The University of Texas at Austin

Founderati

"Founderati" is what I'm calling the people who start up startups. I am getting ready to count them as a step in measuring the entrepreneurial impact of UT Austin.

You might think the people who start up startups should be called "founders." But, I've tried that, so has MIT, and there are problems.

In 1984, while preparing for 3Com Corp.'s initial public offering, I was asked two hard questions by a room full of $500-per-hour SEC lawyers: Who invented Ethernet? Who founded 3Com?

The lawyers asked solemnly if I was THE inventor of Ethernet or AN inventor of Ethernet or the PRINCIPAL inventor of Ethernet … or was I just in the Xerox building when Ethernet was invented? After several hours, noting that my name comes first on the (now-expired) Ethernet patent, we agreed that 3Com would tell Wall Street that I was the PRINCIPAL inventor of Ethernet. We left a harder question — What is Ethernet? — for another day.

Similarly, the SEC lawyers asked if I was THE founder of 3Com or merely a CO-FOUNDER, and if so, with whom? For reasons I'll return to in a moment, until then I had been referring to all of us few dozen 3Com employees as founders. After several hours, we agreed that 3Com would tell Wall Street that its founders were Greg Shaw and I, holders of the first tranche of stock that had been issued on the day of 3Com's incorporation on June 4, 1979. I still have a copy of 3Com stock certificate No. 1 for 51,000 shares, which proves I was a founder (doesn't it?), but of course the certificate is no longer valid.

So, who are the founders of a startup? Sometimes the founders include the inventors of the startup's core technology, but maybe not all of the inventors, maybe none. Are founders the people who paid the few hundred dollars it costs to incorporate? I think not.

Is the first chief executive officer (CEO) of a company its founder? My friend Steve Jobs (RIP) may have incorporated Apple Computer Inc. on April 1, 1976, but he did not invent the Apple I or II — that would be Steve Wozniak. Steve Jobs did not make CEO at Apple until 1997.

I bet you think the two founders of Apple were Jobs and Wozniak. Or you might think that Mike Markkula, the second CEO, was the third founder. Or maybe you think Mike Scott, the first CEO from 1981-83, was a founder, and maybe also my friend John Sculley, CEO from 1983-93. I bet you do not know that the third founder of Apple, before Markkula, was Ronald Dwayne, who bailed out too early, selling his 10 percent stake back for $2,300.

Think of all the people who must have been essential to the starting up of Apple — CEOs, CTOs, VPs, engineers, manufacturers, salespeople, et al. Macintosh wasn't launched until 1984.

We can and do argue who founders are. SEC lawyers would certainly not agree that all of the employees through 1984 were founders of Apple. So, I am going to refer to all those people who start up startups, informally, as "founderati." And I guess one is founderati by degrees.

In the early days of 3Com, I learned to be careful how to use the word founder. It is not a good idea, for example, if you think you are a founder, to have the word on your business card. Founder is not a job function. Titles on business cards are intended to communicate job functions.

Further, when you are building a high-performance team, it does not pay to remind people daily that you are a founder and they are not. This is why from our founding in 1979 until our IPO in 1984, I referred to all 3Com employees as founders. The SEC put an end to that.

My alma mater, the Massachusetts Institute of Technology, ran into this "founder" problem with its two marvelous studies of entrepreneurial impact, the latest of which can be found online.

If you are a student of innovation, you must read this report from start to finish. UT Austin Professor Johnny Butler and I want to do a similar study of the entrepreneurial impact of UT Austin, which is how I got into this founder-founderati mess.

MIT wanted data on how much impact it was having on innovation. It decided to add up all the companies founded by MIT alumni and to report their total revenues and employment. Big numbers.

MIT decided to ask its ~100,000 living alumni if they had started any companies. Many had. And then the data started getting complicated. In the end, MIT decided to count a company as "MIT-founded" if any of its "founders" were MIT alums, undergraduate or graduate, and only if the company still existed and its founders were still alive. Still big numbers.

