I created a $350M software company knowing nothing about software (2015) | Hacker News Reader

I created a $350M software company knowing nothing about software (2015)

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This company was just acquired by Zoom for ~$15B

Yeah, and I have been thinking good job of them sucking from Zoom a la Autonomy or Qualtrics.

Caveat: all-stock transaction.

Turned out to be a great get thanks to COVID.

$15B in all stock = $15B in collateral = as much cash as you can conceivably wish for in your wildest dreams.

"Hey, bank manager, I have $15B in stocks, will you loan me $150 million to buy this really, really nice home in Malibu?"

Bank manager: "Yesyesyesyesyesyesyesyesyesyesyesyesyesyesyesyesyesyesyesyesyesyesyes"

The stock may very well crater in value all the way to 0, but the loan must still be paid, with interest and all.

I would assume that over time the property will have a better total return profile than the cost of the bank loan. Short term this might not be true, but over longer time frames it usually is. So its just a question of the company staying afloat for long enough..

Not necessarily true. The loan (especially if you're borrowing 1% of the collateral value) could be non recourse [0]. In such a case the bank can only depend on the stock value for recovery.

[0] https://www.investopedia.com/ask/answers/08/nonrecourse-loan...

The stock may go to zero. Or it may to to $20 billion, or it may to to $5 billion, or it may go to $5.1487 billion.

My point remains the same. The whole "has it in paper" as if that has no relation to cash, is not correct. Having stock is the exact same as having cash. Actually, it is way better. Because if you get cash, you have to pay taxes on it, so on $15 billion, that would be $5 billion in taxes, let's say. But if you get stock, then there's no taxes, but you get to borrow against it and get the cash anyways, as much as you need.

Sure, it might go to zero, but that's a pretty lame argument.

This is a kind of writing I think of as Silicon Valley mythos - in it, a plucky entrepreneur, a lucky angel investor and a hacker get together, and fail their way into an IPO. At the end they tell the reader he just needs to believe in himself more, and the SV myth will come true for him.

There’s a lot of hate in the comments here, but I am personally more equivocal - it is definitely true that absolutely no centimillion or billion dollar companies get founded by people that refuse to found companies. And, I think the real moral of the story - persist and get lucky with a good team and a good market angle at the right time - is a very potent moral.

But, I prefer the grittier SV myth stories a-la Ben Horowitz which mention all the times you’re vomiting in your bathroom worried about making payroll and fighting with your co-founders while your spouse is like “so, about that day job..” - I’m not sure there’s any company that gets truly valuable without some very difficult times.

> centimillion

hectomillion, surely :) ?

https://www.nist.gov/pml/weights-and-measures/metric-si-pref...

Slip of the mind, surely! :)

Yeah, this is the bulls^H^H^H^H^Hstory that perpetuates that mythos, too.

> persist and get lucky with a good team and a good market angle at the right time - is a very potent moral.

What we should take away is that there is money to be wasted. A lot of money (which is not going into employees pockets). If someone was willing to give a billion dollars for a press of a bag of juice that could be squeezed by hand, a useless product, imagine what can be had if you have an actual product.

A tangent but I think it is a useful behavior to never assume people are stupid or crazy (even if they obviously must be sometimes). The reason is that it’s at best uninformative and at worst just plain wrong.

Instead I would suggest imagining that people are perfectly rational within the limits of their information and ability to reason, and consider what beliefs they could have had that motivated their behavior.

Absolutely, people are def not stupid.

I am just commenting on the greed of capitalists that manifests in throwing around millions and billions of dollars.

Persistent people are much more likely to ignore their misses and focus on their hits. Someone that hits 10M in revenue may have pivoted multiple times when they were below 1k in revenue trying to get traction. They probably don't even see it as a pivot, they have forgotten about the sales pitches that totally fell flat, and remember the times that a customer said "Could you also do X, we really need that"

Whole heartedly agree -- though too long in this desert without the savory success can make one feel like they're going mad.

Too many times I've found comfort from laying prone on a hard wood floor...

I'm not asking to remove the stress completely - it would just be nice to feel like I can afford a small nap pad underneath me.

>I prefer the grittier SV myth stories a-la Ben Horowitz which mention all the times you’re vomiting in your bathroom...

"There were so many depressing nights alone that often I would watch my favorite movie, The Shawshank Redemption, over and over, mindlessly."

every sewage system has a diamond ring somewhere in it, and everyone thinks when itsmfound, that proves the market for diamond rings

> Knowing nothing about software.

