Sramana Mitra: What do you do?
Michael Sikorsky: I happened to be in New York. I was connected to lots of stuff around investing and crowdsourcing to venture capital. The iPhone comes out. I had that lightning bolt feeling when the Internet came out. Now, I’m a lot older. I’ve been through multiple companies. I even started investing in other people’s companies. My theory of business and my theory economics is now not completely naïve. You grow it over time. My theory was that mobile would be bigger than the Internet. It turns out that now, that’s true. I thought I wanted to attack this mobile space.
From Robots and Pencils standpoint, I wanted to do a couple of things. This was really important to me. I actually believe that if you look at pre-Robots and Pencils, every single thing that I have been doing has an investor and it has a forced exit and implied economic return. Over time, I have come to this realization that it just changed the dynamics of the firm. Rather than solving problems for our users, lots of times, we’re solving for the investor. The closer that I got to understanding investment and venture capital, the more I was like, “That’s how your business model works.” Let’s say there’s a hundred things that have to happen to make a great VC. Let’s say there’s 100 things to make a great operating company. Most of the time, most of those blocks don’t line up. Of course, one has money and one needs money, and there’s lots of other things that don’t line up. Which fund am I in and when does that fund exit? What is the internal rate of return?
It turns out to be completely immaterial for me to attract talent to work on my platform. From Robots and Pencils, I got to this point where I thought, “What if you started a business? You have to have some theory.” We had a theory that mobile is going to be massive and we could build apps. What if you design the business to do a single thing – solve for the talent. How do you pretend, as a thought experiment, to be 100 years old and solve for the talent? Those were the founding principles of the business.
If you’re trying to be 100 years old, it means you’re not trying to do any fast exits. To try and solve these talents, you can’t say to them, “We’re in fund four of this VC. Fund four winds up in three years. We need to get out.” At this point in my life, I thought that every single thing that was great was in having an unfair share of collection of talent. The more unfair share of collection of talent I can have, the better everything gets. At this stage in my life, I was like, “If I can actually do organizational design and design it such that it attracts talent rather than repel them.” I wanted at least 100 people to work together side by side for 25 years.
Sramana Mitra: This is something you were doing in Alberta again?
Michael Sikorsky: Robots and Pencils is actually in Canada, America, and Britain.
Sramana Mitra: Where is the bulk of the personnel?
Michael Sikorsky: It’s split between US and Canada.
Sramana Mitra: Because in California, unfortunately, this is not the kind that works that well. I’m not saying that it shouldn’t. Unfortunately, we’ve created, in Silicon Valley, very unhealthy dynamics of people not thinking long-term but thinking short-term.
Michael Sikorsky: Totally. I’m with you. I think it’s nonsense. We’re like an anti-Silicon Valley. I live in San Diego. For example, we have an office in Austin. We have an office in Denver. We’ve hired many people from Silicon Valley. They actually can’t wait to leave. They normally pick Denver or Austin. I just don’t want the names without their permission. One of the latest hire said, “I’m just so tired. I go to a party and it’s only been three months since I’ve seen everyone, and everyone has new jobs. No one’s building anything of meaning.” If you don’t think you want to hang out with me for 10 years, don’t work with me. I don’t want to work with you.
Sramana Mitra: What are you building?
Michael Sikorsky: We have many products. One thing that we do is we obviously help companies with building their mobile capabilities doing mobile apps. We have a product suite that helps designers build experiences for iPhone and iPad. Our next product is Heroku for Slackbot. We have a Platform-as-a-Service for Slackbot which will open up for private beta this Friday. The way we think about it is we actually have lots of product offerings and lots of service offerings because we plan to be here for 100 years. There’s teams that work on different things. The reason it all makes sense in our brains is we have no investors. We have no hurdle rate we have to hit. There’s no reason why we can’t have Platform-as-a-Service for hosting Slackbot at the same time have a tool for designers and programmers to speed up their mobile experiences.
Sramana Mitra: Good story. I particularly like the evolution of your own thinking. I actually started in the venture capital mode because I was a product of the beginning of the Internet. I filed my first company while I was a graduate student at MIT in 1994. Netscape was going public. I moved to Silicon Valley soon after and raised money multiple times. I completely drank the Kool-Aid of the venture capital stuff.
What you’re saying is exactly right and I’ve come to that conclusion as well, which is why I started One Million by One Million. There’s a very small percentage of companies that should be doing venture-funded startups. There needs to be an alternative. There needs to be much more sophisticated thinking. Unfortunately, what the media and business schools have done is glorify venture capitals to a point where entrepreneurs equate success with venture financing, which I think is a crime.
Michael Sikorsky: I think so too. I think you should go home and cry if you had to let that into your system. How many times is having or not having $50 million really put you in a strategic deficit? There are some businesses where you have a strategic deficit? Most of the time, that’s actually not true. Even at Robots and Pencils, our biggest limiter is attracting talent. This guy joined our team. He’s super amazing. I love his brain. He joins our team and the first thing he wanted to do is wait to see if we operate and talk like we said. Once he crossed the half-year mark, he’s like, “I believe in this. I can let in the other 12 people.”
No amount of money solves that problem for me. In fact if I made money a solution, I wouldn’t even have them in the first place. I think that when people realize in building great software experiences, it’s a team sport. Teams that live together and become great together, build better software. This idea of building a team ad hoc is such a fallacy. If you think about me as the Chief Executive, my entire job is culture and attracting unfair share of talent. The more talent that we have, the more awesome products come out.
They actually want to make great software. They want to take care of their customers whether it’s in a hosting platform or helping a company build this mobile capability. It’s in their blood. You can’t take it out of them. It’s so easy to screw up and erode people’s fire versus taking the fire and building it into an inferno. When you come here, it should feel natural. It takes about a half year before people realize that this still works.
Sramana Mitra: Terrific. Thank you for taking the time.