Delivering Happiness

Start-Up
As it turned out, the adventure we were waiting for to happen to us didn’t
end up happening on its own. We ended up sitting around in our apartment,
occasionally doing some Web design work, and going out every once in a
while to try to drum up some more sales.
By the end of the first week, it dawned on me that neither of us was
actually passionate about doing Web design work. We loved the idea of
owning and running our own business, but the reality ended up being a lot
less fun than the fantasy.
My parents were not exactly thrilled that I’d quit my job at Oracle
without a real plan for what to do next. When I told my dad that Sanjay and
I were planning on running a Web design business, he told me that it didn’t
really sound like that could ever become a big-enough business to be
meaningful. And now, one week into it, both Sanjay and I were starting to
wonder if we’d made the right decision to leave Oracle.
The next few weeks were tough and somewhat depressing. We started to
spend most of our time just surfing the Web to combat the boredom and to
keep ourselves entertained. Watching Sanjay go into the coat closet to nap
there in the middle of the day was only sort of funny the first time. We were
starting to get a bit stir-crazy.
Luckily, we both had enough savings from the jobs we had in college
that we didn’t need to worry about whether we would be able to pay the
rent for the rest of the year. We didn’t know what we wanted to do, but we
had learned what we didn’t want to do. We didn’t want to work for Oracle.
We didn’t want to do any more Web design work. We didn’t want to make
any more sales calls. And we didn’t want to be bored out of our minds.
So we spent our days and nights trying to figure out the next great
Internet business idea, but we really couldn’t come up with anything that

---

sounded good. One weekend, out of sheer boredom, we decided to do some
computer programming to test out an idea for something we initially called
the Internet Link Exchange (ILE), which we eventually renamed to just
LinkExchange.
The idea behind LinkExchange was pretty simple. If you ran a Web site,
then you could sign up for our service for free. Upon signing up, you would
insert some special code into your Web pages, which would cause banner
ads to start showing up on your Web site automatically.
Every time a visitor came to your Web site and saw one of the banner
ads, you would earn half a credit. So, if you had a thousand visitors come to
your Web site every day, you would end up earning five hundred credits per
day. With those five hundred credits, your Web site would be advertised
five hundred times across the LinkExchange network for free, so this was a
great way for Web sites that didn’t have advertising budgets to gain
additional exposure for free. The extra five hundred advertising impressions
left over would be for us to keep. The idea was that we would grow the
LinkExchange network over time and eventually have enough advertising
inventory to hopefully sell to large corporations.
Sanjay and I finished all of the computer programming for our
experiment over a weekend, and then we sent e-mails to fifty of our favorite
small Web sites that we had found while surfing, asking them if they’d like
to help test out our new service.
To our surprise, more than half the Web sites we e-mailed signed up to
help us test out the service within twenty-four hours. As people visited their
Web sites and saw the banner ads, word started to spread about
LinkExchange. Within a week, we knew that our project that was initially
meant to fight boredom had the potential to turn into something big. We
decided that we should focus all of our energy on making LinkExchange a
successful business.
The next five months were a bit of a whirlwind. Every day, more and
more Web sites were signing up for our service. We weren’t really worried
about trying to make money yet. We were just focused on growing the size
of the LinkExchange network. We were excited to be creating something
that was growing quickly and that other people really seemed to appreciate
using.

---

Sanjay and I were working around the clock, spending half our time
doing computer programming and the other half answering customer
service e-mails. We were religious about trying to answer every e-mail that
came in as quickly as possible. Usually we were able to answer them within
ten minutes, and people were amazed at our responsiveness.
We got to the point where we couldn’t keep up with doing all the e-mail
ourselves, so a friend who was visiting from out of town decided to help out
and ended up never leaving. It was an exciting, fun, magical, and surreal
time for all of us. We knew we were on to something big, we just had no
idea how it would turn out. All the days started blurring together. We
literally had no idea what day of the week it was.
One day in August 1996, we received a phone call from a guy named
Lenny. He was calling from New York and he said he wanted to buy
advertising on our network and also explore the possibility of us selling the
company to him. Sanjay and I agreed to meet him later that week in San
Francisco for dinner.
We met at Tony Roma’s, a restaurant chain that specialized in all sorts of
ribs. Lenny introduced himself as Bigfoot, which was apparently both the
name of his company as well as his nickname. He ordered a Kahlúa drink,
so I got the same thing. Sanjay, however, avoided the Kahlúa. He and
Kahlúa had not been on good terms ever since that night that our college
roommates forever refer to as “Kahlúa night,” when a few too many Kahlúa
drinks were consumed (and later vomited back out into the toilet that we all
shared as roommates).
Lenny told us he wanted to make us an offer: $1 million in cash and
stock for us to sell LinkExchange to Bigfoot. As part of the deal, Lenny
wanted us to move to New York to work for Bigfoot. Sanjay and I looked at
each other, both of us in shock. LinkExchange was only five months old,
and we now had the opportunity to sell it for $1 million. This could be a
life-changing opportunity for us. We told Lenny we wanted a few days to
think about it, but the only word that I could think of in my head was Wow.
S
anjay and I spent the next twenty-four hours talking about what we
should do. We really believed that LinkExchange had the potential to be so
much bigger, but it was also hard to turn down so much money. So we

