Archive for the ‘meaningful failure’ Category

Preparation for a long offsite

July 23, 2009

I’ll be hiking the John Muir Trail in the Sierra Nevada mountains in California next month, which is something I’ve wanted to do my entire adult life.  The Sierras and backpacking really took root with me in high school, where a core group my friends went every summer, and continued through college and a few years beyond before losing the thread to careers and starting families.

Three years ago we restarted these annual trips, and about then I realized how much I enjoy being up in the mountains, away from all forms of electronic communication, as a way to get some perspective and some balance.

So this year I leave on August 4, and my friends and I will start down the John Muir Trail, five days later they’ll leave the trail at Red’s Meadow, and I’ll resupply there and continue on, on my own.  I’ll finish near Mt. Whitney, two weeks and 170 miles later.

And I’ve been doing a lot of reading to prepare for the trip.  Mostly trail guides, even a book on the geology of the Sierras (ensuring I will be the most boring person at the next cocktail party I go to).  But one that’s proven particularly helpful is a book called High Sierra by Phil Arnot, and it’s been great at providing detail on side trips I can make along the way.

300+ pages of detailed route descriptions, elevation changes, permit locations…in short a bunch of data and information about as “touchy feely” as the phone book.  It even has a section on “Hiking Solo” with a set of very pragmatic preparation guidelines regarding safety.   But then it went in a direction I didn’t expect, with the following passage:

“So, in a way the wilderness experience may be catalytic in bringing us to face, really face, the most important questions we can ever ask ourselves:  Am I really living the life I want to live?  Am I fulfilled in my work?  Are my relationships based on sharing and intimacy or are they primarily obligatory?  What do I really want to do with my life?”

Well, for those of us who love backpacking and being in the mountains, that set of questions told me the author truly knows his subject.  For me, these are the questions my mind gets drawn to when my “job” for the day is to traverse six or eight miles (or more) of trail at 10,000 feet, and what separates you from the beginning and end of the hike is a lot of time to walk and think.

Take the “fulfilled in my work” question.  That one’s easy.  I love my job as a venture capitalist.  I love that it requires that you think hard about strategy and equally hard about operations and execution.  You’re on a constant learning curve looking at new businesses and needing to quickly get to their essence to make a funding decision.  And when you find a business you want to fund, you get to go deep with it, for years, to help it (hopefully) succeed and grow.

But that’s the “work” part of this, and what makes my job truly fulfilling is who I work with.  Through equal parts self-selection and deliberate effort, my partners and I have created the kind of transparent, friction-free, trust-based working relationship that up until this point I had only read about.

The fact that we had all worked together before getting into this business helped, but over the past five years we’ve had to make our way through uncomfortable, difficult conversations that required egos to be set aside, and personalities to be parsed from the logic and data.  Everybody talks about this, it’s the first time I’ve experienced it first-hand.

That’s great, but actually making money in this business is getting incredibly hard.  The whole industry is in a state of transition and transformation.  Fred Wilson has done a good job explaining this, but in short, it’s taking longer to get companies sold, the IPO market is dead, and the median valuations at sale have been declining for years.  In order to generate the returns institutional investors need, you’ve got to as a firm perform well above median.

It’s daunting.  We’re doing well as VCs, but looking at the whole industry it gives you pause.  This business will be getting smaller before it gets larger, and as I’ve written in an earlier post, the old stuff gets broken faster than the new stuff is put in its place in industries who are in a state of transition.  And this is an industry in transition.

But that’s where the exciting part of this job is.  Transitions create no shortage of opportunity, and challenge.  I’m grateful I have the chance to put some more thought into this, during my long offsite.

Between now and when I “go off the grid” on the 4th, I’ll be posting on some related topics.

A Blockbuster closing

July 9, 2009

The Blockbuster closed in our town last week, in the “out of business” sense.  I heard a lot of folks attribute this to the popularity of Netflix.

