“Even if your decision was good before, it's not just your decision. You have to bring everyone along with you.”
On a recent episode of Recode Decode, Quip CEO and Twitter board member Bret Taylor told Recode's Kara Swisher and Kurt Wagner that companies die when they’re afraid to fail.
You can read some of the highlights from their discussion at that link, or listen to it in the audio player above. Below, we’ve posted a lightly edited complete transcript of their conversation.
If you like this, be sure to subscribe to Recode Decode on iTunes, Google Play Music, TuneIn and Stitcher.
Transcript by Celia Fogel.
Kara Swisher: Today in the red chair is Bret Taylor, the CEO of Quip and a long-time serial entrepreneur. Quip was a corporate collaboration service that just a few weeks ago was bought by Salesforce for $750 million. That is a lot of money. He's also a board member at Twitter now and was formerly the CTO of Facebook. Bret, welcome to the show.
Bret Taylor: Thanks for having me.
KS: And here to interview Bret with me is Recode's Senior Social Media Editor Kurt Wagner. Hey, Kurt.
Kurt Wagner: Hello.
KS: How ya doing?
KW: I'm good.
KS: So we're going to talk about a lot of things — Kurt and I are going to pepper you with endless questions. Let's talk a little bit about you. We're going to talk about Quip and where it went, but talk a little bit about your background. You've been everywhere. You've done a lot of companies.
Do you want me to start from the beginning?
KS: Start from the beginning.
I graduated from Stanford and Marissa Meyer recruited me to Google as an associate product manager. So I was there for about five years. I started off on search and crawl — there weren't that many products there at the time at Google — and then eventually was asked to do local search which ended up segueing into Google Maps which I launched with Lars and Jens Rasmussen in 2005, which is definitely my proudest product achievement there.
Lars and Jens had a piece of Windows software called Expedition that we acquired the assets of and then when they got to Google we created this web mapping version of the product that became Google Maps. We also acquired Keyhole, which became Google Earth. And it was an awesome experience. I think when we launched it was like six of us. I don't think we anticipated the response. And then I stayed through mid 2007 and then started a relatively unsuccessful social network called FriendFeed.
KS: FriendFeed. Got a lot of attention.
I always joke it was like the Apple Newton of social networks [KS laughs] where the product itself didn't succeed but it did influence — we invented the "Like" button, the way we did commenting sort of made its way into a lot of other social networks. And sold that to Facebook in 2009.
KS: What happened that it didn't succeed? Because there were a bunch — there was Friendster, it was all friend oriented.
Yes, we're very friendly.
KS: Why didn't it succeed? It was similar to Facebook but not the same.
You know, actually I would say it's probably more similar to Twitter in the sense that it was a follower model and most of the profiles were public. And that leads to people following people they're interested in more than necessarily just following their friends. And it was very oriented around discussion, so commenting and liking.
KS: Sort of like Reddit, too.
Yeah, very similar. And you know, we were big in Turkey and Iran — the typical death of a social network.
KS: [laughs] Orchid, remember? I remember Google people saying, "You know we're big in Brazil." I'm like, "You're acting like that's a good thing. It's good for Brazil but not for you."
You know, looking back, everything's easy in hindsight. I think we ended up where we were sort of an awkward hybrid between what Facebook did and what Twitter did. If you were a public figure on FriendFeed people's comments would sort of be attached to your post. So you would almost feel like these random people were spewing stuff on your profile page. Which works in Facebook because it's your friends, there's social etiquette involved.
KS: So friends you know spewing.
Yeah, exactly. Politics aside. Whereas Twitter, you know even though I think it's somewhat flawed the way that replies work, it wasn't really on your profile. It was on their own. So we ended up creating a thing where I don't think we were opinionated enough about whether we were for friends or for followers. Despite that, though, I think the product was good in its own way.
KS: Does it make you think why does something stick? Is it luck or is it ...?
Consumer products are hard because there's the product quality but [also] time and place and marketing. It was interesting, when we lost to Twitter, which I think is fair to say we did, we like, in the sense I don't think we were really competing against Facebook directly, it was when Oprah and Ashton Kutcher and Obama sort of all in succession adopted the product.
KS: Twitter. Not FriendFeed.
Yeah, Twitter, not FriendFeed. And we realized we weren't really focused on marketing and outreach and all these things that being a bunch of geeks we were just hopelessly naive about. And so you know, you look back and was it the product, or was it that, or was it a combination?
KS: How much money did you raise?
We raised $5 million.
KS: Okay, not much.
Yeah, not much. We had most of it in the bank when we sold.
KW: Did you have any idea how big the feed would become? Because at this point News Feed didn't even really exist. It was just people writing on each other's walls, right?
Yeah, there were early versions of it. What we really wanted to do at the time was we wanted to sort of be the newsfeed for the internet where you could use a photo service like Flickr and your followers could see that you published it and kind of be that social layer on top of the rest of the web. I think there's a chicken and egg problem there, though, that we didn't quite crack. And that was a weird mix of metaphor. Did you get that?
KW: I was wondering if you did that on purpose.
But I think the vision was interesting, certainly as Facebook did things like open graph and things like that. A lot of the reason why I think Mark decided to buy the company was we really shared in that vision of what it means to make these products more social and can be that sort of social glue.
KS: Why did you decide to sell? What was the story behind that?
Fundamentally we just knew we had lost. There's not a silver medal in social networking. We're an enterprise software, you can build a healthy business and it's not necessarily winner takes all. Twitter was more popular but we were gaining on them. And then Obama and Oprah and all that. If you graphed us all together, our graph started to merge into the X axis [laughs].
