How A Professor Learned To Also Be An Entrepreneur

Just 5 years after launching his company, SafeWeb, Stephen Hsu sold it to Symantec for $26 million. The idea for the business came to him when he was a Physics professor at Yale, where he was put in charge of protecting the department’s network from hackers. Based on the solution, he and his partner created a business aimed at consumers. Users loved the service, but SafeWeb couldn’t turn a profit on consumers, so the company had to make a painful pivot toward the enterprise market.

You’re going to learn a lot in this interview about the evolution of an entrepreneur from a professor with little startup experience to a CEO whose investors insisted stay with the company.

Today Stephen is working on his latest startup, Robot Genius, and he’s still a professor. (Though, as you’ll hear towards the end of the interview, he did pretty well financially from the SafeWeb sale.)

Stephen Hsu

Stephen Hsu

Robot Genius

Stephen Hsu is currently the co-founder of computer security company Robot Genius and professor of physics at the University of Oregon. Previously, he co-founded SafeWeb, which he sold to Symantec.



Full Interview Transcript



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Hey everyone, my name is Andrew Warner. I’m the founder of, home of the ambitious upstart. And today’s entrepreneur, Stephen Hsu, sold his computer, sold his computer security company, SafeWeb, for $26 million to Symantec, just five years after launching it. The idea for the business came to him when he was a Physics professor at Yale, and he was put in charge of protecting the department’s network from hackers. We’ll find out how he built the business, why he sold it, what he learned along the way, and, also what he’s doing now. Stephen, how did I do with that introduction?

Interviewee: That was perfect.

Andrew: I’ll put one, I should tell you that I wasn’t looking dead at the camera because I’ve got my notes right here on the screen.

Interviewee: Okay.

Andrew: I wanted to make sure that I introduced you properly.

Interviewee: Don’t worry about it.

Andrew: Alright, so the first question that I got for you is, what was the problem you were trying to solve?

Interviewee: You know, I, I think that the general observations I’m going to make about startups will be useful to almost everybody, but the specific situation is a little bit dated. So you have to take yourself back to the late ’90s early 2000s. And in terms of security, the landscape has just changed tremendously. So, in those days, the word firewall wasn’t really even in broad usage. Let alone, more sophisticated things like SSL VPNs, which is what we, basically, developed. So, at the time, in the late ’90s, I was a Physics professor and I and some students were just setting up Linux boxes around the department. Because, at that time, Linux was kind of the new thing, and we were just saving the department a lot of money by setting up these scientific workstations instead of buying Solaris machines. Which, at the time, was the only way you could get a scientific workstation. So, we were setting these things up and they all just got hacked into, right away. And so, suddenly we got thrust into this whole world of Internet security, and it turned out to be quite fascinating. One of the tools I found on one of the hacked machines was a, was a packet sniffer. And, at the time, I had never seen anything like it, and I realized I didn’t really understand things like TCP/IP very well, and encryption. And I just started getting interested in it. And my student and I, we just said. He, and I have to tell you that the job situation in Theoretical Physics is very competitive. And so, you have a lot of smart people who are trained in the field, but they end up leaving the field, like Nathan [Mierbal], for example. And, so I told my student, I said, “There’s probably a lot of interesting stuff here, because we’re going through this Internet revolution. And I bet there are more interesting things for you to do in technology than, maybe, in our academic subject. So let’s just keep our eyes open.” He said, “Sure.” So we were thinking about it, and one of the things we looked at wa

s SSL, which was quite new at the time. So, it was a, SSL was a collaboration between Netscape and Microsoft. Even though they were competitors, at that time, strategic competitors, they both realized that, in order for e-commerce to work, that some kind of security would have to be enabled. And have, would have to be universal so people could engage in e-commerce. So the SSL, yeah, go ahead.

Andrew: I’m sorry to interrupt. I just want to ask the question. Make sure that I’m understanding. Were you helping him find, were you guys thinking up a business together? Or were you just helping him find a project that was interesting? What was the motivation there?

Interviewee: Yeah, good question. Actually, I mean, we were still doing our academic research in Particle Physics, but I just had the feeling. I guess maybe because I have some, it turns out I guess it’s true, some entrepreneurial instincts. And also, my brother had started a software company. So, I was saying to my student, Jim, who became the CTO of the company, I said, “Hey, we should think about starting a company. I bet we can think up some interesting ideas the can become a company. And you should, we should be open to that.” So, that, that was the idea, actually.

Andrew: I see. It’s interesting because the research that I saw was, I guess, presenting more of a PR story around this that you found some hackers had invaded your system, you found a way to solve the problem for Yale, and then you thought, ‘Well, maybe this could have bigger potential.’

Interviewee: That’s a little bit of a compressed description. What really happened is we were thrust into that problem because of the incident that happened. We started thinking about – in general, because we’re physicist – so we’re thinking, in general, in an abstract way about TCP/IP and encryption and all that stuff, VPNs. Then, we did it with the idea that we might start a company if we had a good idea, but we didn’t have a good idea right away. In fact, I have the idea while I was visiting a research institute in Korea. I emailed Jim, or I called Jim, I think, to tell him the idea and we [xx] around it and we decided to start a company around it.

At that time, everything was very nascent in terms of [xx] and security. There were no firewalls. In fact, at universities today, you’d be shocked that like the server that is sitting in front of me on my desk, there’s no firewall between it and the Internet. So it’s totally, universities are just totally like the Wild West. Nowadays, every company is totally whacked down. There’s a firewall and there’s an intranet. The only connection outward is through that firewall, and that’s the usual architecture now. But at the time, that was not widespread at all.

So, we looked at the SSL. I don’t want to get into all the…maybe a few words, we’re not that interested in all the details, but we looked at the SSL spec, and at the time, people were only thinking about using it to securely send credit card numbers. Even email over SSL was not, at that time, there was nobody doing it. We thought about that as well but there were some competitors already in that space. We were thinking of using SSL as a way to build VPNs.

At the time, VPNs, and even now, there’s a propriety way of building the encryption for VPNs, which uses something called IPsec. It turns out that’s actually cumbersome. You have to have a client on your machine to use IPsec. We said, ‘Hey, this spec for SSL that Netscape and Microsoft are working on, is very high quality. It’s a first rate encryption library set of protocols. We could build the whole VPN based on SSL, and then the client would be the browser, which is going to be on every device.’ So, even then, in 19…yes, go ahead.

Andrew: I’m sorry, but we got to stop and spend a little bit of the time here just defining the terms. Then, we’re going to spend more time talking about the entrepreneur’s story then the technology behind it, but [xx] define the entrepreneur’s story.

Interviewee: Yes. Exactly. OK.

Andrew: We do need to define the technology here. So, VPN is what?

Interviewee: VPN is virtual private network. So I should say a little bit about how your packets are [xx] on the Web. They go all over the place, and there’s no built in security. So, what was shocking to us about the packet sniffer is once that hacker got control of a few machines in the Physics Department, he could see a ton of traffic that was traveling around Yale. He could sniff everybody’s conversations, their email, their Web traffic.

Andrew: That’s because if I send you an email or if I fill out a form, the email doesn’t go directly to you and the form doesn’t go directly to the person who created the form.

