capital.
Livingston: And that’s because you didn’t want to take a huge amount of
capital?
Schachter: Well, there was a lot of risk. It was sort of hard to justify a large
valuation and so on, so we sold a small chunk for enough money to work for a
while and see if it turned into something. That was the plan: see where this
goes.
Livingston: Did you hire anyone?
Schachter:We did. There were eight employees total at the end.
Livingston: Were most of them shareholders?
Schachter:We gave shares to everybody.
Livingston: Did you have vesting?
Schachter: Yes. Even I vested.
Livingston: What were some of the first things that you did once you were officially
a startup?
Schachter: One of the most challenging things was getting payroll going. PEOs
typically don’t want to do less than five employees.
Union Square introduced me to this guy, Albert Wenger, who had some
operations experience. He helped a lot. I lucked out in that he’s a smart guy
who knew how to do not just the corporate operations stuff, but he had a good
product sense and ended up doing a great deal of product work as well. The
first version of the Firefox toolbar, he dealt with, for example.
Livingston: What were some of the biggest technical problems that you
encountered?
Schachter: Scaling, inevitably. Scaling, dealing with bandwidth, dealing with
routing, networks. This is for consumer Internet kind of stuff, but there’s a
great deal of stuff that you have to flawlessly execute on. It has to be done well,
but everybody does it well, so it doesn’t differentiate at all. Like your connection
has to be up. Your office needs to have DSL. There’s a great deal of crap
that has to be executed better than competently that is no value for you to actually
do yourself. So outsource that.
For example, the payroll. I was capable of going 2 to 3 months without
salary, but other employees certainly were not. So that kind of stuff.
But you need to pay attention to the important stuff. Scaling was important
and core to the product, but dealing with the network, getting the hardware
racked, building machines, ordering stuff, getting pricing out of Dell, you name
it. That was a lot of work that was not useful.
Livingston: Outside of the scaling requirements, can you remember any
technical problems that you guys solved?
Schachter: Tagging basically was the thing. And then there’s a gagillion little
improvements in marketing things. We actually thought about the product
always with an eye toward innovation. Everything we did we questioned—and I

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