The news was more than an embarrassment. Arguably, refusing to license the Mac OS was a fatal mistake for Sculley and his management team, and a critical misstep for Apple. No one could know what might have happened if Apple had gone ahead with that agreement and with licensing the operating system to other manufacturers.
Sculley's Apple subordinated the company's big idea to the business model. That model was not the essence of Apple. It was simply that moment's best means of realizing value from the big idea. The business model can and should change over time, as the world changes. Ultimately, when the big idea was lost, the market and Apple's employees could no longer find a reason to support Apple's business. Their fanaticism faded to ambivalence.
I was curious about whether Lenny was following the example of Sculley's Apple even before he'd been able to start the business. Was he selling the business model rather than the big idea—whatever it was—that had attracted Allison and him to Funerals.com in the beginning?
Business conditions are forever changing. You need to reconsider your strategies and business models constantly and adjust them where necessary. But the big idea that your company pursues is the touchstone for these refinements. Ditching the big idea in order to deal with business exigencies leaves you without a compass. I always advise companies to define their business in terms of where it's going, what it's becoming, not simply where it is. Set the compass, then work hard to clear a path, knowing that you may meander as you stumble upon obstacles but will always keep heading toward the same coordinates.
I sent Lenny an e-mail confirming that I looked forward to meeting him and Allison next Monday and went outside to pester the dogs.
Chapter Seven
THE
BOTTOM
LINE
“ONE MEGA, double, decaf, nonfat latte, please.”
“Oh, a Why Bother?” Connie winked at me. “You do live dangerously.”
I handed her my $2.49 and headed to my usual table just outside the door. Why bother, I thought, with a drink that has so little soul, that looks like the real thing, but that has lost its punch through some tedious processing. The portions keep getting larger, but the zest has been replaced with a faint trace. Perhaps it was time to return to drip.
I took a sip of hot foam and hoped for something more satisfying from Lenny's revised business plan, version 8.0, which I put on the table in front of me. I'd arrived early to spend a few minutes reviewing it. If Lenny's claims were true, this version answered all the nagging questions and set Funerals.com on the path to greatness.
I glanced through it. He had reworked the market and share estimates to more aggressively dominate a slightly smaller market. He had added a section explaining how he'd find prospects, primarily through referrals from healthcare professionals who work with the dying and survivors. He had even prepared an organizational chart, with himself as CEO and Allison as VP of marketing. The rest of the boxes were blank. Including Allison in the plan was Lenny's wishful thinking. All in all, he had made a few tactical improvements, but it was still “Better-Faster-Cheaper” caskets. Lenny was prepared to try, it seemed, to squeak by in his presentation. I wondered how Frank and his partners would react.
I looked up to see Lenny and a woman who had to be Allison walking across the parking lot. Far taller than Lenny, Allison seemed to take one stride to his two. Lenny was gesticulating, nearly hopping with excitement as they approached. Allison smiled as Lenny pointed me out, said something, and laughed. An inside joke I'd have to suss out later. The VC meeting must have gone well.
“Randy, it couldn't have gone better!” Lenny bellowed when he was nearly upon me. As he reached for my hand, he added, “Frank was great. He pulled for us. I feel really good about this.”
No armlock this time. Instead he patted me on the shoulder. We were buddies now. “Thanks to you, Randy.”
Yeah, right.
He introduced Allison as his “partner.”
“You two want something to drink?” he said. “On me.”
I pointed at the half-full cup before me. Don't get me started again, I thought. Lenny went off to the counter.
Allison and I shook hands, and she pulled a white plastic chair from the adjoining table and sat down.
“So it went pretty well?” I asked her, trying to conceal my concerns.
“I think so,” she said. “Lenny's very pleased.” If there was a hint of doubt in her voice, she was carefully masking it.
Dressed conservatively in a dark suit and white blouse with a navy scarf, Allison kept her hair pulled back modestly from her face. She and Lenny made a matched pair. But the similarity ended there. With her height and bearing, Allison's quiet confidence was the antithesis of Lenny's edgy energy. I would be surprised, I thought, if she were the spin machine he was. At the moment, in her look and manner, she seemed reserved, or perhaps just reflective. She probably hadn't known what to expect when she agreed to accompany Lenny for this meeting.
“What happened?” I persisted. “What did Frank say?”
“He seemed very positive when he walked us out at the end. He promised he'd be in touch.”
Well, he's a man of his word, but his graciousness did not tell me anything.
I watched Lenny at the counter, entertaining Connie. He was no doubt regaling her with news of the meeting and prophecizing a big check. She was practicing her active listening.
