Hacker News London - 2012-06-27

My First Startup Was A Failure

Lessons Learned from Radik Software

Kirk Wyliekirk@[opengamma|kirkwylie].com

@kirkwy

Who Am I?Why Are You Listening To Me?

• Started my career in Silicon Valley

• Moved to London 8 years ago

• Worked in pure tech, hedge funds, Ibanks

• Co-Founder and CEO of OpenGamma

• World’s first Open Source platform for quantitative finance– Trading, Risk Management– Data Management, Analytics

Computation– APLv2 Licensed

• Founded in 2009• $8.25MM investment (so far)– Accel Partners (London)– FirstMark Capital (New York)

Shameless Plug Time

February 2002 – I’m on holiday in Hong Kong

Radik decides to liquidate

The Radik Investment Thesis(Founded Feb 2000)

• Open Source is hugeRHAT, LINX have massive IPOs

• MySQL is getting really popularIt was (is?) a pile of garbage

• Get smartest DB guys in Silicon Valley to build an Open Source RDBMSTarget more sophisticated users than MySQL could

Feb 2000

Founding Team

• Kirk Wylie – CTO23 year old Berkeley grad DB whiz kid

• Roy Goldman – President27 year old Stanford DB PhD candidate

• The Other Guy – CEO? CFO?We thought we needed a “business guy”

Mistake #1:Don’t Be Too Young

We’re not all Zuck, no matter what Pete Thiel and Paul Graham would have you

believe

Mistake #2:Every co-founder needs to bring something concrete to the table

Adding a co-founder to your team in an ill-defined role you don’t

know you need is excess baggage you don’t want

Sweet, Sweet Angel Funding

• Raised a 2x oversubscribed round Feb 2000Raised $2MM at $10MM pre-money valuation

• Darn impressive angelsRam Shriram (Google), Rajeev Motwani (Stanford), Greg Gretch (Sigma), etc.

• Story was Simple: Build v1$2MM was enough to build a fully functioning prototype ready for seeding to the market

Feb 2000

Radik Conceived

1.0 Ready

Enter: The Pivot

• Situation: 1.0 ready, running low on money

• Problem: Open Source stocks well out of favor with wall street

• Solution: Let’s become an apps company!

Feb 2000

Jan 2001

Real organizations ship code.Even if it’s not your new

focus, ship the code already!

Mistake #3:When in doubt, ship it!

Mistake #4:Pivot small, not big

Make sure your pivot is within your investment thesis and

core competencies

Mistake #5:Know what you’re pivoting

toDon’t pivot to an amorphous

area: make sure you know what you’re going to do before the

pivot

Mistake #6:Get whole team buy-in for a pivot

Don’t allow a long-term schism to develop between founders.

Everybody needs to be convinced!

Mistake #7:Pivot based on evidence

Don’t pivot on a hunch.Pivot on concrete evidence

from multiple sources.

The Big Guns Come To The Table• Story: We built what we said we’d

buildMoney is for commercialization

• Raised $10MM at $18MM PreLed by Redpoint Ventures January 2001 – Post Bubble Burst

• Grew the team dramatically in all areasWe still didn’t know what app(s) we were building

Feb 2000

Jan 2001

Mistake #8:Staff up when you know what you

need

Don’t add headcount just because other firms have. Know your

precise needs before increasing burn.

Situation Mid-2001

• We’re half-heartedly working on the DB

• We still don’t know what app to build

• Our burn rate is astronomical

• Developers are inventing problems to stay busy

Feb 2000

Jan 2001

Jun 2001

Mistake #9:A new CEO won’t fix a

broken company

Executive team changes can be helpful but first determine

what the problems are.

Mistake #10:Communicate strategy

consistently to everybody

Investors, employees all need to be on the same page.

Never give different stories.

Mistake #11:Board governance matters

Have your lawyers involved with every board meeting and

call.

The Valley of Darkness

• “What are we building?”

• “Do we have the right people to build/sell it?”

• “Do we have enough money to build it?”

• “Are we building the right precursor technology for whatever it is?”

Feb 2000

Jan 2001

Jun 2001

The Liquidation

• We had an idea for an application

• It required none of our existing technology or talent to build

• We didn’t have enough money to get to cash-flow positive

• Nobody wanted a down round

Feb 2000

Feb 2002

Jan 2001

Jun 2001

Mistake #12:Communicate future inflection

points to executive team

If there are major board decisions coming up, tell your

executives.Hire adults and treat them as

such.

The Aftermath

• We returned 40% of the Series B investmentThe single best investment Redpoint made in 2001

• All employees got jobs by the time we shutGoogle hired quite a fewAlumni: Google, Facebook, LucidEra, HortonWorks, Duke University, VMWare, etc.

• Kidar, the database, is in IP PurgatoryNo advantage in allowing its releasePortions are now in LucidDB/Eigenbase

Feb 2000

Feb 2002

Jan 2001

Jun 2001

Apr 2002

1. Don’t be too young2. Every co-founder needs to bring something

concrete to the table3. When in doubt, ship it!4. Pivot small, not big5. Know what you’re pivoting to6. Get whole team buy-in for a pivot7. Pivot based on evidence8. Staff up when you know what you need9. A new CEO won’t fix a broken company10.Communicate strategy consistently to everybody11.Board governance matters12.Communicate future inflection points to

executive team

Mistake #13:Don’t be wrong

It hurts when the company you were founded to kill gets

bought for $1Bn.Trust me.