About a year ago our post office (looks like the one in Mayberry RFD) put a sign above their “Out of town” mail slot, saying “Please put Netflix envelopes in the “Packages” drop box.”  Apparently Netflix has gotten so popular that the post office has had to make an adaptation just to handle the volume, and the reflection of the shift in consumer behavior couldn’t have been written more plainly.

But the more I think about it, Netflix didn’t single-handedly kill our Blockbuster.

About six months ago our (only) supermarket got one of those “Redbox” DVD rental kiosks, and slowly it’s taken over the activity at the front of the store.

People are lined up at it all the time, and when I thought it was just a stand-alone machine, I didn’t consider it all that novel until I realized that you can reserve movies, at an individual machine, over the internet. That’s when I thought “this is really cool.”  No wonder folks are jammed there, they’re going to the store anyway, and they can get their movie too, and reserve what they want.  Wow.

So, I did a quick Google search on “Redbox Netflix” and this was the third citation, the headline says it all: Blockbuster CEO: Redbox, Netflix “Not On Radar Screen” as Competition.  The article was from December.  And this is a publicly traded company.  How in the world does someone say this?  What detachment from the customer (and reality) does that broadcast?  It certainly provides a more grounded understanding of why our local Blockbuster went down the drain.

But while Netflix may have pushed Blockbuster to the brink, Redbox may have sent them over the edge.  Not because Redbox was targeting Blockbuster: they were collateral damage.  It’s Netflix who’s in the cross-hairs of Redbox.  And the best part?  Netflix paved the way for Redbox to hollow them out.

How?  Netflix fundamentally changed consumer behavior.  Until they arrived you were at the mercy of your local video store: you had to actually make a separate trip there, choose from their inventory,  and had to remember what you came in there for.

Netflix created a whole new behavioral model of how you rent and experience movies and tv shows.  Infinite inventory to choose from, your own queue on a website, and they mail your movie to you.  How simple, how convenient.  And as I wrote earlier, a change in behavior like this takes time – like a decade.

Convenience is nice, but where Netflix really grabbed hold of people was by also embracing people’s existing behavior: they don’t return movies on time.  Eliminating late fees was the rallying cry that created incredible word of mouth.  And started that hollowing effect for Blockbuster.

So how does this apply to Redbox?  Well, they just applied Netflix’s playbook:  focus on consumer behavior and where the economic leverage is.  They recognized most people rent the current releases, and thanks to Netflix, they also expect to be able to use the web to choose as well as know they’ll get what they want.  Critically, they also realized that having the movie mailed to you meant for many consumers just not having to make a separate trip to get  it.

So Redbox embraced this existing behavior in a clever way.  They just  rent the top movies from a vending machine located in a supermarket.  You can reserve your movie over the web.  So you get what you want, with no special trip.

And the fact it’s a kiosk also means expectations are automatically set that the selection is limited.  This reflects a nuanced understanding of consumer psyches, while dramatically reducing the complexity of inventory management.

And while convenience is nice, where Redbox really gets its leverage is with the economics, just like Netflix did with Blockbuster.  $1 per movie.  Sure there are late fees, but at this price it makes Netflix seem expensive and really tough for digitally delivered movies to pencil out from a margin perspective.  Ouch.

So, against this backdrop, it’s hard to fathom the statement from the Blockbuster CEO.  He’s right, Netflix and Redbox really weren’t on his radar screen.  He wasn’t even in the same business, wasn’t even in the fight.

And if I were Netflix, I’d be working my bankers, hard, to figure out how to acquire Redbox.

The vulnerability of a big idea

June 15, 2009

As Twitter approaches mainstream relevance, it’s also entering a period of strategic and operational vulnerability that startup companies with big ideas run into. 

By going mainstream it’s exposing the structural opportunity its founders saw years ago, but back then, only the founders and the investors were in on the secret.  There had to be a slide in the Series A deck that said  “Here’s the opportunity” and it wasn’t about building a small, derivative business.  It was about building a disruptive, billion dollar kind of company.

