With more users clicking that little “+1″ icon to signal their approval for a website or post, Google is reportedly exploring the idea of using +1s to influence search rank. The idea has appeal: +1s add an element of crowdsourcing to search results that can make them more accurate and give Google a competitive weapon against Bing, which accesses Facebook “likes” as part of its rankings. READ MORE
According to a recent Forrester estimate, there will be 50 million tablet users worldwide by the end of 2012. Onswipe, a platform that makes it remarkably easy for publishers of all sizes to make their content and ads beautiful on the iPad and other tablets, is coming out of beta and will be available to the public reports Alexia Tsotsis for TechCrunch. READ MORE
Content farms beware. Google will root you out and toss you off of it’s top search rankings. Google’s new algorithm has already drastically reduced traffic from the search engine to websites operated by content farms. The algorithm, nicknamed Panda, circumvents search engine optimization (SEO) tricks that allow mass-produced, shoddy articles to rise to the top of Google search results. READ MORE
Is 2007 the year your business will buy new hardware? Despite this year’s twin Microsoft releases of Office 2007 software and the Vista operating system, there’s no evidence that 2007 will be a banner year for small and mid-size businesses in terms of hardware purchases, says Michael Speyer, senior analyst with Forrester Research, of Cambridge, Mass. “It depends very much on where companies are in their hardware cycle,” he says. “In certain areas, we might see an uptick over last year, like in purchases of storage and PCs,” or laptops, which continue to grow in popularity. But for many companies, he points out, upgrading to Vista won’t require new hardware. Moreover, small and mid-size businesses often take a wait-and-see approach to new technology purchases. But if 2007 is your company’s year to buy, where should you look? Shop Around Online and Offline The number of options for buying hardware for business use is overwhelming. In addition to traditional brick-and-mortar electronics stores, Web-based shopping venues hawking computer equipment have mushroomed. Meanwhile, small businesses continue to show a strong preference for buying direct from manufacturers like Dell. Value-added resellers (VARs) are an alternative for those who seek customized hardware. But prepare to pay more for this option. You’d better shop around, as the old song goes, and preferably online first, to get the best price and selection. In fact, some hardware items may be hard to find anywhere but in cyberspace. While the venues for buying hardware seem nearly endless, here are some to consider: Online Comparison Shopping Try sites such as Yahoo Shopping, Amazon, CNET Shopper, or Pricegrabber to sniff out the bargains. Relatively easy to use, these sites allow for easy price comparisons of like products from literally hundreds of vendors, and include vendor reviews, which may or may not prove reliable. Online Computer Stores Newegg, a computer geek’s paradise, has won a slew of awards for its prices and selection, including Forbes’ Best of the Web 2004 and Computer Shopper Shopper’s Choice awards in both 2004 and 2005. Other popular e-tailers include TigerDirect and CDW. Electronic Megaretailers Circuit City, Best Buy or CompUSA. All three have locations nationwide, the option of eyeballing the merchandise before buying, and in-store warranties for those who desire them. Moreover, it’s often easier to return items or seek repairs through a traditional store. Computer Shopper readers rated Best Buy their favorite brick-and-mortar electronics store; many of its locations now feature Geek Squad 24/7 on-site troubleshooting services. CompUSA offers TechPro on-site service. Deep Discounters If bargain-basement prices are a top priority, don’t rule out sites like Overstock.com or Buy.com. Because they are often reselling overstocked items or cancelled shipments from other retailers, they can offer real bargains, especially to those who already know what they want. Direct Buys Going straight to the source remains a very popular option: according to a February 2006 survey by Forrester Research, Dell was named as the most popular computer and equipment vendor by the 700-plus small and mid-size businesses surveyed. Value-Added Resellers. VARs are companies that take computer components and build unique, customized units for their clients. Often, they link hardware and software from different vendors to do this. Since VARs specialize in custom design, they can also design training programs, database development, and consulting and research services. In fact, the line between services offered by VARs and big-name consulting firms, such as Accenture, is quickly blurring. However, VARs are more likely than consultants to work for smaller businesses. And, according to a June 2006 Forrester Research report, small and mid-size businesses are increasingly seeking out VARs instead of consultants to meet their needs.
My career from ages 18 to 28: In 1991, as a college freshman, I had an idea for an online service offering “real life” education to college students: practical advice about jobs, personal finance, and health. I made the simple observations that no one was teaching us these subjects in the classroom, and that computers — rather than books or TVs — had become the primary medium of communication and entertainment. During my sophomore year, Dick Sabot, a very smart Oxford-trained Ph.D. in economics and the professor of a class in which I received a B-minus, agreed to collaborate with me on my concept. He did so not because I was his best student, but because he had had a near-death experience during which a higher power advised him to do “something different.” By 1994, when I graduated from college, our project had indeed become something different: an Internet start-up company we named Tripod. Using what little cash I could raise from friends and family, I hired a team of computer programmers. I did this because I did not know how to install a web browser on my own computer, which is a significant barrier if you plan to run an Internet company. Unbeknownst to me, and surely with some sort of anarchic motive, these lawless, long-haired, multi-pierced, tattooed, incredibly charming and smart hacker hooligans built a piece of software on Tripod that had nothing to do with offering practical advice to anyone. Instead, this software gave individuals the power to publish their own “personal homepages.” By 1995, the popularity of the Tripod Homepage Builder was growing rapidly and had far surpassed my original idea to offer college students “practical advice.” It occurred to me that I might have a business on my hands. Having never written a business plan, I went to the local library and checked out a book called — you guessed it — How to Write a Business Plan. In August 1995, Netscape went public and proved that Internet companies had value. Or at least proved that Wall Street investment bankers had convinced the stock-buying public that Internet companies had value. One month later, I was able to convince New Enterprise Associates (NEA), one of the world’s most respected venture capital firms, to review the Tripod business plan. They agreed to do so only because Dick’s wife’s brother’s college roommate knew someone who knew someone at NEA. NEA liked the plan because it mentioned the Internet several hundred times. It provided $3 million in financing. By the beginning of 1996, one year after it was launched, the Tripod Homepage Builder had fundamentally changed the nature of consumer media. For the first time, anyone with access to a computer and a connection to the Internet could publish pretty much whatever they wanted; and anyone else with access to a computer and a connection to the Internet could view it. By the middle of 1997, Tripod had attracted nearly one million registered members. Tripod never posted a profit. Tripod generated barely any revenue. On December 30, 1997, in the middle of the stock-market bubble, I was offered $58 million for Tripod. On December 31, 1997, I agreed to sell Tripod in exchange for $58 million in stock of a publicly