What do you think I should do? I'd like to take your advice and give the community concept a run. There's nothing else for me in this anyway, and if we can get support for the business that first brought us together, I'm sure Lenny would embrace it.
Thanks a million.
Allison
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.
For a long time, I certainly took full credit for my success. I became a lawyer, an expert in the rules that govern the game, worked at Apple in its heyday, and then helped build a highly successful startup at Claris. All that convinced me that I could determine my own fate. It was at GO that I finally realized there were forces at work far larger than anything I, or anyone else, could control. Riding the highs and lows long enough, never being able to see beyond the next peak or the next valley, makes one realize there is only one element in life under our control—our own excellence.
Here's what I tell the founders in the companies I work with about business risk and success, and what Lenny needs to understand: If you're brilliant, 15 to 20 percent of the risk is removed. If you work twenty-four hours a day, another 15 to 20 percent of the risk is removed. The remaining 60 to 70 percent of business risk will be completely out of your control.
My father's a gambler, I tell them, a blackjack player. The game is always in the house's favor. If you play blackjack consistently, you can only lose. Unless you are, like my father, a card counter. He plays the ebbs and flows of the opportunity based on some probability he continuously calculates in his head as he watches the cards dealt. By playing each hand to the best of his ability, he is ready to take advantage of the odds the instant they swing in his favor, wagering more when luck smiles on him, and building his winnings in those moments. Of course, the casinos have made it harder by increasing the number of decks in the shoe and reducing the number of hands played before reshuffling. Nevertheless, my father plugs away, his love of the game unvanquished, waiting impatiently for his chance to win.