In Twitter’s case it’s the opportunity to redefine how people communicate, and shaping how the economics flow in and around this new communication.  It involves getting to scale, developing a third party “ecosystem” of other companies integrating with and depending on Twitter for their own success, and then monetizing all this in a compelling, huge way.  This is really hard, and the folks at Twitter are still struggling a bit with the exact business model that will do all this.

Eighteen months ago, only people in the echo chamber were exposed to the nature of the opportunity.  But today, with Twitter’s explosive growth and visibility, everyone can begin to comprehend the potential.  When Ashton Kutcher gets petulant about his million followers, when Dell trumpets that they’ve sold $3 million of products to their Twitter followers, the incumbent titans in the internet and advertising sectors, well they notice too, and they notice “threat” ahead of “opportunity.”

You saw this first with the Facebook redesign that provided a real-time status update feed a la Twitter.  A classic “fast follower” approach to someone else’s innovation. Facebook already owns a lot of people’s mindshare and time online, so the fact that they’re tracking Twitter tells you how significant the threat appears to them.  By the way, Facebook is also struggling with business model and opportunity vulnerability too, they just are further along the scale path.

How does Twitter keep eyeballs and session times growing if Facebook is just going to “fast follow” them, treating them like outsourced R&D?  This will be really hard, but let’s assume Twitter wins this round of the battle, gets to scale with a loyal and large audience for their new medium of tweets.  Do they jump out of the frying pan and into the fire?

What’s differentiated about tweets is that they flow in real-time, and finding out what’s interesting and relevant instantly has got to be worth something, and it’s so different from the problem Google solves.  Google crawls the web at a frequency measured at best in minutes, more frequently hours or days, so you could envision Twitter creating a new category Google can’t participate in. 

But what if “instant” isn’t in the end all that important.  The NY Times dug into this a bit, looking into  why Google isn’t Twitter.  And they observed that real-time search is hard and neither Twitter nor Google are currently architected to do this efficiently, or well. 

What became clear is that if you need anything other than instant, real-time search, Google can give you “close enough” search, and get closer and closer over time due to their scale.  We can all figure out who will reap the revenue rewards if all Twitter’s creates is another type of page Google can place ads on.

This kind of battle doesn’t result from incremental thinking, from safe bets.  Twitter’s vulnerabilities are proof of the significance of the idea, and what Twitter’s investors funded.  But it doesn’t mean it will have a happy ending. 

And there’s food for thought here for anyone running a startup.  Expect that you will become vulnerable to the incumbents just when you’re hitting your stride, just when people acknowledge your value and relevance.  The presence of that vulnerability is your ticket to the next round of the fight, validation that you’re headed in a worthy direction.

I dearly hope Twitter pulls this off.  I love to see the status quo up-ended, I love the mental image of apples spilling all through the marketplace as someone with a bold and compelling idea runs through, knocking the carts over along the way.

Truth is relative and changes with perspective

June 4, 2009

My post about ambiguity and alignment provoked some really interesting comments, which I wanted to circle back to.  One comment in particular got my attention

It was an observation that truth is relative and it changes with perspective.  At a certain level that makes sense to me.  Truth can seem to be defined by the winners of the battles, by the dominant doctrine, by the loudest voice. 

The person commenting also observed that because of the relative nature of truth “good people can make poor choices at the crossroads.”

And this brought me to realizing that not only is truth relative, it quickly gets intertwined with morality.

In startup companies I think this is super important.  We’re battling the dominant doctrine of the market, striving to fight or become the loudest voice, working so hard to win.  And we’re doing so under enormous, constant pressure.  Keeping hold of what you believe is true and right can be difficult when it seems like survival is the order of the day, every day.

So you might find yourself in an environment where the pressure is explicit and relentless to place your company’s interests ahead of your customer’s, or your investors.  What is true then?  Well, the Entellium duo felt it was true that if they missed their revenue forecast they’d be fired, and made some really poor choices at that crossroad.  The truth was certainly relative for them.