traded company named Lycos, which at the time was an Internet company only slightly more stable than Tripod. I agreed to a “lockup” that forbade me to sell all of my Lycos stock for two years. Over those two years, I watched the value of my Lycos stock increase tenfold. By December 31, 1999, at the height of the bubble and just a few months before the market crashed, I had sold nearly every share of my Lycos stock. I invested the majority of those proceeds in bonds and real estate because they were the only two investment vehicles I could thoroughly understand. And because I needed a house. By now, I hope my theme has become obvious. Luck is a part of life, and everyone, at one point or another, gets lucky. Luck is also a big part of business life and perhaps the biggest part of entrepreneurial life. At the very least, entrepreneurs must believe in luck. Ideally, they can recognize it when they see it. And over time, the best entrepreneurs can actually learn to create luck. Luck in business is different from regular old luck, like when you find $20 on the sidewalk. First of all, being lucky in business has an intoxicating underbelly called believing you’re smart. No one actually believes that he should take credit for finding $20 on the sidewalk. But when people get lucky in business, they are often convinced that it is not luck at all that brought them good fortune. They believe instead that their business venture succeeded thanks to their own blinding brilliance. The big challenge is that everyone — the press, your shareholders, your colleagues, your significant other, and your parents — will work hard to convince you otherwise. They will tell you, over and over again, that you are in fact a genius and should take complete credit for all the great things happening to your company. Why? Because to them, you are one of the following: A source of professional gain A source of financial gain A boss A lover Their pride and joy None of these relationships provide incentive for any of these people to tell you the cold hard truth about your entrepreneurial success: You may have gotten just plain lucky. The second difference between business luck and everyday luck is that luck in business can be created, whereas everyday luck cannot. You can’t will yourself to find $20 on the sidewalk. But you can create a company that gets lucky more often than the average company. Indeed, there is a pseudo-scientific formula for creating business luck. The key element is this: Lucky things happen to entrepreneurs who start fundamentally innovative, morally compelling, and philosophically positive companies. Why? Because lots of smart people will gather around companies with these qualities. As it turns out, precious few such companies exist. And the vast majority of human beings, and certainly most of the smart ones, are constitutionally caring creatures who would, if given the chance, prefer to spend their valuable time in a positive setting contributing to the betterment of society rather than in a negative setting contributing to its detriment. Shocking, I know, but true. And when smart, inspired people gather around a fundamentally innovative, morally compelling, and philosophically positive company, they work very hard. And when smart, inspired people work very hard, serendipity ensues. Serendipity — the faculty of making fortuitous discoveries by chance — causes lots of unexpected things to happen to a company. Some of these unexpected things are good. Some are bad. But because no one planned for the good things to happen, they appear as luck. In other words, the best way to ensure that lucky things happen is to make sure that a lot of things happen. It’s really that simple. Much of what makes a company fundamentally innovative, morally compelling, and philosophically positive is contained not in the company’s business model, but in how the entrepreneur communicates the mission of the company. A company’s mission, communicated by the entrepreneur with charisma and passion, is what creates the environment that attracts smart people and gets them inspired in the first place. Which is exactly what gets the luck rolling. Tripod made what money it did by selling advertising to clients such as Ford and Visa. That was our business model. But Tripod’s mission, as I described it to my colleagues, was to revolutionize consumer media, allowing anyone to publish his or her views to the entire world using the Tripod Homepage Builder. Suddenly, almost overnight, the stories, viewpoints, and opinions of every individual, interest group, or culture could be made available for others to grapple with. “Tripod isn’t here just to make money,” I told my colleagues. “We are here to fight the most important battles on the frontier of the First Amendment!” Mezze, the restaurant group I later co-founded in the Berkshire Hills of Massachusetts, serves food and drink to locals and to tourists from New York City and Boston. That’s our business model. But the mission of Mezze is larger: to set an example of quality and service for all the Berkshires’ retail establishments. I tell our staff that by working hard to refine Mezze, we raise the bar for everyone. And that by doing so, we will together attract more visitors to our small part of the world. Village Ventures, the venture capital firm I co-founded in 2000, makes money by taking advantage of the supply and demand imbalance that results from the concentration of venture capital in only a few large cities. That’s our business model. But the mission of Village Ventures is different: to enable entrepreneurs to start companies in the towns where they want to live. Rather than having to flee to Boston or San Francisco to find venture capital, entrepreneurs in Boise, Idaho, and Providence, R.I., can get capital from Village Ventures right in their own hometowns and build their companies in the same place they’d like to raise their families. Missions such as those of Tripod, Mezze, and Village Ventures create an aura of authenticity, which is the elixir that attracts smart people and inspires them. There is little authenticity in the modern business world. But it’s just the thing that people crave most in their work. When people find themselves aboard one of these vessels, they don’t want to get off. They form a fierce protective boundary around it and will do anything to keep the vessel afloat and its inhabitants alive. These people are liberated by finding not only a way to make money but also a way to feel good about it. This is what takes inspiration and turns it into hard work. And the results of smart people working hard are serendipity and luck. Marty Liebowitz, the vice chairman and chief investment officer of TIAA-CREF, one of the world’s largest pension funds, once said to me, “Thank God they created the word ‘muffin’ or I’d be eating a cupcake for breakfast.” Words are incredibly powerful, sometimes causing us to do things that we would never normally do. It is for just this reason that I harbor a tremendous amount of guilt about my place in entrepreneurial culture. I fear that perhaps thousands of well-intentioned people wasted hundreds of thousands of hours pursuing entrepreneurial projects in part because of what they read in the press about me. I created a sort of playboy persona for myself as the CEO of Tripod. Pictures of me skiing, mountain biking, drinking beer, skateboarding in the office, and attending meetings in shorts, Birkenstocks, and a baseball cap graced several major media outlets. From Forbes to ABC’s Nightline, from BusinessWeek to People, from MTV to Spin, the media broadcast images of me doing just about everything but working. I absolutely, completely, 100% sold myself to the media to promote Tripod. Together, we created this image of the Slacker CEO: an athletic, shaggy-haired, perpetually mellow 24-year-old making millions while barely lifting a finger. This image was broadcast not just in the United States but also to most of Europe. In five days during the summer of 1999, I jetted from Madrid to Milan, to Hamburg, to Paris, and finally to London, attending launch parties for Tripod Europe, staying in first-class hotels, and internationalizing the Slacker CEO myth of which I had become the archetypal