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Startup.com With Thomas J. Herman Co-founder, govWorks.com Wednesday, July 18, 2001 |
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Turning a familiar story into a high-pressure personal odyssey, the film "Startup.com" chronicles the trials of partners Kaleil Isaza Tuzman and Tom Herman, best friends since childhood, as they progress from being rookies with only a business plan to assuming the leadership of a nationally recognized Internet company struggling to survive an inhospitable economy.
govWorks.com, was an award-winning Internet site that facilitated interaction between local government, citizens and businesses. Herman was online Wednesday, July 18 at Noon EDT to answer questions about govWorks.com, "Startup.com" and the Internet economy. The transcript follows. Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions. -------------------------------------------------------------------------------- Washington, D.C.: What was the third founder doing in the bedroom? Thomas Herman: probably sleeping..... -------------------------------------------------------------------------------- Arlington, Va.: Tom, I really enjoyed the movie, but I feel it didn't address the core reasons for the failure of the business. Where was the miscalculation? What assumptions did you make in your business plans that didn't really pan out? Thomas Herman: This is a good point. The movie was really about two people and their personal relationship. There were a number of things which went wrong which caused the failure of the business. First, I should point out that the business is still operating under the new name govOne Solutions, but to specifically answer your question:
-------------------------------------------------------------------------------- Washington, D.C.: Having seen the documentary a couple of times and again last evening -- I have a startup -- I want to know more about the break-in. Kaleil said last night that the perpetrator was caught, etc. What I want to know is what effect it had on the momentum of govWorks? Did it have a delaying effect. Was it another stumbling block? Was the information stolen sent to any of your competitors? Thanks for being willing to be so open. I certainly am grateful for your candor and your willingness to be a cautionary tale. Thomas Herman: The break in didn't really have any significant effect. govWorks was going to be successful or not based on our ability to execute. It was an interesting event, less disruptive than for example our constant moves to larger office spaces. The movie makers found it dramatic. -------------------------------------------------------------------------------- Washington, D.C.: How did it feel to get fired by your best friend? Are you two able to maintain some kind of relationship today? Thomas Herman: It made me angry more than upset because I felt he was doing it for the wrong reasons (that is to protect himself rather than to because it was good for the business). He obviously feels differently and his perspective is that it was difficult to run an organization with two different opinions about directions we should be moving. Kaleil and I have maintained a good relationship through out the events surrounding my dismissal and continue to work together successfully today. We're well matched skills wise and as you can imagine, there's never a dull moment working with him. I would remind people, hopefully w/out preaching, that there was no benefit to me, to Kaleil, or to any third party for us to be negitive or not get along. The same is probably true for other people in similar situations at other companies. Also, the public nature of our relationship made me think very carefully about how I wanted to handle myself w/ Kaleil in the public eye. -------------------------------------------------------------------------------- Washington, D.C.: What did you think of the competitor shown in the movie -- ezgov? What did you thnk of their strategy, management team, etc.? Thomas Herman: EzGov was (and still is) a great company. They had similar strategies to us and obviously managed to survive longer than we did, so I think that says good things about their management. -------------------------------------------------------------------------------- Washington, D.C.: I really appreciated the opportunity to particiapte in last night's discussion at the Netrepenuer event. If anyone out there has not seen the film I strongly encourage you to. Provides some great insights and 'flavoring' Question: Could you comment on the environment of the past few years that contributed to 'the bubble'. You mentioned several strucutural issues that affected everyone -- the fallacy of grow or go home, access to cheap capital leading to low value added spending. What are the top three to five? Thanks, Ansel
Thomas Herman: - Massive amounts of "Me Too" money needing to be put to work caused capital to be invested in poor ideas or teams w/ little or no diligence.
