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September 22, 2004

Persistence Pays, Part 2

I thought I knew about persistence from the funding process (see yesterday's post). In reality, I didn't know squat. I was bush league. But, I was about to learn from the master, Vinod Khosla.

Vinod and Geoff Yang funded Excite in January of 1995. And, pretty quickly we ran into a bet-the-company scenario where a real persistence lesson was learned.

Back in those days, the Netscape browser had two buttons in the chrome that don't exist today. They were called NetSearch and NetDirectory (NetSearch, of course, became Search but NetDirectory disappeared into the ether). That summer, Netscape let it be known that they were going to put the destinations of those buttons up for bid. Previously they had given, for free, the NetDirectory button to Yahoo and the NetSearch button to Infoseek.

This was the premier beachfront real estate on the web up for bid. We were terrified. We needed to get it.

Here's were the facts as we knew them:

Fact 1: There were at least three bidders for the two buttons: us, Infoseek and MCI (they had a yet-to-be-launched web search and directory product that, I think, was going to be called Genuine).

Fact 2: We had a little less than $1,000,000 in the bank.

Fact 3: We were screwed.

We were screwed because we didn't have enough money to compete. How were we going to outbid MCI? A freaking phone company? Infoseek had more money and more users.

We gathered the troops and I distinctly remember sitting on the floor of my office with a big chunk of our small company and Vinod. And suddenly the right answer appeared.

We were going to bid $3,000,000.

It was Vinod who suggested it. Forced us into really. We had $1M in the bank and we were bidding $3M. How was that going to fly?

Vinod made a critical point. If we don't get this deal we're nowhere. If we do get the deal, we can probably raise the money on this victory alone.

Strangely enough it felt right. A bit irresponsible perhaps, but in reflection it was truly a bet-the-company moment and we bet big. It was appropriate.

We did all the things you'd associate with trying to win a deal once we decided. We submitted our bid. We took people out to dinner. We made our case constantly. And in the end...

We lost.

I was heart broken. We lost. Honestly, I thought we were dead.

Then, Vinod told me a story. It was a story about the early days of Sun Microsystems which Vinod started in 1982 along with Scott McNealy, Bill Joy, and Andy Bechtolsheim.

Sun was a fledgling company, 40 people perhaps, and a deal of critical importance was being bid. Computervision was the name of the company and Sun was fighting for the deal with the 100 pound gorilla of the day, Apollo. Sun had pulled out all the stops to win the deal. They knew it was a bet-the-company opportunity -- all or nothing.

The deal was worked for months. Then, one day in July a phone call came in to Vinod. As Vinod tells it

"It was from a purchasing guy from Computervision and that was terrible. You never want to hear from a purchasing guy, because that means you are getting a rejection. He thanked us very much for bidding on the contract but said they had chosen another vendor."

By the time Vinod got this call, the decision was baked.

"Apparently, Computervision had made the decision long ago. By now, there were Computervision technical people from Europe who had arrived here for technical training, at Apollo. It had gone that far. They were on crossing the Ts and dotting the Is on the contract."

It was over.

But, here's what Vinod did.

"I took over. By 6:00 p.m. I had sent off a letter, Federal Express, to about 30 or 40 people at Computervision. I said we would do anything for their business.

I didn't go home; I had my wife bring my clothes to the office, and I caught a red- eye to Boston.

The next morning, I was in the Computervision lobby, making phone calls, trying to see someone. Nobody would talk to me."

Turns out, after 50 phone calls, he got through to the VP of Sales and Marketing and through a chain of events and two days of non-stop work where no-one was let out of the hotel room in which they were meeting, Vinod threw out Apollo and signed the deal with Computervision. The rest, for Sun, is history.

It truly is an amazing story. If you ever get the chance to hear Vinod tell it, take the opportunity. Cancel whatever it is you have planned and hear it.

Back to the Netscape deal... We had gotten a similar call. We had lost. Infoseek and MCI had won. But, taking a lesson from Vinod's, we continued to press on as if the bidding was still open. We called everyone we knew at Netscape, we sat in their lobby asking for meetings, we persuaded others to call on our behalf. We begged. In general, we made a total pain in the ass of ourselves.

And you know what? It worked.

About 20 days after we were told that we had lost, the door opened just a crack. MCI had a hiccup. Their product wasn't ready.

Within 24 hours, we had the deal.

I can honestly say that if we hadn't persisted, hadn't pushed through when it looked hopeless, hadn't let Netscape know that at the slightest opportunity we were ready to go, that deal would have never happened and Excite would never have had the run it had.

I became a true believer in persistence and it's the #1 lesson I try to bring to the companies I work with. Things are NEVER over. The deal you're working may look closed or the candidate you're trying to recruit may have said 'no', but that's when the real negotiating starts.

Thanks Vinod.

September 22, 2004 | Permalink


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Joe - awesome post. Welcome to the blogosphere - your storytelling is great - keep it up.

Posted by: Brad Feld | Sep 23, 2004 4:25:28 AM

Wow, an amazing inspiring read :)

Posted by: Jacob Pang | Sep 24, 2004 4:54:28 AM

Yes - the value of persistence and determination can never be overestimated. As Churchill put it: "Never give in. Never give in. Never, never, never, never--in nothing, great or small, large or petty--never give in, except to convictions of honour and good sense. Never yield to force. Never yield to the apparently overwhelming might of the enemy."

Posted by: John O'Sullivan | Sep 24, 2004 4:57:28 AM

Joe: Started at the bottom and read each post. In short, a spectacular POV blog and a welcome addition to my daily read. We'll talk . . . or I'll die trying ;)

Posted by: Grayson | Sep 24, 2004 5:55:44 AM

I think this concept clearly applies to getting music acts.

Many musicians get turned down after trying to get a gig. They send a demo and ever hear back. They audition and never follow up.

If you are a musician who is not getting gigs...

You need to work you butt off... you should be making phone calls and not stop at anything until you get the gig...

Try to schedule a meeting, try to preform for them, send them news about your band, bombard them with so much enthusiasm and persistence that they cannot possibly turn you down one more time. Then you will find true meaning in “Persistence Pays Musicians”.

Posted by: allwaysmusic | Sep 24, 2004 2:56:39 PM

Did you also thank Vinod after he'd orchestrated the merger of Excite and @Home?

Nice that he bought you a hard drive but ... the big decisions count more

Posted by: Hugh Jass | Sep 25, 2004 2:09:29 PM

Joe... Please drop me a line with your e-mail address. I'm looking to do some due diligence on a fund that you are listed as an "Industry Advisor" to. Thanks. (PS.. I enjoy reading as well. :) )

Posted by: Charlie O'Donnell | Sep 26, 2004 2:38:46 PM

Persistence is the thing that separates the successes vs. the failures.

Posted by: SWong | Sep 28, 2004 3:06:26 PM

Way back in early 90s I remember reading a book called "Sunburst," the story of Sun Microsystems, which chronicled this Apollo episode. Fyi.

Posted by: Raj | Sep 29, 2004 10:05:12 PM


Excellent blog!! These are all great stories/musings, but this one really hit home for me. I am a partner in a hosting company started after I was laid off from Excite@Home (may she RIP), and we are currently at an inflection point in our growth where persistence is playing a huge part in our strategy. This article rings like prophecy to me, and I can not wait to share it with my other partners....

Keep up to great work and good luck with your new adventure.

Posted by: Q Wade Billings | Oct 7, 2004 8:08:36 AM

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