In the research for my new book to be published this fall, Hungry Start-up Strategy: Creating New Ventures with Limited Resources and Unlimited Vision, one of the most surprising things I found is that entrepreneurs are not motivated primarily by money.
Instead of money, successful start-up CEOs hunger to turn their vision of the world into a thriving venture. The March 25th New York Times features an excellent example of such an entrepreneur, Gilad Elbaz.
Elbaz’s current start-up, Factual, aims to store all the world’s facts. Elbaz had already sold his first start-up, Applied Semantics, to Google (GOOG) for cash and stock that made Elbaz’s net worth soar into the “hundreds of millions [of dollars].”
So in 2009, when he went to Andreesen Horowitz for capital, Elbaz needed to persuade name partner, Ben Horowitz, that Elbaz’s wealth had not sated his start-up hunger.
Elbaz got Horowitz to believe that Factual would yield an attractive return on Horowitz’s investment — or as he told the Times, this was not a “too-rich-to-work-hard” problem. As Horowitz said, “I asked him, ‘Aren’t you too rich to build this company?’ He gave me one of the longest and most thought-out answers I’d ever heard. He thinks this is a chance to change the world — that matters to him more than money,” according to the Times.
My guess is that Elbaz did not have enough money to finance Factual all by himself or that he had other reasons to hedge his bet. So why did Elbaz need the money and why was he so committed to making Factual succeed? Elbaz told Horowitz that the cash was “an incentive for the engineers” and that he needed to do Factual now, because the 34-year-old Elbaz wanted to ”reach his goal while his mind was still strong enough,” according to the Times.
Still not convinced that entrepreneurs don’t care about money? Of course, they need money to pay people who don’t have enough to quit working for the rest of their lives. But an even better example of an entrepreneur who does not care about money is Jeff Hammerbacher.
After all, Hammerbacher was one of Facebook’s first 100 employees and its first chief data scientist. In 2008, he walked away from the social network — leaving behind shares that would probably be worth plenty now if he had stuck around. Quitting the $100 billion (estimated market valuation) Facebook, he joked to me, was “an egregious act of wealth destruction.”
Hammerbacher is a 2005 Harvard graduate who worked at Bear Stearns and Facebook before starting Cloudera in 2008. A Facebook colleague described Hammerbacher as “scary smart, a maverick, individualistic, dynamic, a sponge when it comes to new ideas and his interests evolve quickly.”
When Hammberbacher started Cloudera, its mission was to apply the computing power he had built at Facebook to solve more important problems. Instead of helping to answer what a group of friends “like” the most on Facebook, Cloudera customers would be able to answer questions such as, “What gene do all these cancer patients share?”
At Harvard, Hammerbacher took a core course on moral reasoning which required him to read philosopher John Rawls’ concept of the Veil of Ignorance. As Hammerbacher described it, Rawls’ idea was that if the moment before you were born, you could decide which part of the world you would be born into, how would you design that world so you would have a fair shot at life?
Hammerbacher’s vision is to build Cloudera to last. As he told me, “The vision is to build an exceptional, standalone enterprise software company respected for its technical depth and expertise.”
Hammerbacher, like Elbaz, has a powerful vision in his mind for what Cloudera could become along with an insatiable drive to turn that vision into a real company. As he said, ”We’d like to help commoditize the infrastructure for analyzing all kinds of data at arbitrary scales, so that companies can derive more business value from the data they generate. DEC, Tandem Computers, and Sun are companies that, in their prime, had cultures similar to the one we’re trying to build.”
It is more than a bit ironic that most successful entrepreneurs don’t care about money. Of course it could be that they do care about it an awful lot more than they are willing to let on publicly.
I don’t doubt that there is plenty of competitiveness driving them — and that they would love to turn their burning vision into a business that would be worth more to them than Bill Gates’ net worth.
But for Elbaz and Hammerbacher, the name of the Hungry Start-up Game, is creating a world that they want to live in. And their careers are a living testimony to the power of Rawls’ Veil of Ignorance.
And they may represent one of the biggest returns on a philosophy course ever.