The Monk and the Riddle: The Art of Creating a Life While Making a Living

by Randy Komisar

  Just as I joined Crystal in May, the existing management team finished preparations for a nationwide road show to solicit a round of private investment. My first task as CEO, then, was to lead the road show, which proved a great success. Setting out to raise some $15 million, we received more than $25 million in commitments, and we accepted only $20 million at a very aggressive price. A lot for the time. Investors had liked our story.

  The story we told was based on a plan prepared before I arrived. It rested on a set of assumptions about the number of products we would launch, the estimated market penetration for each, and a development timetable — all dependent on a deeper set of assumptions about the growth of the “Next Generation” console market. I hadn't had a chance to do much personal due diligence—after all, I had just arrived — but the plan seemed to hang together. In any case, we would give it our best shot, I thought, and if it didn't work, we could fix it later.

  Back in the office after the road show, I began meeting with key people from the creative and sales sides of the company. We needed a detailed implementation plan to achieve the projections we had sold to investors. For weeks through late summer we gathered in marathon planning sessions, fueled by pizza and caffeine. Soon enough, alarm bells began clanging in my head. Crystal couldn't deliver on the plan. There wasn't enough pizza in the world to make it work.

  This was troublesome for me in more ways than one. Investors had bought the plan, I realized, at least in part because of my track record at Lucas. It was my plan, and my fix-it-later attitude had been naïve. I felt responsible, and I couldn't let them down. Furthermore, I wanted very much to achieve the plan and move on to interactive storytelling, a prospect that was suddenly in great jeopardy.

  The first problem was the “Next Generation” game market: How quickly would it grow and who would be the winners? The console makers manufactured the razors, and we sold blades. But for which razor? 3DO, the original “Next Generation” console platform, was floundering, and that's where Crystal had placed its first bet. Our second bet, Sega, was already off to a bad start.

  The second problem was that my discussions with the creative producers raised grave doubts about their ability to develop quality titles as quickly as the plan prescribed. And if we couldn't generate enough titles, Crystal would be in trouble, even if the platforms grew as we had hoped.

  Unfortunately, the weaknesses in the operating plan were only the most obvious of our problems. My probing revealed something far more serious.

  Crystal was not one organization, but two. The people who made the games and the people who sold them were at war with each other. Both sides were led by equally talented management partners and staffed with strong people. Before I arrived the trenches had been dug deep. Frustrated by the vagaries of the creative process, the sales side blamed the creative side for failing to deliver on time and for not producing the games the market desired. The creative people blamed the sales people for wanting only “me-too” titles, for not being able to effectively sell potential hits, and for goading them into foolishly aggressive development schedules.

  As summer ended, I could see that we had an unworkable plan and an internecine war, but the prospect of failure never occurred to me. As colleagues warned that the sky was falling, I quickly reassured them that we would be fine, that I had seen worse, much worse.

  In truth, I understood the company's most basic problem and knew what to do about it: In its initial zeal to become a major player, Crystal had tried to instantly become a full-service developer and publisher with its own sales and distribution resources, even before it had produced a reliable pipeline of successful products. A sales force requires a steady flow of marketable titles to sustain itself, and Crystal wasn't capable of delivering them yet. Crystal had tried to do too much too fast.

  My instincts, reinforced by my experience at LucasArts, said we should take a step backward and do this right: Cut back the sales side of the business, and retreat to the core of the company—the creative organization. Focus all our resources on developing a small number of high-quality games. Sell these games through outside publishers. Then, when we had a stable of successful titles, rebuild Crystal's own sales organization, and recapture the control and margin given up to the distribution partners. We would likely wind up in the same place sought by the founders, but by a different route and with less risk at each step.

  Naturally, the prospect of pulling back from the plan did not excite the board. The success of the road show was still a vivid memory, and hope among many of the board members of achieving the original dream — quickly becoming a dominant, publicly traded, full-service developer and publisher of “Next Generation” games—remained high, despite management's growing doubts.

  Instead of pressing for what I believed in the face of their resistance, I offered two alternatives. Scale up by acquiring other companies and creative teams. Or sell out. If Crystal Dynamics could find a company that would value our people, our products, and our early position in the market we could avoid layoffs and still give the investors a good return. Moreover, I would be free of my dilemma.

  For the next few months, we considered candidates for purchase and held discussions with a number of them, but we never found an acquisition that made sense. At the same time, through that winter, we looked high and low for another company to acquire us. We held serious discussions with more than one potential buyer, but those came to nothing and only confirmed my worst fears: as the game business consolidated, the buyers preferred companies with far more revenue and better-established products than we had.

  The board's reaction to my alternatives also proved to be divided. A majority opposed selling because their hearts remained set on building a successful independent company. There was no consensus either that we should grow by acquisition, even if we could find good candidates, because of the inevitable dilution to the investors. In something of a precursor to the Internet “premature IPO” phenomenon, some board members even suggested going public, but I couldn't see how that would solve our operating problems and refused to support it. We needed to get our house in order first. January and February came and went, and we were still trapped by disagreement and indecision.