Interviewee: Right. It passes many servers.

Andrew: [xx] and sent all over the Net and then it reunites at its destination. Right?

Interviewee: Correct.

Andrew: What these hackers do is sniffing individual packets of data.

Interviewee: That’s correct. A VPN is a way to embed some security in all of these which is to encrypt each packet, to have an encryption handshake between the originator and the receiver and it’s called the public key encryption protocol. Once that’s in place, then people in the middle who manage to capture a packet, they capture the packet but it’s encrypted and they’re not able to decrypt it. A VPN is that something layered over the public Internet which exploits encryption.

Andrew: [xx] talking about?

Interviewee: Yes. So nowadays, if you work for a big company and you want to connect in and get to some data that’s on a server within Google or something and you’re working outside, guaranteed, you’re probably going to be doing it through some encrypted pipeline, and that’s a VPN.

Now, our main innovation was to notice that because the browser was going to be the most widely deployed app, this wasn’t obvious in the late ë90s but it was obvious to us and it’s now come true. Since the browser is going to be the most deployed app, in the sense it would have, for e-commerce reasons, a built in SSL engine, you have an end point that can connect a VPN. So we need to build the backend server site capability that can connect out to any browser, so it could be on your handheld. You know, in those days, it was like science fiction to us that there’ll be a browser on a handheld, but nowadays, you have one. So, every remote device then would be a potential entry point into the VPN and that backend software and all the technology behind it had not actually even been conceived, let alone developed. So, that’s what we set out to do.

Andrew: What you’ve created in the end was – if I understand this right – if I wanted to get to a website and then give that website data, but I didn’t trust that website, I went through you first, the SafeWeb, and then you, guys, routed me over to them. So, I would type in a Web address, that was essentially a SafeWeb address, then on your site, I would type in the address of the website I want to go to. Then, you, guys, would basically mimic that connection to the site that I’m eventually end up with.

Interviewee: Right. Now, so far, we’ve mainly been discussing what we did in terms of technology. Now, there are actually two applications that we pursued. One was the consumer application, which you just described, which is really more of a privacy service. But ultimately, what we ended up getting acquired for was the enterprise application of it, which is have a server, in our case we were selling it as an appliance.

Interviewee: And so that’s what we set out to do.

Andrew: And what you created in the end was…how did it work? If I understand this right, if I wanted to get to a website and then give that website data but I didn’t trust that website, I went through you first, through Safe Web, and then you guys routed me over to them.

Interviewee: Correct.

Andrew: So I would put in a web address that was essentially a Safe Web address. Then on your side I would type in the address of the website I want to go to. Then you guys would basically mimic that connection to the site that I’m going to eventually end up on.

Interviewee: Right. Now I want to…so far I’ve mainly been discussion what we did in terms of technology. Now there are actually two applications that we pursued. One was the consumer application which you just described, which is really more a privacy service. But ultimately what we ended up getting acquired for was the enterprise application of it. Which is have a server, in our case, we were selling it as an appliance. You install that appliance in your data center right next to the firewall and any remote users ñ it’s usually employees of a company or business partners ñ who want to access the servers of that company, first connect to that…to our appliance. And then on the back end, our appliance talks to the internal devices. And so that turns out to be…that’s now a billion dollar market, by the way. SSLBPN. But it turns out the consumer privacy aspect of it, although we had millions of users, you could not at that time make any money from users. Users were a huge burn on your capital because bandwidth was quite expensive at that time. There was no unified advertising market. Because at that time there were these huge portal plays that had just incredible amounts of real estate, of ad placement inventory. Prices for ads ñ it was our bad luck that when we launched our public service, even though it was intensely popular ñ we just could not monetize any of that traffic. The situation would be totally different today. If someone built the same privacy service that we had and had the same number of users that we had at the time, it would be profitable instantly. But then it was not true and so we actually had to switch…we actually had a painful moment, now talking about start up management ñ a very painful moment about a year a half in where we just had to basically switch enterprise strategy. And that was quite painful. We had to lay off people and…but it’s the enterprise strategy that ultimately succeeded for us.

Andrew: All right. So let’s get to that by building up to the story. In fact, let’s go back to before you even launched the business. You were thinking like an entrepreneur by saying, ‘Where’s the opportunity in this market? How do I become an entrepreneur in this market?’ Were you always an entrepreneur? It doesn’t seem to me like a physics professor from Yale would be.

Interviewee: No. I was totally oriented to the academic track. My whole life. When I was an undergrad at Cal Tech I had all these engineering major friends who wanted to start companies. They all wanted to go work at Intel or Motorola for a few years and then they were going to go start their company. I was always like, ‘Don’t bother me. I’m trying to learn general relativity.’ But then I guess I had some influence…my brother was an engineer and he started a company and so I sort of was always interested in the topic and the issue, I just didn’t think I was going to do it. And then what happened was, when I was a professor, I just saw that this internet thing was blowing up. And I just said to my student, I said, ‘This is crazy. There are lots of interestingóeven just at the intellectual level ñthere are a lot of interesting problems to be solved here. Let’s just go look at it.’ And that’s basically what got me into it.

Andrew: I see. Okay. All right. So then you come across this idea. You’re still a professor when you launch it?

Interviewee: That’s right. I’m still a professor now, actually.

Andrew: Were you still a professor throughout the building of the business or at some point did you have to decide?

Interviewee: I had to take a leave of absence from the university to run the company. And I don’t want to get into academic politics because probably most of your users don’t give a shit about it, but most departments are not very encouraging of professors to do this kind of thing. There are a few departments now, like computer science departments. Maybe some engineering departments, they are encouraging of this. But in a physics department people are very traditional and they’re like, ‘Why are you wasting your time on this? Why aren’t you solving fundamental problems in physics?’ So I took a leave. I was gone for about a year and a half. I was in the CEO role; I was living in Silicon Valley at the time. But at the end my department chair just said, ‘Look. You either come back or you resign your tenured position.’ And for family reasons, my wife is also a professor here; basically I couldn’t really do that. So I had to come back. And I can tell you some interesting strategic things that happened to our company because we were right in the middle of a fundraising round at that time, which actually were impacted by my having to give up the CEO role. I could get into that later, if you’re interested.

Andrew: Absolutely I’m interested. I’m almost…Let’s not jump ahead. Let’s have people listen to that point. I’d love to find out about that because I can’t imagine somebody saying, ‘I’m going to go pick being a professor over entrepreneurship.’

Andrew: or any part of business

Interviewee: Well remember, I’m not, in that way, I’m not your typical entrepreneur. Cause I wasn’t really imagining that role for myself through most of my life, so.

Andrew: Okay, so let’s continue then with the story, you launched a business. Actually, you’re a professor. You have this idea. What do you do? Do you just go incorporate the way the rest of us would?

Interviewee: We went and incorporated. Actually one thing I learned is that the cheap incorporation, do-it-yourself incorporations are often not done well. And when you find, when you get some venture money, the expensive attorney goes and redoes the whole thing. So, now I’m not a lawyer so, well at least what I’ve been told by them and of course it’s in their interest, these expensive lawyers, to say this. But it’s probably true. We were told that you guys did it but you basically f’ed it up. And we’re going to redo it for you, no big deal. But you kow, If you left it in this fucked up situation, when the acquisition came it would be a big problem. And the attorney was probably right. But just a little warning for people out there.

