers, who are so good at making money as investors, are almost always terrible at making money as the CEOs of consumer companies. They always do the math.

The problem is, that I do too. It’s easy to be crazy, but not after you know you’re crazy. Why did Redfin go to the trouble of figuring out how many people the refund put off, and how many it drew in, if we were just going to ignore the result?

I don’t know. What’s really hard about this job is knowing when to be crazy and when to be calculating, because you can’t just be one or the other. It’s certainly easier to be calculating. It takes confidence to ignore numbers, to set aside focus groups and advisers, and do what you believe in, because then the only person you’ll have to blame for your craziness is yourself.

But if I met my old self, the one just starting out in a consumer Internet business, the first advice I’d give him would be: have the courage of your convictions.

We do this all the time outside of business, without thinking a thing of it. A lovely friend of mine once broke up with someone because he wasn’t a little crazy. How, she asked, could she be crazy around someone who was always totally, maddeningly normal? Then she said, “That’s crazy right?”

I told her it was the only completely sane thing she’d ever said.

The post Never Tell Me the Odds appeared first on Redfin Real Estate Blog.

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.

The post The Shitake Hits the Fan appeared first on Redfin Real Estate Blog.

What that means is that there are more Internet startups with massive revenue growth than I can keep track of, and I can keep track of quite a few. It means that when TechCrunch’s Sarah Lacy argues that high-revenue startups like Zynga and Facebook operate in a completely different universe than the rest of Silicon Valley, she isn’t completely right.

We heard the same argument from plenty of folks when we wondered what Mint would be worth now: that the increase in valuations of Zynga and Facebook are totally unrelated to those of earlier-stage startups, because only a few venture-backed Internet companies are generating serious revenues.

What I’m seeing instead is different: yes Zynga and Facebook are in the major leagues, but there is a very healthy farm system with plenty of prospects moving up through the ranks. This is why the broad-based increase in valuations isn’t just  inflation, but the result of Internet startups’ getting much, much better at generating revenue.

What happened? First, at the end of 2008 startups finally stopped listening to the most misinterpreted — and sometimes just wrong — advice in the Internet’s history: Chris Anderson’s insistence, just as Apple opened the iTunes store to software and venture funding hit the skids, that everything on the Internet be free.

To be sure, the idea of a free trial application is a good one, but many entrepreneurs became squeamish about ever asking consumers to get out their wallets. Music was Mr. Anderson’s primary example of a good that consumers would stop buying, but now Pandora, the company with the temerity to charge for music, is going public.

As we’ve argued many, many times before, as early as 2008, a whole new generation of entrepreneurs has learned from Steve Jobs to ask consumers to pay, early and often, for mobile applications like Angry Birds, or virtual goods in Farmville, or actual goods like clothes, textbooks and baby gear:

Startups have turned to the most direct way to get money: from their users. And consumers are ready to buy, buying software fast-food style on the iPhone, and shelling out for premium subscriptions on sites like Picnik and Animoto.

The change has been good, for startups and for the consumers buying their software, the quality of which has improved immeasurably over the past few years. Now, most of the companies that got serious about generating revenues are growing like crazy. It isn’t too stuck-up to call this change a new Internet era.

The first era was the 1990′s Age of Eyeballs, when every website sought to get as many visitors as possible, without regard for the cost of gaining each visitor or the revenues each generated.  The second was the mid-2000′s Age of Acquisition, when Paul Graham encouraged most entrepreneurs to build websites as features of a larger product, and the goal was to get bought by Google or some lesser light. Since big, unsustainable startups had failed in 1990s, small became  beautiful.

Now we are in The Age of Revenues, in which many Internet startups are maturing into big companies with big revenues. We’ll see more companies invest in large tele-sales operations — the whale-hunting salesmen are mostly relics, as small transactions have flourished like plankton — and we’ll see more companies grow, with more accretive acquisitions at much higher prices. And though there will undoubtedly be more ups and downs, we’ll see more public offerings too.

With great revenues come great power: a new generation of Internet titans. After years of insisting that the Internet had matured, nobody now believes that in two years the only Web behemoths will be Microsoft, Google and Yahoo. In fact, folks have begun to doubt that any of those three will rule the Internet the way they once did.

It’s an amazing turn-about. 2008 year wasn’t, as Sequoia claimed, the death of good times, but the birth of a new, long-lived era of broad and massive revenue growth. The new school of financiers at Sequoia were right about the global economy, which is still a disaster zone outside of Silicon Valley. They were just wrong about how entrepreneurs would react to it.

The post The Age of Revenues appeared first on Redfin Real Estate Blog.

Part of what makes the lecture seem so important is the audience hearing it. West Point students are the kind of people who could have gone to Wall Street or started a company two years out of school but instead will soon find themselves face down in the dirt of Afghanistan on Christmas day, scared and cold, leading people they’ve just met, under circumstances that would overwhelm folks like me.

But mostly, I love the essay because the old professor gives the plebes such strange and good advice. In the plainest terms, the lecture captures everything I’ve been feeling about these charming hoop-jumping robots Redfin has been interviewing at top-flight schools this fall  – smarter, more polished people than I am who’ve never had a goofy moment of pure curiosity, who never blew stuff up for fun or were allowed to make terrible mistakes, who never screwed up their transcript or their resume just to see what it would feel like to stop pleasing everyone else.