Having said these things, I think that a tremendous amount of value was created over the last 5 years and I think we’ll continue to see return on these investments for years to come. Remember that in the 20’s and 30’s there were hundreds of car manufacturing companies all trying new and unproven ideas. Today there are three. I think that’s a normal cycle of investment (or over investment). Please remember that these are off-the-cuff responses, not based on a long thought out writing process. -------------------------------------------------------------------------------- Washington, D.C.: Personally, where do you see yourself headed, career-wise? Do you think you'll ever venture into another Internet business, or are you going in new directions entirely? Thomas Herman: This is a tough question. I'm enjoying working w/ Recognition Group right now because it makes good use of my business and technology skills and I'm learning new things. I could definitely venture into another internet business, but it would probably have a bricks and mortar component too. I've often thought about working with my father to run his experiential education center in New Hampshire (http://www.Windsor Mountain .org). -------------------------------------------------------------------------------- Silver Spring, Md.: One of the things that entreprenuers face at one time or another is getting their team members "on message" when presenting to venture capitalists or other investors. I noticed in the movie that you and Kaliel had different views on a Govworks web site feature that you mentioned to an investor, and Kaliel wasn't shy about expressing his disagreement with you. Were you able to reconcile your differences of opinions on the presentation of the company into once coherent message? If so, how did you go about doing so? Thomas Herman: Good question: Being on message is important w/ business meetings and with investors. This was a fundamental problem for Kaleil and me and we didn't really ever solve it. Eventually we disagreed to the point where he asked me to leave, but despite disagreeing with him on the directions we took and the products we built, I did (and do) agree with his belief that you need ONE CEO who makes these decisions. When the CEO makes the decision the rest of the company needs to get on board and make it happen. The specifics of the situation with Kaleil and me are not straight forward and I'm not sure I can do them justice in this format and I hesitate to say too much about the details and our differing opinions w/out the chance to re-read what I write before it's published. -------------------------------------------------------------------------------- Arlington, Va.: What are you guys doing now? Thomas Herman: We started a new company together: http://www.recognitiongroup.net -------------------------------------------------------------------------------- Truth or Consequences, N.M.: How much money did your company go through? I don't care what anyone says, by the way, you were brave for trying and diving in. Thomas Herman: Thanks. Almost $60m -------------------------------------------------------------------------------- New York, N.Y.: What was the single biggest mistake GovWorks.com made? Thomas Herman: It would be unfair for me to say it was firing me... :) Honestly, #1 was our shift from Producer of Software for Gov't to Consumer branded portal. -------------------------------------------------------------------------------- Arlington, Va.: It was such a downer to see both of you end up with no financial gain at the end of the movie. Tell me that you at least made some good money from the sale of govWorks (or at least from Startup.com) Thomas Herman: Well, that was certainly a downer for me too! Nope, Sale was a loss for Kaleil and for me and for our investors. We also see no financial gain from the movie. If you can think of any ways to make money off of the movie, we'd be happy to share them with you! Right now we're just trying to use the Press from the movie to drive traffic to our new business (http://www.recognitiongroup.net) -------------------------------------------------------------------------------- Washington, D.C.: What about the third founder? Do you and Kaleil maintain business/personal ties with him? What was his role - -technical v. business development? He seems to be the only one who made money when he left the company. Thomas Herman: There were two other founders:
Chieh Chung Both continue to be close friends, but George moved to LA, so I don't see him much. I can't say there's a lot of people in my life I haven't managed to keep good relations with even after strife. --------------------------------------------------------------------------------
Pearl River, N.Y.: What is the future for Web development/E commerce? Thomas Herman: I belive we haven't seen ANYTHING yet on the web development front. It's going to become more mainstream and easier to do. Web/eCommerce professionals aren't going to be technical people, they're going to be creative, ad agency, business types because it is going to be easy to do operationally. There will always be new technical frontiers, but much of what the small businesses of the world need will be as easy as MS Windows (which is pretty easy) especially for generations growing up w/ computers. The future of technology in the business is bright as could be. -------------------------------------------------------------------------------- Washington, D.C.: What did you like best and least about being based in "Silicon Alley?" I remember there was a point in the film where a VC was said to have ridiculed the idea of being based outside of Silicon Valley, especially in the East. Were there in fact some advantages in being based in the center of a major East Coast city? (We'd love to develop more of an urban tech industry here in D.C.) Thomas Herman: New York has the infrastructure to handle new business. There are cheap places to live that are supported by a world class public transit system. It's more diverse in terms of the businesses that are here. Obviously if you're