KS: There used to be a lot of search products and then there was Google.
Yeah exactly. And so we did one redesign which was like the dead cat balance [KS laughs], so then we're like, "Okay, we're either going to pivot in Silicon Valley terms or sell." And we really cared about social networking; we wouldn't develop this product just for fun and we really felt passionate about it. And so we ended up talking to a bunch of different folks including Facebook. And Facebook's offer ended up being the most compelling. And also, you know I'll say it, I didn't know Mark well at the time but I really, in that process ... You know, it's funny, you walk out of the place like, "Yep, now I know why we lost to them. This place is really smart." And so I was just really impressed. Paul, who's one of my co-founders, really felt the same way and we decided it was the right thing to do for us.
KW: Who else were you guys talking to? Like who else were you shopping the company to?
KS: You can say now.
Yeah, yeah. We talked to everyone, just about. Twitter, Google, you know. We really ran a process because we were trying to solve a company so it wasn't like we were being cagey about it. We sort of sent the word out that we were shopping ourselves. And interestingly enough — and I didn't really appreciate this at the time, it was my first company — but the offers were all kind of different. You know, it's just sort of like the structure and who you work for, so with Google it wasn't just the money, we were like, "Do they actually get social? Will they actually want to do this?"
KS: No. I shall answer that for you. Even today.
We respected the people there, we knew them, but we really wanted to work on social networking, like we were passionate about it. So it was interesting that at first you sort of think you shop around, you get a bunch of price tags back, you pick the highest one. And I learned through that process that actually the relationships and the conversations turned out to be as meaningful as the financial part of those deals.
KS: Was it even close?
Yeah. I think we really respected Twitter as well. So I think because we wanted to work in social networking that was probably the one we seriously considered.
KS: Yeah. It's hard because when you do get in those things, you do. You walk out of them and I remember when we were doing funding for Recode walking out of a meeting going, "No. No no no." And it was a great place. If I said the name you'd be like, "Oh wow."
Yeah, no, it is really weird. Because fundamentally, you know, you're going to have golden handcuffs where you have a financial incentive to stay and you have your employees who generally aren't participating in the decision to sell the company and so you really want to do right by everybody and pick a place where people are going to be happy and their careers will thrive and you can be proud of. And so there's a lot of emotions and sort of more qualitative things you consider. And as I said, when it's your first company you don't really think about it and then you're in the process and you're sort of overwhelmed with these data points. And I'm really happy with what we decided. We were talking earlier and the relationships I ended up developing at Facebook have been some of the most meaningful of my career. And I wouldn't have anticipated that. It was just a really good outcome for us.
KW: You then became CTO of Facebook right? For like three years?
That's correct. Give or take.
KS: That's a big job.
KW: Yeah, it is a big job. What was the company like when you joined? How did the company transition from 2009 to 2012 when you were there? I'm sure there was a lot but what were some of the main take-aways that you can think about from your time there?
So one is we were scaling the company really rapidly. I had seen that at Google but not at that level of seniority. I was much more of an individual contributor at Google so you just sort of go along with the ride.
KS: There's a lot of those at Google.
Yeah, exactly. And at Facebook I was a participant in those discussions about how do we scale, who do we scale, how do we bring on leadership in this area, that area. There were a couple bigger events: The shift to mobile and the IPO were both meaningful and complicated and we made some missteps. I think those for me were the most intellectually interesting just because you learn how to make the mistakes at scale and correct them at scale. And I hadn't really done that at Google. You know, Google Maps — I'm really proud of but it was small. We were starting from scratch.
KS: Yeah, there's nobody watching.
Yeah. It's not like you're going public while the company is shifting to mobile and your monetization products haven't made the shift yet. And that kind of complexity was really new to me and really rewarding, to be honest.
KS: And the shift to mobile, how hard was that? That was a big decision at Facebook. And they didn't have the phone, there was a lot of, you know …
Definitely. We made lots of mistakes through that process. The most widely talked about was the commitment to HTML5 versus native apps. And it was interesting because I sort of don't regret any of the decisions we made. I sort of wish we had changed faster. But when we first were making mobile apps, there was a lot more platform diversity. BlackBerry was very popular, Android wasn't quite popular and it started out really fragmented. It never quite had any consolidation and iOS was popular but only in certain countries and not in many of the countries in which we had really strong growth initiatives. And so we ended up sort of saying, "Okay, there's going to be a lot of platform diversity. We want to pick a technology strategy that makes us and Facebook on equal footing on all these platforms."
Then quickly Android and iOS just won. And then it was, "Okay, our strategy is completely flawed, let's make the best of the experience for both of these." And you know, the thing you learn about a larger company is even if your decision was good before, it's not just changing a decision. You have to bring everyone along with you. You have all these engineers who are committed to one strategy and they were for different reasons. Like you might have been for business reasons, but they were for ideological reasons. Like it's the open web. And now you need to shift the strategy, the product. You need to retrain people. It's different programming languages. That was a thing that was very humbling for me. It's like, "Oh, I made a small mistake, now let me spend a year to unwind."
KS: Also you were all committed to that phone. We talked to Chamath about it. Like it was an effort to get in there, too.
