Mark Fletcher was a senior software engineer for
Sun Microsystems when he started ONElist, a free
Internet email list service, in 1997. He ran ONElist
as a side project until he received venture funding a
year later. Yahoo acquired ONElist (later renamed
eGroups) in June 2000.
In 2003, Fletcher created Bloglines, a web-based
news aggregation service. He originally wrote the
program to manage his own bookmark list, but once
he launched it publicly, Bloglines was fast on its way
to becoming the most popular news aggregator on
the Internet. It was acquired by Ask Jeeves in February, 2005.
Fletcher's startups typify many of the Web 2.0 aspects that we value today:
building inexpensive web-based companies that grow fast. ONElist got to one
million users before it took outside investment, and Bloglines took only
$200,000 of investment before its acquisition.
Livingston: Take me back to how you got started with Bloglines.
Fletcher: I had started ONElist, it became eGroups, we sold it to Yahoo, and
then I left at the acquisition in September of 2000. I decided I needed to take
time off--I hadn't had a vacation since eighth grade, between work and school.
So I traveled around a lot, got really bored, and realized--I had been around
computers all my life, that is really what I like doing, so why am I depriving
myself of the fun of working on startups?
It really came down to solving a need of mine. I had started another
company--an anti-spam company--called Trustic, and that wasn't going very
far. But as I was starting that, I was doing this other thing on the side, which
became Bloglines. I had a bookmark list of about 100 sites that I went to every
day just to see if there was new stuff. Things like Slashdot, CNN, my friends'
blogs. It was taking a long time; I figured there had to be a better solution to
233
Mark Fletcher
Founder, ONElist, Bloglines
17
CHAPTER
this, and that's how I found out about RSS. At that time, there were a couple of
desktop-based aggregators--programs that you could download. But those
weren't really applicable to me because I'm on several different computers
every day and the quality of the programs weren't very good. With my background
of building server applications, it wasn't a great leap to figure out that I
should just build something for myself.
So I did that while I was running this spam thing. Then it became very
apparent that the anti-spam business is not a fun one to be in, because everybody
hates you. You're never perfect. You either don't block enough spam or
you block somebody's favorite emails. I quickly got out of that. This other thing,
Bloglines--which was working at the time, but I was just using it for myself--I
wasn't even sure was going to be very popular. Nobody really knew about blogs;
aggregators were the next level up, kind of difficult to explain to people. So I
decided, I'd already written it, might as well just throw it out there and see how
it goes. So that was it. I put it out there in June of 2003, and it started getting
coverage pretty quickly after that. I realized that I should probably put some
effort into it, so I brought some friends in and started doing some marketing
and went from there.
Livingston: So Bloglines was something that you created for yourself to use and
then backed into doing a startup around it?
Fletcher: I had an inkling that it could be interesting, but I guess I thought it
was a little ahead of the curve. I started ONElist because I wanted to start a
mailing list for my parents, and at that time you had to download software and
you had to have a computer connected to the Internet. It was just really difficult
for an average person to put together a mailing list. So it was the same
thing. I guess my advice is: solve a problem that you have, first and foremost,
and chances are, other people may have the same problem.
Livingston: You brought on some people that you had worked with before?
Fletcher: Right. A core group of people that I had worked with at ONElist: a
great marketing person, a great PR person, a UI guy, and eventually a programmer.
But I was the only full-time person until around September of '04.
Livingston: Were you doing this out of your home?
Fletcher: Yeah, the den over there.
Livingston: Was it self-funded?
Fletcher: Yeah.
Livingston: So you didn't have to deal with any of the investor headaches?
Fletcher: Didn't have to deal with any of that. That's the other thing. Doing
startups like this is so cheap that it just doesn't require a lot of money. I think I
put in a total of $200,000. And I didn't do it nearly as smartly as I could have.
I ended up buying all the computers. My recommendation would be: don't buy
any computers. Just use the virtual dedicated hosting services.
234 Founders at Work
Livingston: Tell me about some of the biggest turning points for Bloglines once
you decided, "We're a real company." I assume you incorporated and did all the
legal stuff.
Fletcher: I just used the same company that I had set up for the anti-spam
company. That's why the official company name was Trustic. I thought, "I've
already done the work to set up this company, so it's just another product from
it." I was using the same lawyer that I had used with ONElist, who was a family
friend.
Livingston: So you just did a quick shift into a different product.
Fletcher: Yeah.
