More Awesome Than Money (28 page)

To rebut him, NPR spoke to a blogger who said she was very happy to be on a new social network that permitted anonymity, something called Diaspora, which was “still in the process of rolling out,” said Martin Kaste, the NPR reporter.

He continued: “At Diaspora headquarters in San Francisco, cofounder Max Salzberg says this network does not insist on real names.”

Then Max was heard: “Certainly, with Diaspora, it's not a requirement and, in fact, it's not even something we can enforce because Diaspora is open source.”

Max was gifted with being able to state both sides of an argument, and the reporter noted that he agreed with Google's Schmidt “a little bit.” But he urged an appreciation for pseudonyms, saying that they could be well-constructed identities.

“And it's still, like, an authentic personality they have,” he said.

Salzberg duking it out with Schmidt, and the kid got the last word.

—

Toward the end of the month, Ilya told Bobby he had something that he wanted to give him. It was a gadget for organizing sticky notes. Bobby had been talking about his sticky notes for months, and how they piled up with incomplete to-do lists and ideas. Fishkin was charmed by the aptness of the gift and how utterly inattentive Ilya had been.

“Ilya, the sticky notes that I have are virtual,” Bobby said. “They are not on paper.”

Unlike Ilya's sticky note collection, Fishkin's were generated by a software program and were visible only when the computer was on. “I have two thousand virtual sticky notes on my machine,” Bobby said.

“They're not physical notes?” Ilya said, astonished.

Fishkin shook his head.

“Even so, I want you to keep your revolutions organized. This is my wish for you. I want you to keep organized over the years to come,” Ilya said.

He had stocked up on the organizers, buying about twenty, and presented them to people like Elizabeth Stark and his roommates in the Hive. Ilya kept surprising them.

—

In late September, the two advisers from Singapore, Antonio Lopez Abello and Emilio Manso-Salinas, sent word that they planned to visit as part of a due diligence inquiry into Diaspora. Sarah Mei was curious, and asked Yosem what it would amount to.

It was a particularly relevant question for her. After many months of discussion about her taking the post of chief technical officer, she and Max expected that she would be starting in mid-October. It was almost time for her to give notice to Pivotal.

The advisers wanted to meet the team, Yosem explained, and go over the financials.

“Once we have that, we (Antonio, Emilio, and I) will be pitching to investors non-stop until we close the first $1 million round,” Yosem wrote. Late on the evening of Monday, the twenty-sixth, Yosem got in touch with the men in Singapore. Sarah had given her two-week notice that day; that meant she would be able to start in mid-October with Diaspora. They would need her every minute from then until the beta launch, which was scheduled for mid-November. The logistics of getting the fifty thousand dollars in tide-over money were critical. Sarah would need a paycheck by the beginning of November.

“Wow,” Lopez Abello replied. “No pressure.”

A few minutes later, Yosem wrote back with an update. He had spoken with Max, and there had been a change in Sarah Mei's plans. Pivotal was sending her to a conference, so she would delay her departure for a few weeks.

I
n the early evening of the first Saturday in October, Yosem's phone lit up with a call from Dan. No one kept banker's hours, and the surging frenzy of the last month had found its way into just about every waking hour, but still, it was a surprise for Dan to be ringing him on the weekend. Dan normally had his nose in the code; Yosem channeled his communications through Max. There was no need to be pinging all of them every four minutes with the latest wisp of administrative business.

Yosem, for his part, had not been so busy since falling ill two years earlier. Still on a cocktail of hormones that was constantly being adjusted, he had plowed past his own fatigue, exhilarated that, somehow, Diaspora was finally moving toward a moment of truth.

“Yosem,” Dan said, “why are we saying that we're a foundation?”

The question startled Yosem. So did the edge in Dan's voice. Two days earlier, Yosem made DiasporaFoundation.org a gateway into the project. After talking about this on and off for more than a year, it was time to get it done as they were on the verge of asking for donations.

“I had been told by Max that it was okay with you,” Yosem said.

“We're a for-profit entity. We're a corporation. This is not okay at all,” Dan replied. “That's like lying to people. We're not a foundation.”

Yosem was engaged to be married to Emily Greenberg, a medical student whose mother was a lawyer for nonprofits. He had consulted her, he
told Dan, and learned that because they were not selling any products for money, they could take donations and consider themselves a private foundation. They would in time have to set up a not-for-profit corporation, and shift the free-software code there—this was the approach taken by WordPress—but they had been advised not to change anything until investors figured out what parts of the intellectual property they wanted.

It made a certain amount of slapdash sense to Dan once Yosem had explained it. “I discussed this all with Max,” Yosem said. “He said you had all agreed to this.”

“I never heard any of this,” Dan said, “and I never agreed to any of it. And I'm sure Ilya has never heard about it.”

There was something else on Dan's mind. How had it happened that Max ended up in the NPR story about anonymity?

“Why haven't I been hearing about any of those interview things?” Dan asked.

Yosem was rocked.

“I've been sending all those things to you guys. Max was supposed to be telling all of you this.”

