by Jean Case
But the story of AOL cannot be told without understanding how it benefited from the developments and failures of the services that came before. Steve wisely led AOL to be a good “sponge”—paying attention to market signals and evolving constantly to improve our offerings. And while AOL ushered in many exciting innovations, it also benefited greatly from what Steven Johnson refers to as “smaller, incremental breakthroughs.”
Facebook, Google, and Twitter, in turn, all benefited from the innovations that AOL introduced. The founders of each of these companies have spoken about AOL as an early influence; for example, Mark Zuckerberg “hacked” AOL Instant Messenger in high school. These businesses represent a piece of what AOL brought to the world. Facebook looks a little like a next-generation version of AOL Member Pages, Twitter like AOL’s instant messaging, and Google like a significant leap forward from AOL’s early content search engines. Innovators can take major leaps or make a Big Bet by looking at where previous efforts fell short, and fully exploiting the lessons of those failures.
There is a catalytic power to bold endeavors; their impact is multiplied by the effect they have on others. The micro-lending movement was first pioneered by Muhammad Yunus, winning him a Nobel Prize. Jessica Jackley remembers being in the audience as a young woman when she heard him speak, describing the power of micro-lending to help smart, hardworking entrepreneurs across the globe—entrepreneurs who also happened to be poor. Jessica was so excited by the prospect of putting her own twist on this idea that she quit her job and moved to Africa to launch Kiva. She didn’t have much to work with at first—just a digital camera and a website. But she and her Kiva cofounder, Matt Flannery, started from there, sending stories and pictures of people needing small loans to friends and family back home. By the end of the first year, their company had lent $500,000 in small amounts. And while there have been peaks and valleys in the dozen years since, today more than 2.5 million borrowers from eighty-three countries have received more than $1 billion in loans. The loans can be as small as $25, and projects are crowdfunded, so that each loan involves multiple lenders. And remember, these are not donations; the repayment rate is 97 percent. Those who participate can see their small contributions spark a movement across the globe—such as a fabric business by a former child bride in India, funded with a $570 loan, which employs two people plus her husband; and a thriving goat farm on the West Bank, crowdfunded with $2,000 by sixty-nine lenders.
I am struck by the way Jessica refused to be intimidated by what she didn’t know and didn’t have. At first, she only knew she could do one thing—tell stories and take pictures. But in time she was able to achieve the same global impact as a large philanthropic organization—not with charity, but with a hand up. The recipients of micro-loans, themselves models for starting right where you are, also have an impact far beyond their small companies. They show others in their communities what is possible.
Microbusinesses aren’t just creating opportunity in underdeveloped countries. Many note that they’re also having a positive impact across America. Not only do microbusinesses provide the extra income that helps people escape poverty, but they bring valuable products and services into underserved communities. They can help revitalize struggling Main Streets. From That’s a Wrap!, a gift-wrapping store in Atlanta, to BBQ Rowe, a catering company in Tennessee, to Mama Coo’s Boutique, a vintage shop in Detroit, everyone can start an all-American enterprise, with ingenuity, guts, and a little help from anyone willing to provide a small loan.
• • •
It’s in my husband’s nature to continue to try new stuff. Today Steve is taking forward an initiative called Rise of the Rest, which funds entrepreneurs across America. Riding a bus between the coasts to places that are often ignored by investors, but where the vast majority of Fortune 500 companies have been founded, and bringing press and investors along, he spends a week in these towns spotlighting the talent, innovation, and opportunities that exist there. I think in part Steve was inspired by our “Getting America Online” tour back in our AOL days, which crossed America looking for those who saw the future and wanted to get “on board.” In each city he visits, Steve finds those looking to make a Big Bet, take a risk, and help new companies thrive. People like you and me who have decided that the time is right to Be Fearless. Towns across America’s heartland are beginning to coalesce around entrepreneurs with new ideas, and investors are waking up too, realizing more and more the great talent and exciting new businesses that are dotting the whole of this country’s landscape.
Innovation is needed everywhere, and it’s happening not just in urban centers but in rural communities as well. For example, Justin Knopf, a young fifth-generation farmer, is calling on farmers to reject some of the conventional wisdom that has dominated farming for hundreds of years in hopes of saving one of our planet’s most precious resources: soil. As Miriam Horn explains in Rancher, Farmer, Fisherman, Justin’s attachment to his family farm runs deep. His ancestors came to Kansas as homesteaders and have farmed the same land for 160 years. In the Knopf family, memories of the Dust Bowl that blew away billions of tons of topsoil from farms across Kansas in the 1930s are not easily forgotten. Although not commonly understood, soil erosion remains a challenge for farmers today, and represents a grave threat to the planet’s future. More than a third of all the earth’s organisms live in soil, sustaining precious photosynthesis that helps provide us with food and oxygen. When soil is disturbed, the result is a dangerous release of carbon into the earth’s atmosphere.
Science wasn’t necessarily an interest in Justin’s early years, but he was involved in farmwork and came to understand the impacts of severe drought, dangerous storms, and extreme heat. When he was fourteen, Justin’s dad gave him a piece of his own land to oversee, and Justin experienced firsthand the struggles of farmland versus nature—soil that washed away, weeds growing out of control, and depressing crop yields.
