Episode 3

Garage Days

Hosted by Okta's Frederic Kerrest and Epic Magazine's Joshua Davis

Featured on iTunes' Business New and Noteworthy

The sun is shining, the birds are chirping, and you’ve launched your new company. Sure you’re working from a folding table in your uncle’s garage, but you still call it your own. Maybe you've raised some money. You’re designing a website and recruiting your first employees. But how do you run payroll? And what do you do with lunch receipts? In this episode, we’ll get into the nitty gritty of the early days: renting your first office, landing your first customers, and how not to run out of money.

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Next Episode

In this next episode, we’ll talk about the first big win and what it did for the company. You’ve spent half your first round, hired a dozen employees, signed 20 customers. But be honest: Those “customers” were other start-ups, local companies, friends of yours. Then comes a cold lead, a different time zone, your first “mainstream” prospect. It’s the first deal that would legitimize you. You need the win, the money, the morale boost. Time to step up!

Guest List

Julia Hartz

Cofounder and CEO of Eventbrite

Josh James

Founder, CEO, and chairman of the board of Domo

Aaron Levie

Cofounder, CEO, cofounder, and chairman of the board of Box

Maggie Wilderotter

Former CEO of Frontier Communications

Transcript

[ "Intro music." ]
BILLBOARD:
00:04
Aaron Levie
Nobody should ever want or desire to be living in a garage. It’s not like … this is not like glamorous … This is not like that path to success. It’s like the path of least amount of money spent on anything other than business.
00:19
Maggie W
I think when you believe in something, you can get where you need to get to, no matter what.
00:23
Josh James
Someone’s gotta be on top. Why not me?
[ "Music fade out." ]
0028
Frederic K.
Welcome to Zero to IPO. This time around we're talking about what it takes to turn the scrappy startup in your parents' garage into a thriving company with offices all over the world. I'm Frederic Kerrest, Co-Founder and COO of Okta, a company that started with two borrowed desks overlooking the San Francisco dumpster painting yard.
00:48
Joshua Davis
And I'm Joshua Davis, Co-Founder of Epic which started in my child's bedroom, and a contributing editor of Wired. Today on the podcast, we're talking about the garage days. That stretch of time when your company is up and running but still in its early stages. You've raised your first round, you've hired your first employees. You actually can afford a real desk, maybe, but not an entire office, but you're getting there. It's kind of exciting. Last episode, we talked about the big ideas that started some of the biggest companies in the world. But as we heard, the idea's just the start. How do you take that next step?
01:24
Frederic K.
We're gonna hear from Domo's Josh James, Eventbrite's Julia Hartz, Maggie Wilderotter of AT&T and Frontier Communications, and our first guest, Aaron Levie of Box.
01:35
Joshua Davis
Aaron and his eventual co-founders had unsuccessfully kicked the idea for Box around as undergrads, but as more and more businesses started relying on the cloud, they saw an opportunity that they couldn't pass up. We're going to hear Aaron's story about making the tough decision to drop out of college and pursue Box full time, but before we get into that, here's Aaron telling us why they decided to pursue online storage when other companies had tried and failed in the past.
[ "Music." ]
CLIP 1: AARON LEVIE
02:05
Aaron Levie
There was this era that had emerged which came up with the idea of storing files over the internet and the challenge was ... First of all, the challenge was everything. The cost of storage was too expensive. The internet was too slow [crosstalk 00:02:24]-
02:15
Joshua Davis
Dial-up, yeah.
02:16
Aaron Levie
Browsers ... Literally, imagine [crosstalk 00:02:26] doing dial-up file transfer. That was the era that these companies were born. So, it was too expensive, it was too slow. The user experiences sucked because our browsers totally sucked. And this is actually a pretty good lesson I think, in general, from a technology standpoint, is like often times, say, amazing ideas are just too early. That does not mean that there's not an opportunity to come back and take the kind of basics and the foundational ideas, put them together, repackage it, and then try again. Ultimately, that's what we were doing
02:43
Joshua Davis
You know, in this particular section of the show, we're talking about, why so many companies start out of garages? What is it about a garage that's meaningful? I mean ...
02:56
Aaron Levie
It's cold.
02:57
Joshua Davis
It's cold. What did you-
02:58
Aaron Levie
It's cheaper. Cheaper than other locations.
03:00
Joshua Davis
... What did you guys out of it? I mean, obviously it's cheap. But is there something else?
03:05
Aaron Levie
So after we started the company, we tried to grow. We eventually tried to go raise some venture capital. So our summer of our sophomore year, between sophomore and junior year, we went to Seattle where we'd grown up. We lived and worked at kind of, actually, we didn't live and work together, we just worked together in my co-founders kinda renovated attic. And so that was sort of our elevated garage situation. Same feel as a garage, but obviously vertically raised. [crosstalk 00:04:56]
03:36
Joshua Davis
Warmer, warmer, and warmer.
03:37
Aaron Levie
Much warmer.
03:37
Joshua Davis
Warmer.
03:39
Aaron Levie
Much warmer. Pretty good internet in that garage, attic garage. And so, we were trying to raise capital, and basically everybody turned us down. Any professional investor was like, ran for the hills. They were like, "This is a crazy idea." We were 21 and 20 at the time, my co-founder and I, or 19 and 20, forget which one. And we, especially my co-founder Dylan, he looked like he was 11 years old. He had one of these super young faces. And so it just didn't really add up. You're not going to get venture capitalists when your CFO, co-founder, looks like he's 11. And anyway, we got rejected massively. Nobody funded us. Eventually we got some kind of ... some older time VCs, and a couple kind of real estate people put in $80,000 in Seattle. And then we pitched Mark Cuban over the internet, just over email.
04:34
Joshua Davis
How did you find his email?
04:35
Aaron Levie
That was not hard. He was very public with his email address back then. This was '05.
04:41
Joshua Davis
It was like MCuban@aol.com.
04:42
Aaron Levie
Pretty much. Not that different. In 2005 we all wanted to make friends on the internet, and he was one of those people out there blogging with blog maverick. And so we emailed him. We were actually, we're not even looking for funding, he decided to fund the company. That led us to dropping out of college, because we finally had enough capital. And I think Mark kind of ended up increasing our conviction about the business, cause we're like, "Well shit, if this billionaire believes in us, who are we to say that we can't do this. Now we're going to take it more seriously."
