founding my first company

it was fall of 2001. i had just wrapped up selling electron economy to viewlocity, which has an intense experience of growing and then shrinking a team. during this process, i was the sole executive driving the acquisition and dealing with major investors. once the ink dried, i thought about taking a break, but i didn’t. instead, i holed up in my house and got wired in.

the fall of 2001 was a relatively quiet time. i mainly stayed at home and began building what would become the first real company i would found. at the time, i didn’t think of myself as a “founder.” i was just building software or talking to pilot customers. zero distractions beyond that. i financed the company for the first nine months, recruited a small core of engineers to the team, and we all worked out of my house. pure awesome times.

it was crazy and fun, looking back now. those were great times. it felt like i was really living in silicon valley (but then again i am a 4th generation bay area native!). eventually in august 2002, we raised a $5.2m series a. i moved the company out of my house and became the ceo of the entity: composite software (original name -> codemetamorphosis).

the idea for composite came from a combination of trends. at electron economy, i began to see that interfaces to data were becoming more standardized (with soap, etc.), and historically many of the challenges with data integration had been addressed with adaptors. companies such as crossroads software and active software were started to address this basic issue for enterprise app integration. these forces, plus some of my previous work in bioinformatics (querying multiple public genomic databases with local private databases) provided a background in building federated query engines.

the vision for the new company — composite software — was to build a data virtualization layer whereby the data could stay in the original system and our software could build a queryable composite view. large data lived in multiple heterogeneous silos, and getting a single view of an entity (in our initial case, a customer/client) is a very hard problem, both from a technical standpoint (high-performance queries on vertically partitioned data) and an organizational perspective (in their context).

in the fall of 2002, a year after incorporation, composite was lucky to have a few customers and seven-digit revenue. over a five year journey, our founding team grew the company to where it is today, still alive and doing well, with over 100 employees and many diverse customers and partners. these days, i advise the ceo. i recruited him into the company early, as well as several of the original engineers that worked out of my house are still with the company a decade later.

growing up in the valley, the dream of building software has always been around me. electron gave me a taste. but founding composite was the definitional move in my career. even though electron flew high and then was grounded, many opportunities and connections came out of that experience, especially interfacing with new investors and management. but, something deep down told me turn inward and just write code/have fun. i didn’t want to manage again just yet. i was a bit tired and exhausted from all the busyness of business. in a way, it was easier and more comfortable to build a new piece of software and re-recruit some of my colleagues than to go out into the real world. and, it was one of the best (and most fun) decisions i’ve ever made.

now on the venture side, i am grateful to be in the position to evaluate all these great new people, technologies, and business models. it’s like a never-ending stream of innovation, all coming by the kp offices. it is humbling. and, yet, we can only invest in a few teams each year. we have to be really selective. we have to consider the market size. we have to consider the competition. those are all the harsh realities of today’s technology market.

yet, at the same time, for better or worse, i am trying to find someone who wants to go through what i did. someone who wants to recruit teams but also has the moxie to know when things aren’t working out. someone who has already been working out of their house. someone who has convinced their former team members to go into battle with them. it’s not because this is the only path, or the best path — there are many paths. but, this is the only path i know, and if you’re not on this path, there’s a good chance i won’t be able to help you in any meaningful way. in future posts, i will share many of the learnings that i made throughout founding/building composite software. stay tuned.

kp in sf

in the world of software and the west coast, it sure does feel that there’s been a significant shift underway, north to san francisco. i could feel it for myself, even before i started at twitter in 2010. being at twitter in the heart of sf it was such a wildly different experience than palm and page mail road, and though i’ve grown up and lived and worked in the heart of the valley for so many years, it was clear that something new was swirling around the city proper. nearly the next two years were spent taking the 280 into twitter hq daily, a new habit that became a ritual.

now after a year at kleiner perkins, my colleagues and i have been observing this trend, as well. it’s not hard to spot — just glance over our calendars. while the center of gravity for kp is and will always be on sand hill road, the firm did secure an office in the city about a year ago, and we operate out of it while we are in the city. sometimes i’m there, jordan is there often, and so are chi-hua, megan, ray and bing when he comes up. plus so many others.

i’m in sf a few days a week, but i’m still working south of sand hill road quite often, and that area is still — and will always be — critical to the heartbeat of the valley. i’m excited to continue to spend more time in sf and to reconnect with old twitter friends and meet new companies. just drop me a note if you’d like to come by some time, and you may just see me walking around soma anyway. also, if you have any ideas on what you’d like to see us do with our sf office, please let me know. it’s a quaint space, not really that big, and not something that warrants a big press event, but we do want to create another space where friends in the ecosystem can come to and meet others, as well. i’m looking forward to your ideas, and thanks for reading. see you soon, either on sand hill or in the city!

