Why Companies Should Hate Peanut Butter

Brad Garlinghouse , CEO, YouSendIt

Brad Garlinghouse, of YouSendIt, didn't have to travel very far to get on his soapbox. Our HQ in Campbell, CA is just down the street from the file-sharing service's office. It was great hosting our neighbor as he told us about why companies should hate peanut butter and entertained us with a few well-timed jokes. 

Brad shared why he wrote the now-famous Peanut Butter Manifesto. He also spoke about why passion is important part of any company, and gave great insights on why startups shouldn't believe in the hype and focus on product.

Feel free to listen to the podcast as you read through the summary of the event below.

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Don’t Spread Yourself Thin

When Brad Garlinghouse was an exec at Yahoo, he had a "Jerry Maguire" moment. Three-and-a-half years into his tenure, he came to an epiphany. Like Tom Cruise in that movie, he realized that the company he worked for wasn't focused. Yahoo had begun to spread itself thin, like a smear of peanut butter on a slice of Wonderbread.

Now don't get Brad wrong. He said there's nothing wrong with the actual peanut butter you put on bread. 

Truth be told, I actually like peanut butter. It was just a metaphor that seemed to work.

It was used, Brad said, by the COO of Yahoo at the time. The COO said the company was spreading its investment dollars like peanut butter. The exec had thought he was making an analogy that would be seen as a good thing by employees. However, Brad disagreed. Then a scathing article on Yahoo came out in the New York Times. At a senior staff meeting, some though the article had missed the mark. Someone said it was a bunch of bull.

I said, "What are you talking about? The article's right."

So Brad's boss told him to write down his thoughts and what he thought the company should be doing differently.

He probably regrets telling me that.

Brad furiously wrote down his thoughts on where the company should be going and what it wasn't doing wrong. Or as Brad wrote:

We lack a focused, cohesive vision for our company. We want to do everything and be everything — to everyone. We've known this for years, talk about it incessantly, but do nothing to fundamentally address it.

Brad had two co-workers read it over. One of them encouraged him to share it with the rest of the company. Eventually, however, the memo leaked out and hit the internet.  As for who was the leak, that's a question for the ages, said Brad. Although, he has his suspicions.

It was just awkward. Not to get too Dr. Phil on you … I was emotionally fragile. [I] got all of these emails, particularly, one peer of mine, and I'll leave it at that, who sent me me this email. I thought it was, to me, very telling about where a leak might come from. You let it go. You can never prove these things.

It’s About Passion

When it comes to focused vision, one thing that companies must make sure they have — passionate people.

If you're showing up to work and it's a 9-to-5 job, go work at HP or work at Yahoo. You want passionate people, to borrow Steve Jobs' quote, "they want to put a dent in the universe."

There were passionate people at Yahoo who wanted to change the company while Brad was there. However, the company still faltered. That's because Yahoo still hasn't found itself. It doesn't know who they are, said Brad. 


Knowing Who You Are

Brad is now the CEO of YouSendIt, which is poised for a name change. That's because the file-sharing service has gone beyond send, said Brad. They're going through a transitions, but they know who and what they want to be. And while Brad hates mission statements, YouSendIt can be described in one sentence:

YouSendIt is going to empower you to share and control your content like a professional that is the one sentence we aspire to be.

Avoid the Hype, Build A Product Instead

Brad recently spoke to Forbes about a second Dot Com Bubble. He said in that interview:

There is something unhealthy happening in Silicon Valley where people are more focused on the hype cycle than building great experiences for their customers.

Brad elaborated on that statement when we asked him about it. He said we "touched a nerve" in a good way. It was obviously a topic he's very passionate about. He says some startups focus on financing as if that were their only product and don't spent a dime on building a prototype.

[The] product they've built is around Series A financing and they built all this hype around financing. Put all that hype and energy around building something beautiful and usable that serves a need and solves a real problem.

Brad said we have a selective bubble right now in Silicon Valley where certain companies are the "cool kids."

I'll wager some of them won't be as successful as we thought.

He used Groupon as an example. Before the company went public, it was valued at $12.7 billion, but stocks have since plummeted and the daily-deal service is now valued at just $3 billion. Two years ago, everyone wanted to work there, said Brad.

Now here we are. Who wants to work at Groupon? Don't quote me on that stuff.

At that point, someone in the audience joked that our Twitter hashtag was "#ZURBsoapbox". All joking aside, Brad put it this way:

The best articulation of this is when the hype of a company gets ahead of the reality of a company to come back into equal.

Our conversation with Brad continued as he took questions from the audience. We'd like to thank Brad for stopping by and everyone who attended!

Don't Miss Out on Our Next Soapbox

Soapbox transcript

Ryan: How's everyone doing? Thank you for coming. I want to welcome you to our second soapbox in our new building which is really nice to have and we have a really great guest.

