Starting a Company with no A**H*****s | Phil Libin

All right, Phil, thank you so much for coming out today.

Thanks for having me.

And being part of the fall class. I wanted to start a little bit with your early life. So a lot of these entrepreneurs in the room, it's their first venture that they're starting. About 50% of them are international, specifically for this class. And being an immigrant, I wanted to talk a little bit about the impact coming to America with your parents had on you and, you know, the beginning of your career as an entrepreneur. If you can elaborate a little bit on that.

Sure. I mean, I came to the US when I was 8. We were actually refugees from what was then the Soviet Union. My parents— my whole family is very not entrepreneurial, other than this really extraordinary step that my parents took, extraordinary in hindsight, of picking up their whole lives and moving from Russia to the US, I think mostly so that I could have a better life. My parents are both classical musicians. Everyone in my family is a scientist or an artist or a chess master or something. I was definitely the black sheep of the family. I'm the person that, you know, I don't play chess, I don't play music, I don't have any PhDs. So what I was doing always felt like failure to me. It felt like I was starting companies because I couldn't hold down a real job. And it took a long time to actually realize that this was a legitimate path in life. I was probably on company number 2 or number 3 before I was like, this is actually pretty good. I can do this, and this could be my thing forever. I don't know if being an immigrant affected my entrepreneurial journey or not. Certainly more than half of the founders that I meet are immigrants. Maybe much more than half. Maybe it's like 75%.

Yeah.

It's kind of unusual to see a founder that was born here. It obviously happens, but definitely more than half are immigrants. So it's weird for me to think what this whole landscape would look like if it wasn't for a good immigration system in the US.

So you mentioned that you started some companies before Evernote, so I want to talk a little bit about those. I read a little bit, and the first company was in high school, if I'm not mistaken.

Yeah, I started a company in high school. It was called Pegasus Data Systems. We picked the name out of the Deities and Demigods Dungeons and Dragons book. And we ordered computer parts from Taiwan and just assembled them. And we sold PC clones to local businesses. That wasn't an entirely serious company. It was just me and a high school friend of mine. But we did it for, I guess, about a year. And it was fun. We made some decent money.

And then?

We wound up selling that company. It was actually the first company I sold, and we sold it for $500, which was cool.

So at that time, $500, was it huge money for a high schooler?

It was more money than I would make in a summer working at an ice cream store. So that's kind of what I compared it to. I'm like, yeah, I could have worked the entire summer selling ice cream. I would have made about the same.

I understand your parents come from a musical background.

Yep.

And then you in college studied Or what did you start studying in college and then—

I studied computer science. Well, I started studying business, but then I wasn't sure why. It was kind of a weird— business is kind of a weird thing to study undergraduate. So I switched to computer science pretty soon. I went to Boston University.

Got it. How was that different from your parents? Were your parents pushing you toward that way, or did they want you to be a musician?

No, my parents were pretty chill about All of this stuff, they never really pushed me for any of it. They just wanted, I guess, whatever I wanted. They gave up— they were both musicians and music teachers. They gave up trying to give me music lessons when I was like— by the time I was like 5, they could tell that I just didn't have what it took, so they were like, this kid, he ain't got it.

Gotcha.

So they sort of left me alone in terms of motivational push.

We hear a lot about entrepreneurs, or the big ones that we hear in the news, saying they dropped out of college. Your story was similar, yet a bit different. It was almost one class away, from my understanding?

Yeah, I dropped out of college with one class left, 4 credits. I don't even remember exactly how it happened. I got angry at the administration for some reason. It was probably some billing dispute or something, and then I just stormed out and never came back. It was stupid. I shouldn't have done it. I should have taken one more class and graduated, but I didn't think about it for like 20 years. And then Boston University kind of rediscovered me 20 years later and got in touch. And so now I'm actually on the board of overseers at BU, so we're in charge of the academic program, which is really fun. So I've kind of gotten re-engaged with the university.

That's great.

And supposedly I'm actually— I'm kind of on the hook to like do a class now, and I may actually graduate next year. It's possible. We'll see if I actually get my act together. I'm supposed to be doing a class on science fiction. I noticed some Dune over there. Science fiction and entrepreneurship. So I'm doing research on sci-fi and entrepreneurship as like a directed study in the literature department.

That's awesome.

And if I actually get it done, then they might give me my last 4 credits and I could graduate, get my bachelor's in May or whenever.

Nice. We'll be cheering for you.

Cool.

So right after college, you worked for a little bit or a lot. If you can tell us about that journey and then the other company you started with your college roommates or friends, Engine 5.

Yeah, I was working all throughout. high school and college, mostly doing computer stuff, programming mostly. That was in the late '80s. High school was late '80s, college was early '90s. It was really like the first wave of PC revolution, so nobody knew any more than like a 15-year-old kid did. So it was actually, I could get jobs at law firms and banks and do program whatever their internal systems were. And I was doing that all along. And then after college, I got my first, like, more or less real job at a real software company in Boston called ATG, Art Technology Group, which was great. It was my first experience of being, like, barely adequate at someplace. Like, I was kind of used to not really challenging myself, like, putting myself in situations where I always felt you know, kind of above average. And at this place at AT&T, it was just such a brilliant team of people, like such brilliant programmers and engineers and scientists that I was definitely like barely adequate. Like I just had to really struggle just to like be good enough to stay there. And that was super interesting. It really like, it made me realize that that was kind of the secret of happiness was to put myself continuously, try to put myself in situations where I'm the least interesting person in the room where I have to like I always want to feel— I want to be in places where I feel barely adequate, that I have to strive to fit in. And I've tried to do that ever since, and that's been pretty good. And I was there with a couple of college friends of mine, and then at some point we decided to leave and start our own company. So we started the first company, which was Engine 5, which was kind of my first real company. That was in 1997.

Got it. Now that you mentioned working in teams and how well you've felt at this company, then you started Engine 5. I think I heard somewhere in one video that one of the purposes of starting the company was to work with really great people and not hire— pardon the language— assholes, from what you had seen in other companies. So if you could guide us a little bit about the importance of working with the right team.

Well, that was kind of our whole point for starting the company is we all had these experiences, which everyone probably has, had here where you're sitting at work and you kind of go, well, I understand, you know, I understand what I do and like, okay, I'm okay. Like, I get my job done. I'm pretty good. And, you know, the guy sitting next to me, like, I understand what he does. Like, he seems reasonable and, you know, he gets his work done. And the person over there seems pretty good, but I don't want to look at anyone in particular. But like, that guy over there, like, that guy's an asshole. And like, he doesn't do anything. He's just obnoxious. Like, why is he here? This was like the universal experience. Like, at every job, there's always like people that were just like, what the hell? Like, why did they hire these people? Don't they know that these people are just like, they don't do anything and they're just jerks? And so we thought, well, what if we start a company just as an experiment? What if we start a company and like when assholes show up to interview, we don't hire them? Like, could that be done? Because it's never been done before in the history of companies. Apparently. So that was it. That was the whole idea. We didn't even know what we were going to do. We were just like, we're just going to not hire any assholes and see how that goes. So that was in '97, and it was just at the very start of the first dot-com boom. So it was pretty easy. We were all programmers, so we just showed up in an empty office with our computers and just started working, and people started giving us money to build stuff. And the whole philosophy was just, don't hire any assholes, see how long that goes. So you're talking about the early days of the company.