Why Every Company Needs a Story

Nowak then went to his employees, who knew that the lifetime warranty would put pressure on them. It required stepped-up tracking of defects and meant they needed to get same-day orders out the door -- even after 5 p.m. "I told them that this was how things were going to change, but I wanted them to make the final decision on how that would happen." Some employees feared customers would take advantage of the company by sending back perfectly good parts they had already used. But Nowak had thought the story through. "I said, 'We are not going to base our policies on the 1% of the people who are dishonest.' I told the employees, 'We are not buying business. We are selling service and value.'"

Nowak believes that updating Rocky Mountain Motorworks' story by including vendors and employees in its shaping "has built confidence in what we're doing." He adds that revisiting the company narrative is "an exercise every company should go through every two years."

The storyteller: crazed but not crazy
Author Mark Helprin believes that every good company requires a strong personality and a credible narrator whom people will want to listen to -- but one whose passion also allows them to suspend disbelief. Helprin asserts that a good storyteller "can't help himself." The passion comes through. He or she becomes the vessel in which an urgent story wells up and must be told.

Bob Metcalfe, the founder of 3Com, in Santa Clara, Calif., seems to be a cool, measured sort, who nonetheless will quickly volunteer, "I view my life as participating in a technology crusade." In his pilgrimage to the holy land, Metcalfe met another man of faith, Dick Kramlich. Kramlich knows a profitable story when he hears one. "The idea has to change things in a big way, and the entrepreneur has to be evangelical about his idea. I'm looking for someone who's crazed, not crazy." Kramlich is a partner at the San Francisco venture firm of New Enterprise Associates. In the past five years, he has taken 64 of his high-tech investments public, including some of the brightest stars in the Silicon Valley firmament: Ascend Communications and Macromedia. Eight years ago he backed a then newly public computer company called Silicon Graphics Inc.

Moved by Metcalfe's passion, Kramlich grasped the central truth of 3Com's story. "It made enormous sense to me that personal computers should share resources," he recalls. Metcalfe was selling a lowly-looking piece of hardware, a printed circuit board called an Ethernet adapter that had failed to excite most other investors. But in Metcalfe's rendering, that board suggested an epic in the making. He communicated his belief that the pace of progress in computing had been held back by the lack of compatibility between machines. If someone could create a standard for linking computers, the value of the link would explode once a critical mass of connections had been reached. Metcalfe, an MIT graduate, even expressed the idea in a mathematical formula that the writer George Gilder would later dub Metcalfe's Law. Says Metcalfe, "I was selling not the board but a standard."

The forces arrayed against Metcalfe stoked his passion all the more. In 3Com's early days, a Silicon Valley rival named Corvus had already linked 100,000 computers through its proprietary network, Omninet. IBM was working on its own proprietary standard, Token Ring. Ethernet was an open system, and it had yet to connect a single computer. Even worse, it cost more than other systems. Recalls Metcalfe: "We told people, 'You pay more to participate in the standard. You pay more for 3Com, but then you get Metcalfe's Law.'" Today 3Com has $1.5 billion in annual sales and ships hundreds of thousands of adapters each month. Corvus is out of business, and Dick Kramlich's original investment has returned 141 times over.

The mission: a heroic narrative
Dick Morley says that every investor looks for entrepreneurs who can relate "heroic" stories that contain "mythical messages." He finds that often those stories are told with such zeal they create "blind spots" for the teller. That doesn't dissuade Morley. To him, unshakable faith energizes every good story.

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