I’ve recently been writing “8 Lessons from 8 Startups,” a history of 8 young companies where I’ve worked or founded, to give a story from each that led to a teachable moment. The first lesson, “Good leadership is a prerequisite for a good business,” came from my time at KnowledgeSet Corp in the late 1980’s. The second lesson “Why you need access to inspiration and experience,” tells the story of my first management job at Verity in the early 90’s. Here is what’s next…
Startup Three, Infonautics Corp.
I left Silicon Valley in late 1993 to raise our kids closer to family on the East Coast. New to Philly, I consulted for a few months in order to learn the ecosystem. In early 1994, I was introduced to a new tech startup, Infonautics, by Howard Morgan who I had met in California through Verity’s technical advisory board. Howard was local to Philly working with founders Marvin Weinberger and Josh Kopelman.
I met Marvin for breakfast at Minella’s Main Line Diner. He spoke for about an hour and finished with a question, “Are you an Infonaut?” I had been preparing for a job interview as their director of technology, so wasn’t quite sure how to answer. I punted, saying that I didn’t know yet. I later met with Josh for a more traditional interview and got the job. I think I was the 2nd employee after Ron Berg, our CFO.
Marvin was the epitome of a visionary, always excited and passionate, ideas flying high at 50,000 feet. Josh, then a recent graduate from Penn, was the feet on the ground, the co-founder in the trenches, obsessing over the details. They were a good team and I really liked the company’s purpose and mission - to make high quality content easily accessible to students. This was before the “commercialization” of the web, people were accessing electronic services through dial-up online services, and publications generally weren’t available online. It was a pioneering idea.
Even more pioneering was the business model. Partners, from hardware providers to content owners, were compensated with their “fair share” of revenues. We’d charge customers a fixed price monthly subscription for unlimited access. We launched “Homework Helper” through the biggest online service, Prodigy, and were also working on Compuserve and AOL. Infonautics raised money and planned an IPO. We were growing the company, adding executives and a lot of talent. Marvin and Josh hired an IPO-worthy VP of technology with a big tech company pedigree to become my boss, settling on someone from Prodigy (a joint venture of IBM and Sears). As you may guess, I wasn’t the easiest director to manage. At best, it was a tense relationship.
Infonautics went public. Without reliving all of the gruesome details, it was the worst performing IPO of 1996. Another pioneering initiative for us, going public before the market really understood and embraced tech IPOs. Back then, to avoid short term capital gains taxes, it was a good idea to exercise incentive stock options early to own them for an appropriate long term. Whether holding shares or options, many employees were under water.
The World Wide Web became a thing and we had to pivot from dial up proprietary online services to the open, asynchronous, public Internet. We built and launched the Electric Library. Technologically, it was a very exciting project. Without access to any tools, we invented and innovated a lot. The company must have received a dozen patents, including a method for storing multi-media information in an information retrieval system, an architecture for processing search queries and retrieving documents identified, and a system for capturing, storing and processing co-marketing information associated with a user of an on-line computer service using the world-wide-web. What today seems obvious, we pioneered in 1996.
It wasn’t only the calibre of the talent in the company that moved us toward our vision, but the culture was a big contributing factor. Marvin was a people person. Food was important (Stella D’oro Swiss Fudge cookies at each meeting because they had the right balance of cookie and chocolate). We had a “Good Business Pledge” which, unlike many corporate value statements, actually defined behaviors that exhibited our core values, such as “never offering a deal we wouldn’t accept ourselves.” We believed in professional development. And teamwork. And Bruegger’s Bagels. The Infonautics family was the nicest group of people with whom you’d ever want to work.
Divide and Conquer
Despite our sexy technology and strong team, the business model wasn’t working. It was difficult to sell consumers subscriptions to online content (we even tried a TV infomercial). Our technology was expensive to build and the business costly to operate. The Board brought in a new CEO, one with a strong Sales background. One of the first things he did was to reorganize the company. We broke up into three business units, each with its own P&L. Given technology was a cost center, my technology organization, including project management and quality assurance, was divided into three departments each reporting to a different leader.
Obviously, I was opposed to the change, but advised by a colleague that the train was on the tracks and it would be best for me to get out of the way. So I kept my one third (Core Technology), Lucinda Duncalfe took another, and our tech ops manager took the third. All of the efficiency of having one streamlined tech organization were gone. Still, we were an organization of talented people and did try to make it work. Our ops director (now my peer) was the first to miss goals and left the company. I became acting director of his group. Lucinda, previously leading product management, was doing a great job with her new development team, creatively renamed DevEx because their projects always seemed to be required to get delivered overnight. Then Lucinda left Infonautics for her first CEO opportunity, one with Destiny Software. I was able to become acting director of her group. Now aren’t we back to where it all started, three groups together as one? The new CEO didn’t see it that way, it was only a temporary setback to his master plan. He was right, I was wrong (so he thought).