Yeah, you know, it's hard to say. I think people sort of overstate the experiments at these places. I never viewed that as the strategy by any means because the context around Facebook and mobile is interesting where it is the most popular application for a lot of people. But it doesn't necessarily mean that you want it to be the centerpiece of the product, too. And so at the same time there were a lot of experiments in that area. I do think that the one thing I would say is you want to create a company culture where you're willing to take big bets and fail and that's okay. And I think that's one of the things Mark Zuckerberg, I think in the industry, is probably the best at. And where you're willing to do it, cut your losses, move on. And I think we as an industry over-fixate on the failures a little bit because ... it's interesting. It's like wow, this perfect person's flawed, they've made a bad decision, let's all talk about it. The thing is that companies die, though, because they stop doing that. So let's take a more recent example or less prominent example where they canceled the Paper product. But if you look at the News Feed interactions, in the main News Feed app, it's almost all from that product. So in one sense, the Paper product wasn't successful, but as a user interface R&D lab, it was immensely successful.
KS: Well, the Newton wasn't successful but the iPhone ... it's a bright line.
It is. I think a little bit when you're thinking with these larger companies is how to organizationally let people deal with failure. How do you distinguish between good intentions that just didn't work out, not a product market fit versus bad execution. And it's very hard to decipher at a larger company. There's a joke at Google where it's like, you make the worst product in the world but you have a link from the Google homepage, you're going to be successful but any objective measuring. How do you distinguish from the good products?
KS: Remember the News Reader?
Yeah, yeah.
KS: What’s it called? Google Reader?
And it is really challenging at a big firm to say, "Who are the good product managers? Who has good product sense?" Because it's just such an artificial environment. And when was a failure a good investment that just didn't turn out versus a just horrible strategy. And on the mobile side it was so important for the company to get mobile right. I almost don't regret any of the investments we made because it really shifted the whole company to be mobile oriented. At the end you cut the bad products out — and I think Facebook's mobile strategy is one of the strongest in the industry — could you have done that and threaded the needle and not made any mistakes to get there? I'm not sure that would have been possible.
KW: Is there a need or do you ever forsee Facebook trying to do an operating system type thing again? Like a Facebook Home but, you know, version 2.0 or something like that?
You know, Facebook and Google and others have just gotten so broad and ambitious I think the answer to almost any question is yes. It's probably going to be some group there that does those things. But you know, is it mobile, is it for virtual reality headsets? Or is it they needed an embedded operating system for drones? At some stage, when your market cap is big enough to actually expand your company, you need to look at bigger and bigger markets, which is why you get things like Alphabet, why you get virtual reality.
KS: Although I think we can agree that Facebook is not as crazy as Google. Correct?
I think that's true. Yeah. I would agree.
KS: By a factor of a lot. [BT laughs] Mark seems to have more sense.
KW: Focused, it feels.
KS: Seems not crazy, really.
The good thing is I think Mark's been ... you know, when he lays out his 10-year plan to the world, I think that's one of his strongest characteristics as a leader.
KS: He's tight. Toight. Toight. From "Austin Powers." Toight.
[laughs] But I think it's great because as a company you kind of know where you're going and where these products fit. I think that's a really stabilizing force at a company because the hardest part for me at Google that's gotten much better, but at the end they had all these projects that sort of existed but no one knew if they were going to launch or not launch and you ended up with this deep anxiety if you made something about where it lived — would you be canceled tomorrow? — and that's changed a lot. But that was definitely a negative part of the end of my experience at Google.
KS: Yeah, it's sort of the island of misfit toys. Alright, talk a little bit about Quip.
Yeah, so at Quip we were trying —
KS: So you left Facebook.
We left Facebook.
KS: That's hard. Why? You leave companies, which is really interesting.
Yeah. In part because I wanted to work with Kevin Gibbs, my co-founder. So we met at the tail end of my career. I had done the Google Maps API which is how services like Yelp embed Google Maps inside of their products. And Kevin Gibbs was starting App Engine, or what came to be known as App Engine. And they didn't know what product team to align him with because there's not many developer products at Google at the time. So they just said, "Go work with Bret. He does the Maps API, that's the closest thing we have." I ended up leaving before App Engine launched but we developed a pretty close relationship and in the back of my mind I knew I always wanted to work with him. Facebook had gone public and he was about to go on paternity leave and said, "I'm definitely leaving Google and I want to start a company with you." And I got the impression if I didn't he was going to do it anyway. He's a really special guy and I really get along with him. So I ended up making the decision because Facebook had gone through this big transition to IPO and it felt like it wouldn't be too disruptive to my colleagues and I didn't want to give up the opportunity to work with Kevin, basically.
KS: So talk about Quip. What you were doing there.
We're essentially trying to create the next-generation productivity tool. Essentially sort of the successor to Microsoft Office. The core thing that we try to do differently is build communication deeply into the product experience. So you don't need to go into email or go into chat to actually talk about what you're working on. So every document has an embedded chat thread and you can chat in and around the document. And our customers essentially use it to sort of move away from email and collaborate. So we have documents, spreadsheets, chat and checklists. And people use it essentially as a collaboration tool. We launched about three years ago, almost exactly three years ago, and as you mentioned just sold to Salesforce this month.
KS: So we'll get into why you sold because there've been a lot of sales lately. But there's a lot of productivity tools, part of that is Slack, part of that is other things. What were you trying to differentiate? Some ex-Facebook people, they had Sauna. There's a bunch of them.
There are a bunch of them. I think to answer a question you didn't really ask, there's a lot of them right now because the sort of legacy productivity suite is becoming a little bit more antiquated. Very few people write a memo in Microsoft Word and email it to someone. They just write an email. Because I think the value of communication is more important than the features of a personal productivity tool. Like you'd rather give up fonts and footnotes to have the recipient be able to click reply and respond to what you wrote. So our premise was that rather than design around the authoring experience, design around communication exclusively.
KS: You don't want 900 fonts?
