hard for us to boss them around.
Livingston: So now you have Fred on board and you are becoming more legitimate.
What did you do next?
Graham: Soon after we got Fred, we raised more money. I don’t remember
exactly how much—maybe $800,000. A lot more money than we ever had
before. We really shifted gears at that point. Up till then, we had been operating
out of an apartment. In the very beginning, we operated out of Robert’s
apartment. Then after we got the $100,000 in that first round from the angel...

but nobody’s ever heard of. This was the point where we stopped seeming like
total underdogs and people started to know about us.
Part of the reason was that we hired a fabulous PR firm with this money,
Schwartz Communications. We told them, “When people talk about e-commerce
and they have to mention a few examples of companies, we want to be one of
the companies they mention.” The most valuable sort of press is not articles
about you, it’s when people mention you in passing as a matter of course. That’s
what...

during which the acquirer welched on the deal.
It turned out to be good in the end, but we had to raise our last round of
funding while this was happening. You want to raise a round of funding with an
Paul Graham 215
IP cloud over your head? It’s just impossible, because potential investors have
no way of judging how serious it is. It could be no big deal, or it could be that
this other company owns half your software.
That was the second low point—tied for lowest. Ultimately we managed...

a lawyer to figure out how to quit without getting sued. I was on my way out the
front door when Fred Egan grabbed me and said, “Wait, let’s see if we can fix
this.” It was pouring with rain and I was not too psyched about having to go find
a cab in that, so I went back to work while he made some phone calls. I don’t
know what he said, but I guess he convinced the investors I wasn’t bluffing.
I wasn’t, either.
We had some leverage, because the investors already...

It did, too. Yahoo made a lot of money from this software. When you tell
people you sold a startup to Yahoo in 1998, they get this knowing look, like you
sold someone a bag full of air for a hundred million dollars, but Viaweb was a
real money-making acquisition for them.
Livingston: What was the most surprising thing about being acquired?
Graham: For me the most surprising thing was the day the deal was going to be
announced. There was a point where I had to change our front page to read
...