The Secret to Startup Success? Fudge Your Age

PATIENCE HAGGIN AUGUST 11, 2017

Hollywood celebrities have been known to deduct a few numbers when declaring
their ages. Turns out Silicon Valley startups do the same thing.

In a business where everyone is searching for the next big disruptive concept,
old age is rarely considered an asset. As such, some companies make their stated
dates of founding subject to change.

Chris O’Neill, chief executive of Evernote Corp., uses June 24, 2008—the day the
company’s note-taking iPhone app launched—as the company’s cornerstone date. But
Evernote’s roots go back further: Its founder wrote the first lines of code in
2000 and then formed the company in 2002. It released its first product—a
Windows PC application that it now describes as a prototype of its iPhone app—in
2004.

“There are a lot of important dates in a company’s history,” Mr. O’Neill said.
“Our point of view is, ‘Let’s pick the most important date.’”

Evernote, which has had three chief executives, has at various times pointed to
2002, 2005 or 2007 as its founding year.

Investors say startups often reach for the youngest age possible to make it seem
like they found success quickly. To justify a chosen date, some executives wax
philosophical about what constitutes “founding.”

“I think there’s a lot of expectations on startups to show progress early and
often in their life,” said Mr. O’Neill, though he said that wasn’t a factor in
Evernote’s case.

Like Hollywood, Silicon Valley usually doesn’t bat an eye at this practice.
Venture capitalists say they know some companies fudge their year of founding in
the press. There is no hiding their true age from investors, who see it in
official documents.

“In general, it’s pretty harmless,” said Ted Wang, a partner at Menlo Park,
Calif.-based venture-capital firm Cowboy Ventures. “People take a lot of
liberties with their founding stories.”

In an industry where companies often change their principal products and brand
identities and how they define their market segment, such malleability isn’t
entirely surprising.

The founders of San Francisco-based Lookout Inc. drew widespread attention in
2005, when they exposed security flaws in movie stars’ phones at the Academy
Awards. A news report of the episode said the company, known at the time as a
consulting firm called Flexilis, was founded two years earlier—the year the
founders met in college.

California corporate filings indicate the company was incorporated in 2005. A
spokesman said Lookout considers 2007 its founding year, since that is when the
founders turned their business into a security-software startup. The company
changed its name to Lookout in 2009.

Nevertheless, the practice sets Silicon Valley apart from mainstream
corporations—and these firms are not shoestring operations. Many are “unicorns,”
privately held companies that have been valued by investors at $1 billion or
more.

“This is a Hollywood phenomenon that has crept up into the startup world. There
is such a premium on thinking that you’re an overnight success,” said Venky
Ganesan, a partner at Menlo Ventures. “I think it’s sad, and it undermines
credibility for everybody.”

Many startups that have “pivoted,” in the local idiom, benchmark their
beginnings using the date a current product launched—regardless of how long it
was in development, or how many abandoned products came before that. Since
Redwood City, Calif.-based Evernote’s driving mission was to launch a product,
marking the year it incorporated or began developing would be “kind of like
celebrating your birthday on the day you were conceived,” said Shelby Busen, a
senior marketing communications manager.

San Francisco-based ride-hailing app Lyft Inc. was incorporated in 2007 as
Zimride, an online bulletin board for long-distance carpools. In 2012, the same
founders launched a ride-hailing brand and called that Lyft. The next year it
sold off the original Zimride assets and re-christened the company.

A company spokesman gives Lyft’s founding date as 2012, and says that Lyft and
Zimride are “distinct businesses.”

Sometimes the story changes when a failed startup reinvents itself. Fanbase, a
kind of Wikipedia for sports fans, was founded in 2007. When that idea fizzled,
the founders launched Nextdoor, a neighborhood-based social network, using
Fanbase’s existing capital. They consider 2010 their founding year, a
spokeswoman said. The San Francisco-based company said its executives weren’t
available for comment.

Some startups that spend years developing their product say the clock doesn’t
start with those years. They count time from the day they came upon a solution
that worked—never mind time spent looking for ideas or toiling at approaches
that failed.

Rao Mulpuri, chief executive officer of View Inc.
electronically, incorporated as Echromics and was in development as early as
2007. When its first technical approach failed, almost the entire staff turned
over, said CEO Rao Mulpuri. He took over in December 2008.

A spokeswoman says the company considers 2009—the year it made breakthroughs
that made its product possible—as the year it “really started its journey.” The
company changed its name to View in 2012.

When it comes to the question of founding a company, Mr. Mulpuri says, “there’s
a technical answer, which is the official answer. When was the company founded
in the state of Delaware? But as a team, it’s not as simple as that.”

Silicon Valley investors are used to the idea that a “pivot” or new name takes
off the years like a shot of Botox—though not all are thrilled.

David Gurle, chief executive of Palo Alto, Calif.-based Symphony Communication
Services LLC, isn’t amused by startups that play the age game.

He founded private-messaging startup Perzo in 2012. After Symphony, another
startup, acquired it in 2014, it began targeting financial-services clients. He
proudly cites 2012 as Symphony’s founding year, despite its permutations.

“If you told me that a flower only started growing when it was out of the earth,
then I would say, ‘No, it’s already been growing,’” Mr. Gurle said.