Great talk by Stephen Wolfram on starting companies

From Stephen Wolfram, one of my entrepreneurial heroes, who (unlike me) was able to start and run a successful high-tech company in Champaign, Illinois…

A great talk on how to start and run companies. Worth reading the whole thing, but here are my favorite parts.

Motivation for starting Wolfram Research, the maker of Mathematica:

[As a physicist,] I’d been used to using all sorts of separate programs — and custom software — for things I wanted to do. But I had the idea that perhaps I could make one really general computational system that I could just use forever.

And that lots of other people would find useful too.

Well, that was what launched me on building Mathematica. I was pretty definite and determined about it.

And I knew I needed to start a company.

Starting focused, but learning and adapting as you grow:

I had made a little money by then. And quite a few of the first people I collected were basically moonlighters. So I didn’t need any outside money.

And pretty soon I started making deals with companies like NeXT and Sun and IBM to pay up front to have our software for their machines.

And after a year and a half — June 1988 — Version 1 of Mathematica was released, and made a nice splash.

I think I had about 15 employees by then. I hoped I could keep the company really small. A pure R&D company. With the sales and marketing — or at least the sales — left to the hardware companies.

Well, despite lots of good intentions, that didn’t work out. There were too many cultural impedance mismatches. And pretty soon I realized I was just going to have to build everything directly in my company.

And I’m happy to say that that worked out really well. The company’s been going for more than 18 years now. And been consistently profitable.

I’ve been the CEO all the time. I’ve kept the company small. The core of it is still only about 350 people.

On the value of tapping a rich vein of potential development and expansion from a deep core idea:

You know, Mathematica is really based on fairly deep ideas about computation. That particularly come out in the notion of symbolic programming. That lets one unify all sorts of constructs and operations. And manipulate the structure as well as the content of data.

That’s been at the core of Mathematica for 18 years. But it’s a difficult idea, that takes a long time to get absorbed.

But it’s what’s let us build the huge web of algorithms and things inMathematica.

And over the last ten years we’ve gradually realized that it lets us build some pretty major other things. Which are going to be really exciting when they’re finally out. I think a bigger step even than when MathematicaVersion 1 came out.

Why start a company, and why not start a company:

Well, of course, people are all different. And I think what’s crucial is to understand one’s own capabilities, and one’s own motivation.

A lot of what goes into starting companies is turning nothing into something. Starting with a blank slate, and just inventing all kinds of stuff.

You’ll never know if it’s ultimately correct. You just have to use your judgement, make decisions, and move on.

To some people, that’s pretty scary. Not to have any answers to look up in the back of the book. Just to do stuff.

People have different motivations, of course. A lot of people think the big thing with companies is money.

Yes, if you luck out, you can make a lot of money. But it’s really rare that money carries people as a motivation.

You have to actually care about what you’re doing.

For some people, like me, it’s the actual creative content that they care most about. For other people, it’s the act of building the company. For others, it’s making deals. Or winning against competition.

But there has to be something you really care about.

Why the CEO should be a founder:

And I think it’s important that if you’re the one who cares, you should be the one pushing things forward. If you’re smart, there’s a good chance you can learn the detailed skills to run a company. But to make the company really work, you need someone leading it who really cares about it.

You can’t delegate the core motivation.

On the role — or non-role — of business plans, and the sources of real value:

But in the things I’ve done — and all the various CEOs I’ve counseled over the years — I’m not sure if writing a detailed business plan would ever once have been worthwhile. I’m as analytical as anyone. But somehow there are always variables one doesn’t know. That can just turn numbers and things upside down.

Now of course there’s a certain discipline to writing a business plan. And seeing whether someone can actually put together a logical plan can be a good way to assess them.

It’s like whether one has a good website. That looks nice, and is well organized. Or has some educational degree that proves one can finish something.

Well, OK, I could go on for ages about things to do and not to do with companies.

After a while one gets a certain intuition for what’s going to work, and what’s not. I’m always trying to test my intuition, by watching how things actually play out, and comparing with what I expected.

There are certain constants. Get-rich-quick schemes almost never work. Even if they sound really clever. It takes actual hard work to build things. And usually at the core of anything successful is something difficult. It may not be what people talk about. It might be something technical. It might be a business structure. But there’ll be something there that’s sort of a hard idea. It’s always a good exercise to see if you can figure out what it is.

You know, sometimes there are things in business that just don’t seem to make sense. Some deal that’s too good to be true. Some magic solution to a problem. But somehow those never really seem to work out. Somehow in the long run things always arrange themselves to sort of be fair. To get out what gets put in.

Finally, check this out. Wow.