Delivering Happiness

Rapid Growth
Shortly after we received funding from Sequoia, I reached out to Alfred, the
guy I’d sold pizza to in college, to see if he would join us full-time. He was
busy working on getting his PhD in statistics from Stanford. To me, that
sounded like the second most boring thing to do in the world (the most
boring being watching paint dry at night, when it’s too dark to see what
color the paint is).
Over the previous two years, I had been trying to figure out some sort of
business we could do together. One of my earlier ideas was to open up a
Subway sandwich franchise with Alfred somewhere on the Stanford
campus. At the time, Subway was one of the fastest-growing franchises in
the United States, partly because the franchise fee and start-up costs were so
low. Alfred had actually considered doing it with me, but discovered that
Stanford did not allow commercial activities on their campus at the time.
When Sanjay and I first started LinkExchange, I had asked Alfred
whether he wanted to join. He thought it was too risky at the time and was
also worried that his parents would get mad at him for dropping out of grad
school, so we agreed to stay in touch and instead have him work as a
consultant for us from time to time.
This time, however, Alfred was a lot more receptive. I think it was due
to the combination of knowing that we had $3 million in the bank from
Sequoia and him realizing that getting a PhD was not really his thing. He
joined LinkExchange full-time in 1997 as our VP of finance.
Over the next seventeen months, all of us slept very little. We were
growing very quickly and hiring people as fast as we could. We had pretty
much exhausted our network of friends for hiring employees, so we started
hiring almost any warm body who was willing to work for us and hadn’t
done more than six months of jail time.

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We outgrew the floor we had rented out for our office and started
expanding to additional floors of our building. We even opened up sales
offices in New York and Chicago. It was a strange feeling to be walking
around the office and seeing people I didn’t recognize. It seemed like every
week, there was someone new. It wasn’t just that I didn’t know people’s
names or what their jobs were… I didn’t even recognize their faces.
Walking up and down the stairs of our building, I wasn’t sure if the people I
ran into worked for LinkExchange or one of the other companies that
shared our office building.
At the time, I didn’t think it was necessarily a bad thing. If anything, not
recognizing people due to our hypergrowth made things even more exciting
and fueled the 24/7 adrenaline high that we were all feeling. But looking
back, it should have been a huge warning sign for what was to come.
The short story is that we simply didn’t know we should have paid more
attention to our company culture. During the first year, we’d hired our
friends and people who wanted to be part of building something fun and
exciting. Without realizing it, we had together created a company culture
that we all enjoyed being a part of.
Then, as we grew beyond twenty-five people, we made the mistake of
hiring people who were joining the company for other reasons. The good
news was that the people we hired were smart and motivated. The bad news
was that many of them were motivated by the prospect of either making a
lot of money or building their careers and résumés. They wanted to put a
few years of hard work into LinkExchange and then move on to their next
résumé-building job at another company. Or, if things worked out well,
make a lot of money and retire. We continued to grow and hire more and
more people, and eventually we had over a hundred employees in the
company in 1998.
One day, I woke up after hitting the snooze button on my alarm clock six
times. I was about to hit it a seventh time when I suddenly realized
something. The last time I had snoozed this many times was when I was
dreading going to work at Oracle. It was happening again, except this time,
I was dreading going to work at LinkExchange.
This was a really weird realization for me. I was the co-founder of
LinkExchange, and yet the company was no longer a place I wanted to be
at. It wasn’t always like this. Just a year and a half ago, I had made the

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“There will never be another 1997” speech to our employees. How did
things change so quickly? What happened? How did we go from an “all-
for-one, one-for-all” team environment to one that was now all about
politics, positioning, and rumors?
Reflecting on the past year, I couldn’t think of a single point in time
when things started going downhill and it became less fun for me. There
wasn’t a specific employee I could point to who had single-handedly caused
the company culture to deteriorate.
It was more like death by a thousand paper cuts, or like the Chinese
water torture. Drop by drop, day by day, any single drop or bad hire was
bearable and not that big a deal. But in the aggregate, it was torture.
I wasn’t quite sure what to do. I pushed the thought out of my mind
because there were some more immediate and urgent issues that we had to
deal with: The economy wasn’t doing well (something to do with Russian
currency issues and Long Term Capital collapsing that I didn’t quite
understand), and the company didn’t have much of a cash cushion to
continue running if our revenues were to suddenly dry up. We had started
doing the work for an IPO so that we could raise some more cash, but the
Russian currency fiasco erased the possibility of that happening anytime
soon. We needed to raise a “mezzanine” round of funding as insurance in
case the economy got any worse. Otherwise, we could be bankrupt before
the end of the year.
Over the previous two years, we had built pretty good relationships with
people from Yahoo!, Netscape, and Microsoft. Each of those companies had
shown a lot of interest in what we were doing and was interested in figuring
out strategic partnership opportunities. (I never actually did figure out what
a “strategic partnership” meant and how it was different from just a regular