How many of you remember the movie "Jerry Maguire"? Do you remember the scene, not the show me the money scene but the scene in the beginning of the movie where Tom Cruise furiously bangs out this manifesto that he hopes will fix all the problem he sees in his profession.

Well our guest today had a sort of similar realization as Tom Cruises' character while he was an exec at Yahoo. He had realized his company had lost focus.

I want to get into all of that, but first please give a warm welcome to Brad Garlinghouse CEO of YouSendIt.

Well, thank you very much. It's a pleasure having you here. You're just right down the street, so it wasn't too arduous a journey to get here.

Brad: Very easy, and a beautiful building, I'm very impressed.

Ryan: Thank you very much. We really love it, if you can tell. I wanted to start off by going back a little bit. You have your roots as an investor, an entrepreneur, you became an exec at Yahoo.

Three and a half years into your tenure, you wrote what was called the Peanut Butter Manifesto. What was the company like when you joined? And what was it like when you wrote that memo? And why should we all hate peanut butter?

Brad: Truth be told, I actually like peanut butter. It was just the metaphor seemed to work, and at the time the COO of the company was the person who said we spread around our investment dollars like peanut butter.

He was saying that in a good way so no one was going to be pissed off, everybody got something. And I looked at it as "Oh my God, that's a terrible way to describe it."

So when I joined Yahoo, it was late '02, early '03. The company, and for those of you out in the Valley in those years, Yahoo was on the verge of death. Terry Semel had just come in as CEO, and the company was we're going to reinvest in things, and fix things, and build better products.

I met a handful of Yahoo alums in the audience, and some people who work at YouSendIt are here that were Yahoo those years. It was an awesome group of people, an incredibly passionate group of people who I think had that contrarian, we're going to make Yahoo awesome again.

Yahoo had a pretty amazing run from '02, '03, '04. Part of that was very organic in what we built. Part of that was through M&A.

It gets to be about somewhere around September, October of '06. I haven't actually talked publicly about some of this stuff but it's an interesting story because I went to a senior staff meeting, and that same day, it was a Tuesday.

How I still remember it, and this article had come out in a New York Times written by a reporter called Saul Hansell who covered the Tech Sector for the New York Times. He wrote this article and it was frankly a scathing article about Yahoo. We had senior staff that day.

And there was this kind of general sentiment amongst a lot of the leaders at Yahoo that it was bullshit. Saul's full of shit, he's a pain in the ass, it wasn't fair. The New York Times loves Google, they write about Google all the time which is true.

But I read this article and it's senior staff, what are you guys talking about? The article's right. If you go back, you'll have to look and dig but I remember reading the article and he's spot on. My boss at the time basically wanted to shut me up at staff and said "Tell you what. Why don't you write what you think we should be doing differently." And I'm like, OK.

I think he probably regretted that. I'll shorten this a little bit, but over the course of a few days, myself and there really are a two co-editors that deserve some of the credit for some of the Peanut Butter stuff.

A guy named Sean Flynn who's now at Shasta Ventures, and a guy named Eric van Miltenburg who's been dumb enough to follow me along in my career and we work together again, he's great.
Anyway, I was a little bit nervous about how my boss at the time was going to react to what I written, so I first shared it with Jerry Yang and David Filo. And U had a good relationship with both those guys. And I cared a lot about the company and I think that was evident in the document.

And Filo, who's always is reading email but he probably gets thousands of emails a day and probably replies to two. I didn't really expect a reply from Filo, I thought probably I'd get a reply from Jerry. Filo responds 30 minutes later, and is like you have to share this.

So I started sharing it with a couple people on a very narrow base. It took about eight weeks for it to leak. Which happened over Thanksgiving that year. It was written early October and leaked at Thanksgiving.

Ryan: How did it get out?

Brad: That is a question for the ages. I have my suspicions about who leaked it. This very specific example, I got hundreds of emails from people inside the company and I saved them all.

You show up at work the next day, and this thing had come out the next day at the Wall Street Journal. It was just awkward. Not to get too Doctor Phil on you, but I was emotionally fragile.

I got all of these emails and in particular there's on peer of mine, I'll leave it at that. One peer who sent me this email. And I thought, to me, very telling about where a leak might have come from. But you let it go. You can never prove these things.

For those of you who don't read Kara Swisher's blog, she has microphones in that place. I don't know how she knows half of what she knows. It's quite impressive. That's the long story.

Ryan: No, no, no, no, no, it's perfect. I love long stories. You can go on forever, I love them. I wanted to ask you specifically about a certain point that you've made. And I want to read it here because I want to actually put it correctly.

