Alberto Lugo: Welcome my friends to a new episode of the successful blunders podcast where we talk about failure with successful entrepreneurs, so you learn what not to do in your business, so you can scale fast. And in this episode, we have Adam Beguelin, Co-founder of Holberton, Puerto Rico. Specialized school in software development. But I am going to let Adam talk a little bit about himself and what he is doing right now. So, Adam, welcome to the podcast!

Adam Beguelin: Great! Thank you for having me; this is exciting! I’m ah…

Alberto Lugo: Adam, I need you to tell me a little bit about who you are as an entrepreneur, about your past life, and what you are doing now.

Adam Beguelin: Sure, yes. So my background is, ah. I was trained as a computer scientist. So I got a Ph.D. In computer science, I did a past couple of postdocs. I was at the faculty at Carnegie Mellon in Pittsburgh teaching computer science. A, mainly distributive programming, supercomputing stuff, uh. I taught the first web technology class at Carnegie Mellon back in 1996, and I think it was? Um, and then I was recruited to a start-up in Silicon Valley in 1996. Uh, if you remember, although many people won’t remember. But in 1995, Netscape went public. And that sort of kicked up the whole “.com” thing from pretty much 1995 to, you know, the thing fell apart in 2000-2001, uh. And that’s when I got recruited to a search engine company in 96. So things were starting to heat up, um. You know search engines. You know, people didn’t realize how critical search engines were gonna be. At that time, Yahoo, AOL, and so basically, I got recruited to a company called Inktomi, which was a search engine company. And we did search, but we did other things as well other network products internet infrastructure stuff; and um, that was my first experience with Silicon Valley. It was great. The company was 20 something people when I joined. Um, we went public in 1998. You know, the stock went from 13 dollars a share to roughly a thousand dollars split-adjusted…

Alberto Lugo: Wow!!!

Adam Beguelin: It was a crazy, crazy ride, and that was my first experience, and then, of course, you know, so it was a 25 billion dollar company at one point. Uh, and then two years later, it was worth half a billion, so a great rise.

Alberto Lugo: Massive growth!!

Adam Beguelin: Yes, yes. So in 2000 today I left the company I think in 2000, at the end of 2000, at the beginning of 2001. And then, I started another company, um, uh. And, and I in the, in the end, I think I’ve been involved in seven, now eight, startups and co-founded four. So um, I had, I guess, two hits I would consider an Inktomi a hit, right it was, it was a success uh, in the end, of course, it, you know, lots of things crashed at that time. But I think I made a big impact, um, on the way things are done if you look at the way the internet is structured today, I think Inktomi had a big impact on that, and then I did a few other companies that did not fail, or, they did not succeed that did fail.

Alberto Lugo: Okay.

Adam Beguelin: In fact, I’ll do a shameless plug; I wrote a book. Silicon Valley Stories.

Alberto Lugo: Awesome!!

Adam Beguelin: Hopefully, we can put the link in the show notes, so there are some stories of those failures and the successes in that book. The other success that I had was, I started a company called Truvio which is a video search company we started that in 2004. This was, you know, this is before Youtube, right? This is, I think Netflix at that time was mailing DVDs around. So, you know, this is early in Video. And so we had some ideas on how to build a better video search engine, and we built that uh, started that in 2004 launched the site at the end of 2005 or summer 2005, and then actually we were acquired uh, at the end of 2005 by AOL so uh. And that was a very positive outcome.

Alberto Lugo: As well your definition of a serial entrepreneur for those of you that don’t know that. That is people that start companies and then sell them or get a bio.

Adam Beguelin: Exactly.

Alberto Lugo: Your entrepreneur Adam, I guess you can talk so much about success and failure because you already told us that some of these companies did not succeed, so you, I bet you have some cool stories to share with us.

Adam Beguelin: Absolutely, yeah. So it’s interesting, yeah, it’s called Successful Blunders, right? And when I look back at the failures, I think most of the failures had to do with the team right? And mistakes in building the team so the two so after, you know, maybe just starting with the wrong co-founder right so I started a company with the wrong co-founder we didn’t get along it didn’t work that was exactly…

Alberto Lugo: starting from the get-go starting with the wrong partner that’s, that’s right, reading all over the place.

Adam Beguelin: I think, and so I have a good example actually what the company I started after Truvio was called Sensornet, right? And so, we. The idea was, you know, you have these cheap security cameras you know this is 2009 or 2008 I started playing around with these cameras right? And there was no cloud service for these cameras they were just you know you had to put a DVR in your basement or you had to have a pc that was running some software that records from the cameras.

Alberto Lugo: Yeah, I remember those days.

Adam Beguelin: Yeah, exactly and so I thought well let’s, let’s. This is obvious, it should just record in the cloud right.

