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How Rotten Tomatoes Was Built In TWO WEEKS – Patrick Lee, Co-Founder & Ex-CEO



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PREVIEW:

and then that was how Rotten Tomatoes was born he basically went from idea to launching a site in two weeks and he built it all in static HTML because he wasn't an engineer he wasn't a coder at the time...


Rick:

Hey everyone this is Rick and welcome back to The Seed – The Startup Journey the entrepreneurship podcast sharing the origin stories of amazing founders and the companies in under 20 minutes.

I'm super excited for today's episode because we'll be chatting with the co-founder of Rotten Tomatoes – Patrick Lee! If you've ever searched for a movie and wondered if it's worth watching you've probably come across Rotten Tomatoes. Patrick was the CEO who led the company through very challenging times including the dot-com crash as well as 9/11.

After selling Rotten Tomatoes in 2004 Patrick went on to found three other companies – a true serial entrepreneur with an amazing startup journey!


Hey Patrick! Thank you so much for coming onto our podcast today. You are the most well known for starting Rotten Tomatoes but you're actually a serial entrepreneur having founded more than six startups. Could you take us back to the beginning of your startup journey like was there a moment for you when you knew you wanted to become an entrepreneur?


Patrick:

Yeah so I started my first startup what would have been my junior year of college at Berkeley and for me I think it was really about being a bit impatient I just felt like school was a little bit too slow and boring at the time and I really wanted to just get out there and start doing something and so I had three really good friends Lyle, Jimmy and Oliver that I convinced to leave school to try and do something together. I think that was pretty much the point where I decided to kind of strike off on my own. Our first company that I did was selling computer systems and components so it wasn't like any kind of fancy startup or anything. We would place orders down south drive or half an hour to an hour depending on traffic to go pick up the parts and then come back and like build computers for people, so it wasn't very glamorous or anything like that but I think it was more about just getting out there and doing something.


Rick:

Yeah so your first company was basically selling computer components, the second company was web design, and Rotten Tomatoes was actually your third company I believe, so could you kind of share with us how Rotten Tomatoes was born? I heard it had something to do with the movie Rush Hour?


Patrick:

My second company I was doing a web design firm focused on the entertainment industry and we had a creative director Senh Duong who came up with the idea for Rotten Tomatoes. He was a huge movie fan, a huge Jackie Chan fan and he wanted to know what everyone was saying about the movie Rush Hour when it was coming out. He would go to the library to go look up magazines and newspapers to see what everyone was saying so his idea was you know back in the day you would open up a newspaper. You'd see a full page ad for a movie and it would look like a movie poster filled with quotes and those quotes would always be good even if the movie was not good, and they would just use folks that were not professional critics. So Senh’s idea was – what if I put only quotes from professional critics but I put all the quotes good and bad in one place and then put a score on it for the percentage of critics that recommend seeing the movie? And then that was how Rotten Tomatoes was born he basically went from idea to launching a site in two weeks and he built it all in static HTML because he wasn't an engineer he wasn't a coder at the time.

We were hosting it for him and within that first year you know he was getting mentioned on like Yahoo, on Netscape. This film critic Roger Ebert wrote an article highlighting his favorite movie websites and Rotten Tomatoes was one of them, and I remember when A Bug's Life came out we saw a spike in traffic and it turned out that that traffic was coming from Pixar and that was all within the first year so after that we decided to talk to Senh about working together and basically put our whole design team over to focus only on Rotten Tomatoes, gave the design firm off to another group to take over, raised some money and then started running Rotten Tomatoes as a real company.


Rick:

What was the reason for that because I believe with your design company you were doing very well too! You were getting good traction from clients like Disney, so what made you decide to do that shift?