example. Hell, who wouldn’t want to be an entrepreneur? I was a rock star. And I was the only person who knew it wasn’t true. Friends would ask me, “What’s it like to be a famous international Internet CEO?” “I’m not a famous international Internet CEO,” I would answer. “But I play one on TV.” Working with the media was the most important job I had at Tripod. Period. Twenty-four-year-old Bo Peabody, with his hip Internet company in the mountains, was a perfectly packaged pied piper for the story of the decade. I was not only Tripod’s poster child, I was shilling the whole goddamn Internet. And when it came to promoting these two things, the only self-respecting thing I ever did was turn down an interview on Montel. How noble. I’ve often kidded that 90 percent of Tripod’s value was in the amount of press we received in such a concentrated period of time. Sitting at a board meeting, lamenting our anemic revenue, I once joked to the board of directors that rather than actually running ads on the Tripod site, I’d sell potential advertising customers the opportunity that I might mention them in an article or wear their logo on my baseball cap. The board didn’t laugh. They asked me to look into whether or not this plan was possible. A lot was left out of all those articles. The hundred-hour workweeks. The anxiety attacks. The crashed cars and missed planes. The times I had to tell colleagues that we couldn’t make payroll. The years of a $12,000 salary. Night after night after night of pasta dinners and stress-relieving Advil “cocktails.” The countless meetings with absolute assholes who had no interest in learning about the Internet, the single most significant business innovation of their lifetimes. Pleading to venture capitalists for financing. Firing perfectly pleasant people when they didn’t perform. In the late nineties, this reality did not sell newspapers and magazines. Baseball caps and Birkenstocks did. Had I actually begun to believe what was being said about me in the press, I would never have sold Tripod when I did. I would have reasoned, instead, that I was in fact a genius, and that I should take complete credit for the great things happening to my company. Never mind that Tripod had little revenue, no profits, and an unproven business model; we should take this horse public! “Yeah,” I could have said, “I am smart, not lucky, and I can defy economic gravity. I am in control!” Wrong. Tripod was all hat and no cattle. Had we taken it public, we would most likely have failed, and everyone, including many unsuspecting individual in-vestors, would have lost a lot of money. I was not, however, completely immune to the media frenzy. Following the sale of Tripod to Lycos, what personal money I did not invest in bonds or real estate I invested in more than 20 Internet start-ups. Only five of these companies are still in business. The others are gone, along with a few million of my dollars. The quickest way to tank your company is to believe what you read in the press, especially if it happens to be about you. The vast majority of journalists are not interested in covering what is actually happening. They are interested in covering what they think people want to think is actually happening. Everything is sensationalized. In 1999 it was sensationalized on the positive side, and in 2002 it was sensationalized on the negative side. It’s never exactly accurate. As it turns out, accuracy can be quite boring. And quite boring does not sell newspapers and magazines. Learn to keep your ego in check. That’s how you’ll be able to distinguish the crucial difference between being lucky and being smart. Your ego is both the most dangerous and the most useful weapon in your entrepreneurial arsenal. When used wisely, ego helps entrepreneurs craft their mission, work hard, and keep faith in their companies, even in the face of heavy scrutiny. Ego also gives entrepreneurs the confidence to sell their start-ups to partners, customers, and investors, and the courage to act like famous international CEOs even when they know they really are just playing a role. And ego is the force that allows entrepreneurs to get comfortable with their powerlessness and learn to love the word “no” instead of panicking in the face of it. On the other hand, when allowed to run amok, ego keeps entrepreneurs from knowing what they don’t know and tempts them to believe their own press. Ego is also the culprit when entrepreneurs cling to their role as founder rather than turning their companies over to more capable managers. And ego is to blame when entrepreneurs can’t work with odd people who are clearly smarter than they are, or when they fail to remain calm and gracious in all business situations. Use your ego when it is called for, and check it at the door when you sense that it will get in the way. Unchecked egos are the most destructive force in business. I have often dreamed of a study that somehow measures the impact of ego on workplace productivity. The results, I imagine, would be staggering, with as much as a 50 percent increase in productivity resulting from the eradication of egos. In an ego-free company, all good ideas from all sources would be implemented. Managers would hire only people smarter than themselves, and would never spend valuable time worrying about who gets credit for what. Meetings would be shorter, as no one would feel the need to drone on in an effort to impress his colleagues and managers. In a business world devoid of egos, profits would rise, salaries would increase, and unemployment would plummet. In all seriousness: A number of the planet’s problems would be solved. But it will never happen. As it turns out, businesses consist of human beings, and most human beings have either tragically fragile egos or uncontrollably big ones. All we can do is make an effort to control our own egos. As hard as it may be, there are real incentives to do so. If I had let my ego go unchecked, I would never have let those crazy programmers put the Homepage Builder on Tripod. The Homepage Builder, after all, was not my idea. Moreover, it was the idea of people who were clearly smarter than I was. Someone who was insecure would have declared the Homepage Builder a distraction, a waste of time, inappropriate for the Tripod audience, too expensive, too risky, or any of the other excuses that those with fragile egos use to fortify their own power bases. But the fact is, the Homepage Builder was the foundation of Tripod’s success. The day we launched that little piece of software, we enrolled more members than in the entire previous month. It was like watching the Gold Rush all over again: The automated-membership counter ticked away as hundreds of strangers from all over the world signed up on Tripod and staked a claim to their little piece of Internet real estate. In the end, my original idea for Tripod — practical advice for college students — was completely consumed by the popularity of the Tripod Homepage Builder. At one point, Tripod was the eighth most trafficked site on the Internet. Our membership base spanned every age and more than 40 countries. Now, as part of the Terra Lycos network, Tripod has 40 million members, from virtually every country on the planet. Had I stuck religiously to my original idea, the best thing that could have happened to Tripod would have been my being fired as its CEO. More likely, it would have ended up on the pile of failed dot-com start-ups that now symbolize an age of ego and excess. Without the Homepage Builder, Tripod most likely would have failed, and my life would have taken a different direction. Without the success of Tripod under my belt, Village Ventures would probably not have received the funding and support it has. And without Village Ventures, the four other start-ups I helped found — Mezze, VoodooVox, Waterfront Media, and FilmFree Entertainment — would most likely not be flourishing to the degree they are. Was I lucky? You bet your ass I was lucky. But I was also smart: smart enough to realize that I was getting lucky. This article was adapted from Bo Peabody’s book, Lucky or Smart? Secrets to an Entrepreneurial Life (Random House, December). Peabody (bpeabody@villageventures.com) is the managing general partner of Village Ventures.