Andrew: Yeah, from the venture capitalists who I’ve interviewed here on mixerG, what I’ve learned is that they want you to use a lawyer that works with venture capital, that works with investors. And if you don’t, they’re either going to have a tough time untangling it or they’re just going to walk away. And in your case it seems like it was relatively easy and they just said “let’s reincorporate”

Interviewee: Yeah. Nothing had really happened. Nothing substantive had really happened in the company. So it was easy to basically redo it. Now, that was in the old days. I believe that Paul Graham and I forgot the name of his…

Andrew: Wye Commanator

Interviewee: Yeah. I think Wye Comanator has generated a set of legal documents that now anybody can use so what I just said is probably useless information. But, it might be useful for some people. So, use the ycommunator docs and don’t use some, you know, Delaware $50 incorporation service that’s on the web or something okay. Use something that’s really been vetted by real entrepreneurs and startup people, so.

Andrew: Was your idea to get funding all along?

Interviewee: It was you know. At that time, we got our first round of funding around 2000. Actually, it was, the round closed coincidentally just after the Nasdaq peaked. So if you actually plot the Nasdaq number over time, we closed our first round right after that. We were operating subsequentally in a tough environment cause that was the decline of the first internet bubble. But leading up to it, it was a bubble situation and so everybody was thinking get venture capital, get big, raise a ton of money, blah blah blah. And those are totally different, it’s a totally different era than what people are experiencing now.

Andrew: How much money did you guys raise?

Interviewee: A total of 10 million from 3 sources. 2 of which were actually hedge funds that, because of the bubble, had started dabbling in VC. And one, the other investor, was an interesting investor. It was called Incutel. It’s still existing, it’s called Incutel. It’s the CIA’s venture fund. And because of the security applications of what we were doing, they were quite interested. And so they were one of our investors as well.

Andrew: How tough was it for you to get funding? Considering you didn’t have many connections in this space.

Interviewee: You know, it was tough. I think we were helped by the bubble situation a little bit. I hate to say this to people out there but we were really helped also by personal connections. So, it turned out the very first funder, the lead guy, was somebody I had known at CalTech. And so, to be honest, I think, I don’t doubt there are too many people who are still in high school listening to this. But the elite institutions, if you’re able to get, if you’re able to pass through elite institutions in your educational experience. It can turn out to be a huge help because, somebody who knew me when I was 18 and we were doing problem sets together, they really know me. And so, They’re going to take a risk on me. Whereas if I go in and I do a great presentation on Samuel road and Lightspeed ventures is looking at me. But the guy just met me like an hour ago, yeah he might love me, he might invest, but those connections that go way back, those are very strong. And so, there is a reason an engineer who goes to Stanford, he might not learn that much more than at the University of Illinois, but chances are there are going to be some connections. If he wants to become an entrepreneur, they’re going to pay off in the long run. So, just a little advice to you about, to your viewers about elite institutions. I mean those elite institutions exist for a reason, so.

Andrew: I like how you said, we did problems sets together in college. Not, that we did shots together in college.

Interviewee: Well we did that too, but, you know. That would be more of a CalTech thing to say.

Andrew: More of a CalTech thing yes

Interviewee: Yeah

Andrew: Okay, so you had a connection, you got your funding. You’re in business. What’d you do next? What was the first thing that you did after you got funding?

Interviewee: We had to make a very strategic decision. Now, in the interim, I had moved from Yale to the University of Oregon so I was living in Eugene, Oregon. Which is about, it’s a 1 hour commuter flight from Silicon Valley.

Interviewee: We had to make a strategic decision whether to locate the company in Eugene or whether to locate it in the Bay area. And this is peak bubble condition, so the burn rate hiring engineers, costs of living, everything was much higher in the Bay area much cheaper in Eugene. We thought about it very hard, we decided to locate the company in the Bay area and I think that turned out to be a very smart decision and I’d like to talk about that actually. It’s true that your burn rate goes up. It’s true that these days you can especially if you’re doing like a web two point [xx] start up the capital cost are not that much and you know, you could locate anywhere. But, when it comes to raising money and when it comes to getting the company acquired or making business deals. Proximity still matters. The ability to say I am going to take a meeting, I am going to go down to San Jose and take a meeting but its only going to cost me that morning, it’s not going to cost me a plane flight and several days and that-, that makes a huge difference. Any ability to network and to meet people its-, its just much in hand. So, I still would advise people especially if they are young people who don’t have roots anywhere. If you are going to do a company I-, I still think its worth going to the Bay area. And by the way people would tell you to go to Austin or Boston or Seattle. They are lying to you because they are just ten times as much capital much of capital, it’s much more developed in the Bay area then anywhere else. I think you know, one-, in my current company one of the VC’s investing us is in Austin DC and you know, Austin is a nice place, it does have some startup culture but it’s just not — just talking about different words or magnitude between Austin and the Bay area.

Andrew: Do you have specific example of a benefit that you got because you were living there?

Interviewee: I do, like all — like the guys were able to meet with, like we were able to meet with and could tell their offices were in the Bay area. We were eventually acquired Samantha which is in the Bay area, when the acquisition occurs there is a little calculation that the acquiring companies is going to do and say well how much of the staff, how much of the key personnel of the startup that we are acquiring are we going to lose. And if-, if there is no relocation, they might say, hey we are not going lose very many people, we’re going to keep the whole team together, but if my team had been in Boise, Idaho and Samantha wants to relocate to integrate properly with, you know, whatever business in we’re becoming part of, they are just going to just say, hey we’re going to lose 50% of the people when we acquire these guys. So-, so there’s an issue there, now may if you are a big enough company when you get acquired that they can just let you be a free standing unit, then its not an issue, but on other cases you-, they are going to want to integrate you into existing teams and things like that so.

Andrew: Okay was the original business model based on consumers or enterprise?

Interviewee: We made a strate-, again we made a strategic decision and you know, the amount of thought that went into all the stuff was-, was pretty significant, you know, we have pretty smart people thinking about the stuff and not saying we made the right decisions, but these were very considered decisions. We kind of incorrectly thought that because we had no credibility or background insecurity. It would be foolish to directly go into the enterprise security space because no one would trust us, no one to buy our products, and we thought, oh the consumer thing on the other hand, well there is no track record I mean all this consumer business is like yahoo they-, they didn’t exist a couple years earlier and they just appeared. So, credibility basic credibility seem to us to be more of an issue if you’re trying to sell to IBM then if you’re trying to sell to Joe Smith in,- in Peoria and so that’s why we chose consumer first. I think now having knowing a little bit more about the industry, security was very nascent in those days too. So it wasn’t like actually there were that many competitors had you know strong credibility or brand name. So, we-, we probably could have just gone directly to enterprise space and save like all that burn and consumer stuff that we did.

Andrew: It’s a lot — it’s a lot of work to reach consumers and then as you say they don’t pay?