But the more I talked to my friends about this “truth is relative” conundrum, the more I seemed to be saying there is no real truth.  I was explaining it away.  And it shocked me.  My initial reaction was that the last place you want to go is to say there is no absolute truth.  But actually the more I think about it that’s where I do end up.  The truth in your daily life is completely relative, it’s not absolute.  Except that what it’s relative to is what’s true to you.

When I was at LSI Logic in the early days as a product manager I remember going on a sales call at the end of the quarter to help a salesperson close a huge deal.  We found ourselves seated across from the purchasing manager, who was the wife of the founder,  reviewing the terms of our proposal only to hear her ask for a gift.  She said “I’d like a Gucci purse”.  I heard it as a non-sequitur.  Maybe her birthday was around the corner.  I tried to keep the conversation moving, but it quickly dawned on me that the gift was separating us from this order.I looked over at the salesperson, and we exchanged nervous, and puzzled looks.   

The salesperson and I ended the conversation as quickly as we could, got up and left, I called my boss (using my spiffy “car phone”) and relayed what had happened.  I was in a turbulent state of mind.  We needed this order, and I just made the call to walk away from it.  He was disappointed, really disappoint we lost the deal but supported the decision to walk.  I was relieved to be in a company where we shared this same sense of right and wrong.

I’ve told this story a lot, to me it’s a pure ethics example – it’s the one I put on my business school applications (they all had a question like “Describe an ethical dilemma you’ve encountered and how you handled it”). 

Except I’ve repeated it to people I have first hand experience with and know to be people of solid integrity and had them say “Hmmm…not sure if I wouldn’t have just gotten the purse, and the order.”  And it made me realize I made my choice based on my personal “truths” and these people would have made different choices for their own.  And each of us would have felt like the choice was aligned with our morals.

Another friend told me this topic sent her to look up the meaning of “moral relativism” – that moral/ethical propositions are measured relative to their circumstances.  More important, that only personal subjective morality expresses true authenticity.  Your personal sense of truth = the authentic you.  The other person looking back at you in the mirror.

That means you have to know that person in the mirror really well to remove the ambiguity in what happens at the crossroads.  You need to have an intimate and unabashed knowledge of what you yourself believe to be true about yourself.  If you lack that, well the easier it will be for you to be seduced by or succumb to the loud voices, the accepted doctrines, the winners of the battles.

The collateral damage of a missed opportunity

May 21, 2009

Sometimes life just steps right in and provides an illustration of a key principle, almost as if on cue. My apologies for the length of this, but the topic merits it.

For those of you who have read my bio, you know that I work in Seattle but commute from a small town in the Midwest. There’s a separate blog post needed to explain why, but the town I live in is small enough for us to know everyone, and be very actively involved in our community.

Last week someone at our high school wrote racist comments, a death threat, and the names of a number of the black students at the school on a stall door in one of the boy’s bathrooms. No ambiguity here. Horrible, fundamentally unacceptable, reprehensible thoughts. Scary too.

How the school responded to this presents a crystal-clear example of how ambiguity + fear of failure = colossal missed opportunity for a community and for its students. And it offers a heartbreaking follow-up to my post last week about ambiguity and alignment of your principles and ethics.

Here’s what happened:

  • A death threat naming six of the high school’s black students was discovered on a bathroom stall door at around 2:30 pm last Thursday.

Here’s what was done:

  • The six students were pulled from class that same day by the administration, informed of this, asked if they knew of anyone who might have done this.
  • The next day the police department was pulled into this, and spent the day at the school investigating the incident.
  • This same day – the day after the discovery – the administration met with the six children’s parents.
  • A letter was finally sent home to students this past Tuesday, identifying this as a student safety issue, and stating that “racist or threatening behavior will not be tolerated.” You can see it here.

Here’s the issue. With one exception, what they did wasn’t wrong, it just could have been a whole lot righter. And bolder. And more educational, for everyone.

The one thing they did wrong? Waiting until the following day to tell the parents. My heart goes out to the parents of those six children when those kids came home and told them what had happened at school that day. How alone they all must have felt. I don’t need to dwell on the tragedy here, the local Fox affiliate got there way before me.