"We lack a focused cohesive vision for our company. We want to do everything, and be everything to everyone. We've known this for years, talk about it incessantly, but do nothing to fundamentally address it."

I wanted to ask you how much does a focused, cohesive vision shape a product, a company? What are the dangers without it? And where was Yahoo faltering in that?

Brad: Well I'll take this it in reverse order and I'll probably ask you to remind me of the first part of that question. Where Yahoo faltered in it is, when I got to Yahoo, as an example, Yahoo Mail was about 10% of all page views on yahoo.

Over the years Yahoo mail got bigger and bigger and bigger and got to the point it was representing 40%-50% of all pages on Yahoo. It got to the point where 40+% of all traffic to the Yahoo homepage went to Yahoo Mail within five seconds.

So in many ways we did research on what the Yahoo brand represent? I used to do this exercise at Yahoo off sites. I would say when I say Skype, you say 'voice', when I say Paypal you say, help me out.

Audience response: Pay.

Brad: When I say eBay, you say...

Audience response: Buy.

Brad: When I say Google you say.

Audience response: Search.

Brad: When I say yahoo you say..

Ryan: I think someone said crap in the audience.

Brad: Therein lies the problem. The Yahoo brand increasingly was like, what does that even mean to people? But other companies have dynamics like this. But to do marketing around Yahoo is difficult.

And I remember there being a marketing campaign we did around Yahoo Search, cause search obviously, as we've seen from Google's financial results a very lucrative market. But that mean, are we Yahoo search? Are we Yahoo mail? Are we productivity apps? Are we content?

Over the years, you've seen, depending on who was the CEO and there's been a lot of them recently, you would have answered that question differently. Scott Thompson was taking the company more towards e-commerce and commerce in general.

Ross Levinsohn, he was only interim CEO, but he was very much content content content. Carol was taking more towards the content strategy. To me, Yahoo's roots and the content strategy for Yahoo while I was there, was always an outcome.

What I mean by that is people came to Yahoo for a utility. Yahoo mail, search early on, directory early on, but then things like Yahoo Mail. And the content, the homepage was almost an interstitial.

The data about 40% of all traffic on the homepage went to Yahoo Mail within 5 seconds tells you it's an interstitial. The homepage is an interstitial that actually is a billion dollar interstitial. Search box and other ads on the page, it's a billion dollar page.

I think Yahoo still hasn't found itself. I am totally rooting for Marissa [SP]. I think they should probably be bold and buy something of consequence and make some bets. We'll see.

If you believe Kara's microphones, it sounds like there's something cooking now. She posted yesterday that maybe there were two deals of consequence being discussed. I have no idea if that's true or not just to be clear. I'm repeating what Kara wrote.

Ryan: What is your speculation?

Brad: I don't know.

Ryan: I want to go back to the focus grace of vision and how that kind of shapes a product and a company. I think you've hinted at it with Skype you know it's voice. With Google you know it's search. And with Yahoo I think it's, crap, someone said. How important is that, in your view?

Brad: I think at the earliest stage of a company, I've had the good fortune of having done a couple start ups in my career. And I think in the earliest stages of a company, it's everything. I think that as you look at companies that have been very successful, you can pick on a Paypal or a Skype and I mean pick on it in a positive way.

There was sometimes an individual and sometimes a strategy that was very much clear about what they wanted to be in life. I respect the fact, and there's a lot of start up oriented people in the room. I absolutely respect the fact that in a start up you have to pivot. Because it isn't working, I have to do something new. I kind of hate that.

The reason is all the passion and energy you brought to bear as a founding team, and founding employees was focused over here. And then on a Thursday you show up and say, "No we're going to go over here." I think so much of that early success, whether it be success in recruiting, success in making yourself look bigger than you are is about the passion.

We have three stated values at YouSendIt. The first one is be in, passion. If you're showing up for work and it's a 9-5 job, go work at HP, or maybe Yahoo. As long as you work from home. Can't do that from home. But you wanted passionate people who, to borrow the Steve Jobs quote, "they want to put the dent in the universe." And it may be that is in this little tiny thing around some small niche that not many people know about.

So what? The passion to me is everything at the early stage. Some of you may know I wrote a kind of retrospective on the Peanut Butter Manifesto this past January and posted it on a LinkedIn blog.

While I very much stand by the Yahoo lacks accountability, lacks focus, and some of these things. In retrospect, after years of more experience, I think that's a symptom of something deeper and that's a cultural problem.

I think Yahoo's culture had atrophied from this passionate entrepreneurial group of people who wanted to change the world to people who wanted a job and Yahoo was a place to be and the passion had just atrophied over the years. And if you can build and maintain that as a start up, so many other things will take care of themselves.

Even when I interview people now, YouSendIt's beyond a traditional start up stage for sure, but when I'm interviewing people one of the things I'm interviewing for is passion. Is this somebody who is passionate about what they do?