Beginning of the End
Given my situation with the CEO, and my lack of confidence in the direction he was setting, I started to answer calls from recruiters and, after three years at Infonautics, in 1997 I left to become the CTO at music ecommerce pioneer, CDNOW. (Stay tuned for Lesson #4 in a few weeks!) I was one of those who exercised his Infonautics stock options early and unfortunately lost money when I left the company. (Real cash money, not virtual.) Infonautics subsequently pivoted a few more times in the next few years and the company was eventually was broken up into several entities and parts were merged with other companies or sold.
One could look at Infonautics as a bust. It was a great technology without a business model or sufficient revenue to support it - a lack of product-market fit. The innovations maybe didn’t solve an immediate problem. Or perhaps we were too early, a pioneer that took the arrow in the back.
An Ecosystem is Born
After Infonautics, we stayed in touch. We created a Yahoo Group for our alumni. Then LinkedIn and Facebook. There would be happy hour get-togethers.
Marvin became a Maker, a catalyst for the local Maker community, and founded AmericanCertified. Josh went on to found Half.com and worked with a bunch of ex-Infonauts including Edwin Watkeys (also CDNOW, now Action X), Alan Preston (also Destiny, later Zoomer), Jerry Lewis (now chief privacy office at Comcast). After Half.com sold to Ebay, Josh founded First Round Capital with Howard Morgan. Lucinda is in her fifth CEO role, now at Monetate. Rick Mosenkis went from Infonautics to VerticalNet and then founded WorkZone. Ram Mohan is EVP & CTO at Affilias and on the ICANN Board. CFO Ron Berg went on to become CEO of RadPharm. Andrea Michalek founded EchoFactor and then Plum Analytics. I went to CDNOW and later was joined by a whole bunch of Infonauts, including Russ Cherry (also GSI Commerce, now Booker), Brett Kerbel (now GalaxE), Pete Clark (also CDNOW, IntroNet, and now with Andrea at Elsevier). CDNOW people (hundreds of us) eventually went to Half.com, GSI Commerce, even now Monetate (two decades later), all with former Infonauts.
That’s only a sample. I could go on for pages (and really do want to mention everyone else), but can’t since you already get the point. In 2012, realizing how prolific the Infonautics alumni had become, my incubator, Novotorium, brought 11 Infonauts back together for a panel session to talk what we had learned and what we had accomplished since. It’s a great story, so much so that it was covered by all the local tech pubs, including Technically Philly, Philly Tech News, and Philly.com. We’ve hired one another, helped each other into new opportunities, started companies together, and invested in fellow Infonauts. Our careers, companies and teams have cross-pollinated and grown together. As leaders, we’ve created hundreds, if not thousands, of jobs.
I’m not sure there’s a better definition of success
It’s all About People
As a leader or entrepreneur, you get to create vision, set goals, and define success. As a business coach, I’d be negligent if I didn’t say that money (revenues & profits) is important. A business needs to be able to sustain itself (and its principals, team, investors, etc.). To make money, we need people. To attract and keep people, we need team and well-defined values. There is a direct relationship between money, people, values, culture, and organization.
Who you hire and how you lead and build team is critical to the long term success of anything you may undertake where organization is necessary. In a rare 2003 interview for “60 Minutes,” Steve Jobs said:
At Infonautics, it wasn’t that we ever had the best leadership. A strong set of core values allowed us to attract a calibre of talent that ultimately created the greatest asset of the company. Even though Infonautics as an enterprise missed its goals and wasn’t a viable business, you have seen what it created. I lost some money, but did get to work on innovative technology. I learned a lot. Most important, it was the people on our team, the relationships that I built and the values that we shared which had the greatest impact on my future - and that of most of our team and our community.
Given this is another case where the total is greater than the sum of the parts, it’s a reminder to always be looking at the bigger picture, from the outside in. Whether you’re building a business or looking for the next great thing to do, remember that the people, the team, and its values might be the single biggest success you might experience.
Meet Howard Morgan at the May 17th Philly New Technology Meetup.
Need help seeing your business from the outside-in? Trajectify is doing an awesome Live coaching event. Check out Breakthrough on April 25.
Did you also read Lesson #1, Good leadership is a prerequisite to good business, and Lesson #2, Why you need access to inspiration and experience?
Look out for Lesson #4, Make Yourself Replaceable, in early May.