So, the police got called in to investigate, and a letter went out to the students and parents. A safety issue. My daughter summed this up well by saying it screamed ‘this is not our fault.’ I was profoundly let down, feeling decisions were guided by a desire not to fail, not to make a mistake, and to minimize the visibility of this incident.

Retreating to this being primarily a safety issue is a red herring. This is unequivocally a racism issue. And it’s not about the high school. It’s about the entire community. Whoever wrote these threats does not live at the high school. Any one of us may be running into this kid on a ball field, in a supermarket, anywhere. The school provided the medium for the expression, but those racist thoughts leave the school ground at 3:05 and go somewhere.

The school administration got the whole visibility opportunity wrong. They claimed raising visibility would satisfy “that person’s need to do it and maybe there is more that will happen.” Huh? I can’t think of a better way to ensure this doesn’t happen again than getting the entire school and community to get out in public, now, and express their opposition to this kind of behavior.

And “out in public” is where the six students and their families need to feel supported, and safe. These six children and their families should feel comfortable knowing more than the school and the police are looking out for them. Worse, time matters here, a lot. These children and their families needed that support the moment this was discovered. Importantly, the opportunity for members of the community to show their support in a timely manner was also taken away too.

What if the actions were guided by a fear of not succeeding? Success is not about catching whoever it is who wrote the graffiti. It’s about demonstrating unambiguous intolerance to racism, in the school system and community as a whole.

How could this have been handled differently?

  • They could have held a school-wide assembly to inform the students not of the threat as much as of the intolerance of racism. Of the vigilance to eradicate it.
  • They could have called a joint City Council-School Board emergency public meeting to shine a bright light on these two institutions’ intolerance to racism and vigilance to eradicate it.
  • They could have held a community-wide rally to ensure no one missed an opportunity to show support for these children and their families.

Hiding this or minimizing its visibility means that if whoever it is who made these threats is never caught, then he or she or they will have won. Even if caught, the legal process will be conducted in rooms, in buildings, away from the community.

What a spectacular opportunity to bring the community together and shine a big, bright light on this. And what a colossally great learning opportunity, missed. My daughter is taking a “Race, Prejudice, and Intolerance” class in that very school, right now. Holy cow, why not get the entire student body in on a real-time lesson. How many people can say they’ve taken part in an anti-racism activity, as a student, in their own school?

And that list I came up with about how this could have been handled differently? It can all still be done too.

And this isn’t personal or about the people involved. It’s about the direction they chose. I know the school principal and many of the school administration and teachers. These are smart, caring, very hardworking people. People that make you proud that they do what they do to provide a great education for our kids. That’s why it’s so heartbreaking to witness the straightforward, sensible path that produced this missed opportunity.

A fear of failure produced this. Nothing done wrong, but plenty of collateral damage, and six students, their families, and the community poorer for the experience.

Ambiguity and alignment

May 13, 2009

My last few posts have been very much “inside the world of vc and high tech” and I wanted to get back to the broader theme that underpins this blog – meaningful failure and what you can learn from failure.

I had one of those wonderful experiences last week where a friend connected me to a friend, and I subsequently found myself deep into a conversation I hadn’t expected.  In this case, I was on the phone with a former technology executive who left his career to pursue his passion for poetry.  There we were, getting to know each other, locating some common ground in our shared interests of startups and writing.

One of the subjects we lingered on was how whether you’re at work or at home, you’re the same person deep inside.  And that the converse is perhaps more interesting: what happens when you’re a different person at work than you are at home?  I was thinking alignment of values and areas of ambiguity.  This sent me in an interesting arc.

When I first started thinking about this I thought the issue was more about decency and less about ethics. 

Except people can be incredibly decent, treat others well, communicate compassionately and still be unethical.  They can define “truth” in a way that is not true at all, and exploit this ambiguity motivated by fear, or greed, or insecurity, you name it.  But it means who they are on the outside (defined truth) is different from who they are on the inside (actual truth) 

Which made me think of Entellium.  This is old news, but offers a rich example.