It doesn't need to be they're passionate about what YouSendIt does, has to be passionate about what they do in life. I don't care, it's just bring passion to what you do.

Ryan: It's be passionate about the thing you are doing yourself. Whether it's outside of life, or whether it is your particular skill set within this larger vision.

Brad: I completely agree with that. That's one thing that's hard about some of these pivots is, and I can't think of an example off the top of my head but you know a company's really passionate and I'll see a founder or CEO just pounding the table out.

We're going to revolution this wing nut, and next week it's something totally different. I don't know how you translate that passion over to that new segment. You've got to survive some time.

Ryan: Do you think that tendency to need or want to pivot is really because companies have not really established what their focused vision is or that they've failed to establish what they're actually going after?

Brad: I'm going to slightly dodge the question only because I don't think it's binary like that. I think there are so many reasons, I was talking to a gentleman right before we started up here and he has done four start ups, and one had gone through to an IPO, which frankly, statistically, he's doing great. Very successful.

So I think there's so many things that impact whether or not a start up works. Passion is necessary, but not sufficient. Making sure there is a market opportunity of consequence. You see a lot of these start ups you're like "Oh, that's really interesting"

I'll pick on one. I have no involvement with this one and I apologize to the founders of this. It's the dog babysitting thing. I think it's up in Seattle. I can't remember. Does anybody know what this company is? It's basically like an exchange, a doggy daycare thing.

Find somebody to watch your dog while you're on vacation. I don't know the founding team luckily, so I'm not speaking badly of them but it's one of those things like, OK, that's kind of interesting, but is that a life style business?

She might say I'm really passionate about making a universe in this small way fair enough. But if I were an investor looking at that I would go that is not a big opportunity. My personal judgment.

Audience member: [inaudible 16:16] that don't have dogs.

Brad: I do have dogs. I have never shed as many tears in my entire life as when my dog passed away. I didn't even [inaudible 16:26] like she died. [inaudible 16:28] Let's not talk about that.

Ryan: That's OK. I felt the same way when mine passed, so. Don't worry. Don't worry. Maybe if it was an exchange of daycare for kids or something, maybe it would work then. I don't know. I don't have kids, sorry.

I kind of want to transition that a little bit in terms of YouSendIt. You talked about some value points that you guys have in terms of passion and I kind of want to know how that laser focus on vision and cohesiveness has carried forth from like AOL to YouSendIt today and how that's shaping what you're doing over there.

Brad: I do think that so much of a company emanates from the culture you create. And that culture emanates from the leadership team. Not just the CEO, but the leadership team. Yousendit has been in the good fortune of having a ton of wind at our back, blowing pretty hard.

As I look around the room I see lots of devices in people's hands and just the fundamental nature of people wanting to access, manage and store their data in the cloud so they can access it on their various devices has created a ton of demand for services like YouSendIt and others.

I would actually say it's almost through serendipity that YouSendIt finds itself where it is. YouSendIt started it life as a pretty straightforward, hey we need to send large file in effect.

Now we find ourselves in a juncture where we're touching millions of people and millions of files when people want to do a whole another set of things with those files. One of the things I'm fond of saying is YouSendIt has gone far beyond send. And we'll most likely rename the company, almost certainly rename the company because so much of our product portfolio is not encompassed by our current name, and it's more a reflection of who we were as contrasted to who we aspire to be.

The company is a few factoids, 60-70% are business customers. We have 40 million registered users, we get about 30,000 new registrations a day. And we are reasonably good in the freemium model of converting some of those registrations to paid seats.

We're getting better at converting a single paid seat into upselling into a team group of paid seats into an enterprise. We have active users in 98% of the fortune 500, and customers as large as the Fortune 50 with a 20,000 seat license all the way down to a single seat architect down the street.

Ryan: How do you, at this point YouSendIt has kind of evolved beyond send, and now there's other things out there as well. Box, Dropbox, Microsoft, Yammer, and all that stuff. How do you guys differentiate yourselves? And what is that central vision, that central Ebay buy. YouSendIt what?

Brad: For us, the core of YouSendIt is going to empower you to share and control your content like a professional. That is the one sentence of who we aspire to be. I think there's a couple things in there that I'll elaborate on about how we compare and contrast to some of the competitors.

First of all, there are 60-80 companies that we compete with. There are actually three that do more than $50 million in revenue. And they're the names you mentioned, well I'm not counting Microsoft, they're a different category and I'll talk about them in a second.

Box, Dropbox and us have kind of emerged as some of the leaders in the category. Dropbox is doing a phenomenal job serving what is largely a consumer centric solution.

