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Livingston: How much funding did you take
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Trott: Initially it was less than a million dollars so angel money, really. Livingston: So you now had the money to hire some people and get an office.
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What were some of the first things you did
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Trott: Nothing, that s the funny thing. We treated the money like it was our
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own. We were so concerned about it. Suddenly we had this money and we couldn t spend it all because, if we spent it all, we d need more, and then we d need more and then we d have zero ownership of our company. That terrified us. As a result, we didn t hire fast enough and we weren t in an office. We had closed in April, but we didn t move into an office until August. We had one employee who was working out of his house in San Jose, one in New York, and our support person was in Minnesota. It was like a remote office and nothing was really changing because we thought, We can t spend this money. We bought operations stuff for TypePad servers, etc. and we had payroll for the first time. Five people on payroll. Five people is a lot more than zero. And Ben and I were never really taking a salary other than what we earned from consulting, which was just kind of recycling itself. We were the complete opposite of the things that typified the Bubble. We saw the Bubble, and we saw people spending too much money on things that didn t matter. Then you have us, who didn t even want to buy a refrigerator for the office because it cost $150. I think that there s a middle road that s a lot better.
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Livingston: Why did you set yourself up as an LLC instead of a C corporation Trott: Because we read that LLCs can t take investments. So we figured, if we formed an LLC, we couldn t have stockholders. But then, you can always change from an LLC to a C corp. It s a funny kind of stupid thing that we did, like, Let s form a company that can t take investors, not realizing that you can just change the structure of your company. We were looking at the California incorporation book, and we said, We have to figure out if we re going to be a partnership, a sole proprietary, a C corp., or an LLC. And we were looking at the checklist and we saw can t take money, so we said, Let s do that one. It s amazing. For anyone who is starting a company, it s so hard. Ben and I were 24, and where are you supposed to learn this stuff We got the Nolo book on incorporating and we looked online, but it s so hard. We owe a lot to Barak. He became a board member (for Neoteny) after the investment, and he was the best board member because not only did he help us figure out the business strategy, but he also helped us figure out how to get an office, how to get insurance, how to wire our office and do the business stuff. That s one of the reasons we made him CEO because he was so willing to do everything that we needed and he wasn t an investor who would just give us money and check on us every quarter. He did allow us to make mistakes, however. For example, he let us not ramp up as fast as we could because we had to learn for ourselves that that was not the best idea. Another example was when we went to look at offices. Barak went, because Ben was at home working. We d look at offices that had like 10 or
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