August Interview: Erik Klein, Lucky 13 at PayPal and YouTube

This month, Jelly Theory sat down with Erik Klein. Currently the CTO of SofaLabs, Erik was employee #13 at both PayPal and YouTube, hence Lucky 13.

Erik, how did it all begin?
I was a tech geek in high school. I went to the same high school as the co-founder and former CTO of PayPal, Max Levchin. He moved from Ukraine during our sophomore/junior year. We were in the same band and part of the same BBS communities. Back then, there was no concept of an Internet identity.

How did you stumble upon PayPal?
In 1999, it was the height of the boom before the first Internet bubble burst. Companies such as Webvan and Pets.com were getting huge. It was hard to find programmers. If you knew good programmers, you grabbed them. PayPal was becoming real. Max asked me to join the PayPal team. Rather than work a corporate job in Chicago, I flew out to Silicon Valley. In the beginning, I slept on Max’s floor as I worked 16 hours a day and searched for an apartment.

What was your role at PayPal and later at YouTube?
I worked at PayPal for 6.5 years. While I was there, I wrote customer service software and was responsible for the CS team, making sure sure that software development was going in the right direction. At YouTube, I wrote ad software and worked on Google AdSense integration.

Having left PayPal for some time now, what's your view on the online payment space? How is it innovating, and who are new players to watch for?
PayPal facilitates two kinds of commerce: merchant sales and person-to-person transactions. Buying from a merchant is less risky because the merchant is liable for payment. New platforms such as Facebook have potential to take up the peer-to-peer market. However, the biggest problem that most people don’t realize about online payments is massive fraud. Thirty percent of PayPal’s efforts involve fighting fraud.

PayPal is no longer the small startup it used to be when you first joined. From your perspective, how has the company evolved?
PayPal started out as a startup with core beliefs that were set up by its founders: hard work, rapid innovation, a high standard of security, and engineering-driven processes. PayPal was a tech company above a business-oriented company. Over the course of my six years there, I saw the company grow. The initial culture diluted, beliefs thinned out, and the company made compromises. There wasn’t anything right or wrong about PayPal’s evolution, but a natural course that many startups take as they make it and become larger.

So, what brought you to YouTube?
In December 2005, I took a month off from PayPal and realized I wanted to work at a smaller company again. I didn’t enjoy the slower pace of a large company in terms of moving a product forward. At a startup, you build features and make every decision along the way to push them out in good time. I joined YouTube because I knew the engineers from PayPal and enjoyed working with them - I liked the people. I was also excited about using Python as a language.


What was it like at YouTube after Google acquired it?
YouTube is the second largest search engine on the Internet, so Google owns the #1 and #2 engines. Using Google Search was a big win for us. After Google acquired us, Google was good about leaving us alone and allowing us to develop as a company as before. Google realized that we were a winner in the online video space and told us that its team wouldn’t come to us, but if we needed anything, to let them know. Unlike PayPal, YouTube was a company for only a year before it was bought out. PayPal was 4.5 years old and relatively mature. YouTube was small, and Google gave us freedom to do things the way small companies do.

What is it about Silicon Valley that makes it so conducive to entrepreneurship? Do you think such an ecosystem can be replicated elsewhere?
Going back, Silicon Valley started with the combination of Stanford, semiconductor companies, and older industrial technical companies such as IBM, National Semiconductor, HP, and Apple. These companies made up the first generation of the Valley, and its employees went about in buttoned-up shirts and Heroes glasses. Then came the next generation of hackers. Now we're in the platform generation. If you’re building a site now, it would be silly to build it yourself because there’s so much to leverage. In 1999, sites took a long time to build because it was all about PHP and Python; engineers built everything from scratch. Now you can make a site happen in weeks. This generation can be described as a Lego generation: you piece things together and fail fast. You don’t have to build a user base by yourself with features such as Facebook Connect.