Interviewee: Yeah, now at that time, so we did manage to reach a ton of consumers, they didn’t pay at that time, if you — if you executed the same strategy today and you got the same number of users, I think it would be profitable immediately, but —

Andrew: Do, yes —

Interviewee: — that’s different [xx]

Andrew: Well do you think they care that much the consumers are that concerned with their security?

Interviewee: You know I-, I don’t think they care but remember you got a hundred million internet users or 150 million internet users in the United State or maybe 200 million internet users in United States. If you just take the few percent of those people that are most concerned about privacy and stuff like that, suddenly you got to use your bay so five million-six million people and so, and its pretty sticky-, sticky application because our-, our the way our service work is you used us to then access the rest of the web. So you’re doing all your — all your web page views are going to our-, our client, I mean our service. And so people would be using us for like 100 clicks a day or something like that, so.

Andrew: Do you any example of a company that’s doing that well now, that’s making money from it?

Interviewee: I don’t think so. There-, there is a competitor that we had back in those days that’s still working, still online it’s called the anonymizer.

Interviewee: It’s called the Anonymizer. I think people still use it. And I think it’s a profitable business, privately held. I met the founder once. So I think they’ve just survived all this and they’re doing okay. But nobody’s really succeeded in really blowing it up into a big thing.

Andrew: I’m going to see if I can do an interview with someone at Anonymizer. I used to use them but never for security reasons. In fact, to be honest with you, I never really trusted them. What I used them for looking at websites that I didn’t trust. Or if I was going to go and vote for myself on Hacker News and I’d route it through something like Anonymizer.

Interviewee: Weaseley stuff.

Andrew: Okay so you mentioned earlier that there was a painful moment when you realized that you’re charging after consumers, that you’re actually building up a following, a user base of consumers, but they’re not profitable and you have to change direction. Can you tell us about that realization and how you changed direction?

Interviewee: Yeah. It was the usual lose-a-dollar-on-every-transaction-but-make-it-up-in-volume kind of thing that a lot of people experienced this back in the day. So we succeeded wildly in terms of getting users and…but that was just eating up our cash reserves in terms of the bandwidth costs and stuff like that. Actually I imagine that would still be the case for YouTube if they hadn’t been acquired by Google. I don’t know how they make money on YouTube. Their bandwidth costs must be through the roof. But anyway it was apparent to us we couldn’t continue this way; we weren’t going to become profitable on the consumer side. And there were some efforts at that time to see if there was interest in say Yahoo or by Yahoo or other portals to acquire us so that they could have a kind of Yahoo branded privacy experience for their users. Stuff like that. We had some pretty high level meetings. I shook Jerry Yang’s hand and had a meeting with him at Yahoo and we thought, ‘Oh, hey there’s a chance we’re going to get acquired here.’ But those things didn’t play out and so we had to make a very tough decision just to drop that business and head in the enterprise direction. And that was a very tough decision and we had to cut our team quite a bit after that decision. I’ll never forget…so our offices…I’m sorry. Are you in the Bay area?

Andrew: Actually, I’m in Buenos Aries right now.

Interviewee: Oh, wow. Okay. So there’s a Seybold [sp?] building in Emeryville. Emeryville’s where Pixar is and a bunch of biotech companies just south of Berkeley; it’s right near the Bay Bridge. And it’s a beautiful little place and we were right on the water, we had a beautiful office and one day I had to…well, how do you fire people? Okay? You don’t want to fire people in the middle of a work day with other people around so you know, you kind of wait till the end of the day. This is all, if you look up in management books, there’s a whole algorithm for how you fire people. But one of the problems we had was we had to fire a lot of people, we had to do it all at once and there wasn’t space in the office. So what we did, because we didn’t want to call people in sequentially, so we basically brought a couple of…we just told a couple of guys to meet us outside. The group that we were going to let go and we had a conversation out there. And I’ll never forget how it was a beautiful, sunny, idyllic day. We were standing next to the Bay but I was firing five or ten guys. And some of these guys were people I had known for years and one of the guys actually started crying. And it just…I tell you, every time you hire somebody you should picture that you might have to fire them. That forces you to be careful in the hiring because the most painful thing for me at least, as a CEO, that I ever had to do was fire somebody. And you can’t…you’re not a man if you delegate that. You hired him, you brought him in, youëve got to face him and tell him what’s going on. And it’s the toughest thing, I think, for me. Anyway, so anybody who’s ever done it knows what I’m talking about.

Andrew: I’ve got to say I’ve done it. It still haunts me. Actually, now I’m starting to let it go but it’s haunted me for years. Because in many ways you feel like it’s your own fault. I remember saying to one person, ‘You did nothing wrong. I’m the one who made a mistake here. I wish that maybe you did something wrong; it would have made it easier for us but I got to tell you…’

Interviewee: Exactly. I should differentiate between firing for cause, which is a totally different thing, and firing because my strategic decision didn’t pay off so we got to fir …

Andrew: Yeah, that’s a really painful experience. In the movies they make it out like it’s easy. Like every businessman wants to fire everyone. Like wake up in the morning, feel powerful by saying, ‘You’re fired.’ In reality…

Interviewee: You know, there are probably guys like that but they’re not going to make the best managers. There probably are guys who enjoy their power. Actually, I would like to comment on that a little bit. The culture that we had in the company was always ñ and I think this is pretty prevalent in Silicon Valley ñ is that if somebody in the organization has a suggestion for how to improve something, doesn’t matter what their rank is or their place in the hierarchy, they should just make that suggestion and we’re going to consider it on the merits. You know, every decision in the company’s going to be argued on the merits. And it’s never going to be somebody pulling…ultimately, the hierarchy is there and somebody is the decision maker…

Interviewee: And it’s never going to be somebody pulling. You know, ultimately, the hierarchy is there, and somebody is the decision maker. But the argument is based on the merits, not based on your place in the organization. So, we always had that in our culture.

Andrew: So did you have a conversation inside the company about whether you should let go of people, whether you should redirect your energy towards enterprise?

Interviewee: That, you know, I think as a general conversation, it involved many people within the company, but as an ultimate management decision, it was really the senior management that made that decision.

Andrew: OK. All right. Beyond having to let people go, how hard was it to adjust? What else did you have to do?

Interviewee: Well, I was like, right angle turn. And we just had to go, and start from zero. In the new space, we were starting to see some competitors. It was a pretty tight space. There were about three or four companies doing pretty much exactly what we were doing. So we were just in a tough competition. We had to hire up enterprise sales guys, which we didn’t have in our previous form of existence. And that was a totally different experience in learning how to deal with those guys. We built prototype, had to, you know, had to get some pilot sales, built it up to, I think, one and a half million in total sales, where it was pretty clear that the product worked well. We would have gotten into the different competitive matrices, you know, that Gardner has and stuff. And so, at that point, we were a viable acquisition candidate, based on our technology. And so then we, you know, we started that process.

Andrew: Based on your technology? Or based on…

Interviewee: Well, based on the technology and, as proved out, in, you know, we had sold about a million and a half in actual. By the way, it was, the IP was all in software, but the actual thing that we sold was an appliance. It was just a one-use server thing.

