one of the hardest switches from being an operator to venture capital investor is missing that daily rush of planning, executing, and encountering obstacles along the way to clear. man, I miss that! but, i’ve been angel investing on my own for a while, so coming over to kleiner has been both exciting and humbling. one of the best parts of the transition so far has been the opportunity to reflect on my career as an engineer and manager, and to try to learn from my experiences so that i could maybe help someone who is just starting out in their career.
lately, i’ve been thinking back to one of the first startups i joined, a company called “electron economy.” there’s been a lot of “bubble talk” in the valley over the past two years, but let me take you back about a decade, back to the real bubble. at least from my point of view, those were very different times, much more of a wild west.
back in (june/1999), i joined electron economy as employee #1. i’ll never forget that rush. and now looking back, it dawns on me how much this experience shaped parts of my career, my outlook, and my taste for investing in people and companies. for context, electron economy’s goal was to provide a cloud server (at the time, it was called an “asp”) for order management. the company provided an online service that integrated various third-party logistics companies and shipping providers to manage fulfillment. i worked at the company for roughly two and a half years. there’s so much i’ve learned from this experience, i’ll try to share a few reflections from that time with you all — and of course, would love to hear your feedback and reactions.
electron economy raised a lot of money right up front, mostly because the founders had great, well-earned reputations. but, it may have been *too* much.
i was hired as the first employee, and then charged with the task of taking the engineering department from a total of 1 (that’s me!) to 100. what?? in addition to all the coding and dev ops i had to troubleshoot, i now had to recruit. at first, i was really nervous. but, this was an opportunity in disguise. i learned how to recruit. i had no choice. in one year, i recruited over 99 engineers. recruiting is a full-time job by itself, and it’s really hard. i had to sell the founders, sell the company vision, and sell myself. i wasn’t used to that type of challenge, but it was also a lot of fun, and over time, grew into something i love to do.
recruiting, hiring, and orienting new hires was hard enough. but, when the bubble started to really bubble, i had to work extra hard to keep them. retention was something we paid close attention to. i tried every trick in the book, and learned some things the hard way. i decided that “culture” was the ultimate retention tactic. now, the concept of “building an engineering culture” is a bit overplayed these days, but it is important. i don’t think of myself as an expert. i just made it really simple. i spent a lot of time with potential hires. i personally recruited them. i made sure their first few days and weeks were smooth. i won a budget from the company to take them out. i’d spend time with them to find out, on an individual basis, how i could help with their stuff — sometimes even spilling over into life situations. once we hired someone, i wanted that person to be there, so i had a natural desire to help them, and by doing so, they wanted to help me. it’s kind of like compound interest, but much cooler. out of our first 100 hires, none of them left. i’m really proud of that fact. and, a few years ago, we had a reunion get together and over 70% of the team showed up!
we were able to hire so many great people because we were well-funded. or, now looking back, over-capitalized.
the company raised too much money. beyond the 100 engineers, we took the company to over 220 total employees. i went from “engineer” to “vp eng” to “cto” as well. i don’t think i slept during that time. but, i also wasn’t in charge of the books. it’s a long story (for another post), but i eventually assumed the role of the sole executive and worked with the investors to take the company down from 220 to about 40, and helped engineer a sale and exit for the company, because we couldn’t go on. we grew too fast. we didn’t manage our finances. this was one of the hardest things i’ve ever had to do. part of what made me successful in recruiting is that i got to know everyone really well — and i really liked them. and then telling them you had to make hard decisions was a brutal reality of the competitiveness and dynamism of the valley.
so much of my time at electron economy prepared me for my future experiences. i was ingrained to be wary of raising too much money. fiscal discipline cannot often be injected to a company after the fact. i learned how to recruit, one by one. i learned that great teams are built, brick by brick – and many of these engineers i would later work with again (including some out of my house as i started composite software). on the product side, we developed a messaging protocol called “InternetTONE” which provided a business logic for commerce flows, which in a way helped me even at twitter. i was thrown into a fire and also entrusted with making the technical decisions for the company. i had to let go the very people i recruited. i had to help sell the company to stop the bleeding.it was the ups and the downs of startup life for the uninitiated, both exciting and difficult at the same time. even upon reflection, i’m not sure i can share any real concrete lessons — i can just share the story itself as a cautionary tale of what one guy (me) experienced. we are all going to make mistakes moving forward (and i’ll lead the charge), but it’s always helpful to look back, too, on the chance that you can learn from the past.