Ruth Ann S. Basnillo                                                                                                                              6/30/2008

SYSANAL

O0C

Case study

Paul Graham

Cofounder, Viaweb

Story:

            Paul Graham and his friend Robert Morris started Viaweb in 1995 to make software for building online stores. But before that, they had a startup called Artix wherein their idea was to put art galleries online. The only problem was that art galleries didn’t want to be online, so they switched to the idea for Viaweb. And that idea was going to be software that would be used on desktop computer to build a web site that would then be uploaded to a server. A few days into writing the first prototype, they had a crazy idea of having the software run on the server and let the user control it through their browser. In that very beginning, they didn’t have any funding and they were working in Robert’s apartment. Then, they got some funding from their friend who worked with them on Artix and gave them $10,000. And then after about six weeks, they also got Trevor Blackwell- the very talented employee they had before. Before Trevor’s arrival, the two cofounders actually had a 24 hours work whereas Paul would work up till four and got up at noon while Robert would get up early and continue writing the code. And the thing is they actually did the coding in only one computer. Within weeks, they had a web-based online store builder they could demo to investors. They had their first demo in early August and individual merchants wanted their software. They had many competitors in their online store. One was iCat, their biggest competitor, which actually was not good at writing software but very good in raising money. They also had Shopsite that was better technically but was not too dangerous just like the iCat. They also had a lot of acquirers in the first year or two of Viaweb, one was the approach of a certain big company, who, in turn didn’t had a deal with them because of their disagreement with the negotiation made by Viaweb’s investor. One turning point came when Robert was about to leave for a summer job without Paul knowing it. And after having been informed, their main angel investor suggested that they find a CEO and that’s when Fred Egan came. Soon, they were starting to be mentioned in the press a lot after hiring Schwartz Communications- a fabulous PR firm. They tried to do an online demo for Tim Koogle in the fall of 1997. By 1998, Viaweb store was the most popular ecommerce software. It was then acquired by Yahoo the same year and was renamed Yahoo Store.

THREE THINGS I LEARNED:

            I learned from how Viaweb got started that when doing an application for a startup, you have to remember that your main goal is to reach out for the end users’ needs at the same time look at them as somebody who has been traumatized by bad experiences with other products. It’s one reason why Viaweb was greatly liked by the people.

            Next, I learned that it’s never a deal until you don’t have the money right in your hand. It’s because there is an 80 or 90 percent chance that that deal would fall. And if you believed the offer and change your plans based on that, your company won’t be able to adapt immediately to the rapid changes, thus, letting your company to fall. So, the thing that should be done is to never immediately believe when people from different companies would tell you that they would want to acquire your company. You just keep going.

          Lastly, I learned that it’s not always true that the way to convince people to use your product is to be persuasive. One strategy that I learned from this company is to convince people by telling only the truth. With that strategy, you’ll never think of the things that you would say to the people. Only natural words would come out of your mouth and you don’t have to keep any state in your head. It’s purely true things you know about your product that you’d tell.