Patrick:

I think the biggest reason was because even though we were working on sites for the entertainment industry and that was interesting, it was never really our own thing. We would be building these websites for other clients and they would usually have very very tight deadlines with lots and lots of changes. At the same time we were also helping friends with their websites that were running tech companies and a number of them ended up raising a lot of money or exiting for a lot more. We just thought it would it made more sense for us to try to build something that was really our own, whereas with our web design company everything it was a services based company and it just didn't seem like it would scale as well, like if we got twice as much work we'd have to have twice as many employees to do that work, whereas with something like Rotten Tomatoes we could serve 10x 100x the number of users and we didn't have to hire even one extra person in that situation.


Rick:

Got it. So it sounds like up to that point everything was going well. I think you raised a million dollars for Rotten Tomatoes. It's like one of those Silicon Valley success stories, but Patrick I have a list of numbers here: 25, 21, 17, 14, 11, and 7. Do you recall what those numbers are?


Patrick:

Yeah those were the numbers of employees we had when we first raised money for Rotten Tomatoes and transferred the design team over and then as we had to let go of people. That was the head count that we had, and we basically had to cut from 25 people down to seven within the course of about a year because right after we raised money in January 2000, in March 2000 the market just completely crashed and so it was just a really tough time. If we didn't let go of people we would run out of funding very quickly and would have to shut everything down. So we did what we could to get our costs down and really the biggest cost was in salary and so not only did we cut to seven, two of us additionally went to no salary of the seven and the other five people took a 30% pay cut, so we were operating at seven at more like the cost of about three people or so.


Rick:

I'm actually really impressed because even though it was 20 years ago you still remember those numbers and I heard you were like sleeping under the desk and you're hiding from security guards as well, so thank you for sharing that because I think oftentimes when we think of entrepreneurs we think of it as like really glamorous but like clearly you have to also go through a lot of tough challenges. So I'm also wondering – how did you manage to keep yourself mentally sane and deal with all the stress? Was it by playing Diablo II or watching anime?


Patrick:

Yeah we did watch some anime during that time some people were really into a show called Slam Dunk which is a famous basketball anime and so when we had to cut down we ended up subleasing some space to a friend's company where they also had to do even bigger a bigger cut they went from like 100 something 130 employees down to like a dozen and so they ended up subleasing some extra space from us. There's hard times but yeah some of those one of the employees would download like the latest subtitled version of Slam Dunk and the subtitles were done by you know just random fans and we would all just gather around and watch it together. After work at Rotten Tomatoes and nights you know about half the company would end up booting up Diablo II so we could start all playing together and that was super fun. We play on nights and weekends pretty much for months straight like that. The thing I think that made it easier even though things were hard – the world outside was going crazy you know we had to go through the stock market crash 18 months after that was 9/11 – just really crazy time but for us what made it bearable was that we could see that our traffic our revenue our brand were constantly increasing. Maybe not week over week but like on a monthly basis on a quarterly basis you could see that it was it was growing and that helped us to keep pushing forward. I think it would have been a lot harder if our you know everything was flat or declining.


Rick:

You eventually sold Rotten Tomatoes in 2004 around that time. What was the reason for that?


Patrick:

At the time you know we had been running for about five years or so and it got to a point where I think part of it was you know our fault. We didn't really see much bigger we thought if we just keep running it, it's going to be more of the same you know probably more traffic more revenue more brand but not much changes we weren't thinking big or anything like tha. Versus being able to you know sell, get our investors make our investors a little bit of money, you know for all of us to kind of take some money off the table and then raise money to do something new, try something different and I would say looking back I think we did not fully appreciate what we had built with Rotten Tomatoes. We knew it was was good but we didn't realize how hard it would be to build another company like that I think we were quite lucky in that in my first three companies – the first company didn't really go anywhere but the second company you know we got to pretty large clients fairly easily, and with Rotten Tomatoes we also got it to an interesting place fairly easily. Not you know not counting all the external things that were happening to us but we hit product market fit almost immediately and so I think because of these last two companies everything just seemed like whatever we want to do is going to work. And so I think it was more about hey we're young let's just try something new.