Cool Tools If you’re marketing to a niche or need an online forum for fresh ideas, Web logs could be the new killer app Dave Pell has a split personality. By day he’s the hard-driving managing partner of Arba Seed Investment Group of San Francisco, an angel-investment firm that funds Internet start-ups. But by night — or whenever he’s got a free hour or so — he’s posting new stuff on his Web site, acting as “chief dotconomist” and scribe of Davenetics, a daily E-mail newsletter that has become required reading for some 12,000 followers of the new economy. “I call Davenetics ‘the official newsletter of the next five minutes,” he jokes. Pell’s nether life as an online Mark Twain is just one example of a growing trend among Netheads called Web logging, or “blogging” for short. Web loggers use their Web sites to show off their insight and expertise; as a broadcast medium for customers, clients, and acquaintances; and even as a company intranet. And as entrepreneurs like Pell are discovering, Web logs can be invaluable for building their businesses and brands. At its most fundamental level, a Web log is a Web site, or a section of a Web site, whose overriding characteristic is its ever-changing list of links. But Web logs are also Internet-age gardens. Bloggers add new links — like so many new seeds — to the top of their Web page, and older, staler items drop to the bottom and are later composted in archives. Web loggers can organize their sites in threaded topic areas, bulletin-board style, and visitors can use Web-logging tools — such as those available at GrokSoup (www.groksoup.com) — to easily add their own responses to articles and ideas posted on the site. As a communications and loyalty-building tool, a Web log provides both a news filter and a freewheeling forum that can enhance a company’s reputation and encourage customers to come back to the site. Web logs can also be used as a kind of company intranet to keep employees in the loop. And because Web-logging tools are free and require no programming knowledge to operate, they might just be the hottest thing since E-mail. Fame in Internet Time Of course, news digests predate Walter Cronkite. And surfers have passed around links to one another since the birth of the Internet. Plenty of Web sites, such as Slashdot.com and the Drudge Report, are fundamentally little more than Web logs. But thanks to a slew of relatively new, free, downloadable, and look-Ma-no-programming Web-logging tools, creating a Web log is easier than ever. (See “Blog Me, Baby,” below.) Web-logging tools have already turned thousands of Netheads into self-styled news filters and critics. The vast majority of Web loggers are cyberspace hobbyists and subversives, who publish their own daily stream-of-consciousness wanderings using the Internet’s vanity press. They pick and choose articles of interest, respond to them, and invite others to contribute their own views on a continuously evolving basis. Pell, for instance, surfs dozens of Web sites — ranging from the New York Times online to a gossip site called Techdirt.com — for the latest Web-related news of interest to entrepreneurs, investors, journalists, and the merely curious. Using a set of easy-to-use Web-logging tools, he creates pithy headlines and descriptions of the articles along with links to the full articles at their original sites. Call Davenetics an electronic news service with attitude. The mix of news and views that Pell serves up shields his devoted readers from the informational tsunami of the hundreds of conventional news sources that threaten to engulf them. “In this fast-paced E-biz world, time’s not merely money, it’s survival,” says Rik Myslewski, longtime Davenetics fan and editorial director of Productopia.com, a San Francisco-based consumer-information site. ” Davenetics’ timely updates save me and my troops the precious hours it would take to sift critical news from background noise.” Pell insists that blogging doesn’t interfere with his work at Arba Seed Investment. In fact, he says, it’s really a part of his job. His newsletter has attracted the interest of publications like Forbes, which now invite Pell (who previously hesitated to approach publications through the usual front door of pitch letters) to contribute articles on seed investments and the Net in general. The publicity “has added a lot of value to my brand,” he says, squelching a smile. “I get invited to a lot of nice dinners with smart people offering new business opportunities.” Rebecca Blood, a Web developer and consultant who formerly managed a departmental site at the University of Washington, uses her Web log, www.rebeccablood.net, as an outlet for her creative expression. But her skill at Web logging also subtly promotes her skills as a Web designer and manager, and demonstrates her knowledge of the Internet itself. “A Web log offers an easy platform for self-expression, and it’s easier to set up than an elaborate Web site,” Blood says. “And it’s much more effective than setting up a mailing list where you’re just pushing out E-mail at people about the links you find.” Blood’s site is dear to the large, growing, and endlessly creative Web-logging community, the vast majority of which fiercely opposes the notion that businesses could exploit Web logs for their own capitalist purposes. “I’ve never seen a business do Web logging, and frankly, I hope I never do,” says journalist Jim Romenesko, who operates two news-filtering Web logs, www.obscurestore.com and www.medianews.org. “There’s a certain resentment among independent writers who feel businesses will try to co-opt them.” Nevertheless, it’s happening. Businesspeople like Terry Yelmene see great potential in using a Web log to tout their own expertise. Yelmene, a consultant with 3C3 Applied Research and Technology, a four-person company based in Boulder, Colo., is an expert in knowledge management. Large businesses in the Boston area hire Yelmene and his colleagues to help them find out which employees know what and to develop ways of sharing that knowledge. Yelmene’s Web site, www.3C3art.com, will soon feature a link to a personal Web log called “Knowledgeer at Large,” which will include constantly updated links to new articles of use to his company’s clients and anyone else interested in the wide world of knowledge management. “I’m taking content about knowledge management and publishing my opinions within the framework of a Web log that can be read by my clients and the knowledge-management community,” says Yelmene. “It will be great for my business, because it’s a mechanism for demonstrating what I can do.” If your Web log is successful, your electronic community will grow, which can be both good and bad. Dave Winer also uses his Web log to opine. The CEO of UserLand Software Inc., an eight-person software company in San Francisco, Winer holds forth on content-management software for the Web on UserLand’s public site. Each of the company’s development-team members keeps a public Web log — using tools the company has developed — on the UserLand site, where they share their technical knowledge with the Web-development community and ask for public feedback. Winer and his far-flung colleagues — who work in Seattle and Los Angeles and even in Germany — also use their Web logs as a corporate intranet. After entering the password-protected private site, they follow links to get information on employees, projects, sales numbers, milestones, and more. Winer is able to oversee the private site, post information to it, monitor bugs, and track project deliverables using specific software. “Our Web log is our management process,” says Winer. “It’s remarkable how much more productive we’ve become using it.” To Blog or Not to Blog Although Web logging has valid applications for many kinds of companies, it isn’t practical for every small business, says Jakob Nielsen, principal of Norman Nielsen Group, a consulting company in Mountain View, Calif., and author of Designing Web Usability: The Practice of Simplicity. “You have to be able to say something reasonably new every day about what’s happening in your field,” Nielsen says. “If you have a static site and an irregular publishing schedule, you will turn people off.” And while self-expression may be the main goal of individual Web loggers, a company’s Web log has a different raison d’être. As a marketing tool, it’s the organization’s public and professional face. Thus, anyone who regards word-mongering as more of a struggle than a pleasure should probably avoid Web logging, Nielsen says, noting that there’s nothing worse than reading someone’s bad content. (Hint: If you don’t have the requisite writing skills, find someone who does and put them on daily Web-log duty.) Stretch yourself too thin, and your lack of energy will show in the poor quality of your Web log, he says. “Companies that lack the resources to commit to a daily Web log would be better off publishing a semimonthly E-mail newsletter, containing some fresh insight and links to interesting articles,” Nielsen advises. Another key factor is commitment, veteran Web loggers say. “Doing a good Web log takes a lot of time,” says journalist Romenesko. “Some people have a hard time sitting down and working on them for a few hours a day.” And a fledgling blogger shouldn’t expect any kind of immediate return on the labor investment. “It took me months and months to develop an audience,” Romenesko notes. Even more challenging is the notion of building credibility by swallowing your pride and linking to the other guy’s site. To be a credible Web logger, “you have to have the guts to point to things that are of interest, even if they are considered competitors,” Nielsen insists. Linking to competitors’ sites poses no problem for Brent Holliday, a partner with Greenstone Venture Partners (www.greenstonevc.com), a four-person venture-capital firm in Vancouver, British Columbia. Like Terry Yelmene and Dave Pell, Holliday uses Greenstone’s Web log (the Greenstone Grok) to show off his company’s expertise. The site provides links to news items of interest to entrepreneurs and the high-tech community in the Pacific Northwest — regardless of the parties involved. “Other venture capitalists will come to me and ask, ‘Why did you put the news of our deal on your Web site?” says Holliday. “They don’t notice that people come to us first — and every day — as a source of intelligence. It increases our credibility to talk about what’s going on, no matter who’s doing the deals.” Size is a factor, too. If your Web log is successful, your electronic community will grow, which can be both good and bad. Instead of being an adjunct to your business, your Web log could threaten to consume it. You might find yourself needing to add hardware, bandwidth, and more resources, and gradually morphing into a publisher. “This is a long-term marketing tool,” says Nielsen. “You have to cost everything out and think about how you will deal with it over time.” Caveats aside, dedicated Web loggers can find themselves basking in their 15 minutes of fame, not to mention the loyalty of their customers. “Blogging is the platform for a new meritocracy,” says Pell. “It removes the barriers to creative performance. You don’t have to have the leverage of a major media corporation, but you can prove to the reader that you are smart and good at what you do.” Blog Me, Baby The cool thing about the Internet is that as soon as something becomes popular, someone’s going to find a way to make it easier to participate. And Web logging is no different. The tools listed here are free and easy to use, and help automate (and greatly accelerate) the blog publishing process. You don’t need to know how to write any code, and you don’t need to install any server software or scripts. Yet you can still fully control the look and location of your blog. To use these tools, however, you will need to have either a Web site or access to a Web server. (You can get Web-server access through your Internet service provider.) Web Site What It Does Blogger (www.blogger.com) Blogger provides a template for your page that indicates where you want your information posts to appear. When you make a new post, you’ll get “Post” and “Publish” buttons that will automatically send your new page to your Web server. No programming is required, though Blogger asks that you link your page back to its site. UserLand (http://manila.userland.com) UserLand’s downloadable software comes with “Edit This Page” buttons that let you update your Web log easily without having to worry about programming. GrokSoup (www.groksoup.com) GrokSoup is a classy, supersimple tool with a very straightforward interface for building a Web log. Registration and a password are required. Please e-mail your comments to editors@inc.com.
