What’s one thing that you wish you would have learned earlier as a leader? Value your financial people more than you do. If you’re a technology person, you tend to think that technology is all that matters. For many years, I was the most sophisticated financial person in my company. But until I actually had a CFO who was better at it than I was, I was just missing a huge opportunity. She came in and she renegotiated our contracts. She shifted many parts of the business and made it way more efficient. . . In the 90’s, we were always short of cash. And in the 2000’s, once we got this real financial discipline, we started putting money in the bank. We ended up putting tens of millions of dollars in the bank. And it was all about understanding what a powerful lever cash flow is. It was sort of like lacking financial discipline. We still succeeded but we could have succeeded so much more if we had been running tight from the get go.

We were always profitable. We were a company that had started with no investment other than $500 of used furniture that I used to start the company.

Our average revenue per book in our publishing business was about $250,000 per title. After the dot-com bust, it was about $60,000.

If you think about the portfolio of venture capital as a lab, they’re scientists in white coats, and they want their various lab cultures to grow fast. They want to figure out which ones are going to be winners. And that’s not necessarily the incentive for the entrepreneur.

Mark Leslie [Founder of Veritas] talked about the mistake that a lot of companies make on sales which is they build a giant sales force too soon. He said, “Look, when you’re trying to figure out whether you have the right product or not, you need to bring a very different kind of sales person. And you only need two or three of them because they’re doing discovery and you don’t want to scale it until you know that it works.”

I think way more businesses would benefit enormously if they understood that you’re not building a financial instrument, i.e. something to exit. You’re really trying to build a lasting business because then you have the opportunity to exit if you’re really successful. But we’ve increasingly gone into a world where it’s this self-fulfilling prophecy where you even go talk to an entrepreneur and you’ll say, “How are you doing?” And they’ll say, “Oh, we just raised our money.” And I go, “Well, that’s not about your business. That’s about your fundraising.” I want to hear them say, “We just have these amazing new customers.” Or, “Our users love us.” Why is the first thing out of your mouth is how much money you raised?

I had this really wakeup call with the dot-com bust where we shrank by 30%. We were about a $70 million company in 2000 [in revenue]. And then suddenly we were a $50 million company and we had to lay off a quarter of our staff. It was pretty harrowing. It was one of the worst experiences of my life.

A business model is the way that all the parts of your business work together to create customer value and business advantage. An example: Southwest Airlines and United. They’re both airlines. They have completely different business models. United had this hub and spoke model. Southwest is all point to point. United does baggage handling, Southwest doesn’t. They won’t forward your baggage from one flight to another. They’ve [Southwest] done all these things that make them able to be the low-cost airline. It’s just a really great way of forcing you to think about what makes you special, what is the source of your value.

You thought the dot-com bust was the end, it was actually the clearing out of the people who had the wrong business model.

Leadership is showing what’s possible.

Create more value than you capture because when you make an opportunity for others you can grow with the market.

Antoine de Saint-Exupery quote: If you want to build a ship, don’t drum up people to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea.

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Interview with Tim O’Reilly, Founder and CEO of O’Reilly Media