Livingston: Does that mean that you were the only shareholder?
Fletcher: No, the people that I brought in who weren't working full-time were
working for stock. I'm very fortunate that I can bring in people who don't need
money right away to do this; they can just work for essentially deferred compensation.
So you give them some chunk of stock as a contractor. You say, "You
have a 6-month contract, you get this amount of stock over that time."
Livingston: Tell me about some of the big turning points.
Fletcher: We went online in late June of 2003. I guess the first thing is that we
started getting press coverage almost immediately--and this is even before I
brought in my marketing friends. There's a newsletter called NTK, or Need to
Know, and we got a big old blurb in that within 2 weeks or so. Then it kind of
went from there.
The amazing thing about this company is that... I can show you the press
binder and it's literally this thick, for something that really a tiny percentage of
people actually use.
Livingston: Why?
Fletcher: I think we got really lucky because blogs in general started to become
really big and the downturn was ending, so you had all of these people looking
for the next big thing. Also a lot of reporters used Bloglines. They like to talk
about things they use, so we got really fortunate in that regard. But there was
no planning with that; it was just serendipity.
Livingston: I'm surprised, because I feel like reporters are often the last people
to write about what's new.
Fletcher: In general, yeah, but it became comical. I'd talk to these reporters,
and they'd all tell me they were Bloglines users. Maybe I was talking only to
people who were using Bloglines, but I don't know. If you compare the press
that we got with Bloglines versus the press that we got with ONElist and
eGroups, it doesn't even compare. Whereas with the first company, we had
20 million users at the acquisition, with Bloglines, we only had a tiny fraction of
that. It was this huge, disproportionate amount of press for this little company.
We were all amazed.
Mark Fletcher 235
Livingston: Were blogs as mainstream in 2003 as they are today?
Fletcher: Not at all. Nobody knew about blogs. I was kind of embarrassed
about this little thing that I wanted to put out, because nobody knows what the
hell a blog is.
Livingston: Did you think that blogs would someday surpass the mainstream
media as the source of information? Did you know how popular they'd
become?
Fletcher: No, not with the speed that it happened. I mean, we were incredibly
lucky in that we latched onto this trend which kind of developed at about the
same time. But there was no planning. It was just me trying to solve my own
problem.
Livingston: Did you have a blog back then?
Fletcher: Yeah, wingedpig.com. I've had that for a few years. It's more of a
marketing thing for myself than anything.
Livingston: You weren't trying to say, "Blogs are going to take over--let's get
into that"?
Fletcher: I wish I could say I was that smart, but no. I was just some idiot who
had a bookmark list 100 sites long and it was taking too much time to go
through. I was addicted to reading these things. That's all.
Livingston: What were some of the other big moments in Bloglines's life?
Fletcher: We were around for a year and a half before we were acquired, so it
wasn't very long. Because I was funding it myself, there was no big funding
event that would be a milestone. It was kind of a gradual buildup throughout
the entire time in terms of interest from the press, interest from venture capitalists,
interest from companies. So it got to the point where all the big companies
were talking to us. But that's fairly typical of a lot of startups.
Livingston: Did you ever contemplate taking VC money?
Fletcher: I'd done that with ONElist, and I wanted to do it differently this
time. It was kind of, "Let's see what I can do." Because I fully believed in the
thesis of "these companies can be really cheap to run if you do it with even just
a little bit of intelligence."
I took money with ONElist because at that point we were growing so
quickly that we were running out of money, and I couldn't fund it myself any
longer. ONElist got to be the 150-person company. But you don't have to do
that these days.
Livingston: When you were developing Bloglines, were you following a
purposeful plan or were you just like, "Let's build this product and see what
happens."
Fletcher: My philosophy on these types of companies--consumer-based
Internet companies--is that you don't need to worry about the business model
236 Founders at Work
initially. If you get users, then everything else follows. Basically any technology
can be copied, any concept can be copied. In my opinion, what makes one of
these companies valuable is the users. That can't be copied.
Livingston: Did you think about the idea of "democratization" of the media
when you were doing this? Was there a social ambition?
Fletcher: No, I'm not nearly that smart. Just friends and news sites that I
wanted to follow on a regular basis. But I was latching onto trends, of course,
which are [that] the number of websites on the Internet is just growing
exponentially over time. So if I had this problem now and I knew that I was a
very early adopter, other people would probably have the problem eventually. It
was just a question of when. I thought I was just way too early. But I wasn't.
