The Monk and the Riddle: The Art of Creating a Life While Making a Living (19 page)

The problem was that while increasing our market opportunity Steve had also increased the complexity of the business by an order of magnitude. How would you connect television programming with the Internet in a compelling way? Where would the content come from? How would you cover the costs of additional storage in the set-top box needed to accommodate it all? My head spinning, I could see a river of red ink gushing down the halls like blood in
The Shining
. We would need a billion dollars, not $100 to $200 million. I didn't know how to raise a billion dollars.

Microsoft, it turns out, had been thinking along similar lines, though its view was largely focused on the computer as an alternative to the television set—a view Steve thought was silly. As WebTV began evangelizing Enhanced Television, with its ability to combine Internet content and television programming, Microsoft, realizing it could have the best of both worlds, approached Steve about buying his company. Steve was reluctant to give up control but finally, after a great deal of agonizing, he decided to sell. In the end he knew making Enhanced TV successful was going to cost a fortune, if it worked at all. Microsoft's deep pockets would give him a shot at it. We weren't sure we could ever pay the tab otherwise.

If Steve had ceded his visionary leadership to an operating manager early on, Microsoft probably would never have bought WebTV. Limiting ourselves to the Internet television business would have shortchanged Steve's larger vision, and WebTV would have had to struggle with building a much smaller and just as risky business on its own.

For me, the moral of the story of Steve Perlman and WebTV is the need to emphasize visionary leadership over management acumen in the formative stage of a startup. If you turn a visionary startup into an operating company too early, you throw out its birthright. It will never be as big, as grand, or as influential as it might otherwise be. It will be much harder, perhaps impossible, to expand the vision later, when performance is being measured quarter to quarter against operating plans, because then there's too much at stake. Steve was the right leader, the only leader, to take WebTV through its formative years.

L
ENNY
, of course, was leaning entirely in the opposite direction. He'd taken a big idea and shrunk it to make operational sense of it before he even started. In the process, he'd gutted his big idea and reduced his potential. He had yet to demonstrate his ability to develop a compelling vision worth following. Could he lead?

In my last check of the night, I found an e-mail from him. I was betting he had heard from Frank, though I suspected Frank's message was less direct than his “we're going to pass” message to me. Lenny probably had gotten the hedge-your-bets “no.”

I hit “Reply” and tapped out a response.

Chapter Nine

T
HE
G
AMBLE

W
HEN MY MIND
finally turned to business the next morning, my first thoughts were of Lenny. I knew he was at a crossroads. I had no affinity for Funerals.com, at least as Lenny had cast it, but Allison had struck a chord with me. Her enthusiasm for a community-based service was real; so was her disappointment in the evisceration of their original dream. If Lenny truly shared Allison's vision, I wanted very much for them to get a shot at it. On the other hand, if Lenny couldn't get past his limited view, better to part ways now and put Funerals.com to rest. Lenny was going to have to answer those fundamental questions he had so neatly avoided thus far. Why was he doing this? What was important to him, and what did he care about? Who was he, and how could he express that in his business? I was now curious about the answers.

But when I checked my inbox, there was nothing from Lenny. To my surprise, though, there was a message from Allison. I opened it immediately.

This was a promising turn of events. Allison's job offer was in the bag, and yet she was still willing to gamble on their original business vision. I wondered if Lenny was equally willing to take the risk. In the Deferred Life Plan, by definition, you postpone risking what matters most to you; that happens later, if it happens at all. What if Lenny pursued a business built around what truly mattered to him, and it failed? What if the world told him, despite his absolute best efforts, that what most inspired his passion wasn't very interesting? With Funerals.com, Lenny had been minimizing his exposure and avoiding the real test. He was aiming far too low.

My morning was unscheduled, so I decided to escape from e-mail for a while. I suited up and grabbed my racing bike for a brisk ride in the hills. I do some of my best thinking while pedaling.