A bucket of frustration tipped over. Dan told Yosem that he had run out of desire to keep pushing Diaspora up the hill. He and Ilya were going to give it until Christmas, then leave.

“Max treats us like employees,” Dan said. “Why is our business plan involving a super-senior engineer when we can have, like, cheaper-paid people, interns? People were saying, ‘You need a few out-of-college-kids.' You and Max keep saying no.”

“I haven't been saying no,” Yosem said. “That's what I've been trying to convince Max. But he keeps saying, ‘We need this.' I thought he meant the team had talked about this and thought it through.”

“Absolutely not,” Dan said.

How could they have lived such separate realities? Yosem asked Dan if he knew the terms that Max had offered Sarah: her full salary of $130,000, and the 7.5 percent of the company's stock, the portion that had been allocated to Rafi but had not vested before he went back to school.

“What?” Dan exploded. In the first place, they shouldn't be giving her that much of the company. And second, did they even have the money to pay her?

The investment group from Singapore, due in town the following week, was going to write them a check for fifty thousand dollars. “Basically, that money will go to pay to Sarah,” Yosem said. “I thought you knew about this.” Although, he cautioned, that money was not yet in hand.

“Sarah has kids,” Dan said. “She needs insurance. She's not like us.”

In his role as consigliere/mentor/adviser, Yosem spent hours talking to Max, assuming that he conveyed the essentials to the rest of the team.

“Max would say, ‘We want to do this,' and I assumed ‘we' meant the team,” Yosem said.

“You thought you were talking to all of us,” Dan said.

In Dan's view, Max was CEO only for the purpose of having someone with that title on the slide shows that they presented to the VCs. Yet in reality, the others seemed to have given him the authority to function as CEO, if only because he had energy for taking on thankless tasks—like making sure thousands of T-shirts got mailed to their Kickstarter contributors—from which the others would avert their eyes.

Yosem and Dan then reviewed the aftermath of the Kleiner Perkins fiasco. Dan recalled that Max had taken a call from Ellen Pao while they were all in the Pivotal office. Afterward, he reported that Kleiner was not going to fund them.

“You know that they made an offer?” Yosem said.

All Dan knew, he said, was that they had been turned down. He listened to Yosem unspool the narrative of what happened after the meeting: that Yosem had urged Max to go back and withdraw the $10 million request, and to write it off to them being college kids with no business experience; that Kleiner Perkins had instead made a far more realistic offer of $750,000, and that it had been turned down by Max, who insisted that they needed $2 million to $3 million.

It was news to him, Dan said.

They spoke for more than an hour, each revelation infuriating the other in some form: for Dan, it was all the business decisions that he believed Max had made without consultation, and for Yosem, it was that so little of his conversations with Max were making it to the other members of the group.

Dan signed off the call with Yosem and immediately contacted Ilya, who soon was on the phone with Yosem to get this news himself. After a
few more phone calls, they had decided that Max would be told on Monday that he was not the CEO. And that they could not hire Sarah Mei.

The conversations continued over e-mail, where Yosem went through every business item with Ilya and Dan. It was almost impossible to believe that only then were they engaged with basic decisions about their project and its business. Yet it was the same blithe naïveté that had allowed them to take on a task as formidable as reorienting the web. Some of this had already been packed into e-mails that had been circulated containing the business plan, but as far as the others were concerned, they had not talked it over.

“My understanding was that the board had decided to hire Sarah and had written up her job offer,” Yosem wrote.

“Re: Sarah—none of that was discussed between the board,” Dan wrote.

Ilya weighed in with an endorsement of Sarah—that she would be “an excellent person to join us”—but added, “Unfortunately, there was no codified board meeting nor a job offer that I know about.”

Both Dan and Ilya added that they had no idea about the stock award for Sarah. “Let's not do that again,” Dan wrote.

“100% with Dan on this one,” Ilya wrote.

As far as having structured officers, Yosem described a few titles, then addressed the elephant in the room. “My understanding was that you guys had agreed that the CEO is Max. Is this symbolic or operational?” he wrote. “We don't really need a CEO for the time being, except for symbolic, external investor purposes.”

Dan replied: “When we agreed that Max was CEO, it was to put a title on a slide for a deck. At the time, all I ever agreed to was the symbolic nature of the title. Obviously, this has not been the case. We need to discuss the details of this amongst the board.”

“+1,” Ilya wrote.

As they spoke through the evening, Max was part of another conversational thread about drafts of a fund-raising letter that was due to go out in the next few days. The others did not reveal what they were speaking about, so he knew nothing of the mutiny that was roiling.

Yosem discussed with Dan and Ilya the job of “virtual CEO,” which would involve a mentor-type figure advising them and being their front
person at pitches with investors. Randy Komisar had played that role for a number of companies before joining the investment bank. It was “purely symbolic,” Yosem said, but it “means that I can meet with investors and coach you guys as founders into the CEO role. But Max didn't feel comfortable doing that, which is ok. One thing I could do to help in this regard is hold regular seminars for you guys on how to run a startup company, like a mini-MBA, as I do for my Stanford engineering/entrepreneurship students.”