Entellium was a high flying venture capital backed startup in Seattle, where the CEO and CFO created a second set of financial statements that overstated revenue and presented these to their employees, board, and investors. Only these two executives knew about it, and they compartmentalized the truth, keeping it deep inside.  For a long time. 

John Cook of TechFlash summed it up well:  “More than $50 million in venture capital down the drain. Over 200 people out of work. And two Internet executives — both fathers — going to federal prison.”

They didn’t do it because of greed – they didn’t even profit from this deception.  In fact they ended up spurning a $100million offer from Intuit, knowing the fraud would come to light during the accounting review.  

One of the executives admitted the fraud was driven by the fear of failure.  A missed sales objective one quarter and the fear of confronting that caused them to overstate actual revenue.  And then the next quarter of course they were even further behind, and well you know the way these things play out.  So, they lied to their board and employees.

And to their families too, who were blindsided by the fraud.  The police showed up at their houses and took the execs away in handcuffs in front of their wives and children.  Imagine what was going through their heads, and the heads of their families in those moments.   And the comment I kept hearing from people who knew both men was “they were such decent people.”

So I guess you can be decent and have a very ambiguous ethical foundation.  In fact, the belief that your your ethical foundation has ambiguity is the tell-tale that you are no longer behaving ethically.  Entellium was all about the difference between what was true and what could be gotten away with.  There’s plenty of ambiguity to go around in those last six words. 

But deception is a whole number, there are no fractions of it.  There is no ambiguity.  So it’s really not about being a different person at work or home, it’s about always being the same person inside and outside.  Having truth be the connective tissue between the two.

David Foster Wallace said this well in his 2005 commencement speech at Kenyon College “The trick is keeping the truth up front in daily consciousness.”

If it’s up front, then it’s there for everyone to see.  A nice alignment between who you are inside and who you are outside.

My guest post on TechFlash

May 6, 2009

John Cook was kind enough to let me guest post on TechFlash today, on a theme which turned out to be quite timely given Amazon’s introduction of the new Kindle DX.  The post is about how mobile consumer devices like the Kindle and the iPhone have finally wrested the grip of the mobile phone networks from the device itself.

To me it’s a rare instance where you can witness an industry transformation occur before your eyes.  Or perhaps watch a train wreck occur in slow motion.  The carriers will never be the same, but holy cow, we’re all in for some great new mobile products and experiences as a result.

You can find my post here:  The Kindle, the iPhone and the wireless carrier as commodity

Lots of low cost experiments

April 22, 2009

The really interesting improvements companies make come from takings risks, but in a lot of cases risk-taking can be held hostage by needing data to support every decision.  Being conservative and careful across the board may be safe, but it’s not where breakthrough learning happens.

This is where I see a lot of startups struggle:  confronting the tension that is created between knowing when to apply disciplined fact-based decision making to avoid failure, and when to be disciplined about making decisions where failure is accepted as a likely outcome.

The best companies create a culture that can foster two seemingly conflicting organization abilities: precision and failure.  In fact, you need both to reliably profit from your mistakes.

The key is understanding where in your business you can afford to routinely experience failure, and where failure has more costly significance.  You need internal processes that measure performance, coupled with a culture that has a pretty solid foundation of trust – where anyone and everyone feels comfortable taking a risk, and reporting the results as data.  I wrote on this earlier, it’s a culture where bad news has got to travel faster than good news.

Steve Blank wrote a pithy essay on how to navigate this decision making quandry and I love the quote he referenced from General Patton: “A good plan violently executed now is better than a perfect plan next week.”  This is a variant (or perhaps the inspiration) for another saying “the perfect is the enemy of the good.”

To me they drive home the value of action and experience placed on par with the value of planning and data.  Patton would never go into battle without a well thought through and justified plan, but he speaks to how perfecting the plan is different from winning the battle.

The same is true in startups.  It’s critical that they operate with a well thought through plan supported by data, but it’s equally important that they understand when the plan is no longer as important as what the real world is telling you.  It’s another way of understanding why the numbers in your operating plan are wrong, and is in fact healthy.