For example, Hewlett-Packard Company (HP) might have counted, because founder Bill Hewlett got his masters degree from MIT. But, HP was not counted because Hewlett had died by the time of the study. Intel, founded by Bob Noyce and Gordon Moore, might also have counted, because Noyce got his Ph.D. from MIT, but Noyce had also died by the time of the second MIT study. Fortunately, I am still alive, so 3Com counted as an MIT-founded company.

Notice that Noyce got his undergraduate degree from Grinnell College. Gordon Moore attended Berkeley and Caltech. Still, Intel would have counted as an MIT-founded company if only Noyce had been alive at the time of the second MIT study. Odd.

Many people count Andy Grove as an Intel founder. Grove attended CCNY and Berkeley. So, only one of six degrees held by Intel "founders" was from MIT, but MIT would have counted Intel as an MIT-founded company. Perhaps, if you count three founderati, only one sixth of Intel was MIT-founded, sort of.

MIT alum Ken Olsen founded Digital Equipment Corp. (DEC), once the second largest computer company in the world. Because Olsen died in 2011, and because DEC is now part of HP, DEC revenues and employees would only have counted in MIT's impact, oddly, if Bill Hewlett were alive.

Let's make this founder-founderati issue even more complicated. 3Com Corp., after 30 years, became part of HP in 2010. So, if MIT were to do the same study, 3Com's employees and revenues inside HP would no longer count toward the total of MIT's entrepreneurial impact.

But wait, aren't Ken Olsen and I also in some sense founders of today's HP? Shouldn't HP be renamed HPOM? Just kidding. But, since, as of this writing, I am still alive, shouldn't HP therefore still count as an MIT-founded company?

Going back to Intel, Noyce and Moore moved to Northern California (later known as Silicon Valley) to work for Bill Shockley, an MIT Ph.D. and Nobel Laureate who (roughly) had invented the transistor at Bell Labs. They worked at Shockley Semiconductor, but then left to found Intel in 1968. It could be argued that, except for one incorporation step, Shockley "founded" Intel, but alas for MIT, Shockley Semiconductor failed, Shockley never worked at Intel, and anyway he is long dead.

There is another problem with the word "founder." As a verb "founder" means "to fill with water and sink." Many founders, like Shockley, end up with foundering shipwrecks. I've just read "Insisting on the Impossible, The Life of Edwin Land, Inventor of Instant Photography," by my friend Victor McElheny. Land never graduated from Harvard, hung around MIT, and founded Polaroid Corp. Even if MIT found a way to count Polaroid as MIT-founded, it has by now foundered. By the way, Steve Jobs, who updated instant photography with his iPhone, was a huge fan of Edwin Land.

Harvard dropouts Edwin Land, Bill Gates and Mark Zuckerberg bring up the issue of whether universities should count their dropouts, dead or alive, as alums in entrepreneurial impact studies. I'm betting Harvard thinks so. A question is whether Harvard advanced innovation by educating its famous dropouts, or merely by admitting them.

So now, back from MIT and Harvard to The University of Texas at Austin. Professor Johnny Butler and I want to do an entrepreneurial impact study much like MIT's, except we want somehow to count founderati, not just living founders, and certainly not just founding CEOs.

It is a gross understatement to say that football is big in Texas. So we wisely make analogies between football teams and startup teams. We want our Longhorn founderati to be as well supported and celebrated as our Longhorn football players. And we observe that startups are exactly like football teams in that not everyone on a football team is a quarterback, not all founderati are CEOs.

So, when we study the entrepreneurial impact of UT Austin, how do we identify a company's Longhorn founderati? Should we count the Longhorns from among the CEO and all her initial vice presidents? Should we count the first one, 10 or 100 Longhorn employees? Should we count all Longhorns joining on the first day, the first month or the first year? Should we count the inventors of the company's technology even if they don't join the company? Should we count investors? Bob Noyce (RIP) was a founding angel investor in 3Com Corp. — was he 3Com founderati?