But Justin’s love of the land never wavered. After high school, he headed to Kansas State University, where he was exposed to a radical new concept by one of his professors: the preservation of soil microbes. The professor encouraged his students to adapt their farming methods to focus on preserving soils. At about the same time, Justin learned of a farmer near the hometown of a college friend who was preventing losses from both soil and water. Justin’s interest was piqued. He and his friend loaded up a van and drove across Kansas into Nebraska, where Justin had what he later called “a dawning moment.” The technique they witnessed in Nebraska was called “no tilling,” using machines that enabled planting without tilling the fields, leaving the soil’s rich biodiversity mostly undisturbed. No-till farming also involved rotating crops to build up the nutrients in the soil and limit infestations.
Justin couldn’t believe what he was seeing. He excitedly shared news of these techniques with his father and brother and designed a plan to begin testing the new approach in a limited number of fields. They agreed to start with a small fourteen-acre plot, and based on the results scale from there. Only a few years later, Justin was seeing triple the yields from his fields using this new technique, and soon more and more of the farm’s 4,500 acres were cultivated using the no-till process.
Since those early days, Justin has become recognized as a leader in the no-till farming movement, spreading his knowledge to help others learn sustainable practices to conserve soils while increasing yields. His passion for protecting earth’s precious resources has taken him to Washington, DC, to advise on policy and turned him into an outspoken champion of what is today an expanding movement.
Justin’s story reminds us that there is always room for new thinking, even in some of the most traditional sectors. But it also speaks to the value of measured versus “bet the farm” reckless risk, when taking new ideas forward. Justin hopes to usher in a new agricultural era to meet the demands of an ever more crowded world.
It’s striking how often bold endeavors spring from problems that hit home. Consider Alexand
er Graham Bell (who, incidentally, was president of the National Geographic Society in its early years). His mother lost her hearing when he was twelve, and he spent his young years finding different techniques to communicate with her. His focus on sound technology and communications stemmed from his personal struggle and he turned his passion into a career helping the hearing impaired as a renowned teacher of the deaf in Boston, all the while developing innovations to help this community communicate. Many believe it was his marriage to one of his students, Mabel Hubbard, a young woman who had lost her hearing at age five, that reinforced his connection to this field and anchored his commercial work. Few developments have so changed the world as Alexander Graham Bell’s telephone, but what’s often lost in the telling of that story is that it all started with a problem Bell was trying to solve.
NINE
RISK OR REGRET
In the 1980s, when I was a marketing manager at GE, I thought my career was on a good path. GE’s management development training was world renowned, and I was lucky to be chosen for it—it usually indicated a bright future. Then I got a call. A start-up down the road was interested in talking to me about coming in to head up its marketing efforts. The product I was working on at GE was an early online service, known as GEnie. It’s why I was at GE in the first place. I’d come to the company convinced that the power and impressive budgets of such a well-respected brand would get more people online, allowing GEnie to dominate the market. Once settled in my role, however, I began to see things differently. GE’s dominance in other markets limited its appetite to take big risks in this new, emerging field. The large marketing budgets I had been promised came with unexpected strings. The budgets for the company’s established products and services were determined based on the revenue they brought in. GEnie was a new product, so all my department had was a belief that investments in GEnie would yield future revenues. This wasn’t selling well at headquarters. The powers that be wanted to focus on sure things, not pie-in-the-sky dreams.
Suddenly the idea of jumping to a start-up that had just raised a new round of capital seemed like a surer path to building a more connected world. But I was taken aback by the reaction of those closest to me. “Leave your job at GE? Are you crazy?” they would ask, sometimes shrilly. “You have no idea if this new company will even survive. Why would you put everything at risk?” I began to doubt myself. But it was the risk of not taking the risk that caused me to make the leap. I joined the company that would become AOL and helped build a service that helped usher in the Internet revolution, and changed countless lives.
Looking back, I wouldn’t trade that experience for the world. But in those earliest days, as we tried to attract more talent to our start-up, we came across people who were unwilling to risk a good thing for the possibility of an extraordinary thing. Those who passed up the opportunity to have a ride on our rocket ship often share with me their feelings of regret to this day.
The importance of taking risks isn’t just a business calculation. It’s a life calculation. For example, it’s a crucial factor in parenting. There is a growing body of research that recognizes the importance of allowing children to take risks as an important part of healthy development. I struggled with that as a mom when my kids were young. Since my first instinct was to be protective, it wasn’t always comfortable to let my children take risks. The irony was that I clearly recognized that the risks I was allowed to take as a child helped build resilience and independence. Sometimes it takes the influence of others—partners, friends, extended family members, etc.—who can bring a different perspective to help find the right balance. And even keeping up with important research on the subject can embolden a parent to embrace reasonable risk taking in the lives of children. Psychology Today published an article entitled “Risky Play: Why Children Love It and Need It,” by Dr. Peter Gray, who had this to say: “We deprive children of free, risky play, ostensibly to protect them from danger, but in the process we set them up for mental breakdowns. Children are designed by nature to teach themselves emotional resilience by playing in risky, emotion-inducing ways. In the long run, we endanger them far more by preventing such play than by allowing it. And, we deprive them of fun.”