Desktop real estate – the amount of monitor screen space you have – comes at a premium these days. As people use more applications, the standard 15- or 17-inch monitor is falling short. Unless you are prepared to shrink your font size so low that you’ll need binoculars to read it, there’s only one answer: get another monitor. In fact, analysts at Stanford Research, who study the electronic display industry, are now targeting 19-inch monitors as the fastest growing segment. Many customers, however, are trading up without giving away their older 15-inch models. The option of putting two monitors on one computer works well for the busy person who has a lot of activities going on at once. Windows 98 offers a two-monitor feature that lets you simply add a second monitor card, then attach two monitors to the PC. That approach has some limitations, however. It uses a lot of the PC’s processing power, so it noticeably slows down the computer. And some applications, like DVD or certain graphics programs, don’t split well over two monitors. Here’s another answer. Check out the new Matrox Millennium G400 card. For about the same price as a good graphics adapter card, you can buy this DualHead display and TV output card. With it you can hook up your computer to a pair of monitors, LCD projectors, TV sets, or flat-panel monitors. Since Matrox puts its own graphic accelerator magic into the card, you can run two monitors without slowing down the PC. The graphics card is adaptable to many tasks. One person can be watching a DVD movie, while the other is composing an e-mail message. Or, your kids may ask to borrow it and prove to you that they can watch a movie and do homework at the same time. In fact, the graphics card is so flexible you can even configure it to run a DVD display split between both screens. The graphics adapter is a boon for busy researchers. You can put a Web browser on one screen and your report on the other. It’s much easier to correctly cite the work when you can bring it up in front of you. Or for making presentations, you can click through the electronic slides on one screen and make notes on the other. If you do any work with touching up pictures, the zoom feature of the G400 lets you put the picture on one screen and a zoomed-in version on the other. Each pixel-by-pixel change can be simultaneously seen at close up and at regular size. Of course, I can see other ways to use the G400. For those people looking at financial markets in this nanosecond world, it’s great to get the full view of real time quotes, news, and your portfolio information simultaneously. And, after hours, you can get a new experience with products like Microsoft’s Flight Simulator 2000 or Combat Flight Simulator. Put the pilot’s view on one screen and the controls on the second monitor. If you haven’t seen the view from two monitors, it’s a whole new world. With 13 books and more than 600 magazine and journal articles to her credit, Ms. Currid also writes regular magazine columns appearing in InformationWeek, Comdex Show Daily, LAN Times, and the Houston Chronicle. She has also contributed her opinions on computer industry trends to PC Week, InfoWorld, Network Computing, Windows Magazine, and other industry periodicals, as well as business media including the Wall Street Journal, New York Times, Reuters, Associated Press, Investors Business Daily, Forbes, Fortune, ABC, NBC, CNBC, and PBS. Ms. Currid lectures internationally, serves as a keynote speaker, and conducts seminars on how to get the best from information technology. Copyright © 1999 by Cheryl Currid and used with permission.
THIS PLACE Washington society adjusts to a new breed: the fast-moving, different-thinking, so very dot-com riche In a blaze of lights at the MCI Center Arena, the nouveau Madison Square Garden of Washington, D.C., basketball superstar Michael Jordan made his announcement. He was acquiring an ownership stake in the Washington Wizards and would serve as the team’s president of basketball operations. The news, widely anticipated because of leaks prior to Jordan’s January 19 appearance, played well in the capital. Neighbors couldn’t stop talking about it. Pundits had a field day. It was the knell that signaled an end to the district’s darkest days. There was a new Washington now, with a new, can-do mayor, Anthony Williams. The city’s financial crisis was over. Real estate was rebounding. And now Michael Jordan, with that perennial movie-star grin, had arrived. Only one way to go, everyone seemed to be saying — up — a direction particularly well suited to His Airness (and the loss-ridden Wizards, too). It hasn’t been that long since D.C. — besides being the seat of the most powerful government in the free world — was a ranking murder capital with a standing mayor who was an international embarrassment. The city government was so mismanaged that stories of payroll checks being issued to dead or nonexistent employees were daily fodder for the Washington Post. “We’ve taken such a bruising in the past 10 years,” says John Tydings, president of the Greater Washington Board of Trade, sort of a chamber of commerce for the Beltway. Now, though, the new mayor, the city’s comeback, and Michael Jordan — hell, even the Washington Redskins’ finally making the NFL playoffs — were like manna from heaven. But Jordan’s entrance was eye-popping in another, more significant way. The deal that brought him to town was done without any help from the usual suspects — the cabinet officials, career politicians, lobbyists, media stars, Georgetown Brahmins, society hostesses, policy heads, real estate barons, and well-connected lawyers who have made the town what it is for decades, if not centuries. No, the people who landed Jordan were outsiders, like Wizards part-owner Ted Leonsis, who helped build a local company called America Online Inc. into, arguably, the first dot-com Goliath. These new big-city players did the Jordan deal in their off-hours with play money, much of it from tech fortunes. They made a huge splash for guys who five years before hadn’t even been on the radar screen, let alone on society-party lists. But this is a new day, and not only in Washington. Now politicians are no longer the role models they used to be, especially when compared with the strike-it-rich business stars. On March 9 the Wall Street Journal likened the new era to the turn of the last century, when industrialists with names like Carnegie and Rockefeller led the first entrepreneurial revolution. “It was an era when the economy — with wildcat prosperity, businessmen as media superstars — was shifting like tectonic plates; an era when Wall Street, not the White House, drove events,” the Journal reported. The first big wake-up call for Olde Washington had come only a week before the Jordan deal went down. That’s when America Online — a once unknown speck of a company dabbling in that Internet thing from offices in the distant suburbs — announced it was buying Time Warner Inc. for upwards of $166 billion. The establishment movers and shakers were caught off guard by the hordes of tech millionaires making waves in “our city.” “They don’t know who these people are. They don’t know anything about them. They don’t even know enough to be suspicious,” says Sally Quinn, the Georgetown high-society hostess who offers a window on the elite and also helps shape its outlook through her writings in the pages of the Post. “The first moment anyone ever thought about it was the AOL thing, and they said, ‘Oh, my God! That’s what they do over there.” None of those people were bred in Georgetown. Nor did they attend St. Albans, the elite private school in northwest Washington. Most don’t even have degrees from Yale or Harvard. Worse, they couldn’t care less about the society way of life. They trade neither on their social connections nor on their pedigree but rather on their business exploits, which might include a flaming dot-com failure (it seems to give them credibility, of