Sramana: As an entrepreneur, how do you balance the equity stake of founders and early employees with the inevitable exit?
Amy Pressman: Silicon Valley is very much about technology and innovation. There is also a lot of innovation in how companies are started, run, and dealt with. If you look at more traditional liquidity events where you are bought by a larger Fortune 500 [company] or you go public, suddenly you have less leeway to experiment with innovation. Innovation is what makes companies strong, so that is a struggle that a lot of people face. The struggle for entrepreneurs is to get great returns for the people who built the company and everyone who invested in it while at the same time keeping the company on track in order to keep adding value.
Sramana: The longer we keep companies private, the better. Innovation and keeping founders engaged are easier to do with a private structure. That is what the Facebook structure is putting on the table. How long did it take to get to the point where you had revenue?
Amy Pressman: We had revenue from the beginning of 2002. We were profitable by the end of 2002. We had to be profitable quickly because we were bootstrapping. Early-stage startups that are funded spend a lot of time putting together a great team. We did not have the resources to do that, so everybody had to play multiple roles.
Sramana: That is one of the things I like about bootstrapping. Your priorities are focused on getting customers and revenues. That forces a level of discipline that is hard to reach when you have a lot of money flowing in with formal venture capital.
Amy Pressman: I think there is value in working multiple roles. Entrepreneurs need to get their fingers in all of the different parts of the company. We have a very strong culture as a company that works well together.
Sramana: How many people do you have today?
Amy Pressman: At last count, we had 115.
Sramana: How much money did it take you to reach profitability?
Amy Pressman: We were bootstrapped with one angel investor whom we bought out. The situation in the Valley was changing, and he had invested expecting VC investment to come. When that dynamic changed, we were not in agreement about how to proceed. It made sense to just buy him out and move forward.
Sramana: What are some of the other strategy milestones you have achieved?
Amy Pressman: We chose to focus on hospitality. If you don’t have resources, you have to focus. That is very hard to do, especially in Silicon Valley where companies can explode overnight. We specifically targeted the leaders in the industry. I see a brand or two in every industry that other brands look up to. We wanted to work with those companies rather than the companies that nobody wanted to be like. Choosing well-regarded brands helped our sells. That worked well for us. Great brands care about customer experience, and they tend to be more innovative. They were willing to take a chance on a small startup.
We were very focused on being a technology provider. That allowed us to differentiate ourselves. At the time, I remember attending market research conferences. People were having long debates about whether the Internet was a good vehicle for surveying. They were worried about losing demographics. I had done some research, and I remembered that in the 1970s there were similar debates about moving to telephone surveys. In that context, we stood apart as a differentiated company.
The only way we were going to succeed was by delivering a hell of a product. We focused everything we had on great technology and service. Hilton went to a quality conference and showed our product to a group of other hotel companies. We immediately started getting phone calls. Every time that happens, the other companies in the room become our clients within a year.