Who knew?
Livingston: Why did you think you were way too early?
Fletcher: Because I talked to all my friends and nobody knew what a blog was.
Nobody knows what a blog is and certainly nobody knows what aggregation is.
Even these days, you say, "Do you know what syndication is?" and they think,
"Seinfeld reruns." Which is one of the struggles we had with Bloglines--trying
to explain these concepts to normal people. Syndication, RSS, aggregation?
What are these goofy things? But we didn't have to do the education as to what
a blog is because the press was doing that for us.
Livingston: Did you worry about competitors at all?
Fletcher: Always and never, I guess. I get very competitive, very paranoid. I
freak out about everybody. But, I also knew that nobody was doing a decent job
when we started, so we had a head start. As long as we didn't screw that up,
then it would be difficult for somebody else to come along, unless they were to
grab a whole lot of money and go on an advertising blitz, for example. Yeah, I
was worried, but what are you going to do?
Livingston: Who was your biggest competitor?
Fletcher: When we started, there was only one service that was at even a close
corollary and that was News is Free. When I was talking to reporters initially,
they'd ask the same question, "What's your competition?" It was basically the
desktop aggregators, the programs you could download. We had a fairly good
story around why we were better than that. Most people don't want to install
software on their computers. A lot of people can't install software on their computers
at work. A lot of people use multiple machines. We had several clear-cut
advantages that were fairly easy to describe. About 6 months after we launched,
I think NewsGator came out with their web-based aggregator, and were the
closest competitor.
Livingston: Were there any lessons that you learned through your experience
with ONElist that you said, "I'm not going to repeat that this time" or "I am
going to repeat this time"?
Mark Fletcher 237
Fletcher: Well, I didn't take VC this time; I didn't have to.
Some of the software design we carried over from ONElist to Bloglines, the
way the website was put together and how we scaled certain things. And certainly
some of the people. Everybody I worked with on Bloglines, I'd worked
with at ONElist before. It felt like ONElist, version two.
Livingston: Can you remember any near disasters from ONElist?
Fletcher: Tons. We were growing so fast with ONElist--a percent-and-a-half a
day for the first year or two. We had a million users at 11 months, which in '98
was an amazing thing. We had horrible scaling problems the first year. We had
lots of downtime because I didn't know how to set up monitoring systems. I
guess that's one thing I did a lot better with Bloglines.
I didn't even have a cell phone when I started ONElist. Now, it's easy to use
your cell phone as a pager and you can set up systems. With ONElist, I was
always scared to leave the computer. Just because I knew things would crash.
With Bloglines, at least I had a greater degree of freedom. Especially when you
get something like a Treo, where you can basically log in from your phone. I
remember fixing stuff while sitting in front of a slot machine in a casino.
Livingston: Did you have good relationships with your VCs? Did it suddenly
impose new requirements on your company?
Fletcher: I guess the answers would be "no" and "yes." As an entrepreneur, I'd
never talked with VCs, I didn't really know how VCs thought, so it was an education
the whole time. I didn't even have a mentor. No VCs were blogging. I
didn't know anybody who had started a company. I was just flying blind.
We raised $4 million from CMGI and Bertelsmann Ventures in December
of 1999 as our series A. We had been self-funded to that point--we'd survived
the first year on $55,000. That got us to a million users, and then we took
$4 million. I had never seen a term sheet before, I didn't know what I should be
negotiating for, I didn't know what I shouldn't be negotiating for. So, mistakes
were made, but I can't fault myself for that. I didn't know what things I should
throw out from the term sheet and the lawyer couldn't tell me.
The great thing for entrepreneurs these days is that there is so much more
information out there than there was in the '90s. Any number of people that
have gone through this are blogging. All sorts of VCs are blogging now. There
are a lot more books out now. You can just do a search and find sample term
sheets, for example. All things considered, I certainly can't fault the outcome,
but I made mistakes along the way.
The VCs did come in 2 weeks after we took the money and said they wanted
to replace me as CEO, which was interesting. I was pretty wrapped up ego-wise
with the company. When you start a company, it's your life. So you think you are
the only one that can run it. You think, if you're not around, it will fall apart--or
at least I did--for all of these things. It was very difficult for me to separate
myself from the company in that way. So there was a fight over that for quite a
while before I acquiesced, and we brought in a new CEO. It turned out that
that was very good for the company and, had I been more mature, it would have
been a less painful process.