05:11
Joshua Davis
But there was some issue at that point, I think, between you and your co-founder. You had to convince him to drop out. Cause you were ready to drop out, but he wasn't quite, perhaps, ready.
05:22
Aaron Levie
Yeah, I think, I mean, nobody is like ready to drop out. That's usually a longer conversation-
05:27
Joshua Davis
That's a spectrum.
05:28
Aaron Levie
... like, "Dylan, money has been wired. Ready to drop out?" So we, I mean, it was multiple conversations. We had to break the news in kind of like a multi-step process to our parents. I'm sure there's a very specific sequence about how we did that. I don't remember the whole methodology at this point. But we broke the news. We kind of, at some point we got so pumped up, and amped up, that we kind of were super into it. And we were like, "Okay, YOLO." Before there was YOLO. And we got in a minivan, my parents minivan, and drove down from Seattle to Berkeley. And my uncle was kind enough to basically let us live in his backyard, effectively. And ...
06:08
Joshua Davis
You felt like you needed to be in the Bay Area?
06:10
Aaron Levie
Yeah. And so we decide to make the leap, move to Berkeley, and then we lived in this sort of backyard renovated cottage garage thing. Convinced two of our other high school friends to drop out as well, so Jeff and Sam, and then they followed us a couple of months later. And then it was basically the four of us living and working together in these two cottages. And it was quite literally a garage that we were building the company out of.
06:40
Joshua Davis
So you're in that, in that first cottage garage, and then eventually, I think, you move to Palo Alto?
06:46
Aaron Levie
We did.
06:47
Joshua Davis
And there were actual garages involved.
06:48
Aaron Levie
There was another actual garage involved. We again lived and worked out of this sort of dual purpose building where we slept in the garage, and we had split up the building in kind of four parts. Jeff and I slept in one garage, Sam slept in another garage, and then Dylan got the upstairs, effectively attic area, so.
07:12
Joshua Davis
How did that split up, like how, did you draw straws? [crosstalk 00:08:52]
07:15
Aaron Levie
We drew straws. Well, I think we sort of like who had the most similar hours. So Dylan gets up at like 5:00 am, so I didn't want to be woken up, cause I usually get up at like 10:00 am, and Jeff had very similar hours to that. We basically lived there until our next building, where we all kinda disbursed and lived in legitimate kind of environments.
07:33
Frederick Luddy
So there's the traditional vision of you've gotta be in Silicon Valley, like Hewlett and Packard, and start in a garage, and that's where it all goes down. And I think they even have it in the HBO TV shows that they have now. They're actually in garages. And this had nothing to do with it.
07:50
Aaron Levie
No.
07:51
Joshua Davis
You're just like, "This is less expensive and it makes more sense."
07:53
Aaron Levie
Yeah, we were not, I mean, nobody should ever want or desire to be living in a garage. It's not like ... this is not like romantic.
08:02
Joshua Davis
This is not glamorous. Not glamorous.
08:03
Aaron Levie
This is not like the path to success. It's like the path of least amount of money spent on anything other than the business.
08:10
Joshua Davis
Got it.
08:11
Aaron Levie
And this was a time where I remember the first garage, and the challenge, I feel bad, cause we had so many baked-in benefits because of our situation. An uncle that had extra space, the fact that we had no obligations, kind of family obligations or expenses, and so I don't think that a lot of people can replicate what we did. But we were very fortunate, because we could literally live off of $500 a month in salary, and live for free, effectively, and not everybody can do that. But we decided to take kind of full advantage of that, and put all of the money back into the business. And so it's harder for me to recommend that to other people, because there's so many other kind of obligations and situations people find themselves in, but in our case, we were able to do that.
[ "Music." ]
09:00
Joshua Davis
I think when you listen to stories about the early days of these companies that are now massive, where you hear about the garage, or your uncle's bungalow, which sounds quite nice by the way in Berkeley, you tend to romanticize it. But you're often times in a space that's freezing cold, that doesn't have a lot of light, and you're there day after day, nights and weekends-
09:25
Frederic K.
Eating ramen.
09:26
Joshua Davis
... eating ramen. And ideally, you're pumped up about your idea, and that's what gets you through, but I also wanna acknowledge that it's not all ramen and roses. Freddie, tell me about Okta's first office.
09:40
Frederic K.
We actually started in our friend Hassan and Alex's offices. They were the founders of Jawbone. And we were given two desks in the back of the building overlooking the San Francisco dumpster painting yard.
09:53
Joshua Davis
Very romantic.
09:54
Frederic K.
Extremely romantic. And I thought, "Wow, what a nice view, and look, we have scenario," and so forth, until the first weekend that I left the window open and then came back to soot covering my entire desk. And that was the first and last time I did that.
10:07
Joshua Davis
And what was the soot?
10:08
Frederic K.
The soot was from whatever paint color they were painting. I'm sure in my memory now it must have been red paint, since we were well in the red.
10:16
Joshua Davis
And it had basically wafted up and-
10:19
Frederic K.
It had wafted up from the dumpster painting yard, across the street, through the window, right on to our desks.
10:25
Joshua Davis
But did it smell like paint, or did it smell like garbage, or did it smell like both?
10:27
Frederic K.
It smelled like both. It smelt like painted garbage.
10:33
Joshua Davis
So we've heard that sometimes the garage days can literally happen in a garage, and it seems like they almost live up to that Silicon Valley myth of dropping out of school and making it big. But for other entrepreneurs, those first business experiences come much earlier in life. Our next guest is Maggie Wilderotter, whose best known as the CEO and executive chairman of the Telco giant Frontier Communications. She's also worked as an SVP at Microsoft, the president and CEO of Wink Communications, and as an executive vice president at AT&T Wireless.
11:08
Frederic K.
Maggie is one of those people whose business savvy was obvious from a very young age, and was encouraged by her father in some interesting ways.
[ "Music" ]
CLIP 2: Maggie Wilderotter
11:19
Joshua Davis
