SM: After working in some of the leadership development positions you felt confident you could leverage your experience with a startup of your own?
RY: Yes. Unfortunately, I was overconfident. I jumped back into starting companies but I still had some learning to do. I started a company which provided an underlying technology similar to what AJAX does today. It was plug-in users would download, and developers could provide rich Internet applications on top of the plug-in. I raised a small amount of money for it and ran it for a year but the company did not go anywhere. After that I started a customer support company providing a hosted email solution to consumer companies. I got the business to the point where it was slightly profitable, but I realized it would take a long time to make it a big business. I also learned I have to do things where my passion lies. I was not passionate about enterprise software.
SM: What did you do with that company?
RY: I did not have investors. It was entirely bootstrapped so I just stopped running it.
SM: That brought you to hi5 in July 2002. What was the genesis of the idea?
RY: I really wanted to get back into consumer-facing applications. At that time the web was good at being a publishing model. The idea of using the web for collaboration, communication, and getting people to do that through more than email and instant messaging was new. Those were some of the things I was thinking about. I was also thinking about the growth in the US of Internet users. It seemed there was huge opportunity internationally.
The first way we started to take advantage of that was replicating what Match.com did. I thought there was an opportunity to do the same thing internationally. I built a competitor to Match.com and launched it in the beginning of 2003. I did that for about four or five months and quickly realized it was not the kind of business I wanted to be in long term. It was a turn model. The media was used to acquire users, and they stayed for three months and then moved on.
SM: Was that when Friendster was going?
RY: Friendster had launched in early 2003, I believe. There were a lot of lessons from that as well. If you look at search, social networking, and a bunch of similar categories, they all seem to go through evolutions. Friendster was first generation. Some of the things we learned from them were that scale really matters. If you are going to build a service and it has a good chance of becoming very popular, make sure you address the skill needs up front.
SM: In your analysis was that their main problem?
RY: I don’t know enough about what was happening inside of the company. Externally there was a big problem. Users could not get to the site and could not register. They could not log into the site as often as they wanted.
Scale is really a simplified version of it. It really comes down to how they approached the problem, the technology used, and the product provided. The organization needs to be focused on the goals for success and what the usage is going to be. There may be other things as well. I think they were trying to do a lot early on. The lesson I have learned from many businesses is focus. Both picking the businesses initially as well as deciding the order of areas to pursue.