Rich Barton and Court Lorenzini spoke last week at a Founder Nexus event on Microsoft’s campus, sharing entrepreneurial lessons with budding Seattle-area startup leaders.
It was a homecoming of sorts for Barton, who began his career at Microsoft in 1991 and led a project that eventually spun out as Expedia.
Barton said the inspiration for Expedia came from his frustration with Microsoft’s internal travel booking agency.
“I knew I could do better if I had access to the system,” he said.
He recognized an opportunity to use burgeoning online services to help connect consumers with travel booking information.
After spinning out Expedia from Microsoft and taking the company public in 1999, Barton started another company — also born from a personal frustration.
“I was shopping for a home, and there was crap available on the web, in this giant vertical of real estate,” Barton said.
Zillow launched in 2004 and became a digital real estate juggernaut, going public in 2011.
Lorenzini’s startup spark came under different circumstances. He helped launch Docusign in 2003 after acquiring a digital signature patent and brand from the remnants of a failed company.
“We took that idea and ran with it,” Lorenzini said.
Barton noted that Lorenzini “recognized the pearl in the ocean.”
Zillow and Docusign are two of Seattle’s biggest startup successes, with a current combined market capitalization of more than $40 billion.
The conversation revealed different philosophies about early-stage company building, from customer acquisition to revenue models to leadership style.
Barton, who also co-founded job review site Glassdoor, built his career on freemium models that accumulate massive consumer audiences before monetizing.
“Once the consumer audience has accumulated, the people in the existing industry who want to sell stuff in the marketplace bang down your door,” he said. “They may not like you because you’re disrupting, but what they do like is the fact that you have lots of customers.”
Lorenzini took the opposite approach.
“I was very adamant about never giving anything away for free,” Lorenzini said. “Consumers in that era — early 2000s — were being trained on freemium, which was really annoying to me, and I still find it incredibly annoying. I don’t like that strategy.”
Barton quipped: “It’s the only strategy I know, Court.”
Lorenzini said Docusign focused entirely on business customers who could pay from day one.
“The only reason it thrived is because we focused on people that could pay us and eventually earned the right to be a consumer brand,” he explained.
The veteran founders also discussed early resource allocation, particularly around sales and marketing.
Lorenzini advocated for direct sales until achieving product-market fit: “Until you get strong signal, only then do you start investing in sales, and after you’ve got sales, go into marketing,” he said.
He said companies fail by scaling prematurely: “Companies die on the hill of overspending: building a sales team and a marketing engine, long before they’ve actually got true pull.”
Barton agreed on avoiding early advertising spend and encouraged building provocative features that generate organic word-of-mouth.
“I always wanted to have a feature that provoked people, such that word of mouth carried naturally, and I didn’t have to spend big money on advertising dollars,” he said. “The most important part of the marketing mix is the product.”
On building culture, Lorenzini was “very intentional” and viewed it as “a strategic differentiator” that helped with hiring efforts. “It still helps us attract and retain great talent,” he said.
Barton took a more intuitive approach, but he was equally committed to certain principles, particularly after learning from Microsoft’s harsh early culture.
“When I spun Expedia out, I deliberately set a culture of mutual respect,” he said, adding: “The wheel of our business does not turn unless all the spokes in the wheel are evenly distributed and tightened to the same tension.”
Lorenzini, who left Docusign in 2008, launched Founder Nexus last year as a community for startup leaders. He’s a limited partner in Seattle firms including Graham & Walker, Ascend, and Unlock Venture Partners.
Barton returned to Zillow in 2019 as CEO, and left his day-to-day work last year. He remains executive chair and is also a longtime board member at Netflix.
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