You've been in Silicon Valley for ten years now. Any lessons to share?
Spend the majority of your efforts on the stuff you have to do and don't worry about your teammates’ work. At a startup, your team is your family: you talk over dinner and share opinions, but there has to be a baseline of trust. You need to worry about your stuff and get your stuff done. Respect your teammates and treat them fairly. Don’t let petty issues get in the way of your relationships.

What has been a memorable moment of your career here?
The PayPal IPO party: It was the only party I attended on Friday and was still sore on Monday.

Many entrepreneurs work as life. Thoughts?
When I was 24 and working long hours at PayPal, the head of DBA, Paul Tuckfield, was working long hours, but he also had a family and even managed to perform music every Friday. He was someone to look up to. I don’t believe in your work destroying personal life: you can work hard and have a personal life. It comes down to working smarter and understanding that if you put in a full day at work everyday, your work will get done.

And finally, please define entrepreneur:
An entrepreneur is someone who feels responsibility for everything he/she works on.

Thanks Erik! We're rooting for your next venture...

0% Probability

Something cool happened, and the likelihood of it happening was close to zero percent.

On Thursday I attended a Facebook Developer Garage in Palo Alto, which is an event that Facebook puts on to bring its application developer community together. The subject of this particular dev garage was Feeds and Social Distribution, and members of the Facebook Platform team gave developers a sneak preview of where Facebook is headed with the News Feed, and advice on how to create more user-engaging Feed stories. I blogged on the event for Inside Facebook - You can read it here.

Being a Facebook-sponsored event, there was of course a Facebook Event created for the dev garage. I RSVPed "Attending" about a week before the event. A day later, I received a Facebook message from Mike, who was a complete stranger to me at the time.

He wrote: "hi, mind if i ask u a question? have you been to one of these events before? just wondering what it's like and if i should make the trip from SF to go! :)"

I wrote back: "This is my first garage too, so I can't say. Sorry I can't be more helpful!"

That was that.

On the day of the dev garage, doors opened at 6:30 pm, but I got there at 6:00 pm, to find that there was already a long line. The rather unlikely situation was that by a random stroke of luck/timing/coincidence, I was standing in line right behind Mike. According to my rudimentary calculation, the probability of this occurring was:

P = P(Mike messaging Jessica) x P(M & J standing next to each other in line)

There were 622 confirmed guests. Suppose Mike browsed only the first page of results for confirmed guests. There are 10 results per page, and assuming he messaged only one person, P(M messaging J) = 1/10. Say on the day of the actual event, only 50 percent of the confirmed guests show up - 311, then P(M & J standing next to each other in line) = 2/311. That equals:

P = (1/10)(2/311) = 1/1555 = 0.000643

Improbable, huh? Thanks Mike for being my buddy during the event; for explaining some of the more technical concepts to me; and for giving me iPhone tips for beginners. Consider OpenTable (where Mike works) before making your next online restaurant reservation!

February Interview: Casual Coworking with Amit Gupta

I'm beginning a monthly interview series in which I interview (either face-to-face or by phone) people who have something fresh to say. Because Jelly Theory is an idea-driven blog, I thought it would be nice to share the conversations I have with people I consider to be idea-oriented. This is my way of allowing this site to be a space where today's ideas can be freely exchanged and discussed in a real, personal way. I'm very pleased to present to you the first in my interview series, Amit Gupta. Amit is a 20-something entrepreneur in San Francisco who started Jelly, a global casual coworking network, with his friend Luke Crawford in Manhattan in 2006. He is currently working on Photojojo, a biweekly email newsletter filled with photography tips and ideas.

Check it out, Jelly in their own words:

Here’s the deal: Luke and Amit both love working from home, but they find that spending the occasional day working with others really helps get the creative juices flowing. Even though everyone’s working on their own projects, they can bounce ideas and problems off of each other and have fun doing it.

