HBO’s Silicon Valley is funny – sometimes hysterically so, smart – sometimes ingeniously so, profane, and, ultimately, really, really entertaining. It is also, sometimes spectacularly so, a primer on business planning.
For those who may not be following Silicon Valley (if you own a startup, it is a must see, start from episode 1 of season 1 … now), it’s a half-hour comedy centered around a tech startup operating out of a Silicon Valley ‘incubator’ that looks a lot like a ranch house in the suburbs. Because it is.
The company is called Pied Piper (to everyone but the founder’s derision), it has developed an algorithm that could revolutionize file compression – making video, chats, and a whole lot of other internet stuff a lot faster.
The product has great potential. The company needs money. Through the first seasons the show takes a meandering, crooked, ultimately accurate path as Pied Piper deals with venture capitalists, non-disclosure agreements, trademarks, intellectual property, employment contracts, non-compete clauses, investment agreements, proxy fights, board of director formation/dissolution/reforming, succession issues, conflicting duties among officers, offer sheets, lawsuits … the show has them all, and a lot more.
Silicon Valley gets almost everything right. It’s been written about and talked ever since it first aired in 2014. It has been universally hailed as a dead-on look at start-ups and business in the 2010s.
When we started this post about a week ago, when HBO launched the new season of Silicon Valley, we had every intention of centering this post around a few of the many great real-life business scenarios the show has covered so far. Then, of course, tie it into what we see every day.
There was a lot there, and we’re reasonably sure it would have made a good post, but then a funny thing happened. We ran across an article from The New Yorker. It was about how Silicon Valley is written and filmed. The detail and planning involved in every episode – and each season – are simply mind-boggling.
The show has two hundred advisers and consultants, most of them volunteers. They include “academics, investors, entrepreneurs, and employees at Google, Amazon, Netflix, and other tech firms.” Everything that ends up on the TV screen has been vetted a dozen times.
How in-depth do they get? “If someone is holding a document on the show, that document is written out, in full, the way it would be in real life.” Post-it notes, lines of code, whiteboards, all have real formulas on them. The producers are convinced that the more work they do to make things real, the more “the process leads” them to better ideas, better shows.
In-depth planning, active, welcome involvement of outsider advisers and consultants, HBO’s Silicon Valley is doing what every company should be doing in the real world. Every company, that is, except for Pied Piper, if they ever used someone like us, the show would way too boring for TV.
You probably saw the Anheuser-Busch ad during the Super Bowl. You know the one, it went somewhat viral after the game because a lot of people saw it as some kind of comment on immigration.
Regardless of one’s political leanings, it was an effective ad – two immigrants meeting in St. Louis around the time of the Civil War and launching Budweiser. Coors, of course, has a parallel story, almost at exactly the same time Anheuser and Busch met, Adolph Coors was getting his brewery up and running just a little way to the west.
The rest, as they say, is history, by the 1980’s Anheuser-Busch and Coors were the first and fourth largest breweries in the United States. In third place was Stroh’s. Stroh’s . . . you can be forgiven for never having heard of them, never mind ever sipping one.
Yet, in the early 1980’s Stroh’s was a household – well, at least a beer-drinker-in-the-mid-west household – name. Even if you never had a Stroh’s you had heard of them. Like Coors and Budweiser, Stroh’s was founded by an immigrant in the mid-1850s. Like the Coors, Anheusers, and Buschs, Stroh’s started as a family business. Like the Coors, Anheusers, and Buschs, the Stroh’s passed the business down for four generations.
Unlike the Coors, Anheusers, and Buschs, the Stroh’s didn’t survive and thrive into the 1990s. Neither did the Stroh’s family fortune, at one time one of the largest family fortunes in the United States.
It’s not often that real life allows a direct comparison of companies over a century like a business school problem, but that’s the Coors, Anheuser-Busch, Stroh’s scenario. Family businesses that made it – while surviving Prohibition, no less – from the Civil War through to the Reagan years.
Then, in the space of ten years or so, there were two.
As you can probably guess, there is no one reason for Stroh’s demise, there are many. But they all revolve around one theme, bad planning.
Not bad decisions, bad decisions can be rectified, overcome within a good plan. It seems that Stroh’s never really had a plan for the future until the future was on top of them. Which, of course, is too late.
Stroh’s made beer in Detroit. They marketed mostly to the Mid-West. They, obviously, had a great, loyal following. They had decided generations earlier that only the men of the family would run it, no women, no outsiders. They had decided generations earlier that every family member would get dividends for life … regardless. An easy thing to support through a generation or so, but by 1980 Stroh’s dividends were paying for the lavish lifestyles of some twenty-seven family members, only a few of whom were working in the business.
