A few years ago, when you walked into the offices of many Internet start-up companies - usually one-room hovels on the wrong side of town - you tripped over pizza boxes, got a headache from the burning sounds of bad techno, and were unable to tell the difference between the scruffy 28-year-old CEO and the staff's grungy 29-year-old drug dealer. |
And then there was the smell. It wasn't the scent of an electrical fire, old food, or unwashed jeans. Rather, it was the stench of failure. The employees didn't detect it; they were too giddy from writing the Great Code, too concerned with saving the Web, too rapt in dreaming of the day when they would take over the world and become the next Bill Gates.
Back before the browser wars, before cyber porn and tripledub were even phrases, very few people could even write HTML, the language of the Web. But people knew the Web was the last frontier, and the early '90s were like the gold rush. The ones who got there first made the most money. Just look at Yahoo.
Now it's more difficult to strike it rich. Although the Web has become vital to computer users, financially it hasn't yet delivered the promised pot of gold. You can't just put up a website and wait for your bank account to fill up. You need capital, and most venture capitalists won't give you cash unless you have a viable business plan and people working with you who can execute it.
Venture capitalists know that most start-ups are going to fail - five out of eight companies they invest in won't survive, two might break even, and if they're lucky, one, a Microsoft or Lotus, will make them zillionaires. At a time when health care is expensive, job security is scarce, and your college loans are staring you in the face, working at a start-up is precarious.
Why, then, are so many young professionals signing up? When you run into that nerd who lived down the hall from you junior year, your ex, and the guy who was going to write the great American novel, why do they all say, "I'm working at a start-up"?
Comet Systems isn't located in a hovel, though they used to be in a tiny, cramped loft in the Tribeca section of New York. In June 1998, six months after the company's three founding partners made their first hire, Comet moved into a 9,000-square-foot space in the Continental Building at the center of Wall Street. As an inexpensive sublet, the space was a lucky find.
The building has security guards, a corporate cafeteria and high-speed elevators. Comet's neighbors include Continental Insurance and the successful ad agency TBWA Chiat/Day. The space has a corporate look: there's dull gray and blue carpeting, Formica cubicles and tinted-glass partitions.
One employee, all too familiar with the typical start-up aesthetic, says, "It's almost comical that we have this Merrill Lynch view of the harbor."
In the last week of July 1998, three weeks from the August 17 product launch, Comet is still a start-up - even if it looks like an established company.
On a Monday in mid-July, about 10 people are staring at their screens and clacking on their keyboards. Over the course of an hour, the phone rings only once.
A week later, a desk and a receptionist, 23-year-old Tripti Lahiri (who triples as the accountant and office manager), seemingly drop from the sky. The next day, a couch appears next to her desk, along with three more employees. The phone rings with much greater frequency.
One day in late July, Guy Smith, a 26-year-old programmer who just started that morning, walks over to Nick Corman, Comet's jack-of-all-trades and second employee, and asks if there are any forms he needs to sign. "For the ID card?" Corman asks.
"Yeah," says Smith, "but I thought there were more."
Corman is confused. "Oh, for benefits! Yeah," replies Corman. "We outsource that. I'll, um, call them."
Smith goes back to partitioning the server.
Bureaucracy makes many people at Comet nervous. The men who started the company don't want to be mindless drones in the sterile aisles of corporate America. They want to do something, to make something. They want to be superstars.
The inspiration for the company came from Jamie Rosen, Comet's 28-year-old President. Rosen, a lifelong New Yorker, favors T-shirts and sneakers to complement his wry personality. He is proud to call himself a "big Gore supporter" and has always been an entrepreneur. As an undergrad at Harvard, he tried to set up a database of college applications so that anyone applying to, say, Swarthmore could look at successful Swarthmore applications. He had a toll-free number patched into his dorm room and answered the phone as though it were a business.
After graduating, Rosen tried to write a travel guide to Mongolia, but he got sick and ended up in Washington during the first Clinton/Gore inauguration. He printed thousands of "Socks the Cat" T-shirts and laminated thousands of Washington Post front pages from the day after the inauguration and set up shop. "I made a lot of money very quickly," he says, smiling. He bounced around New York and Harvard Business School and spent a semester on a fellowship for young inventors, sitting in the aforementioned Tribeca loft, just thinking. At a venture capital conference in 1996 he met Dean Margolis, who became Comet's CEO.
