Summation

10 years in the Internet industry

Ten years ago this month, Scott Bonds and I started Kyber Systems. The reason: I had run out of money.

We were both engineers at UC Berkeley and we both had to pay our way through college. Having run a business in high school, I had the luxury of not having to work during my first few years in college (and only working during the summers). Instead, I was able to major in social life, student government, and beer. But as I was closing in on my senior year I realized that I was rapidly depleting my savings.

Around that same time, like everyone else around me, I started using Mosaic and then Netscape … spending all my free time surfing the newish world wide web. Scott and I decided that we'd help political candidates create web pages … of course, that was a really bad business model and it didn't last too long. Our first and only political client was San Francisco Mayor Frank Jordan (who was running for re-election and lost to Willie Brown). The San Francisco Chronicle did write some very nice things about our web page and I met some terrific people on the campaign (including working closely with Mike Farrah who is now the political advisor to Gavin Newsom).

After our excursions in politics, we decided to instead build corporate Intranets (of course, this was before the word "Intranet" was used) and our clients included Bain & Company, Charles Schwab, Sybase, and others. We hired a few really smart Berkeley students (some dropped out to work more) and I learned how to program better (Scott was the tech genius). We were young, brash, and thought we knew everything. We got a 150 sq foot office in downtown Berkeley that quickly filled up so Scott and I got an apartment together and leased an ISDN line so we could work from home while our employees worked from the office. It was awesome.

I remember landing the Bain & Company account. After they signed the contract I told them "I just want to let you know that I'm 21 years old and I'm the oldest person in the company" (Scott was 20 at the time and some of our employees were as young as 18). They understood, we were told. Of course, we found out later that our bid for the project was one-third the price of the next highest bidder. But for us, we thought we were rich. The check we got from Bain was the largest check I had ever seen at the time. I ran to Bank of America to deposit it.

We sold Kyber Systems in 1997 and started BridgePath together in 1998. But I will never forget the early days of 1995.

And so, now it is 10 years and three companies later … and I remember fondly those early days that have changed my life and so many of the lives around me … and I am really looking forward to seeing what the next 10 years will bring.

Book: Collapse

Collapse: How Societies Choose to Fail or Succeed by Jared Diamond

I LOVED Guns, Germs, and Steel. So when i heard Jared Diamond had written a new book, i jumped at the chance to read it (or listen to it as i downloaded this from Audible).

you can read the summary and reviews on Amazon ... here is my overview: great first 2/3 of the book. very poor last 1/3 of the book (at the end, Diamond goes into a diatribe about today's environmental problems). He's a great historian and amazing storyteller about ancient people's ... but i think he does a sub-par job on relating that information to today's world.

that said, this book (especially the first 2/3 of the book) is very much worth the read.

80% of New Employees Fail Within the First 5 Years

Michael Fitzgibbon passed on this great post entitled:
80% of New Employees Fail Within the First 5 Years

it is a great defense of entrepreneur ship and goes nicely with my notion that it is more risky not to take a risk.

search index size does matter

Charlene and everyone else writes that index size doesn't matter ... it is all relevancy.

actually, i think it matters a lot. a real lot. relevancy is very important, of course ... but relevancy comes after size ...

let me explain ...

Doing a quick search for my name ("Auren Hoffman"), i get 7,160 results in Google and 11,800 results in Yahoo. (but who knows if it is true as they each only show the first 1000 results) when you search for something more specific [Auren Hoffman sv100] you get the same number of results in both.

but ... and here is the but ... not long ago i never got comparable results in Yahoo. Google used to dwarf Yahoo by 2x or more. so i always assumed that Yahoo was missing docs that Google didn't have. so even if yahoo claimed it had better relevancy, i wasn't going to switch from Google.

now that i am satisfied that Yahoo has indexed about the same number of pages as Google, i might actually consider switching to Yahoo.

so size is really important ... because i'm not even going to consider a better relevancy engine if it only indexes 50% of what Google has.

It is too risky not to take a risk

When I speak to classes at UC Berkeley and Stanford, most of the questions center on career advice:
What should I do? Should I get my masters now or later? Should I join a start-up, start a company, or join a more established firm?

My answer: It is too risky not to take a risk.

That's right. Doing the "safe" thing is the riskiest thing you can do in today's environment.

What's "safe"?
Joining Google, HP, McKinsey. Huh? That's right … joining one of these firms is way too risky.

What's better?
Joining a start-up or starting your own company. It is counter-intuitive, but it is actually far less risky to take a risk. Of course, that assumes you live in a place like Silicon Valley and not in a place like Germany.

Let me explain and compare to opportunities:

Let's say you’re a newly minted Harvard MBA with an engineering background and you get a sought-after product management job at a large tech company at $105,000. You've got a few stock options and a potential bonus. Sounds low-risk right? Wrong.