So I started Sensornet and it was called Sensornet because it was more than just cameras right? We’ve got home automation you’ll have motion sensors you have all kinds of stuff right? And so, we built you know Sensornet we built a quick prototype, I had, great team.  the team was fantastic on the technical side so… no complaints. We were like amazing technical entrepreneurs, right? We were building software, we could crank stuff out quickly, we end up raising, initially, we raised a million and a half dollars from spark capital in Boston and Charles River Ventures put some money in, a bunch of my friends puts money in. And, you know, we were cranking along and I was a CEO, it’s really my first time as CEO, and the mistake I made was in putting the team together I hired people I want to hang out with right so, I love my team, they were great they were, unfortunately, they were like me right they were, they all had PhDs except for our graphic designer, so we had three PhDs we all love writing code and what did we do you know we read an office in Burlingame California we sat down and we wrote code right and we had this amazing software system but what I should have done in our strategy was to sell our cloud service to the camera manufacturers so you know think of you know these cheap Chinese manufacturers they can make hardware but they can’t build a really good software system.

Alberto Lugo: Yes, when you buy hardware from China the configuring it and getting it to work it’s very difficult because the software sucks.

Adam Beguelin: Exactly, exactly, so we had an SDK. We had an SDK that we said okay, put this on your camera it’ll automatically config it with you know you would point the camera to QR code it would automatically config jump on your wifi off you go record to the cloud…

Alberto Lugo: Beautiful.

Adam Beguelin: we had all that working you know? And this is 2011 you know before nest cam existed before ring existed you know all the guys that are big now.

Alberto Lugo: You know? I was gonna ask you that because this day is pretty common to have cameras pointed to the cloud but back then it was not.

Adam Beguelin: Exactly so we were probably the first or among the first to build this it was us and there was a camera company called drop cam. Uh, drop cam got acquired by Google and is now called Nest. Nest camera and so we started at the same time, about the same time. And so what they did which we should have done was figure out the hardware angle. Right? And so we were just like we will build the software and we’ll kind of, we need. So here’s the mistake I made in the team, right? I did not hire a BD guy or a sales guy to go sell our stuff into the hardware manufacturers so, that was my mistake, right? I should have taken, you know, I probably shouldn’t have hired three PhDs I should have hired, you know, one or, you know, spent just spent more money we had money, right? I should have just hired the guys that we’re going to go do the sales make the camera deals and that would have made us I think.

Alberto Lugo: It’s a management decision so you had the money you came from other successful ventures it was just that you were having fun coding I guess with the team and we were not paying attention to hiring the salespeople because without sales obviously, it was going to be a flaw.

Adam Beguelin: Right… So I thought I could do it, right? So I’m like, ok. So I was going a meeting with you we’re in Silicon Valley, right? so I would spend time going meeting with the chip camera guys we met with Ambarella, they are the chip that’s in Nest, the nest camera or the drop cam they’re in the GoPro you know these were like the high-end chip guys.

Alberto Lugo: Yeah!!!

Adam Beguelin: We got their SDK so I thought, well these guys will help us because they only make money if they sell more chips so they said we’ll help you. We will take you into these camera companies. And they eventually got us connected to one, you know, we were small fries, right? We should have we you know, I’m not a sales guy right so I that was my mistake, I thought  I could do sales and I should know better, but  I’m not a sales guy.

Alberto Lugo: It’s very difficult and people overestimate are sub estimate closing the sale because you can talk to a lot of people but the ones signing the pos are the clients.

Adam Beguelin: Yes, so I think so that’s a team right so that’s an example of a bad team decision that was my decision and, in the end, the spark capital wrote off their, you know, their investment. And we, you know, the company still sort of it’s a zombie. It’s still running along in fact I just had the tax I saw the taxes we did for last year. Last year I think the revenue was like a hundred thousand dollars right? And then this year uh, for the previous year was a hundred, now it’s 80.000 right? And so it’s just slowly dying and you know we’ve paid back the investors maybe half of their the remaining investors, maybe half their money, but it probably needs to be shut off now because it’s going to soon it’s going to start costing more to run it than it is than it makes.

Alberto Lugo: For sure and you mention a few companies do you have other stories that you can share with us?

Adam Beguelin: Yes, there is another story about Team, and we had so when I sold Truvio to AOL our, my mentor at AOL was this great guy you know he had been at warner music he came in to help AOL with their video strategy and we became friends and then after, as Sensornet was sort of dying and actually about the time I was moving to Puerto Rico, he approached me and said, I’ve got this idea we want to build this cool app and we’ve got this guy, that is a fantastic app guy. He designs apps he did the HBO GO app and we need a technical person we’ve got a great marketing person so we’ve got the design so I’m thinking about the team right? Because I’m like yeah, I kind of screwed up, no one likes failure.

Alberto Lugo: So you want to correct that.