As one point of evidence around that, about 6 or 8 weeks ago we bought a company. At the same time, Dropbox bought two companies. The companies they bought were a music company in effect, and a photo company. That's great for more a consume- centric use case.

We bought a company called Found, which is much more looking at a utility for more of a professional use case. What Found does, which by the way if you're on a Mac you should absolutely check it out. It's an awesome piece of software. It's only available on the Mac right now but we're moving it to the Cloud.

The idea being, almost everybody in this room I would wager uses multiple cloud experiences. You might use Dropbox but you probably use Gmail, you probably use Exchange Server, you probably have a hard drive, which is effectively a private cloud.

You have all these cloud experiences and all of a sudden you can't find something. What Found is basically doing is authenticating against these different services, taking metadata from those objects you've stored in these different places and creating what they call a 'found fabric'.

Which then they index and allow, the first application on it is search. Thus the name Found. We actually think about how we could light up the metadata in ways to help you be a smarter person in effect. Sorry, you asked about...
So Dropbox is focused on a consumer audience. They can do great in the consumer segment. We want to do great in more of a small business, business segment. Box is much more of a direct competitor.

The biggest difference between us and Box frankly is they have a strategy and vision which is all about "Come to me. Change your workflow and build applications on me."

We take the point of view of don't change your workflow. We integrate into Outlook. We integrate into Share Point. We have out of date but we will update integrations into Adobe using Adobe's SDKs.

Our viewpoint is no matter where you work already, we want to extend that. That's certainly true. We lost a new iOS for the iPhone app recently. Which I think is a great manifestation of that.

We really just embrace this idea of we work where you work. And I think if you look at Box's strategy is more about 'we're a new platform go build on top of us'.

Ryan: So you're about getting into the workflow as opposed to creating another workflow for people to get to.

Brad: My life's really complicated.

Ryan: So is mine.

Brad: I don't think people generally want yet another...

Ryan: Thing to worry about.

Brad: Thing. I think over time, I think, to be fair... I'm not trying to speak for Box's strategy as much as I probably have, but I think they would articulate a "No, everybody's going to use Box, so we can all share with Box". I actually enjoy following Aaron Levie on twitter because he talks about how Microsoft's going to go out of business, and SharePoint is going to die.

Share Point is 78% of the Fortune 500 and that's continued to remain steady to slightly increasing. We integrated with Share Point because we feel like the reality is we're a small company, Microsoft's a rather large company.

We'd rather look at how do we work alongside SharePoint and make your SharePoint applications or SharePoint files mobile, where SharePoint doesn't have a mobile application. Pieces like that.
The last thing I should have mentioned is security is a differentiator in this space. From the earliest days of YouSendIt we took encryption very seriously and even to this day knock on wood we have not had any issues.

So we try to take that pretty seriously given the professional use case. What I'd like to say and I'll say in a smaller audience, crassly, when a Fortune 50 company before they'll sign a 20,000 seat license, they give you a proverbial proctology exam to check for your security.

So our single seat users get the benefit of a Fortune 50 security review that I think has served us well.

Ryan: Awesome, nice. I kind of want to go back, it sounds like you guys are narrowed in on this inserting yourself into your workflow. We make it work for you type of attitude.

When there are these competitors, how do you fight that temptation to start spreading yourself thin like peanut butter? Also, what was YouSendIt doing right before you became CEO?

Brad: One of the first things I heard when I joined YouSendIt was, are we a consumer company, or an enterprise company? I do think there was a lack of focus in terms of what was the priority? And by the way I would say YouSendIt is still a company in transition.

I feel fortunate that we have a ton of tailwind and we have an amazing new management team. We just hired a CFO who's got a ton of IPO and M&A experience at Omniture and more recently at Ancestry, who just joined this week.

But it is a company in transition as we I think do do a better job. Let's make sure we're very focus. As point of factor on this, I literally just finished meeting with every employee in groups of ten to talk through, here's an eight slide presentation about who we are and what we're trying to be. I wanted every single person in the company to hear from me here's where we're trying to go.

Ryan: You're trying to get buy-in from everyone.

Brad: Buy-in or dictatorship.

Ryan: Isn't that the other definition of CEO?

Brad: You seek buy-in

Audience member: [inaudible 26:10]

Ryan: Well, I'm going to have a talking to after this.

Brad: Yes, I was seeking buy in. I was seeking evangelism. I was also seeking if people have good questions about why this is the wrong strategy in where we're trying to go. Your employees are your first evangelists.

Every employee should be able to articulate in a short description who are we, who we're trying to be? Because you can't, especially as the company gets bigger, you can't help prioritize every single task. So you have to articulate "Hey big picture, here's where we're going and here's the priorities at a big level."

Then everybody in their respective groups whether it be design, engineering, what have you, needs to translate those macro priorities into here's my job today, here's my job this week, here's my job this quarter.

