Good afternoon, ladies and gentlemen. I’m delighted to welcome you to the fifth and final of our Science Week lectures for 2008. Discover Science & Engineering, in association with the Science Gallery, have brought together some leading speakers during Science Week, and I for one have really enjoyed the lectures that we’ve had, and I’m really looking forward to today’s. Anyone who’s interested in programming and engineering is in for a treat. We’re delighted to welcome Patrick Collison, who’s a former BT Young Scientist of the Year, who co-founded a software company, Auctomatic, which he sold this year, and he now works as director of engineering with the new owners, based in Vancouver. So a big welcome to Patrick. And our MC for today is Liz Bonnin. Liz first started her career presenting on RTE television, and she later moved to the UK to present on a number of TV channels. She’s presented a number of shows on Channel 4, and was also a regular presenter of Top of the Pops. Most recently, she presented the Science Friction programme on RTE, and she’s currently working on a new BBC science series. So I’ll hand you over to Liz and Patrick. [applause from audience]
Liz Bonnin
Good afternoon. It’s my great pleasure to welcome you here on behalf of Discover Science and Engineering. And we’ve got a very special last lecture in our Science Week series this afternoon. It’s my great pleasure to introduce you to a Young Scientist of the Year winner, who was accepted into the prestigious MIT at the tender age of 17, but who decided after just one term to move on and set up his own computer programming company. Now, within the year he sold this company for quite a considerable sum of money, and is now the new owner’s director of engineering, and all of this before the ripe old age of 20. I’m very much looking forward to finding out how on earth he’s managed all of this, and I’m sure you’ll have lots of questions for him as well, but for now would you please put your hands together for Mr Patrick Collison.
So, I mean, despite how it might sound, when myself and my brother John decided to start a company in, I guess, January 2007, it would be hard to imagine two more implausible candidates. I was 18 at the time; John was 16, in transition year. I had just finished my first semester at college. We knew absolutely nothing about business. I mean, to us the idea of starting a company involved, picking some sort of name, deciding we were worth X, and just sitting down and starting to write some code.
And we made a decision to start a company together in January, but we were not able to make it completely definite, and so I actually went back to start my second semester at college, and just as I was about to do that, we decided, hey, no, actually we really were going to do this company. John came over to Boston where I was to spend a month with me, where we tried to work out initial ideas. And on one of the first nights there in Boston, we found that there was this group Enterprise Ireland were holding an event in Boston, where they were inviting prospective entrepreneurs, whatever else. And, I mean, we felt that we were pretty lucky, that we’d just got to Boston, and we’d just decided to do this company, and here it was. I mean, there was this investment dinner that we could go to, and they were going to give us millions of dollars, and it’d be great.
And so we found out about this dinner the evening it was on, and so the dinner was starting at seven o’clock or whatever, and someone happened to tell us about it at, I think, five o’clock. So we decided we were going to go to it, obviously. And then at, maybe six or 6.30 we found that this was actually a formal dinner. And so I went to the wardrobe and looked through my extensive collection of formal T-shirts and decided that none of those were perfectly appropriate, and so at around 6.30 or so myself and John was scurrying around the dorms at MIT trying to find people who had suits and whose suits would fit us. Sometime around a quarter to six [sic] we found something that would kind of pass, and we took the subway to this dinner and kind of turned up at the door five minutes late in these sort of ill-fitting suits and asked to be let in.
And this I think was kind of indicative of our general experiences. I mean, we knew absolutely nothing about how this whole process worked. After this dinner in Boston, we weren’t too discouraged by our initial experiences, and myself and John went back to Ireland and rented a small office in the National Technology Park in Limerick, and pretty much just put our heads down and started writing some code. We knew from the beginning that we wanted to do something to do with eBay. We kind of felt that obviously eBay had been extremely successful, but they weren’t innovating a whole lot, they hadn’t released too many new features, and so we felt that there might be some sort of opportunity there.
