Selling out. It's taboo in so many social circles. But in business, it's practically en vogue. Ever since independent innovations in software and Internet spaces became prey for tech manufacturers and Internet portals seeking increased brand power, the minds behind them have willingly begun to accept a lump sum--of cash, stock or salary at a new corporate job (complete with high-walled cubicle)--in exchange for their contribution to technological advancement.
And don't forget the white-hot selling-out-to-the-public-to-raise-tons-of-money-and-maybe-get-rich method, where the founders of Private No More Co. can still claim ownership--along with a bevy of shareholders. Now no one's saying it's right or wrong. But aside from the fact that this trend is altering the strict definition of "entrepreneur," some insiders fear wealth-centric temptations--primarily of the IPO sort--will lead to business plans devoid of substance and multimillion-dollar ad campaigns backing shoddy products. To investigate whether the old-fashioned entrepreneurial ethic of starting up for the sake of autonomy rather than making obscene amounts of money overnight still exists, we asked several young current and former business owners what motivated them. If anything, our findings were refreshing.
Granted, our test sample is small. But to our surprise, the one entrepreneur who actually admitted to selling his company for the riches involved isn't the power-hungry playboy-type you'd imagine him to be. We can't numerically define Jayson Adams' wealth--but let's just say, despite retirement a month before his 30th birthday, the now-33-year-old will be very well-off in life. The Stanford grad's "How He Got There" story didn't climax until he sold his 1995 start-up Netcode Corp., creator of a Java-based interface builder and object toolkit for developing Java applications, to Netscape in the spring of 1996. Before that, Adams co-founded a software company and an e-mail-based subscription news service "way ahead of its time," which sold for practically nothing in 1995 after suffering a lackluster response. But the wanna-be tech game participant started at 12, when Adams taught himself to program the family computer. By 16, Bill Gates was his idol. Taking a company public was also on the teenager's to-do list. "I didn't want to be a super-powerful person," he says. "[Gates] wasn't even that powerful back then. I was just very excited about computers and had lots of fun making them do cool things. It was that, plus not wanting to work for 40 years."
Something besides work is exactly what the undisclosed amount of wealth has allowed Adams to do. Rather than surrender the remainder of his life to high-tech's hyperspeed world as so many do to satisfy their competitive urges, Adams has been spending most of his time in Santa Monica, California, studying guitar and music theory at the Musicians Institute in Hollywood. A recent Time article insinuated that an overabundance of time and money has turned Adams into a somewhat spacey, anti-employment techno-phobe. Not the case. Don't be surprised if you see this "pretty down-to-earth" guy, who owns no property and considers the "high life" pursuing his interests, launch "a media empire" exploring the best of art and music in the future.
"Whatever I do start will not be a high-tech company," says Adams. "Working at Netscape after the acquisition, I'd see people worth tens of millions of dollars working insane hours, not seeing their kids. What's the point, really?"
Name Of The Game
To the overly-ambitious lot of young entrepreneurs, putting in 100-hour weeks has a little something to do with fear of either a) not being at the forefront of the next big thing, or b) relaxing for two seconds and being edged out by the competition. For Ari Horowitz, founder and chairman/CEO of New York City-based Opus360 Corp., an integrated Internet solution platform, it's the latter. "I'm working 24 hours a day, almost. And the reason? Competition," he says. "It's the first time in history when the new entrant has a competitive advantage over the incumbent. If you have any experience doing this stuff, there's an unlimited supply of inexpensive capital available to you. Private financiers are much more willing to fund [just] an idea."
That's what concerns Bo Peabody, the 28-year-old first-generation Netpreneur who initially founded Tripod Inc. in pre-Web 1992 as a proprietary online service and sold it to Lycos in February 1998. "Almost every person I talk to is like `I want to make a million dollars, and I'm going to start an Internet company,' " he says. "As a result, I've seen some of the worst business plans where the word `IPO' is mentioned 500 times. If that's their focus, ironically, they're never going to get there."
But Horowitz, 31, who, like Jayson Adams, no longer needs to work, contends fast money isn't motivating his endeavors. "If you're doing this for the money, go into investment banking," he says. "It's almost bad to an extent, but I have people who manage my money, so I don't really pay attention to it." Horowitz adds that the $100 million acquisition of his former company Gray Peak Technologies by USWeb/CKS, a Santa Monica Web service firm, wasn't a premeditated get-rich-quick scheme from start-up. "We thought Gray Peak was going to be a big, public [networking solutions] company," he says. "But USWeb had a very compelling business model, and we felt we could leverage their sales channel, which would accelerate our growth and more rapidly increase the value for our shareholders." You'd figure Horowitz would endlessly tout the bottom line or market position of the 200-employee Opus360 he founded in 1998, but he didn't even mention its 1999 sales of $15 million. It was more important to explain the rewards of receiving positive feedback. "The most satisfying thing is when people say `I think what you're doing is awesome.' "
Becoming a brand people want to identify themselves with and be loyal to has always motivated Speakeasy Inc., parent company to Speakeasy CafÃ©, a "casual and relaxed" Seattle storefront offering Internet access, an espresso and pastry bar, an art gallery, and an 80-seat theater for film, video and plays. The Speakeasy Network offers Web design and hosting, along with RainMail, a network of public-access kiosks throughout Seattle. But lowering the economic and technical barriers to Internet access was primarily why Gretchen Apgar, 34; husband Michael Apgar, 31; and Michael's brother, Tyler Apgar, 28, opened the first Speakeasy CafÃ© back in 1995 and launched Speakeasy Network's initial dial-up service in late 1997. Dreams of Euro-dragster-filled driveways and membership in the dot.com elite? Nonexistent--to that extent, anyway. "Gretchen, Tyler and I sit around talking about the challenge, our employees--who's doing well, who'd rather be in a different job function--and how well we're building the business to scale," says Michael. "But we don't talk about the money."
The claim's easier to swallow when you learn all the founders still rent, and just last year Mike and Gretchen replaced the "junker" VCR Mike had since college. "That's a big deal for us," says Michael. "I mean, certainly, we want to monetarily profit from the business and have a lifestyle." But going public has never been "on the radar," according to Michael, nor been financially possible. Graduates of their father's school of entrepreneurship, he and Tyler learned a no-nonsense business approach: Bring money in, pay your expenses, keep your overhead low, and pay your employees fairly. With 50 employees and 2000 projections of nearly $15 million--up $13 million from last year--the Apgars are now examining the bigger picture. "Everyone has to work for a living, but we're having a fabulous time doing it, and we want to provide a rewarding work environment for our employees," says Michael. "At the same time, we're extremely excited about our growth last year and what we're looking at doing this year."
Speakeasy rests in the heart of Microsoft- and Amazon.com-land, but its cafÃ©'s street presence prevents the ISP side from becoming "completely virtual." And because the Apgars are so in-tune with their goals and personal interests, they've avoided becoming one of the money-hungry new-school entrepreneurs who people like Bo Peabody, now vice president of network strategy for Lycos, find questionable. Peabody, "no slave to gold watches or yachts," says location often catalyzes the downfall of good intentions. "Everyone's really grounded here in [high-tech hot-spot] Williamstown, Massachusetts, because it's not like Silicon Valley, where everybody drives a Ferrari and tries to get a better house than the next guy," he says. "That's a culture that just breeds bad products." Well, you can't always decide where you're based. But thankfully, you can always keep your priorities in check.
Opus360 Corp., (800) 445-5775, http://www.freeagent.com
Speakeasy Inc., (206) 728-9770, http://www.speakeasy.net
Tripod Inc., (413) 458-2265, http://www.tripod.lycos.com