Yahoo’s Jeff Bonforte talks failure, unicorns and the Silicon Prairie

Jeff Bonforte is the Senior Vice President of Communication Products at Yahoo. A serial entrepreneur, Bonforte has founded or led several startups including i-drive, Gizmo5, and Xobni, which Yahoo acquired in 2013. He is an active angel investor and a product development veteran on both the startup and corporate side. SPN sat down with Bonforte…

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Photo credit: Joshua Foo

Jeff Bonforte is the Senior Vice President of Communication Products at Yahoo. A serial entrepreneur, Bonforte has founded or led several startups including i-drive, Gizmo5, and Xobni, which Yahoo acquired in 2013. He is an active angel investor and a product development veteran on both the startup and corporate side.

SPN sat down with Bonforte while he was in Omaha to keynote Prosper Omaha, an event put on by the Omaha Chamber.

 

SPN: This is your first time in Omaha. What do you think?

JB: It’s good! We’re going to the Stormchasers game tonight. I bought tickets last night.

Because I’m a nerd, I like [visiting] the data center. I’m always excited to see that side of our business. For me, when you work in software, it’s virtual. It doesn’t feel real sometimes. We like seeing the servers that have been goofy to us, you know? To physically touch them. It puts a little tangibility into our life. When you serve millions of customers, sometimes the data center is the most real part.

The Prosper Omaha event was cool, too. Everyone was eager to talk about innovation, and they were eager to talk about the boring, tactical stuff as opposed to the glamorous stuff. There was a level of professionalism in the discussion that make me feel this is beyond the beginning stages.

SPN: What makes Omaha an appealing place for Yahoo?

JB: Omaha makes sense for us on several vectors: Good labor pool. The labor pool has an affordable standard of living, which is the challenge we have in Northern California. We want to pay a wage that everyone can raise their family on. That’s challenging in California.

Also, good bandwidth. Affordable power. And a lean forward mentality across the ecosystem–that can be political issues, dealing with the local community. Data centers have kind of weird footprint. We consume a lot of energy, we’re very sensitive about our fiber–who’s digging where. It takes a while to build trust with a community.

SPN: Our readers love a good startup story, and most of all, a good failure story. Can you share one your failures?

JB: I have ‘em all! (laughs) With my second startup [i-drive] I raised $40 million. This was 1997-2000, and I was doing online storage. I spent $5 million for my first 16 terabytes of storage. Today you can get 16 terabytes for around $500 bucks. We had a monthly bandwidth bill of $1.7 million. Ten percent of the Internet was going through my data center servers because everyone was downloading music.

I did a fun little startup deal with this other company called Scour. We did a great deal where they could search our customers’ hard drives and people could find stuff. Type in “Smurfs singing Metallica” and, bam, you get 77 songs. It was great, and then the MPAA shut them down. That company was headed by an entrepreneur named Travis Kalanick, who is now the CEO of Uber.

For Omaha and Nebraska, it’s a full court press

His first big deal was with my company, and my first big deal was with his company. He got shut down by the MPAA for doing a deal with us, and I was thankful that they didn’t know enough about technology to shut us down. We just went out of business the more natural way a few years later.

SPN: What did you take away from i-drive?

JB: I was way too early. Because then Dropbox came along. Dropbox and Xobni, the other startup I eventually led, were started in the same dorm room in MIT. The founders of Dropbox and Xobni were fraternity brothers.

SPN: How do you feel startups have changed since you started out?

JB: It’s a lot cheaper now to do a startup than it ever was. And, as a result, the labor market is far more efficient.

Well, it’s both more efficient and less efficient. Bad ideas get funded today, which creates an inefficiency in the market, with people wasting time on a bad idea that will never go well. Unfortunately, there are enough weird signals of terrible ideas that become amazing companies or bad teams with great ideas. The hard part about the Valley is that it’s so hard to predict because most of the things that succeed are themselves the exception.

On the other side, software isn’t disrupting software as much as it is disrupting other markets. In 2000 it was a company going up against Sun, or Oracle or IBM. That was the friction. Today Uber is going up against an established way of doing things, and software is the facilitator that makes the scale work. It’s a more vibrant form of innovation. There’s a lot of room for startups now.

Photo credit: Joshua Foo
Photo credit: Joshua Foo

SPN: What can the Silicon Prairie as an ecosystem take from what’s going on the Valley right now?

JB: I spoke in Stockholm this summer about innovation. The city with the second highest number of unicorns in the world is Stockholm . A lot of people don’t know that. You’d think it would be another US city, but it’s not.

And Stockholm represents many things that people say would hinder innovation–two years unemployment, socialized medicine, all these things that have historically been considered counter to innovation. But they tapped into entrepreneurs, education, and the industry and investment around that.

For Omaha and Nebraska, it’s a full court press. You don’t innovate because you find one smart entrepreneur out of college.That’s not the breakthrough.

Portland became very innovative in the 80’s and 90’s because Tektronix’s CEO encouraged his employees to leave the company and do startups. Four hundred companies spun out of Tektronix in the heyday of the printer business.

There are employers that can be the driver, but in general that’s not what typically happens. You embrace failure. You make it not a sin to fail. You celebrate success, but you don’t beat down on the failures that are the necessary outcome of pursing that. And when you get there the landlords know how to partner with startups, the big companies know how to partner better, the lawyers understand how to do contracts better.

Don’t get caught playing baseball against the Yankees if your game is basketball

I think a lot of the stuff you often see around innovation can be a fake, artificial constraint. The incubator here or there. Innovation wants to happen. It’s just a matter of reducing the speed-bumps you would otherwise hit. Because people are fragile, and ideas are fragile in execution. A lot of things can go wrong.

And the other thing is to innovate outside of software. Don’t get caught playing baseball against the Yankees if your game is basketball. Just play another game you’re really good at. You don’t have to do iOS apps and Android apps in order to be the Valley. Tap into what you have.

Some of that comes from government supporting core research. Some of it comes from pent up expertise. Some of the best things happen when you have old industry with expertise that’s just dying to breakout.

It will help when you have a couple billion dollar breakouts. That tells everyone, “It’s OK. We can keep going.” Plus, those startups shed employees. I don’t know how many startups have been started by former Yahoo employees, but it has to be in the thousands. How many executives of large tech companies are former Yahoo employees?

While a lot of industry is about protecting their employee base, the Valley embraces change. We encourage employees at Yahoo to stay as long as possible, but we don’t beat them up when they leave. We look forward to working with them again, which we hope is not too far away.

Ryan Pendell is the Managing Editor of Silicon Prairie News.

This story is part of the AIM Archive

This story is part of the AIM Institute Archive on Silicon Prairie News. AIM gifted SPN to the Nebraska Journalism Trust in January 2023. Learn more about SPN’s origin »

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