What’s Jelly? Jelly’s our attempt to formalize this weekly work-together. We invite you to come work at our home. You bring your laptop and some work, and we’ll provide wifi, a chair, and hopefully some smart people.

[You're probably wondering about the name - so was I. Last week, I stumbled upon Jelly casual coworking, and it piqued my interest, well, because of the Jelly connection. I emailed Amit, and we found some time to talk over the phone this week. I'd like to thank him for being that cool. Note that in the interview below, I try my best to quote Amit, but the responses below are not exact quotes. (Still learning the art of transcribing.)]

Can you give a brief history of coworking? How is Jelly's version of casual coworking different?
Coworking has existed for quite a while, especially among journalists and writers in New York who have a freelance lifestyle. Now the trend is moving to tech. In the past few years, people in tech have flexibility to work anywhere, but they lack a sense of community and structure. The Coworking Wiki will give you a more thorough history. Jelly is different from the traditional concept of coworking, which addresses the need for physical work space (e.g., renting desks). With Jelly, the motive is different because it addresses the need for human interaction rather than physical space. The primary activity is to share.

Please explain the name.
We were working at the kitchen table, and there were jelly beans beside us. We wanted a fun name.

When you first started Jelly with Luke, how did you spread the word?
We began by inviting friends to work with us at our kitchen table. While we worked on our own individual projects, we also shared ideas, and discussed problems and potential solutions, and word got around. Friends began raving about it. People wanted to start their own Jellies, and Jelly spread firely. We also got a lot of press from Wired, NPR, Today Show, etc.

Some questions on the people dynamics:

• How many people usually attend a Jelly? How often do Jellies meet? It depends. In San Francisco, Jellies happens once a month with 20 to 25 people showing up. We rotate among three different apartments.
• Do people who attend Jellies come in groups or by themselves? By themselves, mostly, but they may know people who are attending.
• Age? People in their 20s and 30s
• Gender? In San Francisco, probably 2/3 male, 1/3 female
• Careers represented? San Francisco is very tech focused. We have developers, designers, bloggers, and journalists attending. New York is less skewed. Different cities are skewed in other directions.
  
• What personality type does Jelly draw? People who are comfortable around other people and obviously not super shy.
• Safety concerns? So far it hasn't been an issue. The ethos of the event and the language on our site select a particular kind of person who is trustworthy.
  

How has Jelly grown since 2006?
Jellies exist in the US, Australia, Europe, and Canada, and are getting started in Africa, China, India, and the Philippines. (See a complete list.) It's tough to say how many people are in the Jelly network, but I'd guess in the low 100s. You can also start your own Jelly through our wiki, which provides organizers with a guide to getting started. Each Jelly has its own culture, depending on the local climate. For example, in New York and San Francisco, Jellies are mainly held in apartments; while in Austin and Chicago, they are more often held in coffee shops.

Are you surprised by this growth?
I don't get surprised anymore. There's a universal human need to connect to other people. People go looking for something to get back that sense of community.

Can you tell a story that happened at a Jelly?
I'll tell you about an interesting person I met at a Jelly, and I wouldn't have met him otherwise. Joey Roth is an industrial designer who moved to San Francisco from New York and comes to the Jellies in San Francisco. He designs beautiful glass and steal teapots. He's a one-man company, both in designing and manufacturing. In my own social and work life, I'm usually interacting with people in the tech industry, but I still get to see a window into product design.

What are critical success factors for Jellies?
The key ingredient is to have a great organizer. Somebody who really wants Jelly to work and organizes consistently. The personal need for Jellies to exist is the most important part.

I saw that Jelly Talks are getting started. How are they going?
Our first two Jelly Talks went great. Both were well attended with a dozen Jellies represented in each one, and tons of streams around the country and globe. The first one was on on Facebook Connect and Open ID (January 30), and the second one was on tips for entrepreneurs (February 13). Our vision for Jelly Talks is to bring together the disjointed Jellies around the world.

