How to Keep Your Job When You Don’t Know What You’re Doing

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:

• We worked hard
• We wanted to learn

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.

Law & Order, Special Victims Unit: How To Get “The Man” On Your Side When Starting a Company

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, 13^th 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.

Twelve Months of Tech-Savvy Hunkiness

Absurd Ideas that Have Gone through My Mind While Working at Redfin over the Years:

• Goth Fridays
• Everyone Wear Red Pants Just Like Glenn Day!
• Everyone Dress like Vice President of Real Estate Operations, Scott Nagel Day! (We actually got this one to happen…)
• Redfin: The Movie (Casting occurs with every new hire…)
• The plot for Redfin: The Movie. Must include international intrigue, car chases, explosions, and most definitely a martial arts master, a dog side-kick or both.
• The Men of Redfin I.T. Calendar

Several of us joked about making a Men of Redfin I.T. Calendar over lunch a few years ago. We created multiple scenarios such as, “A voluptuous Ken in a provocative pose in the server room!” We laughed our asses off and went back to work.

But the joke always resurfaced. So this year I simply walked over to their man cave/office and asked them if they’d be willing to pose for a calendar. Here are their responses when individually asked:

Ken: Sure
Daniel: Uh, I guess so. Sure.
Andy: I guess so. Okay.
Mac: Why would anyone want to look at THAT?!??
Eric: Hell yes. I am so in.

A disturbingly enthusiastic Glenn Kelman even offered to pose for November. (“Um, yeah. Thanks Glenn, but I really want to give the I.T. guys their moment in the sun, you know what I mean? But I’ll definitely keep your offer in mind.”)

Baby New Year/I.T. Manager Eric

We printed up and handed out 300 Men of Redfin I.T. Calendars for our annual company meeting in Vegas last week. Anyone who wanted one (???) donated any amount they saw fit to MIND Research Institute. We chose MIND because they do amazing work, the money sent to them goes to the right places, we like math and computers, and the guys of I.T. really liked them. We just hope they’ll accept our final check given the unconventional fundraising method.

Winter Wonderland “Twins” of Systems Analyst Mac

Shot over the course of a month around the office using thrift store props and crappy IKEA floor lamps, these images would not have been worth diddly–squat if it weren’t for a little help from my Redfin friends. Hippie Goddess Lily Supardan brought her expert photographer’s eye and Graphic Designer Angela Salvo magically transported our studs to idyllic shires, romantically secluded beaches, and winter wonderlands through the miracle of Photoshop.

Colossal and eternal THANK YOUS to our heroes of the I.T. Department: Ken Brush, Eric Hollenbeck, Mac Jonson, Daniel Kasen, and Andy Wickell for their willingness to make love to the camera for the next twelve months. They brought Smizing to new levels, thereby making the halls of Redfin full of even more laughter. And, we finally got that picture of a voluptuous Ken in a provocative pose in the server room.

Ken hiding Easter eggs in the server room

Want your own calendar? Be of one of the first 50 people to donate $15 to MIND, then leave a comment here saying: “I donated! Send me a calendar!” We’ll contact you about how to ship your calendar later this week.

Updated 5pm we inadvertently uploaded some gigantic images. We apologize both for the file size and for the extreme closeups you may have experienced.

A New Phoenicia

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.

The Shitake Hits the Fan

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.

A Changing of the Guard

Quick! Name the top 10 publicly traded consumer internet businesses in the US. When you woke up Thursday morning, the list was:

1. Google: $171 billion market capitalization (26% annual revenue growth)
2. Amazon: $90 billion (38% growth)
3. eBay: $43 billion (14% growth)
4. Priceline: $26 billion (38% growth)
5. Yahoo!: $21 billion (-24% growth)
6. Netflix: $13 billion (45% growth)
7. Expedia: $7 billion (14% growth)
8. WebMD: $3 billion (21% growth)
9. Open Table: $2 billion (57% growth)
10. AOL: $2 billion (-17% growth)

The next one down would have been Ancestry.com, and there wouldn’t have been many more with a valuation over $1 billion. Sixteen years after Netscape’s IPO, the most amazing fact about the Internet is how few large-scale public companies it has created, and how irrelevant some of them already seem to our daily lives.

That’s all about to change, because most of the companies on that list are about to change. One telling sign: it’s a lot easier to come up with a top-10 list of private Internet companies. If you’re a consumer under 40, you’re far more likely to have used their services today than those of WebMD, Priceline, AOL or even eBay:

1. Facebook
2. Groupon
3. Zynga
4. LinkedIn
5. Twitter
6. Gilt
7. Living Social
8. Pandora
9. Yelp
10. Foursquare

The first of those companies to graduate from the ranks of private to public ownership is LinkedIn. Worth $9 billion, or 36 times 2010 revenues and 520 times 2010 earnings, it debuted today at #7 in public-company market capitalization. With the possible exception of Foursquare, it seems very likely that each of the other private companies will be publicly traded in two years. Most will be worth as much or more than LinkedIn.

