Clinkle has been the talk of Silicon Valley for the past year, although few of the consumers who will make up its hoped-for user base have even heard of it. That is in part by design. A payment app co-created by Duplan, it has been in “stealth” mode for more than three years, its unique selling proposition a closely-held secret. … A few details have leaked, however. Those who have used Clinkle say it’s an exceptionally well-designed, simple-to-use mobile wallet app that utilizes a high-frequency sound to transmit money between users in close proximity — no phone-bumping, QR code-scanning, texting or dongle-swiping required. … Last June, Clinkle announced a $25 million round of seed financing from a dozen top venture capital firms and angel investors — the largest early investment raised in Silicon Valley history. A few months later, the company raised $5 million more from Stanford’s StartX fund as well as Virgin CEO Richard Branson. Duplan, a first-time founder who was barely of legal drinking age, seemed full of promise. … But nine months later — during which time several rounds of layoffs have been announced and rumors swirled of turmoil inside the company — the app still has yet to launch publicly.
The alleged coup plotters were middle-aged immigrants, who had made good lives for themselves in America over the course of decades, with careers, wives, children, savings, suburban houses, citizenship – the whole archetypal dream. They only visited the Gambia occasionally, if at all, and they had little connection to politics in their homeland. What could have possessed them to risk everything in a foolhardy attempt to topple one of the world’s strangest dictators? ... Jammeh is a tyrant out of caricature, a throwback to the African strongmen of the 1970s. He’s boasted that he will rule for “a billion years”. He’s adopted a ridiculous string of titles: “His Excellency Sheikh Professor Alhaji Dr Yahya AJJ Jammeh Babili Mansa.” (The last phrase translates to “conqueror of rivers”.) He’s posed as a fetishistic healer, claiming magical powers to cure Aids, asthma and diabetes, and has launched witch-hunts to root out enemy sorcerers. He’s deployed demagoguery against human rights groups, fanning popular hatred of gays, whom he has threatened to behead. He’s massacred protesters and disappeared political opponents. Through his feared intelligence service, he exercises crushing power over every aspect of the Gambia’s politics and economy, which subsists mainly on income from discount tourism and peanuts. ... Since January, that fight has largely been focused on a court case in Minnesota, where federal prosecutors have charged five Gambians with violating the Neutrality Act, a seldom-invoked 1794 law that makes it illegal to mount a military expedition against “any foreign prince or state” with whom the US is at peace.
All told, the company spent more than $600 million. In its brief time in operation, it generated $2.3 million in revenue; when it filed for bankruptcy it listed assets of $58.3 million. ... The next generation of biofuels, made from plants and biowaste (so-called cellulosic materials), which have lower carbon emissions than oil, were a particular passion. Khosla invested hundreds of millions of dollars in about a dozen biofuel and biochemical companies. ... His ambitions were audacious. Khosla declared “a war on oil.” As he wrote in 2006, “I believe we can replace most of our gasoline needs in 25 years with biomass.” He dismissed incumbent energy companies in a 2007 interview as not investing heavily in biofuels because they weren’t “used to innovation and the rate of innovation we are likely to see in this business.” ... Unlike most failed startups, KiOR hasn’t just shut its doors and disappeared into oblivion. Today recriminations, investigations, and litigation continue to surround it. The Securities and Exchange Commission has been examining whether the company made false statements, including on a critical point: the yield of its biofuel (the amount that can be made per ton of wood chips). Two KiOR executives and Khosla himself are also facing a class action suit alleging that company executives misled investors about production volumes and yield. ... The state of Mississippi is also suing Khosla and key KiOR executives on similar grounds, claiming they hoodwinked the state to obtain a $75 million loan.
