Startups these days can very swanky offices that can hold their own against offices of top multinationals, but they make Eric Schmidt very uncomfortable.
Former Google CEO Eric Schmidt says that seeing a beautiful startup office makes him cringe. “I can always tell when we’re dealing with a proper founder (based on) how are they spending their money. And so whenever I go into a startup that has beautiful offices and really nice chairs, I cringe because that means that they haven’t quite figured out that it’s not their money. Unless it is their money, in which case they can waste it on that,” he said in an interview.
Schmidt then recalled the early days of Google when the company didn’t have anything resembling a swanky office. “When I joined Google, I was given an office and I had a little corner of a desk with four other engineers. Eventually I was given an 8 by 12 office where my desk was literally a door. I’ve retained (that door) to try to remind myself of what it takes to be successful. So my office today has that door in it,” he explained.
“The great founders are frugal,” Schmidt continued. “They understand that the money needs to be used precisely for certain areas. Many of the most successful founders begin with no salary at all. I have lots of stories about (Google founders) Larry and Sergey, but let’s just say that when I started, one of them was having trouble with his car, so I had to loan him my car because he broke down,” Schmidt recalled.
“That’s the kind of stuff we’re talking about. So if you’re not prepared to live that, you don’t really understand what being a founder is like,” he explained.
Schmidt’s comments will ring particularly true for India, where during the ZIRP period of the mid 2010s, brand-new startups were building offices that looked like they belonged to a Google or a Facebook with stunning decor, game rooms, and large-screen TV displays. Many of these startups never found product-market fit, and ended up shutting shop before these offices were ever properly used. These companies drew inspiration from multinationals like Google and Facebook, which had similar offices in India and elsewhere.
But Google and Facebook hadn’t started off with such offices. Google had started off in a garage, while Facebook had started off in a dorm room. Both companies managed to find a business model that made tons of money, and then moved into suitably swanky offices for their cutting-edge workforce. And like Eric Schmidt says, for a startup with no product-market fit and no revenue to build a beautiful office might be putting the cart before the horse.