Communications - August 2009

you create today may well be the basis for enormous companies in the future. So work harder now. Now is the time. In a recession/depression, people need new directions. They need new directions politically, and they need new directions scientifically. Open your mind to new possibilities. Those possibilities can take the world in new directions that can enhance our lives economically, socially, and spiritually. Take a risk when no one else is trying, and you can set the path that others will follow for generations to come.

Big ideas crop up when scientists, engineers, entrepreneurs, and busi-nesspeople go after big problems. A great entrepreneur with dedication, passion, and a grand vision has a good chance. Venture capital sees it over and over. Sometimes it is a by-product of taking a valuable first step. Sometimes the first step toward the grand vision yields enormous value. For example, yesterday’s entrepreneurs sought the self-navigating cars and made GPS navigation affordable and accessible. Yesterday’s entrepreneurs sought holo-decks and put virtual meetings within reach of the broadband world.

Sometimes it involves an unexpected bonanza. That is because a grand vision leads smart and dedicated entrepreneurs into new situations requiring novel solutions to challenging problems. That gives serendipity a chance to sparkle. What do electricity, penicillin, Velcro, Teflon, and microwave ovens have in common? They were all unexpected bonanzas. So was “viral marketing.”

In 1996, I helped create an unexpected bonanza. An entrepreneurial team (Jack Smith and Sabeer Bhatia) came into DFJ with a proposal. They wanted to try something new: free Web-based email for the nascent and growing Internet. But it needed a way to attract new users. I recalled Tupper-ware’s marketing from a case in business school, where one friend invites another. I suggested they put a line at the bottom of their email that made it easy for one friend to invite another. That was the start of viral marketing. Now viral marketing is standard practice for marketers everywhere.

Did we know it would work? We had a hunch, but it was a new situa-

tion and a novel problem. We could not be sure until a team of dedicated entrepreneurs gave it a try. Entrepreneurs who pursue a mission can find it leads to an unexpected bonanza. Jack Smith and Sabeer Bhatia were on a mission, which put me in a position to enhance their vision, which in turn drove a company to great heights.

Sometimes a third thing happens. Now and again, entrepreneurs do get what they wish for. There is a breakout winner that employs tens of thousands of people with very little investment dollars. It creates huge value and huge economies. If you are a technologist pursuing a vision, be prepared for innovations on top of your vision. The best technologies have taken many paths to get to market success.

In the future I expect to see a lot of valuable steps, unexpected bonanzas, and breakout winners. In fact, I am counting on it. Some recent investments of ours have brought on electric cars (Reva and Tesla), solar thermal generators (BrightSource), social networking for the enterprise ( Social-Text), iPhone GPS apps, new ways of communicating (Meebo), and nano solar panels (Konarka). Who knows what extraordinary businesses can be created in the future.

That is my advice for entrepreneurs in these times: If you take an entrepreneurial risk, make sure you go after something big. Extend your imagination. Think flying and self-navigating cars, holo-decks, brain enhancers, saltwater purifiers, fusion energy, and space travel.

Think opportunity

I asked Warren Buffett what he thought we needed to do to get out of this economic quagmire. He said, “Throw a bunch of things up on the wall and see what sticks.” He is absolutely right. Any experiment could pull us out this time too: A flying car, a cure for cancer, a better cellphone, brain-wave communications, entertainment on demand, fusion power, even a liquid stock market. Any of these could generate extraordinary demand and require a large work force.

Entrepreneurs and technologists will pull the economy out of the downturn, just as the growth of

businesses around the Web pulled us out of an economic funk in the mid-1990s. Even if the businesses are only reasonably successful, or even if some of them fail, they move technology forward. They employ people. They get things happening. Their energy begets other ideas.

This is not the common mantra today. Bad news is good news to the press. Recently, reporters have seemingly gleefully given one account after another pointing toward an increasingly grim future. Companies are laying people off, markets are down worldwide, lending is frozen, real-estate values have plummeted, consumer and capital spending appears to have slowed, and investors are confused.

That misses the point. The future rests—and has always rested—squarely on the shoulders of entrepreneurs. Entrepreneurs create new jobs, they build value from nothing, they make our lives better, and they rebuild the economy.

It may sound contrarian, but it is not. I travel all over the world. In China they’re thinking “opportunity” now. Even in a down world economy they’re thinking “where’s the opportunity?” I see it elsewhere too—in Ireland, Israel, Indonesia, and many other places.

Entrepreneurs with an intense dedication to what they are doing—one that will overcome all odds—seek to change the world. Their companies offer significant improvements over existing technology that could, if there is a large enough market, change the world. Eventually those entrepreneurs will help the economy boom.

During every financial downturn, from the Vienna stock exchange crash in 1873 through the Great Depression of the 1930s, the cold war of the 1950s, and the dot-com collapse that occurred earlier this decade, great entrepreneurs have embraced change. That attitude drives innovation and the economy to new successes. This time is no different. There’s nothing that can stop the true entrepreneur from changing the world.