Andrew: How did you get customers? It’s really hard to go after enterprise customers. You can’t call up a big company and say, “Hey, I’ve got this new hardware I want to sell you”.

Interviewee: You know, we were lucky in some ways. Some of these were just really hard sales to close. And our first sale, in turned out, in the building that we were in, next to the Seba building, there was a medical insurance company. I think it was. And so, they had a lot of proprietary information stored in their database that was being accessed by doctors and health administrators. And so we did a pilot with them. And it was lucky that they were in our building because we could sell them. We could go over and say, “Hey, we’re going to do this almost for free. Look how great this is going to be. Your users can do. So, that was like old-fashioned, I don’t know what you want to call it, just salesmanship. You know, just go in there and, shaking hands and trying to do it. And we were lucky that they were in our building. But what was on our side, and really, ultimately, I think, has been shown in the development of this marketplace for this technology is, it’s a natural idea. And so ultimately, there are people looking for this technology, at the same time that the companies were building it. So, you know, it’s a natural idea. Then say, well, we need some simple server-side thing that just lets all our users, who now have web browsers, or starting to have web browsers, to come in and do stuff. All of our business partners should be coming in to do stuff using a web browser, instead of this cloogy Ipsec BPM thing that is the current method. So we got contacted by people like the World Health Organization. Google was one of our customers. EMC was one of our customers. So a lot of those guys, it was driven by them, thinking like, well, this should be technologically possible. Surely there’s somebody out there selling this capability. And then they found us. And so we would just end up in bake-offs then, with our other competitors. And often, the customer was somebody who, you know, on their side, they wanted to solve a problem. They could actually see it could be solv

ed this way, and they were looking for the vendor to do it.

Andrew: Now this was a world without the dominant Google that we know today, so they couldn’t just go online and Google you. How did they even find that you guys were out there?

Interviewee: At this time, Google was, I think, dominant among the tech savvy population, but not maybe dominant in the, this is pre-IPO for them. But it was so. I think even at that time, we were using AdSense to get customers. And so people would search for certain keywords, like SSL.. SLBPM wasn’t a commonly used term, but you know, certain keywords, and we would buy those. And we would bid for those. And so we did get customers.

Andrew: You were probably paying pennies a click and then converting them into thousands of dollars in sales, right?

Interviewee: Oh, yeah. Our average sale was like, you know, $100,000, or something. And we’d sell this little 1U, which cost us maybe a couple thousand dollars in hardware, but it had all our IP and the software. And we’d sell that on, you know, a C license basis. We’d sell. You know we could have a $250,000 sale based on two of these 1U appliances. So, yeah. That’s a pretty sweet deal.

Andrew: All right. I’ve got a note here to come back and to you about the transition back to school, to teaching. Why did you have to make that decision again? Because it’s so…

Interviewee: So, OK, so, at this point, we were competing well in this SSL BPM space. We have a potential closing a pretty big round.

Interviewee: …potential closing a pretty big round, like 5, 10 million dollar round, with one of the big Sand Hill shops. And at this time, I’m still the CEO. But what’s happening now is my Department Chair is telling me I have to come back. You’ve been out a year and a half, and you’re going to have to resign or come back. And that’s a typical story, actually. Universities are pretty rigid about this stuff. My wife is also a professor at the same university. So unless she wanted to give up her career, too, I had to go back to the university. I couldn’t stay down in the Valley anymore. And, very tough decision. And at one point, the senior partner, the managing partner of this fund that wanted to put the money in, we had had a very nice dinner in, you know, one of these. Can’t remember the name of the restaurant. It’s one of the standard restaurants where you eat with these C’s down there. [Laughs] Anyway, so he calls me on the phone, and for some reason I think I’m back in Eugene. He calls me. I’m in my office. I’m actually sitting right where I’m sitting right now. And he says, “Hey, we really like you. We love the company. We think it’s a great opportunity. We want to put the money in. But we’re not putting it in unless you’re CEO. And we don’t like the guy that you have slotted in to take your place.” And that was a very tough decision. And the future of the company basically bifurcated on that point. So had we taken the money, we would have muscled up. And we probably would not have gone for an acquisition until much later. And it would have been like a 100 million, 200 million dollar acquisition. Instead, because we didn’t get that money, we had to look more immediately for an acquisition. And it turned out to be a smaller acquisition. So my whole life, basically, in that other parallel universe, I would be very different, living in a very different life right now.

Andrew: And so why did you make that decision? Here you’ve got someone who’s offering you money, who thinks so highly of you as an entrepreneur, that he won’t have anybody else in your place. You still have the possibility for incredible riches. Why give that up?

Interviewee: Well, you know, part of it is, it’s a life choice. And I’m still, to this day, I’m still a professor. So, I’m obviously intellectually interested in the kind of work that I do as a theoretical physicist. And I ultimately chose that, and the family situation, over staying in the company. And, I mean, I became Chairman of the Board of Directors, but I wasn’t the CEO anymore. So, it was a tough decision. I second guess it. I mean maybe I should have stayed, you know.

Andrew: Yeah, do you…

Interviewee: Yeah.

Andrew: I actually had an incredible offer back at the height of the bubble.

Interviewee: Uh-hmm.

Andrew: And I remember when the bubble burst, and all my sales, and all my customers, were disappearing, I remember walking through the streets of Manhattan on my way into work, and just saying, “What did I do? Why didn’t I take that offer? What’s wrong with me?” Do you ever have those moments, too?

Interviewee: I do. I’m pretty happy with the way things turned out, so I shouldn’t complain. I think maybe things could have turned out better had I stayed. But, hey. Life is like that, you know.

Andrew: So you…

Interviewee: You can’t really second guess.

Andrew: You chose family, you’re saying, and you chose security over building a business somewhere else.

Interviewee: Well, I think this might be hard to understand for people who aren’t academic scientists, but there are a lot of people if I walk down the hall over here who would say things like, ‘I don’t really care about money. Money is not the measure of success. I care about the contributions I’ve made to this research in fundamental physics.’ And so, it’s just a different value system.

Andrew: Communists.

Interviewee: Yeah. Yeah, you can’t. Well, people are going to benefit down the road. I mean, we’re benefiting, all the [Mooreslock] growth in computing power is what’s powering us, and that’s due to work done by fundamental researchers 50 years ago. So, uh, you know.

Andrew: Right. You know, when I was younger, I wouldn’t have understood that at all. Now, I understand, there are other interests, there are other aspects to life beyond business. Go figure, but that’s true.

Interviewee: Yep. But having said all that, once being bitten by the entrepreneurial bug, I think it’s just fantastic. I wouldn’t, I’m still interested in starting companies, building companies. I’m, it’s actually changed my whole view on how things are done in academia, how you should do things in your everyday life. Just the whole idea that you can make innovations and improve things, and that many, many innovations are just there ripe for the plucking, and nobody’s really pursuing them. Because people with the entrepreneurial mindset and spirit are a rare commodity. That observation definitely has stuck with me since…

Andrew: Is there something that you’re seeing right now in your work that you wish would be different, that would be different if it was a more entrepreneurial environment?

Interviewee: Yeah, I think academia is very ossified. I think the university chain is very slow. Managers at the university, administration, tend to be not entrepreneurial.