Steve talks about a simple heuristic, that decisions have two states: reversible and irreversible.  With the reversible decisions you can liberally experiment, and should.  This is where you can create significant breakthroughs for your company by being highly creative, and surprise yourself by taking risks, and failing, perhaps a lot.  If you’re wrong, re-load and try again.  For me the construct is learning to try “lots of low cost experiments”.

He makes an even more interesting observation about tempo.  It’s not sufficient to be able to take risks with reversible decisions, it’s to do so at a brisk tempo.  Quick, responsive, hungry.

Where this comes in especially handy is with sales and marketing performance and new product development.  In both cases you’re in a race to discover what works, and then what works on a repeatable, scalable basis.  I forwarded Steve Blank’s article to one my CEO’s who is focused on improving her sales and marketing team’s pace and performance.

Jenny Hall also made a similar observation in her post about what she learned as CEO of Trendi.com when it failed.  For her it was “if it won’t matter in three months, don’t spend too much time on it.”

She’s got the necessary ingredients: a culture of trust within the company, data-driven decision making, and performance measurement processes.  When she first arrived, these ingredients weren’t as prevalent, and she worked hard to put them in place, and placed a priority on reducing errors and increasing predictability.  But that was then, this is now, and she’s making the transition to fostering more appropriate risk taking as a way to increase performance.

Lots of low cost experiments combined with a brisk tempo supported by a disciplined acceptance of failure.  That sounds like a lot of fun.  Try it.

The next big thing

April 7, 2009

“What’s the next big thing?” I get asked this a lot, and a lot of VCs get asked the same question too about what’s the next big trend/device/web-service/… and that always makes for an awkward detour in whatever conversation preceded the question.  The truth is “I don’t know.” And it’s a great answer, because none of us do. 

The next big fill in the blank only becomes apparent in hindsight.  It’s not that I’m not smart nor anyone else who gets asked this question, it’s just that you can’t really tell.  Sure, I’ve got favorites (twitter is now at the top of my list, but I wouldn’t have said that a year ago). 

Remember when Google actually was in beta, in 2000?  It began appearing on people’s desktops where I worked at RealNetworks.  We thought it was cool and efficient, but there were ZERO people talking about it being the next big thing.

Last Thursday’s NY Times had an interesting article about the rising popularity of “netbook” computers, and how these are a big emerging phenomena enabled by a structural technology shift in the computing landscape: we no longer need Microsoft, and probably Intel.  The next big thing?  Maybe.  More on that in a second.  Let’s look at newspapers.

Clay Shirky did a phenomenal job explaining the collapse of the newspaper industry on his blog, pointing out it too results from a structural technology shift – the internet.  Clay references Elizabeth Eisenstein’s book, The Printing Press as an Agent of Change, where she observes that during these technological transformations the only obvious effect in the moment is the destruction of the status quo.  What transcends the status quo takes time to emerge.  Clay sums this up well: “That is what real revolutions are like. The old stuff gets broken faster than the new stuff is put in its place.”

In the case of netbooks, we’re about to see a lot of old stuff get broken, but it’s not clear if netbooks are the transcendent replacement, or just one of the convulsions of the revolution.

But netbooks are significant because they’re exploiting the growing vulnerabilities of Intel (price, performance) and Microsoft (price, legacy support, integration) at the low end in the same way that Apple is (more elegantly) exploiting them at the high end.

Netbooks have traction because they focus on where people spend the majority of their computing time: web-based documents and services, and the consumption of digital media.  That’s it. 

Whether or not someone buys one, netbooks educate the average citizen that GoogleDocs and a browser are all you need, and that MS Office is both irrelevant and overpriced.  My belief is the impact of netbooks will not be felt so much in unit volumes, but as catalysts speeding the unraveling the Office franchise. 

But wait, there’s more.  How much distance will separate the Office franchise “unraveling” from prying MS’s grip off the operating system?  Apple can’t do it, and is smart enough to steer clear of this outcome.  Will Android and Linux be good enough at the low end?