announcing a new kind of technology show

i have an exciting announcement to make, and one that may surprise former and current colleagues…i’m really excited to announce that i’ll be hosting a new video interview series on techcrunch tv (TCTV) called “founders’ stories – engineering companies.” the concept is simple and straight–forward: on the first wednesday of every month at noon pst, TCTV will publish a short video conversation between me and a founder focused exclusively on some of the key technical challenges they faced in the creation of their products and businesses.

i’m personally excited for this new opportunity because it gives me yet another excuse to do what i love most — talk directly with technical founders and learn to understand the inner workings of the technical issues they’ve faced. the beauty of making it into a show is that these conversations become “open-sourced,” in a way, and will hopefully help transfer and spread knowledge within the community through a conversational format. (another potential win in this series is that future founders may better understand how a technical former-operator like me may be thinking in a venture context.)

enough about me, though. it’s all about the guests, and we have a great lineup on tap, such as bradford cross from prismatic (we’ll discuss balancing design and engineering decisions and other topics), a number of founders both at the later stages of their company’s evolution and others that are very early, and more. of course, i’m open to suggestions for guests, so feel free to contact me.

thanks in advance, also, to all the folks at techcrunch and TCTV for the opportunity. if you have any suggestions for guests, or topics to drill into, please don’t hesitate to comment or shoot me a note

here is the first session:

http://techcrunch.com/2012/11/07/founder-stories-bradford-cross-of-prismatic-on-running-his-startup/

hard lessons, a decade later

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.

announcing our investment in codecademy

over a decade ago, when i was starting out as an entrepreneur in the valley, things felt pretty concentrated in and around the bay area. that’s not the case today. less than a year ago, i met sahil of gumroad, who had just turned 19 yet possessed so much experience already. as we got to know each other, i also got to know zach of codecademy, which was taking off in its own way. recently, we at kleiner were lucky enough to get to know zach and his team and are proud to be new investors in the company. (and, as an interesting aside, it turns out that sahil and zach are old friends, having met in china at a conference almost five years ago.)

i am sure most of you have heard of codecademy by now, but briefly — the company has created an online learning platform for others to learn about software development. and, it comes at a very opportune time, when a number of large trends are about to converge. in the immediate sense, we in the valley and tech community feel the shortage of available technical talent on a daily basis. at the same time, educational programs at middle and high schools, and even colleges, aren’t producing enough graduates ready to work in this sector, and in some cases, missing great opportunities to expose younger folk to the joys of programming. and on the ground, early-stage companies are beginning to need technical experience within its traditionally nontechnical teams, such as business development (through apis), marketing (growth), and sales (systems).

there’s also a personal attachment for me. as someone who grew up as a geek in the valley (self-taught basic & pascal on the apple ][+), and now as a father to a little one about to start school soon, i think about the democratization of information and knowledge that the internet and our social networks provide to future generations. codecademy is a powerful example of that democratization, a platform so simple yet deep it can truly attract anyone of any gender, race, or class.

i am so excited to work with codecademy, zach, ryan, and his team. specifically, i’ll be helping them scale their company, with a particular focus on the engineering team. a few times a month over the weekend, ryan and zach and i hop onto skype and check-in about how their recruiting is going, as well as management issues they face. i’m 3,000 miles away, but feel close to the challenges they seek to overcome. and, a nice side benefit is that it will put me in new york city a bit more often, too ;) ultimately, we all believe that zach, ryan, and the team can take codeacademy to the masses, to attract anyone worldwide who harbors dreams and desires of designing or engineering software for the platforms of today and tomorrow.

announcing my investment in apcera


in the headline-grabbing and tweet-filled world of consumer web and mobile startups that we live in today, it’s sometimes easy to forget about more traditional b2b companies that have been or are currently being built-in the valley. sure, it’s not as catchy as building software that will touch millions of hands, but the act of company-building in the enterprise is just as interesting — at least to me. and while my experience at twitter certainly opened my eyes to the potential of consumer-facing technologies, my entrepreneurial dna is made of up of many pieces of the b2b space, and now at kleiner, i fully anticipate being quite active in this space, as well.

months ago, i received an email from derek collison. i recognized the name and then googled, recalling that derek’s work at tibco, as well as how badly microsoft was trying to recruit him. as a long time angel investor and now vc, you just absolutely love to get those emails. derek had heard of me from composite software, a b2b company i founded back in 2002 and which is located in san mateo, and wanted to reach out because he was trying to decide which startup to join next.

