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.
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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.
That's what attracted him to Michael Damphousse, then manager of global-business development for a business unit at AEG Schneider Automation, in North Andover, Mass., a $600-million joint venture between Daimler-Benz and Groupe Schneider. At AEG, Damphousse had been spearheading work on factory-automation systems. A couple of years ago he began developing software for the white-collar end of the business that would allow the company to better manage and deploy its sales-and-marketing staff. But Damphousse couldn't interest his bosses in the idea.
That's when he met Morley, who recalls Damphousse's story as "unformed and unstructured." On the other hand, says Morley, "I couldn't shut him up. He had this great belief in the story and in his ability to communicate it." While Morley accepts single-minded passion in his heroes, he still looks for people who understand the art of the possible. He rarely invests in Ph.D.'s, because they "know how the world should be." Entrepreneurs, conversely, "understand how the world is," he says.
Heroes take chances that inspire others. They can be reckless at times, and that, oddly, gives their adherents a sense of security. When Morley introduced Damphousse to a group of his fellow angels, Damphousse handed out bank-deposit slips to all the people in the room, with the amount he expected them to invest already filled in.
A few days later, with his bank account still flat, Damphousse called Morley to see what had gone wrong. Morley replied, "Nothing." Damphousse asked, "Well, then, what do I have to do?"
Morley told Damphousse what he needed to do to live up to the story he told. "You have to quit your job," he said.
Damphousse, who had just been offered a promotion to head up marketing for a new business unit and had just bought a large new house -- "I was mortgaged to the hilt" -- quit his job. The investors then sent him $150,000. It was a week after that that Damphousse summoned the nerve to tell his wife what he had done.
Heroic stories embolden not only their creators but all who hear the narrative. In making sales calls, Damphousse had no trouble throwing down the gauntlet: "I told people that if they didn't buy the product, then they wouldn't be part of the future. We want our clients to beg for the solution." Damphousse's company, Pangaea Consulting Inc., based in Andover, Mass., with projected sales of just $1.8 million this year, currently has 15 employees, but 6 of those people are moonlighting engineers who work for nothing. Each time Pangaea, which specializes in sales-force-automation software, lands a new contract, Damphousse hires another engineer full-time.
Heroic business stories are less about money than they are about ideas -- the sinew, after all, of stories. The money is the result of heroic action, not the cause. San Franciscoñbased Salon, like Pangaea, is an idea-driven company. Producing on the Internet a magazine about books, arts, and ideas, Salon was formed by a cadre of journalists who left the San Francisco Examiner, a declining afternoon newspaper, to strike out into the world of digital publishing. Its business model is fluid, given the rapid and unseen shifts occurring on the World Wide Web. It remains uncertain how the company will make money.
But against that backdrop, consider the over-the-top language of its president, David Zweig: "We are a tribe of journalists that has broken away from the pack. Our narrative line is that there's an appalling lack of quality on the Internet. We believe San Francisco is the creative epicenter of Internet content, the way Hollywood was for entertainment back in the teens. We have gathered up the brightest and happiest talent that was trapped in an aging technology and bureaucracy, that was oppressed by deadlines and space limitations."
Although Zweig can point to venture backing from Hambrecht & Quist, he would just as soon cite an endorsement from novelist John Le CarrÈ or the company's ability to recruit legendary consultant Dan Schafer, who has written 47 books on the computer industry and has prized his independence for 15 years. "I think of us in terms of Lewis and Clark. People say, 'How can you go down that river when you don't know if there's a waterfall or a beautiful meadow around the next bend?"
Zweig's response is, How can he not go down that river? Otherwise, there will never be a story to tell. "We will have an adventure here," he says. "Ultimately, what's important about Salon is not whether it succeeds or fails, but that it offers people the chance to live out their narrative and be a part of the story they fashion."
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