Legendary Silicon Valley failure General Magic sits at the center of a new documentary that a Forbes review describes as full of “life lessons” for inventors.
I’d describe General Magic as the poster child for what I’ve personally experienced multiple times in my life: the Visionary’s Curse of being Right… But Early.
The mirror image of the Visionary’ Curse is the “Why Now?” slide in a venture capital pitch deck. Timing is key to success for startups and high risk equity investments. And both investors and entrepreneurs should understand if now is actually the right time to turn vision into reality.
My goal here is to help you convince investors that your timing is perfect.
General Magic and The Visionary’s Curse
The short story of General Magic is that an amazingly talented Silicon Valley team envisioned the smartphone a decade or so too early.
They raised a bunch of money and even went public prematurely. Their product did not take off, and they ultimately crashed and burned as a company.
But the team members individually went on to play major roles in the ultimate smartphone disruption from Apple and Android/Google.
“General Magic” the movie debuted at the Tribeca Film Festival in April 2018. Here’s how they described the company’s trajectory.
In 1990, a new company called General Magic spun out from Apple. It took Silicon Valley by storm as rumors spread of its secret, “next big thing” project. Four years later, the company shipped its first product: a handheld, wireless personal computer—what was essentially a smartphone, even down to the emojis, all the way back in 1994. But the mid-’90s tech landscape wasn’t ready for an innovation so far ahead of its time—after all, the average consumer didn’t even have email and certainly was not prepared for 21st-century, anytime-anywhere communication. The product flopped, and General Magic shuttered.
The Visionary’s Curse is actually a pretty common story.
My Visionary’s Curse
I’ve just returned from the annual finals for the Gooding Cups, the student a cappella trophies named after me and my wife Kate. It’s one of my personal reminders about the Visionary’s Curse.
I started the first a cappella CD catalog in 1992, a year before the commercialized internet web began (so it was an expensive paper catalog). I bought the National Championship of College A Cappella in 1999 in its third year of operations. I had this vision of a cappella reaching the mainstream. Kate could see that high school a cappella had huge potential appeal when she started that competition from scratch in 2005.
We were right… but early.
We couldn’t foresee that the book Pitch Perfect, written by a graduated frustrated college a cappella wannabe singer, would turn into an astonishingly successful movie franchise. And overnight student a cappella achieved the enormous potential appeal we had envisioned.
The book came out in 2008, the same year we sold our a cappella businesses. The first movie came out in 2012.
We were right… but early.
My Father’s Visionary’s Curse
When I went to college, my father joined a startup that was going to change the world and make him a million dollars. They were designing computers that would go into trucks and help monitor truck driver productivity as well as communicate when there were problems.
He suffered from the visionary’s curse as well.
The company launched in the late 1970s. It failed in 1979, when I was taking the year off from college to sing with the Yale Whiffenpoofs. I came home over Christmas break to find my father pumping gas (which was a job back then before self-service gas stations) after the startup crashed and burned. It was a far cry from his earlier job at the Federal Reserve Bank of Boston.
Cell phone networks hadn’t been built. The personal computer hadn’t been invented yet.
They were right… but early.
And to state the obvious, I didn’t learn that lesson back then.
As I look back on my 11 years in venture capital, I was insufficiently aware of the Visionary’s Curse. I drank entrepreneurs’ Visionary Kool-Aid plenty of times and helped get Accel Partners invested in ahead-of-their-times startups.
For example, we invested in a residential fiber optics equipment startup. In 1988. At least 20 years early. We managed to make 3X on our investment but we got lucky – in and out before reality set in.
Is Your Vision A Curse Or A Blessing?
I’m probably as qualified as anybody to help Visionaries figure out if they are Right… But Early. Here are the four things you should think about to see if your vision of the future is way too early to be commercially successful:
- The Innovation Adoption Lifecycle
- Technology cost curves and end user pricing curves
- Supporting infrastructure availability
- Customer education requirements
The Innovation Adoption Lifecycle
Since the 1960s we’ve understood that all types of innovations are adopted over time by people with different appetites for innovation. The now-famous Innovation Adoption Lifecycle curve shows a normal distribution (that’s a statistics term) of customers who accept and use innovations over time.
The very earliest of customers are Innovators. They are visionaries themselves. They can be convinced your vision is going to happen. And they can accept all sorts of limitations with the first round of your innovation because they can see into the future and understand that things are going to be great then, even if they are far from perfect today.
Here’s the problem to watch out for. This first stage can last for decades. Those with the Visionary’s Curse can see innovations taking hold far before the Innovation Adoption Lifecycle is actually ready to move from Innovators to Early Adopters and then on to the Early Majority, which is where the real money is made.