The first leg of my route was up Page Mill Road, a winding climb to over two thousand feet, through oak forests, with an occasional glimpse of the Bay shimmering in the morning sun. Cycling has long been my favorite way to travel, and I had logged thousands of miles zigzagging throughout New England, Eastern Canada, and even China during the seventies and early eighties. I put my love of travel on hold, though, while I pursued my Valley career. A few years ago, I reshuffled the cards when I became a Virtual CEO and recalibrated my priorities and passions. Since then I have biked France, Spain, Vietnam, Laos, and Myanmar. Soon, Bhutan, and who knows where else?

As my legs spun, my mind churned on the idea of risk. Everything in this Valley turns on risk. Lenny had been hedging, unwilling to expose the big idea, because he suspected it had a substantial chance of failing as a business. Cheaper caskets seemed straightforward as a moneymaker, and he wouldn't have to stretch hard to try it. Proposing a business with higher aspirations seemed too risky because it wasn't clear how that business, the one he and Allison first discussed, the one that had excited them, could work. So Lenny focused on the bottom line in an attempt to appeal to what he presumed to be Frank's greed. He underestimated Frank and the importance of vision, passion, and the big idea. The question he seemed to have answered was not, How can I make a difference? but, What's the least risky path to financial success? Ironically, he had assumed the biggest risk of all in Silicon Valley, the risk of mediocrity. He had dug his own grave.

Lenny didn't understand how the Valley thinks about business risk and failure. Instead of managing business risk to minimize or avoid failure, the focus here is on maximizing success. The Valley recognizes that failure is an unavoidable part of the search for success.

Silicon Valley does not punish business failure. It punishes stupidity, laziness, and dishonesty. Failure is inevitable if you are trying to invent the future. The Valley forgives business failures that arise from natural causes and acts of God: changes, for example, in the market, competition, or technology. The key question here is
why
a business failed. When you have a big idea as GO had, and you turn out to be years ahead of the market, failure doesn't end careers. Ironically, businesses that fail for acceptable reasons can actually provide a wealth of experience and increased opportunities, as was the case for all the key players at GO.

Ted Williams once said baseball was the only human endeavor at which one could fail 70 percent of the time and still be a success. To baseball I would add the venture capital business, in which only two or three in ten of all funded business ideas eventually hit big, the Internet phenomenon notwithstanding. For the investor, the explanation of this paradox is simple: the lonely winners return 10 to 100 times or more what the losers lose. With those odds you can see how the VC business and the Valley work. And if you understand that, you can understand how VCs evaluate business ideas. They want something that will make a difference, and not a small difference. Hedging is not the way to get their attention. Reducing your downside risk will not warm the cockles of their hearts. Business failures are unfortunate but necessary steps in the search for those few huge successes.

I reached the top of Page Mill Road and turned north on Skyline, along the ridge of hills that mark the volatile San Andreas Fault. These hills, the result of the millennia-long collision of tectonic plates, literally define Silicon Valley to the east and shield it from the Pacific Ocean on the west. This ridge is part of a plate drifting inexorably toward Alaska.

For some of us, Silicon Valley's forgiving attitude toward failure rests on a more profound realization: Change is certain, and in a world of constant change we actually control very little. When there are important factors outside your control, the risk of failure always looms, no matter how smart or industrious you are. We delude ourselves if we believe that much of life and its key events fall under our control.

Most people will respond to that statement by saying, “Of course. Obviously.” Yet many still believe that those who enjoy exceptional achievements and accomplishments rode to the top entirely by themselves. The media always look for a single person, a CEO or an entrepreneur, to personify the accomplishments of an entire company or industry. It makes good reading, but it's simplistic. Someone in the Valley suddenly finds himself worth $100 million dollars and begins to believe he earned, and therefore deserves, that money because of his skill and ability. The rest of the world, egged on by the media, tends to be seduced by the myth, despite the hard work of many others and the role of simple dumb luck. How many of these people accept equal responsibility for the failures in their lives? When you experience the vagaries of success and failure firsthand, it is as hard to accept credit for success as it is to accept blame for failure.