I read something about how, I'm not sure how old you were when this happened, but you and your sister presented your parents with a business plan about why you should get your ears pierced.
11:33
Maggie W
Yes. So-
11:34
Joshua Davis
Tell me, what was the business objective? Walk us through the business plan.
11:40
Maggie W
... So I grew up in a household where my parents really instilled business values in my older sister and I at a very young age. My father was an executive, and my mother was very supportive and very active in all the conversations we had. And we had dinner table conversations every night when my father got home about what he did at work, and how things went, different innovations he was working on. He bounced things off of us. And this is when we were anywhere from six years old on. So the process of what happens in business has not been foreign to me when I got into business. And an example of that is when I was 12 years old, I wanted to get my ears pierced. And my sister Denise was 13. So we're 13 months apart. We're Irish twins. So we asked my mom, and she of course said ask your father. And when we talked to my dad about it, my dad being a good Irish catholic said, "Well, if you were meant to have holes in your ears, God would have put them there. You would have been born with them." And we said, "Well, we appreciate that dad, but everybody is getting holes in their ears at our age, and we really want to get our ears pierced." And he said, "Well, if you wanna do that, you have to put a business plan together."
12:56
Joshua Davis
I mean, a business plan though? That seems like a very unusual reaction. But he's a businessman.
13:01
Maggie W
He's a businessman, and he wanted to know what value add, and why it would be acceptable for us to go do that. So Denise and I, we put our heads together, and we came up with a couple good reasons as to why. First we felt it would help us be more accepting and fit in with our friends. We also said that we would ... and we called several jewelers, and-
13:24
Joshua Davis
You did a market survey.
13:25
Maggie W
... that's right.
13:26
Joshua Davis
Okay.
13:27
Maggie W
And again, remember, we're 12 and 13.
13:28
Joshua Davis
Sure, sure.
13:29
Maggie W
And adolescence, it's really important to fit in with your friends.
13:30
Joshua Davis
Sure, of course.
13:31
Maggie W
So we had to stress that as an umbrella statement.
13:32
Joshua Davis
I understand.
13:35
Maggie W
But then we called a number of jewelers and we got pricing on getting our ears pierced. And we pushed for a two for one, for the two of us to go together, and we got a great deal at jeweler in Asbury Park New Jersey, who happened to be Bruce Springsteen's father.
13:55
Joshua Davis
What, what?
13:56
Maggie W
Yes, and he pierced our ears, and-
13:59
Joshua Davis
Would you say that little but again, I just want to hear it twice. You got through to who?
14:05
Maggie W
... Bruce Springsteen's father was a jeweler in Asbury Park New Jersey. And he pierced our ears, because he gave us the best two for one price. And then Denise and I, also in our business plan, said that we would share earrings so we didn't have to buy a lot of earrings, so we would save money on that as well.
14:22
Joshua Davis
But that meant that on any given day, only one of you would be wearing earrings.
14:25
Maggie W
Right. It also taught us the art of negotiation and planning.
14:30
Joshua Davis
Was this all written down and presented?
14:32
Maggie W
Yes. We wrote, handwritten of course back then, but we hand wrote our business plan and gave it to our father.
14:38
Joshua Davis
How many pages, do you recall?
14:39
Maggie W
It was probably three or four pages.
14:41
Joshua Davis
And had you seen business plans before? How did you know what to do?
14:46
Frederic K.
Yeah.
14:47
Maggie W
Well, as I said, we'd talked about business plans for lots of things. My sister had to do a business plan when she wanted to get a horse. And we did a business plan for our bicycles. So we learned the format of a business plan.
15:01
Joshua Davis
Got it, yeah.
15:02
Maggie W
So.
15:03
Joshua Davis
Did she get the horse?
15:04
Maggie W
Yeah.
15:05
Joshua Davis
Oh.
15:06
Maggie W
But it took her a year and a half to convince them to get her a horse. And my mother, every time she went to the grocery store, on her grocery list was one horse on the bottom of it. My sister would write on every grocery list.
15:18
Joshua Davis
And would you-
15:19
Maggie W
We learned to be tenacious.
15:20
Joshua Davis
... would you get feedback on your business plan? For instance, with the ear piercing business plan, did you submit it, it was rejected, you had to revise? Or did it get approved?
15:28
Maggie W
That one sailed through.
15:29
Joshua Davis
Another story of early business mojo that I've heard was that I believe it was in ninth grade you called then president Nixon-
15:41
Maggie W
Yeah.
15:42
Joshua Davis
... and invited him to dinner.
15:44
Maggie W
Actually ...
15:45
Joshua Davis
A dinner benefit.
15:46
Maggie W
Yes. I was actually in seventh grade, in junior high. I was the president of my class, and the student council, and I also sat on the city council representing the junior high and high school students in our city of Long Branch. And it was during the Vietnam war, and we had two Vietnam vets that came back from the war that lost either one or both legs in Vietnam. And the city council was going to do a fundraising dinner for those two families. And all of us on the city council had to raise money. That was our job. So I was thinking, "Well, I can, I raised money from my parents, some of my parents friends. But I said President Nixon is the one that's responsible for this war, and for sending these two young men overseas to Vietnam. So I think he should come to the dinner." So I wrote a handwritten note to the president, and I enclosed four tickets. And I asked him to come to the dinner and support, and I explained about the two individuals, and I just sent it. I didn't tell anybody. But I put in the note, "If you would like to get in touch with me, I go to Long Branch Junior High, and here's the phone number of the office." So about two weeks later I'm sitting in math class, Mr. Erm was my math teacher. And someone walks in and Mr. Erm says, "Maggie, the White House is on the phone for you down stairs." And everybody turns around and looks at me.
17:11
Joshua Davis
They thought it was a joke.
17:12
Maggie W
Yeah. So I go down, I was on the second floor. I go down to the office, and there's the principal, the vice principal, all the teachers who aren't teaching a class at that moment. They're all like gathered there. And I pickup the phone and I have some staffer in the White House who was probably not much older than I was who said, "The President has received your letter and unfortunately he and the first lady are busy that evening and won't be able to attend." And I said, "Well, that's too bad. How about the vice president, can he come instead?" And there's dead silence on the phone. And all of a sudden he goes, "I think the vice president is also busy." And I said, "Well, are they sending a check for the tickets?"