If Visionary entrepreneurs are just talking to Innovator customers, they can get a false sense of whether the world is actually ready for the innovation.
Steve Blank in his book The Startup Owners’ Manual suggested what to look for at this stage. He uses the term “Earlyvangelists” to describe potential customers who have a huge problem, are actively trying to solve the huge problem, and often have cobbled together the beginnings of a solution.
When General Magic started in 1990, it’s likely no potential customers had such an intensive “anytime anywhere” communications and computing problem that they were trying to create the equivalent of an ugly smartphone to solve the problem.
Technology Cost Curves and Customer Price Curves
Digital technology has been increasing in performance and decreasing in cost for many decades. That “learning curve” has also affected other technologies such as solar power, genome splicing and 3D printing.
When a new technology comes along it is very often too expensive to be used in mass market products. It can often take many years for costs to come down such that a product can be made profitably at a price the Early Majority will find acceptable.
If you have a vision based on new technological capability, it’s worth thinking through what the cost curves will look like over time, how that translates into end user pricing, and what Early Majority customers will accept. Remember that Innovators will accept higher prices, sometimes much higher prices, so they can give you a false signal that the world is ready for your Vision.
Innovations don’t happen in a vacuum. Successful new businesses don’t happen in a vacuum. There are lots of direct and indirect contributors to success outside of the hard work and vision of an entrepreneurial team. These might include:
- Communications infrastructures including the internet, mobile communications networks, and fiber optics networks
- Industry infrastructures such as supply chains, industry associations events and trade publications, distribution channels, and industry tuned sales/marketing expertise
- People infrastructures including experienced senior management and individual contributors, recruiting specialists, and a culture of job switching, knowledge sharing and risk taking
- Regulatory and legal infrastructure that sets the rules for how new businesses can operate, what quality and safety new products must achieve, what taxes and registration fees must be paid.
If you’re a Visionary it’s easy to think that all the pieces will magically fall into place. But some supporting infrastructure can take a very long time to evolve enough that your disruptive product can be widely embraced.
It’s extremely expensive and time consuming to educate customers on the very concept of a new product or service category. And yet Visionaries sometimes conceive disruptions that are so massive they sometimes aren’t even a word yet.
Or maybe as in the case of a cappella music, they have old preconceptions and have to be convinced that your new thing is really, really different.
The upside is huge, of course. If you are the first to get broad customer acceptance, your brand can be synonymous with the category.
Kleenex. Scotch Tape. Xerox. Coke. iTunes. Spanx. Uber.
But investors will be paying attention to how much cash it will require to educate the very early customers. Often they will look for significant traction before they sign on to funding a new category.
General Magic Vs. The iPod
These four elements of the Visionary’s Curse all contributed to the downfall of General Magic. No Early Adopters were trying to solve the problem they addressed. Key technologies such as touch screens, processors and wireless communications were still too expensive to support mass market pricing. The internet, cellphone and WiFi infrastructures were either underdeveloped or non-existent. Massive consumer education was required.
Contrast the Visionary timing of General Magic with Apple’s timing of the iPod, the music device that preceded the iPhone.
Before Apple introduced the iPod in 2001, other companies had already introduced ugly MP3 music file players, and consumers were buying them. The music industry was challenged by illegal music downloads, so they were open to a legalized monetized solution. Apple had already introduced its iTunes music management and purchasing platform eight months previously – a key infrastructure.
Technology had become advanced and inexpensive enough since the time Apple had tried to launch the Newton “personal digital assistant” (a Right… But Early product) that a mass market price point was possible. The successful Sony Walkman educated consumers that portable music was a desirable electronics product.
There was no “first mover advantage” in portable digital music playing devices. Like many large companies, Apple watched what Visionaries were doing and waited until the timing was right.
Apple, and Steve Jobs, learned the hard way that patience is often required.
The “Why Now” Slide Vs. The Visionary’s Curse
Let’s translate this into some practical advice for a fundraising pitch deck.
You want to convince potential investors that the Big Wave embodied in your Vision has started, it’s inevitable, it’s going to be big soon, but it’s neither too early nor too late.
For them, it means their investment will help you dominate the Early Majority market as it unfolds, soon.
A key part of that story is when customers go from testing or piloting a new product or technology to deploying it or using it regularly. That should be part of your “Why Now” slide.
You should also be paying attention to technology cost curves and important infrastructure. You should try to show that everything is, in fact, coming together very soon to make widespread adoption possible.
And finally, sales cycles and onboarding are key indicators of the need for customer education. If your sales cycle is shortening, and it’s taking less time to get customers from initial purchase to regular use, that is a strong indicator you won’t be subject to the Visionary’s Curse.
And it will help you get the funding needed to make your Vision a reality!