“I would definitely love regular mini-MBA seminars (business is something I know very little about, but would love to know more),” Ilya wrote.

They would hold a board meeting Monday morning to tell Max that he was not the CEO. After that, they would tell Sarah Mei that her hiring was going to be put off. Yosem sent around an e-mail at nine-thirty that night to the group; it was entirely for Max's benefit.

“Dan called me a while ago, and we spoke for a bit,” Yosem wrote. “The gist of it is that it appears that we're experiencing some communication issues.

“To avoid them in the future, we should hold a weekly meeting where, during the first half, I can keep you abreast of our progress on the business front, and during the second half, say over lunch, we can have Peter and Sarah join us.”

After midnight, Dan sent Yosem an e-mail. “Just wanted to say thanks again for taking the time to talk earlier tonight,” he wrote. “You've got some great insight, as always.”

They had scarcely ever held a board meeting, and on Monday morning, no one was quite sure if Rafi was even still a member. Had he automatically resigned when he left the project to go back to school? It was spelled out somewhere in their incorporation paperwork, but they did not have time to figure that out. To be certain that he was notified of the meeting, Dan sent him a note. Did he want to join them by phone around eleven or eleven-thirty Pacific time? Not possible: Rafi was in class then. But he wanted the minutes.

The three of them gathered in a conference room.

“You're not calling yourself the CEO anymore,” Dan said. “You're not the CEO. That was a title we put on a slide. We are equals in this.”

He went on to recite the developments that he and Ilya had learned about only over the weekend: the hiring of Sarah Mei, and the awarding of 7.5 percent of the company. That, Max said, had been part of the plan all along. It was in the business plan they all had been sent.

“We never made a decision to make a formal job offer,” Dan said.

Ilya said that he thought Sarah Mei was great, but that he had known nothing of the plan to give her Rafi's stock.

“She's giving her notice today,” Max said.

Dan swore. They were paying themselves virtually nothing, and any new money was committed to one person making $130,000, who was also getting a hunk of the company? It made no sense.

Max insisted that was the price for Silicon Valley talent, which was what they needed to move forward.

What about the Kleiner Perkins offer? How come he had not told them about it?

“I went back to you guys, and you said no,” Max said. “Don't blame me. That was what you guys wanted.”

Dan and Ilya said they had known nothing of it. Max insisted that he had told them. No, said Dan.

“That would have changed everything,” Dan said.

Going forward, the three of them would function as co-CEOs. It was a silly notion; they had not figured out how they would divide the tasks. But in truth, it was a holding position. Yosem was waiting in the wings.

How often did start-ups fail? Depending on who was counting, nine out of ten, or six out of ten, or some other majority fraction. In the tech world, failure was not a failing; it was part of the culture of trying.
As Drew Houston, who started Dropbox at age twenty-four after he got frustrated on a bus ride from New York to Boston because he had forgotten his thumb drive, noted: “Bill Gates's first company made software for traffic lights. Steve Jobs's first company made plastic whistles that let you make free phone calls. Both failed, but it's hard to imagine they were too upset about it.” The Bay Area teemed with small groups, two or three people who had an idea for something. Even the most devoted band of brothers, or pals from the computer club room, would succumb to the tensions of working side by side for hours without end. Ilya thought it was
fortunate that they had not all ended up living together. Being able to tolerate partners took work.

Diaspora did not fall under the standard rubric for evaluating start-ups; it had no investors waiting for returns or for a big exit buyout. They were not subject to the discipline of venture capital, for good or ill. It was more than a year and a half since they'd heard Eben Moglen's speech and run away to join the circus. For nearly all that time, Max, by default and by aspiration, had been the person who took care of the business side—whatever it was or might be—in between coding with the others. Or, in Ilya's case, as he learned to code. In truth, Max had been stretched in a million directions. As he saw it, now he was being blamed for them not being a functioning business, for not telling them about things that they did not want to know about. Dan was ready to kill him, Max thought.

When the meeting ended, Max stalked out of the conference, over to the table space that Pivotal had given them. He slammed down some papers, put on his headphones. He was done speaking to people for the day.

Dan turned into the aisle and headed across the room to Sarah Mei's desk. “I'm sorry,” he said. “Don't give notice.”

They were not ready to move ahead with her hiring, for reasons that had nothing to do with her, he told her. They thought she was awesome. Sarah took the news calmly.

During the evening, Yosem noted in an e-mail to Dan and Ilya that Max had recently offered him 5 percent of the stock. “I didn't mention this in front of Max at today's meeting, however, because I assumed that Max had not discussed this with the board either,” Yosem wrote. “As I see all four of you as my friends, please decide my stock compensation based on what you think is fair given my contributions to Diaspora during the time I've been working with you. As you know, I've worked on Diaspora, not because I care about compensation, but rather because I believe in what we're doing and really enjoy working with you.”