17:55
Joshua Davis
Right, cause you sent four tickets in the mail.
17:56
Maggie W
I sent four tickets.
17:57
Joshua Davis
Yeah.
17:58
Maggie W
And he said, "Absolutely, we'll send a check for the tickets." I said, "Perfect." And I gave him the address, "Thank you very much." And what happened is a couple days later what was delivered to us were the big checks, the big life sized checks.
18:15
Joshua Davis
I could see that coming.
18:16
Maggie W
One for each of the vets families, and then also our regular check that we could go deposit. But we got to present the big checks to each of the families at the dinner.
18:25
Joshua Davis
That's amazing. I think what I wouldn't have done any number of things in that situation in seventh grade, but one of them was enclose the tickets and just assume, put it forward, that the tickets already there.
18:41
Maggie W
Yeah, I was going for the sale. I was definitely going for the sale.
18:44
Joshua Davis
Not only that, but thinking on your feet. "Well, president can't make it. What about the vice president? Well I don't think he can make it either. Great, well, you're sending money though?" It's like, get something. I mean, what is the lesson we can learn here?
18:56
Frederic K.
So were your eighth and ninth grade teachers to be in the group who were sitting there watching you negotiate with the White House. Because that would probably have something to do with what would happen when you went into eighth grade, they'd be like, "Ah-ha, yes, I know all about you. You're the one negotiating with the White House last year."
19:14
Maggie W
Yes, and if they weren't there, they heard about it, believe me.
19:16
Frederic K.
Exactly.
19:19
Joshua Davis
So lessons that we can draw from this?
19:21
Maggie W
I've always been fine in my own skin, and I've always felt that “no” just means I haven't figured out what “yes” is yet. And I do think that served me well in business. I also have been always clear on the ask, always respectful of the answers. [crosstalk 00:21:11]
19:39
Joshua Davis
You enclose the tickets.
19:41
Maggie W
Yeah, enclose the tickets. Showed the value for what was being done. So it taught me a lot of life lessons. And I think when you believe in something, you can get where you need to get to no matter what.
[ "Music transition." ]
19:59
Joshua Davis
One of the things that impresses me about Maggie is this unwavering conviction she has about almost everything, whether it's getting her ears pierced, or the fact that the President of the United States is going to show up to her fundraiser.
20:13
Frederic K.
Yeah, and I think there's something there Josh about drive. She's got this inner drive and focus and determination, that she's going to do this regardless of what others think, or how others feel. She's like, "This is my focus, and this is my unwavering belief that Richard Nixon should come to this event that I'm throwing." You have to have conviction in what you're thinking about, or you're planning, or you're going to do, to convince anyone else to do it. People can see through that. And if you genuinely have that kind of conviction I think it can be very powerful. First person you have to convince, obviously, is yourself.
20:48
Joshua Davis
Our next guest is Julia Hartz from Eventbrite. And before she started her own company she worked in Hollywood and saw exactly this: the importance of convincing yourself to do crazy shit. And it all started on the set of Jackass.
[ "Music transition." ]
CLIP 3: Julia Hartz
21:07
Joshua Davis
Starting early on, before Eventbrite, you were a TV development executive.
21:13
Julia Hartz
Yes, I was.
21:14
Joshua Davis
And you were part of the team that helped bring Jackass to the world.
21:19
Julia Hartz
I was.
21:20
Joshua Davis
What did you learn about business from Jackass?
21:22
Julia Hartz
Well, I actually was an intern at MTV during my senior year of college. I went to Pepperdine, and I interned five days a week for free, full time, and I went to school at night. That was sort of the brilliance of the Pepperdine optionality in terms of schedule. So I was there the day that they sent their demo in. And my-
21:47
Joshua Davis
The Jackass guys.
21:48
Julia Hartz
... the Jackass demo. And it was my job to make copies of the VHS tapes, I'm just making sure we're all back into 2000, and distribute the VHS tapes to all the executives in the department. And I remember handing out the tapes to each office and just trying to give the executive a little bit of warning as to, "Don't eat lunch and watch this video, because I'd watched it while I was obviously creating the dupes of the tape."
22:20
Joshua Davis
What was on the demo, that?
22:22
Julia Hartz
So that's actually the biggest learning, is that the demo was the pilot. But when we acquired the series, we re-shot the pilot with 20, 30x budget. And it honestly wasn't as good as the demo.
22:38
Joshua Davis
Oh wow.
22:39
Julia Hartz
So we totally fucked it up with more money. But it was still great. And I think what I learned from being an intern where we acquired the pilot and then maybe a year later, when I was a full time employee, was that the vision was so clear. And I know that sounds so funny when you think about Jackass, but PJ Clapp, who, his stage name is Johnny Knoxville, was one of the strongest examples of a great leader. He had a vision, and he cared a lot about how to execute the vision. And the best part of working on that show was the weekly OSHA standards and practices and legal calls that we'd get on. So it'd be one collective conference call. The executives would be at MTV, we would be on mute, because we literally would be on the ground crying laughing. The guys would be at their studio, and they would have in the last week, come up with maybe three single space types lists of things they wanted to do. Ideas for stunts. And then they would describe it, and then everybody from standards and practices to OSHA to legal, would pontificate on how they could actually do this.
23:52
Joshua Davis
Most of which were just absolutely outrageous ideas.
23:54
Julia Hartz
And so it was amazing to hear the attempt to make them doable.
23:58
Joshua Davis
How can this work? Yeah.
23:59
Julia Hartz
And so, I just think that they were so, that the conviction of what they were doing, and the vision of what they were doing was so clear, and it was held really by PJ, and obviously he had to keep his little tribe together for this to actually take shape. So I worked on the first season, and the first movie before I then went on to FX.
24:23
Joshua Davis
So you in 2006 started Eventbrite. Were there lessons from your previous career in television that carried over?
24:32
Julia Hartz