Andrew: Is it the same thing that just sticks in your craw?

Interviewee: Gosh, I’d have to think about it. I could probably list like 10 things, but I don’t know of a really great, crystal clear example, but, but, you know…

Andrew: I don’t know a crystal clear example. But if you encounter a manager at a big established company or the administrator at the university. There incentive structure is just not the same as for you as an entrepreneur because there’s the stable environment and what’s the best thing that can happen. They are going to get 10% raise and they are going to get promoted. That’s the best thing can happen to them. In that environment why would you take a big risk on anything. And why wouldn’t you just go along with everybody else and try to shape as best you can but not try anything dramatic. Because if you try anything dramatic, you can get fired but the upside is very crap. That’s why the most institutions that we deal with day-to-day are not dynamic, they are not like real start ups and that’s why people like to be at decent start ups.

Interviewee: I just want to thank a couple of people for watching us live. Wesley Ross who is telling people to come watch us and _ _ out always there watching us live and has been a big support. Thanks guys. How did you get to be a such good entrepreneur, such a good CEO that not only did venture capitalists kick you out the way that they often do or at least back then they did. But they wanted you on and they were only going to put money in if you were in. How did you get to be so good?

Andrew: I don’t think I am that good.

Interviewee: So what was it about the job that you did that made them want you there?

Andrew: It is a good question. I think some people have some personal attributes that other people find attractive. Like I am sure I have never met Steve Jobs. And I am sure that if I met Steve Jobs I would be in a reality distortion field of Steve Jobs. And I think for some people in some circumstances when I meet them, they have some confidence in me and want to make bets on it. I think it is a very hit and miss. Like some times I have a decent meeting and they will be like pass who are you get out of here. Sometimes they will say we love you. We do want to invest, we do not want to invest whatever.

Interviewee: So there is a large chemistry component to this

Andrew: So there is a huge gap. So there is a huge chemistry component. I do want to claim.

Interviewee: Is there something about you? Is that you are really a well thought out and so it is easy to understand where you are going and work together with you? Is that you are decisive that you make decisions quickly so they want that?

Andrew: Couple of things. 1. Actually experience as a teacher is key. I often say that honest every meeting I take. Whether it is a business meeting, whether say I am meeting with other company to tell about our technology or communicate with my team. It is a kind of teaching thing. Because nobody knows more about your business, your space and your technology than you. So you often have, your job really in 30 minutes meeting is to convey as much as you can in digestible bite sized chunks to the other person and if you are good at that then other people will appreciate it. They will say wow OK I understood what that guy was trying to tell me. I understand the value proposition. Lots of time when you meet academics, scientists they say that guy was smart but I can’t tell what are they talking about. That is terrible because they will not be able to invest based on that. But if they can walk out of the meeting saying I understand what their basic innovation is and why it has got a shot therefore I am going to invest. That teaching ability is the key. As far decisiveness, I notice while dealing with my wife and other people that it is a rare ability to actually make decisions and not torture yourself for a long time about those decisions. I mean of course you can torture yourself a little. But I notice my wife like when she makes a decision, it really bugs her for weeks on end and she revisits that decision again and again. If you are a rational decision maker, well this is the best decision I could make that time, I won’t kill myself. We did the best we could and it baked in the cake and we have to go now. That discipline is rare. I think in general all the traits that make a good entrepreneur is rare like 10% level. I was recently talking to a William _, who is a very famous investor and he was saying to be a good investor there are traits that you would need but you wouldn’t need at the 90 percentile level. So you need to be smart but you do not need to be Albert Ein

stein. You need to be decisive but you do not need to be the most decisive. You need to have good interpersonal skills but you don’t have to be inspirational leader. But you need those things at a certain level. But since those skills are roughly independent quantities. So when you multiply those quantities. OK. 10% chance someone has this ability, 10% chance someone has this. By the time you multiply all together 1 in 10,000 people or 1 in 1000 people can really lead a start up and do a good job of it. And I think that is actually true.

Interviewee: It is true except there may be some areas when you are blessed

Andrew: It’s true. It would be great if you are exceptional at something like you have great technical jobs like you have great ability to sell or motivate decision making.

Andrew: And I’ve got to say too, you mention drive. Sometimes I talk to entrepreneurs here who’ll talk about the painful times as they were building a business, or talk about the times where they lost one business completely, and then they’ll talk about how they started the business that they’re here to talk to me about. It must sound to the audience sometimes like it’s just a step along the way, but to the entrepreneur who feels it it’s a deep questioning of who they are. It’s a real pain point that most people would experience and then back away from that fire forever. They would never want to go anywhere near business. What makes these guys extraordinary I think is that they feel all that, and that they’re somehow willing to continue.

Interviewee: Yeah. You have to be ready to go back for more. If you’re a lifelong entrepreneur you have to…In the current company that I’m doing with the same former student, Jim Hormoustiar [ph], that we did Safeweb with, every time we hit a tough patch we were just like ëWell, we signed up for this.’ We signed up for it. You can’t blame anybody. Nobody put a gun to your head and said ëStart a second company’. We signed up for it.

Andrew: There’s a lot to be said for just knowing it’s part of the process because when you know it’s part of the process you don’t question yourself as much. You don’t say ëWell maybe I’m not meant to be in this game. Maybe there’s something wrong with me or this business’. You just accept that that’s part of the process and then you can get to the solution a little bit better, a little faster.

Before we get to this current company which you brought up, let’s talk about the sale. So you weren’t going to be the CEO, investors said ëAlright, then let’s find a buyer.’ How did you go from deciding to find a buyer to finding Symantec specifically to buy your business?

Interviewee: There are a number of points here. We did engage a small boutique investment bank that does mergers and acquisitions for tech companies. They’re based in the Bay Area. I highly recommend them but there’s a handful of things that do this. They take a transaction fee, a success fee. It’s relatively small if you have ea good transaction. We work with them. We met with a bunch of different companies in the States. We had two offers at the end. One was from Symantec and the other was from another company called Netscreen. Netscreen was later acquired by Juniper so all their technology is now in the Juniper stuff.

So we had two offers and basically had to negotiate with both sides. I’ll tell you the most stressful, other than having to fire people, the most stressful period in my life was the 30 days closing the acquisition. I can remember being on conference calls with eight lawyers at a time. And you’ve got lawyers representing the management team, you’ve got a lawyer representing the firm, you’ve got a lawyer representing their firm, you’ve got IP lawyer…It’s incredible, the amount of work that goes into this stuff.

Andrew: Yeah it sounds expensive too.

Interviewee: Yeah it is.

Andrew: Actually do you still have a contract at that firm? I’d love to do an interview with someone who helps entrepreneurs sell their businesses.

Interviewee: Yes. The firm is called Intelligent Capital. They’re based in San Francisco. There were two partners: Chris and the other guy was named Rick Marshall. I think either one would make a great interview for you.

Andrew: Can I hit you up for an intro after the interview?

Interviewee: Sure. Absolutely. They’re both good.

Andrew: I’d love it. So you sold the business for $26,000,000. You got $10,000,000 in investment. How much of that do you end up with at the end of the day?