after meeting derek a few times, i went into “persuasion-mode.” if i had anything to do with it, he was not going to join a company, he was going to found one — or so i told myself. derek and i spent more time together and it was clear that not only he was an outstanding technologist (and person), but he could also attract top technical talent from his deep experience in the valley. we met more frequently, and the idea for a new company — apcera – was born.  derek knows that the maturation of these platforms is hard work and needs heavy lifting. you can’t just build this next generation as a bunch of scripts. to that end, the company already has dna from the likes of Google, Twitter, and TIBCO..

apcera’s mission is to build and deliver the next generation of cloud platforms to the enterprise. people have been waiting for platform as a service (paas) to arrive as a core technology for future cloud platforms, and while it has done well out of the gate, apcera is trying to build platform technologies that all aspects of the enterprise can leverage. i’m so excited to work with derek and his team on this mission — it reminds me of the days sitting in my house a decade ago, trying to recruit engineers for composite software and building something entirely new that creates the foundation for a real, disruptive company.

anatomy of my first venture investment, gumroad


they tell you not to invest in your first year of venture — or at most do one. the conventional wisdom is to observe, not be tempted, develop a bit of pattern recognition, and eventually, when the right opportunity comes around, you’ll be ready to lean in. well, that sounded boring to me. i’m too impatient for that, it seems, and it’s hard to temper my excitement when i get to meet new technical teams every day. of course, i have the unfortunate task of saying “no” quite often, though even i’m surprised how fast the first “yes” came.

back in december of 2011, i had just joined kleiner perkins and had a slew of meetings, coffees, and phone calls. it was exciting, overwhelming, not to mention i was swimming in a sea of new introductions generously made by friends and colleagues. during one of those 100 initial meetings, someone suggested i meet this guy — sahil — who just left pinterest to found his own payments company. that certainly caught my attention. luckily, my friend followed up with the introduction and i was able to meet sahil. i remember being a little shocked at how young he was (19), but also impressed how mature he was and his thoughts on design and business. at the end of the first meeting, we decided to keep in touch, began emailing about product ideas, and i tried to help him with some introductions to various valley companies for his partnership ideas. through those interactions, i quickly learned sahil was no kid — he was a force.

so, i started to dig into his product, gumroad. he’d raised angel funding, and the company was formed from one of sahil’s many side projects. this was a different type of product. rather than raise money for a specific idea, sahil saw a need earlier and just hacked together a tool to solve the problem of selling online. with gumroad, now links become vehicles for purchases. i dug around some more and saw that gumroad was in the luxurious position of having mostly organic traffic (which is priceless), and since i just came from twitter, the prospect of innovating around links was simply intriguing. i started to get more hooked on the idea.

founder, check. product, check. but what about market? this is tricky. it’s not a space i’ve poured over, but luckily, one that was clearly emerging. kp is already invested in square and has experience with other payment technologies. and, there’s the reality of what facebook and twitter mean to the social web. we all share links, billions a day. what if those links are just a way to get new content, sell items, buy e-books, sell instagrams, and so forth? during my runs over a few weekends, and it began to dawn on me just how big this market could be, and how close to the transaction gumroad could be. it was a simple yet powerful idea. the timing is right. the focus of “making selling as easy as sharing” feels right.

and so, i talked to my partners, and called up sahil and said i’d like to offer him a term sheet. i think he was surprised. there was silence on the phone. he wanted to think about it. that was fair :) and over the next few weeks, we talked a lot [and went up to sf to hack on a project together!]. there were some tough negotiations. this guy can negotiate! i’d be lying if i said i know where gumroad is going to go in the future. and, that’s the exciting part. i thought a lot about sahil, the product, the market — and making my first real venture investment. and, this just felt right. so, i followed my intuition after that, and was lucky enough to have sahil agree. it is a real honor to work with him, and i look forward to helping him and bryan, sid, and the rest of the gumroad team invent the future.

a letter to my future self

over the past decade, things moved really fast – sometimes too fast. founding a company – seems like a long time ago. at palm and twitter, things moved lightning fast. i figured that when i moved over to venture, it would still be fast, but not as fast — and i was wrong. only a few months in, and it’s moving really quickly. it’s exciting, but i also have to force myself to stop every now and then, to reflect, and readjust as needed. colleagues and friends have told me it could take a few years.

coming to this blog will be one of those forced “stops,” where i give myself the time and space to simply write, share, and ask questions. today, given how quickly things are moving, i wanted to stop and do something different — to write a letter to the mike abbott of the future, something to memorialize what i’d hope i could turn into as an investor — perhaps something i’d write now, tuck away, and read a few years later. so, here it goes…

dear mike,

if you’re reading this now, you’re probably on a caribbean island celebrating your second investment that has just gone public.

just kidding! never. i know that you are still hacking away. you know that, as long as you are uncomfortable, that you are learning.

