File Sharing & Startup Innovation: A Historical Look

Patterns in Successful Startups: A Look at Origins

Analyzing in-depth profiles of early-stage EC-1 startups reveals recurring patterns among companies that achieve success. While individual company histories and growth paths differ, the most effective organizations frequently originate from comparable environments and are built around unique, yet discernible, themes.

The Unexpected Connection: File Sharing and Infrastructure

A noteworthy commonality observed in recent profiles of Expensify and NS1 centers on the significance of file sharing – and, for some, even unauthorized file sharing – alongside the foundational role of internet infrastructure in their respective beginnings. This is a surprising link, considering the substantial differences between the two companies.

Expensify, initially founded in San Francisco (now based in Portland), is a decentralized startup specializing in expense reporting and analytics solutions for businesses and Chief Financial Officers. Conversely, NS1, located in New York, develops highly reliable DNS and internet traffic optimization tools designed for web applications.

Founding Stories: Parallels Emerge

Examining the origins of each company reveals striking similarities. Anna Heim detailed the beginnings of Expensify:

Sean Michael Kerner’s account of NS1’s formation further illustrates these parallels:

A key similarity is that both founding teams initially focused on essential components of internet infrastructure. This is logical, given that expanding the networking and computational capabilities of the internet presented a major engineering challenge during that era.

Furthermore, in both instances, the founding teams connected while working at relatively obscure companies known for their strong engineering cultures. These companies were later acquired by larger internet infrastructure firms for modest sums.

Acquirers as Innovation Hubs

These acquirers, though often overlooked today, served as incubators for numerous innovations. While companies like Akamai and Internap may not be household names, they continue to operate and contribute to the industry.

The group of founders involved is particularly noteworthy. Travis Kalanick, who later established Uber, is a prominent example. The team from Voxel, acquired by Internap, also boasts significant talent:

Learning the Ropes and Building Networks

A recurring theme across these and other startup stories is that founders often tackled different problems before launching the ventures that ultimately brought them recognition. They honed their skills, cultivated networks of exceptionally talented colleagues, gained experience in business development and growth, and fostered a cycle of innovation among their peers.

They also experienced a partial exit, gaining a taste of success without fully realizing its potential.

The Rebellious Spirit of Early File Sharing

The world of file sharing at the turn of the millennium possessed a unique rebellious and democratic ethos. Engaging in file sharing meant challenging major music labels, disrupting established industries, and removing obstacles to facilitate the growth of the internet economy.

This environment attracted a distinctive group of individuals – the very type of unconventional thinkers who often become successful startup founders. This aligns with the core arguments presented in Fred Turner’s book, “From Counterculture to Cyberculture.”

Identifying Today’s “File Sharing” Markets

This raises the question: what are the contemporary equivalents of those “file-sharing” markets where similar individuals are congregating? Blockchain technology immediately comes to mind, as it embodies a similar blend of rebelliousness, democratization, and technical prowess. (Though this isn't always the case.)

Modern-day innovators like Alexandra Elbakyan, the creator and operator of Sci-Hub, who strives to democratize access to global research and knowledge, also exemplify this spirit.

Focus on the People, Not Just the Companies

The next generation of extraordinary unicorns may not be among the companies currently attracting attention. However, it’s crucial to observe the individuals who are drawn to innovative and challenging fields – their future endeavors often prove remarkably successful.