Craig Walker on the Earliest Days of Google Voice

Earlier today, the New York Times reported that Google Ventures has hired Craig Walker, “the man behind Google Voice,” to become an entrepreneur-in-residence and, hopefully, to build a new startup.

Walker has been a product manager for real-time communications at Google since 2007, when it spent $50 million to acquire his Internet phone startup, GrandCentral, and turn it into Google Voice. The growing ubiquity of the service must be particularly satisfying given that in 2005, Walker sold his previous Internet phone service, DialPad, to Yahoo, where it was never heard of again. (Terms of the deal were never disclosed.)

Walker also knows about venture capital, having spent time in the ‘90s at Sterling Payot, a San Francisco-based boutique investment bank that also dabbled in venture investing. In fact, it was while at Sterling that Walker met another young executive, Ron Palmeri, who later brought Walker to Minor Ventures, the personal investment arm and incubator of CNet cofounder Halsey Minor. It was at Minor Ventures that GrandCentral was born and funded.

While doing a piece on Minor several years ago, I talked at some length with both Minor and Walker about their experience working together. Minor told me at the time that “if you were to go and talk with Craig Walker, [he will tell you that] they were ready to launch but the interface was horrible and I made them go back and when they launched two months later, it was great. And they liked it.” And indeed, Walker, who is as personable as they come, pretty much said exactly that.

In fact, given the news today, and the soaring popularity of Google Voice, I thought readers might enjoy reading Walker’s oral history of that time. Worth mentioning: I’ve edited some of Walker’s comments for length. Also, he was responding to my questions, which I’ve reinserted where it would be too confusing otherwise.

“Ron [Palmeri] was someone who [the Dialpad team had] met and was in the Valley and we got to know him and we kind of stayed in touch. So that’s how I got an initial introduction [to Minor].

“I’d been with DialPad and its whole business was [like] Skype — a soft client that you could call any number in the world from. It was all about cheap calling. And it was acquired by Yahoo. And I wanted to do more than cheap calling. How do you use these new communications to do more interesting stuff? So I’d been thinking about it, then I touched base with Ron, who was thinking about the same stuff.

“So we met and had a meeting of the minds, and it made sense. So they basically funded me to start [GrandCentral]. They gave me some small amount of seed investment to work out a business plan and hire a team. So it was very entrepreneurial on their part to say, ‘We know you have the vision [even while] you don’t have the team or anything.’ So that’s when I moved into their offices in San Francisco.

“I think we were a little bit of a different case [than other startups at Minor Ventures]. They were kind of thinking about the same things that I was, so it was more of a traditional venture round. We wanted enough money to launch a product. We didn’t want to have to raise more money before it was built. So we raised $4 million and that lasted a year and a half and we still had money in the bank when Google bought us.

(Here, Walker responds to why GrandCentral met with other investors before the Google acquisition.-Ed.)

“Why raise money? We were raising our Series B and we wanted to get the best valuation possible and the only way to do that is to talk to outside investors. If you keep going back to the original investor, it’s hard to get a read. So it’s a good market check. So we were in the process of raising our Series B, we had a number of offers, and then we had this Google offer kind of come and trump the whole process.

“Our preference was to keep it with Minor Ventures. I had a really good working relationship with Halsey and his approach to portfolio companies. I would have preferred to keep that relationship without having to complicate it without other outside investors.

(Here, Walker addresses a question about Minor, who didn’t want GrandCentral to sell so quickly to an acquirer.-Ed.)

“It wasn’t pleasant. It’s one of those things where you’re trying to balance a bunch of things. I think we all thought it was early for us to be exiting because we were onto something great that could be a super service that could have a lot of success. That said, the only company we’d be interested in entertaining an offer from at the time was Google, which had the opportunity to take the vision super big. And now [post-acquisition] we have opportunity to do what our ultimate goal was, to do it on a massive scale. So anyone else, we wouldn’t have done it. So that led to tension of Halsey wanting to hold on and us wanting to accept it because it was so attractive post-deal, too, by us launching it here.

“So we’d been in the process of raising money. [We] were in process of reporting back, and there were debates on whether or not you’re giving away too much of company. It’s a never-ending, unsettling process, because everyone is affected by it. I love the Valley, but raising money is the worst part. So we’d been talking about it, and we’d been chatting with Google about potentially partnering, and then the conversations grew more serious so it got to the point where we needed to discuss it as a board. Frankly, I worked more with Ron as the face of Minor Ventures in getting things done and getting everyone on the same page of the term sheet. So there was back and forth of getting a deal that made all the investors and employers and Google happy. We moved out after about four months.

(Here, Walker talks about life during those four months.-Ed.)

“We saw Ron every week, and we’d come in for a Halsey meeting once a month. He’s a funny guy in that he’s very passionate and very focused on what he thinks is a usable product and what he thinks is going to win on the Internet. And God bless him for it —  it made our product so much better for it. We built version one. It was superinteractive. You could do drag and drop and a lot of innovative stuff. And Halsey saw it and we were all excited about giving him a big demo of it, and we had a big readjustment meeting.

“He said, ‘You have a service that’s so good. Don’t clutter it with all these tricks. Focus on the actual service.’ And we went back and re-architected it and it made it much more usable. But he has a great way. You put the whole thing on a board and he goes through things page by page, item by item.

“He was great about going through it at 30,000 feet. He wouldn’t say, ‘I think your graphics are too large, shrink them down by 35 percent.’ He was more like, ‘This doesn’t work. This metaphor doesn’t work. Why draw attention here when it should be there? You get unsolicited feedback from your users all day long. Why not show that on your Web page?’

“So we put a rolling banner, a way to show this was this growing, vibrant  product that people love. [Then Minor would say] ‘Have you tried ecru?’ Again, he didn’t say change it from orange to blue.’ He said, ‘Man, this orange is burning my eyes. I come to this page and it screams stop or danger.’ We built it three times before it was acceptable to launch publicly.”