Notwithstanding their happy smiles, both Lenny and Allison actually looked spent from their morning. As these events go, they were probably only one of several auditioning teams on the roster at Frank's firm. The partners usually sit around an enormous, wooden conference table equipped with every space-age audio-video device known to man. Of course, no one ever knows how to use it all, and no matter how technically distinguished the founders, it always seems an eternity as the last-minute technical glitches are wrestled to the ground before the pyrotechnics begin. Eager young assistants enter at will, passing scraps of paper to partners. Partners leave, and new ones enter. As a presenter, you hope all this coming and going involves intrigues of dramatic proportions, but it usually means something more innocent—a partner's new Mercedes has arrived or arrangements need to be made to pick up the kids after school. In spite of the informality, the whole experience leaves many presenting teams feeling stripped naked. Sometimes a team never even proceeds beyond the first slide, as the inquisitors hurl unanswerable or painfully sensitive questions that cut through dreams with surgical precision. I have observed the ritual many times. Every day, in the lobbies of Sand Hill Road, scores of founders sit nervously waiting their turn with the dentist.
“Sounds like you sailed through without a problem,” I probed.
“Oh, I wouldn't say that,” she replied. “I don't know how these things are supposed to go, but there were lots of tough questions. They seemed tough to me, anyway. I'm not sure we answered to their satisfaction, but Lenny seems to think so.”
Lenny returned with Allison's black tea and his coffee.
I changed the topic. “Lenny never told me,” I said to Allison, “how you and he got together on Funerals.com.”
She smiled, more relaxed with this tack. “We've known each other most of our lives.”
They played together as kids. She had been born in Boston, but her parents moved shortly after to the Midwest. Times were hard, so she spent summers with her grandmother, who lived next door to Lenny and his family. Somehow Lenny and she became fast friends. She was a few years older than he.
“We lost touch when I stopped visiting,” she said. “We only ran into each other again eight or ten months ago.”
Allison, back in Boston for her grandmother's seventy-fifth birthday, learned that Lenny's father had died suddenly that week. The next day she attended the funeral and paid her respects. Afterward, she and Lenny fell into talking about the funeral and the complications caused by the fact that Jack's children, not to mention his many brothers and sisters, were scattered around the country. Lenny and
Allison's discussions turned into exchanges of lengthy e-mails and then face-to-face meetings as they laid the plans for Funerals.com.
Allison, who held a master's degree in social work and had worked her way up over the course of eight years to head of marketing for a chain of funeral homes, knew the industry. Her knowledge and Lenny's fascination with the Internet formed the impetus for Funerals.com.
“Lenny's the salesman here,” she added. “He's had to carry all the water with the business plans and presentations.”
I asked Lenny, “Did you give them your funeral home pitch today?”
He shook his head a bit sheepishly.
“I told him I'd walk out if he did,” Allison laughed.
“Tell me what you thought about the meeting, Lenny,” I said.
“Meeting with you and working through your questions,” he began, “was like practicing for today's presentation, the main event. All the detail about markets and distribution went over just great.”
He went on to recount the meeting blow by blow, as Allison sat quietly. He had talked through his slides. There were many questions, he said, about the market and about how the funeral business worked now. They answered all the questions, and Allison and her knowledge of the business were invaluable. Frank was extremely helpful. He made sure key points were brought out and understood. Like Allison, Lenny put great stock in Frank's manner and words as he politely walked them out.
It was a mystery to me. The way Lenny described it, the presentation sounded like a lovefest. I began to wonder what Frank and his partners were putting in their own coffee. This didn't sound like your run of the mill VC presentation. Nor did it sound like the meeting Allison had started to describe moments earlier.
“And the tough questions?” I wondered.
“There were some tough questions now and then,” Lenny said, “but nothing we couldn't handle. I think everybody was happy with the answers.”
Allison's brow creased. “Frank was supportive,” she finally offered. “And they do seem genuinely interested in the market. I don't think they hear many ideas like this. I mean, I can't imagine too many hot, young Internet entrepreneurs are dying to work in the funeral business.”
Lenny laughed.
“But, Lenny, I thought Phil asked some questions we didn't fully address,” she said. She watched Lenny, knowing that she was contradicting him.
I knew Phil, one of Frank's partners—he's a wiry, intense, former academic noted for wearing suspenders and bow ties. He had taught engineering at Stanford before becoming a VC. “I think we handled them all right,” Lenny defended.
“But I was watching him closely while you were talking, and I don't know if he was …”
“Yeah, but Frank covered for us,” Lenny cut her off. “He'll take care of it. He was very upbeat at the end.”
“What did Phil say?” I asked, looking at Allison this time.
“Well,” she said. “He wanted to know how many people were going to buy our products on-line. He was skeptical that people would be so deliberate at such an emotional time. Would they shop around? Why would they use the Web to research their choices? Lots of questions like that.” She stopped for a moment. “I don't think he was satisfied. Phil stopped taking notes and started doodling long before Lenny was done,” she remembered.
This sounded more like the meetings I was familiar with.
“But Phil was the only skeptic,” Lenny said, “out of the whole group.”
I told him I doubted that. Most VCs require unanimity among partners before they move forward with a deal. They won't invest unless they all agree, or close to it. In these meetings, there's usually a proponent for each idea. Frank brought Lenny in, so he was probably playing the role of good cop. He made sure all the points in favor of the idea got presented, were understood, and were discussed. VCs want to run prospects through their paces, but it makes no sense to crucify them. So there's a good cop, and often some other partner will assume the role of bad cop to ask the hard questions and probe the issues that surfaced in earlier discussions among the partners. Sounds like Phil was the bad cop this morning. He may have been the one asking the tough questions, but he was probably speaking for all the partners, even Frank, in his skepticism.