I think when we started Eventbrite, I one of the things that I noticed when I would come up here to the Bay Area, where I'm actually from, so all worked out well, was just how quickly everything changed. --
24:46
Joshua Davis
Versus, LA.
24:47
Julia Hartz
... Versus Hollywood at the time. And I think it's changing, but it was like ... I'll give you a good example of how slow things were. We actually had the pilot of Breaking Bad at FX. We owned it. It went on air years later-
25:02
Joshua Davis
Yeah, a decade later.
25:03
Julia Hartz
... on the movie channel. It was not, I mean, that show should have been on FX, right?
25:07
Joshua Davis
Right.
25:08
Julia Hartz
And I was there when they bought the pilot. And it was brilliant. It is brilliant. But it just gives you an idea of sort of where everything becomes very long and convoluted, and development hell is a real thing. So I was really attracted to the notion of velocity, and still am. And when we ultimately decided to settle on the Bay Area, and frankly, I was a little burned out. Hollywood at the time was like, and again, I don't know decade plus later how this is, but for me it was just ... it was a grind. It was sort of everybody always wanted to be somebody, but yet, it wasn't really clear to me sort of how you advanced. I'm a workhorse. I've been working since I was 14. So work ethic to me is just something that's ingrained. But that was like a novel idea there. So it was just this odd thing. [crosstalk 00:28:39]
25:57
Joshua Davis
Yeah, the workday starts at 10:00 am there.
25:59
Julia Hartz
Well, and it's all about who you know. And I'm actually not very good at that. I'm not very good at like cultivating network by design. I think it's best when it happens authentically. But I really actually kind of lack that skill. And so I put all those pieces together, Kevin proposes. We're like, "Okay, we should probably live in the same place." I find a job opening at Current TV, because I'm like, "I'm not entrepreneurial." I'm a focus, operational, get it done, make a plan, and execute. So I figure, "This is great. I'll join this startup cable network. It parlays my skills nicely. We'll get married, and be based in the Bay Area."
26:37
Joshua Davis
Happily ever after.
26:39
Julia Hartz
Happily ever after, with our family, which actually did happen. Which is amazing, just in a totally different way. They gave me a low ball offer, which was the best thing that could have ever happen, because it made me pause. Kevin was like, "Oh wow, you shouldn't take that low offer. That's not what you're worth. And you probably shouldn't even go to someone else's startup. You should build something and maybe we'll build it together and we'll bootstrap it and put all of our savings into one pot."
27:09
Joshua Davis
Starting to sound a little crazy.
27:10
Julia Hartz
Yeah, and I blacked out in the moment that I said, "Yes." I cannot for the life of me remember the moment where I said, "Oh, you're right, that sounds like a good idea." So it's questionable.
27:21
Joshua Davis
Your husband, he's a good sales person.
27:23
Julia Hartz
He's a great salesperson.
27:24
Joshua Davis
You might have actually never said yes.
27:25
Julia Hartz
I don't actually think I said yes. But what I-
27:27
Frederic K.
And he's just like, "Oh great. It's called the presumptive close. And it worked."
27:30
Julia Hartz
I think it's serial entrepreneurs are missing a chip in their brain that says, "This might not work out." Like that chip is just not there. And so I think for Kevin, he just doesn't tend to see the ways in which something might fail. He only sees possibility. And it's this sort of infectious optimism. And all I know is that I got the offer from this other company. It was low. I was like, "Huh, should I ... is he really worth it?" And then all of a sudden I'm moving out of a 42nd floor window office in Fox Plaza, which is like Nakatomi Plaza from Die Hard, and I'm driving to San Francisco. And the next day I'm pushing sawhorses and plywood into a windowless phone closet, no joke, at 208 Utah, and he's like whistling zippidy-do-da, and I'm sort of going, "I really hope that he-"
28:25
Joshua Davis
What's happening in my life.
28:27
Frederic K.
She's pointing at me because I actually have been there. [crosstalk 00:31:56]
28:29
Julia Hartz
I'm pointing, I know, so funny.
28:30
Frederic K.
You can't see it on the podcast.
28:32
Julia Hartz
Freddie's been there, and I won't tell you the stories, but this old-
28:37
Frederic K.
I was an unpaid intern.
28:38
Julia Hartz
... Freddie was an unpaid intern.
28:40
Frederic K.
In the phone closet.
28:41
Julia Hartz
Yeah, no, no, no, we had a room. [crosstalk 00:32:10]
28:42
Joshua Davis
No, no, no, at that point we didn't.
28:43
Frederic K.
Oh yeah, we actually had a room with a window.
28:44
Julia Hartz
Yeah, we went from phone ... so we were in this warehouse owned by a father of a neighbor of Kevin's. A good friend of Kevin's. And he did something brilliant. He had us market the space for him. So we were there for free. We marketed the space to other entrepreneurs. He then ended up taking minor equity positions in everyone's companies, and it was Eventbrite, Zynga, Trulia-
29:11
Frederic K.
Flixster. Yeah, there were some good ones.
29:13
Julia Hartz
... Flixster. Opower. It was pretty great.
29:16
Joshua Davis
But you were the first.
29:17
Julia Hartz
We were the anchor tenant. And so we got the phone closet. He's very ... he has passed, but he was very old school in putting us in the phone closet. And as more people came, as we were successful we got upgraded. So we got upgraded to a conference room.
29:31
Joshua Davis
Based on your ability to draw in other tenants.
29:34
Julia Hartz
Yes, yes.
29:35
Joshua Davis
So what percent of the early days of Eventbrite was spent as a real estate agent essentially?
29:41
Julia Hartz
Probably 1%. It was amazingly easy at the time to get people to come join us in this sort of collective. And there was no formality. We had this ... it was very low brow. Like low budget. It was a warehouse. And we really were, and it was-
29:58
Joshua Davis
With the sawhorses with plywood boards on them.
30:02
Julia Hartz
... yeah, and like a wall of cup of noodles. I mean, it was a real startup. And I feel like if I could for a minute sound like an old curmudgeon, I don't see that type of grittiness these days around here.
30:16
Joshua Davis
WeWork. You've got WeWork.
30:18
Julia Hartz
You've got We Work. You've got multi-million dollar seed investments. It just doesn't feel the same. So during the time that Freddie was an intern, we were still sort of living in that like it was a ghost town. And there weren't many startups. But we had about 10 or 12 founding teams all together in one space, which was really magical because we had bootstrapped the company. Our co-founder Renaud was living in France. It was just the three of us for the first two years, and we had these other co-founding teams, and we would all get together on like Fridays and share our ideas. And I'll never forget this.
