Some kind of magic happens in startups, especially at the very beginning, but the only people there to see it are the founders. The best way to understand what happens is to ask them, so that’s what I did. 

The world thinks of startup founders as having some kind of superhuman confidence, but a lot of them were uncertain at first about starting a company. What they weren't uncertain about was making something good or trying to fix something broken. They all were determined to build things that worked. In fact, I’d say determination is the single most important quality in a startup founder. If the founders I spoke with were superhuman in any way, it was in their perseverance. Perseverance is important because, in a startup, nothing goes according to plan. Founders live day to day with a sense of uncertainty, isolation, and sometimes lack of progress. Plus, startups, by their nature, are doing new things and when you do new things, people often reject you. Starting a startup is a process of trial and error. What guided the founders through this process was their empathy for the users. They never lost sight of making things that people would want.

6 Founders' Stories in Their Own Words


Max Levchin (Cofounder, PayPal)

PayPal was founded in December 1998 by recent college grad Max Levchin and hedge fund manager Peter Thiel. The company went through several ideas, including cryptography software and a service for transmitting money via PDAs, before finding its niche as a web-based payment system. That service became wildly popular for online vendors, especially eBay sellers, who preferred it to traditional payment methods. PayPal went public in early 2002 and was acquired later that year by eBay for $1.5 billion. PayPal was started during the Internet Bubble, but it was in no sense a Bubble startup. Its success was a direct reflection of the intelligence of the people who built it. PayPal won because they built a better mousetrap. With any new method of moving money comes new forms of fraud. In large part, PayPal succeeded because it could deal with fraud—and its competitors couldn’t. The software that Levchin and his team developed to combat fraud runs quietly and invisibly. To this day, PayPal doesn’t talk much about it. But Levchin’s software was just as much the reason for PayPal’s success as a more visible product like the Apple II was for Apple.

' The company was really not founded to do payments at all. My focus in college was security. I wanted to do crypto and stuff like that. I had already founded three different companies during college and the year after, which I spent in Champaign-Urbana, where I went to school. Then, in favor of not doing graduate school, I decided to move out to Silicon Valley and try to start another company. So I was hanging around Silicon Valley in the summer of ’98 and was not really sure what I was going to do with my life. I was living in Palo Alto, squatting.

on the floor of a friend. I went to see this random lecture at Stanford—given by a guy named Peter, who I had heard about, but never met before. The lecture turned out to have only six people in it. It was in the heat of the summer, so nobody showed up. This guy was like, “There are only six of you, OK.” Afterwards I walked up to talk to him. He was this really intense guy, and he said, “We should get breakfast sometime.” So we met up the next week. I had two different ideas that I was considering starting companies around, and I pitched him on both evenly. Peter was running a hedge fund at the time. For a few weeks we kept talking, and eventually he said, “Take this idea, because this one is better, and you go start a company around it, and then I can have my hedge fund invest a little bit of money in it”—like a couple hundred thousand dollars. That was a good thing, since I was starting to run out of money.

I had just moved from Champaign; most of my contacts and friends were in Chicago. One of them I was trying to convince to be the CEO. He wasn’t really available, so I wound up being without a CEO. I called Peter and said, “This investment is a great thing, but I have no one to run the company. I’m just going to write the code and recruit the coders.” And he said, “Maybe I could be your CEO.” So I said, “That’s a really good idea.” The next 2 weeks we were sort of playing with the idea, and by 1/1/99 we agreed that he would be the CEO and I would be the CTO.'


Steve Wozniak (Cofounder, Apple Computer)

If any one person can be said to have set off the personal computer revolution, it might be Steve Wozniak. He designed the machine that crystallized what a desktop computer was: the Apple II. Wozniak and Steve Jobs founded Apple Computer in 1976. Between Wozniak’s technical ability and Jobs’s mesmerizing energy, they were a powerful team. Woz first showed off his home-built computer, the Apple I, at Silicon Valley’s Homebrew Computer Club in 1976. After Jobs landed a contract with the Byte Shop, a local computer store, for 100 preassembled machines, Apple was launched on a rapid ascent. Woz soon followed with the machine that made the company: the Apple II. He single-handedly designed all its hardware and software—an extraordinary feat even for the time. And what’s more, he did it all while working at his day job at Hewlett-Packard. The Apple II was presented to the public at the first West Coast Computer Faire in 1977. Apple Computer went public in 1980 in the largest IPO since Ford in 1956, creating more instant millionaires than any other company up to that point. The Apple II was the machine that brought computers onto the desks of ordinary people. The reason it did was that it was so miraculously well designed. But when you meet Woz in person, you realize another equally miraculous aspect of his character. A programmer might describe it by saying he’s good in hardware.

Even back in high school I knew I could design computers with half as many chips as the companies were selling them with. I taught myself, but I had taught myself in a way that forced me to learn all sorts of trickiness. Because you try to make valuable what you’re good at. I was good at making things with very few parts by using all sorts of tricks—almost the equivalent of mathematics—so I valued products that were made with very few parts. 