Adam Beguelin: Yes, exactly so I didn’t make that same mistake, we had a great team in terms of each individual the problem was we never really knew each other. So we had three guys in New York, and then we had me in San Francisco but moving to Puerto Rico, and then I had another guy that I hired another tech guy in San Francisco. So we kind of had like and for a startup, it just doesn’t make sense, you’ve got, kind of design and marketing in New York and then you’ve got some tech guys in San Francisco, and then you’ve got me who’s like not paying attention because I’m not 100 percent focused, so I think that’s a key and so I was one of the problems with that team, I admit  I kind of was doing it almost like a favor to my friend as opposed to like, difficult…

Alberto Lugo: You come from an exit a successful. So you’re in a different position your life, I guess…

Adam Beguelin: Yes.

Alberto Lugo: Where when you’re starting something if the other people are razor-sharp focus and they want to make it and you’re not in that same boat it’s difficult to relate to them, right?

Adam Beguelin: Yes, yeah. So the way I say it is I’m just not hungry anymore and so you’ve got these other guys like the guy hired in San Francisco, he’s was super hungry and he was pushing hard but we had this kind of dysfunctional team and so he’s gone onto to a very successful starting, so he, you know, you have to have the hunger and the focus and the drive and so that again it’s evaluating the team and the team dynamics, maybe if you have the right people they can work distributed in this case you know we were all kind of doing our things and never really coordinated well and you know and once we got to know each other there were personality issues. Hahaha, right?.

Alberto Lugo: Sure, so that’s also an issue because you if you don’t know the person you’re partnering with it might happen that you’re not that relatable when you start knowing that person or you’re not in the same page I think communicating it’s very important when you have a partner or a team that so everybody’s on the same page, right?

Adam Beguelin: Absolutely. Yeah, you have to think of it like this is a serious relationship, you’re going to be spending a lot of time with this person right? Do you get along do you like spending time with them those are critical issues you know when you sign up for this you’re going to you know you’re talking about years of your life, so make sure that this is the right you know the right people you want to be hanging around with do you trust them? Do you have each other’s back? That kind of thing.

Alberto Lugo: And you also talk to me a little bit before we started about the well burning through cash in another one of the startups. Can you expand a little bit on that one?

Adam Beguelin: Yeah, so for instance it was that some company the one that we were going to build this app the one that was based in New York and San Francisco I mean we were supposed to be a scrappy startup and our…

Alberto Lugo: Yeah.

Adam Beguelin: And the guys in New York came from you know they worked for big companies and so they one of the things they did was hire this like New York lawyer to do all of our incorporations and we should spend around ten thousand dollars, to do all your incorporation stuff that was kind of the number I was used to and these guys I think spent I don’t even want to say I don’t know it was a lot and I should look back at the bill but I’m sure it was many times that. And it was ridiculous, and also he wasn’t a silicon valley lawyer, he was more of a New York media lawyer and so they were doing just crazy things like, they would put together a term sheet that they said well we can put together a term sheet for you. Well, you are a lawyer at a startup you don’t put together the term sheet. Investors put together the term sheet, and you respond to the term sheet. So, we were just wasting you know those guys probably charging us 500 and hour to do work that wasn’t even necessary…

Alberto Lugo: To a startup, that you are trying to…

Adam Beguelin: So, here’s one thing you can do which I did in almost all my startups was you know you find a lawyer that’s also a scrappy lawyer, that knows, how to do startups and when we did Truvio, for instance, we, our lawyers didn’t take any upfront money, we knew them they knew we were good entrepreneurs they took a bet on us they did all that work upfront for no upfront money and they said when you get funding then we’ll bill you and we’ll build you this reasonable amount which is about ten thousand dollars.

Alberto Lugo: That’s something that’s great advice, to our audience, because I didn’t know you could even entertain that idea.

Adam Beguelin: Yes, you can find especially in silicon valley but that I would imagine anywhere if you can find lawyers that will front you the money to form your company to do the options, set up basic incorporation, option plan founder agreements, nondisclosures, intellectual property agreements you know kind of the standard thing that you need to get off the ground when you’re just, two guys, with an idea and or two girls with an idea, you know just you can convince you can find these lawyers that are savvy and if you have a good idea you can convince them and it’s a good test maybe if you can’t convince a lawyer to make a ten thousand dollar bet on you maybe you don’t have a good bet right, but it is common to get the lawyers and especially if they know these guys are gonna get funded you know? We’re gonna get paid in six months, so it’s not a big risk on their part you know these I mean frankly all these incorporation papers are pretty standard you know they’re just gonna tweak team a little bit, so you know I think it’s a win-win.

Alberto Lugo: Let me ask you something these days you are a successful entrepreneur you are working with new ventures but, now and then, when you get approached by a new idea or a team of people looking for funding, what do you look for?

