How a Boy Billionaire Starts a New Business

Boy billionaire Sean Parker got famous pretty young and pretty fast.  If you are old enough to remember the original company called “Napster” then you know the kind of trouble Sean Parker caused in 1999.  His amazing little file-sharing company kicked off a revolution in the music business and made (then 19-year-old) Parker an overnight celebrity… or villain, depending on your perspective.

If you are more familiar with Facebook than Napster, you may still know Parker (portrayed by Justin Timberlake in the movie “The Social Network”) because Parker was the first president of Facebook  .

I had the good fortune to speak personally with Sean and we talked mostly about his second big startup, called Plaxo, which he launched in 2001.  It was funded by VC Sequoia Capital (Mike Moritz was the partner who championed that deal), in March 2002.  Sean later left Plaxo, (and it was acquired by Comcast) but Sean’s vision for that company and his approach to startups is a great lesson for all startup entrepreneurs.

Here’s a direct transcript of my discussion with Sean:

DW: Can you describe Plaxo for me? What’s the elevator pitch?

SP: Plaxo is an application that helps you update your address book, automatically.  Over time it helps keep your address book up to date and lets you access your information via the web.

We use natural language processing technology … to update your whole address book without requiring data entry.  As more people join the Plaxo network, they can be automatically synchronized.

DW: Why did you start Plaxo?

SP: That answer’s very simple: My address book was out of date!

At Napster I’d accumulated huge number of contacts very quickly and they’d fallen out of date.  I toyed around with a lot of different technology proposals for updating that information, and settled on this as the most efficient and straight-forward way to get that information up to date.

This is really what I think software development is all about; automating processes and offering value via technology.  Exactly what good software is supposed to do.

DW: What are the top lessons you learned from the Napster experience?

SP: With a consumer Internet company it’s important to build value and acquire users for as little money as possible.  You need to have a model that allows for near zero – or approaching zero – cost of customer acquisition or you’re not really building a scalable internet business.

You have to offer real value.  You have to solve a real problem that consumers can relate to.  Part of what makes PLAXO compelling is that it grows organically.   There were definitely other lessons from Napster that are not applicable to Plaxo!

DW: How did you apply these lessons to Plaxo?

SP: Since each user is an evangelist for the product, we have the potential to build a huge user base at very little cost.

DW: Why do you think Plaxo will be successful?

SP: We’re the only company to offer all this functionality.  Our value proposition is, “Update, Maintain, and Access.”  We think this solves the complete problem of contact management for the end user.

Use your imagination; there are all sorts of places where you can build conduits and connectors to our infrastructure and some of those can be very valuable.

DW:  What are the largest challenges you/Plaxo will face?

SP: All the standard challenges: recruiting well, scaling the company to each new level, etc.  We want to be ubiquitous. We’d like to see Plaxo integrated with most address books, and there are challenges inherent with making that a reality.

DW: What’s your 10-year vision for Plaxo? For the Internet? For Internet businesses?

SP: [referring to Paypal founder Elon Musk’s “SpaceX” company…]  I can tell you that Plaxo will not be launching rocket ships… we may have our logo on a rocket, however!

I hope Sean’s clear vision for Plaxo — and his understanding of the challenges of entrepreneurship — inspire you as much as they did me.

I’ve been fortunate to have similar conversations with other entrepreneurs over the years, and I’ll be posting them here…so check back here often!  (Including Elon Musk of SpaceX)

Dedicated to your (Billionaire Boys Club) profits,

David Worrell