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Livingston: You worked at Sun before the startup, right?
Fletcher: I got to Sun via the acquisition of a startup I was working at, called
Diba.
Livingston: So you had some startup experience.
Fletcher: I had worked at a couple of startups as an engineer before.
Livingston: But you didn't have any mentors?
Fletcher: No. My parents are a fantastic resource; they were both managers at
IBM. But, we were all flying blind. You look at a term sheet and it talks about
vesting schedules for founders stock, and you have no idea what you should
expect and what you should negotiate for.
Livingston: How did you feel when the VCs said they wanted to replace you as
CEO?
Fletcher: It was jarring. I think there was bad behavior on all sides. During the
whole funding process they said, "We're interested in you guys because of your
management team; we think you're fantastic." I'm on the phone with David
Wetherell, head of CMGI, and he's saying, "We're making the investment
because we believe in the management team." Two weeks later they pull me
into the office--before even the first board meeting--and say, "We want to
replace you as CEO."
Looking back, I can absolutely see why they would want to do that, because
I was not a good negotiator with the term sheet and I'm sure they could see
that. But I was so wrapped up in it at the time, it was very difficult. The good
news is that we did bring in a new CEO, he did get us acquired by Yahoo, and
things turned out wonderfully. So there are no complaints.
Livingston: But maybe there should be more open discussions between management
teams and VCs?
Fletcher: Well, always. I've been dinged as having poor communication skills,
which I'm certainly guilty of. But what nerd isn't?
The whole VC process in general has been very closed and oftentimes by
design by the VCs. Because they don't want to be negotiating against other VCs,
they don't want terms of the deal to get out, so it's in their best interest to keep
things secret. But it is very nice that things are starting to open up now, whether
they like it or not.
With VCs, it's all about power. It's great that that's changing. It's changing
because more people are talking about it because it's so much cheaper to start
companies these days. At least these kinds of companies. There will always be
the need to raise $10 to $50 million for some companies, but for most userfocused
Internet startups, you just don't need a lot of money.
Livingston: Do you remember some surprising features that your users
wanted?
Fletcher: Not features, but the stickiness of the site. I thought I was a freak
because I would go back to Bloglines all the time--10, 20 times a day. But then,
Mark Fletcher 239
when we started looking at user behavior, the average user came back to the site
4 times a day for 12 page views each time, which is a huge number. Usually, the
average user doesn't come back to a given website more than one-half a time a
day or something like that, so it was this incredibly high number of sessions and
incredibly high number of page views. Whenever I quoted that to Bloglines
users, they would say, "These numbers sound low to me. I go back ten times a
day." People were saying that this was one thing that had changed their use of
the Internet, which is incredibly gratifying.
Livingston: Can you remember one of the most surprising things about the
startup experience?
Fletcher: I don't think there was any one thing. Startups are just so amazingly
fun; they are so amazingly stressful. Whether you are an engineer or whether
you are a founder, at least for me, it takes every emotion you've got and multiplies
it 100-fold. Higher highs, lower lows than any other work experience. A
startup is all-encompassing, so do it when you are young and when you don't
have a family because you'll lose it all.
Livingston: Back to the money thing--you said startups can be cheap. I read
that you said that a lot of the Web 2.0 principles started even back in the '90s.
Fletcher: With ONElist, we didn't own machines until years into the company.
We did the virtual dedicated hosting thing. So we had 40 or 50 machines at
Digital Nation in Virginia, that we had never seen. Which is smarter. That was
the biggest mistake I made at Bloglines--not doing exactly what I had done in
the '90s. Because when you do that, you don't have to worry about buying
switches, racking the damn machines or moving them when you run out of rack
space. Or going down to the colo at 2 a.m. to reboot something because it
crashed--all that gets taken care of. And these types of startups are never
valued on the cap x, so you don't get any more money in any sort of acquisition
based on the number of machines you own. Unless you're Google. So we had
40 or 50 machines at Bloglines when we were acquired, and that didn't play a
factor at all.
So just get something out there. If you find really early versions of ONElist
or Bloglines on archive.org, the websites are horrible. They are crap, they don't
have any features, they just try to do one thing. And you just iterate because
users are going to tell you what they want, and they're your best feedback. It's
critical just to get something out quickly. Just to start shipping and then you can
iterate. Because shipping is just this huge hurdle. I've been a part of companies
that have had big problems shipping--they just can't ship. It's a psychological
thing.
