Joshua Baer: Austin’s own Erlich Bachman

- So when did Capital Factory start and where did it start? - So, we started in 2009, it was right after the 2008 housing market crash.

- Sweet, awesome.

- Actually, honestly, there's a lot of different factors, but part of it was this feeling of helplessness, of like hey the market's crashing around us, we don't have any control over that, what can we do? What can we actually do to influence this thing? And i was like well we can go start a bunch more companies and honestly, i thought that was pretty smart because when the market's down, it's harder to start companies so there's less of them.

There was actually less competition and also, when the market's down, there's nowhere to go but up and it's good to be in a growing market so i thought this is actually a pretty good time to go start a bunch of companies because if the market gets better, these companies will grow with it.

- And they have to work with less.

You start a company.

And actually we had a guest on, Hugo Benatsos who was essentially saying that some of the best companies either lived through that time and are better now because of it or they started at that time and are better because of it because they learned how to be a very good, a very efficient company with less.

- Yeah, the good times, the easy times make it harder for good companies because bad companies get funded who then drive up the prices of resources you need.

They drive up the prices of talent, they drive up the prices of bidding on key words or ad words or things like that.

You don't kind of think about that but it's a real issue.

When times are good and the money's flowing, then everybody's got lots of money, then guess what? Everybody is really competitive for talent.

Everybody starts paying everybody more money and now you're base resources cost a lot more.

When times are tight, actually there aren't as many good places to go.

The good companies that are making money still grow and hire people and they have a lot more people to pick from, there's less competition.

- That was one of the big takeaways from Ben Horowitz's book "The Hard Thing About Hard Things" when he talks about loud cloud, was that era in the company's life span and how much of a better company - even though it was a horrible experience for him, he probably shaved years off his life - they're a much better company because of it.

So wait, did you start where you are currently in this space here in downtown Austin? -? Yes, when i came to Austin, i first lived in the suburbs up north in an area called Andersonville and i bought a house for myself, and i just ran it out of my house because I'd been running it out of my dorm room at school.

- Okay, so you were like Erlich Bachman? Cool, i got it.

- Then, a couple more of my friends graduated and they would work out of my house during the day when i was going to Trilogy during the day and then i would come back and sync up with them at night and there got to be a bunch of them, so then they rented a house on the same street so then they were like down the street and we would just like skateboard up and down the street to each other.

And then i got sick of having them all at my house so then i bought another house on the same street and we just made that the office.

So, i lived in one house, a bunch of my friends lived in another house and we all commuted to this third house.

The backyard was all fenced in, we all brought our dogs so it was like the dog pen in the back and we all worked out of this house for awhile until about 25, 35 people.

It was really funny, too because of course we had kind of the reverse schedule of everybody else.

Everybody else is leaving to go to work and then we're all coming in and so then during the day there's 20 cars lined out in front of the house and I'm pretty sure they all thought we were drug dealers for a long time.

- Really? - Because we were all in our 20s, we were skateboarding around, looked unemployed.

But then we started hiring all the kids on the street as interns and we became the neighborhood watch.

We were there all the time, somebody's dog got loose, we'd grab it and throw it in the back yard.

They loved us after awhile but at first i think they all thought we were drug dealers.

And then eventually, we all outgrew that.

(upbeat music).

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