In attempting to identify entrepreneurship fables, one place to look is the dot-com boom that began in the Nineties. If the dominant fable is the entrepreneurial success story, as most recently depicted in The Social Network, then the counter-fable would be the disaster story. The disaster story looks at a dot-com startup that began with high expectations and fulsome venture capital funding. However, the concept was flawed or poorly executed, the entrepreneurs burned through the funding with nothing to show for it, and when no more capital was forthcoming, the startup declared bankruptcy.
The best-known dot-com disaster movie is the 2001 documentary Startup.com. In it, co-director Jehane Noujaim embedded herself for about a year in an Internet startup, followed the firm to its demise, and provided a compelling cinema verite documentary. The film won a number of documentary awards for Noujaim as well as her mentor, co-director Chris Hegedus. (Hegedus is the spouse of another renowned documentarist, D.A. Pennebaker.) The film got good reviews, seems to have recovered its investment, and launched Noujaim’s career.
A more recent (2008) dot-com disaster movie is August, directed by Austin Chick and written by Howard Rodman. Unfortunately, the movie itself is a disaster. It received poor reviews, quickly closed, and didn’t come near recovering its investment. Its user rating on imdb.com is 5.4, as compared with Startup.com’s very respectable 7.
In the entrepreneurial dot-com genre, the essential business partnership is between the marketer, who attempts to find a need that can be answered online and to convince the world of the value of the website that is intended to answer that need, and the programmer, who attempts to build the website. The potential failing on the part of the marketer is narcissism and on the part of the programmer is solipsism.
Startup.com followed govworks.com, a website intended to facilitate online transactions for municipal government. The essential flaw in the business plan was that, like its federal and state counterparts, municipal governments ultimately developed their own websites to handle transactions, rather than sending them to online intermediaries.
In startup.com we see the failings of Kahleil Tuzman, the externally oriented but narcissistic CEO, and Tom Herman, the skilled but unfocused head programmer. By spending a year up-close and personal with Tuzman and Herman, Jehane Noujaim showed us their strengths and weaknesses. Tuzman was effective at selling a vision to the outside world, including an admiring President Clinton, but had no idea how to manage a growing organization. And Tom Herman was equally at sea as a manager. By the end of the movie, we feel as if we know Kahleil and Tom and sympathize with them, but also understand why their startup did not succeed in the market.
In August, the startup’s CEO, Tom Sterling (played by Tom Cruise clone John Hartnett) tells us that no one does what his website Landshark.com does, that it is not a vehicle but the road itself, that it is pure e, and that it is a brand that speaks for itself. But he never spells out exactly what Landshark does. While I interpret this as a deficiency in the plot, I suppose it could also be interpreted as a satirical statement about the deficiency of many Internet startups during the dot-cot bubble.
We see Landshark in August 2001, which turns out to be the critical lockup period before its managers and investors can trade their shares. Its share price is tanking, along with the rest of the Nasdaq, and it is rapidly burning through cash. Sterling is frantically searching the VC world for enough cash to make it through the lockup period, but stubbornly unwilling to give up control. Sterling’s brother Josh is the programming genius, writing code for whatever Landshark is supposed to do, but also worrying whether the company will be able to provide some financial security for him, his wife, and their new-born child.
Tom, the main protagonist in the movie, assumes the CEO role because of his alleged business acumen, but is a total narcissist, concerned only about his appearance and his gratification. He shows no leadership skill, and rules by command rather than by inspiration. His personal relationships are a disaster. He offends his brother by asking him for a loan and insults his father, saying “you take your failure for success and my success for failure; you wanted to change the world, but settled for tenure.” He reconnects with a former girlfriend, an architect, wins her trust sufficiently to get her into bed, but loses her just as quickly when he is unable or unwilling to show up at her first design show until five minutes before closing.
All told, Tom is a disaster as a leader, and, as he acknowledges, Landshark’s numbers don’t add up, it is running on fumes, and its market doesn’t exist. Tom and his team approach a venture capitalist, charmingly played by David Byrne, who gives Tom an instant take-it-or-leave-it offer of 15 cents on the dollar for his shares, on the condition that he leaves the company, while the rest of the management and technical team stays. Based on the evidence presented in the movie, the venture capitalist made precisely the right decision.
Tom is so disastrous a leader that one wonders how he made it into a leadership role in the first place, which necessarily undercuts the credibility of August’s plot. It is always possible to create how-not-to films, but they are usually comedies (Fawlty Towers, Yes Minister at times, and the Video Arts training films). Drama demands some redeeming virtues of its protagonists. August leaves the audience with contempt for its protagonist and satisfaction at his being cut loose, but it teaches no management lessons.
In future posts, I intend to documentaries or docudramas that chronicle the technology sector’s most notable success stories.