Our document tool has an inbox and it has notifications. It has all of these things you'd find in social networks or communication products. And it is really different in practice because of that. People don't attach a Quip document to something else. They just do it inside of Quip. And it is really different for our customers. They really do reduce email, reduce meetings, things like that. I think what's going on though is we're definitely in this period of productivity where there's just a thousand flowers blooming and people are trying to say like, "What does the next productivity experience look like?" And certainly we're trying to prove it's us but we haven't yet. But I do think you're seeing that the confluence of Microsoft's waning importance in this and the experience of Office waning in sort of …
KS: Waning is a kind word.
[laughs] Yeah.
KS: That's troublesome.
Well, everyone still has Office on their computer. It's not like it's gone. It's just that, it's not the first thing that you open as much anymore. You use email on your phone. You're chatting. So I think people see it as an opportunity. A lot of people see an opportunity to say, "Okay, what does the next-generation experience look like?" And it's fun as a product developer because I'm not saying we're perfect or right in every way but you just start from carte blanche and say, "Okay, given the way modern teams work, what's the tool that would fit that way of working?" And companies like Slack and Sauna and Quip are all trying to take on this at different angles. And my guess is, in some number of years you'll start to see some consolidation as one proves to be the winning pattern. But it's a really fun time right now because I think there's just so much experimentation and innovation right now.
KW: That was actually what I was just going to ask you. Because when you look around it's a little overwhelming. I kind of think of it as similar to the messaging, right? There's like 50 different ways that I could send someone a text-like message. Do you think you guys are going to be the first domino to fall? Are we going to see a bunch of other kind of productivity companies get scooped up by bigger players in the near future? Was there a lot of appetite for when you guys got acquired, were you seeing a lot of appetite out there from the bigger guys?
It's hard to know whether you'll see consolidation in our space specifically. I think in the tech industry broadly right now there's consolidation.
KS: Absolutely.
And I think it's just because there's a handful of tech companies with much healthier businesses than others. And so I think that's why you saw LinkedIn get sold. And I do think that there's a handful of technology companies that are just in a much more leveraged position and that's going to put them in a position where they can expand into new markets and get companies where they can afford companies they used to not be able to afford. And so I think you'll see consolidation across the industry. Productivity's interesting. I think we are in a period of rapid experimentation so it really depends on the strategy of the company. In this case, Salesforce really felt like they wanted to move into this space. But it was unique to individual companies.
KS: They've been picking up these things. Why do you think these companies don’t do it themselves? Why can't the Microsofts, the Salesforces, the Googles — Google's been putzing around in the document space but didn't create Slack. Neither did Microsoft or Quip or anything else. What happens? Does it have to happen outside with these smaller companies that they then acquire?
That's a really good question. It's really hard to create new businesses at existing companies. One of the ways to think about it is if your market cap is $200 billion or something, to create a new business and decide to invest in it is hard because at every stage of its life cycle, it's inconsequential to the business. So to create a culture where you actually identify those things, when they're inconsequential but you want to see them grow, is really challenging. And you tend to see these things, you know, when we launched Quip it sort of, you know, we didn't have any customers. We had to work and iterate and find the few threads that were popular among our customers and invest in them. And I don't know that many large companies have the patience to do things like that. So using the market broadly as an R&D lab where you validate new markets and find product market fit, tends to be easier even though it's probably less cost effective. It's just really hard to do that. It's interesting, we were talking earlier about you hear these people have some friends at these larger firms who are like, "Oh I'm not going to do a startup, I'm going to do a startup within Google or startup within Facebook."
KS: I always go, "Mhmm..."
Yeah, it never really works because you just don't have the same incentives. You don't have the same risk and reward, but you don't also have the same patience. A year into something, if it doesn't have 100 million users or 100 million revenue or whatever it is, you're going to get canceled. And almost no product in history has grown that quickly, Pokémon Go aside. And I think that's why it's —
KS: That was outside of Google, though.
Yeah, it was.
KW: Is it weird, by the way, to see your mapping technology being used in that way?
Well actually, John Hanke was the CEO of Keyhole, which we acquired, so I know him really well. It's so great.
KS: It was Field Trip before.
I think every entrepreneur loves to see these things take off. Everyone in the Valley's rooting for that company. It's so cool to see that kind of success after — I mean, they were a really patient team. They went through a lot of iterations.
KS: Remember I went to the Field Trip debut? I was like, "This is dull, John. I'd love to know about Susan B. Anthony but not that much." Or whatever he was doing.
[laughs] So just talking about passion on a team and commitment to an idea, it's just such an awesome story.
KS: Yeah it is, absolutely. So, in starting up, your goal was not to sell it, correct? I want to talk a little bit about the sale thing. You're seeing sales — I have a piece that I still haven't written where my lead is if Jeff Weiner was a Russian female gymnast, she'd have gotten a 10 on the dismount, you know what I mean? [BT laughs] But there's like a lot of "the jig is up." Is it that the jig is up or we can't get any further? I know Silicon Valley people like to put up a "victory is mine" — like Travis in China, "I won because I didn't win" — you know, that kind of thing.
No, it is complicated, you're absolutely right. I think every entrepreneur is lying to you. They want to create the next Google, the next Microsoft. The interesting thing is, there's two types of acquisitions for those listeners who are not familiar. There's talent acquisitions and strategic acquisitions. Talent acquisitions tend to be in the kind of like $1 million to $50 million range and you're acquiring a team of people. You're going to dissolve the product and put those people on other projects. You tend to do it for the team. You just want their point of view in your product. And then there's strategic acquisitions where you actually want the product, the technology, those tend to be higher values and also structured differently as well The strategic acquisitions are interesting because you essentially are evaluating the independent path and all the pain and struggle you'll go through, but the value of the independence, the ego, or all those things, versus …
KS: No boss.
