Startup

Key Takeaways:

1. I got my best ideas in my sleep.

2. Lotus was in a race with several more established competitors, and he knew it. Most industry people thought Lotus was crazy to try to unseat Visicalc, which dominated the market at that time. But Mitchell intuitively understood something that only the Japanese taught in school: in a fast-growing market, what matters is your share of new machines, not existing ones, because new machines quickly come to dominate the market. When IBM announced that it would be bringing out its own version of the personal computer, to be called the IBM PC, Mitchell directed his programmers to tailor their program to this machine.

3. Almost like clockwork, every ten years since the beginning of the computer revolution, a new class of computers had unexpectedly emerged.

4. Mitchell and I had stumbled upon a plain truth: personal computers are deskbound, like typewriters, and are unsuitable for people who spend their time away from a desk or work face to face with others.

5. COMPANIES ARE NOT conscious in the human sense, but each one nonetheless has its own personality. A company develops attitudes, even emotions, that are expressed through the actions of its people. It creates goodwill, establishes trust, and forms relationships with customers, employees, government agencies, and other institutions. This personality is captured in the corporate culture—the values and beliefs that the people in the company are expected to live and work by.

6. This incongruous assortment of engineers, reminiscent of the diverse characters of a Passion play, had one thing that bound them together: a deep, almost spiritual conviction that a good idea and some hard work can make a difference. They believed in the power of a concept to change people’s lives for the better, and felt a moral imperative to make it happen. GO was a vehicle for each of them to put this feeling into action, to prove to themselves that their faith was justified.

7. our company, everyone is responsible for understanding our goals and how their work contributes to it.

8. Once your city is established, owning the API is like being the king of the city. The king gets to make the rules: collecting tolls for entering the city, setting the taxes that the programmers and users have to pay, and taking first dibs on any prime locations (by keeping some APIs confidential for personal use). This is the great secret of the computer industry.

9. Robert was renowned for giving good demos. This stemmed from an unusual skill: he could deliver a relaxed and articulate exposition while he surreptitiously carried out a complex sequence of operations with his hands. He held your attention with his words as he deftly recovered from problems that would normally require total concentration. If it weren’t for his interest in computers, he probably would have become a magician.

10. Although they had just walked in, Gates immediately slouched in front of a new Macintosh that sat unattended on the receptionist’s desk, to see what software was loaded.

11. “Look, Jerry,” he said, “the name of the game is to create a sense of scarcity. It’s a game of numbers—the more people we interest, the more likely we are to get the money we need.”

12. “OK, let’s get started,” I said. “How do you like our new offices?” The room broke out in cheers and applause. “Now we look like a real company. We have a nice reception area, new furniture, a real phone system, computers . . . But we’re missing one thing. Do you know what it is?” “A company masseuse!” Todd Agulnick yelled. “No—revenues,” I said. The room went silent. “We look like a company, but we are only a venture. Ventures have investors, while companies have revenues.

13. In the real world, management is an art, not a science. The formal techniques for decision analysis that business schools teach are fool’s gold, a vain and misguided attempt to systematize the chaotic. The mere existence of these methods betrays a darker truth: we harbor a desperate desire to believe that the world is ultimately predictable. But anyone who has managed a startup knows that predictability is an illusion. In this environment, you are faced with an endless stream of arbitrary challenges that bear down on you with the relentlessness of an automatic pitching machine. There’s no time to think. The trick is to know when to swing and when to duck.

14. Well over a billion dollars had gone into developing this operating system, an investment that continues today with no realistic possibility of a return. The technique works well as long as enough money pours in to buoy up moribund projects. But by mid-1989, IBM was so laden with the walking dead that its highly profitable mainframe monopoly could no longer keep the rest of the company afloat. The problem was that nobody knew it yet.

15. The meeting took all day. I later learned that this was standard procedure at IBM: a simple review takes one day, and if there is something substantive to discuss, it requires two. In contrast, GO’s meetings were usually scheduled in fifteen-minute increments.

16. Sometimes I wasn’t sure what motivated John. It certainly wasn’t money. To most investors, the prospect of a quick sellout to IBM would be irresistible. But for John, investing in high technology was a calling, and monetary reward was the byproduct of a successful mission. The higher goal was to create something enduring, a growing enterprise that delivers products, employs people, and enhances the wealth of its stockholders.

17. Although it seemed impossible, the pace of activity at GO continued to increase. There were so many urgent matters demanding my attention that I took to staying at a nearby hotel, to save the few critical minutes spent commuting from the city. There was no such thing as a weekend off.

18. “Look, gang, it’s time to bet the company. IBM is getting antsy again; Microsoft is breathing down our neck; the investors are anxious; and our reputation is fading. We can’t afford to delay any further, period. It’s time to stand and deliver.” Carol interrupted. “I can get the Meridien Hotel in San Francisco for January 22, but only if we make a fifty-thousand-dollar deposit now. Then we can take a redeye to Boston, where the Boston Computer Society will let us present at their January 23 meeting.” I looked around the room. Everyone’s face was white with fear, wondering if I had the nerve to make this substantial deposit to reserve the hotel. “OK, Carol, book it. Listen people, figure out what you can get done by that date. This is it—we’re either going to make fools of ourselves or take the high ground in the coming debate.” The room was silent. “I’ll do my part.” It was Phil Ydens, the stoic operating systems engineer. “Whatever it takes, my group will be ready.” “Same here,” said Celeste Baranski, the director of hardware. “Tell me how many units you want, and we’ll deliver.”