you’re continuing to do the work that you love — plainly, to scour the earth to find captivating technologies, markets, and teams. you’ve had to say “no” more often than you’d like to, and it’s not easy, but all the “no’s” make the one “yes” more certain.

you’re a technologist and engineer at heart. you are drawn to technologies, both in software or hardware. there will be opportunities in other areas too, and you’ve kept an open mind when needed. you’ve also thought about markets. you’ve realized that, no matter the technologies in front of you, market sizes matter. yet, at the same time, there are moments when entirely new markets are created. you can’t afford to miss those, mike! and sometimes, disruption occurs not from a direct attack on a market, but from cutting in from the edge. keep your eyes wide open.

and, then, there are the entrepreneurs themselves: the founders, the founding team, the core engineers and designers… what it’s really about. it’s cliche, but “team” matters a great deal. you’ve gone to war many times with different teams, so you’ve been careful about who you surround yourself with, and you’ve guided your entrepreneurs to learn their own way, too. you’ve learned from your own experiences that ideas and tactics often change, but teams remain mostly the same, so you’ve invested in team-building and recruiting for the right attributes.

hopefully, too, you’ve learned that things don’t often present themselves as they truly are. you have to be both optimistic and skeptical. you’ve come to your own conclusions, paying little attention to what the chorus may say. you’ve learned to really use the products and services you decide to invest in. and, you’ve given careful consideration to the teams and products that don’t look normal, that may be true outliers. you’ve been unafraid to lead, or to back the un-backable. you haven’t needed validation when you’ve decided to lean in — it’s a choice you’ve come to naturally.

and, finally, there’s work, and there’s life. you know you could work 24 hours a day, 7 days a week. there’s always more email, more meetings. you’ll sacrifice sleep to get things done, but you have a family, and you’ve spent time with them, too – not just time, but being there, being “present” when it’s not work-time and fully engaging in real life, in things that you like that aren’t related to technology. you know you can’t get that time back. time is your most valuable resource. it’s invaluable, in fact. and, just like any good investment, this approach will pay handsome dividends, as well. while work/life balance may not be
attainable, you must continue to pause and take in life.

the journey will be amazing – enjoy it – and stay uncomfortable

cheers,

mike

the journey begins.

Image

my name is michael abbott, and welcome to my blog.

my goal for this blog is simple, two-fold. one, to share my story and evolution as an engineer with others, and to attempt to capture the essence of founding, building, and scaling technical companies so that it may be helpful to one other technical founder out there so that entrepreneurs who are in the same shoes i was in over 10 years ago know what i wish i would have known. through these experiences (some good and some not so good), i am inspired to chart my own path as an investor.

a little about me. i grew up playing sports intensely, team sports (soccer, crew, and rugby) for over a decade, followed by individual sports (triathlons, running, and swimming) for another decade. i didn’t realize it at the time, but each sport pushed me in different ways to be part of a team and focus as an individual. it sounds cliche, but at the same time, it defines me. and, i’ve found it’s just more fun to be part of a killer team. without those collaborative experiences, i may have been a very different type of engineer.

i began my technical entrepreneurial journey over a decade ago. after years of being a code monkey in elementary school (apple ][+ ftw), junior high, high school and college, and after dropping out of a PhD program. a couple of years later i started a company in my house, scraped up money to pay the founding engineers, and was fortunate to work with a team that build a venture-backed company that still exists today , a decade later. that was a success.
i’ve been involved in a company that didn’t pan out, too…that was really hard. we often don’t reflect on the ones that didn’t work out, but they’re important. more recently, i managed to head over to palm and led the team that built/shipped webOS, and most recently, led the engineering team at twitter where it is great to both the service and the team scale to new heights! be gone fail whale!

after twitter, i was fortunate enough to join kleiner perkins at the end of 2011, and this is what i’m going to do for the rest of my career. already just a few months in, and i love it. i love every minute of it. things are changing fast in the valley — and at kleiner, too — and i’m lucky to be a part of it. i have scaled technologies, teams, and companies, and also participated in rebuilding efforts at other times. i’m now trying to scale myself — as strange as that sounds — so that i can help the next generation of great technical entrepreneurs build the next big things.

if you’ve gotten this far, thanks! i’m going to post here about once a month, maybe more, and simply try to capture whatever knowledge i acquired over the last decade in the hopes that it will help others who are on the verge of starting their first, second, or third technology company. specifically, i want to cover all items a technical founder will face — from fundraising, to hiring, to recruiting, to scaling, to when to bring in nontechnical hands, how to pick advisors, and much more. if you have ideas, please also share below. i’m looking forward to it!

-mike abbott
@mabb0tt on twitter