10 lessons we are taking to heart from internet pioneer and veteran American investor Ram Shriram
In the late 90s, Indian-American businessman Ram Shriram happened to meet two PhD scholars at Stanford University. He ended up discussing a research project the duo were working on, which had the potential to revolutionise how search engines worked. Shriram knew that their work was special and became one of the three initial investors in the project and mentors to the scholars. The two students were none other than Larry Page and Sergey Brin — CEO and president Alphabet (parent company of Google). Their little project went on to create history and came to be known worldwide as Google.
It takes a visionary to recognise genius in its preliminary stages, which is exactly what made our July 2021 session of the Meesho Speaker series so special and important. This month we had the privilege of having Shriram in the house, sharing his journey as an entrepreneur and investor , during a candid chat with Meesho Co Founder and CEO Vidit Aatrey.
The founder of the venture capital firm Sherpalo, Shriram understands the foundation of the internet ecosystem better than most, having worked closely with Amazon founder Jeff Bezos for many years, and having been handpicked by Jim Clark, the founder of many Silicon Valley technology companies such as Silicon Graphics, Inc. and Healtheon, to be employee number 17 of Netscape Communications Corporation in 1994.
Whether you are starting up, or are already on your entrepreneurial journey, you will definitely find some insights from Shriram’s take on being user obsessed (a value we love in Meesho), finding your niche and embracing your failures. Edited excerpts from the chat.
Source codes are software companies’ greatest assets! Narrating an anecdote from the early 90s, when the executives at Netscape had a meeting at Microsoft, to discuss a partnership a year prior to the release of Windows ’95, he relates how selling Netscape’s source code at the time could have been a huge mistake.
“The first lesson of building a software company is, you don’t sell your source code, because then you don’t have anything. So, we ended up saying no to Microsoft, and went on to build a web server by developing a nimble and clean software out of a buggy, bloaty one that was already in the works at the University of Urbana. It certainly posed a unique set of challenges but selling our source code was out of the question.”
After the first generation of coders at Netscape rewrote the “buggy and bloaty” software that they had licenced from University of Urbana, they realised that they had a smaller, nimbler, faster, and better version with a whole new user interface. This opened up a world of opportunities on the world wide web, which democratised the playground and took gatekeepers like Microsoft out of the picture.
“We put it out on the internet and waited for someone to download it. First week we were at 2,000 downloads, second week we saw 50,000 downloads, and by third week we were approaching 100,000 downloads. It was then that we realised that we didn’t need to work with any gatekeepers on the internet and people will come, if they like what they see. That was the genesis of downloadable software on the internet. The smaller, faster, downloadable, and versatile it is, the better it works.”
When Shriram left Netscape in1998, he decided to branch out and explore the consumer business, which turned out to be one of the best decisions of his career.
“When I left Netscape, I said with a vengeance that I would now only build a consumer business. And so, I decided to try my hand at a direct-to-consumer product starting with e-commerce and so, I took on a role as the President of Junglee, an online comparison shopping firm, which Amazon eventually acquired. We built a comparison shopping engine for books, music, and video, which though a primitive and imperfect model, had infinite potential.”
In the early stages of Google and Amazon, there were no opportunities to host on a third-party site. You had to buy your own computers and do your own hosting. Shriram explains that these companies were forced to spend capital to build their own data centres.
“Even though Amazon was forced by necessity to build data centres, this in itself turned out to be a business for them, and gave them the lucky break to leverage their growth. Developing these data centres allowed Amazon to have blended margins that are much higher than it would have been if it was just the retail shipping business.”
Soon after Shriram invested in Google in 1998, “the emerging dinosaurs of the internet age” AOL and Yahoo, licenced the search engine. One day, there was so much traffic that they had to shut down the traffic to Google.com and power Yahoo because of server shortage. And, despite this large amount of traffic, Google wasn’t making a lot of money. But this was the right way forward, says Shriram, who believes that monetisation always follows traffic.
“One of my biggest takeaways from this period is to not get too anxious about monetisation. First build a large base of users that will come to you, and following the traffic, good things will happen. Monetisation is the easy part. Building the flywheel of traffic is the hard part, especially organic traffic.”
When the Marketplace was being built, it was obvious that this was the right business model for Amazon. Rather than buying platforms that had already established this model, Amazon chose to create it internally and that came with its own challenges. In fact, it saw a series of failures before the first taste of success.
“It wasn’t until the failure of a couple of iterations that Amazon got its recipe for Amazon Marketplace exactly right in the mid-late 2000s. We embraced failure each time and learned from it. If you fail for the right reasons and take learnings from those failures and adapt it into the next version or the product, you will eventually succeed, which is what happened with the Marketplace.”
Having worked closely with Bezos, Shriram recollects that one of the most important values he imbibed from him is to always focus on the customer and not competitor.
“I remember that Bezos would always say, ‘I don’t want to hear about any of our competitors, I only want to hear about what we are doing for each of our customers and how we are retaining them, how are we going to nurture them, what new innovations are we going to do for them, week on week while also maintaining velocity.’
It didn’t matter who we were in Amazon. Each of us had to man the customer service lines, so that we knew exactly what our customers’ issues were, what they liked, what they didn’t like, and more. He wanted all of us to hear their feedback first hand. Customer-centricity was of utmost importance to him.”
Having worked at Amazon and Google, where the founders were all very hands-on with their work and highly valued the importance of hiring the right members for their team, Shriram advises every new founder to be a micromanager in the best sense of the word.
“Bezos, I remember, was very hands-on, and would manage the homepage himself, meaning even a single pixel change on the homepage would only happen post his approval. He had a pulse on every aspect of the company, and was always available and approachable 24X7.
Similarly, Google co founders Page and Brin are also huge believers in building their team and nurturing a great work culture personally. They, in fact, were part of the hiring process of the first 1,500 employees of the company.”
When a company grows, it is important to encourage employees to innovate, experiment, and voice their ideas. More often than not, small groups are breeding grounds for great ideas. Google’s university-like atmosphere, according to Shriram, where employees come together to work on projects and innovate, is the primary reason for its many successful products.
“Every employee in the company must have their own individual goals, which would lead to an atmosphere of controlled chaos — aperfect setting for innovation. At Google, for example, Maps, Chrome, and advancements in machine learning and artificial intelligence, all come from the employees and not executives. The people who work at Google thrive in the university-esque atmosphere that the company provides and it has a direct impact on innovation and growth.”
A value Meeshoites have demonstrated since day 1, Speed over Perfection, is an essential aspect of surviving and thriving in any competitive environment. Shriram narrates how working quickly while not compromising on efficiency was a skill he perfected during his time at Amazon.
“While working at Amazon, we all knew that executing tasks without errors is expected from all of us. Beyond that we practised how to execute solutions quickly on a day-to-day basis as well. To succeed in any business, being nimble and quick is of pertinence. It helps to focus on task-oriented goals on a weekly basis and review those goals periodically.”
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