Rick:

After selling it I believe you started three other companies and you've also recently taken a break to like see friends and families. Kind of fast forward to now and 2021 – where would you say you are now along your startup journey, like kind of what's the next chapter for you?


Patrick:

Right so I think for me after doing three more companies after Rotten Tomatoes I just got quite burned out I had been doing six companies over 20 to 23 years I just needed a change of pace and so I don't think I will do another startup I just think the time and effort that it takes and where I am in my life it just doesn't really make sense anymore. I've been looking a lot more at investing you know mentoring, working with startups, investing into startups and so I've been kind of running some experiments around that side with a couple other tech founder friends where we've been looking at identifying interesting companies and trying to get really you know strong tech founders to invest into those companies and kind of support each other. The other thing for me my other... I guess project I would say is I got married last October. Came to Taiwan to take a look, a longer look at it because in the past I've only ever been here usually a week every few years or I think I was here for a month in high school which was a very long time ago, and so I wanted to come to check it out. My plan was to come for three months, decided to extend it and then my wife ended up getting pregnant so we are you know expecting towards later this year and we plan to you know take advantage of the postpartum centers here in Taiwan. So right now that is really the top priority. It’s really figuring everything out as far as having this new addition to the family and just kind of getting ready for the baby so that's kind of where I'm at now.


Rick:

That's awesome! Congratulations for everything!


Patrick:

Thank you!


Rick:

I think in previous interviews when you were asked – what industries are sort of the next big things and what you're interested in – you mentioned artificial intelligence and genetic engineering. Crypto and blockchain you said not so much because those are more money-centric but I recently saw that you were promoting a bid for NFTs of influential Asian Americans and Pacific Islanders. So I was wondering if your views has changed about blockchain and what the next big thing is?


Patrick:

I mean my feelings about blockchain and stuff are still kind of the same. For me I never really did startups… it wasn't really about the money it was really about doing something with friends and doing something I thought was interesting and I think with like blockchain you know a lot I feel like a lot of the people who kind of are in it are really financially focused. They're in it to really just make money and they're not so much focused on like hey how do we make the world a better place? Some folks are but I would say the vast majority I don't get that sense. With doing the NFT4Good it was more you know some friends were trying to put something together around NFTs but rather than just try to make a quick buck they were actually trying to raise money for charity and I thought that was a good cause so that one I was fine with you know lending my support.

As far as the next big thing you know I've seen since my time multiple ways of technology come through. In the 80s it was desktop computing, in the 90s it was the internet, and it was mobile and so right now each time when a wave of technology comes through there are a whole new set of companies that spring up because of it and if you really did it right you end up becoming huge. I mean the biggest companies in the world right now Microsoft and Apple came during desktop computers, internet created like Google and Amazon, you know mobile helped with Facebook and Uber and companies like that. I think the next wave of technology is probably either artificial intelligence I mean most likely artificial intelligence I do think there's some interesting stuff again around genetic engineering as well it's kind of a different path but with genetic engineering we potentially could be curing things like Alzheimer's, Parkinson's, cancer which would be absolutely amazing. I know another area I think is very interesting is the metaverse you know like Ready Player One or The Matrix right? For everyone to be kind of connected together digitally in a virtual world I think it doesn't have to be VR/AR although they can make the experience better, but you look at things like Fortnite and Minecraft and Roblox and right now people are already connect connecting digitally using avatars and stuff like that. I think it's just going to get bigger right now you know 20% of all of facebook resources are working on oculus and VR, I mean over 10,000 people – that's pretty crazy! Apple is about to release some AR glasses you know microsoft has Hololens and they own Minecraft, and Google and Amazon and everyone's looking at that space so I think it's just something that's really interesting and if it really does manage to take off in its perfect form, you know would it be Facebook 2.0 would it be internet 2.0. I think that area is quite interesting and I do think if you're talking about the metaverse blockchain will actually play an important part because of the NFTs. In the virtual world there are not going to be any physical objects anymore so you're going to need some good representation of that.


