My First Startup Was A Failure Lessons Learned from Radik Software Kirk Wylie kirk@[opengamma|kirkwylie].com @kirkwy
Who Am I?Why Are You Listening To Me?• Started my career in Silicon Valley• Moved to London 8 years ago• Worked in pure tech, hedge funds, Ibanks• Co-Founder and CEO of OpenGamma
Shameless Plug Time• World’s first Open Source platform for quantitative finance – Trading, Risk Management – Data Management, Analytics Computation – APLv2 Licensed• Founded in 2009• $8.25MM investment (so far) – Accel Partners (London) – FirstMark Capital (New York)
February 2002 – I’m on holiday in Hong KongRadik decides to liquidate
The Radik Investment Thesis(Founded Feb 2000)• Open Source is huge RHAT, LINX have massive IPOs• MySQL is getting really popular It was (is?) a pile of garbage• Get smartest DB guys in Silicon Valley to build an Open Source RDBMS Target more sophisticated users than MySQL couldFeb2000
Founding Team• Kirk Wylie – CTO 23 year old Berkeley grad DB whiz kid• Roy Goldman – President 27 year old Stanford DB PhD candidate• The Other Guy – CEO? CFO? We thought we needed a “business guy”
Mistake #1: Don’t Be Too YoungWe’re not all Zuck, no matter what Pete Thiel and Paul Graham would have you believe
Mistake #2:Every co-founder needs to bringsomething concrete to the table Adding a co-founder to your team in an ill-defined role you don’t know you need is excess baggage you don’t want
Sweet, Sweet Angel Funding• Raised a 2x oversubscribed round Feb 2000 Raised $2MM at $10MM pre-money valuation• Darn impressive angels Ram Shriram (Google), Rajeev Motwani (Stanford), Greg Gretch (Sigma), etc.• Story was Simple: Build v1 $2MM was enough to build a fully functioning prototype ready for seeding to the marketFeb2000
Enter: The Pivot• Situation: 1.0 ready, running low on money• Problem: Open Source stocks well out of favor with wall street• Solution: Let’s become an apps company!Feb Jan2000 2001
Mistake #3:When in doubt, ship it!Real organizations ship code.Even if it’s not your new focus, ship the code already!
Mistake #4: Pivot small, not big Make sure your pivot is withinyour investment thesis and core competencies
Mistake #5:Know what you’re pivoting to Don’t pivot to an amorphous area: make sure you know what you’re going to do before the pivot
Mistake #6:Get whole team buy-in for a pivot Don’t allow a long-term schism to develop between founders. Everybody needs to be convinced!
Mistake #7:Pivot based on evidence Don’t pivot on a hunch.Pivot on concrete evidence from multiple sources.
The Big Guns Come To TheTable• Story: We built what we said we’d build Money is for commercialization• Raised $10MM at $18MM Pre Led by Redpoint Ventures January 2001 – Post Bubble Burst• Grew the team dramatically in all areas We still didn’t know what app(s) we were buildingFeb Jan2000 2001
Mistake #8:Staff up when you know what you need Don’t add headcount just because other firms have. Know your precise needs before increasing burn.
Situation Mid-2001• We’re half-heartedly working on the DB• We still don’t know what app to build• Our burn rate is astronomical• Developers are inventing problems to stay busyFeb Jan Jun2000 2001 2001
Mistake #9:A new CEO won’t fix a broken company Executive team changes can be helpful but first determine what the problems are.
Mistake #10: Communicate strategyconsistently to everybodyInvestors, employees all need to be on the same page. Never give different stories.
Mistake #11:Board governance matters Have your lawyers involved with every board meeting and call.
The Valley of Darkness• “What are we building?”• “Do we have the right people to build/sell it?”• “Do we have enough money to build it?”• “Are we building the right precursor technology for whatever it is?”Feb Jan Jun2000 2001 2001
The Liquidation• We had an idea for an application• It required none of our existing technology or talent to build• We didn’t have enough money to get to cash-flow positive• Nobody wanted a down roundFeb Jan Jun Feb2000 2001 2001 2002
Mistake #12:Communicate future inflection points to executive team If there are major board decisions coming up, tell your executives. Hire adults and treat them as such.
The Aftermath• We returned 40% of the Series B investment The single best investment Redpoint made in 2001• All employees got jobs by the time we shut Google hired quite a few Alumni: Google, Facebook, LucidEra, HortonWorks, Duke University, VMWare, etc.• Kidar, the database, is in IP Purgatory No advantage in allowing its release Portions are now in LucidDB/EigenbaseFeb Jan Jun Feb Apr2000 2001 2001 2002 2002
1. Don’t be too young2. Every co-founder needs to bring something concrete to the table3. When in doubt, ship it!4. Pivot small, not big5. Know what you’re pivoting to6. Get whole team buy-in for a pivot7. Pivot based on evidence8. Staff up when you know what you need9. A new CEO won’t fix a broken company10. Communicate strategy consistently to everybody11. Board governance matters12. Communicate future inflection points to executive team
Mistake #13: Don’t be wrongIt hurts when the company youwere founded to kill gets bought for $1Bn. Trust me.