A few lines in:

> I created a horse-racing simulation game in Applesoft BASIC in Manhattan Beach Middle School’s computer classroom and ran a small gambling operation.

... Ok.

Yeah that was hilarious. Also:

> Many of my friends who are founders of their own companies tell me how they exhibited the entrepreneurial spirit as a kid… But that wasn’t me.

Literally next sentence:

> I ran a small gambling operation

Compared to the engineers, it does sound accurate. I couldn't claim to know anything serious about medicine by reading Wikipedia compared to a practicing doctor.

Disingenuous title? Well yeah. The author does sales.

No, but you could claim it if you'd worked as a volunteer EMT for a year.

> I couldn't claim to know anything serious about medicine by reading Wikipedia compared to a practicing doctor.

A basic understanding of biology beyond high school level will get you further than you think. Keep in mind the medical industry has a lot of artificial barriers and gatekeeping.

I see nothing conflicting.

"Software" is much more than just ability to write a small BASIC program.

I have "been in software" for quarter of century and I am still constantly learning as if I was beginner.

Though having been able to write even a small BASIC program may have had an effect of you appreciating the work of a developer just a tiny little bit. And this is not given -- I have seen in the past many CEOs having no appreciation whatsoever and this leads typically to disrupting developer work and underutilizing their abilities. Then when everything starts to fall apart management blames problems on developers rather than try to understand what caused these developers to fail.

> And this is not given -- I have seen in the past many CEOs having no appreciation whatsoever and this leads typically to disrupting developer work and underutilizing their abilities.

That was one of the reasons Microsoft, Google and Facebook grew so fast in the early days.

The more you know the more you realize how little you know.

“ After what must have been more than 2,000 cold calls, I finally reached a receptive voice on the other line.”

Sounds like he is a solid sales person. That stuff is worth a lot ... probably more than knowing a lot about software ... even in a software business.

Discussed at the time (of the article):

How I Created a $350M Software Company Knowing Nothing About Software - https://news.ycombinator.com/item?id=10802194 - Dec 2015 (108 comments)

On the recent acquisition by Zoom (thanks ksaxena for pointing this out: https://news.ycombinator.com/item?id=27968224)

Zoom to Acquire Five9 - https://news.ycombinator.com/item?id=27878412 - July 2021 (24 comments)

https://www.bloomberg.com/news/articles/2021-07-19/zoom-to-b...

>"We then hired “The Machine” (Engineer #2) and I moved in with him into an apartment in the Twin Peaks neighborhood of San Francisco, mostly so I could harass him into programming day and night. And as my two engineers built a beta version of our call center software, I started dialing for dollars and calling call center owners with the pitch and promise of something cheaper.

After so many rejections, I wanted to reject myself.

After what must have been more than 2,000 cold calls, I finally reached a receptive voice on the other line.

Joe owned a small but successful call center in Provo, Utah. He called my bluff and said that he knew we didn’t have anything solid yet, but he trusted we could get it built — but it had to be half the price I quoted him.

And that’s the early lesson I learned about entrepreneurship, or maybe it was a lesson in America itself. That after so many rejections, I wanted to reject myself, but then found someone who would mail me a check for $40,000, even during a recession, because they were risk-taking business owners themselves.

It made me realize that America was a magical place for entrepreneurs."

[...]

>"I’m not sure if I have any sage advice for other entrepreneurs, but out of this experience I did learn one important truth. Namely, you don’t have to be an Ivy League graduate (I’m not) or have a lot of money (we didn’t).

You just have to believe in yourself against all reasonable logic,

as trite as that sounds."

PDS: What a great piece of writing about Entrepreneurship!

Worth reading and re-reading in the future!

The guy knew about multi-tenant SaaS and Voice over IP and built a company around that before his competitors, I would not say he “knew nothing about software” any more than Steve Jobs.

Someone always hits the lottery. The probability that it will be you is zero.

Most people are much better served working for a company and punching the 9-to-5 clock--especially since startups nowadays rarely give contributors sufficient stock to make the risks worthwhile.

Not sure why you’re being downvoted, this is a very valid point for most people by definition.

I spent nearly 8 years at a fintech startup in London, leaving late last year. It just recently had a liquidity event (private capital) which means that my options will net me a bank deposit worth several times my after-tax annual salary.