That helped in two ways. When you are a startup or an individual on your own, you don’t have very much money, so the fewer parts you have to buy, the better. When you design with very few parts, everything is so clean and orderly you can understand it more deeply in your head, and that causes you to have fewer bugs. You live and sleep with every little detail of the product.

In the few years before Apple, I was working at Hewlett-Packard designing scientific calculators. That was a real great opportunity to be working with the hot product of the day. But what I did that led to starting a company was on the side. When I came home from work, I kept doing electronics anyway.I didn’t do the same calculators we were doing at work, but I got involved through other people with the earliest home pinball games, hotel movies . . .

The first VCRs made for people were actually made by an American company not Betamax, it was before Betamax even—called Cartravision. It was put in some Sears TVs. I got involved with that. I saw arcade games—the first arcade game, Pong, that really made it big—so I designed one of those on my own. Then Atari wanted to take my design and make it the first home Pong game. They said to do one chip, which was better for the volumes that they would have—to do a custom chip. Steve Mayer came up with that idea. But I was kind of in with Atari and they recognized me for my design talents, so they wanted to hire me.


Evan Williams {Cofounder, Pyra Labs (}

Evan Williams cofounded Pyra Labs in 1999. Originally, Pyra intended to build a web-based project management tool. Williams developed Blogger to manage his personal weblog, and it quickly became an important mechanism for sharing ideas internally at Pyra. Once launched publicly, Blogger grew rapidly, and Pyra Labs decided to focus on it full-time. But did not generate a lot of revenue at first, and as the Bubble deflated in 2001, Pyra seemed near death. Williams remained as the only employee and managed to bring the company back from the brink. By 2003, Blogger had one million registered users. That attracted the attention of Google, who made Pyra their first acquisition. Williams left Google in 2004 to cofound a podcasting company called Odeo.

I have always been pretty entrepreneurial, and I had started a couple of other companies. In late ’98 when I decided to start Pyra, I had been doing Internet stuff for about 5 years. I actually started a company in Nebraska. I had never even really worked anywhere. I was just totally self-taught technically, but I started a company and kind of ran it into the ground over 3 years or so, and it was a very educational, painful experience. But I knew I was going to do that again. I just always knew I was going to start my own thing.

I went to college, and I dropped out because I didn't need to have a degree—because I wasn't going to try to get a job with anyone. I came to California after playing with the Internet for a few years because Nebraska wasn't the place to be, very clearly. I moved to California to take a job with O’Reilly, which ended up being very fortunate as you’ll find out later. I worked there for a few months, though I knew I didn't want to work for anyone. I taught myself web development—this was in the middle of the boom and there was lots of work to be had as a contractor. I knew I was going to start another company. I just wasn't ready yet. So I was a web developer on contract for about a year and a half, and worked in various companies like Intel and HP. Finally I got to the point where I said, “OK, I am going to start another company.” This was very much in the middle of the boom.

I had visions of raising money and building something cool, but originally the idea for Pyra was around web-based project management, or collaboration, which was an area I had been interested in for a long time. The idea for Pyra was the personal and project information management system: to build projects for clients around their intranets and help them organize their work and personal information. It is a web application where you would put your stuff, things you are thinking about, things you had to do, things you wanted to share with other people. There is not exactly a corollary to it today, but it is along the same lines as Basecamp or Ta-da List (but more complicated). There are a lot of products that are about organizing your work and stuff. That was what I saw as the big idea, and I had specific ideas about how that could be done better than it had ever been done before.

Around the time I was thinking about starting the company, I was talking to a friend of mine, Meg Hourihan. She got excited about the idea and said, “Hey, let me start it with you.” She had been a management consultant and was really smart, so I said OK. I had been contracting, so I had a little bit of money, so I could coast for a little while, but we didn't know anybody. We weren't hooked into the startup scene.

Everyone was getting funded, but it is still completely just a network. You have to know the right people. Whether it’s good times or bad, you have to know people and you have to talk their language, and we were just from a different place and not hooked into that at all. So we just said, “OK, here is the product we are going to build,” and we started building it. We actually kept contracting on the side I had a contract with HP. That’s how we paid the bills we turned my personal contract into the company’s contract and we did a little work on that and we did a little work on our project, and that is how we started.


Mike Lazaridis (Cofounder, Research In Motion)

Mike Lazaridis founded Research In Motion (RIM) with his friend Doug Fregin in 1984 while still an undergraduate at the University of Waterloo. One of their first projects was a local area network that ran industrial displays. Near the end of Lazaridis’s senior year, they landed a $600,000 contract to build a similar network for General Motors. A few weeks shy of his graduation, Lazaridis left school to focus full-time on the company. RIM was one of the first companies to appreciate the importance of wireless networks. In the early 1990s, when email was still largely unknown in corporate America, Lazaridis foresaw the potential of mobile email. A series of projects in this area culminated in 1999 in the BlackBerry, now the dominant product in this market. The BlackBerry was one of those innovations that not only became popular, but changed the way organizations operate. Some of the most powerful people in business and politics run their lives with this device. RIM went public in 1997, and is one of Canada’s most admired technology companies.