Rick:

Yeah it's definitely super exciting and like I really like Ready Player One, so definitely looking forward to seeing the world like that. Patrick I also wanted to get some advice from you because I know that you talked a lot in the past about focus, how you think startup founders should focus on one feature, one category, one market in the very beginning but my question is – even before that like when we're still coming up with ideas, sometimes I have a bunch of ideas I think are cool and I kind of want to just dip my toes in all of them. How do we decide which ideas to focus on and when do we know to pivot or move on to something new?


Patrick:

I would say a few things. One – ideally you want to be trying to solve a problem it's easiest if it's a problem that you are having kind of like Senh with Rotten Tomatoes and trying to see what all the critics are saying about Rush Hour. I think ideas that don't solve any problems tend to be harder to pull off successfully. It has happened but I think if you're actually trying to solve a problem it tends to work better. The second thing I would say is whatever idea you have think about how you can test that idea as quickly and cheaply as possible. For example if you're trying to do almost any kind of marketplace, a lot of times you can pull it off with just a mailing list. You know you can get a bunch of buyers to subscribe to your mailing list and get a bunch of the sellers to list things onto them. You can connect these two groups together and then see if any kind of transactions happen, and if you're able to get some transactions happening then you might think about like investing more time into building out a website or an app or something like that right? But if you just want to test really quickly oh hey will you know can I make a marketplace for I don't know Pokemon cards then you can just go and list a bunch and if people buy it on from the mailing list then you know something's there right? So I think that's really a big thing is a lot of times people have an idea and either they end up spending way too much time researching and writing a business plan talking about it and they never actually build anything, or spend too much time building something a website or an app spending months all their savings hiring people or all their time and never actually like launching it and taking just way too long to launch it, and instead I'm like try and launch as quickly as possible even like the most basic form and sometimes it can be 100% manual, and then see if there's something there. With Senh, he went from idea to launch in just two weeks you know he built the site in static HTML because he couldn't code. That's the kind of time that I think people should be putting in and then if you're able to launch things within say two weeks each time, you can probably test a lot of ideas in just within a few months.


Rick:

I love that! Yeah even if it's just lines of static HTML it could turn into a huge company like Rotten Tomatoes, so that’s awesome. I have a quick question from my audience and that kind of goes back to Rotten Tomatoes – when the reviews from movie critics and the reviews from the audience or even from yourself are very different, how do you feel about that?


Patrick:

I think it's actually good because critics – the thing with critics is they have to watch everything, but they tend to prefer more like drama Oscar type films, Indie films, Arthouse films, film festival films right? The average you know user or audience member they choose what they see they don't see everything and they have to pay for it and so they're more predisposed to want to like whatever it is that they put money down to see. Audience in general will prefer things like summer blockbuster movies you know comedies, romantic comedies, action those kinds of things so it makes sense that they don't always agree. If they both agree and they say it's fresh or rotten – it's very accurate and when they don't agree you need to see which one you tend to agree more. I'm actually more into like the summer blockbuster films so in that case when they don't agree I'll tend to side more with the audience.


Rick:

Speaking of ratings I prepared a quick game it's called Rotten or Fresh, basically I'll throw you a lot of titles of anime or video games and just quickly rate them.

First one – One Piece

Patrick: Fresh

Rick: My Hero Academia

Patrick: Fresh

Rick: Attack on Titan

Patrick: Fresh

Rick: Crazy Rich Asians

Patrick: Fresh

Rick: Overwatch

Patrick: Fresh

Rick: League of Legends

Patrick: I haven't really played it

Rick:

Awesome so that's it for today's interview, thank you so much for coming on again and I wish you the best of luck. Taiwan's food is awesome so I hope you enjoy that as well and yeah thank you again for coming on!


Patrick:

Yeah thank you for having me, great job with the questions and the research!




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