Interviewee: We did pretty well because the first amount of money that we raised was kind of at bubble valuations so we didn’t give up that much equity. So we did pretty well. I don’t want to say exactly how well I did but what’s the right way to characterize it? A pretty good chunk of that went to me, so I’m much better off than the average physics professor. Let’s put it that way.

Andrew: So we’re saying more than 30 percent of what was left went to your pocket? More than $3,000,000 you ended up with?

Interviewee: Yeah that’s the right ballpark.

Andrew: Wow so you really did OK then.

Interviewee: Yeah. There’s a presentation if you look on my webpage and you look under ëTalks’ there are some presentations that I’ve given over the years mainly to encourage academic scientists and people like that to get involved in entrepreneurship and start companies. I go through some math there for how the different investment rounds dilute you out. Those are not our numbers but they’re not that far off from our numbers. So anybody who wants to look at that math can go there and look at it.

I notice that a lot of beginning entrepreneurs are a little bit naÔve about all this stuff. It’s good to actually go through the math in your head. Experienced guys know immediately. They know what their stake in the company is and they know how this deal’s kind of diluted out. It’s very simple math, but that venture math, you can immediately tell whether people can do it in their head or not and that tells you whether they’ve been through these kind of deals.

Interviewee: … and stuff like that so.

Andrew: I see and you know what it is, to me it’s still impressive when I see these guys who have been funded, have conversations over a coffee and do the math in their heads right away and understanding —

Interviewee: Yeah.

Andrew: — liquidation preferences and this —

Interviewee: Exactly.

Andrew: — detail and that detail.

Interviewee: There’s a lot of just — I would not even call it strategy, just really tactics like — like if I accept this provision then if the company goes this way it’s going to hurt me but if it goes this way, it’s not going to hurt me and people who experience understand all that stuff right away and VC for sure understand that stuff right away, so.

Andrew: All right. [xx] is watching us life, it goes by [xx] on twitter, he’s saying do universities get a cut from professors who start a business while on the job, especially [xx].

Interviewee: That’s a great question, that’s a great question, if — if I had been a computer science professor then the IP agreement I sign with my university would have covered the innovation, however because I’m a physics professor I was able to point out to them this has nothing to do with my core research which is on black holes and corks and stuff and therefore I didn’t actually get it — anything to the university, I did donate a chunk of money to Caltech to establish a scholarship but — but I didn’t actually have to give anything to the — to my employer. Whereas I think like if you are Stanford CS professor which is you know source of many successful companies like VMware for example you know that guy probably had to negotiate something to free up the IP rights from the university because it’s related to his core academic research.

Andrew: Right. Let’s talk a little bit about what you’re doing now. So, you mention that you’re working on a new company, I’m looking here at my notes to make sure that I’m up to speed, this is

Interviewee: That’s right. So you know [xx] we — we took a year off, Jim and I and then we decided to start another company and again, I don’t know if [xx] the technology details of what it is but basically it had — it’s — it’s a technology for fighting Malware and the basic problem is this, if Malware gets on your system it can then subsequently without your knowledge download more components on the system and that’s why people have so much trouble getting rid of Malware because you were on that Symantec scanner on the system or the Norton scanner and it’s going to catch some pieces of what has been installed [xx] catch everything and sophisticated Malware now is so good that it will then just regenerate the pieces that had been cleaned by the — by the scanner, so that — that technology basically [xx] technology and actually if you talk to people in the industry really you know overbear or in an honest way they will tell you that’s [xx] that’s the end of the road, okay, and so we will try and go beyond that and the basic idea for us would be was — if you could put a layer in your OS that was at — deep enough level that it can see everything happening in your system, it could monitor what every process on your window machine is doing and would record in a — in a very precise way what had happened, you could then reverse, chains of events that had occurred on your system without effecting other things and that is essentially what we built, that’s what robotgenius is and so it’s — it’s a — it’s primarily designed as a security tool but then it has other applications as well for just monitoring what’s going on the machine or remote management etcetera, etcetera. It’s — it turns out it took us much longer to — to — to solve the problem then we thought, we are overly optimistic at the beginning in terms of how easy it was going to be.

Andrew: Why, what was the trouble?

Interviewee: It’s just — it’s such a — if the really — the implementation of what I just describe really depends on a nitty gritty of windows internals and we had [xx] toward windows because that’s really the market and it just took us a long time to understand, we now thing we understand all of the ways in which a malicious program on a windows machine could either get [xx] capability or take control of other processes and we’ve believe that our software actually blocks every — each and everyone of those methods, so we think we have actually comprehensive way of making a protective shield for windows. Now, there are situations where the users legitimately wants to do things that would penetrate that shield like if you have to install a driver, you have an HP printer or something, but those cases tend to be relatively rare so — so the [xx] for our product is — if you — if you never override a warning from the robotgenius client we guarantee we can reverse anything that’s happen on your system, however if you do accept — if you do override a warning then we can’t guarantee it because if you override a warning, it might have been a benign HP printer HP driver that you put in but it might be real [xx] and at that point we can’t — it’s going to get underneath us and we can’t do anything.

Interviewee: So it’s a different value proposition. Symantec and McAfee, and all these guys, they would like to pretend that, “Well, you don’t have to make any decisions. The thing is just there and then it can, it can save you.” But that’s just actually completely wrong. And so, really, the best you can do is to say, I can protect you always, but then you would lose a little bit of functionality. Like you wouldn’t be able to install a printer driver when you wanted to. Or there’s going to have to be a decision point where you say, “Well, I trust HP. I’m going to install this driver. But, because I overrode the warning from Robot Genius it, there’s something, you know, potentially catastrophic here that’s happening.” So it’s just a different tradeoff. It’s been quite difficult to educate people on this shifting value proposition. Even people who are in security, in the industry. So, you know, we’re, I would say we’re, we haven’t really succeeded. We’ve succeeded on the technical side. Everything, I think everything I’ve said to you, on the technical side, is correct. But on the business side we have not really succeeded as a company, yet. And so.

Andrew: Because the, because because?

Interviewee: Well, one mistake we made is we thought, “Oh, if I build a better mousetrap and I bring it to the mousetrap producing company. They’ll say, “Hey. that’s a better mouse trap. I would like to have that mousetrap. Here’s your $100 million”, whatever, and give it to me.” Now, it turns out when, because we, we went through about a year and a half ago, we went through some pretty serious acquisition talks with, you know, a lot of the big names in the security space. It turns out, these guys have a established product that’s their main revenue driver, in the case of Symantec and McAfee. And, it’s built a certain way, and any change they want to make, in say the core Norton technology, they’ve got to, even internal changes that they want to make, they’ve got to put it in their product road map, like, a year or two years in advance. So, their ability to digest a radical new technology is very low. They’re, kind of, locked in by their existing product. So it’s very tough for them. None of them, in fact they basically said this to us, “We’re not going to jettison our cash-cow, existing product. Even if you bring me a better, radically different mousetrap.” So, then you’re left with this other value, this other option. Which is well, you could try to basically build a large competitor. Take it to market yourself, and just because it’s a better mousetrap you’re going to beat these other guys. The problem there is that it is very difficult for the average user to figure out. If I give you two possible security products for your machine, how do you know which one’s better? It’s a very difficult situation for the consumer to judge quality. And I would submit that even the analysts, the people who review security products for the major magazines and stuff like that, they really don’t know what they’re doing. And, you know, they, they basically do the following kind of test. They have a sample set of, like, ten pieces of malware. They try it out. They look to see which s

canners can deal with it, which ones, you know. It’s a very superficial kind of analysis. And, so, it’s, we’re in a situation where the better mousetrap, it isn’t easy to recognize that something is a better mousetrap, even if you have one. So we’re kind of, we’re kind of in that situation.

