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�It might shock you, but I let go of pretty much everybody. When we went from 34 employees to 4, everyone was sh*tting Twinkies. Everyone was scared to death.�
For Steve Newcomb, the founder and CEO of Famous, �pivot� is not a strong enough word. �We did a reboot,� he tells me in a stylish penthouse office that shouldn�t exist. His $30 million-funded open source JavaScript startup was going down in flames, with a spiraling burn rate and no business model. Laying off 90 percent of the company and forging an entirely different direction was the only option.
�This was all my fault. These were great people. It was the toughest professional thing I�ve ever had to do,� Newcomb wistfully recalls. But against all odds, he�s built something new, hired back up to 16 and suddenly has millions in revenue rolling in.
Told for the first time, this is the startup redemption of Famous.
The rise
It�s easy to fool yourself that you�re succeeding when there�s a line around the block to get into your open source JavaScript library meetup. �I confused hype for traction,� Newcomb admits.
He was used to winning. After raising $8 million as COO of his last company, Powerset, he sold the search engine startup to Microsoft for $100 million in 2008. That made scoring funds easy when he came up with the idea for Famous in 2011. Greylock, CrunchFund [Disclosure: same founder at TechCrunch], InterWest, Javelin, Quest and some angels fronted a seed round.
At birth, Famo.us wanted to build mobile websites for iPads that felt as fast and full-featured as native apps. Then it wanted to create BenchRank, a ranking system for people. But Newcomb and teammate Mark Lu discovered the limitations of the HTML5 mobile web standard prevented them from developing sites that could compete with native apps.
In 2012, Famo.us launched at TechCrunch Disrupt�s Startup Battlefield competition with a demo that was heavy on the flashy graphics, light on the business model. Rather than explain how clients could use Famo.us or how it would make money, Newcomb wasted the six-minute demo demanding that the audience imagine a future where apps were 3D� whatever that meant.
That�s because Newcomb and Lu had pivoted last-minute to build out an experimental JavaScript-based interface rendering engine, scaring off former co-founder Dan Lynch. Yet Famo.us� rendering engine had the potential to become a backbone of the mobile web. It bypassed CSS and HTML rendering, and communicated directly with a computer�s graphics processing unit to produce impressive visuals.
While weak on direction, the developer community was enamored with the idea of an alternative to HTML5. Facebook�s Mark Zuckerberg had just called using HTML5 one of his company�s biggest mistakes. Venture capital and job applicants poured in, with Insight Venture Partners and Samsung Ventures joining the existing investors on Series A, B and debt rounds that fluffed Famo.us to $30 million in funding.
On top of that, 1,200 developers showed up to one of its meetups, �and man did that feel good. I�m not gonna lie,� Newcomb recalls. �Oh, we�re so popular. I�ll figure out the business model later.�
But he didn�t.
The fall
�We scaled the company before we had product market fit. We scaled the company before we had a business model that was anything for real. I wasn�t using lean startup methodology when I should have. And I had gone away from my passion,� Newcomb says, calmly cataloging his failures.
Famo.us� flashy but shallow 3D graphics demo
Famo.us had hitched itself to the idea that it would give away its core technology platform as open-source software. Monetizing that valiant decision left Famo.us scrambling. It waffled from trying to sell development assistance for its platform to big hardware vendors, to bundling that with A/B testing, hosting and monitoring cloud services. But while 90,000 developers had signed up to try the platform, it was still half-baked and only a tiny fraction of those were allowed in, so there weren�t many clients to sell to.
Steve Newcomb, co-founder and CEO of Famo.us
Approaching its peak headcount in 2015, Famo.us was hemorrhaging cash in its posh office, with a bleak venture climate on the horizon. Newcomb likens it to the old Road Runner cartoons, �floating in mid-air like you�re Wil E. Coyote.� Famo.us had stumbled over the cliff, but just hadn�t realized it yet. The fall would come fast.
He could try to raise a Series C on hype and keep pushing a broken business model. Yet Newcomb says, �To close your eyes and hope it works out, that would be a soul-ripping venture for me.� He could try to sell Famo.us� engineering team for whatever he could get, but after watching Powerset sell too early, he insisted that �This one�s mine. This is my passion and I want to see this thing through to the end.�
So he drove back and forth across the country while coming to grips with his decision. Famo.us� tech would be left for the open-source community. And except for himself, co-founder Mark Lu, Greg Barto who ran operations and Sara Stoddard who ran the office, Newcomb would fire everyone at Famo.us.
The reboot
�When you broke the story, I didn�t want to confirm any of the names, it was an emotional time,� Newcomb says, referring to the TechCrunch article we published a year ago about sourced accounts of the fall of Famo.us. The decisive choice was critical, though. Sure enough, a fundraising frost set in at the end of 2015, killing or crippling startups with too high a burn-rate or too little money in the bank.
�I saw the market getting tight and we were one of the first companies to pull the plug,� Newcomb tells me. �I knew it was an admission of how much I was wrong. And I was way wrong, and it ultimately led me to have to say goodbye to a lot of wonderful people.�
Famous� fancy San Francisco penthouse apartment
Jed Katz, a Famous board member and managing director for its investor Javelin Venture Partners, explains that �The CEOs that find themselves in this position but can�t do that simply run out of cash. He made the correct decision that it was time to pivot. He didn�t waste time. He stopped spending money that didn�t need to be burnt, he kept a great culture over there, and I give him a ton of credit. The board was completely unanimous in how he went about this.�
With a clean slate and years of runway in the bank, Newcomb went back to why he started Famo.us in the first place. He wanted to build mobile sites that were as powerful as mobile apps, and five years later, no one else has figured out how. So Newcomb took the JavaScript rendering engine and finally gave it a purpose: to make landing pages for advertisers that don�t require a daunting download like native apps, but are more seductive and functional that mobile sites.
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