“That's all very insightful. Solid thinking,” Debbie commented when I finished. “But they're looking for the CEO. They're looking for the leader. What's your vision? What's the big idea? How will you get people excited? They'll want to hear where you intend to take them as a company.”
I was a wise, old hand when it came to solving tactical issues. That had always been my job as a manager. Now I was being asked to lead and motivate, to create a vision that could attract and inspire talent and partners. Managing—vigorously driving execution—is a rare skill, Debbie told me, but rarer still is the ability to lead, inspire, and motivate people.
So I sat down with a blank piece of paper and started working out my ideas. I concocted a diagram about the evolution of interactive storytelling—concentric circles showing how interactive storytelling was or could be different from other forms of storytelling and other media. It was a crude chart, but it seemed to make sense. It excited me, both because of what it said and because I'd forgotten how much I enjoyed that free-form way of thinking.
After some soul searching—developing a vision that excited me was certainly a factor—I decided to proceed with the interview process, which meant meeting the myth himself. I rode my motorcycle to Skywalker Ranch, buzzing with ideas for LucasArts. I had a plan to expand on the creative strengths of the organization and to drive the medium in a way consistent with George Lucas's storytelling legacy. With LucasArts we would accomplish for the video game business what Industrial Light & Magic had done for the movie special-effects business. The Lucas brand would become a haven for a new breed of creative talent excelling in interactive storytelling.
When I finally met with George, I couldn't stop talking. I whipped out my charts. I ran on about interactive storytelling and my vision for the medium. George, who had of course already given the topic a lot of thought, engaged with me in a lively give-and-take about the future of games and interactive content. Whether it was my vision and enthusiasm or simply LucasArts' desperation, I don't know, but I was eventually offered the helm.
No CEO's job is all vision, though, and my job at LucasArts included considerable management efforts. We almost immediately restructured our domestic distribution strategy and renegotiated our international distribution deals, improving our margins and control significantly and thereby putting us in a better position to attract outside products for redistribution under the Lucas label. We engaged our own sales force. These moves were controversial, given that Lucas had never invested in anything other than the creative side of the business, but they turned out to be a stroke of good timing when our earlier distributor went under just as we were releasing our summer hit product, TIE Fighter.
Next we greenlighted a sequel to the company's CD-ROM megahit, Rebel Assault, against the protests of many in the company. Once again, we were fortunate, and the sequel turned out to be a huge seller. We set up a new group to develop an edutainment CD, a first for the company. We hired a “Next Generation” development team and struck a deal with Nintendo to be a preferred developer and partner in a Star Wars title for their impending juggernaut game console, the Ultra 64.
I struggled to build consensus at every step, but I knew that ultimately I had to earn everyone's confidence through results. With hard work and good luck, the results came. In less than two years we catapulted the company to the number one PC game publisher and increased sales and earnings by a factor of three or four.
I liked being the leader better than being the guy who made the trains run on time. I found that the art wasn't in getting the numbers to foot, or figuring out a clever way to move something down the assembly line. It was in getting somebody else to do that and to do it better than I could ever do; in encouraging people to exceed their own expectations; in inspiring people to be great; and in getting them to do it all together, in harmony. That was the high art.
Lenny would need to step up and make a similar transformation. He would have to take on the mantle of leader and rally people to his vision to enlist their support. He could not hope to get by simply trying to make the train run; he would have to set its course and motivate others to join him for the ride. It would be easy to dismiss him as no Jack Welch, but if he could become the Retriever and assemble Funerals.com from the muck, he would be the right CEO for phase one. The time to worry about operating leadership would come in the company's next phase.
WORKING WITH Steve Perlman at WebTV taught me how critical it is in an early-stage startup to strike the right balance between leadership and management.
I met Steve at Apple in 1986 when he was a young whiz kid, one of the more inspired inventors, in the Advanced Development Group. We stayed in touch over the years. In the spring of 1995, just after I started at Crystal Dynamics, Steve invited me to his house for a peek at his latest top-secret project. In his study, crammed with wires, electronic boards, and gadgets from Fry's Computer Store, he showed me the Playboy Web site.
Checking out the Playboy site was commonplace among early Web surfers, but Steve was doing it with one critical improvement: there it was in his study on a television set. In creatively marrying two disparate technologies never designed to work together, the computer and the television, Steve had just made the Internet available to every couch potato. Suddenly it was possible for the Net to touch anyone with a TV set, not just those with computers and the savvy to use them.
Steve and his partners were founding Artemis Research, ultimately WebTV, to pursue his invention. Lacking experience in operating a business, he wanted me to join as CEO. As excited as I was about his vision for the Internet on television, and as fond as I was of him, I had to beg off because I had just taken the CEO gig at Crystal Dynamics. I did, however, advise him and his team on building the company, and shortly afterward I joined the WebTV board. Steve called me often to seek advice about specific operational issues—financing, business plans, negotiations, hiring. He proved a quick study.
A year later, as I left Crystal, Steve asked me again to join as CEO. Not an easy decision this time. He was a natural, inspirational leader, and his charismatic vision attracted the best talent, investors, and supporters. But given his role as company visionary, my job, if I had become CEO, would have been primarily operational, more like my role at GO than at LucasArts. I had to decline.
Still, WebTV was growing rapidly, hiring a couple of hundred people and raising over $100 million dollars in the first couple of years, and Steve needed someone who had lived through it before. So, without taking a formal position, I increased my involvement to help with operating issues, and that's when Steve gave me the “Virtual CEO” business cards.
This was a quintessential “Brave New World” company. Despite its rapid growth, WebTV's business model was still largely undefined. No one knew how it would finally make money. The hardware was far costlier to make than our wholesale price to distributors. Profits would have to come from services provided through the box, but which services and at what price were still unclear.
In this uncertainty, Steve shined. To call him a technical leader did not do him justice. Technology was not the sole source of his success. He was in fact a brilliant promoter— part Edison, part P. T. Barnum. He could inspire investors and employees based on a mesmerizing vision that, for the moment, made everyone forget the absence of a clear economic model. In round after round of financing, Steve was always able to sell a higher valuation than I thought possible and bring in critical partners.
Supporting Steve, I felt a strong obligation to investors and employees to rationalize the business quickly. We needed to make economic sense of it, and better sooner than later. Steve resisted. He insisted on evolving his vision for the Internet on television and exploring its potential before constraining himself and the company with a bottom-line operating mentality.