doing work in the Finance world, this is the place to be. Downside is that many of the best technologists are in the Valley. If you're doing stuff which is about cutting edge technology, the valley is probably a good place to be, but otherwise, there are a lot of other great places to start a business. -------------------------------------------------------------------------------- Arlington, Va.: Tom, You and Kaleil have very different leadership techniques. I was wondering what both of your backgrounds are in the area of leadership. Did either of you play sports in high school/college or participate in school government, etc.? Thomas Herman: I can only speak for myself on this one.... Kaleil played sports (soccer) in high school, I think he did debate. I was a competitve downhill skier through grade school and high school. I was also an avid rock-climber and I was a spring-board diver in college. Much of my leadership training was through teaching (I taught sports and math). -------------------------------------------------------------------------------- Washington, D.C.: Was it difficult having serious business discussions while being filmed? Do you think it affected the discussions, either by people "playing to the camera" or, alternatively, people holding things back? Thomas Herman: Probably things were held back. I don't think people played to the camera. We were so focused on the business that we didn't pay much attention to the camera. Sometimes we asked Jehane (the filmer) to turn off the camera. -------------------------------------------------------------------------------- Washington, D.C.: I'm curious the effect of the filming on you behavior -- did you find youselves hamming it up, speaking more deliberately, making different decisions? Ansel Thomas Herman: no, not really. -------------------------------------------------------------------------------- Washington, D.C.: You have said that you felt "screwed" by the board of govworks when you were let go. That would suggest that you felt that you should have gotten something out of the whole deal -- vacation pay, severence, stock, etc. Given that hundreds of people lost their jobs and you lost a fortune for investors, do you really still think you deserve a nickel out of the venture? Thomas Herman: no, I really just felt like I had worked hard to build the business and that it was really my business, so I felt screwed because the board didn't want to vest any of my unvested shares when I was fired. They tried to gag me from talking about what was really happening. However, at the time when I was feeling 'screwed', it was not clear that the investors would not make money.... -------------------------------------------------------------------------------- Washington, D.C. : I was blown away by the movie last night. Something I found very interesting was the apparent differences in your motivations for starting govWorks and in general. Have you both had to discuss motivations in order to ensure success in your new venture? Thomas Herman: Not really. I think we might have different motivations, but we're both motivated to be successful. -------------------------------------------------------------------------------- .com trenches, Virginia: hey Tom, Really enjoyed the movie; I think you're geniuses for deciding to capture the whole ride on film. I hope you make more money on "Startup.com" than you did at govWorks.com.
Which brings me to my questions: Lastly, did you ever find out who broke into your office? Thanks! Thomas Herman: we don't make any $ from the movie we thought the documentary would be a good way to show friends and family what we were doing and I don't think there was major impact of having the camera there. Yes, it was a competitor (Not ezGov) and by the time the FBI identified him, he was already in a Federal Facilty for other activities. We did not press charges. -------------------------------------------------------------------------------- Washington, D.C.: Hello. I saw "Startup.com" and was fascinated by your story. It's amazing to see how much passion really went into some of the companies that are currently disappearing as the "New Economy" collapses. That said, my question (which is probably being asked by several people) is "where are you now?" Or rather, "where are you going?" Do you have any plans to work together again? Do you still have any faith in the Internet as a sustainable place of business? Thomas Herman: Yes, I have faith in the Internet as a sustainable place of business (esp. for moms and pops) and I see it as a tremendous (necessary) tool for large corporations.
We have started a new business together: -------------------------------------------------------------------------------- Silver Spring, Md.: On second viewing of the documentary last night, I appreciated even more your candor in allowing the debacle to unfold on camera, and in fielding tough questions from the Netpreneur audience. Could you talk more about the role of the Board: who was on it, their role throughout the life cycle of the firm?
Karl Signell
Thomas Herman: board can be seen here: -------------------------------------------------------------------------------- Arlington, Va.: I saw and loved your documentary at a small theater in Washington, D.C. Subsequently, I have told many friends and family members that you have to see a movie entitled 'Startup.com'. It is the best documentary since 'Hoop Dreams'. However, there are barely any theaters that are showing it. How come the movie isn't more mainstream, especially in a big technology area like Washington, D.C.?
Thomas Herman: good question. you could request a theatre around you to play it or you could ask Artisan to get it to your theatre.
-------------------------------------------------------------------------------- Pearl River, N.Y.: Hi: Whic sectors of IT are likely to have job opportunities in the future, say next year? Thomas Herman: Java, VB/COM/Microsoft in General/Open Source/App Server/XML
Logistics That's what comes to mind in no particular order.
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