[laughs] Yeah exactly. So for Quip we do care a lot about the space. We do think that we have a new way of working that's better. And to have the platform of one of the largest direct sales forces in the world to be able to spread that to more companies is worth the trade-off of losing some of that independence. As I mentioned earlier, the FriendFeed acquisition, a lot of it is personal, too. Like I really got along with Marc [Benioff] and I think he's a really wonderful human being and it's not a huge tax for me to work for him. I'm looking forward to it. And I think all those things add up.
KS: You can also ignore 73 percent of the things he says. He doesn't mind. But when you get to 74, don't.
[laughs] When it came down to it, you're sort of weighing all those qualitative things, but it's not like a black-and-white decision. You sit there and Kevin and I were just sort of, you know, a lot of navel gazing, and you're just like, "Oh my gosh, is this the right thing to do?"
KS: Had you gotten acquisition offers? Or did you say, "Uh oh, we better sell." Because with FriendFeed you were like, "Uh oh, we better sell."
We hadn't even started spending the money raised in our series B.
KS: Which was how much?
$30 million in our series B.
KS: Total?
No, $45 million total. And so we hadn't even started spending our money from our series B so we weren't necessarily in the position, definitely not necessarily, we were definitely not in the position to —
KS: There's a pressure.
We really felt like we wanted to grow faster and this was a really great way to do it. We felt really aligned with the team at Salesforce. And so you know, you're weighing two completely different things. You're right, in the grand scheme of things creating the next Google is awesome, but you also have to weigh reality into it and this is a way that our product can thrive and grow faster. We were more excited about that than the cost.
KW: We were talking about this right before we sat down. This trend where companies acquire someone and then they just try to be hands off, right? So you guys are going to continue to operate independently, essentially. How's that going to work, number one? And then number two, has this been happening more often, where a company will acquire like a WhatsApp, or Instagram, and just say, "We're going to let you keep doing your thing but under our umbrella."
Yeah, that's a really good question. We are going to be independent, like we're in our own office. I work directly for Marc. So they do want Quip to exist, which is great. The structure's interesting. The interesting thing is I don't want Quip to be completely independent because then we're just in the same position we were the day before the acquisition.
KS: Yeah, you want their help.
Yeah, and so the interesting thing is where you decide to integrate and how you decide to integrate. I think the best acquisitions are where they chose those membranes really thoughtfully. So I think with Instagram, the way they've done account integration, the way your friend list makes its way into Instagram, like really thoughtful things that I think have probably accelerated Instagram's growth, but the product experience and the culture of the product really feels unique and separate. That's sort of the process we'll have to go through once this closes is just figuring out, "Okay, what is Quip and where do we want to actually leverage this amazing organization that we're now a part of." The interesting thing is, I do think that YouTube, Instagram, like some of the most notable successes have changed people's perceptions of how to do acquisitions and integrations and I think it is really great that those exist.
KS: They're far fewer though, they are. There's also a weasel, that's what I always say.
Well, there's always bad ones as well.
KS: Yeah. Well there's always a couple of weasels at companies that create that problem.
Yeah totally. And you know, the good thing is because I've been on the other end of this too. I feel like both, we and they are going at this with a lot of maturity and transparent communication, so I feel very optimistic about it.
KS: What's your hope? That they will further accelerate the growth? That's it?
Yeah. At a very high level I just think that our products are really complementary and so they view this as a way of they can provide more value to their customers and for us it means that we get this platform to grow faster.
KS: But you don't want to be like — I don't mean to pick on Microsoft, but Skype and Yammer? Or where the hell did they ... I know they say they grow but the potential of those things were so much larger.
It is. It’s so complicated because it's sort of like you could do a really long analysis of why Yammer is different than Instagram and there's a lot of reasons. And so it's sort of like, I'm sort of trying to hold myself accountable to make myself successful. And that's on me. I went into this because I believe we can. But it is complicated.
KS: What would be your flash point? Like, no no no no. When you're in this, as someone who's acquired, not someone who's doing the acquiring.
What do you mean by flash point?
KS: What would they do that you go, "No I don't ..." What's the things that are really important to you to this working?
One of the things I feel really proud of at Quip is the team that we've built. We've recruited really well. We've a very small but very productive team. And keeping the culture and how we grow our team is very very important to me. I think everyone pretty much says this but it's true. Like the way you make your product is actually very important in how it manifests itself to the world and it's unique at every company. I think our culture's really strong and it's something that I really want to maintain.
KS: Are you going in the Salesforce tower? I hear it's sinking.
We're in our separate office for now. It's probably way nicer than our office, though. [laughs]
KS: Yeah, you don't want to go in there.
KW: One of my big questions is, I was looking at your list of customers. Facebook, Instagram, and I know that Facebook has it's own Facebook at Work thing that it's also kind of building. Is that awkward? Are you a competitor with them? What do they use you guys for versus what are they doing on their own?
As far as I know, Facebook uses Quip for everything. And in terms of documents. Facebook at Work they use for groups and messaging. That's at least my perception. And so we view it as very complementary. When you sell into these larger companies, you always end up overlapping with a lot of their existing tools. And so I really don't even worry about it. What we look at is daily active and weekly active users and we look at that as a ratio to a number of employees as that's our main health metric for all our customers. What percentage of the employee base uses this every week? That's our main health metric and it's very healthy at Facebook.
KS: And finally in this section, talk about the selling again. Like you talked about when you sold the first company. What was this one like? This is an enormous figure for your company.
