Evergreen Magazine

California Dreaming

by Ann Mary Quarandillo

Greeners are making their mark in Silicon Valley

First it was the Gold Rush. Then Hollywood. Then Haight-Ashbury. Dreamers from all over the world have flocked to California in search of success in a new… a better… a different life. As early as the 1930s, Stanford University faculty members were envisioning new companies growing among the apricot, plum and cherry orchards of Santa Clara County, and today the “gold mines” of Silicon Valley still draw thousands of technology entrepreneurs, hoping to parlay their innovative ideas into viable careers.

California Dreaming magazine header

Over the past 30 years, U.S. companies less than five years old created 44 million jobs, and accounted for all net new jobs created, according to the President’s Council on Jobs and Competitiveness 2011 report. Although other startup havens in New York, Tel Aviv, Seattle and L.A. have begun to challenge its supremacy, many companies still flock to the world’s top startup ecosystem because of its edge in investment dollars and the culture of entrepreneurship that continues to flourish. In 2012, the Valley got the ultimate pop culture crown—Bravo debuted the reality show “Start-Ups: Silicon Valley” (which quickly tanked).

“There’s such an intellectual diversity in all the companies I see,” says Sarah (Brown) Cone ’99, who has been on the ground floor of some of the latest organizations to change the way we live and work, and is now an associate at Illuminate Ventures, a venture capital firm in Oakland, Calif., where she seeks out promising business-to-business startups for early stage investment.

Bart Myers ’97 and Zach Miller-Catlin Larson ’97 have been involved in several startups since they graduated and headed to the Valley. Their company, SideReel.com, a service that helps people find online content, was bought by technology and licensing company Rovi, where Myers now manages a team of 40 who deliver entertainment experiences online for film, music and TV. Larson is deep into his next startup, Threadbare Games. All are thriving in Silicon Valley’s entrepreneurial, interdisciplinary environment, and excited about the new things they see coming.

An early employee of Amazon.com, Cone worked in investments for eBay founder Pierre Omidyar, and learned about venture capital from Rob Hayes, an early Twitter investor. After earning her law degree from the University of California, Berkeley, where she also took business classes, she was hired to work in public policy at Google. Throughout her career, she’s seen the value in Silicon Valley’s unique environment, and learned “a ton” about what makes a successful startup—including being willing to fail.

She worked as a consultant at CTI, helping large companies work more like Silicon Valley—optimizing their research and development operations to combine their technology development with business development, researching the market, potential customers and how they might use the technology, and how to market it. Armed with her knowledge and research, she founded her own social news startup, which lasted close to a year before closing.

“It’s amazing how accepting people in Silicon Valley are of failure,” she says. “So many companies don’t get off the ground, but that doesn’t mean there’s no value there. It’s actually seen as a positive on your resume!”

Larson agrees that failure has a different weight in the Bay Area than it does elsewhere. SideReel was the second company he officially cofounded, and he sees how the entrepreneurial life can look glamorous to those who haven’t experienced it. “You can’t be part of startups without a large amount of risk and a great deal of chaos—you have to be comfortable with that,” he says. “Most of them are failures. It’s the complete opposite of glamour. But if you accept that in failing you can learn something, that’s a good thing.”

Cone spends her days looking for entrepreneurs and companies that are a good fit for investment, then leading the due diligence process to follow up after an investment is made. One of the reasons she enjoys the work is the same reason her own startup wasn’t a good fit for her. “I love meeting entrepreneurs,” she says. “I’m more suited that way. In your own startup you have to think about one thing all the time. Here, I’m always thinking about the future and where the world is going, because that’s what we’re investing in—where the world is going.”

That attitude towards investment and collaboration is what brings people with new ideas to Silicon Valley. “(It)… promotes collective learning and flexible adjustment among companies that make specialty products within a broad range of related technologies,” wrote Dr. AnnaLee Saxenian, dean of the UC Berkeley School of Information, who has long studied technology clusters and the Silicon Valley networks. “The region’s dense social networks and open labor market encourage entrepreneurship and experimentation. Companies compete intensely while learning from one another about changing markets and technologies through informal communication and collaboration.”

Myers, a Bay Area native, and Larson, who grew up in Eugene, Ore., met during orientation their first week at Evergreen, and immediately bonded over their interest in technology. “We were giant nerds who like to stay up late at night and play games,” says Larson. When they developed the idea for SideReel, though, they knew it would take more than great tech to make it work.

They started out in 2005 with a website business selling movies and TV shows online, when video on the web was still new. “It was a dark time but a time of great promise,” says Larson. “We knew that companies with bigger war chests were going to determine how this kind of service developed. So we started a new guide to help people find content no matter what service they were on—a search engine that relies on a community of users to help populate it.”

Zach Miller-Catlin Larson
Zach Miller-Catlin Larson’s first startup was an electronic version of his school
yearbookthat he did in 9th grade. The CEO at Threadbare Games says you too can
succeed with your startup, “if you’re comfortable with a large amount of risk and a
great deal of chaos.” On Twitter @zachlarson.

SideReel launched in 2007, offering users the ability to search for TV shows, track them and watch full episodes online, as well as reviews and discussion boards. It quickly became a company to watch in the digital entertainment field, and they were able to show revenue after only eight months—key to attracting investors. “That’s when we had the first idea it was going somewhere,” says Larson. “We kept trying small things and measuring them to see if they worked. I remember thinking at the time that this was part of our Evergreen experience – learning how to learn, questioning assumptions, getting close to source data. It mentally geared me toward this sort of career.”

