We certainly live in a world of clichés, inspirational mantras and advertising slogans. “Time is money.” “All is fair in love and war.” “You are what you eat.” “Just do it.” “Serenity now.” While I appreciate the wisdom of Frank Constanza, I tend to avoid clichés as a rule. I just can’t rally around a poster of kitten hanging from a branch to inspire me to “hang in there.” But I do consider myself a man of faith and do believe in some words to live by. One of my favorite quotes, that I keep in right near the tip of my tongue in tough times or points of inflection in my life, always seem to inspire me.
“It is not what you know but what you do with what you know that makes a difference.”
My twin brother Rocco had this quote under his picture in our senior class yearbook. I have always liked it for not only this personal reason but because it crystallizes my position many things, especially the difference between intelligence and smarts. It is clearly personified in the hundreds of entrepreneurs who have harnessed a good idea into a great company. The two are not as highly correlated as you might think.
From the early technology entrepreneurs of Edison and Tesla, inventors parlayed their patents into financial success, some more than others. Edison left a legacy of stature and wealth while Tesla died penniless. Look at any successful technology company in the world today and you rarely find the “first mover” as the market leader. Microsoft created the first operating system for personal computers for IBM’s PC but retained the right to market MS DOS separately. Google was maybe ninth to the table for web based search. Apple certainly wasn’t first to the party for personal computers but has certainly adapted well and survived based on its ability to understand the consumer. Check this picture of the Apple II from 1977!
The current class of successful entrepreneurs have taken a basic concept (let’s say people getting to know each other), applied technological solutions already in use (networking, web interface, security), created an application for a specialized niche (oh, I don’t know, maybe college students at Harvard University) and then gave the world Facebook. At the time it was founded, February 2004, the world already had Napster, Friendster, MySpace and LinkedIn. Then, a few years later in 2006, an upstart comes along with a business model based on a word that founder Jack Dorsey found in the dictionary to mean “a short burst of inconsequential information.” Twitter was born and like the word “Google” has become engrained into our hip technology vernacular.
The common denominator in all of these success stories is the ability to see a good idea as the beginning of a great company. Throw in some bravado with realistic humility (knowing your limitations and hiring or partnering with the team that can get you to the Promised Land) and you see the difference between inventors and entrepreneurs, intelligence and smarts, Einstein and Tesla. Sure, some, if not most, of this recipe for success is the ability to market and sell a product (Sony’s Betamax was a much better format than JVC’s VHS but we all know who won the video format war.) But a successful idea learns to live and breathe on its own. In my world of discounted cash flows, the value of an idea will only have a terminal value equal to what it would take to recreate it. Build a successful company around it that can generate cash flows, intangible assets such as brand, customer relationships and goodwill and this success will change lives and build legacies.
In my other world of wine and spirits, I leave you with another success story; “When life gives you lemons, make Limoncello.”
