History of Famous Startups. Lotus Development

the incentives.

Mon, 03 Aug 2009 02:57:02 -0700

the incentives.
Livingston: What would you tell an entrepreneur to understand before he/she
meets with a VC?
Kapor: I try to explain how it works. There are more choices nowadays for
people—angel money, for example. And many things are much less expensive
to do now. You can go further on your credit card than you could before. I want
entrepreneurs to make informed choices when it comes to financing. Understand
what the impacts and implications are for different financing options.
Livingston: Plus, many people don’t need to have as much money to get something
started.
Kapor: You can also do…

the paperwork, they

Mon, 03 Aug 2009 02:57:02 -0700

the paperwork, they take advantage of entrepreneurs who haven’t been through
this before. They do things on terms that favor them in a way that really can’t be
justified—that take advantage of their ignorance. It’s not a good way to do
business. Some of the VCs try to rationalize it, “This is just the way things are
done.” Well, I’m sorry but they’re wrong. Why do you think venture capital also
enjoys a reputation as “vulture capital?” It’s not an accident; it doesn’t have to
be that way.
Livingston: Did you try to change this when you joined Accel Partners?...

through from first

Mon, 03 Aug 2009 02:57:02 -0700

through from first principles.
And always having something running was a Sachs thing, because it was just
his experience it was a good thing, and I saw it and said, “Yes indeedy, we
should do this,” long before extreme programming.
Livingston: Was there ever a point when you wanted to quit?
Kapor: After we shipped and the business felt like it was getting out of control,
yes. The most fun parts were from time-equals-zero till 1984. I was terrified
about stuff—how’s this going to come out, what’s going to happen?
I did almost walk out. We raised a second round…

are inspired by

Mon, 03 Aug 2009 02:57:02 -0700

are inspired by a vision and are passionate about some piece of disruptive technology—
who are going to create something that actually has value for people in
a way that can be a game changer. That’s sort of my sweet spot. But every project
is different, so the specific advice needs to be customized.
The most important thing for me is, I don’t want to work with someone who
says, “Just help me make the business be more successful.” I want to work with
entrepreneurs who are personally passionate, committed, and believe in what
they’re doing. Not all entrepreneurs are…

but, to be

Mon, 03 Aug 2009 02:57:02 -0700

but, to be the recipient of that . . . I wasn’t particularly prepared for, nor did
I want most of that. I mean, I liked attention, but it’s a lot to get used to and a
lot of it made me profoundly uncomfortable.
And there was a series of values challenges that came up with running a
business that I was unprepared for that were very painful.
Livingston: Can you describe one?
Kapor: Lotus as a company wound up suing some other companies that
were copying our look and feel. Now, that was not done on my watch. I…

lawsuit; we had

Mon, 03 Aug 2009 02:57:02 -0700

lawsuit; we had a whole bunch of different alternative dispute resolution
conflict management approaches, through the employee relations function.
And then we had a diversity committee that had out gays and lesbians on it—
this was in 1984. We were the first corporate sponsor of an AIDS walk. We had
a corporate philanthropy committee in which the employees actually made
decisions about where the money went, not the pet projects of senior management.
So for many people what was memorable and important about Lotus was
that it was the best place they ever worked.
The other thing to say is…

’60s, then you

Mon, 03 Aug 2009 02:57:02 -0700

’60s, then you weren’t there. But it turned out I also have some entrepreneurial
talent. It’s not surprising—my father was a small businessman, my grandfather
was a small businessman, it kind of runs in the family. But I think I had cultural
biases against seeing it or valuing it that took a while to get over. So while Lotus
was getting started, I just saw it as a vehicle to doing great product. I never
wanted to have a big company.
Livingston: The word “creative” comes up a lot when you do a search for Lotus.
Did you make a…

good middle management

Mon, 03 Aug 2009 02:57:02 -0700

good middle management structure. And not recruiting a board that could help
me build the company. Big mistakes in picking a successor, big mistakes in having
an undisciplined product strategy—I was much more interested in having
distinctive, innovative products and thinking about what would make sense for
a product line for our business overall—and big mistakes in expanding too fast
and not having discipline about what we were doing. So I give myself a C or C–
on all that stuff.
Livingston: You guys grew to 1,000 employees before you went public. Did you
know you were going to go…

it would calculate

Mon, 03 Aug 2009 02:57:02 -0700

it would calculate properly. So it was much faster for certain cases.
Livingston: Was the code tuned to the IBM machine?
Kapor: It was tuned to the Intel 808X 16-bit architecture. And Sachs was also
very, very good. He was just an artist at high performance with limited resources.
I didn’t know how good he was; I got lucky. I knew he was good, but he was a
genius at this sort of stuff. The two of us together was essentially 1 + 1 = 3,
because I had a vision about the product and very strong ideas about the…

advantage of the

Mon, 03 Aug 2009 02:57:02 -0700

advantage of the IBM PC, that integrates the graphing, so you could hit one
button to get a graph”—because I knew people wanted that—“and have a
better user interface for non-expert users”—which we did—“and allow user
customization and user programming”—which we did in the macro language.
So there was a set of ideas that gave 1-2-3 its character, that really made it a
second-generation product, that had sufficient differentiation that was immediately
visible when you demoed it, and that was what gave it its market entr?e.
Being at the right place at the right time also helped. The business world…