30:55
Joshua Davis
Over lunch.
30:56
Julia Hartz
Over lunch, and the Flixster guys, Joe and Saran, remember they got the phone closet-
31:00
Joshua Davis
Totally.
31:01
Julia Hartz
And they wallpapered their phone closet with ideas on post-its. And they would come out with like three or four every week. And I'll never forget when they came out and they were like, "Okay, it's a coupon, it's for restaurants. It gets better when more people buy it." And we're like, "Ah, get back in there." And it was completely Groupon. It was amazing, and we told them that that idea stunk, so.
31:23
Joshua Davis
Get back in the phone closet.
31:24
Julia Hartz
Get back in the phone closet.
31:25
Frederic K.
Let's see what you come up with next week.
31:27
Julia Hartz
Don't come back until you have movies. So I think those years were incredibly formative for us, because, and to get back to your original question, I think what I brought to the mix was a ... one of my superpowers is empathy. And I think that helped me in media, cause basically what you're looking for is to make people feel something, and to understand what they're feeling. And you can't actually help influence how somebody feels unless you can read how they're feeling. And so there was this notion that I was basically focused on the people side of the business, which were our customers. So I was identifying event creators who would benefit from our platform, and then helping them onboard and getting all of their feedback and then giving that to Kevin and he would build, he would spec out the features and build the product, and then Renaud would engineer everything. And we'd all QA, essentially, without event creators. And it was super quaint. And it was very small. And I also think that gets lost along the way these days, where things have to start out as seeds. There needs to be a seed of an idea, and it needs to be able to grow, and it needs to be able to defend itself against harsh climates. So what began as something very, very quaint, started to gain traction really about 12 months in. And by the time we went out to raise our first round of funding in 2008, we had traction. We understood that we had identified a really interesting mid-market in events. That was potentially massive, and that we had been able to essentially democratize ticketing through offering this self-service platform.
[ "Music transition." ]
33:15
Joshua Davis
So since you were there, what was that Eventbrite closet actually like?
33:20
Frederic K.
It was a small, little dark, dungey closet that's for sure. No windows. Kind of claustrophobic, and I'm not even, I don't get claustrophobic easily, and I definitely was in that room.
33:30
Joshua Davis
When you say closet, are we talking-
33:33
Frederic K.
Phone booth. Couple of phone booths.
33:35
Joshua Davis
That was the office?
33:36
Frederic K.
You take a phone booth, and maybe you stack like three deep and three wide. Nine by nine phone booth. That's what we're talking about.
33:42
Joshua Davis
And how many people were in there?
33:44
Frederic K.
Three of them. Kevin, Julia, and Renaud.
33:48
Joshua Davis
Did they have table?
33:49
Frederic K.
Yeah. One in the middle, and then they kind of sat around it.
33:52
Joshua Davis
You know, it's interesting, you hear a lot of people talk about the magic of the startup spirit. But there's a flip side to that, which is that working at a startup means you're working seven days a week, 14, 15 hours a day. It's not for everybody.
34:06
Frederic K.
Yeah, I mean, I think what people often forget about the garage days is that you're in that garage. And you're in there all the time. So you're working day, you're working night. Sometimes you even live in there.
34:16
Joshua Davis
If you're Aaron Levy, You're living there!
34:18
Frederic K.
Levy, you live in that garage. And when that happens, you forget what it feels like to even take a break.
34:24
Joshua Davis
Yeah, you're not taking vacation. You're barely, you're probably not even opening the door to the garage.
34:28
Frederic K.
You probably are once in a while, cause it just starts to smell in there.
34:31
Joshua Davis
Right, you gotta air it out.
34:33
Frederic K.
You gotta air it out. Cause it probably doesn't have any windows. It's a windowless garage.
34:16
Joshua Davis
Our next guest is somebody who doesn't even know how to take a vacation.
34:41
Frederic K.
He tried one time. And how'd that work out for him? He started a company the next day!
34:45
Joshua Davis
He couldn't do it.
34:47
Frederic K.
And he couldn't hack it.
34:48
Joshua Davis
His name is Josh James, he's the co-founder of web analytics company Omniture, and the founder of the SaaS company Domo.
34:54
Frederic K.
I'm pretty sure Josh never sleeps.
[ "Music transition/slightly longer pause before we get into the interview." ]
CLIP 4: Josh James
35:00
Frederic K.
You're tired and frustrated at Omniture. You were this old, tired, crusty entrepreneur. You were 33 years old, is that right?
35:07
Josh James
I was 36 at the time. [crosstalk 00:40:25]
35:08
Frederic K.
Oh, 36, I'm sorry.
35:10
Josh James
I was going through that phase, mid-life crisis, yeah, I was 36.
35:13
Frederic K.
You had two ideas.
35:14
Josh James
Yeah, I had two ideas. And one of them was just ... it came to me when I went to see Expedia. It was a very large customer of ours, they were paying us seven figures a year, and I was meeting with one of CXOs at Expedia. And they told me, "We made 12 million dollars off of your products last month. Thank you. This is an awesome product." And they showed me how they did it and I was like, "Wow, we really did make them 12 million dollars. That's amazing." And then they were like, "By the way, how's your company doing?" We're a public company, and I'm like, "Yeah, things are going really well." "How many employees do you guys have now?" No clue, I mean, I know plus or minus a 100, but I only get the numbers once a quarter now, because we're public. And actually, I don't even get my numbers until after the CFO gets the numbers that he needs to do the earnings call. And I was like, "This is so stupid. It just doesn't make sense." They asked me about sales, and they asked me about retention, and I just, I didn't know any of the numbers. But especially head count, that was an easy one for me to solve for. I'm like, "well, we pay people every two weeks, so at a minimum, I should have ... that's not a hard calculation to run. How many employees I have." And it should be available on my phone. And Facebook was there, and then Airbnb with all this great design. And I remember just thinking like, "This should be the enterprise experience." And so when I left, that was like, okay, I'm going to go and solve it. And I tried to solve it too. We tried to build CEO dashboards, we bought every BI product under the sun. I had my own team that kind of rolled their own, and that didn't work. Nothing worked.
