Eric Ly may be one of Silicon Valley’s most “linked in” entrepreneurs, though you’ve probably never heard of him.
Ly founded Presdo, a months-old online scheduling company in Mountain View, California, that he has himself bootstrapped — for now. He also co-founded the business social networking company LinkedIn, where he was chief technology officer for three-and-a-half years. He’s a recently appointed venture partner with pan-European venture capital firm Wellington Partners. He’s an angel investor. And in the years since graduating from Stanford in 1991 (his classmates were Larry Page and Sergey Brin), Ly has also worked at IBM, Sun Microsystems, and General Magic, as well as founded two companies. (One was acquired in exchange for stock in the dot.bomb era; one flopped outright.)
I just spoke with Ly about why he left LinkedIn to start from another Web company from scratch, why today’s Internet entrepreneurs are counting way too much on online advertising for revenue, and how, unlike his celebrity entrepreneur friends like Reid Hoffman, Ly has managed to stay out of the limelight almost entirely.
Presdo launched in April; did we really need another scheduling startup in the world?
The idea behind Presdo is bigger than that. In the mid ‘90s, the big idea was commerce and Amazon.com; it was the money era. Then Google came along, ushering in the information era. Since then, we’ve watched the rise of social networking and getting people to collaborate and share information. I think that time is the next data type, and Presdo will use the Internet to enable people to make better use of it. It’s a scheduling product today, but eventually, I want to expose the many choices that people have throughout the course of a day to help them choose what to do. Basically, we want to combine effective time management with what’s going on within other, established social networks.
But why leave LinkedIn, now one of the hottest companies on the planet, to start another company? Were you just growing bored?
Well, we’d built a lot of the foundational stuff. And to be honest, a lot of projects that were coming just weren’t as interesting to me at that point. I was at end of a project I was working on, I’d been there for 3.5 years, so my vesting was coming up, and I really wanted to work on this [Presdo] idea, so it just made sense to leave. That said, the company has gone on to do some wonderful things since I left, so kudos to everyone there.
Have you sold any of your shares in LinkedIn?
[Pauses] Um, no.
That wasn’t convincing! How did you end up co-founding the company? Were you pals with Reid at Stanford?
Yeah, that’s pretty much what it was. [Laughs.] Reid was just finishing up with PayPal [where Hoffman was executive VP in charge of lots of stuff, including business development], and he said, “I’m going to take time off and exercise more and write a book.” And three months later, I got this frantic email from him, saying, “I have this idea and I need to talk to you right away.” And we met later that week and within five minutes, I was sold.
What did you learn at LinkedIn that you’ve taken with you to Presdo?
LinkedIn runs a very successful business doing subscriptions and advertising — the two don’t need to be mutually exclusive. I think other entrepreneurs should take a harder look at what they’re offering and whether they can make money through advanced or premium services and if they can, they definitely should.
So you aren’t relying solely on online ads? How refreshing!
We’re looking at several business models, but yes, though investors won’t like to hear this, we’re actually really interested in a subscription model. We think there are advanced users who have advanced needs that we can build on top of our core product because there’s recognized pain in scheduling activity. Some people are lucky enough to have assistants to do it for them but most of the world isn’t, so we’re sort of trying to be that assistant, to provide that functionality. We’re also looking into advertising in a contextual way, so that people who are planning activities will see other services show up. And we’d see some revenue share from that.
Speaking of online advertising and startups, there are so many companies right now with valuations north of $100 million in spite of elusive revenue. Are we in a bubble?
First, I think this round [of Web startups] is a lot more sane than the last [in the late ‘90s]. Having said that, it does seem like there are some areas that are overinvested. In the ’90s, it was ecommerce sites, like Pets.com with its sock puppet. Now it’s social networks. It seems like every company has some feature mixed with social networking. At LinkedIn, we saw a lot of fatigue after people were asked to join so many social networks. Fortunately, we were one of the early ones.
A lot of Web entrepreneurs were eschewing venture capital at the beginning of this latest wave and now, not so much. Is that a mistake on their part?
In general, I tell other entrepreneurs to hold off on taking VC as long as they can, because VCs do bring expectations along with their money, and they have a time line. The clock kind of starts when you do that round. The good news is that VCs’ standards have gone up since Web 1.0, and entrepreneurs are building companies much more cheaply, which is allowing them to iterate to a point where they are happy with their product and business model before they go get venture capital.
Are you investing in any Web startups as an angel?
I actually just got started. One company that caught my eye was Good Rec, a [still in beta] mobile recommendation site funded by [seed-stage investor] Jeff Clavier. He’s the main guy, and they’ve lined up a number of good angels. I primarily invested in the people — couple of engineers coming out of Yahoo and M.I.T. who’ve been around the space.
Reid Hoffman does a lot of seed investing. Are you seeing deals with him and his angel friends?
I’m starting to [get plugged into that whole loop]. A lot of people want to invest to play the game, but I’ve been trying to get involved with people who have a discriminating eye about what’s going to work and what’s not going to work, and Reid is one of those people who has that rare talent.
You’ve worked for or cofounded a number of venture-backed startups. What have you learned from those experiences that’s going to help shape your role at Wellington Partners? What will you be mindful not to do?
I just see a lot of investors who do these momentum investments, and what I’ve learned is that the most successful opportunities are the most unexpected. I remember being at a board meeting years ago, and the investors there said, “Do you know these guys Larry and Sergey? They’re telling everyone how great their technology is and they don’t have a clue about their business model.” They had such an industry changing idea, and yet most people missed it. So I think you have to be open-minded and not look for trends.
Last question: you played a huge role at LinkedIn, but you stay out of the limelight. Why not play it up a little?
You know, that probably comes from my personality. I don’t get my jollies that way. I get my jollies from having users be delighted by something I’ve built. If it means that I can build a really great company that’s also highly profitable-
So be it?
[Laughs.] Well, that would be okay in my book.