It’s easy to imagine the business being run like a large, benevolent fiefdom. Stroh’s had an entrenched market, but made the mistake of becoming entrenched as a company. After one hundred and twenty years of success doing it the ‘family way’ no one running the company apparently saw change coming, certainly never thought to plan ahead.
So, when change did come, it – as change has a way of doing – came fast and Stroh’s wasn’t ready. What happened to start it off is what happens to all successful companies across the spectrum of industries, a competitor began to push. In Stroh’s case it was their fellow-immigrant founded in the mid-1800’s company, Coors.
Coors was spreading eastward. By the late ’80s their sales were poised to surpass Stroh’s. Stroh’s management wasn’t ready. They seem to have panicked. In a short period of time they tried a series of increasingly ill-advised, knee-jerk-like reactions. None worked, just piled debt into the equation. By the time Stroh’s had to fire-sale their assets, including the Stroh’s brand, they had even tried to diversify into bio-tech.
It all gets us thinking – the only companies that need planning more than start-ups are established, successful ones.
Back when it seemed that no one would ever beat him, back when he was on the cover of countless magazines, Mike Tyson was asked about an upcoming fight and his opponent’s plans to beat the unbeatable fighter. Tyson replied, “Everyone has a plan until they get punched in the mouth.”
Great line, it made headlines, he won again. Tyson was actually quoting the great Joe Louis, Louis said “Everyone has a plan until they get hit.” That quote had lain dormant for decades until Tyson resurrected it.
In either version, nowadays the quote is extensively employed. It seems as if its used mainly to illustrate (if not champion) the idea that audacity and force either stuns or disables planning. It’s a kind of bravado.
I was reminded of this quote – in a very roundabout way – by a passage in Ronald White’s new biography of Ulysses S. Grant. It’s about Grant’s first experience with the Army of the Potomac after he was installed as the Commander-in-Chief of all the Union Armies in 1864.
Grant chose to go into the field with the Army of the Potomac rather than sit in Washington and ‘manage’ the war from there. In joining the Army of the Potomac he was joining an army that was, at best, dysfunctional. An army that had been soundly beaten in almost every battle it had ever fought against Robert E. Lee and the Army of Northern Virginia except Gettysburg. And, that was close. Very close.
The Army of the Potomac, then, wasn’t Grant’s army, he was, in essence, the new Chairman of the Board, management stayed the same. He did, however, order the offensive in May, 1864 that resulted in the Battle of the Wilderness.
The Army of the Potomac attacked on May 5th and suffered a severe setback. All the while, Grant, stoic, sat and observed George Meade and his generals as they conducted the battle. He received updates but otherwise kept to himself and watched, listened.
That night, when it was crystal clear that the day had been horrific for the Union forces, several officers took it upon themselves to tell Grant about the horrible things Robert E. Lee was probably out there in the dark getting ready to do the the Northerners. Dire warnings of flank attacks and utter destruction.
Grant was famous for being implacable. That implacability snapped after about ten minutes of ‘Lee-will-do-this-to-us’ warnings.
He exploded, “I’m damned tired of hearing what Lee is going to do to us … it is about time we start talking about what we are going to do to him.” The battle resumed the next morning, the North fought to a draw, moved south the next day and began the offensive that eventually ended the war.
Then, there was the Superbowl Sunday night. You may have heard that the New England Patriots were down 28-3 in the third quarter then scored thirty-one straight points to win it in overtime. It was the greatest comeback (by far) in Super Bowl history and fifth greatest in the history of the NFL – for any game.
There’s been a lot of writing about how and why this happened. As the 3rd quarter ended the Patriots had a .04% chance of winning. Yet they did. The best explanation I’ve read on why this happened was in FiveThirtyEight. They simply stated that in the second half the ‘Patriots went back to being the Patriots and the Falcons went back to being the Falcons.’ What they meant was that the Patriots played the first half as a shadow of their usual selves while the Falcons played out of their minds good – virtually perfect.
They went on to cite the fact that despite getting blown out the Patriots approached the second half like they always approached a second half. They made some changes to counteract what the Falcons were doing, then they executed their game plan as if the score was 0-0. The rest is history.
So, here’s what hit me with all this – the important thing, the really important thing in life and business and sports and everything else – is to have a plan for what to do after you get punched in the mouth.
That’s the thing. Grant was a great planner. Bill Belichick is . . . well, Bill Belichick. With them, it’s all about contingencies for contingencies. Their planning included contingencies for getting hit. Hard.
Good planning, then, plans for getting smashed in the mouth. And for what to do while it still hurts.