Catch-22

The Perplexing Predicament of Pioneering

Being a pioneer and attempting to sail uncharted waters is not an easy thing by any means. There are many risks and obstacles that must be overcome all while flirting continuously with failure, disaster, and unexpected complications. The overall struggle is evenly split between the internal and external. Internally, a pioneer (or entrepreneur), must regularly wrestle with self-doubt, second-guessing, and finding balance between many things…life and work, doing work yourself or delegating, choosing one path over another, and so forth. Externally, the pioneer must fight unbelievers, naysayers, lack of vision, competitors, sharks, pirates, and even resistance from friends and allies.

History is studded with many examples of pioneers, inventors, explorers, scientists, and forward thinkers that have grasped, fought, clawed, wrestled, and sacrificed with great exertion of will and spirit to accomplish their goals. Columbus, Tesla, Edison, the Wright brothers…the list goes on and on.

I have had my own problems over the years, but most recently with our efforts with augmented reality. I think we have solved some huge problems and we know how to make it happen, but we continually have difficulties with explaining the technology to people (a common problem with any new or disruptive technology), or convincing people that it will work, there is a business model, people will use it, etc. If we don’t do it, someone else will. There are many trends in technology, mobile computing, data visualization, contextual and locative content, human-computer interface, cognitive computing, and so forth that are all driving toward the same thing (this is one aspect of the Singularity that everyone seems to be talking about these days).

But pioneering here is not without predicaments. Raising funds to actually develop and bring this technology to market is one example of many. Everyone recognizes the value of being first to market with something, but no one wants to take a risk on “unproven” technology until someone else has done it first. Of course at that point, the conversation becomes “soandso already does that, we don’t believe you can compete). Other comments we have heard are along the lines of:

“If this is so great, why isn’t Google doing it?”

“It isn’t possible that you are the only ones that figured it out…Microsoft is probably doing this right now”

“We are interested, but come back after you already have revenue and then we can discuss funding”

“We will fund you, but you need a new management team, the business model needs to be changed, and we need to rethink the product you want to build”

“If you aren’t based in Silicon Valley, there is no way you can build a successful company”

Again, the list goes on. Imagine if Columbus quit trying to get his boats, or Edison stopped bothering with light bulbs after the tenth failure, or if there were only six computers in the world, all serving up recipes in the kitchen. What if the Wright brothers kept selling bicycles because that was a “real” job.

When I think about how difficult it is for any entrepreneur or startup that has the ambition of changing the world, or a vision to create something new and wonderful, it really irritates me. You almost can’t get any traction unless you are fresh out of college, working on some facebook widget, biotech, or some web app that is sure to get acquired by someone else. What stuns me is the sheer number of “what the hell are they thinking” venture deals that keep getting done. I could rant about this alone for a long time, but that isn’t what I want to talk about today.

I tell people that I think innovation was stifled tremendously after the dot com crash. Venture capitalists are acting more like investment bankers now and there are very few funding sources that are willing to take the risk of funding innovation. Our country was built on innovation, big ideas, big risks, and a soul deep belief that anything is possible…if we but strive for it.

As Alan Kay said, “…Really smart people with reasonable funding can do just about anything.” I firmly believe this is true. There are no bright ideas without electricity and you can’t win a race without gas in the car. 

The venture community must rethink their current method of doing things. Mitigate your risk, but don’t be afraid of visionaries and innovators. Pair them up with experienced business builders and fund them well (never overfund!). Encourage, cultivate, guide, and mentor. The returns on your capital will be far greater than throwing money at some hair-brained social network widget thing with no discernable business model.

Nikola Tesla is quoted as saying “The present is theirs; the future, for which I really worked, is mine.”

This really sums up how I (and other pioneers) feel. Sure your shiny facebook widget or rehashed 1996 technology virtual world might be getting all the funding and attention now, but I am building for the future.

I refuse to give up. You should believe in yourself, your dreams, and your ideas as well. Be smart about how and what you do, but never let anyone choke your passion or cloud your vision. Keep your head in the clouds and your feet on the ground. Don’t wait for opportunity to come knocking…she is very shy. You need to chase after her unceasingly.