The untold tale of Target Canada’s difficult birth, tough life and brutal death ... Fisher, 38 years old at the time, was regarded as a wunderkind who had quickly risen through the ranks at Target’s American command post in Minneapolis, from a lowly business analyst to leader of a team of 400 people across multiple divisions. Launching the Target brand in a new country was his biggest task to date. The news he received from his group that February afternoon should have been worrying, but if he was unnerved, Fisher didn’t let on. He listened patiently as two people in the room strongly expressed reticence about opening stores on the existing timetable. Their concern was that with severe supply chain problems and stores facing the prospect of patchy or empty shelves, Target would blow its first date with Canadian consumers. Still, neither one outright advocated that the company push back its plans. “Nobody wanted to be the one to say, ‘This is a disaster,’” says a former employee. But by highlighting the risks of opening now, the senior employees’ hope was that Fisher would tell his boss back in Minneapolis, Target CEO Gregg Steinhafel, that they needed more time. ... Nobody disagreed with the negative assessment—everyone was well aware of Target’s operational problems—but there was still a strong sense of optimism among the leaders, many of whom were U.S. expats. The mentality, according to one former employee, was, “If there’s any team in retail that can turn this thing around, it’s us.” ... Roughly two years from that date, Target Canada filed for creditor protection, marking the end of its first international foray and one of the most confounding sagas in Canadian corporate history. The debacle cost the parent company billions of dollars, sullied its reputation and put roughly 17,600 people out of work.
In 1976, the best surfers in the world began seeking Quiksilver because they were the best. The combination of Velcro, snaps and a high waistband made them grip hips and stay on, even in the largest waves. Before long, Hawaii-based Americans such as Hakman sported them. Soon, the surf mags were running photo after photo of pros gliding down famous waves such as Banzai Pipeline and Sunset Beach while wearing them—the best advertising imaginable. ... From its garage-like space, Quiksilver swelled. Within 10 years, it became the first publicly listed surfwear company; soon after, it opened boutiques in New York, Paris, London and Dubai. And by 2004, it announced annual earnings that exceeded $1 billion. ... the brand has crashed mightily ever since, leading up to this past Sept. 9, when Quiksilver sought relief in a Delaware bankruptcy court from $826 million in debt ... "Rossignol, I think, was the thing that killed Quiksilver in itself," Pezman says. "When you try to be all to everyone, you lose the support system. When you de-specialize, you lose your attraction to the specialized markets you had."
In an industry where no one knows anything, here, finally, was someone who seemed to know something: Ryan Kavanaugh, a spikily red-haired man-child with an impish grin and a uniform of jeans and Converse sneakers who had an uncanny ability to fill a room and an irresistible outlook on how to make money making movies. Not yet 30 when he founded Relativity Media in 2004, he very quickly became not only a power player in Hollywood but the man who might just save it. With a dwindling number of studios putting out ever fewer movies, other than ones featuring name-brand superheroes, Kavanaugh became first a studio financier and then a fresh-faced buyer of textured, mid-budget films. To bankers, Kavanaugh appeared to have cracked the code, having come up with a way to forecast a famously unpredictable business by replacing the vagaries of intuition with the certainties of math. ... Even Hollywood wasn’t used to a pitch this good. Kavanaugh alternately dazzled and baffled — talking fast, scrawling numbers and arrows and lines on whiteboards, projecting spreadsheets. ... Borrowing a tool from Wall Street, he touted his “Monte Carlo model,” a computer program that runs thousands of simulations, as a device that could predict a film’s success far more reliably than even a sophisticated studio executive. Better, Kavanaugh convinced several studios that he could raise more money for them if they gave him access to their guarded “ultimates” numbers showing the historical or projected performance of a film across all platforms (DVD, video-on-demand, etc.) over a number of years.
