Startup Founder VS. Company Creator

Below is a quote from one of the online discussions:

    […] with all my huge respect for Meg, she did not create eBay. She has been its CEO for a long time, she bought PayPal, she developed its business – but when she joined, it was already a successful established company.

Gregory Gromov: If you want to talk about company founders, then of course Meg is not eBay founder, otherwise I would have called her in my post “eBay’s co-founder”. Whereas I wrote – read carefully – “the lady who was creating eBay”.

I believe there are good reasons to call Meg that.

When she came to eBay, it employed a few dozens people, with the sales volume in a few millions. Can’t recall exactly, but I’m pretty sure they didn’t make even $10 mln at the time.

I’ll agree that by then – late ‘90s – E-Bay was already a successful established company. True, but it was exactly under Meg’s leadership that in the next 10 years E-Bay has become world-known, with thousands employed and billions in trade volume

It happens quite often that a team that shone at the start would suddenly hit the wall to a large-scale transition when time comes to reap the fruit of early success.

This is an obstacle that only a few can overcome, especially since there are just not enough Megs and Erics for every startup – even in the Silicon Valley.

But I am sure that neither Meg Whitman nor Eric Schmidt would even try to create a startup of their own, because they are fully aware that this is not their strong suit, where the art of business is concerned. I would also suggest that under no circumstances either of them would have succeeded in that.

Yet one can argue that eBay would have reached their current world status if Meg Whitman had not come to lead it in 1998 – in the exactly right moment when, like a newborn chick, they were picking their way out of the startup’s eggshell. Ditto for Google headed by Eric Schmidt in 2001.

Even by 2001, three years afer Google was founded, its sales volume stood at $19 mln with the expenses at $34 mln.

Let us also bear in mind that it was taking place amid the turn-of-the-century crisis when not only freshly hatched dot-coms collapsed, but the respectable established industry leaders were starting to crumble as well.

And in this dramatic moment, like a fairy-tale knight in shining armor, the Grandmaster of Managerial Arts and Sciences Eric Schmidt rides into Google’s field of vision.

10 years later, Schmidt has trained young founding fathers in the ABCs of management and built up Google – and then, and not a moment earlier, the company”s co-founder Larry Page wished to take back the CEO chair…

Browsers War

As of 2008-2014: Google has unseated rival Microsoft as the leading browser maker in the U.S. for the first time:

browsers_war_2008-14

~Google unseats Microsoft as the U.S. browser powerhouse. By Gregg Keizer, Computerworld.

How this war began: 20 years ago …

June, 1996: Turn-point  in the Browser’s War

Month Netscape Navigator Microsoft Internet Explorer
May-96 83.2% 7.0%
Jun-96 78.2% 8.3%
July-96 72.6% 15.8%
Aug-96 62.7% 29.1%

~ Roads and Crossroads of the Internet History : Chapter #4 – Birth of Web, Browsers Wars …
 

 

Two Key Factors that Makes Silicon Valley Such Fertile Ground for Startups

The most important legal factor is the California State ban on Non Compete Law:

    … a very special law was enacted in California in 1872. The law in question declared null and void any contract between a business owner and employee if said contract in any way restricted the employee’s freedom to change employers, even if that meant joining the former employer’s competition.

    In other words, any previously signed agreements—for example, an employee contract signed upon hiring—that could in any way limit the employee’s right to freely choose his or her place of work were deemed unenforceable in this 1872 law. More specifically, those clauses that were in conflict with this law were deemed unenforceable.

    This law was initially ratified in 1872 as part of California’s Civil Code. It is now listed under California Code – Section 16600, also known as CAL. BPC. CODE § 16600, and reads:

      Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.

    As a result of this cascade of direct and indirect consequences from the application of this law in Silicon Valley, today a number of generally operating U.S. legal standards, including some of the most important, are practically blocked (“de facto” canceled). Read more: From the Gold Mines of El Dorado to the “Golden” Startups of Silicon Valley

    The above California law was recently tested during the Hewlett-Packard special experimental research: NDA Experiment Set up by Mark Hurd.

The most important among Silicon Valley startups motivation factors is the “not afraid to fail” attitude:

    Perhaps one of the first practical application of this attitude was formulated about 22 centuries ago.

      “A mistake in choosing the right way of actions should be punished less than omission”
      ~ Roman army, 200 BC

     

    Two thousands years later people still continue to look for some of the alternative approaches that can bring the positive results as well:


    See also, a bit more detailed description of the same phenomenon:

      “Our results indicated that the frequency of omission increases when punishment is possible. We conclude that people choose omissions to avoid condemnation and that the omission effect is best understood not as a bias, but as a strategy”.
      ~ The Omission Strategy. Peter DeScioli, Brandeis University, Departments of Psychology and Economics

My Startup Failed, and This is What it Feels Like…

Startup_failed

Over 90% of tech startups fail, but I never thought my baby, …, would be one of them… Since then I’ve survived being stabbed in the back by cofounders, investment rounds falling through, massive technology fuckups that brought sales to a halt, visa problems, lack of money, lack of traction, lack of a team, hiring the wrong people, firing people I didn’t want to fire, lack of product-market fit, and everything else in between. I learned so much, and yet I failed. I won many battles but I lost the war.
~ Nikki Durkin

See also:

  • Silicon Valley “War on Women”
  • For Silicon Valley’s Leading VC “it doesn’t matter what your probability of failure is …”
  • For Silicon Valley’s Leading VC “it doesn’t matter what your probability of failure is

    If there’s a 90% chance of failure, there’s a 10% chance of changing the world.”

    • Most technology startups fail. There’s a winner, and there’s 7 out of 10 that lose.
    • I don’t mind failing, but if I succeed it better be worth succeeding for.
    • I have seen too many startups where they have reduced risk to a point where they have a higher probability of succeeding, but if they succeed it is inconsequential.
    • We invest more in people than in a specific plan, because plans often change.\
    • Where most entrepreneurs fail is on the things they don’t know they don’t know.
    • There are probably three or four things you can control out of ten that matter for the success of your company… The rest is just luck.

    Partly for that reason, he is dismissive of business plans: “I’ve never seen one that’s accurate.”

    ~ Tren Griffin “A Dozen Things I’ve Learned from Vinod Khosla“.