At 41, Margolis is older than most of Comet's employees and one of the few with noticeably graying hair. He claims to be "the adult supervision." Affable, vaguely funny, but mostly serious, Margolis gave Comet its legitimacy at the start, having already helped start and sell four companies. He teamed up with Rosen originally to create an online real estate company called Eureka 24. In the midst of writing the business plan, which one Comet employee calls "hardly viable," Rosen had an actual "Eureka!" And if all goes as planned, it will alter the face of the Web and make both Rosen and Margolis quite wealthy.
Rosen's idea is to customize the mouse cursor for specific Web pages. If you go to a Disney site, for example, your arrow becomes Mickey Mouse; when you pass over a clickable link, Mickey smiles; when you pass over a clickable advertisement, like a Tide banner, your cursor becomes a Tide bottle. A cool idea. When prospective clients, like Warner Brothers or MTV, see the demo, they more often than not say, "How do we get it and how much do you want for it?"
It's hard to believe no one else had thought of it before. "I have no doubt it's going to sell," Margolis says.
Three weeks before the cursor makes its debut, dozens of sites are signed up, and dozens more want to. Comet is betting that thousands will want the technology after the launch.
Neither Rosen nor Margolis had the technical ability to make the cursor work, so Rosen called Tom Schmitter, whom he'd met at the MIT Entrepreneur Club. Rosen had worked with Schmitter once before, when they tried to make a billboard-sized flipbook for advertisers. The cursor is potentially much more profitable.
"They asked me if I thought it was possible," says Schmitter, a low-key 33-year-old, who found the idea "amazing."
Rosen and Margolis persuaded Schmitter and his wife to move to New York. Schmitter became chief technical officer and partner - a factor that convinced Prospect Street, New York's local tax-funded venture capital firm, to give Comet Systems its start-up money.
A cursor that changes shape may sound simple, but it is "the most technologically challenging thing I've ever done," says Chris Putnam, a 30-year-old software engineer whom Schmitter hired in January '98. Putnam was weighing offers from banks promising huge money and little work.
"This was a lot more fun than working for a bank," he says. "It made more sense. Greed doesn't always win."
Start-ups hold the possibility of financial explosion - recent public offerings of software companies have made millionaires out of many young entrepreneurs. "The potential to make money [here] was higher than anywhere else," Putnam says. Other companies may offer a high salary, "but you knew you weren't goin g to get any more."
"There's definitely a 'Hey, kids, let's put on a show!' quality to it."
-- Nick Muson
Throughout the summer of 1998, others are hired. Most of Comet's employees come for similar reasons. Practically everyone in the company disdains large corporations. Margolis spent two years working for a large corporation. "You'd leave at midnight and come in at 9:05, and they'd be more concerned about why you came in five minutes late," he says.
Adam Solomon was an intellectual property lawyer before coming to work at Comet. At the monolithic United Technologies, he says, "There was a procedure for going to the bathroom." There were no incentives. "Your whole life was about developing your career instead of developing the company. As one of the two guys in business development [at Comet], I can have an instant impact."
The ability to work on something they can envision, build, and then see implemented is very important to most of the staff at Comet. You can't do that when you're a cog at a large company.
And the risks? It's not surprising that few at Comet think of start-ups as risky. "Maybe 10 years ago being at a failed start-up would put a red letter on your chest, but not now," says Margolis. You weigh your options.
"I figured it was a calculated risk," says Putnam. "I had offers to do stuff for free, so this was better in comparison."
Comet's employees know that they can always go someplace else given the current market for skilled employees. They are at Comet for the experience, not the short-term cash.
Doug Stone, a 37-year-old in business development, says that at a larger company, he could be making twice the money and have a much bigger office (not the cubicle he has at Comet). "But with only 15 other people, your voice is heard," he says.
The freedom of a start-up is also enticing. At Comet, there are no suits, time clocks or backstabbers. Almost everyone shares the obsession with the product. "There's definitely a 'Hey, kids, let's put on a show!' quality to it," says Nick Muson, a 32-year-old programmer.
Teamwork is encouraged in both real and ironic ways. Propped on a shelf, next to a wooden sled named Comet, is a card touting "the 11 Commandments for an enthusiastic team." Among the directions are such things as "1. Help each other be right, not wrong," "6. Maintain a positive mental attitude no matter what the circumstances," and "11. Have fun!"
When a staff is so driven to work, the results can be incredible. "If the people at my old job knew I was up at 5 in the morning [getting ready for work], they'd be flabbergasted," says Solomon. "And I don't drink a cup of coffee all day. At my old job, I'd be drinking it constantly."
