Diane Greene @ YC Startup School 2013
Done three startups: low-bandwidth streaming video company that came out of Silicon Graphics (Microsoft), VMware, another one she's doing right now.
VMware founded in 1998; created the virtualization industry. Diane left in 2008.
Started with a big vision. Self- and family-funded first funding (Q1 1998); went out for angel money a year later (Q1 1999), tried to get people who understood the technology really well — computer scientists: Bechtolsheim, Hennessy, Cheriton. Subsequently tried to get strategic investors to get into the server market: Michael Dell led the round; was talking to VCs until bubble burst in April 2000.
What smaller thing could they do before their big vision? The first milestone that creates value for somebody: a company, a customer — ended up being a desktop product that let you run Windows on Linux, Linux on Windows. Didn't want to require any specific architecture/platform to make concessions (Intel, Microsoft) to not let them have power. Initially sold product over the internet; supported over email; international from day 1.
How did they price their first product? Put their beta online as 30 day trial; asked for $299 from companies, $99 from hobbyists. Launched at DEMO conference on stage.
Started working with patents on day 1; tried to protect their IP from Microsoft/Intel. Kind of hopeless to protect your IP against a monopoly; VMware's patents were "rock solid" but didn't help them that much.
Looking for a board: tried to find who was best able at helping them stand up to Microsoft/Intel. They wanted Larry Sonsini as he had seen every deal in the world, knew how to negotiate these things. If you have a good reason to get someone powerful on board that's not just the fact that they're powerful, they'll usually join — Diane explained to Larry the complicated situation with Microsoft/Intel; he joined immediately. A board can be really helpful if you get the right people.
Sort of daunting to go into the enterprise market; have to "play the wind shifts" to get there. VMware found a way to help hardware vendors make money: were approached by IBM to put on their powerful, high-margin servers to help them sell them; subsequently created preferred hardware vendors program that everyone got on board because they artificially created a sense of urgency before a deadline.
Put yourself in position to take advantage of lucky breaks. IBM got cold feet due to legal problems; VMware approached resellers instead, gave a keynote at a major reseller conference, then VMware's server market took off.
Bring something to the market that people absolutely love.