Even before all of Fuhu's money disappeared, Mitchell was having a doozy of a month. Three weeks before, he and his co-founder, Robb Fujioka--Fuhu's mastermind and headstrong president--had been contacted by attorneys representing the company's primary manufacturer, Foxconn. The Chinese giant was more than just a vendor. It was an investor and patron that had been instrumental in launching Fuhu on its meteoric rise. With gross revenue of $196 million and a three-year growth rate of 158,957 percent ... But behind the scenes, the company was falling apart. In recent months, it had racked up unpaid bills from just about everyone it did business with. And Foxconn--to which Fuhu owed between $60 million and $110 million, depending on who was counting--had finally reached its breaking point. The lawyers told Fujioka and Mitchell that until they paid their tab, their company would be cut off. ... The consequences of losing their supplier were laid out in a thick stack of a Tennenbaum loan agreement that the Fuhu bosses had never bothered to read. ... The rise and fall of Fuhu is a cautionary tale about the seductions of early success and the overconfidence it can breed. But most of all, it's the story of two entrepreneurs who pushed too hard to go big--one whose personal drive led him to take oversize risks against the advice of those around him, and one who failed to stop him.
But in my underwriting of the investment I priced much too high the perks of being Mr. One-Forty-Second. Which wouldn’t have been so bad had I understood anything about how the restaurant business in New York City works. ... That business, more or less, stinks. New York restaurants are at the intersection of the low-margin world of food businesses like grocery stores (low margin because so many compete in the all-out war to sell food) and taste-predicting nobody-knows-anything businesses like Hollywood. I spoke to one of the two owners of the restaurant, who wished to remain anonymous in case he decided to keep his hand in the restaurant business. He provided me with the Manhattan math, from the seven-year profit-and-loss statement. If you as a customer generated a hundred-dollar tab, about thirty-seven dollars went to the staff (plus the twenty or so dollars you tipped); twenty-nine dollars went to buying the food and beverages that became your meal; fifteen dollars went to the landlord; six dollars went for supplies (such as new forks) and maintenance (hello, plumber); five dollars went to bank fees, insurance, and workers’ comp; five dollars went to other costs (utilities, permits); and just under three dollars (two dollars and eighty cents, to be exact) was left over for operating income. For the record, that is less than was paid in credit-card fees.
I could go on about the innovations at Domino’s, but Doyle’s most important lessons are about the mindset required for organizations to do big things in tough fields. Two of the great ills of executive life are what he calls, borrowing from behavioral economics, “omission bias” and “loss aversion.” Omission bias is the tendency to worry more about doing something than not doing something, because everyone sees the results of a move gone bad, and few see the costs of moves not made. Loss aversion describes the tendency to play not to lose rather than play to win. “The pain of loss is double the pleasure of winning,” he argues, so the natural inclination is to be cautious, even in situations that demand creativity. ... Leaders who want to shake things up have to be comfortable with the idea that “failure is an option,” Doyle concludes. In a world of hyper-competition and nonstop disruption, playing it safe is the riskiest course of all. That’s a recipe for reinvention that makes for good pizza and big change.
How do experts go wrong? There are several kinds of expert failure. The most innocent and most common are what we might think of as the ordinary failures of science. Individuals, or even entire professions, get important questions wrong because of error or because of the limitations of a field itself. They observe a phenomenon or examine a problem, come up with theories and solutions, and then test them. Sometimes they’re right, and sometimes they’re wrong. ... Science is learning by doing. Laypeople are uncomfortable with ambiguity, and they prefer answers rather than caveats. But science is a process, not a conclusion. Science subjects itself to constant testing by a set of careful rules under which theories can be displaced only by other theories. Laypeople cannot expect experts to never be wrong; if they were capable of such accuracy, they wouldn’t need to do research and run experiments in the first place. If policy experts were clairvoyant or omniscient, governments would never run deficits, and wars would break out only at the instigation of madmen. ... The most important point is that failed predictions do not mean very much in terms of judging expertise. Experts usually cover their predictions (and an important part of their anatomy) with caveats, because the world is full of unforeseeable accidents that can have major ripple effects down the line. ... The goal of expert advice and prediction is not to win a coin toss, it is to help guide decisions about possible futures.