Interviewing such poised job applicants, I kept thinking this fall of Wagner’s complaint about Mendelssohn, who was more precocious even than Mozart and more lyrical: that he never lost control of himself. Drawing on decades of grooming Ivy League students, Deresiewicz argues that this control is crucial to being successful in society, but not to being a leader. His students are always thinking of how to get to the next step, but always on someone else’s stairway:

So I began to wonder, as I taught at Yale, what leadership really consists of. My students, like you, were energetic, accomplished, smart, and often ferociously ambitious, but was that enough to make them leaders? Most of them, as much as I liked and even admired them, certainly didn’t seem to me like  leaders. Does being a leader, I wondered, just mean being accomplished, being successful? Does getting straight As make you a leader? I didn’t think so. Great heart surgeons or great novelists or great shortstops may be terrific at what they do, but that doesn’t mean they’re leaders. Leadership and aptitude, leadership and achievement, leadership and even ex­cellence have to be different things, otherwise the concept of leadership has no meaning. And it seemed to me that that had to be especially true of the kind of excellence I saw in the students around me.

The essay argues that what a leader really needs is solitude — the kind you feel when completely absorbed in a creative project, or on a long car ride through an empty place. For me that solitude has come most intensely running up a mountain, all alone in winter, with darkness coming and the snow falling as thick as the air itself, running until I’ve thought through what to do with my life or decided how I really feel about God, running so far that I’ve started to get scared about making it back alive. Deresiewicz worries this solitude is being drowned out by modern life:

“Your own reality—for yourself, not for others.” Thinking for yourself means finding yourself, finding your own reality. Here’s the other problem with Facebook and Twitter and even The New York Times. When you expose yourself to those things, especially in the constant way that people do now—older people as well as younger people—you are continuously bombarding yourself with a stream of other people’s thoughts. You are marinating yourself in the conventional wisdom. In other people’s reality: for others, not for yourself. You are creating a cacophony in which it is impossible to hear your own voice, whether it’s yourself you’re thinking about or anything else.

What I love most about the essay is that it talks about  how the solitude that a leader needs — that anyone needs — is not incompatible with friendship, especially the friendship of one person, someone you know well enough to welcome into your solitude:

Introspection means talking to yourself, and one of the best ways of talking to yourself is by talking to another person. One other person you can trust, one other person to whom you can unfold your soul. One other person you feel safe enough with to allow you to acknowledge things—to acknowledge things to yourself—that you otherwise can’t. Doubts you aren’t supposed to have, questions you aren’t supposed to ask. Feelings or opinions that would get you laughed at by the group or reprimanded by the authorities… Instead of having one or two true friends that we can sit and talk to for three hours at a time, we have 968 “friends” that we never actually talk to; instead we just bounce one-line messages off them a hundred times a day. This is not friendship, this is distraction.

I was lucky to grow up always having a friend like this: until we left one another for college my twin brother and I lived in our own country, unassailable and determined. The French describe a newly married couple as, “alone, just the two of them,” a phrase that perfectly describes the feeling we’ve had together.

Over time, I’ve been lucky enough to make new friends like that, but lately not so much. I don’t know if I’ve gotten too old, or too busy — I’ve often just felt that I’m no longer gooey, that my identity has sadly hardened to the point where it can hardly accommodate the shape of a new personality. But Deresiewicz’s beautiful lecture convinced me that there are, at least, a few more kindred spirits out there, for all of us.

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Startup offices are supposed to have the buzz a newsroom once had, but often are sort of hushed, like a law firm. The floor plan can be open but only because everyone now has a thousand MP3s to pipe through their headphones. The environment is transparent — we can see what one another is doing — without necessarily being collaborative. It’s a little bit like the panopticon a philosopher once imagined would replace our prisons.

And it’s weird, and maybe perfect too. If a 1980s office-worker emerged from a time machine and walked around a typical office, he might be surprised at many things: gym-hardened 25-year-olds riding elevators to the second floor, the presence of computers on everyone’s desk, casual dress, Costco muffins but no ashtrays, the occasional ping pong table.

But what would surprise him most might be the popularity of DJ-sized headphones, worn by everyone from the lowest-level employee to the CEO. The time-traveler might feel about headphones the way we would if we learned that future office-workers will all wear goggles, so that they never see anything except what is on their computer screens.

Don’t we come to an office so we can work together?

I do, but then I don headphones to isolate myself. We have all seen offices with thousands of people like me — the size of a new country, with its own silent language and customs.

I catch myself deferring face-to-face discussion in favor of online chats and email — the growth of IM and the sales figures for headphones probably line up very nicely – just so I can finish listening to a song. I do this even though I can’t concentrate while listening to music unless I listen to the same songs over and over again. I do this even when, as is usually the case, I am wearing headphones without listening to music at all, just to block out background noise.

This tactic may be the latest twist on Virginia Woolf’s insistence on having a room of one’s own. At work I often think of her advice to keep windows open and doors closed: a way to see and feel the world while still preserving your own creative space. Now the office sights and sounds come to us via IM windows and email messages, popping up in a manageable corner of our computer screens rather than standing in our office doorways, demanding our full attention.

Sometimes, it’s good to avoid a face-to-face conversation. When I get back to my desk from a face-to-face conversation, I have to take a few moments to re-orient myself to the three-ring circus running on my computer, and I have to queue up my music all over again. The person I interrupted has the same challenge.

But usually, a conversation is essential. Whenever I disagree with someone, I try to do so in person because we end up reaching a fruitful compromise much more quickly. And whenever I need to collaborate on an idea, I get more energy from being in the same room with someone. I work at Redfin because I love the people here, and noticed I’m happier when I actually get to talk to them.

So whenever I think that maybe I should go chat with someone — I slowly take off my headphones — but never decide to email them instead. And whenever I’ve tried — a dozen times at least — to give up my headphones entirely, I lose control of my perimeter, and get less done.  Modern life will give us more and more ways to enter that isolated yet connected state, with open windows and closed doors. Our only challenge is not to spend too much time there.

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