Now, it turns out that, and this is, this is actually reminiscent of our previous startup. It turns out there are many management, enterprise management applications of our technology. So, if you, if you just install our client on lots of machines. Like, say, you’re in a company and there are a thousand desktops in your company. You want to manage them. Our client can do all kinds of things like it can, it can enforce a rule, like no iTunes on any machine in this. No Skype client on any machine. Show me the last hundred pieces of software installed on any machine in my company. And, let me see, I want to, I want to remove these fifty because I don’t like them. So, all those kinds of management applications are also things we can do with our technology. We’re actually moving more in that direction, now.

Andrew: I see, now you and Jim are doing the same thing as before, going toward enterprise.

Interviewee: Yes. It’s like, well, we screwed it up. So. We screwed it up. We, we invested blood trying to solve something, now. We now see the structural obstacles to succeeding with that strategy. Now we’re trying something else.

Andrew: Alright. Well, how long has the business been around?

Interviewee: Well, we, we were around since 2005. So, it’s been, been a while. Too long.

Andrew: And is it, may I ask if it’s bootstrapped yet?

Interviewee: No, it’s venture-funded, actually.

Andrew: Okay, and, and so you’re still a professor.

Interviewee: Yeah.

Andrew: You’ve got a new business, venture-funded, and you’re able to make them both work at the same time?

Interviewee: Sort of. [laughs]

Andrew: How? What are the challenges now?

Interviewee: Don’t sleep.

Andrew: I see.

Interviewee: No, it’s just super, you’re super busy. And you’re always feeling like, at least for me, you’re always feeling like, “Wow, I’m not doing well enough here. I wish I had more time to do this. I’m not doing well enough here.” It’s tough, but, you know, I, I chose it. So I can’t complain.

Andrew: Alright, well, we said before the interview started that I would ask you at the end if there’s anything that I missed. Is there anything the you think entrepreneurs need to learn? What do you think? I think we covered a lot here.

Andrew: So what do you think? I think we covered a lot here.

Interviewee: Yeah, it’s a tough…I’m trying to think. The talk that I usually give on this subject, one of the things I emphasize… a lot of things I’d say in that talk are oriented toward people who are scientists but they’re not necessarily entrepreneurs. And they’re things to encourage people to go out and take risks and stuff like that. And I think maybe your audience doesn’t need to hear that so they probably already know that. 4

Andrew: I tell you what. I’m going to link over to your website and the presentations are one there. And if somebody needs to reach out to you, has any questions is there a way that they can connect with you?

Interviewee: Absolutely. They can shoot me a …anybody can shoot me an email. And I actually blog…I have a blog and although not all posts have to do with companies and start ups a fair number of them have to do with issues related to that.

Andrew: And you blog pretty regularly, right?

Interviewee: I do. Every couple days or something.

Andrew: And I think you said on a recent post that you’re not on twitter. That you’re intentionally staying away from it.

Interviewee: I’ll just tell you this ñ I have to tell you this funny story. I was at this O’Reilly get together called Fu Camp and I met this guy called Evan Williams. Okay. And at the time, I knew Blogger. I knew about Blogger; I used Blogger because Blogger became…it was acquired by Google so that was his earlier company. And so I started talking to him and I said, ‘Well, what are you doing now Evan?’ And he starts describing stuff to me and it’s funny. He was actually doing something called ODayO which is a podcast start up. And I don’t know where that went. But as part of ODayO, while they’re goofing around, they built twitter. And he’s telling me about twitter and in my mind I’m thinking, ‘Who would ever use that?’ I literally in my mind said, ‘Who would use that? Who wants to send out stupid short messages to million…’ It just shows I have no Web 2.0…I know my limitations. I’m no Web 2.0 whatever. So I said…I didn’t ask him that because that was too rude but then I said…but what I did verbalize to him was, ‘Well how are you going to monetize that?’ Which is I guess something they’re still dealing with. So anyway, I guess I’m not a twitter guy but…

Andrew: You did recognize one of the big challenges which how are you going to monetize it. And apparently, we’re going to find out this year how they’re going to monetize it.

Interviewee: I’m sure they’re going to succeed but yeah… If nothing else they’re going to get bought by somebody so…

Andrew: Well, all right. Well, I’m looking forward to seeing what happens with… is the company called Robot Genius?

Interviewee: Robot Genius is the company.

Andrew: All right, so I’m looking forward ñ

Interviewee: Wish us luck.

Andrew: I’m sorry?

Interviewee: Wish us luck.

Andrew: I’m wishing you luck and I’m going to watch on the sidelines and let me know if there’s anything I can do to help out. Or let my audience ñ well, ‘let my audience’, I don’t know how we could do that. Guys, reach out to him. Check out his website, check out the business, stay on top of his blog. You’re a very interesting blogger. I love the technology that you bring to your blog. What am I thinking of? The glasses, for example.

Interviewee: Oh yeah, that was another amazing thing to learn about. That’s another example of entrepreneurism. Somebody had to take the initiative on that, you know?

Andrew: These are glasses that you don’t need to go to an eye doctor to have fitted. You just can wear the pair and then start adjusting them.

Interviewee: Yeah, the focal length changes and these are really oriented toward poor people in the third world. These glasses apparently can be produced for like four Euros. So you put it on the kid, you cover one eye and he can adjust it himself so that it’s focused. And then he can just wear them. And it’ll solve vision problems for hundreds of millions of people in the third world. I even think there might be ñ I was talking to my brother about this ñ there might even be interest in the developed world for these glasses. I wouldn’t mind having a pair of adjustable glasses.

Andrew: I agree. I think so too. But I wonder if you could just go into a store and buy glasses?

Interviewee: Well, my brother and I we were talking about it, we’re going to email these guys and say, ‘Hey we’ll buy ñ if you want to send us ten pairs we’ll buy ten pairs because we’ll pay you a big multiple of the four Euros or whatever.’ I’d just like to have them to play with.

Andrew: Actually yeah. I like that. I think if they put it on line a lot of people would go out there just to buy a pair and try them out.

Interviewee: Absolutely.

Andrew: If nothing else, they’d be good back up glasses.

Interviewee: Exactly. One of the things I said in my blog post is if society melts down you’re going to want…if you need corrective lenses, you’re going to want to have a huge stack of ñ

Andrew: I thought you said ‘when’ society melts down.

Interviewee: No,’if’! If.

Andrew: All right. If. All right, well thank you for doing this interview. Thank you guys all for watching. Give me feedback on this interview. Come back to Mixergy and give me feedback. And I’ll see you all in the comments.

Interviewee: My pleasure. Thanks guys.

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