I'm not sure how much I can say because it hasn't closed yet so I apologize for being a little cagey about it. But at the end of the day I think largely this was about Marc and my personal relationship and talking about our vision for the future. And so it was a much more personal process.
KS: Did they approach you? I know he's been on the hunt.
Unfortunately I'm going to have to be cagey, I apologize.
KS: Okay.
KW: How about this: How did you celebrate? Can you celebrate a $750 million sale in a cool way?
We brought a keg into the office. So it was, you know ...
KS: Bret's not the exciting entrepreneur who has the party dressed as King Henry VIII.
No no, we have a pretty frugal company and I care a lot about that stuff.
KS: He's wearing a gingham shirt, Kurt.
KW: I'm sure it was nice beer. It was craft brewed, as they say.
Yeah. I think we had two kegs, so …
KS: Wow. Crazy, crazy. Let’s talk about another thing you've done in the news, which is the board of Twitter.
Yeah.
KS: Why?
Honestly, a hundred percent of it was because I love the product.
KS: Because you were a competitor against them.
We were. I mean, my social network FriendFeed lost to Twitter and I really believe in the service, which I kind of feel like the follower graph leads to this real-time news-oriented service that I think is really important for the world. And they approached me and I was worried mainly about time commitments — I've got three small children and a startup. And I'm very sensitive about taking on commitments.
KS: Obviously a nice wife. But go ahead.
[laughs] And it was interesting because everyone's sort of aware of the problems they have. But the thing that's so unusual about Twitter is it's so important in the world. Like in this election, in the Olympics. A lot of people read about things that happen on Twitter. But they're not personally creating accounts and engaging in the service. And I really felt like there's an opportunity to close that gap. I spend a lot of time with Omid and Jack and I felt optimistic about working on that. And I knew that there was going to be a lot of business complexity in the business for obvious reasons that everyone's been writing about but I just care so much about the service that I chose to do it.
KS: It more than a business. I was with Mike McCue who was an ex-board member and they were competitive and that's why he came off the board. He has Flipboard, and he was talking about that he really thinks that the problem is Twitter is more of a phenomenon than a company. Which I thought was [interesting]. I'm going to use it in the piece that I'm writing. But it's a really smart way to think about it. It's really a phenomenon, obviously journalists are super interested in it. It's a pretty small company for us to be obsessively writing over it, but we do, because we like it. It does have a phenomenon feel to it as you were saying with the Olympics. Donald Trump is the best Twitterer ever right now if you really think about it.
You could call it a phenomenon but it's interesting because they are news articles about things that happen on Twitter. Like it's importance.
KS: That's because journalists lack creativity, but go ahead.
That's perhaps true, but there are also these interactions that only happen there. It gives you the ability to participate in these real-time significant events and actually sort of feel like you're a part of it, and participating in it, in a way that's very unique. I think all of us who use Twitter a lot really do feel that. And I think the opportunity is that gap. It's like, can we actually produce an experience where more people want to create an account and experience that for themselves? And articulate that value that I feel in the service in a more broad and mainstream way? The whole "it's a feature not a company, it's a this not a company," I also find those very reductive. There's a lot of nuance to it but I just feel like there's a lot of really meaningful stuff that is only on Twitter. And I think most people in the world would benefit from experiencing that but the company is struggling to provide that value proposition to enough people.
KS: Why?
You know, I don't know exactly why. I just joined the board, I only know stuff from afar. But I do think the company's gone through a lot of management transition, it's gone through a lot of product leadership. I think the company hasn't had a lot of stability and it's hard to know what's cause and what's effect, but I do think there's been some execution problems. I really believe in Jack's ability to turn it around, to kind of focus on more and execute faster, frankly.
KW: What's your role going to be on the board? You see yourself as like a product adviser? Or?
Certainly they didn't bring me on for my financial expertise, so... [laughter]. Yeah, it was actually the main question I had when they approached me. It was like, "Why do you want a product person on your board?" Because I've generally felt like the board is the wrong level to have product discussions. And I think they just felt they had a lot of traditional representation on the board for things like …
KS: Media.
Yeah, media, finance, things like that. And they just wanted to have a board where the user and the product were represented more directly. So that was sort of my expectation going in.
KW: When you first joined, this is before the Quip sale had been announced, there were a lot of people who thought you might then go run product at Twitter. It sounds like, though, you're pretty squarely seated at Salesforce.
KS: FriendFeed reemerges!
Yeah, no, I'm set at Quip.
KS: But in the idea of this execution, you had seen the errors you'd made at FriendFeed.
Yeah.
KS: Or not the errors, it just didn't work. One of the things that's interesting about Twitter is how many execution problems, how many management mishaps, can happen to one company, with so much promise. I think everyone agrees the promise is there. People are worried about the product, whether the product is iterated enough. I think that's always something they talk about in Silicon Valley, it should succeed.
Yeah, it's true. I mean the best part about Twitter is how much the community who uses it really loves that product. But it also makes it hard to make changes. You know, I think a few months ago they announced we're going to rank timeline and there's this big uproar. And the thing that I think, the reason why I feel optimistic about the company is because Jack is in charge and I think Jack has the credibility to change that product in a way an external manager wouldn't. And you know the community trusts him and he obviously gets what makes Twitter special. So a little bit is I do think they've had trouble with execution and I do feel like bringing on the founder is one of the few ways you can actually start to make changes with a product that's had execution problems in the past. I don't know if I would have joined the board had Jack not been there.
KS: Of course, that's fraught too because of the double CEO shit.
Yeah.