all things) as easily as a stunning success. Instead of considering social standing in the good old-fashioned meaning of the term, they measure one another by the growth curve of their companies, the size of their paper fortunes, and the global impact of their businesses. Washington, to put it politely, has always been defined by power and access — who’s got it, who wants it, who lost it. Money has never been a part of the equation; certainly not in the way it is in, say, New York. But now money is a force to be reckoned with, big-time, and it’s here to stay. Politics has always supplied Washington with a new crop of movers and shakers, who tended to assimilate into the standing social fabric, refreshing their own ranks with each election. But this new group of tech-fortune youngsters isn’t leaving with the next election. “The way I view it, this is the biggest thing to happen to this city since Washington was made the capital of the nation,” says Quinn, who notes that the recent arrivals are infusing much-needed new blood into a town where the old money kind of “dried up.” And she enthusiastically welcomes the transfusion. “It’s going to have a big impact in every way,” she predicts. Washington used to be quaint, run by a stable circle of friends. Not anymore. To understand how all that is playing out, you need to look at the people who made the Jordan deal happen. The aforementioned Ted Leonsis, now president of AOL Interactive Properties Group and worth an estimated $1 billion, came up with the idea. Originally, he’d been a marketing guy with a company of his own, whose operations were folded into AOL when the larger company bought him out, in 1994. The then-unproven online service paid $45 million, mostly in stock, for Leonsis’s CD-ROM catalog company. That brought Leonsis on board for practically the whole AOL ride, all the way from obscurity to megagiant. Now he’s using the resources he gained to have some real fun. In May 1999, Leonsis and two partners plunked down $200 million for the Washington Capitals hockey team and a stake in the holding company, which counts the Wizards basketball team among its multiple properties. Leonsis figured that snagging Jordan would be the ultimate buzz card, elevating the profile of both teams. He and his group took a meeting with Jordan at his Chicago restaurant. Under the deal they eventually cut, the one that was announced at the MCI Center, Jordan got the front office of the basketball team, a stake in the partnership, and a chance to play with the dot-com boys. ( Boys is not a casual term; modern as dot-coms may be, there are few women among their ranks in Washington.) The way Leonsis tells it, the Capitals’ Web site will be the foundation for building an “Internet distribution channel” for the team in the same way that Ted Turner used cable TV to promote the Atlanta Braves. Right now the Capitals are red-hot. If Jordan also manages a comeback for the Wizards in the next few years, it isn’t hard to figure the upside: valuable teams, Web channel, and then the eventual acquisition of the entire basketball franchise when its current owner, Abe Pollin, 76, retires. No doubt, this was a value investment for all concerned. Six days before Jordan made his role official, Leonsis brought in a partner, Raul Fernandez, to help design the sports-team-cum-Web vision. Fernandez immediately took a place on the roster of Washington’s new power players. Just 33, he is a card-carrying member of the current crop of dot-com millionaires. He is the founder and CEO of Proxicom Inc., a fast-growing Internet-consulting firm based in Reston, Va., that serves clients like General Electric Capital Corp., Mobil Corp., and Mercedes-Benz Credit Corp. And he’s a big sports fan. “I told Ted last summer, ‘If you ever need another partner, I’m in,” he says. Fernandez has gotten a lot of ink lately, being featured in the Wall Street Journal and on the cover of Fortune, where he appeared right next to Jordan (“America’s 40 Richest under 40″). His background speaks volumes about how diverse the new A-list in D.C. can be. Fernandez is the son of a Cuban immigrant who came to this country with $100. He grew up outside Washington, D.C., attended the University of Maryland, and then worked on Capitol Hill for Congressman Jack Kemp. In 1991, with $40,000 in savings, he formed his own company. It grew like crazy and went public in April 1999. Since then Proxicom has grown so rapidly that Fernandez’s 28% stake is now worth about $600 million. With that kind of money, he can afford to indulge his “love of competition, in any form.” Although he jets around the world all the time — Proxicom is steadily expanding — Fernandez calls the sports team his “night job.” It has raised his profile, as have his other local activities. Fernandez talks passionately about the importance of community service and appears on philanthropic panels. He is conscious of being a role model for his employees, many of whom are already millionaires in their late twenties and early thirties — the coming shock troops for the new establishment. The rise of a figure like Fernandez is just another signal that times are changing inside the Beltway. Talk to one of the society veterans, like real estate power broker Robert Linowes, about the Washington business world of the 1960s and 1970s. You’ll get a picture of a quaint, provincial town, run mostly by developers, bank managers, and retail executives, who would welcome the other power players — the pols and their minions — in full knowledge that eventually most would return to wherever it was they came from. By contrast, the old Washington hands Linowes recalls knew one another: they sat on the same corporate and philanthropic boards. In the evenings they hobnobbed with the ever-changing political-cultural elite. “It was incestuous, but no one even thought about it,” Linowes says, recalling the days when the landscape could be altered by a few words over dinner at the Willard Hotel. “Conflict of interest? If you didn’t have a conflict, you didn’t have any interest.” It was a cozy little community in those days. But that community has long faded away. The local retail chains were bought out or folded. The banks were gobbled up, the CEOs with community ties replaced by professional managers. And while Washington’s business world was devolving, the federal government was seeding a vast and entirely new industry outside the city’s borders. So-called Beltway bandits grew by feeding an insatiable demand for information technology, supplying all the computers, software, telecommunications services, and training that could fit into the budgets of federal agencies. The defense buildup and deregulation of the telecommunications industry during the 1980s fueled the growth of high tech so well, it now has more employees in the D.C. area than the federal government itself. By the mid-1990s, the local versions of Silicon Valley-style growth companies were primed like a tinderbox ready to explode. The technology, the communications, and the workforce were all in place. All that was needed was the economic spark — and then came the Internet. Mike Daniels, chairman of the Internet-domain-registration company Network Solutions Inc., based in Herndon, Va., is a prime example of a player who was brought into the game by the dot-com revolution and the explosion in Web businesses. He’s one of the “new” breed that was actually in the area all along, one of the tech executives who had worked for decades in obscurity under the shadow of the military- industrial complex. He started out as a naval research officer at ARPA (the Defense Department’s Advanced Research Projects Agency, which invented the Internet — first known as the ARPANET) and then formed his own technology-consulting company. He sold it in 1987 to Science Applications International Corp. (SAIC), an employee-owned company and one of the Beltway bandits. “We were very typical of what went on here in the Washington