Then in 2008, with the economic collapse and ad markets down, they had to slash their costs, and focus on revenue generation. They did lots of experimentation until traffic and revenue began to grow again. “As long as it kept growing and we could pay ourselves enough to keep us in Ramen, that was success,” says Myers. “Every day there were new challenges we needed to go out and learn about, find resources and figure out problems. If we hadn’t figured out what was wrong and how to fix it, SideReel would be dead.”

Instead, it thrived, and in 2011, the company was purchased by Rovi. Myers and Larson were excited to be able to offer a great return on investment for their investors, who included family members and friends, but they also made sure that everyone who worked on the product was taken care of. And now, they’re able to be angel investors for other early-stage startups, the way others were for them.

Silicon Valley may have the greatest concentration of startup funds in the world right now. And what’s more exciting for entrepreneurs, says Myers, is that “Although there is a lot of risk, and a high chance of it not working out, it’s a lot easier to start now than it used to be. So many people think they can’t do it, but the capability to create their idea is actually within their grasp.”

Bart Myers
Bart Myers advises startups to “build a product customers love and listen to them;
make a lot of mistakes and learn from them.”
He blogs at bartolah.com and is on Twitter @bartolah.

The up front costs of starting a tech company used to be significantly more prohibitive, explains Sarah Cone. “Five to ten years ago, it would have taken a quarter-million-dollar investment just to buy the servers to run your business. Today, companies like Amazon, Rackspace, HP and others rent space on open cloud servers that are able to process terabytes of information for a few thousand a month.”

This is opening up a new era of lean startups, which is the market her firm invests in. And not only is the cost of entry much lower, the collaborative nature of Silicon Valley has combined with growing infrastructure to provide early-stage startups with office space, funding, and access to a network of investors and mentors. “There’s a lot more angel investing because there’s a lot you can do by raising $100,000,” says Cone. “Time has passed and now people who have been in serious operational roles at Google and Facebook and PayPal have gone into investing. Since they know how to run a company and how to offer support to startups, they can help new companies along.”

Today, all three Greeners encourage entrepreneurs with new ideas to do their research, focus their attention, and, as Larson says, “Make things!” Myers agrees. “It’s very interesting seeing the amount and variety of innovative platforms that have emerged and are emerging for people to create and do unbelievably interesting things,” he says, citing the rapid development of camera and mobile technology as well as 3D printing, which Cone agrees could be the catalyst for bringing manufacturing back to the U.S. Companies like Raspberry Pi are already creating small, inexpensive, programmable computers to teach kids how to code.

Sarah Cone
“Entrepreneurs I meet have amazing, exciting ideas that
are going to completely change the world,” says Sarah
Cone. On Twitter @sarah_cone.

In addition to technology advances, Myers and Cone both expect crowdfunding sites like Kickstarter and Indiegogo to continue growing as places for consumer companies to get off the ground. At the same time, because the barrier to entry is so much lower, competition for investment is high, and companies need to show early on that they can bring in revenue. “First you need to actually build something,” says Larson. “Ideas don’t have intrinsic value. Build something, show it to people in your market and get their feedback, incorporate that feedback and build it again. It’s useless if it’s just in your own head. It’s another Evergreen thing—seminar is all about showing people your work and getting them excited about it.”

When you’re trying to get the most people to use your product, it’s good to get slightly ahead of where people are now. That’s Larson’s goal with Threadbare Games, where he’s bypassed the console system and is producing games solely for mobile devices. He’s done his research. “People are spending more and more time on their mobile devices—your phone has more computing power than the first space shuttle,” he says. “59 percent of people now play games, but they’re busy, they’re working, they don’t have six hours to spend in front of a console. Our games work for those times when you have 15 minutes to kill—something people can pick up, engage, then set down and move on and not spend a lot of money, but still have fun. My job is to make things that people have fun with.”

“You need to validate that there’s a market or a problem you’re trying to solve,” says Myers. “If you’re interested in starting a company in any area, you should read Eric Ries’s book The Lean Startup. Testing and measuring the effectiveness of what you build is critical. Too many funded companies fail to reach a market and scale to success. It’s upsetting and, in many cases, avoidable. At SideReel, we failed many times, in some fairly creative ways, before we were successful. When I have a chance to work with founders, that’s a valuable lesson I share.” Cone, who studied art at Evergreen, says entrepreneurs need to remember that making something from nothing is never easy. “But Evergreen’s a great education for entrepreneurs because you have to figure it out,” she says. “In business, you have to be intellectually curious, responsive to the data you’re getting, able to learn on your own and figure out how to go out and get the connections you need in the world. The faculty are there to support you in figuring things out yourself, so it prepared me for my entire career, but especially for being an entrepreneur.”

She also encourages anyone with an idea to get a plan in place and get it out there. “We review a lot of companies and are open and accessible – most venture capital companies are,” she says. “We take a look at everything that comes in to us.”

Myers agrees, but stresses that the ability for small entrepreneurs to be successful also requires a lot of work and a lot of luck. “Doing even something very simple well is more difficult than you expect. You’ve got to be scrappy, work hard, and that’s how it’s always been,” he says. “You’re only going to get so much capital to execute your idea. It’s hard, and the odds are stacked, but you have more tools at your disposal now than ever.”

And the best part about their work? “It’s awesome!” he says. “The act of coming up with something that people love and use, and knowing you solved a problem for them or entertained them in some way—it’s very gratifying. It’s not easy but it’s cool.”

The Sidereel.com executive team
The Sidereel.com executive team in 2010, from left to right: Bart Myers, Peter
Arzhintar, Zach Larson, Orion Auld and Roman Arzhintar.