Building an Evergreen Company | Jack Herrick

So before I get going, looks like a great crowd. Really excited to be here. Love meeting entrepreneurs. Love meeting people, especially first-time entrepreneurs. I just remember the energy I had my first startup. It was— and I still have it. Once you get it, you kind of can't lose it. Let me go back to the beginning of this slide. Before I get going here— That's still the beginning. How many people here have used wikiHow? Awesome. Cool. The— well, I'm going to talk about starting wikiHow, kind of the process of wikiHow and how it's— I think you probably— hopefully you're going to— this Draper University, you're going to get a lot of good entrepreneurs in, lots of ideas about how to start companies, the path of how you start companies. I just heard Tim talking about how you need 18 months when you're— 18 months of capital when you raise from a venture capitalist. I'm going to talk about a totally different path. And I've done the traditional venture path and wikiHow has been on a different one, so I'd like to talk about that, give you all some diversity of education on the startup path. And my background is I grew up here in Palo Alto. I have very lucky genes being born in Palo Alto. What a lucky place to be born. My dad was an entrepreneur. He— to show how the world has changed, my dad had a car parts business in Palo Alto. He had a warehouse which is now like a multimillion-dollar office space where the warehouse used to be, basically importing car parts and sending them around the United States. So— but sitting around the kitchen table with him, I learned a lot about entrepreneurship. He and Tim Draper actually play tennis together, so that's kind of how— How I'm here. And so after growing up here, I started 4 companies. One, Big Tray. All these companies are still around, which I'm happy to say. Big Tray was Sequoia funded, raised $10 million from Sequoia and some other investors. It's a marketplace for restaurant supplies and restaurant equipment. Second company, Luminescent Technologies, which is a semiconductor company. Our customers were companies like TSMC, Samsung, folks like that making semiconductors cheaper and faster and better. We raised over $30 million from Seven Rows Inn, Adams Capital, and some other investors. Third company, eHow, another how-to site, and fourth company, wikiHow. wikiHow is my favorite of them. I'm going to talk about what we are and how we're different. And I'll get right into it. So the topic of today's talk is The title of my talk here is How to Build an Evergreen Company. And let me define that. Evergreen company is a little different than your average startup. An evergreen company is a company with the goal— built around a socially positive mission, with the goal of having that company last forever, and not raising any venture capital money or raising any private equity money, doing the entire thing bootstrapped. So with that background, I'll dive right in. Thank you, Tim. See if this actually works. Yes. OK. So 11 years ago today, I started wikiHow. Or maybe not today. 11 years ago about 2 weeks ago. January 15th, 2004. Or 2015. 2005. I should say. Yeah. Yeah. I'm very bad at my 11-year math. And when I started wikiHow, I had a dream that I didn't know how to make true. My goal was to build a company focused on a socially positive mission, have the company last forever, and not raise any VC. I'd done the VC thing twice. VC is a great model for some types of companies. It wasn't for the company I wanted to build, so I decided to do something different, but I didn't know how to do it. So without always knowing what I was doing, I ended up building what is now called an evergreen business. Again, these businesses with trying to live forever without any venture capital money. Now, it turns out that evergreen businesses are a real thing. There's some evergreen businesses that are household names, companies like Patagonia, Clif Bar, In-N-Out Burger. And there's also some businesses in the tech space that are evergreen businesses. SmugMug, which is a popular photo sharing site, paid photo sharing site right here in Mountain View. SAS, which is a company in North Carolina, enterprise software company with 13,000 employees, billions of dollars of revenue, 100% bootstrapped evergreen business. And there's an organization in Palo Alto called the Tugboat Institute which coined the term evergreen and holds conferences trying to gather other evergreen companies once a year. So why build an evergreen company in the first place? If you are like most entrepreneurs, you've heard a lot about the venture model, you've heard a lot about angel funding, you've learned all these different ways you can start a business. People don't talk about the evergreen model very much. So why start one? Well, it's really about aligning your passions and loves with those of the organization of your company. If you're like a lot of founders, you have a lot of reasons for starting a company. Maybe you want to change the world, or maybe you just want to build a great team, or maybe you just sort of want to make lots of money. Now in my case, in the case of wikiHow, I did want to make money, but that was my secondary goal. My primary goal was to give every person on the planet a free practical education. And so in my mind it didn't make sense to do business with a venture capitalist who would have those 2 priorities flipped. So how do you start an evergreen business? Well, the first step is really easy. You just say no to venture capitalists. And I can tell you from personal experience, when you do this honestly and forcefully and repeatedly, It drives venture capitalists crazy. They can't believe you're saying no to their money. And you'll get invited to lots of free lunches and lots of free dinners at great restaurants. I definitely recommend it. Now you're going to need money, but you're going to need a lot less than you think. If you're doing a web business, an app business, or some business with a— like that, some sort of consumer business, you can often get to break-even with $100,000 $200,000 if you really work at it. Now, $100,000, $200,000, that's a lot of money, but it's the sort of money you can raise from friends and family, passionate angels who are passionate about your cause, or even Kickstarter. If you go down this path though, there's going to be sacrifices. For the first few years of wikiHow, I was really jealous of all my venture-funded friends because they had cool swag at all their startups. Hats, t-shirts, jackets, blankets. I knew that I had made it when I— after 5 years of wikiHow, I got a pen that said wikiHow on it. For the first few years, it was also very lonely. It was me and one engineer, and he worked remotely in Canada. And so it was a pretty lonely go. You're not going to have anything like a fancy office space. I mean, these offices here are incredible. I think everyone would dream of having a startup with office space like this, right? This is great. I still don't have this. In fact, 11 years later, I still work out of a house. We got so— we started working in a house in wikiHow early on, and it turns out houses are pretty cozy and comfortable places to work. Now 11 years later, we kind of got used to the house, we really like houses. Now we have 2 houses in downtown Palo Alto, we're still working out of them. I'd like to keep— You're still working out of your house? keep going in houses. So hopefully one day maybe we'll have 3 houses. We'll just kind of keep expanding with the house thing because it's a great theme. Here we are. It's a nice cold day when I took this. We've got our fire going in the middle. We have a wonderful backyard where we have a lot of our meetings. And since we didn't have the free food policy that a lot of startups have, we planted a vegetable garden in the back. We have great organic vegetables if anyone ever wants to stop by and get all the Organic produce you want. WikiHow is a good place for that. So people ask me, hey, I like this idea of the evergreen company. I love what you're doing. I would love to start an evergreen business myself, but I know what's going to happen, Jack. If I do that, my competitors are going to raise venture capital. They're going to raise so much capital that they're going to crush you. They're going to crush me out of existence, and I can't do this. But I'm here to tell you, you just don't need to worry about that. wikiHow has dozens and dozens of competitors, and 15 of these competitors have raised over $10 million each. Collectively, these 15 companies have raised a staggering $1 billion. However, if you take these same 15 companies and you plot them by audience size, we're currently number 3 on this list. We have over 100 million people visiting the website every month. I know one day we're going to be number 1 on this list because we get stronger and stronger every month, and our competitors, their game is kind of running up.