Are founders necessary?
Conventional wisdom holds that nothing is more critical to a startup than its founders. A company's founders are often glorified as the single essential ingredient in a successful business. What then of a company that isn't started by businesspeople? I recently heard one perspective from Dan Ciporin, who was CEO of the price-comparison and product review site shopping.com until its acquisition by eBay in August.
The first stage of any venture, Ciporin argues, is a "gathering of the prophets." These people do not need to be founders, but simply people with the business acumen, connections, and passion to move the company forward. Shopping.com (originally dealtime.com) started with technologists, but it didn't have a founding executive.
Dealtime was located in a small office above a deli in Israel and needed someone to take it from "gizmo" to company. At the time, Dan was a Senior Vice President at Mastercard. The recruiter who matched up the two must have been very creative, but it soon became apparent that it was a good fit. Dealtime's original product was an email alert system that notified shoppers when an item's price dropped below a given level. After being offered the CEO job but prior to accepting, Dan signed up for the service and set an alert on a new computer. After hearing the PC beep from another room, he rushed back and bought the computer on the spot.
We take such alerts for granted these days, but the "experience of consumer empowerment" he felt in his gut turned out to be the defining moment in his decision to leave Mastercard for uncharted waters. Having been infected with a passion for the idea, he was positioned for the challenges to come.
The challenges came soon enough. 2001 was a tough year for all tech companies, but especially for consumer e-commerce. shopping.com laid off 250 of their 300 staff and withdrew their IPO filing.
Through all this, Dan remained convinced of the company's potential. There was indeed a light at the end of the tunnel, which eventually arrived in the form of eBay. In August 2005, eBay paid $620 million cash for shopping.com. While the CEO hadn't changed, the business model had adapted and evolved over the years, particularly with the acquisition of epinions.com, expanding recommendations from "where" to "what."
It's tough to draw sweeping generalizations from a sample size of one, but at the very least, Dan's experience underscores the importance of passion and dedication in ventures where the path from idea to exit is impossible to predict. Having a set of founders to take a company on this journey may not be critical, but a new business won't get far without executives who feel a founder-like passion.
Coincidentally, a check from shopping.com for $3.01 arrived in my mailbox today, final payment for their Cash Back program that was discontinued on Aug. 31, 2005, the day after the acqusition by eBay closed.
[As an aside, Dan quoted Bill Gates loosely as follows: "Human beings are funny animals. They always overestimate the amount of change that will occur in a 2-year period, and they always wildly underestimate the amount of change that will occur in a 10-year period."]