KS: I'll just tell you, recently I've gotten called by a lot of financial people and you know who they are. Every one of them a shark. Who are all thinking of attacking on that thing again, like having the same thing. The noise around it is just extraordinary. And some of it is deserved, some of it not deserved.
It's challenging to be a public company and have issues in your company and have to make change. And we've seen this with Yahoo, we've seen this at all these other companies and even LinkedIn and others. So it's really hard to have that scrutiny. You not only have the complexity of employee morale and employee retention and the product issues, and on top of that you have the scrutiny of investors. But that's why I joined the board. I want to help. I really just care about the place.
KS: So you just run into a building on fire [laughs].
It's interesting, it's true. And there was a lot of commentary from my friends and colleagues about this, but I just love Twitter. I mean I really do. I don't know. It's like I worked on a very similar product, I want it to exist, I want it to be healthy, and if I can in any way contribute to that I want to do it. And it's a little bit hopelessly naive but that's the way I think about the world and I really care about the product, so …
KW: Yeah, you Tweet a lot, which separates you from some of your board members.
Yeah, I love the service. It's interesting. I largely Tweet about tech and Stanford football, people get annoyed on the weekends.
KS: I do Trump Trump Trump, so …
Yeah, there you go.
KS: People are like, "You're outside your zone!" I'm like, "I'm not outside my zone, it's my zone."
I've connected with so many people I wouldn't have on there and I'm engaging with people I wouldn't have engaged with and I just derive so much value from it. I can't imagine watching a live event and not having Twitter open. Whenever the internet's bad at Stanford stadium, I'm like, I can't fully experience [the game]. And I believe that that experience is a mainstream experience and the company just hasn't to date made it a great experience for enough people. But I believe it can be and that's why I joined.
KS: I want to do one more thing with Twitter and then finish up with talking about Silicon Valley in general. The recent controversy which I think — I just had lunch with the CEO of Reddit — the cesspool nature of it. And how Twitter's talked about how it's not a technology problem, it's a technology problem too. Is that an important thing as a board in general to think about this? Because it really is something that can bring companies down.
Oh absolutely. Abuse is a very important issue. And I agree with you, it needs to be fixed and should be fixed.
KW: Did you deal with it at FriendFeed?
Oh yes. Every social service does.
KS: Except Facebook where you just get inundated with squirrel videos or cat videos, which is just as abusive. No, not just as abusive.
The interesting thing is, I'll speak more to Facebook because it's a little bit simpler for me to talk about since I'm not on the board of it. The interesting thing is you have a lot of tools at your disposal. You have technology, you also have social mechanisms. So how did you deal with bullying?
KS: Right. They did.
And you can do it, and instead of just technological things you can report to the teacher, and so I think that you just need to have a team work on it. You need to use every tool at your disposal, both the social things and the technological things. But you have to take it really seriously and get in front of it. And I think it's a very important issue.
KS: Why is it that it's so vexing to these companies? All of them? Because the two things, they're like, "We're the smartest people in the world, oh we can't do anything about diversity and also abuse." And you're sort of like, "I thought you were super smart at math?" Or, "I thought you were super fantastic." Is it a priority thing? I mean, be honest with yourself.
The companies where I've seen it fail, I'll just take again products that I'm not on the board of, it's like you like at things like Reddit and others, it does run up against some concepts that might be culturally important to the company, like free speech. Which comments do we suppress and why? And to define a framework by which you deal with abuse that doesn't run up against what were very real values of the company when it started is really challenging. So you end up probably not taking assertive-enough steps because you start to run up against some of those deeply held beliefs that were probably the reason the product became successful in the first place, and I saw a lot of the discussion around Reddit that were, you know, on one hand you can be like, "That's totally simplistic, you can block this totally racist stuff." On the other hand you can see why internally there's strife.
KS: Yeah, it's a slow process. When Steve was talking about it he goes, "Sometimes I want to let it bloom and sometimes it's like, no that's enough."
I don't think anyone has bad intentions. I do think, though, the media should hold people accountable. Like there's no excuse why there's diversity issues in Silicon Valley and they haven't found a way to solve it but it's wrong. You're right, it's just wrong.
KS: Is it because you all, and I'm not saying you're the white guy here in the room, but you are. But you don't get abused as much, you're not subject to some of the things so it's hard to believe when people complain about it.
On the abuse issue or diversity? You're talking about both?
KS: Yeah. I think they're so linked.
Oh, that's interesting. I wouldn't have said it; I need to think about that more. On the diversity issue, a lot of these things are sort of self-fulfilling. If you don't source aggressively enough early in your company's life cycle and you end up with a team that is not diverse, it's harder to fix that issue later because you don't want to be the only person from your minority social group at a company. Because you're then, you encountered all the problems that everyone who's in a less represented group understands. And so really you have to be assertive from day one and if you're not, turning that around is even harder. You have to work way harder on sourcing, you have to work way harder on fixing the cultural issues that manifested themselves because you weren't diverse. And I just think companies aren't trying hard enough. And I agree with the criticism.
KS: I think they just feel it's not their fault and they're trying, and that's not good enough.
Trying is not good enough. It's like you wouldn't have an earnings call and say, "We tried really hard, but the earnings just didn't come through."
KS: That's Yahoo. You see what happened there?
[laughs] So I think the criticism is completely correct on this issue and it is harder because it is a self-fulfilling prophecy. You do have to find the right candidates, it's harder to find qualified candidates, but you have to try harder in that part of the pipeline if you actually want to achieve the end goal that you have to have your employee base represent the population. And I don't think we as an industry have actually treated it with like that level of accountability and we should.