“You may have been so busy presenting that you missed the signals,” I suggested to Lenny.
Lenny looked at me for a moment, miffed. “You had to be there,” he finally said.
And I wasn't. True enough.
“Phil was most worried,” Allison went on, “that if we pioneer the market, some big funeral chain, like my company, would see the opportunity and decide to compete with us. They have the size and money we don't have, and their network of local funeral homes is a big advantage.”
“But they're slow and stuck in their old business model,” Lenny pushed back. “They have to support all that brick and mortar with high margins. That's what I said in the meeting. They won't cannibalize their current business. Besides, when the brick-and-mortar guys finally get it and decide to go ‘click and mortar,’ they'll buy us. Maybe they have money now, but they're not hip to the Internet.” He glanced at me to see if he registered any points.
“I'm not sure,” I started to say.
“How smart do you have to be,” Allison jumped in, “to sell caskets cheap on the Internet? Come on, Lenny.”
At first embarrassed, Lenny then glared at her. His entire face glowed red.
She looked at me again and made some sort of decision to go ahead. “Selling cheap caskets isn't what we started out to do,” she confessed.
“Wait a minute. We'll get to all that later,” Lenny cut in sharply. “Once we land the money and Funerals.com is up and running, then we can evolve the business to content and community. One step at a time. We've talked about this.”
“What if we never get to it, Lenny?” she asked. “Things change. Priorities change. The market changes. We'll have our hands full just delivering the e-tailing business. Now is our opportunity.”
This turn of discussion clearly made Lenny uncomfortable, but he did nothing to stop it. He knew he needed Allison.
“Let the funeral homes dispose of the remains,” Allison continued. “The Internet's never going to take care of that. Let us focus on the emotional needs of the people left behind. That was our starting point for this entire idea, and that's still what we should focus on.”
In their early brainstorming, Lenny had convinced Allison that the Internet provided an opportunity for them to address those emotional needs, especially for survivors and friends spread around the world. Many of those people, Allison claimed, want a way to communicate with each other, to remember their loved ones, to come to terms with and sort through the meaning of the death. There were ways to do that on the Internet. Just because family and friends live apart, doesn't mean they have to grieve alone. The core of the business that excited Allison was community, and into the community areas of the site they could build content—information about funerals, about the process and arrangements, the law and regulations, information that would demystify all of it as well as arm consumers.
“Right,” Lenny said sarcastically when Allison was done. “And how exactly do you make money with that?”
“If we provide information about counseling services, referrals, places you can go to talk about grief,” she added, “that's real value.” She hesitated. “Maybe there's a way for family members to share their memories on-line, and some way for people even to address the person who's gone. If we make the site useful, people will return and rely on it, and advertising and commerce opportunities will follow those people.”
“On-line séances,” Lenny commented, looking at me. “What a great idea.”
“Lenny.” She was impatient. “Say what you want now. But we talked about all of this, and I thought we agreed.”
“I just don't think it's a business,” Lenny said.
“And I am not interested in selling cheap caskets and liners,” she retorted.
>
That got Lenny's attention. I suddenly realized he had assumed, despite Allison's reservations, that she would come along if they could raise the money, that she would suspend her hopes indefinitely while they nibbled at a morsel of the original idea.
“I don't think, if we pursued all those ideas we talked about,” he said almost belligerently, “we would have gotten even this far.”
She was talking about some sort of social agency, he claimed, some not-for-profit meant solely to help people, not make money. They couldn't get funding for that. Who would put up money for that? he demanded to know. She had no ready answer.
“For all the problems with Funerals.com,” he went on, “they didn't laugh at us, and we would have been laughed out the door today if we'd come in saying we were going to help people, we were going to fill needs that churches used to fill. How are people going to pay for that? What's the economic model for that?”
He waited for an answer.
“What's it cost to run a site like that?” he went on when she clearly had no answer. “What's the content cost, the infrastructure? How do you find customers? What's your relationship with funeral directors and funeral homes?”
I smiled inwardly because his litany of questions probably echoed the very questions Phil had shot at him that morning.
Allison simply listened to all this with jaw set, shaking her head in incredulity. Obviously she knew Lenny well enough to let him run down a bit before jumping back in.
“Al, I'm not saying we will never do what you want,” he offered finally, in what sounded like a closing. “I think we can do it eventually, but I don't believe we can get funded by promoting a business aimed first and foremost at helping people. We have to focus on products, revenue, growth, profits. Your ideas are too squishy. You see this utopia, this company with no structure and a bunch of eager beavers who work for the love of it. What you want is unrealistic. If we win on the bottom line, then we can consider new ideas and directions. Hey, if we're a big success we can even endow a foundation to deal with the virtuous, people aspect of death and dying.”
The Monk and the Riddle: The Art of Creating a Life While Making a Living Page 11
