Gabor Cselle: “The first startup is always the hardest”
12.09.2016 | Alumni Portraits
By: Nina Bader
Albert Einstein failed the ETH Zurich admission test – Gabor Cselle barely passed. A wake-up call for the ETH Alumnus which had a big impact on his future. After graduating in computer science at the ETH Zurich, he founded two startups and sold them to Twitter and Google. Today he is an operating partner of Area 120 at Google.
Gabor, you did your Master's degree in Computer Science at ETH in 2006. You are Hungarian, but grew up in Germany. Why did you decide to study at ETH?
While I was attending high school (“Gymnasium”) in Germany in the mid-1990s, my father took me on a trip to ETH Zurich where he was doing some research at the library. The trip left a lasting impression, as I remember just how well-stocked and well-run the library system was. Determined to study computer science, I did some research while I was doing my Abitur in Germany, and discovered that ETH Zurich had one of the highest-ranked programs. Because my German Abitur didn’t meet the admission criteria, I had to take the ETH admissions test – the same one that Albert Einstein failed. I just barely passed the test myself, and this served as a wake-up call that the standards were very high and that successfully completing ETH was going to be hard.
You have already founded two startups. The first you sold to Google and the second to Twitter. How did you come up with the ideas for your own startups?
My interest in startups began when I read a biography of Bill Gates in my teens, and then intensified when I started Paul Graham’s essays while I was a student at ETH Zurich. While I was an intern at Google in 2004, I briefly worked on the Gmail team, and that sparked my interest in email. I later wrote my Masters’ thesis about the topic of how email could be made more effective through machine learning, and I joined a startup called Xobni which was building a plugin for Outlook. My first startup, reMail, was also borne out of my interest in how to make the email better. Unfortunately, it turned out that improving the email experience was not a great business: The only email-related businesses that generate a constant revenue are developing and selling Microsoft Outlook, providing email hosting and charging for a subscription, or providing email marketing services. After a number of iterations, however, reMail found a great niche in building an iPhone app that would download all your email to the phone and make it immediately searchable. Despite generating solid revenues from the App Store, reMail was never a great business. But Google found the idea interesting and did a small talent acquisition for reMail in 2010, where I worked on the Inbox by Gmail team, and later was the first product manager on Google Now. For my second startup, I wanted to build a real business. In late 2012, Facebook released an earnings release that showed that it had gone from $0 in mobile ads revenue to $150M in revenue in a quarter, using native ads that were in the stream rather than the 320x50 pixel banner ads that were the default mobile ad format at the time. At the same time, I had just built and sold a small app to Handmark, a company that was building news, social, and communications apps. Handmark was frustrated that the mobile ads banner they had in their apps were annoying and unprofitable. Combining these two insights, my cofounders and I realized that these apps were in need of a new solution that would allow for in-stream native ads, and the idea for Namo Media was born. I knew it was a promising idea when I received an offer for funding in the first 15 minutes of the first pitch meeting, and a few weeks later we raised about $1.8M from Google Ventures, Andreessen Horowitz, Trinity Ventures, Betaworks, and other prominent investors. This made hiring and sales substantially easier as well.
Was is it difficult to start your first startup?
Startups are more likely to succeed when they are started by experienced entrepreneurs: The second time around, you know how to develop a good idea, raise funding, hire great people, and get to revenue. The first startup is the hardest because you don’t have a track record to show investors and potential hires. In addition, I started my first startup in the recession of 2008, when investors were shying away from investments. This made starting reMail pretty hard. Namo Media was a lot easier.
What would you recommend someone who wants to start its own startup?
In university, it’s often easier to think about ideas for consumer startups because those products are the ones the media writes about: Facebook, Google, YouTube, Snapchat get all the attention. But for founders, B2B startups that cater to paying businesses are easier to build. With B2B startups, you can find a problem that lots of paying customers have, solve it, and sell it at scale. For every successful consumer startup, there are 100 that failed. The success rate in B2B is much higher. Namo Media was easier to build and operate than reMail because we had revenue less than a year into the business.
"The most important lesson wasn’t what was taught in the classes: It was the time preparing for the Vordiplom" Gabor Cselle: ETH Alumnus & startup founder
You have been working for Google, which is a dream for many people. What’s it like to work there?
I remember going to my first weekly company meeting when I was an intern at Google in Mountain View in 2004. Google’s founders Larry Page and Sergey Brin announced that Google had now scanned thousands of books, with the goal of eventually scanning every book in the world. This seemed ludicrously ambitious at the time, but the ambition of trying to solve big problems at scale is somewhat of a theme. Google puts a big emphasis on learning and development. One of my favorite experiences at Google was a class that focused on how teams form and learn to work together, in which I learned a lot about my own personal quirks and biases and how to counteract them. One of the things I love about Google is a document called “Ten things we know to be true”. Some companies have value statements that tend to be abstract and vague, but Google’s list is concrete, actionable, and insightful. I find myself mentioning one of the ten points in conversations almost every day, and they guide the thinking about product development in my day job.
For the past nine years you have been living and working in the US. How does work life in the US differ from the one in Switzerland?
The average length of employment here is much shorter – it’s common here to switch companies every 2 years, while in Europe that’s unusual. When I first moved to San Francisco in 2007, the difference seemed very stark: When you overhear conversations in coffee shops, they revolve around startups, venture funding and technology. The concentration of the industry here enables a healthier appetite for risk and makes venture funding more attainable. Switzerland, in contrast, hosts a much more diverse set of industries and a slower pace, which allows for more predictable outcomes and better work-life balance.
Could you use your knowledge from your studies at ETH in work life?
Absolutely. My major was computer science and my minor was business (“BWL”) and that gave me a lot of applicable knowledge for my industry. In the computer science major, you end up writing a lot of code which comes in handy in your career.
But the most important lesson wasn’t what was taught in the classes: It was the time preparing for the Vordiplom, which back in my days would take up the entire free time in the summers. For me it took about 12 weeks of concerted, sustained effort to study up enough to be able to pass the tests. This same concerted, sustained effort that I needed to get products launched at startups.
Are there any other dreams you would like to accomplish in work life? Or in your private life?
I think I am now done with startups, and am focusing more on my family: My wife and I have an 18-month old son. The one unfulfilled interest I have is architecture: My alternate plan to studying computer science was to major in architecture, until my parents asked me to reflect on the economic realities of that profession. At some point, I may return to the classroom to learn more about it.