KS: Right. I mean it's fascinating that Peter Thiel can spend all his money ruining a group of people that he considers mean and there's so much meanness everywhere. Why doesn't he take his ridiculous billions and try to stop that? Like that's what's important because his friends got yelled at? Like he didn't like that abuse.
It's also easier to say in some ways, "I'm going to give a lot of money for a scholarship." It's hard to actually source and hire lots of employees. I think that's where the gap has been. There's been all the soft ...
KS: Well his wasn’t soft.
Yeah. I think the issue is talked about a lot, that's great, step one. But I think the execution is lacking and I think it's absolutely good that people are holding companies more accountable.
KW: I have one more Twitter-related question before we jump to Silicon Valley stuff. As a diehard user of the product, what feature are you just excited for? You have Jack's ear so you're at an advantage.
Yeah, that's a good question. Every feature that Twitter's added that lets me put more stuff in my Tweet, cards, photos, I love it. And I want Tweets to be more expressive and I'm excited, I don't know all the stuff that they're developing there but I feel like 140 characters is just the beginning and I love that my timeline has —
KS: Yeah, look at what's going on in China and everywhere.
Yeah. Every time I see a video or a quote or a this or a that and all the stuff people are stuffing into screen shots, I feel like there's so much opportunity there. It's like such a rich experience now that I hope that we —
KS: Well look at Snapchat, right? Save for their idiotic filters, some of them. Let's finish up by talking very briefly about Silicon Valley. Where do you think it is now? There is this selling cycle going on, where on we in the innovation cycle? Everyone always agonizes over that. As a longtime entrepreneur, you sold a company, do you want to start another one? Do you feel we're in a slower period of innovation?
For me personally, I'm committed to Salesforce right now and committed for the long term. But the broader question about where Silicon Valley is —
KS: Because you're an investor, too.
A little bit. I don't do a lot of it. I don’t have the time, honestly. But I do think that early-stage investing, I'm not sure it's going to dip too much. I think we've created a really healthy ecosystem. I think things like Y Combinator were some of the best things to happen to the Valley where we now don't just have series A investments where you have to know someone to know somebody. You have these broader programs where it's a much more inclusive sort of early-stage investment environment than I when I came out of college, and that's really great. I'm not going to say it's self-fulfilling, these things all go through cycles, but it's small enough amounts of money that I think even if the entire late-stage market collapses, I think there's going to be a lot of early-stage investment. I think the thing that I've really been interested in reading is Bill Gurley's comments on when to go public and late-stage investment and the investment structures that these late-stage investors have. I feel like that's a thing that has been changing over the past year.
KS: Nobody wants to go public.
I do think people have been waiting too long to go public and I think it creates weird [times]. One of the things you only know if you're in the Valley but is true, when you leave a company you have to pay to exercise your options or you lose them. But that was sort of started within 90 days or something like that, usually. Some companies have started to choose different structures, but that's the norm. That was started on the premise that a company would have liquidity within your existence at the company. Now you can work at a company for seven years and leave and you have to —
KS: We wrote about it with 1 King's Lane. Everyone got shafted.
And so I do think that like a lot of the structures of private companies were based on the premise that you'd end up having liquidity within some reasonable period of time and not that that's changing, I feel like both employee incentives are different, you still have like heavy stock, low cash. Like how long can you endure in the Bay Area with not getting paid in a lot of cash. And similarly I think that there's a lot of advantages to being public, too. Look at all the acquisitions you can do. I feel like that is going to shift.
KS: So it's going to be cool again?
I believe so, and I think people like Bill Gurley who I really respect are articulating in a more intellectually rigorous way than I am.
KS: He's just trying to prod Travis into going public, I think.
[laughs] Perhaps that's it. Maybe he'll stop after that. But I also think there is some consolidation going on. I think the strength of the Big 4 — Big 5, depending on how you count it — is growing. And I think you're going to see a lot of consolidation as well.
KW: I'm curious if you've noticed — and since you don't invest a ton right now, maybe not — but I'm curious if you've noticed if Silicon Valley has indeed been bleeding into other areas. I know we've talked about this a lot, with Silicon Beach down in LA or whatever. I'm curious, do you feel like it truly is starting to become a [thing], there are other tech hubs out there that are viable for this kind of stuff? Or not really?
I'm going to give my instinctive answer because I don't invest enough to actually have stats on this, but you see great LA companies like Snapchat, and that's great. Great Seattle companies, New York companies. For all of the growth in those areas, Silicon Valley has grown faster. And there's a unique thing here where I did FriendFeed, by many metrics I was just a failed company, right? But in Silicon Valley it was a great success, it was a good financial outcome, the product was influential, people respect it. People are like, "I loved FriendFeed! I loved what you guys did!" I don't know if that culture of celebrating failure, the availability of capital, the availability of talent, it is a very unique place and there's so many variables, it's not one thing, it's not just like there's capital to be invested. It's how it's invested. For example, I know friends in Canada and the investment terms they get are just so much worse, whereas here the investors say, "Well, this probably won't be the first company this person starts, so I want to maintain my relationship." And the terms are friendlier, the availability is higher. So I think Silicon Valley is very unique.
KS: Yeah, there's a suspension of disbelief here.
Yeah, it is.
KS: For good and bad.
You'll hear a lot of people talk about what's bad about it. I do think the things that are great about it far outweigh it and it's why it's sort of self-fulfilling.
KS: Alright, last question I ask everyone, entrepreneurs, and you're a longtime one. What's the biggest mistake you've made that you've learned something from? Entrepreneurs are listening to you, Bret.
So when I started FriendFeed — I'm an engineer so I'm the typical engineer, antisocial, I'll say.
KS: Act