were going to be catalog companies. Now all the catalog companies are online,
but back then, they just didn’t want to hear about the Web. This was late ’95,
early ’96. A lot of people didn’t even have web access yet. So these middle
Paul Graham 209
managers at the catalog companies we called up, at that point they just wished
the Web would go away. It was just making their lives more complicated. We
would call them up and tell them how we could solve all their problems and
make an online...

about?
Graham: We worried about different ones for different reasons. Our biggest
competitor was a company called iCat. Fortunately for us, they were not very
good at writing software. They were, however, very good at raising money and
seeming corporate. At one point they did one round of funding that was more
than our entire valuation, in fact probably twice our valuation. But fortunately
they were never a threat technically.
At first they weren’t web-based; they had desktop software. Finally they
came out with a web-based version. Trevor and I were at...

at Julian’s loft in New York. One of our investors was a metals trader, so we figured
that he must be a great negotiator and we’d let him handle it. The guys
from the big company said, “We want to buy you for $3 million.” And he said,
“Well, I won’t sell you the company for $3 million, but for $1 million, I’ll sell
you an option to buy the company in 6 months for $20 million.” At that point
the guys from the big company just got up and walked out.
Livingston: How...

to California?” I looked at Robert and said “California?” And it turned out
he was going to leave in a week for the whole summer.
So now I had to explain to our investors why one of the founders of the company
they had just invested in had gone and taken a summer job working for
another company. That required all my spin abilities.
Livingston: What did you tell them?
Graham: I said that this was part of his graduate student career and that it was
a common thing for people in graduate...

Livingston: What was so special about Fred?
Graham: He didn’t need to be our boss. He was willing to be the COO and do
the business stuff and let us handle the technical stuff. He had worked for a
company that I had worked for, actually, Interleaf, and so he came with a lot of
credibility. In fact, he had been a big executive at Interleaf while I was just a
peon, so I was very impressed with him.
Livingston: Did he reassure your investors?
Graham: Oh God, that was so great. I...