We’ve already seen the indifference that’s greeted Windows7, and the reluctance to even adopt Vista, with people scrambling to stick with XP.  My family did exactly this in February when our five year-old XP home computer died, and we scrambled to find someone who could sell us a new XP machine (we succeeded).  It was an intelligence test.  XP or Vista…hmmm.

Maybe this reveals a nuance to Clay’s “revolution” observation.  Perhaps the path to destruction takes you through the terrain of irrelevance.  What netbooks show us is how irrelevant the once mighty Microsoft and Intel platforms are to the needs of people today.  They may be lucrative businesses but they just no longer point to the future like they used to.  They’ve become what’s broken in the revolution. 

It’ll be exciting to see the new stuff that’s put in place.  I’ll be sure to blog about it, after we all see what it is.

Man On Wire – Best Startup Movie Ever?

April 1, 2009

I saw Man On Wire for the first time in February; I’d read a snippet somewhere about this being the story of the man who tight-rope walked between the two World Trade Center towers in 1974.  And at a certain level, that’s exactly what this movie is about.  It’s exquisite.  The tight-rope walker, Philippe Petit is almost a caricature, his vision and ambition equal parts boundless and focused.  I’ve seen the movie three times now, and each time it’s more revealing.

What viscerally strikes me is how it tells the story of starting up a company.  This is all about having an idea so audacious it’s almost not believable to someone who hasn’t drunk your kool-aid, yet.  It’s about staying focused on the one reason why you will succeed and not the 10,000 reasons why you will fail.

Man On Wire reveals four super-compelling principles that underscore what it’s like to be in a startup, and if you haven’t been in one, it’s a wonderful way to get a sense for what it feels like to be there:

  • A meticulously constructed plan, discarded.  Philippe Petit spent six years planning this act, including building scale models of the towers’s roofs, constructing a tight-rope the same length as the towers in a field, and on and on.  And guess what?  The day of the “coup” huge elements of the plan had to be thrown out, the real world just didn’t cooperate.  This is “why the numbers in your operation plan are wrong” writ larger than life.
  • Repeated visualizations of the outcome.  This is one of the critical mechanisms to ensuring you’re focused on why you will succeed.  Philippe from the moment he learned of the Towers construction, visualized walking between them.  For years and years visualized walking that wire, how he would do it and succeed. This is critical when you only get one shot at an opportunity, like he had. 
  • Significant emotional toll.  Getting something done that’s ambitious, with a visionary leader means you will do things that are difficult and way outside your comfort zone.  You will find out who the chicken killers are, who can be relied on and who can’t, and most importantly what you can rely upon yourself for.  It’s messy and painful, and you will be different as a result of this experience.
  • The fear of not succeeding.  Philippe’s obsession was on success.  Startups are all about being laser focused on why you will succeed, and your only fear is success NOT happening.  I just can’t say this enough.  People who are afraid of failure may very well get great things done, but just not at startups.

For me the most piercing and fiercely honest confession of the entire movie is when Philippe describes the moment when he committed himself to walking that wire.  A simple shifting of weight from the foot resting on the tower to the foot resting on the wire.  Silent and internally deliberate. 

Compare/contrast this with the article in this April’s Outside Magazine about why people participate in risky sports, and profiles BASE-jumper Ted Davenport.  Neuroscientist Russell Poldrack asserts that there are three ingredients to risk taking: desire for adventure, relative disregard for harm, and acting on your desires without fully thinking them through.  That last factor strays way, way too far into the landscape of recklessness and separates Philippe from Ted.  There was nothing reckless about Philippe Petit.  Deliberate, honest, ambitious, meticulous.

So see this movie for the reasons I outline above.  Also, let yourself ask the other questions.  Like “how can someone afford to spend six years planning this”?  How “real world” is that?  We’re not getting the full story here, but it sure is enjoyable. 

Before your Netflix delivery arrives watch Philippe break Stephen Colbert out of character on the Colbert Report, and you’ll hear Philippe describe that moment when he shifted his weight onto the wire.  Mesmerizing.