technology community, especially in the northern Virginia side, until the Internet revolution began,” says Daniels. In 1995 he convinced SAIC that it should buy Network Solutions for $4.8 million. Network Solutions was as close to being a world-dominating organization as there ever was, if you consider cyberspace to be the world. The company was the registrar for the Internet, the keeper of domain names on the Web. Daniels became chairman of the subsidiary and led its initial public offering. In March, VeriSign Inc. agreed to buy Network Solutions for $21 billion. Obscure no longer, Daniels is a made man. Now he appears with the Steve Cases and Michael Dells of the world on panels such as Governor Jim Gilmore’s 2000 Global Internet Summit, which was held in March in Fairfax, Va. The pace at which this new world has emerged isn’t lost on traditional power brokers like Linowes. In the past, he says, if he wanted to raise money quickly on behalf of some philanthropy, all he had to do was get on the phone. With calls to 20 close friends from the city’s business community, he could complete a fund drive. That’s all changed now. Trudging out to northern Virginia recently to seek funds for the Smithsonian’s National Air and Space Museum, Linowes met with a number of the new-wealth class of greater Washington: high-tech executives. “But I had to be introduced. No one knew me,” Linowes said afterward, briefly interrupting the interview to take a call from the governor of Maryland. And what of the old crowd in the Washington business world? Where are they now? “Either dead or out of business or both,” he said, laughing. Anthony Kennedy Shriver (a member of two of the “best” families in town) started the nonprofit organization Best Buddies in 1987, when he was a student at Georgetown University. His organization offers social and employment opportunities for the mentally retarded. In the early days, he says, he relied on his family’s circle of friends — Washington’s political and cultural elite — for the donations he needed. That all changed in 1995, when Shriver was introduced to Leonsis. The AOL honcho decided to make Best Buddies his charity of choice. Leonsis came aboard as cochairman of the Best Buddies ball, the nonprofit’s fund-raising event, and one that drew many famous names. But not the names Leonsis could draw. He brought in his contacts from the high-tech world. “Honestly, in those days no one had heard of Ted Leonsis, and when I told my mother, she was like, ‘Fine, whatever. It’s your thing,” Shriver recalls. “But Ted was willing to work and get involved, and that’s what we were looking for.” Now Shriver talks about the “pre-Ted” and “post-Ted” eras at his charity. “I try to avoid remembering the pre-Ted days, because they were very unpleasant,” he says. In those early days the charity typically raised anywhere from $200,000 to $300,000 from the establishment. But with Leonsis working the phones — or rather, E-mail — the northern Virginia tech crowd began to show up in force at the Best Buddies ball and to give generously. Last year, with Leonsis’s Wizards partner Fernandez serving as cochairman of the event, tickets went as fast as shares in a dot-com IPO. With the ball oversubscribed, Shriver expanded the tent at his aunt Ethel Kennedy’s Virginia estate, and then he sold out again. When the black-tie event took place, in October, limos got stuck in the driveway. Muhammad Ali posed for pictures. The Pointer Sisters sang. The Kennedys welcomed guests. “People showed up from my family, but they didn’t know anyone, which from my perspective was a great sign,” Shriver says. Best Buddies raised a record $1.1 million that night. “When we hold events in Hollywood with a good number of celebrities, or in Houston, Palm Beach, Miami, or New York on the Forbes yacht, we raise maybe $300,000 to $400,000 a night,” Shriver says. “Washington just blows them away.” He is calling the upcoming 2000 event the “dot-com ball.” And this year he plans to raise $2 million. It will be a real A-list event, especially in the tech community — a party “where anybody who is anybody in the Internet world will be,” he says. That example hasn’t been lost on the region’s cultural institutions, ones that have been at the heart of the Washington social circuit for ages but that have been at a loss to capture much of the new wealth. “In the 1990s, at almost every board meeting I attended, the question was always raised, ‘How are we going to get those people interested?” Linowes recalls. “Almost every major foundation and charity had a committee aimed at doing just that.” “Is it a conscious strategy to get those new people involved? Yes. Is it organized? No,” says David Levy. The disconnect makes sense when you think about it. Many of the new paper millionaires are young and simply haven’t had the time that the older crowd has had to focus on how to give money away. And many of the philanthropies have never had ties to a class of people who lived on the wrong side of the Potomac River. But that’s changing. The Corcoran Gallery of Art, which as the largest privately funded art museum in the capital also runs a college of art, recently lured Bob Pittman, president and chief operating officer of AOL, to its board; he’s the first major figure from the tech community to join at that high level. Why, you might say that Pittman — the New Yorker credited with creating the massive MTV phenomenon before making his high-profile move to start shaping the world in AOL’s image — had finally arrived. But you’d better have your tongue firmly in your cheek, because in this case it seems that Pittman brings as much cachet to the Corcoran and the society it represents as they give to him. “Is it a conscious strategy to get those people involved? Yes. Is it organized? No,” says David Levy, the Corcoran’s president and director. The way he sees it, people give money for two reasons: to support the arts and education and to gain access to social and cultural circles in Washington. “We provide that access, and they provide the support,” Levy says. What’s not clear, however, is whether access to society is something the dot-com crowd wants. Where a charity-board seat might have been de rigueur for the well-bred, it’s more of a fun option for the newly minted. As Linowes says, “We had a certain way of giving and a certain level of giving. These people want to do things in new ways.” Remember, many high-tech fortunes were spawned by battling the establishment business world. These start-ups exploited small niches and built new entities by going against the grain. The late Bill McGowan, founder of MCI, is a perfect example. In fact, he’s something of an Ôber role model for many of the established entrepreneurs in the region, because his Washington-based company battled giant AT&T for years. McGowan used to exhort his troops, Whatever AT&T does, do the opposite. That rattle-the-gates strategy worked for all who followed, and they prospered by it. Why change any of those attitudes now? Already, there are strong indications that Washington’s technology elite is treating philanthropy in a very different way from that of the establishment. Many even take umbrage at the word philanthropy, since it suggests a handout rather than an attempt at producing fundamental change in people’s lives. Mario Morino, chairman of the nonprofit Morino Institute, in Reston, Va., for example, speaks in no uncertain terms of the need for “social change” to correct the huge disparities in wealth and opportunity for youth in the region. He’s not going by Karl Marx; quite the opposite. He’s repeating lessons learned by virtue of his entrepreneurial experience, which some would term ultimate capitalism. Morino earned his first entrepreneurial merit badge building Legent Corp., a software company that was sold to Computer Associates International Inc. in 1995 for $1.8 billion. By then Morino had stepped back from day-to-day business affairs and embarked on an eight-year odyssey to figure out how to give some of his $140 million away. Oddly, he found it harder to properly give his wealth away than it was to build it in the first place. [In the interests of full disclosure, the writer of this article worked on speeches for Morino a couple of years ago.] “We took [MicroStrategy founder Michael Saylor] to lunch, and over the course of that lunch his net worth went up by $145 million.” –Lloyd Grove, society columnist fpr the Washington Post