The technology community brought this about almost despite itself. Only a few years ago, the two most prominent thinkers in venture capital said that even their portfolio’s most ambitious companies shouldn’t necessarily go public.

One said that no one wants to run a public company; the other reported that his hand shook every time he had to sign off on a public company’s financial statements. Yet today the two are investors in nearly half of the remaining private companies on the list.

Back then, the investors cited regulations as the main problem. But what has changed since is revenues, not regulations. More importantly, the ambitions of entrepreneurs and investors have changed, in just the way we once hoped they would. As we wrote in 2008:

This quarter was the first since 1978 that a venture-financed company didn’t go public. But the real headline isn’t the dearth itself, but the fact that some of the smartest people in venture capital are fine with it. It’s like the PGA moved the Masters to a pitch-and-putt, and Tiger Woods applauded the decision.

…We have to keep building businesses to be businesses, not just to get bought. There are plenty of entrepreneurs who, if they could grow a business to $100 million and beyond, would prefer to keep building it rather than get acquired. The hard part for us isn’t the regulations, it’s getting past $100 million, which takes patience, big thinking, and a huge appetite for risk.

Fortunately, everyone heard the VCs’ warnings but almost no one listened. All except one of the companies on that list were around when investors declared that the public markets were no longer such a desirable goal, and all of them could easily have sold for life-changing amounts of money. None did.

And after years of caution, fortune now favors the bold. Wall Street bid LinkedIn up 109% on its first day of trading for all sorts of irrational reasons, but also because investors are starved for high-growth businesses. Growth is what new Internet businesses do best. If we as Internet entrepreneurs aren’t going for broke, no one else will.

And without a new wave of businesses, the whole Internet sector would become the domain of value investors, eager for Google to pay its first dividend. Already, eight of the top-10 public companies grew revenues by less than 40% last year, and analysts are much less optimistic about their growth over the next two years.

Everyone is debating whether LinkedIn’s stock ended today overpriced, but this isn’t the important debate.  What matters more than the day-of-IPO frenzy is that LinkedIn and all the other soon-to-be public Internet companies are going to grow much more over the next decade than the current top-10 will. And that means the Internet segment of the economy will grow much larger, too.

In Praise of The Middle Finger

The United States is becoming a startup factory. It’s a very good trend for the U.S. and for entrepreneurs. But this post is how it must feel different than it once did, when startups were hand-crafted in a basement or a garage, and stayed there much longer than they now do.

First, a few numbers. Michael Arrington reported today that Y Combinator is accepting 60+ startups for its summer 2011 class. With two – four founders per startup, this is the equivalent to the entering class at some liberal arts colleges, with a more selective application process and a similar regimen of lectures, discussions, and graduation. The kinds of people who progress in life by applying to one increasingly elite institution after another are naturally attracted to this approach; it’s just like getting into Harvard!

And Y Combinator is just the tip of the iceberg. Despite the popular sentiment in Seattle that our main problem is “we don’t do nearly enough to connect with one another,” the local startups calendar lists 29 public events from Monday to Friday. Here among some of Redfin’s up-and-comers, we have our own little startup forum that meets twice a month, too.

The success of these programs and the energy they create is staggering. I contribute to some and benefit from many others. I feel a touch of envy when sizing up the participants, because they seem so talented, and they have so many resources. But I also want to impart a different message to the participants, to take my advice if they want but mostly to take their own.

A startup needs mentors, structure,  guidance but the main thing we had at the company I co-founded was a lot of smart people and what Jay-Z would call a middle-finger-to-the-Man mentality. We were all heads-down and screw-you. What I first loved about a startup, especially in the early days, was that I could finally stop listening to people tell me what to do.

Incubators, I thought, were for babies not men. No one needed training more than I did, and no one was less interested it. Only the product mattered, and networking was baloney. In my own life, and at a shameful 11th hour, I chose starting a company over medical school only in part because I would have been a bad doctor. The emotional reason was I couldn’t bear the thought of attending Columbia’s orientation pizza party.

The first time my partners and I were alone in our own little office, it felt like finally getting the keys to the family car. We were shocked that neither the police nor anyone else ever stopped us to ask for a license. Our first thought was We should have been doing this years ago. You want to run over a garbage can for the heck of it.

