The Third Wave: An Entrepreneur's Vision of the Future Read Online Free Page B

because we needed to raise some capital if we were going to pull off the pivot.
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    We met with our CVC investors and pitched them the plan. They were intrigued but remained skeptical of us. Having just lost their money on our previous effort, they expected a much bigger stake if they were going to take another leap with our team. They didn’t just want to generate a return on their new capital; they were also looking for a payback on their squandered investment. We didn’t want to give up so much of the company, but we knew we had very little choice. In 1985, the startup tech world was still young, and venture investors were hard to come by. If we couldn’t get a deal here, we were going to go out of business.
    Our investors had all the leverage, and they used it to their advantage. They crafted a deal wherein they would own virtually all of the company, allowing management to earn some of it back over time, depending on our performance. All told, I don’t think I ever owned more than 3 percent. But it didn’t matter. It had never been about the money, anyway. It was always about the vision. I didn’t like the deal the investors imposed on us, but I was happy to keep the idea alive—and delighted to have another shot at building a business.
    We were able to launch Quantum with just a million dollars of new capital, largely because we were able to leverage partnerships to minimize our marketing costs. We customized our pitch for each PC company, and we started small. First we struck a deal with Commodore to create a gaming-centricservice called Q-Link for their vast base of Commodore 64 computer users. That helped us negotiate a partnership with RadioShack to create PC-Link, a downloading service that leveraged their graphical user interface. We later convinced IBM to partner with us to create an educational service called Promenade. Each company had its own unique brand and tailored offering, but their online services would all be built and run by us.
    This time it worked. We kept costs low and were able to achieve profitability in our second year of business. And while growth was modest, it was steady. We believed that the best way to jump-start our growth was to secure a major partnership—so we set our sights on Apple.
THE KINGS OF CUPERTINO
    I rented an apartment in San Francisco in 1987 and showed up at Apple’s headquarters every day—for six months. I buttonholed everybody I could within Apple to try to interest them in the nascent online market. I would tailor my pitch, depending on which team I was talking to, trying to come up with the perfect reason for them to partner with us. Ultimately, the group that was most interested was probably the group that had the least power and influence within the company: the customer service group.
    My pitch to them was straightforward: If you launch this service and bundle it with your computers, it’ll be a cheaper,better way to provide customer service to Apple customers than staffing large call centers to handle phone calls. “Oh, and by the way,” I would add, “in addition to the customer service benefit, we can provide a suite of other services that will make it compelling for consumers and help differentiate Apple.”
    The pitch resonated well with them. The people I was dealing with saw it as a way to be strategic, to strengthen their position within the company. On the one hand, they knew that their involvement was predicated on the partnership’s being about customer support. But they also saw that there was a broader opportunity—and that if online services took off, this was something that could transform their customer service department from being a drain to a profit center. A career-accelerating move, to be sure. So we seemed equally motivated to make the partnership work.
    Had Steve Jobs been at Apple at the time, I suspect the deal would never have happened. Steve never would have licensed the Apple name or allowed such a critical