Where is Jelly headed, in its long-term vision and business model, if any?
There's no institution behind Jelly, it's not incorporated. We created it as a project, not to make profits, but because it was personally useful to us and our friends, and that's just fine. It doesn't cost much to run Jelly, and we have generous sponsors who support us. The model is to let the community drive what Jelly will become. If the Jelly community is still interested, we'll keep growing it.

Define entrepreneur, please.
An entrepreneur is someone who writes his/her own destiny. You're in control of your life, what you want to work on, and who you want to work with.

Thanks again, Amit.

On a related note, in the past month, I've been pleasantly surprised by the enthusiastic responses I've been getting from the people I've been reaching out to. It goes to show that conversation is a natural thing after all.

Don't Patronize, Please

Note: This is a blog post I wrote for Wokai. Wokai is a website that allows you to lend money to the poor in China. You can also find this post on the Wokai Adventures blog.

Al Hammond: “…Most of what Mr. Karnani says seems just silly—armchair theorizing. His numbers are wrong—as we have already explained in detail elsewhere, although he does not acknowledge the criticism. And he misquotes me and attributes words to me that I’ve never spoken, thus underscoring his questionable scholarship...But it is his larger critique that is more troubling.”

Aneel Karnani: “Al, I am sorry that you are not happy with my article…that certainly was not my intention…I take scholarship seriously, and would appreciate it if you would substantiate the charge of ‘questionable scholarship.’”

The above email debate between Ashoka’s Al Hammond and University of Michigan’s Aneel Karnani was posted (with permission) on Next Billion’s blog last Thursday. Their exchange was sparked by an article that Karnani wrote back in December. The article, “Romanticizing the Poor,” was published in the Stanford Social Innovation Review, and it was provocative.

In the article, Karnani argues that market-driven solutions to global poverty are in need of a serious reality check because they assume that poor people are rational consumers and innovative entrepreneurs when in fact they aren’t. To Karnani, this romantic picture of the poor gives multinational companies (MNCs) in the tobacco, alcohol, and consumer products industries license to exploit poor people with harmful, unnecessary products; and it encourages the misguided notion that microfinance is a realistic means of alleviating poverty. For Karnani, the real harm comes when governments begin deferring their responsibility in the fight against poverty to the rosy market. Karnani pleads, “More Government, Please.” A few quotes from his article:

“But poor people seem to lose control more often, for reasons that reflect the realities of their daily lives.”

“Mounting evidence suggests that just being poor hinders people’s ability to make good decisions.”

“I have found little evidence suggesting that poor people are particularly discerning consumers or creative entrepreneurs.”

There is nothing romantic about the poor or being poor – anyone who has experienced poverty can tell you that – but please don’t patronize the poor either because:

Change needs to come from the bottom level. The quest for growth in poor countries has been long and elusive. In his book The Elusive Quest for Growth, William Easterly shows that in the past 50 years, foreign aid, capital investments (both in machines and humans), population control, policy reforms, and debt forgiveness aren’t the answers when it comes to explaining growth. When Easterly spoke at Stanford last spring, he concluded his talk by admitting that experts can only do so much to understand and promote growth. Instead he focused on the individual, specifically on the idea of the creative individual and individual responsibility.

Entrepreneurship isn’t classy. I agree with Karnani in that governments need to stay involved in the welfare of the poor by investing in infrastructure and reforming policies, but we’ve seen that neither government investments, nor policy reforms are the elixir to sustained growth and improved lives. Before we dismiss the poor as incapable of an entrepreneurial life, we need to consider for a moment that entrepreneurship isn’t just for the elite. Sure, poor people with cool ideas may not have access to the training, resources, and funding that their wealthier counterparts have, but all that can come with time and experience, while the vision of those ideas can never be taught.