Ryan: Right. It's like a mantra or a mission statement. What are those for YouSendIt?

Brad: I personally hate mission statements. We had an all hands back in November. The company kind of... It had a mission statement but it wasn't very good. I'll tell what our version is in a second.

I decided to put up on the screen some example of mission statements. And if somebody, you guys are on various devices, you can look up Barnes and Nobles mission statement. No shit, it's three paragraphs long. You're like, "But of course it is, it's Barnes and Noble, it's going out of business."

In contrast, Nike's mission statement is somewhere along the lines of "To inspire athletes everywhere." That's cool. They sell shoes to inspire athletes everywhere. OK wait a minute, how does that align?

Ryan: You can see it in your head, it creates an image.

Brad: Yes, and I think a lot of us, how many of us wear Nike clothing or shoes? I'm not an athlete. I like to pretend. I think they do a brilliant job when they highlight a Michael Jordan or what have you. We aspire to be like Mike type of thing.

YouSendIt, I don't call it a mantra or mission statement, just that one sentence of who we are. "We empower people to share and control your content like a professional." As simple as that. Control is an absolutely important part of it. One of the challenges with some solutions in our category, and I bet many people in this audience have had this experience.

You share a folder whether it's Dropbox or somebody else. Now somebody else can do things to it as well and all of a sudden the file that is stored on your hard drive is no longer what you thought it was. And it ended up being 30 hours of work or what have you that got changed or overwritten.

This stuff happens a lot. And so, we think a lot about empowering people to share and control your content like a professional. That control part is really important.
You'd be amazed how popular the simple feature at YouSendIt is. We have a read/receipt function. Not that hard. All it's doing, it's saying is...

Ryan: "Hey, I read this."

Brad: If you sent somebody something and just sent an email saying,
"Hey, they downloaded it." Well there's a lot of people, whether you are in the graphic design business or architect or a lawyer, you want to know when that person went and if it's your photography client, say you took pictures for a wedding.

When your client goes and downloads it, you want to know that happened at Tuesday at 3:00 so you can call them at 5 and talk to them about them.

Ryan: Or yell at them a lot.

Brad: Whatever, right? Little features like that better enable you to control your documents, as we increasingly move to this world three to five years out, I think it's more and more invisible to us where we're storing and accessing and managing our files.

But you want to know they're secure. You want to know the control aspect around them. It's one of the reasons why I think the Found acquisition is very important strategically to where we're going.

Ryan: I have one more question. I read an interesting interview with you...

Brad: Oh, no.

Ryan: In Forbes, about a second possible Dot Com Bubble. They were asking your opinion and you said and I quote "There is something unhealthy happening in Silicon Valley where people are more focused on the hype-cycle than building great experiences for their customers". Can you elaborate on that?

Brad: I'd love to elaborate on that.

Ryan: What was that hype-cycle that can damage a product before a product even starts?

Brad: You touched a nerve here. I have some passion.

Ryan: Good.

Brad: In a good way. I love talking about this in an entrepreneurial start up kind of environment. I'm a very amateur angel investor. I will meet with companies on occasion, I've been too busy in the last year since joining YouSendIt.

I'll meet with a company and I'll feel like the product they're focused on is raising their money. They haven't spent shit for time on building a prototype or building something or testing something. But the product they're building is a Series A financing.

They built all this hype around financing. Put all that hype energy around building something beautiful and usable. It serves a need and addresses a real problem.

My point is I think there's something going on in the valley right now. People smarter than me have said there's not a bubble, there's not a bubble. Listen there are companies that are trading at valuations that make no sense.

There are also companies that I think some of us have seen, that's a really cool idea they can't even get funded. I don't think there's a global bubble going on the way, I'm a little older these days but I was out here '97, '98, '99 through 2000, 2001. That was a bubble like no other.

But I think we have a selective bubble that there's a certain number of companies that have been dubbed the cool kids. And I will wager some of them are not going to be as successful as we thought.
By the way I'll pick on a couple cause these are more public versions. Two years ago I remember, two years about this time of year, everybody wanted to go work at Groupon. It was like holy shit, it's killing it, everyone let's go work at Groupon.

I remember worrying about retaining people that were working on my team. Here we are. Who wants to go work at Groupon? Don't quote me on that stuff.

I think that the best articulation of this is when the hype about a company gets ahead of the reality of a company, eventually those things have to come back into equilibrium.

For Zynga and Groupon, the forcing function was the transparency of the public markets. Other companies there haven't been that forcing function yet. So it will be very interesting to watch. I think you absolutely see companies that are trading well above their reality. That eventually, I guarantee that will come into equilibrium.

