One day, in the middle of my wrestling with building a business around Internet TV, Steve walked in and announced, “It's not the Net on TV, it's Enhanced TV.”
What the heck is Enhanced Television?
His new, broader vision included but went far beyond the Net on TV. At its core was the notion that information could flow back and forth between the service or program source and the viewer. No longer wholly passive, the viewer would be able to interact with the television. Interactive programming would be served up from the Internet and seamlessly connect with video programming from cable, satellite, and terrestrial broadcast. Viewers could chat with their favorite soap stars, get behind-the-scenes glimpses of celebrities, explore the historical background for the events in a movie, or peruse a mountain of statistics while watching a game.
At first I dismissed Enhanced TV as Steve's folly, yet another frustrating distraction from our attempts to make WebTV into a real, operating enterprise. Of course, Steve persisted, and, finally, I realized he was right. The Net on TV had the disadvantage of introducing a new service to the living room, where it would need time to gain a foothold. The ultimate market was probably small; not that many couch potatoes were dying to surf the Net. But enhanced television offered to take a ubiquitous, well-understood medium—television—and make it better. Enhanced Television was about 100 million households. A big idea.
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.
LENNY, 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.”
TO: randy@virtual.net
FROM: lenny@alchemy.net
SUBJECT: Dead Wrong
Randy,
Got home tonight and found a note from Frank. I'm confused. He says I should feel free to “explore other possibilities.” When do we get the money?
Thanks,
Lenny
I hit “Reply” and tapped out a response.
TO: lenny@alchemy.net
FROM: randy@virtual.net
SUBJECT: Re: Dead Wrong
I cannot speak for Frank. But my assessment is that nothing is going to happen there for you, Lenny. Frank's telling you nicely to go somewhere else. My sense is that, in your two attempts, you've failed to excite anyone with Funerals.com.
Sorry for the bluntness, and I may be wrong, but I doubt it.
My advice: Go back to why you and Allison started on this path in the first place, to the things she was talking about at the Konditorei, and try to recapture some of that. Valuable content and a vibrant community can establish a strong following that you can monetize with commerce and advertising. Where there's a critical mass, there's money.
Stop playing it safe. Don't waste your time or Frank's.
Ask yourself the question: What would make you willing to do Funerals.com for the rest of your life? Start from there.
best
r
Chapter Nine
THE
GAMBLE
WHEN 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.
TO: randy@virtual.net
FROM: awhitlock@digger.net
SUBJECT: One Last Question
Randy,
Thanks for meeting with us the other day. I hope you understand my position. In his frenzy to get Funerals.com funded and operating, Lenny won't consider anything not directly on point. To be honest, I find it demoralizing. Lenny forwarded your e-mail regarding the outcome of the VC meeting. I'm sorry for Lenny, but I wasn't surprised. Unfortunately, Lenny now seems paralyzed with indecision. He finally hit a wall he can't break through, and it's shaken him up. As much as I know he'll deny it, I think he needs someone else to call this one.