Letter From Silicon Valley

"What you wanna do is imagine your business plan as Lord of the Rings, and the investors are like Legolas the elf and Gimli the dwarf."

In the 1990s storytelling was embraced -- by the sort of companies that embrace such things -- as a tool for persuasion and motivation. The management-consulting firm that hired me out of business school in 1994 had a "storytelling consultant" on retainer. An old guy with a thick gray beard, he regaled us with ghost stories and implored new associates to apply the narrative arts to our PowerPoint presentations. I remember sitting around the campfire at a corporate off-site, roasting a marshmallow and thinking, "What is this geezer talking about?"

September 11 brought the power of storytelling home for me in a way that consultants and seminars never did. On National Public Radio, I listened to Jimmy Dunne III talk about how the rest of his working life would be dedicated to rebuilding Sandler O'Neill & Partners, the Wall Street firm that lost 66 of 171 employees, including both of Dunne's managing partners. In the New York Times I read religiously each capsule biography of a World Trade Center victim. On television I heard the president speak of evildoers and fighters for our freedom. I saw clearly how stories help us understand events and supply the resolve to take action.

It was the first time I'd thought seriously about storytelling in a long while. And that brought to mind, appropriately enough, a tale from my early days as an entrepreneur. Since the renewed interest in storytelling is widespread, the time seems right to spin this particular tale, which also has the benefit of a more-or-less happy ending. It goes like this:

Once upon a time -- in 1998 to be exact -- I was the never-been-there, never-done-that founder of a company called Gazooba, mailing my first business plan to potential investors. The responses were uniformly discouraging. Many letters began like this one from Advent International: "After careful review and consultation with my colleagues...." Most ended like this one from Venrock Associates: "Best of luck in building your company." The Golden State Venture Capital Conference gave the plan 23 points out of 100 and offered helpful comments from its selection panel: "Vague direction and exit strategy for investors. Product viability ... doubtful."

One day I was strolling along Broadway in Manhattan debating whether to blame the rejections on a flawed EBITDA calculation or the wrong font size, when I happened to glance in the window of a Barnes & Noble. On display was a book titled Story: Substance, Structure, Style and the Principles of Screenwriting. A promotional poster described author Robert McKee as "the Stanislavski of writing" and claimed that his students had produced and written their way to 17 Oscars and 79 Emmys. The book jacket promised a step-by-step guide for screenwriters who wanted to turn "great ideas into great stories."

The book didn't say a word about business. But as I skimmed the pages, it struck me that Hollywood producers and Silicon Valley investors share more than a love of the Porsche 911 Turbo. Both make risky resource commitments in search of huge returns. Both need to be convinced that others -- audience members, employees, customers -- will also buy in. Both, I realized, want a good story. I didn't wait for the paperback.

Following the book's advice, I set about giving my business plan what the movie biz calls "spine." McKee explained that every blockbuster needs an "inciting incident": a shark-eats-swimmer, ship-hits-iceberg kind of event that throws the world out of balance and that the hero -- or perhaps a tiny start-up -- was born to make right. For our Big Bang I chose the day in 1996 that an Israeli company called Mirabilis began marketing ICQ chat software by having users E-mail the program to friends. After that my cofounders, Zen and Shanti, and I figured (wrongly perhaps, but can we suspend disbelief for a second?) that individuals might become the primary distribution channel for everything digital. Our software, which rewarded people with frequent-flier miles for forwarding commercial messages to friends, was no longer a boring collection of features. Rather, it became part of a valiant quest to allow the masses to share recommendations.

Next I had to throw in some conflict. "No matter what they say, no matter how they comport themselves, the only way we ever come to know characters in depth is through their choices under pressure," the book explained. Zen, Shanti, and I had never faced the evil ninjas, sadistic jocks, or reanimated dinosaurs that are the standard bane of movie heroes, but we had certainly undergone our share of hardships.

One incident, in particular, seemed rife with drama. When we released the alpha version of our software, so many people began using it that our puny server crashed under the load. We lacked the money to buy another server and ended up giving every user 100 frequent-flier miles to apologize for the company's service lapses. Since we had 5,000 users at the time, our mileage inventory took a big hit. I had not included that incident -- or others like it -- in the first version of the plan. That omission, I now realized, had prevented investors from understanding the real us.

Finally, I added a vision of a happy ending, what McKee calls "the object of desire." I described how great the world would be when people reaped the value of their word-of-mouth networks and how rich that would make anyone who helped us along the way. I merged all the elements into my executive summary. Talk about audience response: the afternoon after Shanti sent out the new business plan, a VC showed up at our office. Three months later I had new money in our bank account, fresh faces at our board meetings, and a sublet in San Mateo.

The company is called Qbiquity now, and some of the characters -- including myself -- are off enjoying other adventures. As for McKee, he appears to be flourishing. Not only are his writing seminars hugely popular, but he's also a character in Adaptation, the new Nicolas Cage movie from the makers of Being John Malkovich. (Actor Brian Cox will reportedly play McKee.)

Since I was going to talk about his book in a column, I phoned the author recently at his Los Angeles home to ask if other businesspeople had made the connection between getting the green and getting the green light. Turns out they had. "Entrepreneurs tell me they've learned from my book how to present the story of their enterprise," said McKee, who cemented his Hollywood credentials by constantly calling me "guy." The author went on to provide a handy formula.

"What you wanna do, guy," McKee explained, "is imagine your business plan as Lord of the Rings, and the investors are like Legolas the elf and Gimli the dwarf -- what we call 'helper' characters. They're the people who join forces with the hero to save the world from evil. In business, it's customers -- suffering in the evil world of your competitors or the absence of your product -- who need saving. When good triumphs, these helpers win, and they profit greatly."

Considering the number of bad entrepreneurial endings in Silicon Valley of late, I asked McKee if those involved should keep their stories quiet and practice the business equivalent of direct-to-video. "I don't recommend that," he said. "Have you read Shakespeare? When you watch Macbeth, and you see a great man fall and be destroyed by his own doing -- his own ambition -- the effect is cathartic. Tragic stories are ironically uplifting in that they reveal human beings to be rather magnificent creatures. For one thing, life goes on. You start again. And the insight you gain from failure may very well make you a more balanced human being. Or it might destroy you. Who knows? But the strongest people are not destroyed by financial failure. They learn from it."

I found McKee's words themselves to be uplifting, and I thanked him for talking to me. "Anytime, guy," he said.

Andy Raskin is the cofounder and former CEO of Gazooba Corp. (now Qbiquity) and a contributing writer at Inc. The object of his desire is sometimes a Ben and Jerry's Peace Pop.

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