I can't guarantee when or how or those kind of things, but I would rather be involved as an investor, as an operator in companies where, I think at YouSendItour hype is behind our reality.

I think we've had a remarkable run across lots of different very clear metrics and it's up to myself and the new management team to foster that going forward.

I think what I was talking about in the Forbes article and I think that is a reasonably fair summary of what that quote said is I feel like there's companies that focus more on driving the hype cycle than on driving the reality.

I think sometimes it gets so out of whack that you hear some of these pitches and you're like what are you talking about? That's my soapbox.

Ryan: That's the right place to be.

Brad: Exactly.

Ryan: With that, I want to open it up to audience questions and I know Peter's already got his hand up, so we'll start there.

Peter: Just a question about your company's strategy and stuff like that. You mentioned Box and Dropbox. How about Intralinks and the space that they're in. Do you see them more wanting to move into your space, or do you kind of want to move up market into that kind of super secure area?

Brad: So the question Peter is asking, there's a company called Intralinks which is a public company. I think about a $200 million market cap and it has been struggling. I think, I don't follow that closely, one point of evidence I don't consider them much a competitor, they provide very secure data room for M&A. If you're going through a big M&A event, that's where the due diligence room will be in an Intralinks data room.

I think Intralinks has found, they charge a shit ton of money for that service. And if you think about well you can do 99% of exactly the same stuff for 1/100th the price on YouSendIt, that's a tough place to be if you're Intralinks.

I don't consider them a competitor only because I'm not going on that super high end market. I think they have a tough position because they have an extremely high premium price point, narrow market that's kind of getting eroded because, granted, if you're talking about Exxon-Mobile merging, maybe you want Intralinks as your solution. But there's not many Exxon Mobile deals that require that level of attention and management of who's accessed what, that type of stuff.

Audience member: Are there any specific articles where you've found more success than others, or any specific demographics?

Brad: I'm thrilled you asked that question. When we were talking earlier about the differentiators, YouSendIt really has historically and we were doubling down in this direction, we have a very strong base of creative professional users. I define creative professional kind of broadly. Meaning not just architects, CAD designers, photographers.

We just signed, I'm not sure we talked about this publicly, but why not? We just signed a deal with Miller Coors. Miller Coors, interestingly, it's not a traditional deal in that you have say 1000 people at headquarters.

It's really for the agents, truck drivers, sales reps where the marketing group back at headquarters wants to make sure the sales person shows up at the Safeway down the street that the point of sale stuff, the end caps are done the way they're supposed to be done and things like this.

So it almost extends the definition of what a creative professional is. It's really creative professionals and their networks. Creative professionals are absolutely our core base and we'll continue to invest in that.

Audience member: How do you compete with the mindset that Box is sort of bigger. You're kind of dealing with the mindset that most people probably came to the room didn't know that YouSendIt does what you just said they do. So how do you kind of work on that and compete with that?

Brad: One way you overcome them is you come do these soa boxes and you talk about it. Here's the things you do. You get more proactive in talking about your business. You spend more dollars on marketing. You probably rename the company because it's called YouSendIt and you're not just send.

But the other thing I want to caution and I probably say this in context Ryan was asking about the hype factor. We live in a bubble and it's called Silicon Valley. The echo chamber of silicon valley, it's an echo chamber. You can be really effing good in Silicon Valley.

I pride myself on the fact that, I grew up in Kansas and when I was at Yahoo and I had a question about what do real people think? You guys are real people too. But I would call high school friends, I'd call college friends who live in towns like Dallas and St. Louis and Minneapolis.

I think as you get outside of the echo chamber of Silicon Valley you get different impressions of even our categories. Which I bring that up. I think the metrics speak for themselves. We have 40 million registered users, Box has 13.

I get they've done a brilliant job, and I credit Aaron and his team immensely. But I think our metrics speak for themselves. But we also do a better job without saying our brand.

Audience member: Is this a Yahoo problem too, that you are in? Where the Midwest really loves Yahoo.

Brad: The Midwest doesn't love Yahoo either. I think that's a different problem. The YouSendIt brand does mean something very specific. It's too specific and too narrow. It's specific but also restrictive.

We want to step back and have a product that does send, but we have a portfolio of products that do other things already.

Download if you have an iOS device. Download the new iOS app we launched a couple weeks ago. It has fFour and a half stars and it is a great manifestation of a broader portfolio.

Ryan: Anyone else? Next question?

Audience member: You said it's had perhaps a bit of a tumultuous history, change of leadership and you talk about hiring people with passion. Here you're taking over a company and trying to instill that passion.

I wonder if you can talk a little bit about what it's been like going to YouSendIt and turning it around?

Brad: It's interesting you choose that word. There are people who said it's a turnaround. It's a turnaround that grew from $39 million to $57 million in revenue. So it's a turnaround that has some great characteristics of a turnaround. If every turnaround looked like that that would be great.