36:49
Frederic K.
This is at Omniture?
36:50
Josh James
At Omniture. And I know data as well as anybody, cause I've been doing it forever. And certainly the application of it and how you use it to run your business. So I knew that it was possible, but no one had done it. Come to find out, the reason that no one had done it is because they'd all come from the technical side. They'd all come from solving big data issues and ETO, and writing SQL code, and making something that had really powerful query tools. And that wasn't the experience that I was looking for.
37:16
Joshua Davis
You were coming at it from a customer perspective? Like what was the vantage point that was helpful?
37:22
Josh James
I think in technology we're like, "Why doesn't somebody make a better phone yet?" Like, we know these technologies exist. Why hasn't somebody done it? And for me it's kinda the same thing, like I know data, I know what the experience should be like. Why hasn't someone just put it together to create this experience to really help you run your business on your phone? And no one had done that. In fact, even getting data and making it work automatically mobile, well, it works for your laptop, and works for Android. No one had done that. And so just we started with here's all your data on your phone. Well, in order to do that, first you gotta get the data in. To get the data end, you gotta built a bunch of connectors. Once the data in, it gets in, then you gotta organize it and built a bunch of ETL tools. Once it's in you've got to store it in a place that allows you to query billions upon billions, or tens of billions, or in some cases a trillion rows of data for our customers. And that's really difficult to do. And then after all that you build a visualization layer, an analytics layer, and then you gotta make it so that it works on mobile, and then you wanna put some machine learning and AI on top of it. And then you want to put apps on top of it. And it truly, really is for us like seven startups in one. But it's all integrated, and it's amazing what it can do. But people think about us as, "Oh, we're a thin dashboard in there."
38:28
Frederic K.
I was going to say, "What's the hard part?" That sounds pretty hard.
38:32
Joshua Davis
You were talking about the day you left Omniture, when you left Adobe, after the acquisition, and it was a-
38:38
Josh James
Yeah, my great day of insignificance.
38:42
Joshua Davis
Talk more about that day and talk about the day after.
38:48
Josh James
So that day, I'd always heard from people, like they take breaks. And they recharge. And I remember I called Senator Hatch's office, and I didn't get a call back. I called an executive that used to work for me. I didn't get a call back.
39:03
Joshua Davis
And Senator Hatch, in the past, would call you back?
39:05
Josh James
Yeah, he would call me back. I had one of the biggest companies, and one of the most interesting companies-
39:10
Joshua Davis
In Utah.
39:11
Josh James
... the most successful sale in the history of Utah to that point. That was a day that I realized, "Man, having that PNL allows you to do things when you have ideas." It's not that I want, I don't really care about the ego and the notoriety, but when you want to get something accomplished, it's a lot more fun when you can pull a lever that has a PNL behind it. And so I realized that actually I get a lot of pleasure and satisfaction out of doing that. So I'm like, "I gotta do another one. I gotta do another one." So the next day, I started it.
39:38
Joshua Davis
The next day?
39:39
Josh James
Yeah.
39:40
Joshua Davis
So you took-
39:41
Josh James
One day.
39:42
Joshua Davis
... one day. Maybe, but probably not even one day, because you were already making phone calls to Hatch. I don't think it was one day.
39:46
Frederic K.
That night. So like that morning, so the next day ... so on day one, you wake up in the morning and you called Hatch just to check in.
39:52
Joshua Davis
Just to check in.
39:53
Josh James
Just to check in.
39:54
Joshua Davis
How you doing Orrin?
39:55
Frederic K.
How you doing bro?
39:56
Joshua Davis
You want to play tennis?
39:57
Josh James
Hey, what are you doing this afternoon? I've got a tee-time at one.
39:59
Frederic K.
But he didn't call you back?
40:00
Josh James
He didn't call me back.
40:01
Frederic K.
And you were like, "Well, I guess I should start a company."
40:02
Josh James
Make the tee-time, and then by like four pm you're like-
40:04
Joshua Davis
I gotta start another company.
40:05
Josh James
F it. Josh.com.
40:06
Joshua Davis
That's exactly right.
40:07
Josh James
That's exactly right. That's pretty much how it went.
40:08
Joshua Davis
And did you know what the idea was at that point?
40:11
Josh James
Yeah, you guys know I had those two ideas that I was trying to keep out of my head, because-
40:14
Frederic K.
First 24 hours.
40:15
Josh James
... as an entrepreneur, like it can be so distracting if you're constantly thinking about new companies. So I would ignore them. But that one was always back there. So yeah, I went and I'd already owned the domain name CEO. And Co.com, and I started a company to do that, and hired my old assistant. And hired a CTO, and then went and bought this graphing, charting engine that hadn't really done anything for ten years, but I knew it was scalable, because we used them in Omniture and it was in Utah. And so then I had 10 million dollars revenue, and 60 employees, and then I just had to change that around to what I needed it to be. And that took four or five years of stealth mode.
40:50
Frederic K.
So you said that you want Domo to be a 50 billion dollar business by the time you're done.
40:56
Josh James
Yeah.
40:57
Frederic K.
You're in no rush.
40:58
Josh James
Yeah.
40:59
Joshua Davis
But, next year would be good.
41:00
Frederic K.
Well, next year would be a good year, or the year after.
41:02
Josh James
I'm in no rush to sell.
41:04
Frederic K.
Yeah. So how do you ... you've been through this experience as a tired, over the hill 36 year old. Sell your company. You're on vacation for one day. You start your next company that you've now taken pubic, and you seem more energized than the day I first met you like five years ago. You're like more jacked up. You don't need any coffee. You're in here, you're fired up, you're ready to go. And you're going to build a business, a 50 billion dollar business, which I have no doubt you're going to do. How do you think about that ahead? You take it day by day? You take it week by week? That's a very big goal that you've set up. It's a BHAG. Big Hairy, Audacious, Goal.
41:48
Josh James