  So began my sleepless nights. They were not sleepless because of the business problems—serious as those were, I had faced worse in other companies without losing sleep — but because I began to recognize a fundamental flaw in my relationship with the company.

  If I understood the problem and the solution, why didn't I act on it? Why didn't I shut down the sales organization? I had stood up to resistant board members on other issues — why not now, on the most important issue of all?

  Resolution for me and for the company did not come until May, a year after I joined Crystal. That month the Electronic Entertainment Expo, the industry's annual trade show, known as E3, was held in Los Angeles. Hollywood had become enamored with the game business, and they were going to up the ante with their star power and cachet.

  What did not bode well for Crystal was obvious as I surveyed the exhibit hall: several game publishers—glitzed out with dancing showgirls, pinups signing autographs, and huge screens featuring the latest releases—dwarfed my little company. We had puffed up to look like a substantial player for the show, but we seemed puny by comparison. And we were running out of time.

  One evening, I cruised the industry parties with Toni, a friend of mine. A very bright and exotic woman, part French, part American Indian, with a strong aesthetic sense, Toni had cofounded a game company that made cool, avant-garde games for the PC. Her titles weren't best-sellers, but they were beautiful and innovative, and, not surprisingly, she was not a fan of Crystal's shoot-'em-ups and fantasy play.

  As we whizzed along the freeway in a limo, each of us half drunk, she turned to me rather suddenly. “What are you doing in the game business?” The way she said it was “the game business.” What are you doing in the game business?

  Taking her challenge, I sober
ed up enough to launch into my grand vision speech: We're at an early stage, but it's the dawn of a new era of entertainment and storytelling…. We're learning to put together the pieces and developing the vocabulary…. Yada, yada, yada.

  She listened politely to my entire spiel. But when I finished, she crossed her arms over her chest and maintained matter-of-factly, “You're in the fucking game business.”

  Her words jolted me like a hammer to my not-so-sober head.

  I hardly played games as a kid. I'd never played a video game all the way through. There always seemed to be something more important to do. I liked sports, because there was beauty in physical prowess. But games to me always seemed a distraction. I was definitely not a gamer.

  I sighed, sinking into the plush seats, a weight suddenly off my shoulders. “I'm in the game business,” I confessed—to myself as much as to Toni.

  I had joined Crystal with a vision of taking the company to a new level of interactive, cinematic entertainment, but the prospects for achieving that had evaporated months earlier. Cutting back the company would have meant confronting what I already realized but couldn't admit: Crystal was going to be a video game company, plain and simple, nothing more. My drive said, “Stay and make it work,” while my passion prevented me from making the changes needed to do so.

  The next Monday, I returned to the office and called in my two lieutenants. I explained what they already knew, that Crystal Dynamics was trying to do too much. Given the size of our competitors, we would bleed to death if we didn't change course. We had to shrink the company, I continued, to its core strengths. Naturally they were uncomfortable with my decision, even though they had long been frustrated with my inaction. I asked them to suggest strategies for carrying out the reorganization, and they went off to ponder the options.

  Next I met with two key board members and told them my decision. We had skirted this issue more than once without conclusion, but this time there had to be resolution. So I added something further: I was resigning. I would stay long enough to help the company scale back, but I wouldn't run it any more. What was right for Crystal wasn't right for me.

  In the end, my two lieutenants, whose groups had fought so bitterly with each other, resigned as well. One of the board members stepped in to lead a scaled back Crystal focused on producing a few quality games that were distributed by larger players. Crystal was finally sold two years later, a small video game company gobbled up by a larger video game company.

  My departure created turmoil and bitterness for many involved. I felt I had done the unforgivable. I had bailed out of a plane that was still in midair. Yet when I finally asked myself the question that I had encouraged Lenny to ask himself, I could not ignore the chasm between my own passion and what the company needed. Without a grander vision, and some prospect of realizing it, Crystal was not a place I could see myself working the rest of my life. That meant I needed to get out, now.

  MY MIND came back to the PetUniverse.com pitch. At least, I thought, I'd started at Crystal with a story and a passion. All I saw in this pitch was greed.

  I had begun to find aspects of the startup game increasingly disturbing. Expedience ruled. Sometimes I wondered if, rather than developing tomorrow's business leaders and talent, we weren't merely cloning speculators, hack business men and women, who arbitraged their drive for a quick hit and who believed that if you're rich, you're right. Heaven help us if these businesses actually have to be operated on a bottom line basis for the long run.

  I retreated to my home and checked my messages. After the kind of morning I had, I felt compelled to e-mail Lenny.

  The deferred life: drive, then passion.

  Who wants that?

  * * *

  TO: lenny@alchemy.net

  FROM: randy@virtual.net

  SUBJECT: Ask it again

  Lenny,

  You completely missed the point of my question.

  It's not about doing the same job for life. It's about what things you would consider worth doing today if it were your last day.

  Don't confuse drive and passion. Drive pushes you forward. It's a duty, an obligation. Passion pulls you. It's the sense of connection you feel when the work you do expresses who you are. Only passion will get you through the tough times.