What we decided to build initially was what I now describe as this combination of Amazon and Wikipedia and eBay, and it was as terrible an idea as that sounds. But we hadn’t realised that yet, and so we got to work on building it. We spent the first three months, I guess, doing little else but living and in some cases sleeping in this small office in Limerick. And then as we, as things moved forward, and as we realised that we may want to actually launch this thing at some stage, we began to think about other questions like whether we would raise some money or how we would buy servers and whatever else.
Up to this point everything had been funded by our savings, which is to say, our parents. [audience laughter] And so at this point, about three months in, we decided that we may actually want to raise some money. We started looking at the various options available to us in Ireland. I mean, the obvious one was Enterprise Ireland, which specialises in funding start-up companies. And after our great initial experiences we felt that that was a promising option. There was also stuff like county enterprise boards and whatever else, and I guess also private investors.
We had some initial discussions with various organisations, I mean, both Enterprise Ireland and some of those county enterprise boards, but we were, I mean, to say again, we weren’t the most promising candidates. I didn’t have a degree, I didn’t do my Leaving Cert. John was in transition year. We didn’t, not only did we not have a business plan, we weren’t even sure how to write one. And so, needless to say, they didn’t just write us a cheque. So even though we never got a definitive no from anyone, we did not do particularly well on that front.
And so things were looking a little bit bleak. We had this idea which we thought might be kind of OK, but we hadn’t raised any money and whatever else. But then, we knew of this investment group based out of San Francisco called Y Combinator. Y Combinator specialises in providing what they call seed-stage capital. That is to say, as investment amounts go, extremely small amounts of money, in the region of 10, 15, 20,000 dollars. This was in the region of what we thought we needed. We liked the sound of Y Combinator. I knew one of the guys involved in it from a couple of years previously. And so we decided to put together an application. We applied in around April 2007, and were pretty pleased when our application was accepted. And so, Y Combinator, as I said, is based out of San Francisco, and so we basically said to our parents, you know, again, John in transition year and me just finished college, or me just left college, that, ‘Hey, we’re moving to San Francisco.’ And they said, ‘Fine, OK.’
And, I mean, that’s basically what happened. Things have been kind of OK in Ireland for the three months, but we felt that our luck might be better out in San Francisco. So we went out there. We knew nothing about the city. I mean, I remember the, in particular the first night, trying to find a place to stay, which was an interesting experience, but another story. And we met with these investors from Y Combinator on our second day there. And they actually suggested that we merge with another company that they had already invested in. This was two guys from the UK; Harjeet and Kulveer Taggar. And they’d similar ambitions to us. They also wanted to do something essentially competing with eBay, but they’d gone about it in a slightly different way. They had built a marketplace for students, essentially.
And so we kind of had some discussions, talked about where it was we wanted to go. We realised that we were kind of a good fit, in the sense that they had focused quite a bit on the business side and had the different business models at work. They had raised some money, whereas myself and John had pretty much just been writing code. And so in, I guess, May or so we decided to merge, and that’s how Auctomatic came about.
And after that merger, we immediately decided again that we needed to change our idea. And what we ended up deciding to build was power seller tools for eBay. Basically, with eBay, or with any competitor to eBay, there’s this sort of chicken and egg problem of, like, the power of eBay, what makes it so successful is that there are, there’s a huge number of sellers and a huge number of buyers, and there’s this great network effect where they’re all in the same place. And so, for any competitor to eBay to succeed, you kind of need to get the buyers and the sellers simultaneously in the same place. I mean, you could launch a great improvement on eBay in the morning, and it would go absolutely nowhere unless you managed to, like, get that sort of confluence of inputs.
And we’d spent a lot of time thinking about this problem, and we still weren’t sure how we could solve it. And Auctomatic was what we came up with. Auctomatic was going to provide a better interface for sellers who were, say, making a living on eBay, or selling a large volume of inventory. And so these were frequently, I know, retired couples who had started to sell the family heirlooms or something, and realised that, hey, this is actually a pretty profitable business. eBay had never really focused on these people to any great degree, had never tried to make it very easy for them. And so we decided to put a better interface in the whole process, and that way get sellers starting to use our software, and then when we built up some critical mass there, we would also introduce some buyer-side stuff.
