At Startup Bootcamp today, two presenters represented two different eras and two different approaches to starting an information technology business. Before Bob Metcalfe started 3Com, he met, one by one, with all the VCs on the West Coast (going through the directory of the regional VC association), interviewing them about starting a business. (He learned that there were three reasons why startups fail: the ego of the founder; lack of focus; lack of funding.) When he founded 3Com in 1979, he had a product and a business plan (and made sure to hire an experienced executive as CEO rather than insisting on running the company himself). Thirty years later, Bill Clerico and Rich Aberman started WePay, and spent almost a year presenting their idea to VCs, trying to get funding. After burning through $50,000 of their own money, they realized that what they should have done first is develop a product. They did (with help from Y Combinator) and met with immediate success.
Starting information businesses: 1979, 2009
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If I’m not mistaken, Y Combinator is Paul Graham’s firm? I wrote about him in my own last post. Quite the Renaissance man.