---

decided to tell Lenny that we would sell the company for $2 million cash.
This way, Sanjay and I would be able to walk away with $1 million each
after only five months of work. I had read somewhere that you’re in your
best negotiating position if you don’t care what the outcome is and you’re
not afraid to walk away. At $2 million, I would be happy whether the deal
happened or not.
As it turned out, Lenny didn’t think we were worth $2 million (and I
don’t think he actually had $2 million either), so we agreed to go our
separate ways but continue to keep in touch.
“LinkExchange is a once-in-a-lifetime opportunity,” Lenny said. “I’ve
made a lot of money in my lifetime, but I’ve also lost a lot of money when I
decided to bet the farm instead of taking money off the table. I wish you the
best of luck.”
Sanjay and I were more motivated than ever to make sure that
LinkExchange would be successful. We had to prove Lenny wrong.
As more and more people signed up for our service, Sanjay and I
realized that we needed a lot more help, both on the customer service side
of things as well as with computer programming. In addition to convincing
friends who were visiting us from out of town not to go home and instead
help us answer e-mails, we also started looking for more computer
programmers.
I remembered that in college, I had been in an international computer
programming competition. Each college was allowed to send a team of their
best three computer programmers to compete against teams from the other
colleges. The team I was on ended up winning first place in the
competition. I decided that I should reach out to Hadi, who had been one of
my teammates during one of my years on the team, to see if he would be
interested in joining LinkExchange.
Back in college, I’d learned that Hadi was interested in magic, so we had
briefly discussed the idea of putting on a magic show in the college
amphitheater as a way of possibly earning some extra cash. We thought we
could be the next David Copperfield duo, but in the end it never went
anywhere because we were both too busy.
When I contacted Hadi, I asked him if he’d be interested in joining
LinkExchange, and I gave him all the background information about how
quickly we were growing, the $1 million offer we had just turned down, and

---

how exciting everything was. He told me that it definitely did sound
exciting, but he was busy in Seattle working at Microsoft, heading up the
team that would launch a Web browser called Internet Explorer to compete
with the Netscape browser, so he wouldn’t be able to join.
However, he told me he had a twin brother who looked just like him,
and acted just like him. The two of them were so similar, he told me, that in
college they used to go to each other’s job interviews and pretend to be the
other person if one of them was too busy. I wondered whether they ever
pretended to be each other when going on blind dates.
“So… you basically want us to hire your stunt double…?” I asked.
“Yeah.”
“Is that story about you going on job interviews for each other true?”
“Yeah.”
“Okay, sounds good. What’s your stunt double’s name?”
“Ali.”
So after one meeting with Ali at our apartment, Sanjay and I decided to
make him our third partner at LinkExchange, and we opened up a real
office in San Francisco. Each of us started recruiting our friends to join
LinkExchange, and one by one, they did.
By December of that year, there were twenty-five employees at
LinkExchange, and most of them were friends of ours. That’s when Jerry
Yang, the co-founder of Yahoo!, said he wanted to meet with us. Yahoo!
had just had a very high-profile and successful IPO earlier that year, and
was worth over $1 billion. Jerry was the poster child for the dot-com
craziness of the time, so we were all pretty excited to get to meet an Internet
celebrity. We were hopeful that we’d be able to work out some sort of
advertising deal with Yahoo! to help accelerate our growth.
As it turned out, Jerry wasn’t interested in an advertising deal. He was
interested in buying us, which came as a bit of a shock. We had to wait until
the holidays were over because everyone in their corporate development
office was on vacation, so we agreed to talk again in January.
After the New Year, he came and met with us in our old apartment and
told Sanjay, Ali, and me the ballpark number of what they were willing to
pay.
“Twenty million dollars.”

---

I tried my hardest not to flinch and to appear as calm as possible. The
first thought that came to my mind was Wow. The second thought that came
to my mind was I’m so glad we didn’t sell the company to Lenny five