And so we decided this in May. We went about building it, essentially, and for the next, I guess, four or five months we did little else but sleep, eat and build our software. We launched it in October of 2007. It did reasonably well. The reaction we got from our initial users was very positive. Over the preceding couple of months we’d tried to work as closely as we could with eBay sellers so that we could get their feedback and make sure what it was we were going to release would be somewhat useful to these people. And it mostly paid off. We found out very quickly there was a huge amount of stuff we still had to do, but what we had was looking like it might be a pretty good idea.
Maybe, I guess, a month and a half after we launched this, we got our first tentative expression of interest from some other companies. Basically this company came along and said they may be interested in some sort of acquisition or something like that. And because Auctomatic was really not the company we wanted to build, we initially weren’t too interested in this. I mean, Auctomatic for us was very much a means to an end. This was just, you know, the Trojan horse by which we were going to engage our much larger ambitions of competing with eBay. And so, when some company suggested something like acquisition, it just, it wasn’t really something that we’d ever thought much about.
But then two other companies came along and said the same thing, and so by Christmas of 2007 we were kind of in this, in this strange situation where we expected to be focusing wholeheartedly on the product and trying to grow it as fast as we could, but actually we were in negotiations with three different companies about some sort of potential acquisition. One of the companies was called Live Current Media. And they were particularly interesting to us because even though they were a public company and had a reasonably long history, they were also reasonably small. At the time I think they were only about, maybe, 30 or 40 people. And so they were much larger than us, but at the same time they weren’t inconceivably large. They weren’t the kind of organisation where you join them and just become a face in the crowd. And so the discussions with Live Current continued, and then in February we ended up signing a deal with them to be acquired. And that, I guess, that finally closed in May of 2008.
And so when people ask what the overriding emotions were as a result of this acquisition, it was not surprise or elation or anything like that. I mean, it was relief, that, like, hey, in this four month process from February to May, like. On so many occasions, there were various things that looked like it would sink the whole thing. But when it all managed to close successfully, it was just like, ‘Hey, shit, thank God.’ So anyway, I mean, this means when there was all this, I guess, media attention surrounding it in, I think, March, was it, last year, it hadn’t even closed at that point. So it really was a long, drawn-out process.
And one of the questions that – well, actually, sorry, I should say that this, by the way, is the official story of Auctomatic. I mean, I’m admitting all the great stories like, I mean, you must know Troy McClure from The Simpsons. Yeah, yeah, right. So at one point there was this investor, Josh Kopelman, who was, who had expressed some tentative interest in investing in Auctomatic. And, I mean, we were in awe of Josh Kopelman. He had founded several extremely successful companies, and, like, the notion that he might have the slightest interest in investing was very exciting to us, and so we arranged to have a call with him, I think it was two o’clock one day in order to give him our pitch. And, I don’t know, two o’clock for us was very early in the morning, but we felt we could make it. We got to bed pretty late the night before, I think it might’ve been five or six o’clock or something, and all I remember is at 11 o’clock the next morning the phone started ringing, and I’m kind of in some sort of half-asleep stupor, just, like, slamming the floor around me trying to find it. Eventually I pick it up, you know, it’s, ‘Hey, it’s Josh’s secretary,’ and ‘can you hold for one second,’ you know, she’ll put Josh on the line. I’m trying to figure out, like, what’s going on, it’s only 11 o’clock. And then it dawns. It was two o’clock Eastern Time, and we were in San Francisco, which is Pacific Time, three hours offset.
And so Josh duly comes on the line, and it’s, ‘Josh, sorry, can you just, can you hold on for one second while I get the team together.’ And so I run into the next room and, like, kick the other guys awake, and it’s like, ‘Hey, Josh is on the line.’ And so, basically, the three of us, myself, Harjeet and Kulveer sort of gathered around, like, you know, the shitty speakerphone in our underwear, giving our pitch to Josh Kopelman.
And so, Auctomatic was, I mean, in one sense it was the story I just outlined, and – sorry, the story I initially outlined, and in another sense it was like a long series of those sort of events.
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