Another job offer is a newly funded start-up. 18 people. Has 18 months of cash to burn. Seems to have a good plan and good potential. You get a product management offer for $80K and lots of options. Seems risky? Wrong again.

The big company is the wrong move because your up-side is capped and your downside is roughly the same as the start-up. The down-side at the start-up is it goes under and you're out of a job. The downside at a large company is they do another re-org and you're out of a job. Of course, the bigger downside is that they never do a re-org and you actually keep your job at big bertha for the next ten years. What then? Maybe you've worked your way to a VP and have to deal with bureaucracy and in-fighting … and you cannot understand how your SVP still has a job because he's so incompetent.

Let's a assume you do lose your job (the downside in each scenario). Guess what? Who cares? You can always get a job. I repeat, you can always get a job. Of course, this assumes you live in a place where failure is embraced (Silicon Valley) and not in a location where failures are shunned (Germany). In Germany the bankruptcy court might go after you personally. In Silicon Valley, if a large company offers you a job today … they'll likely offer you that same job two years from now … even after a failed start-up.

Now to the start-up … we've already discussed that your downside is low (basically it is earning $25K less a year and a slightly higher possibility of being out of a job earlier). But your upside is outstanding. And not just financial upside, but the learning, the dynamism, the fun, and the opportunity to help change the world. Put it this way -- joining a start-up (loss of $25K/year) is much less risky than getting an MBA (loss of $150K/year) and both have similar upside.

Some people say that working at a big company is like investing in a bond that gives you a guaranteed 4%/year while working at a start-up is like investing in a high-beta hedge fund. That's not a good analogy. Because your downside is capped at a start-up. It is like investing in a hedge-fund where the upside is limitless but the downside is capped at 2%/year -- wouldn’t you take that option over investing in the guaranteed 4%? Of course, you'd take it any day.

The real problem is that finding a job a cool start-up (or founding your own company) is hard work. It takes a lot of time and effort. Finding a big-company job is easy. But the job market is changing fast. Vertical job search engines like SimplyHired (www.simplehired.com), referral rewards systems like karmaONE (www.karmaOne.org), and candidate centric sites like The Ladders (www.theladders.com) and WooMeNow (www.wooMeNow.com) are changing the way people find jobs and how companies find people.

Summation: it is far more risky not to take a risk.

Newest jobs on KarmaOne

Here are some of the newest jobs on karmaOne ... if you know someone who would be a good candidate, you could claim the referral reward:

Book: The Man Who Mistook His Wife For A Hat

The Man Who Mistook His Wife For A Hat : And Other Clinical Tales
by Oliver Sacks

This was an absolutely gem referred to me by Alan Peterson and Paul King.
Dr. Sacks is a world renowned neurologist. this book is his notes on 24 different patients with various types of disorders. it is fascinating, sometimes uplifting, and truly interesting.

like the last book i read, i read it with someone else in mind. this time, all i could think about was Malcolm Gladwell ... because the book had such insights into people's thoughts and character -- just like Malcolm's books and writings in the New Yorker do. i thought i found a rare gem and emailed Malcolm with my discovery ... only to find out in his reply that he had read the book ages ago (and was equally impressed).

so read this book ... i would highly suggest it.

Book: Crimes Against Logic

Crimes Against Logic by Jamie Whyte

In a desperate attempt to find a book that Jonathan Abrams hasn't read (he's always critiquing me that i read outdated books like Trading Up), i downed this little book on my way back from Halifax last week.

the subtitle of the book is "Expose the bogus argument of politicians, priests, journalists, and other social offenders". and amazon lists the book with "customers also bought" Freakonomics, Wisdom of Crowds, and Blink (all amazing books). so i was really excited about this book.

the problem was ... though i agree with pretty much everything stated in the book ... it is not that interesting. not too many items in there really gave me an "A-HA!" moment.

so Jonathan ... i'll need to keep trying to find that gem that you did not know about ...

Suicides in China

Wow. 250,000 suicides a year. in China. every year. wow.

and 3 million people attempt suicide every year in China. most of those being college students. wow! suicide is the number ONE cause of death for Chinese age 20-35.

imagine a society where 1% of college students attempt suicide every year. parental and society pressure in China is enormous. the outcome is staggering.

this will be an interesting indicator to watch over the next decade as China continues to change and morph.

Book: All Marketers are Liars

This was a fun book sent to the SV100 in July. Amazingly enough, it is the first Seth Godin book I've read -- and a good read. (part of value-add of this book is that it is very short)

Based on this book (and based on www.sethgodin.com -- Godin's blog that I read regularly), I would highly suggest reading at least one of Godin's books to get a flavor of his interests, style, and point of view.