I knew Doug from grade school, but we started working together in high school. Our high school had a state-of-the-art electronics and shop program that was the result of a donation from a local industrialist. When all this equipment had arrived, it was still in crates. I had asked to open some of the boxes and pull out the equipment, and I remember the teacher saying, “Well, you can open any box you like, but there’s one condition: you have to read the manual first.”

This doesn’t sound like a big deal, but, to a student that just came to high school—to read a manual on how to use an oscilloscope, how to use a signal generator, a computer trainer, how to use all this advanced equipment—these were tricky textbooks to get through and understand. Of course, once I was able to prove that I knew how to use the equipment and what it did, I was able to open the box. And we opened every single box.


Paul Buchheit (Creator, Gmail)

Paul Buchheit was Google’s 23rd employee. He was the creator and lead developer of Gmail, Google’s web-based email system, which anticipated most aspects of what is now called Web 2.0. As part of his work on Gmail, Buchheit developed the first prototype of AdSense, Google’s program for running ads on other websites. He also suggested the company’s now-famous motto, “Don’t be evil,” at a 2000 meeting on company values. Although not a founder, Buchheit probably contributedmore to Google than many founders do their startups. Gmail was in effect a startup within Google—a dramatically novel project on the margins of the company, initiated by a small group and brought to fruition against a good deal of resistance.

A little bit of both, actually. I started working on email software a long time ago. I think it was maybe 1996, but it was just a little project. I had all these ideas that never really went anywhere. Oddly enough, I think I was calling it Gmail at the time, for some other reason. It was just a random project not necessarily the predecessor to Gmail—but it was something that I’d been thinking about because I’d been sort of unhappy with email for a long time. It was before Hotmail and I was in college at the time. If you wanted to check your email, you’d have to go back to your dorm room. I thought, “That’s so stupid. I should be able to just check it anywhere.” So I wanted to make some kind of web-based email. But I really didn’t know what I was doing, so it didn’t go anywhere. I wrote something, but it was never useful and never got off the ground. So fast-forward to much later: I was here at Google and I had worked on Google Groups, which is not exactly the same, but it’s related. After the first  generation of Google Groups had mostly wrapped up, they asked me if I wanted to build some type of email or personalization product. It was a pretty non-specific project charter. They just said, “We think this is an interesting area.” Of course, I was excited to work on that.


Caterina Fake (Cofounder, Flickr)

Caterina Fake started Ludicorp in the summer of 2002 with Stewart Butterfield and Jason Classon. The company’s first product, Game Neverending, was a massively multiplayer online game with real-time interaction through instant messaging (IM). In 2004, they added a new feature—a chat environment with photo sharing—which quickly surpassed Game Neverending itself in popularity. The team knew they were onto something big and put Game Neverending on hold to develop a new photo-sharing community site called Flickr. Flickr became extremely popular and was acquired by Yahoo in March 2005. With its emphasis on user-generated content and its devoted online community, Flickr is one of the most commonly cited examples of Web 2.0 companies.

Stewart and I are married. When we met, I was living in San Francisco and he lived in Canada. One of his wooing strategies was to suggest that we start a company together. Both of us were doing web development at the time and his idea was that we do some type of transnational web development company which is kind of a harebrained scheme. We didn’t end up doing that, but we did fall in love and have a long-distance relationship. I eventually moved up to Vancouver and we got married. We went on our honeymoon and came back and two days later started Ludicorp. The name is from ludus, the Latin word for “play.” We were building a massively multiplayer online game called Game Neverending. It was a lightweight web-based game, and atypical for massively multiplayer games. Most of those have Sword and Sorcery or science fiction themes, and are usually CD-ROM based. Game Neverending was very much based around social interactions; you could form groups, instant message each other, and there was a social network associated with it.

When we came up with the idea for the game, Stewart had been working at the CBC, on the kids’ site, and in doing research he started playing all these online games. Neopets was one of the inspirations for Game Neverending. It’s really fun. I was totally addicted. They have these pets, which are Tamagotchi-like, and you can buy them presents and give them toys. But what’s interesting is that it has a market and you can trade things with other people in the game. The little area that I cornered the market on was trading JubJub hats. My sister became completely absorbed in it, and we thought, “Wow, there’s something interesting here.” Both of us have backgrounds in web design and development, and I have a focus on social software. Before Ludicorp, I worked on or participated in a bunch of online communities including the WELL, Electric Minds, the Netscape online communities, and various sites I’d started on my own. At Interval Research, I worked on a collaborative animation game, which was a cousin to the Game Neverending idea.


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