Go for it. Without risk, innovation, passion, and funding, the world will never change. We will never set foot on another planet, never cure cancer, never feed the world, never find renewable energy solutions, never evolve. Lack of risk and change is equal to stagnation, which ultimately leads to decay and death. 

Some quotes to ponder:

“There is no reason anyone would want a computer in their home.” — Ken Olson, Founder of Digital Equipment Corp (DEC)

“A rocket will never be able to leave the Earth’s atmosphere.” — New York Times

“Flight by machines heavier than air is unpractical (sic) and insignificant, if not utterly impossible.” - Simon Newcomb

“The cinema is little more than a fad. It’s canned drama. What audiences really want to see is flesh and blood on the stage.” -– Charlie Chaplin

“The world potential market for copying machines is 5000 at most.” — IBM

“I must confess that my imagination refuses to see any sort of submarine doing anything but suffocating its crew and floundering at sea.” — HG Wells

“Television won’t last. It’s a flash in the pan.” — Mary Somerville

and of course… “The world is flat.”

"If this is such a good idea...

Why aren’t the big companies doing it?”

This is, perhaps, one of the most frustrating questions that I have been asked by investors, venture capital funds, and colleagues/mentors kind enough to take some time to look at my business plans over the last decade and a half.

The mentality behind this question assumes that big companies are naturally successful, smart, and have both the will and the resources to continually push for bigger, better, faster. If the “big boys” aren’t doing something, than it probably isn’t worth doing…because of course, you have to assume that they already thought about your idea and have discarded it as unworthy.

Ok, this sounds like it makes sense, but it is a very weak assumption. Big companies are naturally slower than smaller ones, and usually bogged down in bureaucracy, policy, or conflicting interests. More often than not, it is simply easier (and cheaper) for a big company to sit back and wait for someone smaller to do something new and innovative, and then acquire them.

In the game industry, most of the “big companies” are either publishers that made a lot of money with a particular business model (put games in boxes on retail shelves) or they are other large media conglomerates that have bought into the industry through large publisher acquisitions. In both cases, these companies are very successful in their own rights, but are out of their depth when it comes to innovation or different business models. MMORPGs for example are still “new and mysterious” and not quite understood.

EA, arguably one of the most successful game publishers ever, has a horrible and dismal record with online games. They destroyed Origin after acquiring them and nearly destroyed Ultima Online as well. They have a long history of acquiring companies and then dismantling them. I’m not going to get into how they treat their employees or the terrible corporate culture they cultivate, and I’m not going to make a long list of all of the massive amounts of money wasted on funding projects and then canceling them at the last minute (remember battletech online?).

EA’s latest foray into MMORPGs (again) is through their acquisition of Mythic and Warhammer Online. Shortly after they acquired Mythic, they put the team to work on updating the graphics for Ultima Online and give it a facelift. WTF? I still don’t understand why you would divert a team working on a large project like Warhammer to spend time on a completely different game. This is just one example of the odd and backwards things that EA tends to do.

So why isn’t EA making multiple MMORPGs? Why is Sony picking up a lot of half-dead MMORPGs (cough, Vanguard, cough) and aggregating them instead of trying to innovate and push the industry forward? There are other companies, but I think I’m making my point.

The big companies “aren’t” doing X or Y because it simply hasn’t occured to them, or they are too focused on other things than hunting out every new opportunity. Or they are just sitting on the sidelines waiting to make an acquisition play. That is why our ideas are great and why the big companies aren’t doing the same thing.

Big does not equal smart or all-knowing.

Big is risk averse and will continue to do the same thing day after day because it is safe.

Small is where innovation and creativity occurs. Invest in small things, sell out to big things.

I’m not sure I feel like making a list of small ideas that challenged industry goliaths and found success. Anyone familiar with capitalism and industry in America can figure that out on their own. Just look at all of our inventors and scientists, or companies that revolutionized entire industries with a simple idea or process.

The next time you are looking at investing in a small team of people with an idea, don’t ask them “why aren’t the big guys doing this”, instead ask how they will execute and take their idea to market to knock the big guys off their horses, or at least make themselves a hot acquisition target.