It’s not 1982 anymore, and Scott McNealy is no longer one of the many relatively unknown entrepreneurs trying to make it big with a Silicon Valley startup. Twenty-nine years after co-founding Sun Microsystems — a company that once boasted a $ 200 billion market cap — McNealy is a known commodity in the Valley, and that makes life a lot easier when it’s time to launch a new venture.
I recently spoke with McNealy as part of GigaOM’s special New Year’s package, and a portion of that interview went up this morning (my favorite quote from the piece: “What Steve Jobs understood was that he was more like Calvin Klein than he was like Andy Bechtolsheim.”). But the post doesn’t cover the entirety of our conversation, specifically McNealy’s thoughts on launching his new company, WayIn, as an IT celebrity and a proven enterprise CEO.
According to McNealy, knowing how venture capital works and knowing seemingly everyone in California makes for an entirely different experience. “It [WayIn] was actually a little easier probably than it should have been,” McNealy told me. “I keep telling our folks, ‘You know, you’re gonna have to keep the intensity level up.’”
Just flip through the Rolodex
The launch was relatively easy, he explained, because McNealy, who serves as chairman of the board, and the rest of his who’s-who board are very well-connected. McNealy, for example, personally called AT&T CEO Randall Stephenson, and now the WayIn app will be built into 12 or 13 million U-Verse set-top boxes.
Ditto for PGA president Tim Finchem, who got WayIn running on the President’s Cup website. To get WayIn incorporated into the Los Angeles Kings’ website, McNealy had to take the extra step of calling a friend who knows the team well.
Other notable members of WayIn’s board are uber-lawyer Larry Sonsini, Newmont Mining EVP Bill MacGowan, television producer Burt Sugarman and pro sports executive Greg Jamison.
“That seems kind of like cheating,” McNealy said. “It’s just been a series this year of reconnecting with all these people I know and connecting the WayIn to these folks.”
Contrast that to the early days of Sun: “I remember a year and a half into it, we finally got a one-line mention in Fortune magazine, I think it was, and we were all excited.”
Getting venture capital right
WayIn was also able to raise $ 6.3 million without seeking out VC funding, McNealy said, which has serious benefits for shareholders. “Raising money was very hard to do [when Sun launched], and we gave away most of the company to the venture capitalists,” he said. “They’re the ones who really made out like bandits on the company.”
“What [venture capitalists] want to do is get a company that’s valued at $ 4 million, give it two [million dollars], and own half the company, he added. “And we’re kind of beyond that day one.”
Not that McNealy is anti-venture-capital. Sun’s early investors such as John Doerr, Dave Marquardt and Doug Boyles added a lot of value, McNealy said, “but they extracted a lot of value in return.” WayIn itself likely will raise VC money in its Series B round, McNealy said, it just has the luxury of doing it on its own terms to a larger degree than most startups do.
Some things never change
One shouldn’t mistake McNealy’s honesty about WayIn’s experience, connections and cash with cockiness, however. The social-mobile space in which WayIn plays is quite different from the enterprise IT world in McNealy made his name and fortune, and all the contacts in the world won’t make up for a short-sighted business plan.
“The real key is to make sure we use all of those assets efficiently and effectively,” McNealy said, “and we’re really taking a big enough swipe at the market to be revolutionary and not just evolutionary.”
Image courtesy of Flickr user deege@fermentarium.com.
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