Not all MNCs exploit. It’s suspicious that the only examples Karnani refers to in his article are MNCs in the tobacco, alcohol, and consumer products industries. What about, technology? Cell phones have penetrated developing-country markets at rapid rates, leading to interesting and beneficial services that run off the mobile platform, including mobile education (mEducation), mBanking, and mHealth. In the nascent field of mHealth, for example, the cell phone is quickly proving to be an efficient means of healthcare delivery in areas where health infrastructure is severely lacking. The introduction of mobile phones in the developing world means greater connectivity, which means more access to information and heightened transparency. The case study of fishermen in Kerala is a compelling one. (The illustration at the very top is by Belle Mellor and was used for The Economist's article "The meek shall inherit the web.") When healthy incentives align all players in the value chain, and value is delivered to each player – MNCs, governments, nongovernmental organizations, and the poor people themselves – you can’t call that exploitation anymore.

Everyone has the right to invent and innovate, and to make decisions to buy things without judgment, and if you can free yourself from a life of poverty in doing so, that’s a beautiful thing. “Freedom is just another word for entrepreneurship.” I believe in that.

"{Search is Dumb}"

Last night I attended a tech talk by Marissa Mayer, VP of Search Products and User Experience at Google (and Google's first woman engineer!). The event was organized by Stanford IEEE. What I walked away with? A slice of pizza and the provocative statement that, "Search is dumb," the title of Mayer's talk. What's it called again when you assign human traits to objects...personification?

I often feel that the world's information is at my fingertips, so it's hard for me to completely get it when I'm told that only a small fraction of search (not even 10 percent) has been solved, that the most interesting stuff in search is still to come, and that, as Mayer put it, search is like a three year old child. Here's why.

Search doesn't understand you. For example, when you search "nice cafe," it doesn't know what you mean by "nice" (a value judgment), and when you search "jaguar," do you mean the animal or the car (type differentiation)? Search doesn't understand the context you bring to your searches, i.e. it doesn't understand user intent. This is the next big challenge in Computer Science -- the journey to engineer the perfect search engine. In a world of perfect search, each search you do would be returned with a perfect answer that takes into account context and intentions...and it'd conveniently be in the right media form (maps, images, videos, web pages).

Search is growing up in a bad environment. Search can only be as good as the Internet is, and right now the Internet has gone negative because the current infrastructure doesn't encourage people to create websites that house high-quality information/data. What we see on the Internet today is:

1) Unmanageable/unmonitored growth: Every minute, 15 hours of video content is uploaded to YouTube. Every day, 120,000 new blogs are created.

2) Anonymity/lack of responsibility: 60 percent of bloggers don't list their full first names. 31 percent of users on social networking sites lie about their identities.

We need to build a more useful web. In the past 10 years, Internet content has grown a thousand fold, but the percentage of that content that can be called useful has stayed constant at about 15 percent (based on web crawling research). Until more of the web becomes useful, improvements in search technology will only have marginal effects on the quality of information users can access. (A useful website is one that contains reliable, relevant information that can be used for productive purposes. It doesn't show up as the 2000th result of a Google search, thus offering duplicate information; it doesn't drive traffic to its site for the main purpose of generating ad revenue; and obviously it isn't porn.)

I'll end with some final thoughts...

a) If Google is really heading toward basing its search results off a database of intentions (as opposed to mere indexes), how will Google collect information on user intentions? If it's through analyzing and tracking user clickstreams and inferring intentions based on past trails, then my question is: Are past trends a good indicator of what users want in the future? To a certain degree, I believe that users don't always know what they want or what's best for them and that part of the innovation process involves exposing them to ideas (or in this case search results) that they may never have stumbled upon otherwise.

b) I'll get over the fact that my blog isn't useful yet. ;)

Viral Buzz

Viral marketing is very now.

Microsoft Research's "Everyone Has A Song Inside"


To marketers - Don't try too hard.

The Onion's Apple Mac Book Wheel (The No-Keyboard Laptop)


To users - Don't be fooled.