Livingston: It's hard to do though, no?
Fletcher: Well, you want things to be perfect, and the great thing about userbased
Internet services is that they don't have to be perfect. You got a bug, you
can fix it in 5 minutes. You don't have to worry about upgrading everybody's
software installation.
240 Founders at Work
Livingston: What would you tell a founder who just could not release new features
and was overanalyzing everything?
Fletcher: That it's very easy to do, very understandable; but, in my opinion, the
best thing for your company is just release early, release often. Because then
you start a dialog with your users, because they're going to send you emails saying,
"This is what I want." We were getting 50 to 100 emails a day at Bloglines,
and most of them were feature suggestions. Once you start acting on those feature
suggestions, the users see that you are actually listening to them and they
become more loyal to your site. Because they see they are able to participate in
this and it's just kind of like a virtual cycle. So it is not a disadvantage--it may
even be an advantage--to ship without all your features initially, for that reason,
because you get all of this going and you get out there sooner.
Livingston: You called yourself a nerd. Do you have any thoughts on founders
who are technical people versus founders who are MBAs?
Fletcher: I guess it takes all types. When you say a technical guy, they can
range from a hardcore nerd to somebody who has some product knowledge as
well. I like to think I have a little bit of product knowledge, which helps me
develop these websites. A lot of engineers don't necessarily have that skill set,
but they are better engineers than I am, so for those people, if they were to
partner up with somebody who was a product designer, I think that probably
helps out a lot.
But in terms of MBAs, these user-focused Internet companies aren't very
complicated business-wise, so until you actually build something that's got users
and has momentum, it's not like you're going to be doing biz dev deals or anything
like that. Actually, I don't have the greatest opinion of biz dev people for
these companies because they're just not needed, I don't think. You either
stand on your own or fail on your own, initially. If you build momentum, if you
get users, then deals may come your way, but a lot of times most deals don't
make sense, so you don't need hardcore MBAs. It's more focusing on the product
and engineering side.
Livingston: Do you think that the technical founders can tell if the deal doesn't
make sense? A lot of technical founders might think, "Oh my god, get bought
for $5 million dollars? This is amazing!"
Fletcher: Yeah, and there's nothing wrong with that. If you are two guys in a
garage and if you've been doing something for 6 months or a year and somebody
offers you $5 million, it doesn't sound very dumb to me. You can hire help
for acquisitions, so with the Yahoo acquisition of eGroups, we had a board
member, Mike Moritz, who was also on the board of Yahoo, so he was involved
in that. With Bloglines, Ask was interested in us. We had talked with Google
and Yahoo and some of the others, and things were getting interesting with Ask.
I knew that I needed help negotiating any sort of deal. So at that point I
brought in an investment banker.
Mark Fletcher 241
What an investment banker does--and especially boutique investment
bankers ([who] are guys that deal with smaller deals, up to $100 million)--what
they'll do is serve as the middleman, essentially creating an auction and [trying]
to drive up any price. They'll help you negotiate the deal; they'll do all of that
for you and then just take 2 or 3 percent of the purchase price. I had a pretty
good experience with that with Bloglines.
Livingston: How did you know that the time was right that you should be seriously
considering selling Bloglines?
Fletcher: Because there was a lot of interest and Google was making rumblings
that they were going to come out with something, Yahoo was making rumblings
that they were coming out with something. I tend to be a lot more paranoid
than I probably need to be. We weren't growing as fast as I wanted us to,
and it came back again to users are really the only thing that you have with
these types of companies that protects you, that makes you valuable. When
somebody buys you, they buy you for the users and to a lesser degree the buzz.
It depends on the acquisition. So it was a combination of factors that just felt
like the right time.
I knew no investment bankers and had never dealt with any of them before,
so I asked my lawyer, who's a senior partner at Wilson Sonsini, for some names.
He gave me three names. I interviewed all three, and I went with one because
I liked them and they had just done another deal with Ask Jeeves, who I knew
was the leader in this process right now. I knew that these guys had experience
and they knew all the contacts there, so that's who I went with. That was probably
in late October/early November of '04, and the acquisition was announced
February 7 of '05.
Livingston: Any other lessons or things that would be helpful for a founder to
know about the acquisition process?
Fletcher: The biggest question is when to sell. Even with ONElist, I had acquisition
offers 4 months into the company. Offers by websites that no longer exist.