And yet, my current total comp at Google is worth more than my final salary + (pre-tax option value at liquidity event / 8). And I reckon I was the highest paid engineer in the company.

I did forgo the options from my most recent grant when I left, but even with them, it wouldn't have exceeded Google's TC, especially considering $GOOG's recent appreciation. Since you only make money on options if the value rises, you need quite a lot late in the day for it to add up. And the 10 year expiration for the initial options was starting to come into view.

I consider myself lucky to have come out of it so well, but in retrospect, I would have been better off joining Google earlier, though it would have been at a lower level.

The less sexy way of "making it big" is get a well paying, interesting but low stress job, live below your means, dollar cost average your way into an index fund.

Instead of spending nights and weekends hacking away, spend it with your family or a hobby...become a guaranteed millionaire.

$20k invested per year, 8% average yearly return, 30 year growth = $2.5mill. YMMV based on tweaking those numbers

You make it sound like getting a well paying, interesting, low-stress job is a total cake walk. For most of us it's not.

I also love how someone inevitably trots out the "just invest $<more spare money than most have> at <unrealistic rate>% for <very long time>". Nothing is giving you guarenteed 8% post tax returns, and you might want to, I don't know, buy a house in the next 30 years.

Genuinely curious...Why is it that "most of us" it's not? Because you don't like in the US? Or you live in an area w/ limited tech jobs? Or is it that you believe that all 3 criteria is unattainable?

8%...how is that over 30 years unrealistic? That is the historical going rate for the S&P since its inception...

Also I don't know why you threw in the words "post tax" as if it means something for dollar cost averaging. If you dollar cost average the S&P...even in a taxable brokerage account...the only thing you're taxed on is dividends. Your gains compound tax free....If you throw it in a 401k, where the max individual contribution is $19500 then nothing is taxed till you withdraw.

My example of $20k is drawn from a max of $19500 contribution (and hopefully you get employer matching) because ideally you are maxing out a 401k to get the tax benefits.

past returns are not indicators of future ones

no guarantee that future returns will match past returns but they are a pretty good guide

Perfectly reasonable path for some people. For others, like myself, not being my own boss and working a "normal job" for years on end is the definition of hell. I know I'm in the minority though.

I think the exception is if you are a founder, for at least two reasons. First, if the startup does have success, you can make substantially more than any 9-to-5. Secondly, the skills you develop running even a smallish company can translate well to upper management if you do ever decide to “work for someone else”.

N.b. I do not know this from personal experience, just my observations.

> especially since startups nowadays rarely give contributors sufficient stock to make the risks worthwhile.

All startups aren't created equal. Most startups aren't worth it. Unless the founder has a good background or showed he can raise capital, always go for consulting fees.

It's not clear what this person actually did. It sounds like it's his employees/partners did all the work.

From my reading of the article it sounds like sales and product vision — both as essential as coding.

The others were diggers, he told them where to dig.

That is a delightful expression. I think if you told this to 5 people, there would be 5 different attitudes arising from it. I'm going to have to steal that!

And he went and bought the shovels for all.

Abd he got the money for the permits and the bureaucracy.

And he actually motivated everyone to dig in the exact place they did.

2000 phone calls. Count me out after two. I somehow still manage to pay the bills consulting :).

Yeah he admits as much, he didn't do any software work. He 'just' a sales guy

Got 150k seed, landed a 40k contract without a product. As for team, he convinced a potential cofounder to sell his house and move across the country and hired his ex-boss, just to start

This resonates well with Paul's "How not to die" [1]

[1] http://www.paulgraham.com/die.html

F me — I didn’t need to read this tonight. My ‘sewer pipe’ feels light years in length, and I’m in a row boat.

Much love to all those burning the candle at both ends with a blowtorch, may you make it out alive

Yeah, articles like these read as psychopath porn to me. Not interested in subjecting myself to any of this on my own time.

amazing story. I love the way he writes, as if he's still that 20 year old entrepreneur.

I sure do love a good dose of survivor bias.

It looks like a paid content for advertising.

If that's the case then someone screwed up, because I had to actually read the article just to find the name of the company.

I thought Microsoft was worth more than $350M.

Awesome story.

This reads like the pilot episode of a quirky netflix show.

@dang, would be nice to add the year (2015?) to the title.

Added now. Thanks!

(2015)

Added. Thanks!

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