• • •
It can be easy to get caught up in protecting the status quo, or what seems comfortable, rather than pursuing a different path. And yet, as Josh Linkner says in his book The Road to Reinvention, “It turns out that playing it safe has become recklessly dangerous.”
“It turns out that playing it safe has become recklessly dangerous.”
—JOSH LINKNER
Consider the cautionary tale of Kodak. Kodak’s story starts with its founding by George Eastman in 1888. With photography still a relatively young art, Eastman saw an opportunity to democratize it, taking photography beyond its then-limited use in professional studios out to the consumer. In 1900, Kodak introduced an easy-to-use, lightweight camera for amateurs, known as the Brownie, which sold for one dollar. For Kodak, it was the film used in the camera, then sold for just fifteen cents, that provided the recurring profits that enabled the company to continue to grow and innovate. Kodak became so synonymous with photography that the phrase “It’s a Kodak moment” came to describe memorable moments in life.
Then, in the 1970s, a Kodak engineer, Steve Sasson, and the company’s chief technician, Jim Schueckler, tested a new technology that could produce a photographic image on a screen without the use of film. Such experimentation at a company sustained by the sale of film was fearless in its own right. Kodak had billions of dollars in sales and boasted a 70 percent market share in film. Could it risk throwing its weight into a new arena that might undermine its core business? In the end, Kodak couldn’t make the shift. Concerned about protecting its lucrative film business, the company was slow to embrace this revolutionary form of digital imaging and failed to invest adequately in it, leaving the door open for competitors to step in. And step in they did. A Japanese competitor, Fujifilm, gobbled up Kodak’s market share in traditional film, offering a lower-priced product to consumers. Meanwhile, the digital market was exploding—by 2003, digital cameras outsold film cameras, and Kodak faced disruption across its product lines. In 2012, the company filed for Chapter 11 bankruptcy. The same company that democratized photography in the nineteenth century refused to take the risk of riding the next leap into the twenty-first.
Kodak’s opposite would be a company like Netflix, which has gone through several iterations, totally changing its business model to stay on top of trends. In the beginning, cofounders Reed Hastings and Marc Randolph had a simple premise: a customer-friendly rental company that would deliver movies right to your door. Hastings was still smarting from paying forty dollars after losing a video store’s cassette for Apollo 13 when he had the idea of charging customers a monthly rental fee, and having them send back their previous rentals to order new titles. By being a good sponge and watching the shortcomings of other offerings, Netflix created a compelling consumer experience. Convenience, check. Quick delivery, check. Inexpensive, check. Easy returns, check. No late fees, check. Large title library, check. Netflix was so successful that it killed the brick-and-mortar movie rental model; large companies like Blockbuster folded.
But the Netflix team refused to rest on its laurels, building a new video streaming service to both fend off competitors and maintain its leadership in the video delivery business. The transition was not as smooth as Reed Hastings would have liked, including a now-famous apology to customers when changes in the pricing structure alienated many of its original DVD customers. However, by making a bold leap into streaming, Netflix continued to innovate, refusing to play it safe. By 2013 the company had more customers than ever before. It was a big, risky pivot—and it paid off.
Netflix could have continued as a successful video streaming service, but it decided to take another leap that many people thought was crazy, into developing original programming. Again, there were predictions of doom. How could a strea
ming service hope to compete with networks, or with HBO and Showtime? The key was high-quality programming, beginning with House of Cards and Orange Is the New Black. Netflix became equated with top-quality original movies and TV, and did so well that other companies, such as Amazon, followed suit. There is little doubt that when the original programming market becomes saturated or no longer plays to Netflix’s advantage, Reed Hastings will explore pivoting again.
Another quintessential pivot story also comes to mind. It wasn’t so long ago that a podcasting platform called Odeo was introduced to the world. Thanks to a solid track record and business plan, the founders of Odeo were successful in attracting early capital. But as they began building their customer base, Apple announced it would include podcasts in its well-established iTunes platform, pushing Odeo out of the market.
Almost overnight, Odeo, led by CEO Evan Williams, realized it had to find another application for its platform. It created an employee challenge, and three now-legendary members of the team—Jack Dorsey, Biz Stone, and Noah Glass—came up with the concept of micro-messaging: short blogging updates comprising 140 characters that could be sent to one’s friends or “followers” on the platform. Odeo redefined its mission: to give everyone the power to create and share ideas and information instantly. That quick pivot created the company we know today as Twitter.
And what of those who don’t take risks? Sony Pictures will long lament its 1998 failure to do a deal that would have given it the film rights to Marvel’s stable of superheroes. When the studio first approached Marvel Entertainment, a struggling comic book company, for the rights to Spider-Man, Marvel offered to sell Sony movie rights to all of its unlicensed characters, including Iron Man, Thor, and Black Panther, for $25 million. No, Sony responded, it only wanted Spider-Man. It was unwilling to take a risk on fringe characters. Marvel sold Sony only the rights to Spider-Man for $10 million and 5 percent of gross profits.