That being said, I think the culture of the company wasn't in a great spot when I got there. I think attrition of employees was high. It does, it takes some time it takes some energy.

There's a handful of people in the room I worked with before, either directly or indirectly. It's a reflection of who I am. I'm a very passionate person. I'm not going to go into something I don't believe.

I left AOL in large part because I lost faith entirely that the turnaround was possible. There's a Warren Buffett-ism of most turnarounds don't turn. I increase it to the point of view that I lost passion, so I'm "Alright, I'm out."

And for me, I got a lot of passion of what YouSendIt's trying to do to put our dent in the world. And I think there's a core group of people there who are fabulous. I think if you talk to people there, the culture change in the last year has been pretty profound. Although, I love this building, we can move in here.

Ryan: I don't know. How much are we charging for rent nowadays, Bryan? Next question, there in the back ... Forest.

Audience member: I have a couple questions about your time back at Yahoo, Ross Levinsohn left Yahoo last July and was replaced by Marissa Mayer. Do you think Ross would have been a good leader for Yahoo, and did the Yahoo board ever approach you to potentially take over the CEO spot?

Brad: On the second question, the shortest answer is just no.

Ryan: Did it have something to do with the memo?

Brad: No, actually. I had really good relationships with some of the board members. I'm going to leave that one alone. The first part of your question, Yahoo, Marissa, Ross.

Audience member: Yes. Do you think Ross would more effectively lead Yahoo than Marissa?

Brad: I'm not a friend of Ross' but I like Ross a ton. I think Ross would have been a very capable CEO of the company. I think he would have been an effective leader.

The Marissa CEO was a bigger risk and bolder. Is it going to pay a dividend? I don't know. I think if Ross was going to become CEO, you could have plotted the strategy of the company continuing to go down the content-centric view giving Ross' heritage and what he's good at and what he does. I think that's an interesting strategy of the company. Whatever.

With Marissa, I don't know what you're going to get. I don't mean that in terms of her leadership I mean that in terms of where is she going to take the company. What are the big bets she's going to make from an M&A point of view or investment in new products?

I think that's still to be determined from my point of view. I'm totally rooting for Yahoo. I think a lot of people who were at Yahoo, it was really informative for me. I loved my experience there I would love to see the company reborn.

That being said, having spent two years in the kind of "Hey, can we turn AOL around?" Whoosh, AOL in fairness was in a darker place to start. But I think it's still hard. Once consumer sentiment shifts, it's really hard to get it back.

Ryan: We have time for one more question.

Audience member: I was just curious, when you mentioned there were three things you looked for when hiring, you mentioned passion, what are the other two?

Brad: There's three values we articulate at YouSendIt. One is Passion, be in. The second is authenticism. Be real. The third is be bold. Take risk, be bold. The idea around those is one, around passion I kind of talked about.

Two, I guessing everybody here at one point or another has worked at a larger than 100 people company. And as you get into these bigger companies, you get politics. You get people that aren't actually saying what they think.

At AOL there's an expression which I have to, for PG-13 purposes edit a little bit. It was called Grin effing. The idea being you're in a meeting, and this is an AOL-ism. I'd never heard this expression before.

The idea being that you're talking about something and you're like, "Yes, yes, yes." You walk out and you're like, "Nope." I had never heard that expression until AOL. And actually, I saw it happening.

So one of the core values for YouSendIt is be real. Even if you don't agree just put it out there. We can constructively and you know, don't have to fight about it. Just be real.

I think my leadership style of the company is pretty candid. People ask me questions sometimes that frankly I'm not keen to answer in front of the whole company.

We kind of do an every Monday lunch like this. And sometimes I get questions I'm not super psyched to answer but you have to answer it. I think you got to be authentic and real about your communication style.
The third one, about being bold, I just think as companies gain an inertia. Even for a company like Intralinks, it's just so hard to be bold and take risk and do something different. And I want us to instill the fabric of our culture, like, let's be bold, let's take risk every day. How can we do this differently that's not captive by what we used to do.

There are example of YouSendIt still behaving in a way I think is a little bit captive of what we used to do. And I think that's part of the shift, but those are the three values we talk about. Be in, be real, be bold.

Audience member: I like the last one because many companies want you to grow and do things but if you do something to be bold, you're chastised.

Brad: A great culture in my opinion encourages risk and is tolerant of failure. Nobody wants to fail, but you have to create an environment where if someone tries something and doesn't work they don't get fired. That will be an instant way of discouraging anybody from taking risk.

Ryan: Very good. And on that note, thank you very much Brad.

Brad: Thank you.

Ryan: Thank you everyone for attending. It was great fun, thank you so much.