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Lesson 5 Grab the Golden Ring

Guest post by: Christopher Golis

Article Overview: The fifth and final lesson taken from 25 years in the venture capital industry and based on my talk 5000 business plans, 50 deals, 25 write-offs. In this lesson I describe how three people (including yours truly) failed to grab the golden ring in the merry go-round of life.

Lesson 5 Grab the Golden Ring



If you go to my LinkedIn profile you will see I worked some 25 years as an entrepreneur and venture capitalist. Go to the bottom of the profile and you will see in the Slideshare section a presentation called 5000 Business Plans, 50 deals, 25 write-offs: Lessons Learnt from 25 years as a VC. In this presentation I describe five key lessons that I have learnt and over the next five months I am going to elaborate on these five lessons. Here begins the fifth and final lesson.

One evening we were sitting around the dinner table and the talk turned to what was the biggest deal that we had missed in our life. I started the discussion rolling by saying mine was in the early 1970s when after graduating from London Business School and working two years in Sydney I was head hunted to work in Melbourne. On arrival I contacted an LBS colleague who asked what I was doing on Sunday. Nothing I replied which is why I ringing you. He said that several of the LBS cohort based in Melbourne were helping Tony and Maureen Wheeler repack and send a book they just written out to the bookshops on Sunday morning and then we would have a BBQ lunch. I accepted the invitation and for several Sundays helped pack the books. During the lunch the same theme was repeated. All the rest of us had jobs with major corporations and we tried to persuade Tony to emulate us. How wrong we were for this was the birth of Lonely Planet. Subsequently and much later I said to Tony that if I had offered him $10,000 for 10% at that time would he have accepted? "With undisguised alacrity as we were broke at the time."

Gordon Bell then told us his story. Gordon was the second computer engineer hired by DEC, had become head of DEC's R&D, and was regarded as the father of the mini-computer. In the early 1980s he approached Ken Olsen, the CEO of DEC, with the idea of developing a micro-computer. Ken asked, "Who would use it?" Gordon replied, "Maybe in homes?" Olsen hit the roof, "That is the dumbest idea I have ever heard. If I hear that one dollar of DEC's R&D budget is spent on the micro-computer, I will fire your." To get this into perspective, based on the mini-computer, DEC had usurped IBM as the key computer company and Ken Olsen had been declared by Fortune magazine the entrepreneur of the century. Not the decade, but the century. Thwarted, Gordon left DEC and went to Silicon Valley and DEC lost its primacy in the computer industry.

Sheridan Bell looked at us both despairingly and told her story. She was working for DEC, in charge of internet marketing. DEC had a product called Altavista and she had heard of a start-up in Silicon Valley called Yahoo. She met with the founders and proposed a merger. About 10 days later the founders, Yang and Filo, contacted her and said they wanted to talk to her but not about the merger. They wanted her to be their first employee and finally offered her 10% for equity. She turned them down and the chance to earn $3 billion!

I remember a VC once telling that a fund receives on average one reasonable proposal a month. But once a year a VC gets the deal where any fool could make money and which is a golden ring on the merry go-round of life. That is the deal you have to do and you have to forget the other 11.

For individuals the deal flow is less and I reckon about once every seven years you get a golden ring deal. Of course working out that it is a golden ring deal is not easy and there is much chaff compared with little wheat. But they do occur. A secret of a successful life is to receptive to those opportunities when they do occur.

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Article Tags: Chris Golis, DEC, Gordon Bell, Lonely Planet, Yahoo



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