Last week, entrepreneur Craig Walker announced that he has started a new “accelerator” called Firespotter Labs. The company’s plan is to build roughly three startups simultaneously, and then, before they raise a Series A round of their own, hand them off to teams of individuals who Firespotter recruits. To get started, the company has raised $3 million from Google Ventures, which is also housing Firespotter’s seven employees, including Walker.
It’s far from certain that Firespotter will work – it’s an unconventional model — but it’s clear that Walker could have raised much more than $3 million. After all, Walker cofounded GrandCentral, which became Google Voice when Google acquired it in 2007 for roughly $50 million. Walker also turned around DialPad Communications, a VOIP startup that raised $65 million between late 1999 and 2000 and “spent $82 million” over the same period, says Walker, some of it from Sterling Payot Capital where he was a young venture capitalist at the time. (Later installed as DialPad’s CEO, Walker took it through Chapter 11 bankruptcy, then sold it to Yahoo in 2005 for an undisclosed amount.)
As Walker piloted his car down to sunny Monterey, Calif., earlier this week, I asked him to explain the thinking behind the 8-person incubator, including why he thinks handing off its ideas makes sense. Our conversation has been edited for length.
GrandCentral came out of an incubator of sorts called Minor Ventures, which typically came up with its own ideas, then hired teams to breathe life into them. But GrandCentral was born before you arrived at Minor Ventures, correct?
[Google Voice product manager and longtime colleague] Vincent Pacquet and I had done DialPad, which was about how do I make cheaper calls instead of using phone lines. But we wanted to do more, something that was really rich in features and fun and easier for users. [Meanwhile] Minor Ventures was looking at putting money into a cloud-based PBX that had lots of features and that would be similar, except they wanted to sell it to enterprises for a high monthly fee. So we had similar but different ideas and it worked great, but they certainly didn’t come up with the idea.
Will Firespotter be similar, given that you’ll be hiring people to advance your own ideas?
We’re not hiring people to come build out ideas. We’re putting together a hard-core engineering and design team that will bring multiple products to market from our own lab. We’ll then take them to market and launch them and get customer feedback and do everything we’d do as if we were founders of the company. Then, we’ll bring in other engineers and product managers and a potential CEO to take each company to the next level and to go out and raise a real Series A round.
I don’t see Firespotter as part of the Minor Ventures story. I think it’s more akin to a modern-day Idealab.
Didn’t Idealab burn through something like $800 million dollars in eight months of 1999 or 2000?
Idealab also created more than one multibillion company [including Overture, which Yahoo acquired for $1.6 billion in 2003].
It was a product of the time, too. It [came to pass] right at peak of market. We aren’t turning Firespotter into a [similarly] massive organization. We want to keep our craft, core team disciplined, and we understand that great ideas aren’t these infinitely scalable things.
Part of the reason I like our model is that you can do things multiple times. You can try to capitalize on more than one idea, because a lot of this stuff shares common themes and common DNA.
You’re targeting tools for industries that haven’t yet been transformed by mobile. Can you be any more specific?
Basically, we’ll be able to look for opportunities anywhere. Not everything we’re going to do will be change-the-world type stuff. Some might be fun or a goofy. Frankly, a lot of cool things come out of trying different things. I’m not sure anyone could have predicted how massively useful Twitter has become.
But no matter what we do, we’ll learn the best process for doing a certain thing, and our hope is that as we do more and more of these projects, we’ll become that much more of a well-oiled machine.
How long will you give an idea before pulling the plug?
It’ll be interesting. Those are things we’ll discover along the way. I don’t think we’ll build anything that has really high carrying costs, so it won’t be like we have to shut things down. Our real opportunity cost will be our time, and I doubt we’d spend more than six months primarily focused on a single thing unless it shows a lot of promise.
How will you juggle your recruiting efforts with everything else that will be going on?
Fortunately, people are coming to us. But also, one of the wonderful things that Google Ventures has is in-house technical recruiting, so we’ve been getting wonderful leads through that. Google Ventures says a lot about how they’re entrepreneur friendly, and frankly, they are.
Will Google have first dibs on whatever you roll out? You’re housed at Google Ventures right now.
No, just because you’re funded by Google Ventures doesn’t give Google any special rights. It truly is a third party that’s independently funded.
So, why $3 million? Surely you could have raised more, particularly in today’s environment.
With the money we’ve raised, we hope to be able to create three companies or so a year, somewhat in perpetuity. If we need to raise more money to do that, we will, but hopefully some of our companies will fund future company creation. We want this to be real, living, vibrant model for as long as we can imagine.
Some, like Marc Andreessen, don’t believe you can ‘hand’ an entrepreneur an idea and expect him to be as passionate about it as someone who’s bringing his own ideas brought to life. What do you say about that view?
I don’t think you need to be the first employee to have that passion. [Our challenge will be] to find that person who can lead a product and lead a company. A lot of times, startups change, and it’s the good CEO who is making that happen.