Entrepreneurial Ego It’s also for Gates, the man who has shown his true entrepreneurial colors by turning Microsoft operations over to Steve Ballmer and heading back to the laboratory. If Rodney Dangerfield still feels he gets no respect, I want him to consider the reaction to Bill Gates’s most recent career move at Microsoft. In January, Gates went from being CEO of the multibillion-dollar business he cofounded to naming himself “chief software architect” and handing over executive responsibility for his company to Steve Ballmer. What is most striking about the business community’s reaction to that changing of the guard is how few people recognized it for what I think it was: a courageous leap into a self-esteem-threatening black hole. On the contrary, I’ve encountered two interpretations of Gates’s ceding control: that it had the potential to temper the Justice Department’s wrath and, more reasonably, that it could ease the ennui Gates suffered as a result of being an incredibly successful businessman with nothing left to prove. Typical of the cynicism that dogged Gates after he bounced himself upstairs were doubts about his ability to innovate, based on how little of Microsoft’s core technology sprang from the mind of Bill. Because Microsoft rose to prominence by selling products that it purchased or copied from others, the argument went, Gates’s return to the “garage” could never produce the stuff of legends. Who cares? Gates is an entrepreneurial genius, and only fools who don’t understand what entrepreneurship is about denigrate his aptitude or his success. I suspect that Peter F. Drucker would be among the first to remind Gates’s detractors that entrepreneurship and innovativeness are parallel dimensions of genius, much as composing music and being a concert pianist do not necessarily overlap. In his landmark book Innovation and Entrepreneurship: Practice and Principles, Drucker first debunks the notion that entrepreneurial spirit must emanate from the inventor’s laboratory to be worthwhile. He then goes on to define entrepreneurs as those who apply “the basic concepts … of management to new problems and new opportunities.” The entrepreneur is a change agent who helps society enhance the yield and satisfaction from existing resources. And if Gates and company do not deserve the lion’s share of credit for moving the information-technology revolution from punch cards to PCs, no one does. You’ve probably heard the old saw “Windows 95 is Macintosh 85.” Although it may be true that the Windows interface looked virtually identical to the first versions of Apple’s Macintosh operating system and that Microsoft invested $150 million in Apple to, among other things, resolve long-standing patent-infringement litigation back when Apple’s viability was in question, using those facts to “prove” Gates’s lack of entrepreneurial talent misses the point. What are the testaments to, and proof of, Gates’s entrepreneurial genius? His savvy decision to pump life into Apple when he did, because keeping a competitor alive would ultimately expand his market; and his understanding of marketing his product to the world rather than innovating for innovation’s sake. Gates did business better than Jobs and the folks at IBM. An ocean of propellerheads would not be working today, let alone driving Porsches, but for a man who bought or copied what others had invented. In a similar vein Gates gets panned for being a Billy-come-lately to the Internet party. After he had recognized the threat posed by Netscape’s dominance, it took him a while to come up with the technology necessary to take his own browser to market. So what? I would argue that Gates’s prescience is what sets him apart from entrepreneur wanna-bes: he saw the future, put his money where his mouth (and mind) was, admitted the need to play catch-up, and posed a big enough threat to Netscape that it ran to Washington, D.C., for protection. Gates’s approach to business not only demonstrates the wisdom of “better late than never” but also embodies the cornerstone of entrepreneurial talent: It ain’t what you’ve got, it’s what you do with it that counts. Because I don’t know Bill Gates and have no idea what goes into the development of software, I can’t say whether a revolutionary product will result from his moving from corner office to computer lab. I can say that he’s proved he has the psychological fortitude to endure the travails of innovation. That, to be sure, is half the battle. Consider the following attributes, which all but guarantee Gates’s success in the ongoing transformation of Microsoft in the face of ever changing customer demands: He has no fear of failure. When Gates handed the reins of his company to Ballmer, he didn’t retire, leave the field to buy a sports franchise, or develop venture-capital firms. Instead, he strode boldly into the trenches and proclaimed his willingness to test his mettle against the best the world has to offer. Gates has guts with a capital G, as I see it. He shows no signs of having “founder’s disease.” Gates has spent his life building the business that he just turned over to a trusted ally. Show me a dozen successful business builders who can lay claim to the same strength of character. If Gates’s lack of “my company equals myself” pathology were the norm and not the exception, the consulting industry that deals with family businesses would die in a New York second. Remember, Ballmer sets the strategy, Ballmer gets the credit for the next two-for-one stock split, and Ballmer calls and addresses the press conferences. Gates innovates or stays in his lab. After a lifetime of having Wall Street and Silicon Valley jump every time he sneezed, forfeiting that degree of power and control shows a strength of character typically found only in Congressional Medal of Honor winners. He didn’t hedge his bet one iota. In fairness, $85 billion provides a nice cushion against a fall, and no one doubts that if Bill fares as badly in his career shift as Michael Jordan did when he left basketball for baseball, he’ll still never miss a meal. That said, most folks who make the Forbes 400 still establish a host of hedges before making a career move into the great unknown. Not Gates. There was no “It will take me years to recapture the technical knowledge I’ve lost while running this business” before he stepped down. Instead, he sounded like a Cyndi Lauper lyric extolling the desire to “just have fun.” That attitude is the foundation of self-actualization and the psychological precursor of viewing the world with childlike creativeness and openness to the possible. Gates, by running with abandon toward the demands of an encore performance, has told the world that he is not afraid. Whenever I read press reports about former CEO Bill Gates I am struck by how often reporters use the adjective nerdy to describe him. Judging by what he did back in January, I’d be willing to back him in hand-to-hand combat with a Navy Seal. The sort of courage that Gates displayed when he relinquished control of Microsoft is as characteristic of the successful entrepreneur as any other attribute I can name. Dr. Steven Berglas is a clinical psychologist and management consultant on the faculty of the Harold Price Center for Entrepreneurial Studies at UCLA’s Anderson School of Management and of Harvard Medical School’s Department of Psychiatry. His previous columns can be found at www.inc.com/ incmagazine/columns/ego. Please e-mail your comments to editors@inc.com.