The best entrepreneurs have a touch of that impetuousness. One of my co-founders at Plumtree, Kirill Sheynkman, wrote a parting message to his previous employer on the whiteboard of his vacated office: FAYMF, in huge block letters. The acronym is untranslatable, except that the A stands for All, the Y for Y’All, the M for Mother and the F’s for you-know-what. It was completely obnoxious and anti-social, but the main thing Kirill taught me was to please no one if not yourself.

We’ve come a long way from that brashness. A year ago in a post for TechCrunch, I worried that entrepreneurship was becoming a profession, when it had always felt to me like a lightning strike or a jail-break:

There were 2,500 self-help books on entrepreneurialism published last year… Business schools and conferences have institutionalized entrepreneurialism as an avocation like law or medicine when it is more often a streak of temperament, luck and inspiration. Far from a program taught by somebody else, entrepreneurialism has always been for me my only shot at being myself.

Some days entrepreneurship seems like a lifestyle. Some days it feels like the result of a carefully crafted process. But what you also need to change the world no one can teach you: brains, ambition, computer science and the occasional middle finger.

Endurance

It’s fashionable these days to talk about a startup as a roller-coaster, with ups and downs, flips and flame-outs,  twists and turns. There’s some truth to that, and even more drama and glamor.

But roller coaster rides last five minutes, not five years. And as any venture capitalist will tell you, the average holding period for a successful early-stage investment is now approaching seven years.

It’s a new problem. Whereas the 90′s generation of startups either went public before the bubble burst or died trying, this generation is now entering an awkward adolescence: generating revenues, growing fast, still privately held.

Many entrepreneurs didn’t expect to still be at it: in the many, many lists of heroic traits an entrepreneur is supposed to have, no one includes endurance. Yet in my experience, the most common reason startups end is not because they run out of cash but because the entrepreneur runs out of gas.

Even so, some dispute that endurance is desirable, let alone important. When an entrepreneur leaves her own company, we’re supposed to nod sagely and say that this is the natural way of things, that she is better suited to starting companies than building them.

This may be true of entrepreneurs at many companies but not at the greatest ones: Microsoft for 32 years under Bill Gates, Apple for 35 off-and-on years under Steve Jobs, Oracle for 34 years under Larry Ellison, Amazon for 17 years under Jeff Bezos, Google for 15 years with Larry Page and Sergey Brin, now Facebook for 7 years under Mark Zuckerberg.

We rightfully celebrate these entrepreneurs as geniuses but I feel sure that what they value most about themselves by now is their endurance. Compared to the many talents with which they were born, endurance is the only trait these entrepreneurs have had to earn. “I can’t go on like this,” they tell themselves each year. “I’ll go on.”

In the age of the long startup, this endurance has become even more important, especially for entrepreneurs less talented than Larry Page or Bill Gates. The only plaque I have from my years at the company I co-founded, Plumtree, isn’t our IPO tombstone — I threw it out in my last move — but a cheesy piece of lucite we gave everyone on her fifth-year anniversary.

The five-year award is a tradition we’re starting this week at Redfin, in recognition of our first five-year veterans, Allie Howard and Bryan Selner. Allie and Bryan are, as Redfin’s Fernando Ferrufino likes to say, the Original Gangstas who made Redfin into their own thing, which has in turn become our thing.

Without Allie, Redfin would be much, much less fierce, in its advocacy for its clients, in its intolerance for mediocrity, in its bad-ass attitude generally. Without Bryan, Redfin would be less exacting, less thorough, less thoughtful, less pragmatic, less team-oriented, less goofy and nerdy.

But what have Allie and Bryan gotten out of Redfin? It’s a serious thing to walk into a startup on a lark and come out years older; and in an age of secondary stock sales and recruiting revolving doors, it’s more unusual too.

The simple answer to this question is, I think, love. Love is a strong word, but I find myself using it more often as the days pile up at Redfin, to describe the brilliant people around here who have stuck together through ups and downs. It gives a thickness to our life at work.

The other reason Allie and Bryan are here is because they believe in what we’re doing. What people fear most in their careers is the absence of any arc or substance, which leaves us to float in the air like that mesmerizing piece of garbage in American Beauty – moved by forces we don’t understand, hardly able to keep going.

Compare that heart-breaking aimlessness to the intensity of Mark Zuckerberg in The Social Network. I just loved watching him alone, plugged into his laptop, listening on headphones to the film’s min0r-key soundtrack. You feel an almost pelagic sense of peacefulness and then that midnight blooming of creativity which give sudden weight to our lives; it’s one thing the whole sordid soap opera really got right about startups.

And it’s a good place for Mark to be, right there, thinking. There have been many, many nights where Redfin has been, for me, the same kind of good long groove: the place where I belong, the work I should be doing, the thing I believe in.