So I dodged a bullet. With ONElist, we were growing so quickly that it was like
a no-brainer that we just shouldn't sell. And we didn't really have much in the
way of competition back then, so it was basically hang on for your life and see
how long you can go. With Bloglines, we weren't running nearly as fast as that.
I was feeling there was competition coming. I do think we're kind of in a bubble
again to some degree. Not in terms of money flowing into all these companies,
but certainly... somebody put out the canonical list of Web 2.0 companies, and
I think every company has like 30 competitors now or something like that. So I
was just starting to see some of that.
And actually, thinking back to this, all the press that we were receiving was
wonderful, but it was also a double-edged sword. I remember thinking back
then, "Just leave us alone and let us grow for a while more before you hype us."
You can't complain about it, but... there was a stretch where we were in the
Wall Street Journal four times in 6 months. With ONElist, we were never in
the Wall Street Journal, ever. I was joking with my PR person saying, "So it's
242 Founders at Work
been 2 weeks since we've been in the Wall Street Journal. When are we going
to be in again?" And she said, "Don't you dare expect this kind of stuff forever."
So you have to figure out when is the right time to sell, what you want out of
an acquisition--both in terms of money and whether you want to stay on.
Would you be happy with somebody else running the company? It's a very personal
decision. And there are better times to sell than others. If nobody is talking
to you, it's going to be hard to set up an auction and you're not going to get
much money and you're not going to be happy about it.
I think those are the main things. Then, in terms of selecting a banker, it's
"Who are you comfortable with; who understands your company?" One of the
investment bankers I talked to had no clue what we did, didn't do any research
to figure out what we did and was just unresponsive. Well, how is somebody,
who is essentially going to be your representative, going to make a good sale of
your company if they don't know what you do?
Livingston: You were acquired by Yahoo and Ask. How does life change once
you become part of these big companies?
Fletcher: There were differences. With Yahoo, I left at the acquisition, so I was
never a part of Yahoo. With Ask, I stuck around for 14 months. Not that it
was contingent on the acquisition in any way, it was just the right thing to do. If
you compare the two companies... when eGroups was acquired by Yahoo, we
were 150 people. I essentially hadn't played in the code base in a year, I wasn't
running day-to-day operations, so it was very easy for me to go away. At the
acquisition by Ask, there were two of us going over. It wouldn't be right, regardless
of anything else, for me to leave. I wanted to make sure that the acquisition
was viewed as a success for Ask 1 year later--5 years later, even. I've learned
that your reputation is very important, as an entrepreneur, as a tech guy in the
Valley, and it's a good thing to worry about your reputation. I was very concerned
about that, and so, when only two people are coming over--and most of
the knowledge was still in my head--it wouldn't have been right for me to
leave. So that's why I stuck around for a while, helped build up a team, made
sure that the knowledge in my head was transferred to all of these other people,
and that, when I did leave, the place wouldn't fall apart.
Livingston: You said you started to get acquisitions offers very early on with
ONElist. Is it hard to turn these down?
Fletcher: Sure. It's very flattering to have some company come up and start
schmoozing you. It comes down to you have to figure out what you want to do
with your startup and your life. With ONElist, it was very easy--I didn't even
have to make the decision just to keep going as long as I could, because I knew
I was creating all this value from the users. Otherwise it just comes down to the
intangibles I guess. If you like the people you're talking to, if you think you're
getting a decent deal. But what is a decent deal? It's the most money you can
get, right? But what is that? Nobody knows.
Livingston: It's a confusing situation for a lot of founders.
Mark Fletcher 243
Fletcher: Sure. Why do you start a company? Do you start a company to get
rich? Do you start a company for the fun of it? That's going to play into it also.
And then, what's your definition of rich, I suppose is another thing. It doesn't
take a lot of money to let you live without working ever again, if you do the
numbers. So what are your goals in life? You have to think that through.
Livingston: What other practical advice would you give to would-be founders?
Fletcher: I guess, get a lawyer. With ONElist, I incorporated not using a
lawyer. There's a company in Delaware called the Company Corporation, so I
created an LLC by myself before I had a lawyer. Then we went online and fixed
things after the fact... it was a big hassle because VCs want a C-corp--any sort
of investor generally wants a C-corp because that's what they understand.
With Bloglines, I had an accountant, at least for a good part of it, who was
fairly cheap. One of the hassles of ONElist was that I was the one managing the
books the first year, as well as answering the 200 support emails every night, as
well as doing all of this other stuff. I guess I'm torn with how cheap do you want
to go with a startup. Having an accountant is kind of a nice frill.