I think the way that I think about it is there was this thing that I always got reminded of, because it was seen as a negative, that I was the youngest CEO of a public company. But in my head, I'm like, "Well, if I'm the youngest CEO of a public company, that means I'll be the youngest person that's starting a new one that's been CEO of a public company." And one thing I noticed is when you'd go around and you'd meet the people that had the biggest companies, they all had decades in the seat. And so I'm like, "I still got decades in front of me. I've got to pick out a big enough market opportunity. And then we'll just grind through it." Because the way I've always thought about it is I meet a bunch of CEOs, and half of them I'm like, "Well, they're smarter than me, or they're quicker than me, or they have better EQ than I do." But the other half that I meet that are successful, I'm like, "I've definitely got something on him," or, "I got something on her." It's-
42:35
Joshua Davis
They haven't been on Touched By An Angel.
42:36
Josh James
Yeah, they haven't been on Touched By An Angel. They don't know how to fake it like I know how to fake it. And yeah, so I think that's ... it's just, it's possible. And I've always thought, I remember being in high school, I mean, I started when I was in my freshman year in college and we'd go sit up on top of the mountain and look down over the valley at be like, "Someone's gotta be on top. Why not me?" [Music transition.]
43:02
Joshua Davis
Okay, what'd we learn Freddie?
43:03
Frederic K.
What did we learn?
43:04
Joshua Davis
I feel like listening to a lot of these guests today, there's this joy in those early days where anything is possible. But at the same time, you're kind of fumbling around in the dark, and you don't quite, you have some suspicions, you have some ideas. You don't know how it's going to come together.
43:20
Frederic K.
Yeah, but you gotta keep moving forward. You have to maintain the faith. You have to maintain the scrappiness.
43:26
Joshua Davis
But moving forward in which direction?
43:28
Frederic K.
Doesn't matter. Just keep moving forward. If you hit a wall you're going to take a right, and then keep going.
43:33
Joshua Davis
It's different, though, than big established legacy companies which are like steaming forward like a tanker.
43:40
Frederic K.
Yeah, yeah. Tankers take three miles to stop on the open waters. Here you have the opportunity to stop, pivot, change, whatever you need to do, you need to keep moving forward. Momentum is very hard to regain once you've lost it.
43:52
Joshua Davis
But if you're constantly exploring and shifting direction and going in one way, and going in the other way, to try to figure out what the right product is, how do you build momentum?
44:04
Frederic K.
You can't be constantly shifting and changing direction. You have to pick lanes, and you gotta go down those lanes. You're never gonna have perfect information. You have to get as much information as quickly as possible. You gotta make decisions and keep moving. And I think if the decision is wrong, you'll take a break, you'll take a step back. You'll take a look around, you'll be like, "That didn't work. Let's try something else." But you can't keep constantly shifting. Actually, I think that's a huge problem. I think people need to make decisions, have conviction, get as much sense for information as you can, and then get rolling, you gotta keep moving.
44:33
Joshua Davis
Okta is, in 2019, hitting it's 10 year anniversary.
44:38
Frederic K.
We are.
44:39
Joshua Davis
What do you keep from the original startup ethos of the company, when it was just you and Todd on borrowed desks at Alex Asseily’s office at Jawbone.
44:49
Frederic K.
Yeah, it's actually funny. We had a couple of signs early on in the life of the company that I kept up over my desk. The first one was a quote from Herb Keller, the founder of Southwest Airlines. It said, "We have a strategic plan. It's called doing things." And I think that was very important, because the idea was you gotta keep moving. You gotta get shit done. And people who come from very large companies into very small environments, they spend a lot of time building up plans and strategies, and you just gotta execute, because you only got so much money, you're going to run out of time. You've gotta get going. The second thing we had a sign up, after that I took the first sign down, I put another sign up, it was called, "You gotta keep that the main thing the main thing." Because then there's so many things that are starting to happen that you couldn't be doing all these different things. And then you're actually not doing anything at all. Or you're doing a lot of things very poorly.
45:34
Joshua Davis
You took those signs down. They don't exist at Okta anymore?
45:37
Frederic K.
I still have them, but they're not up on the wall anymore.
45:39
Joshua Davis
I guess you moved beyond the garage days.
45:42
Frederic K.
No, I put them up in my garage.
45:43
Joshua Davis
Oh are they?
45:44
Frederic K.
Yeah.
45:45
Joshua Davis
Literally?
45:46
Frederic K.
Yeah.
45:47
Joshua Davis
Those signs are in your garage?
45:48
Frederic K.
Those signs are in my garage where I have my five year old building things.
45:51
Joshua Davis
Did you think about that when you ... it's like, they're in your garage, cause those were your garage days?
45:56
Frederic K.
No, no. I mean, I'd love to tell you that I did, but that's not the case. Basically, it was because my wife wouldn't let me put them up anywhere else in the house.
46:03
Joshua Davis
But you still have some fond memories of them.
46:05
Frederic K.
I don't know about fond, I think that they're going to-
46:06
Joshua Davis
Are they framed?
46:07
Frederic K.
... No, they're the backdrop for the dart board.
46:12
Frederic K.
This has been Zero to IPO, a podcast about how to keep the startup spirit alive, even after you've outgrown the garage. Special thanks to our guests: Aaron Levie, Maggie Wilderotter, Julia Hartz, and Josh James for taking the time out of their busy schedules to speak with us, and to the Martin Trust Center for MIT Entrepreneurship for collaborating with Okta to bring this podcast to life.
46:33
Joshua Davis
If you like what you've heard and you wanna know more, check out exclusive, in-depth stories from each episode on FastCompany.com. And to hear the next step in taking a company from Zero to IPO, make sure to subscribe, and give us a good rating on iTunes, Spotify, Stitcher, or wherever you listen to your podcasts.
46:53
Frederic K.
I'm Frederic Kerrest.
46:54
Joshua Davis
I'm Joshua Davis, and we hope you'll tune in for our next episode. The first big win.
46:59
Frederic K.
Thanks for listening.
[ "Music." ]
TEASER FOR EP04
47:00
Carl
There's a reason the elephants are at the back of the zoo. The zookeepers do that for a reason. They make everyone walk through the rest of the zoo to see the small animals and buy stuff, then you get to the prize at the end.
Nobody should ever want or desire to be living in a garage. It’s not like... this is not romantic... this is not like that path to success. It’s like the path of least amount of money spent on anything other than business.
Aaron Levie