And it can be hard to get your groove back, or to find a new groove. When I read about a Google rapid-response team running around with billions in money and stock to throw at anyone who threatens to leave, I think the real problem there must be meaning, not money. If you have to pay someone $50 million to stay at a job, it’s time to start over with a new team, and probably a new mission too. This is exactly what Larry Page is now trying to do.

But if you’ve still got something to believe in and live for — a work project that will be a multi-billion-dollar force for good in the world or, more personally, a life that sits at the center of a family — the only problem is leaving not staying. Gabriel Garcia Marquez wrote about this on the final page of Love in the Time of Cholera, which I still remember, 20 years on, as if I just read it:

The Captain looked at Fermina Diaz and saw on her eyelashes the first glimmer of wintry frost. Then he looked at Florentino Aziza, his invincible power, his intrepid love,  and he was overwhelmed by the belated suspicion that it is life, more than death, that has no limits.

“And how long do you think we can keep up this goddamn coming and going?” he asked.

Florentino Aziza had kept his answer ready for fifty-three years, seven months, and eleven days and nights.

“Forever,” he said.

The Age of Revenues

I was talking to a friend in Silicon Valley last night who told me about a consumer Internet startup that is generating tens of millions of dollars in revenue, with eye-popping year-over-year growth. What was striking about the conversation wasn’t the revenue itself, but that I’d never heard of the company it came from. This has happened half a dozen times in the past month.

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.

Knowers and Learners

At breakfast earlier this month, my friend Roy Gilbert made an offhand reference to two types of people, knowers and learners. It was a distinction I’d never heard before. But I liked the idea of identifying someone as a learner, just because it’s so hard to make any change to our identity, unless part of our identity is itself a commitment to change.

At work I often marvel that the self-professed raconteur doesn’t become, for just one meeting, a sphinx. Why doesn’t the tried-and-convicted critic shock everyone just once with a simple affirmation? Why can’t I do these things? I don’t know. A few days after I met Roy, the great Twitterer Eric Barker pointed out a Harvard Business Review article, “The Best Way to Use the Last Five Minutes of the Day,” suggesting how we can become learners:

Every day, before leaving the office, save a few minutes to think about what just happened. Look at your calendar and compare what actually happened — the meetings you attended, the work you got done, the conversations you had, the people with whom you interacted, even the breaks you took — with your plan for what you wanted to have happen. Then ask yourself three sets of questions:

• How did the day go? What success did I experience? What challenges did I endure?
• What did I learn today? About myself? About others? What do I plan to do — differently or the same — tomorrow?
• Who did I interact with? Anyone I need to update? Thank? Ask a question? Share feedback?

It’s a great essay. It reminded me of the advice that aQuantive’s old CEO once gave Redfin folks at a brown-bag lunch, that your competitive advantage comes from having made more mistakes than anyone else, that the most important behavior an executive can model for others to see is the admission that she’s wrong.

The Harvard essay, and many like it, are part of a culture of learning that has been one of Silicon Valley’s signal contributions to business culture. As the Valley’s engineers have become executives themselves, practices like group de-bugging and rapid iteration have become standard elements of business decisions as well as software projects. These days, even a Cleveland ketchup factory is trying to become more like a lean startup.

It wasn’t always that way, not even at startups. When I began working in Silicon Valley, startups were gladiator academies for ambitious young men competing to be the smartest person in the room. We were all knowers. The cult of precocity demanded that every entrepreneur have a vision of her fully formed company emerge like Athena from Zeus’s forehead, with a story of derring-do to go along with it.

Now with the emphasis on “pivoting” and “failing fast,” we all seem to have become learners, not knowers. Try to imagine a ’90′s dot-com founder admitting that his white-hot, world-changing company started as a desperate side-project to sell bedroom slippers with flashlights embedded at the toes. You can’t. But this goofiness is exactly what has made Groupon’s founder so revered.

There are, of course, drawbacks to an emphasis on learning. It can become a California-style narcissism, an extended adolescence in which no one is ever wrong, only learning. Executives feel blameless, even when their mistakes cost people jobs. They breezily refer to pivoting as if it were a nifty basketball move rather than a reorganization that involved a layoff.

This casual mutability is what Robert de Niro’s Jack Byrnes hates about Dustin Hoffman’s Bernie Focker, what Kantians hate about Hegelians, what standard-model physicists hate about string theorists: you can never pin down where they really stand. Their ideas are always becoming something else.

If you’re the one entrusted to make decisions, it’s important to get them right. But I still think that most folks are too scared of being wrong, and thus unlikely to make a decision at all. Then once we’ve made a decision, we’re too stubborn about sticking with it. That’s why my money is on the learners, and why it’s important to think of yourself as a learner, no matter how much you’re supposed to know.