I also think a lot of people don't know about all these outsourcing sites,
which are absolutely wonderful. One of the things that I did do differently with
Bloglines was rely upon an outsourcing site, in this case eLance, for a lot of
things. Not a lot of coding, but other things. So, if I wanted to put together a
presentation and I needed a couple of graphics, I put up a proposal on eLance
and ended up working with some lady in Australia, who turned things around in
6 hours, for $50. So sites like that are so amazingly powerful, which is just one
more reason why it's really easy to do very small companies, because you don't
need a graphic designer necessarily.
Livingston: Can you remember any moments in ONElist that were harrowing?
Fletcher: Sure. Many times. The first year especially when I was still working
the full-time job at Sun and doing this on the side.
Livingston: You were still working?
Fletcher: Oh yeah, did I forget to mention that? In most aspects of at least my
fiscal life, I'm very conservative. I had a mortgage and didn't want to take the
leap of faith to do this without a salary, and so I started ONElist while I was still
working full-time at Sun and did that for the first year.
Livingston: Weren't you worried they would claim they owned the IP?
Fletcher: Yeah, and I talked to a lawyer about that. Because ONElist was not at
all competitive with anything that Sun was doing--and I certainly wasn't working
on it while I was at Sun--it was thought to be OK. But that is absolutely a
valid concern. But I was, at least in that regard, very much risk-averse, because
I had a mortgage and didn't have much savings back then. So the first year was
incredibly stressful. The whole thing was stressful, but the first year especially.
For example, it got to be the summertime and we'd take off for the weekend.
I'd come back and have 500 emails to answer for customer support on Sunday
evening. And I'd just curl up into a fetal position... and I had to go to work the
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next morning, too, and how dare I not answer every single email? That was
crazy.
I remember my birthday that year. I got a phone call because the phone
number registered in the ONElist domain was the second line in my townhouse,
and there was an answering machine on it. I remember getting woken
up on my birthday that year by some guy saying, "I don't know if you know this,
but your site is down." So I logged in, and our whole database machine had
died, in Virginia. We were Digital Nation's biggest customer and they didn't
really have much experience with these database machines we were using, so
they were trying to figure out what was wrong. I had to call in sick from work. It
was very stressful. We had scaling issues all summer; we had to turn off new
user registrations for 3 months because we couldn't handle the influx of people
coming in--which is crazy, you're not supposed to do that.
Livingston: Would you recommend starting a startup on the side while you are
still employed?
Fletcher: It worked out for me. Sometimes that's the only way you can do it. It
certainly is one way of mitigating the risk significantly, because if you do it on
the side and it doesn't work out, you still have a job. Of course, you absolutely
have to pay attention to the employment issues. You can't work on your startup
at work. Depending on your employment contract, they may own stuff that you
do on the side, too. You have to be very cognizant of that.
Livingston: I hadn't realized that you did it on the side.
Fletcher: By the end of the first year, there were five of us, and we were all
working, just nights and weekends.
Livingston: What was the tipping point to make you resign to work full-time on
ONElist?
Fletcher: We got funding. We had signed the term sheet for the $4 million in
our series A, and at that point we were like, "Time to quit."
Livingston: Was there any time with your startups when you felt like giving up?
Fletcher: Not with Bloglines, but certainly the first year with ONElist. A lot.
Especially with all the emails every night, with working a full-time job, with the
incredible amount of stress. My family was great. I just remember them
encouraging me to stick with it. I probably never would have forgiven myself
had I quit, too. There are always dark times with startups, always. I was in a
startup in San Diego where we didn't get paid for 3 months. There are different
types of dark times, but for some there is just no more fun than doing a startup.
Livingston: Did you ever experience some sort of malaise like, "This isn't going
anywhere, I just can't work on it anymore"?
Fletcher: Yeah. Somebody asked me what was my greatest strength and my
greatest weakness, and I think it's the same thing. I get easily bored. I think I'm
able to focus on one thing, but I burn out easily. I'm still not good at the whole
work/life balance thing, and with a startup it's very easy to skew that in only one
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direction. Sometimes you have to do that, but you absolutely get burned out. So
I was burned out after eGroups; I was burned out definitely to a degree with
Bloglines.
So now I'm taking a little time off. I'll do some skiing, and then I'll start
something else.