  As I tell the M.B.A. classes I sometimes address, it's the romance, not the finance that makes business worth pursuing.

  You need something in Funerals.com that by itself will inspire you, and others with you, to prevail, no matter what adversity arises. In my experience, the promise or hope of money by itself won't do.

  Ask yourself the question again.

  best

  r

  * * *

  Chapter Six

  THE BIG

  IDEA

  THE NEXT MORNING I headed toward San Jose for a board meeting. Traveling south on Highway 280 offers none of the gleaming lakes and plush hills that texture the landscape leading to San Francisco. After a brief stretch of road flanked by Stanford's rolling open spaces, grazed by meandering cows, and spotted with giant radio telescope dishes, sprawl displaces the more bucolic scenery. First, suburbia with its housing developments and strip malls. Then block after block crammed with one- and two-story buildings whose fronts are stamped with a veneer of business respectability but whose three other sides drop the pretense. “Tilt ups,” built in a hurry to house wave after wave of new industries, these generic cubes have replaced boundless acres of cherry, plum, and apricot orchards. This is the “silicon” in Silicon Valley, the place where the Fairchilds, Intels, and their progeny were born. Microprocessing plants, chip fabs, clean rooms full of drab bunny suits; this is the place. Like a ghetto that takes on the face of each new wave of immigrants, this part of the Valley has, in turn, sheltered the chip, computer, software, and now Internet hopefuls. In the future, anthropologists will be able to identify each generation of the Valley's industries by sifting through the flotsam and jetsam of endless remodels. A sudden rash of competitors marks each industry cycle; then the industry peaks and consolidates into a handful of winners. In no time another wave of wannabe industry-builders moves in and fills the vacancies. It's “recycling,” Valley style.

  I made haste to the offices of TiVo, a high flyer with a big idea, attracting a lot of attention with its promise of changing the entertainment world. The conference room hummed with activity this morning. Various VCs and industry leaders in their denim and khaki finery milled and munched pastries and bagels, clustered in twos and threes. Meanwhile, the management team welcomed arriving board members. Mike Ramsey, CEO and one-half of the founding team, was dressed in the stylish LA banded-collar, pleated-slacks look. In his late forties, Mike's dignified gray is unusual in startups these days. He is an experienced leader, poised and polished and always appreciative of the people who work with him. His sidekick and co-founder, Jim Barton, on the cusp of forty and dressed in jeans and a button-down shirt, looks like he grew up on the range. A no-nonsense technologist, he always gives it to you straight. The rest of the executive team, attired somewhere along the Mike-Jim continuum, excused themselves from the room periodically to deal with whatever momentary emergency required their attention. The finely tailored director from New York, in a blue suit and white shirt that Lenny would have appreciated, stood a little off to the side, pouring himself another cup of coffee and adding a generous splash of milk.

  The room was decorated, if that's the right word to use, in the mode of “Valley professional”: stark, functional, disdaining extravagance. A wood conference table for a dozen or more dominated the space. A sleek black box the size of a large laptop computer carefully perched atop a television set somewhat inconspicuously in the far corner. Except for the parking lot, where the shiny, late-model luxury cars attested to many earlier wins, it was hard to tell that the assembled group comprised some of the Valley's most prominent deal makers and game changers.

  In these early-stage businesses, where progress is measured in minutes,
monthly board meetings are the norm. At this moment, TiVo was only two years old, and it had already raised more than $100 million, attracting an illustrious group of investment partners, including Sony, AOL, Disney, DIRECTV, Philips, CBS, NBC, Liberty Media, TV Guide, Showtime, and Quantum. It had launched a world-class product and service, and it had assembled a stellar team.

  Now TiVo was on the verge of what most founders think of as Heaven. It was about to go public. Looking around the room, though, I would say exhaustion trumped elation. And unlike Lenny and other wannabes like him, these guys viewed an IPO as a means, not an end—as a financial pit stop, a chance to refuel for the long—the very long—road ahead.

  TiVo had attracted such high-profile support because of its unusual potential—because of the power of the idea and the promise of fundamental change. I had first heard of the company in the autumn of 1997, when Stewart Alsop, a Silicon Valley pundit, columnist, and venture capitalist partner in New Enterprise Associates, called me about the initial idea. He and Geoff Yang, a prominent venture capitalist then at Institutional Venture Partners and now at Redpoint Ventures, were seeding a startup called Teleworld, TiVo's first incarnation. A few days later I headed over to the Konditorei to listen to the founders' pitch. Mike Ramsey was a distinguished executive from Silicon Graphics, where he had run a large piece of the business, and Jim Barton was a standout engineering wizard who had also come from SGI. Among those who pitch me, they were unusual in their maturity and accomplishments. SGI had been involved with Time Warner Cable's video-on-demand trials in Orlando, Florida. An ambitious attempt to cost effectively deliver to home viewers a vast library of movies they could watch at their convenience, those trials had been a bust, but Mike and Jim wanted to apply the lessons learned to a new venture.