19. IN THE SIX MONTHS since I had begun working with Bill Campbell, I learned by watching him what leadership was all about. The key skill is not in convincing people of your point of view with rational arguments, but, when circumstances require, in building a feeling of consensus in the face of uncertainty or adversity. Bill’s strength was his ability to select a straight course through the swirling darkness, then create a deep emotional reserve in his team that drives them to victory, even when defeat seems inevitable. He metered out sufficient time for open discussion, then closed debate with a fatherly decision that all were expected to accept as their own, in the service of the greater good. His moral authority to work this miracle sprang from a simple fact: he was passionate about whatever he was doing, and he placed the welfare of his employees above all else, including his own.

20. Bill could suffer just about any indignity with grace, except when someone had abused his trust.

21. For once Bill was the calmer one. “Actually, we’re better off now that we know what kind of partner IBM really is. If this happened once, it will happen again. We’ve got to close the AT&T deal right away.”

22. Robert offered to pay for baby sitters for those who needed to come in on weekends. We held a Family Appreciation Day, when spouses and children were invited in for presentations, to learn about why their loved ones spent so much time at the office. To help build morale, two senior technical managers with New York accents dubbed themselves the BBC—Brooklyn Broadcasting Company—and prepared a daily videotape of the day’s progress, punctuated by important announcements for the team, spoofing network broadcasts of the Olympics.

23. A master of promotion, Sculley knew that the secret to success was to change the name of the field and find a new audience.

24. A principle widely held by physicists states that there is no such thing as a truly independent observer, that every act of perception, no matter how trivial, affects whatever is observed. Information theorists recognize a similar principle: every message, no matter how perfunctory, is carried by a medium that colors its meaning for the recipient.

25. “In finance, you always have to have an alternative,” Byers said. “Otherwise, you’re sure to be eaten alive.” “Even with a blue-chip company like AT&T?” “With any large company. That’s why I recommend that you look into a Reg D with a retail investment bank.” “What’s a Reg D?” “Regulation D allows you to sell stock to individual investors of high net worth without having to register with the SEC as a public company.

26. Nothing strokes an investor’s ego more than having a friend or colleague mention a high-flying company in a hot new field and then pointing out that he’s in on the action.

27. “That’s a post-money valuation of one hundred fifty to one hundred seventy-five million, depending on how much we raise.” I was worried that this price was unrealistic, and that the offering might not fly when it hit the street. “I just can’t see how our business plan supports that valuation,” I said. “It’s enough to make a sane investor toss his cookies.” John couldn’t resist flinging his macaroon at me in protest. “There’s no right price, Jerry. It’s just willing buyer meets willing seller.”

28. Through the power of television, I knew that lions were large, proud creatures that roared and lived in Africa. But one day my father took me to see the big cats at the Bronx Zoo. I could barely relate the coarse, smelly creatures in front of me—lying docile and panting in their cages while flies buzzed around their heads—to what I had witnessed from the comfort of my bedroom. The TV images just didn’t capture the real experience. Sitting in the briefing rooms of AT&T thirty-five years later, watching staffers project spreadsheets, graphs, and slides from their portable computers onto the large screen monitors, I realized that computers mislead managers just as television misleads kids. Fed a steady diet of numbers and charts from the comfort of their conference room chairs, senior executives experience only a desiccated version of the powerful forces that shape and grow their organizations. Mistaking these two-dimensional reflections for reality, they shadowbox their way through complex decisions, unwittingly jostled in one direction or another by self-interested emissaries, who can spin a tale of threat and opportunity as skillfully as any Hollywood screenwriter. In these rooms, individuals are stripped of their unique skills and reduced to chits, then shifted from one column to another. Complex working relationships, knitted together over time like trees intertwining their limbs, become statistical learning curves. Loyalty and trust, painstakingly earned through years of delivering useful products and serving customers’ needs, are measured as the difference between market capitalization and book value. Real human wealth, in the form of security, freedom, productivity, and knowledge, is scarcely captured by unexercised stock options. There are no line items that gauge the real engines of prosperity: vision, passion, and commitment. The plain truth is you cannot suck reality from the hypnotic glow of a vacuum tube.

29. One of GO’s sharpest salespeople, Danny Shader, was accompanying me on the trip. As unobtrusively as possible, he went around the room collecting business cards. “What’d you do that for?” I whispered. “You pretty much know who everyone is.” “Titles are deceptive, but you can tell who really matters by the paper.” He showed me the cards. “The ones with the real power are printed on this bone-colored stock. The others have white cards with blue logos.”

30. I could see that something had changed in him. He seemed less intense, more at peace with himself. “Where did you park the jet?” He sighed. “Sold it. I’m also selling our vacation house in Hawaii.” “Too bad, I never got to mooch a vacation there,” I said. “How come?” “We just decided to get our priorities straight. All this stuff—our material possessions—were weighing us down. They owned us instead of the other way around.” “Sounds great. What convinced you to do it?” “Nothing, really. We just started to realize that life is about people, not things. We were wrapping ourselves in stuff to prop up our egos. I guess we just didn’t want our kids to grow up thinking that what you have is who you are.”

31. As a veteran of many layoffs at Apple, she understood the importance of a swift announcement and decisive action. “Let everyone know that their voice mail will remain active while they look for a new job, and I’ll be setting up a placement center where they can work on their resumes and check job listings.”

32. Jay Hoag of Chancellor Capital, who by now was a friend of mine, offered comforting words. “Sure I’d rather make money. But bear in mind that this happens all the time. It’s a numbers game. Everybody understands that your first responsibility is to take care of your people. Let me know if there’s anything I can do.”

33. If you’d like to contact Jerry Kaplan regarding Startup, please send your e-mail messages to [email protected].

What I got out of it:

A real, emotional journey of the highs and lows of starting a startup. It was inspiring to see how Bill, Jerry, and the rest of the team prioritized things when things were looking bleak.