Why did file sharing drive so much startup innovation?

One of the great things about editing all of our deep-dive EC-1 startup profiles is that you begin to notice the patterns of successful companies. While origin stories and trajectories can vary widely, the best companies come from similar places and are conceived around very strange themes.

Wisely, a common theme that has come from our recent Expansify and NS1 profiles is the centrality of file sharing (or, illegal file sharing if you’re on that side of the fence) and Internet infrastructure in the origin stories of the two companies. It’s weird, because the two honestly couldn’t be more different. Expensify is an SF-founded (now Portland-based), decentralized startup focused on building expense reporting and analytics software for companies and CFOs. New York-based NS1 designs highly-redundant DNS and Internet traffic performance tools for web applications.

Still, see how the two companies were founded. Anna Heim on the Origin of Expenditure:

To really understand Expensify, you first need to take a look at a unique, short-lived, P2P file-sharing company called red swoosh, which was Travis Kalanick’s startup before founding Uber. dressed as her by Kalanick “Vengeance Business” Since your last P2P startup start investigating was sued into oblivion As for copyright infringement, Red Swoosh will be a harbinger of Expensify’s future culture and ethos. In fact, many of Expensify’s initial teams were actually found in Red Swoosh, which was eventually acquired by Akamai Technologies for $18.7 million in 2007.

[Expensify founder and CEO David] Barrett, A self proclaimed alpha geek and lifelong software engineer, was actually Red Swoosh’s last engineering manager to be hired after the failure of his first project, iGlance.com, a P2P push-to-talk program that Skype could not compete against. “While I was licking my wounds from that experience, I was approached by Travis Kalanick, who was running a startup called Red Swoosh,” he said. Remembered that in an interview.

Then you move on to Shawn Michael Kerner’s story about how the NS1 came together:

The story of NS1 begins at the turn of the millennium, when [NS1 co-founder and CEO Kris] Beavers was an undergraduate at Rensselaer Polytechnic Institute (RPI) in upstate New York and found himself employed at a small file-sharing startup called Emster with some friends from RPI. Emster was her first taste of life at an Internet startup during the prime days of the dot-com boom and bust, and where she met an enterprising young engineer by the name of Raj Dutt, who would become a significant relationship over the next two years. decades.

By 2007, Beavers had earned his Ph.D. in Robotic Mapping at RPi and for 10 months at SolidJoint Research, Inc. Tried his hand at co-founding and running an engineer-wood-products company called. But he soon returned to the Internet world, joining a company called Voxel with some of his former colleagues from Amster, which Dutt had founded.

The startup provided a cornucopia of services, including basic web hosting, server co-location, content delivery, and DNS services. “Voxel was one of those companies where you learn a lot because you’re doing way more than what you’re doing right,” Beavers said. “It was a business type built out of a love for technology and a love for solving problems.”

The New York City-based company grew to about 60 employees before being acquired by Internap Network Services in December 2011 for $35 million.

Note some similarities here. First, these wildly different founders worked on both major Internet plumbing. Which is certainly understandable, since two decades ago, building the networking and computing capability of the Internet was one of the major engineering challenges of that period in the history of the Web.

Additionally, in both cases, the founding teams met with little-known companies defined by their engineering cultures and which were sold to large Internet infrastructure conglomerates for relatively small amounts of money. And those acronyms became the lab for all kinds of innovation, even if few people really remember Akamai or Internap (both companies still mind you today).

The group of founders is fascinating. Obviously, you have Travis Kalanick, who would later go on to found Uber. But the voxel network that went to the internap is hardly a fluke:

Dutt will leave Internap to start Grafana, an open-source data visualization vendor that has raised more than $75 million to date. Voxel COO Zachary Smith found bare metal cloud provider, Packet, in 2013, which he ran as CEO until the company was acquired by Equinix in March 2020 for $335 million. Meanwhile, Justin Beagle, who spent time operating at Voxel, has raised about $62 million for his startup, Kentik. And of course, NS1 was born out of that same alumni network.

What’s interesting to me with these two companies (and a few others in our story set) is how often the founders worked on other problems before starting the companies that made them famous. He learned the business, built networks of ultra-intelligent current and future associates, understood business growth and development, and began to build a wheel of innovation among his friends. They even got a taste of the exit without actually getting a full meal, if you’d like.

With file sharing in particular, what’s interesting is the rebellious and democratic ethos that accompanied that world back at the turn of the millennium. Working in file sharing in that era meant fighting big music labels, overturning the economics of entire industries, and breaking down barriers for the Internet economy to flourish. It attracted a strange group of people—the kind of weirdness that clearly has to be what it takes to make good startup founders. This echoes one of the key arguments of Fred Turner’s book, “From Counterculture to Cyberculture

Then the question that arises: what are the “file sharing” markets today that these types of individuals tend to congregate around? One that seems clear to me is blockchain, which has a balance of rebelliousness, democratization, and technological excellence (well, at least some of the time!) and then today there are modern-day “pirates” like Alexandra Elbakyan who are the world’s research and research scholars. Invented and operated Sci-Hub to democratize knowledge.

It’s probably not the current batch of companies that we see that will become the next extraordinary unicorns. But watch the people who show up in interesting places – because their next projects often sound like gold.

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