Adam Beguelin: I think it is Team, you know? I keep saying team but…

Alberto Lugo: That’s great because that’s the whole thing about that your episode it’s that it’s very important to assess your team where you’re doing any kind of work.

Adam Beguelin: Yes, I mean you have to so I mean I worked with Travis Kalanic, at his,  you know, the founder of Uber his previous startup, I was his CTO at his previous company. And you could just see and that company did okay, it was a nice exit, but it was not Uber of course, but you know you could tell at that time that this guy is driven, he is, he was super smart, super driven and you know so I think that’s just kind of a feeling, you meet somebody like that and you want to work with them. So I think you have to kind of you know when I, when I assess startups for investing or advising how do I feel about those teams the people on the team and also how do I mean the idea is important but you can make the argument that if you are if you have a good team and a bad idea the good team will find a way to make a bad idea better.

Alberto Lugo: The idea with A-Team.

Adam Beguelin: That you need an A-Team, yeah.

Alberto Lugo: yeah, B Idea or C Idea with an A-Team can be successful right?

Adam Beguelin: yeah, yes, yes.

Alberto Lugo: Maybe not, Hockeypot successful, but successful right?

Adam Beguelin: Yeah.

Alberto Lugo: All right, so team it’s important guys remember that and I think most of the things that you are describing in this episode are due to the team dynamics. Adam we’re just getting to the end of the podcast and I wanna learn a little bit more about Holberton and what are you doing these days here in the Caribbean?

Adam Beguelin: Yes, we’ve been in Puerto Rico four and a half years, we love it we moved from Silicon Valley, I love the culture in Puerto Rico, the fact that people are so warm and open and there’s always something interesting to do.

Alberto Lugo: Yes.

Adam Beguelin: We’ve heard about the tax incentives and we’re like, wow this sounds great I should move to Puerto Rico I can start my next company sell it and pay zero tax, okay that’s a great idea…

Alberto Lugo: It is!

Adam Beguelin: When I got to Puerto Rico of course I’m having too much fun to start a company really, ha hahaha.  So that’s a drawback but I got involved in parallel 18 as a mentor, we’ve invested in some private equity funds that invest in Puerto Rico and one of the things I see was companies like yours, there’s not enough raw talent not enough programmer talent and so I saw that as a problem and as an entrepreneur what do, you solve your problems. So, I want to hire more people but I don’t have any trained coders in Puerto Rico or not enough there are trained coders, great coders, there but we need more and so I found out about Holberton. Holberton is itself a startup it’s been running in San Francisco for over five years they are churning out top-notch programmers and they have franchised their model and so the model is it’s a two-year program but you start working after nine months so you go in very intensive full- time program for nine months and when you come out, you start making money and you also don’t pay us so we don’t take any money until you get a job. And when you get a job, you do it well. Before you start you sign an income share agreement which says you’re gonna give us 17% of your salary for 5 years and pay us back with a cap so you’ll never pay us more than 55.000 so we’re fratting your education.

Alberto Lugo: So you’re like that lawyer you were talking about you’re doing all the work and then billing at the end right.

Adam Beguelin: Exactly, so we’re taking we’re betting it’s like a mini startup like I am betting on these students, the students come in it’s tough to get in it’s not easy right we only have 50 slots applications are open for one more week so… Please, If you know anybody, let them know applications are open we start the day after labor day September 8th for our first cohort we’ll take up 50 people so get in now, in January we’ll take another 50 and next June we’ll take another 50. So three times a year we have openings and those that cohort is going along with the cohort in San Francisco, the cohort in Connecticut, the cohort in France, the cohort in Colombia, Mexico so…  also it’s a networking opportunity I think for the students, they’re going to get to these amazing coders also all over the world just like when you go to a, you know, I went to Carnegie Mellon, right? Or, I worked at Carnegie Mellon, so I have my Carnegie Mellon network right, I got my Ph.D. From boulder colorado so I have my colorado network that’s another advantage I think of going to Holberton right.

Alberto Lugo: You’ve got you so much it’s not only about education but about networking and having people everywhere so that’s very important. I want to thank you for doing this in Puerto Rico because, being part of the ecosystem, I’m well aware of the need that we have to train more people in technology. So I’m thankful for that and I’ve been collaborating with your director on finance.

Adam Beguelin: Thanks for the help, thanks for all your help.

Alberto Lugo: So, Adam where can people find you?

Adam Beguelin: Well I think mainly, you should go to google Holberton Puerto Rico and you’ll find our Facebook page and so that’s probably the best place to find out Holberton and of course I’m here as well I would also google Silicon Valley stories and look for this book.

Alberto Lugo: I’ll put the link of course in the show notes. Thank you for being with us.

Adam Beguelin: Thank you.