Not every employee is so excited - some are at Comet just because it was the right job at the right time. But the company's enthusiasm is palpable, even when growing pains are evident.
By the last days of July, Comet's staff has grown to 20. Days away from launching a product over the Web, one that could potentially be downloaded by millions, the start-up mentality is still charming, but no longer as useful. As a company expands, communication can suffer.
"There's a big risk that we're going to collapse under the weight of information flow," says Putnam.
In the beginning, everyone at Comet knew and decided everything, but that is no longer feasible.
At an impromtu meeting, Rosen, Margolis, and Corman discuss the search for a more permanent space to move into after their sublease ends. Both Rosen and Margolis have brokers looking; Corman is the only one visiting the spaces. No one can agree on what Comet needs. Margolis and Rosen argue over whether the space should be L-shaped or square; the discussion is comical in its ineffectiveness. By the end, nothing but the size of the space is decided - it should be between 10,000 and 15,000 square feet. Corman, caught in the middle, makes jokes. No one laughs.
When you reject hierarchy, it's hard to know who's in charge.
Try asking Lahiri whom she reports to. "Um," she says, pausing for 10 seconds before saying, "Sort of Dean, sort of Nick. But anyone can ask me to do something."
Corman himself has only a vague job description. Sometimes he's ordering fax paper; sometimes he's working on strategic planning and hiring new employees.
Namho E, a 28-year-old who dreams of making animated movies, started out as a freelance designer for Comet in April. He was then hired full-time and found himself managing all the artists who design cursors. "I do it because I have to, not because I enjoy it," he says.
It's not altogether clear who manages Namho. It seems to be Ben Austin, the Director of Marketing, but even Austin isn't sure. "It's tricky," he says. "Six months ago, we had no business development staff. Now I'm the Director of Marketing, and I support the business development staff. I'm flying all over the place. I don't know exactly what I will be doing in three or six months."
The lack of a bureaucracy is, for some, one of the draws of working for a small company. Schmitter says he doesn't want to be "building a system, rather than just having great people who are driven." As you institute chains of command and procedure, the character of the company changes, he says. "Instead of being a hungry animal on the prowl, you become a defender," he says. "I like being hungry."
"There are definitely different ideas about the way things should be done," says Roe. "Sometimes we have crossed wires because we're not formal enough. There's a lot of freedom. People will be doing the same thing [because we're] not communicating. Tom doesn't like systems, rules, bureaucracies. But eventually there's going to be a bureaucracy."
Even Solomon, whose disgust with corporate culture prompted him to leave the stability of United Technologies, says that some structure is needed.
Margolis says that the speed and exuberance of the company are good things, but the exuberance can also be "froth" and "irrational." He wants to make sure there's some control. "You can't have a car without the brakes or the accelerator," he says.
As the "adult," Margolis puts on the brakes. But Austin puts it all into perspective: "If you need structure, a start-up is a bad place for you."
By definition, Start-ups usually don't have cultures. If they do, the cultures are what anthropologists would call "emerging." So far, Comet's emerging culture seems to be very male and a bit geeky. (The conference room has a Ping-Pong table. "Geeks love Ping-Pong," says Roe.) Comet's staff hasn't begun obsessing over frequent-flyer miles, like employees at many consultancies do. They don't all eat at the same two restaurants, like many of their investment banking neighbors might.
From the beginning, though, Rosen has been trying to create at least a sense of company cohesion. He's the self-appointed Company Cheerleader.
In the fall of 1998, the staff was expected to grow to at least 30. The staff may no longer fit into the conference room, and their offices will likely begin to resemble those that many of Comet's employees escaped from. Employees will no longer know each other's names, departments will exist in their own worlds, and there will be a Director of Human Resources. As Comet hurtles into the world of corporations, it may start to lose its luster.
Stone has worked at a number of start-ups as a consultant. "When they distribute the first employee handbook, that's when you know you're at a company," he says. And that's when the adrenaline-seekers leave.
Six months after the launch, more than 10 million people have downloaded the Comet Cursor, making it one of the fastest-adopted pieces of Web software in history. Comet Cursors can now be found on sites for Comedy Central, iVillage and Furby.
In January Comet Systems moved into a new office near the Holland Tunnel. "There are flag poles in front of the building," says Rosen, "and we're having Comet flags made so that all the tunnel traffic to New Jersey will see us."
Ted Gideonse is a reporter-researcher at Newsweek.