Lucky Or Smart by Bo Peabody
Animated Book Summary
Bo Peabody is an entrepreneur. The first company he built, Tripod was the 8th largest website in the world before it was sold to Lycos for $58 million in 1998. He then sold his Lycos stock a few months before the dotcom bubble burst and invested in real estate all by the age of 28. So, was he lucky or smart?
While he was at university, Bo Peabody worked with one of his professors to cofound the internet start-up, Tripod. After graduating in 1994, he hired some programmers and they produced some software that allowed people to produce their own personal home page. By 1995 he had learnt how to write a business plan and convinced a venture capital firm to finance the company with $3 million. By mid-1997, Tripod had a million registered members, but never made a profit. On New Year’s Eve in 1998, Peabody agreed to sell the company in exchange for $58 million in stock of the company buying it, Lycos.
He wasn’t allowed to sell his Lycos stock for two years, during which the stock increased in value ten times the original worth. After the two-year embargo, Peabody sold almost all of his stock and invested in real estate and bonds increasing his wealth yet further. He believes he was smart enough to realise he was getting lucky. He has since cofounded five other companies.
Luck is a big part of entrepreneurial life. Being unable to distinguish between being lucky and being smart is the biggest killer of start-ups. The best entrepreneurs can “create” luck. Peabody believes that lucky things happen to entrepreneurs that start companies that are fundamentally innovative, morally compelling and philosophically positive. This is because:
Lots of smart people will gather around these sorts of companies
When smart people gather around these types of companies, they work hard
When they work hard, serendipity follows
To discover which of these companies contains these elements, you need to look at the companies’ mission, rather than their business plan. Google’s business model for example is to make money by selling advertising, but its mission is to organise the world’s information and make it universally accessible and useful. This type of mission statement creates authenticity and attracts smart people and allows people to not only make money, but do something they really believe in.
Peabody was an entrepreneur from a young age, mowing lawns when he was ten years old for extra cash. He thinks entrepreneurs are born, not made.
As an entrepreneur, he does no one thing well, but many things well enough. For example, to raise money from investors, you need to be able to speak intelligently about any aspect of the business. Entrepreneurs are great at starting things, but not so great at managing them. There are some notable exceptions but this is why so many start-ups fail. Entrepreneurs need managers. Their job is to attract, organise and motivate the best managers.
Many business books these days focus on helping you get from “good” to “great”, but Peabody believes that great should never be the enemy of good. Entrepreneurs shouldn’t strive for greatness and a good decision made quickly is far better than a great decision made slowly. All start-ups can be improved on and are not yet great. The main objective should be to not mess up and fail. Success is about being around tomorrow. For a start-up, survival is success. They move more quickly than larger, established companies and don’t have time to perfect their products.
The workload at a start-up is all-consuming. Bo Peabody’s main problem when working at Tripod was time. There simply weren’t enough hours in the day to capitalise on every opportunity. Despite a large number of people telling him that he and his idea were crazy, what kept him going was his unconditional love for his start-up. It was blind faith and it is this sort of faith that helps the successful start-ups escape from the clutches of failure as most start-ups teeter with it at some point. He convinced the sceptics into believers.
Entrepreneurs hear the word “no” more than anyone else in business. This is because they are fundamentally trying something new or different and most people are not paid to take risks. Peabody believes you must learn to love the word “no” as an entrepreneur to survive. When he received a rejection letter from the college he applied for, he rang the assistant director of admissions and said he “rejected his rejection”. He worked with the assistant director on a year-long program to fix his deficiencies in his application. He applied the following year and was accepted. Peabody says “don’t ever accept the rejection”. You should train yourself not to shut down when you hear the word “no”.
You must always be gracious in every meeting and in any situation. Being irate never pays. You will be tested often and be tempted to become defensive, but your ability to remain gracious is key as the business world is a small place and who knows what opportunities lie ahead in the future.
Peabody’s most important job at Tripod was working with the media. He created a playboy, slacker-CEO persona and the media coverage showed him skiing, cycling, anything but working, to perpetuate the myth that he was a 24-year-old CEO making millions of dollars without doing much actual work. A large amount of Tripod’s value came from the press they received in such a short period of time. In fact, Peabody was working very hard, sometimes 100-hour work weeks but this didn’t sell newspapers. It was important to him not to believe what the media were saying about him. It was what convinced him to sell Tripod when he did, rather than believing the hype.
The main job of an entrepreneur is to create a market for their start-up’s stock. To achieve this successfully, they need to understand that venture capitalists that can supply the money to keep a start-up afloat in the early years, are extremely busy. When presenting your business plan to a VC, you must know how to sell. You need to give your investors a picture of what the future will be and then work hard to make sure it actually happens. When pitching your idea, remember that difficult questions do have a right answer and it is important to admit if you have no idea what it is. It is vital to know what you don’t know.
Bo Peabody considers the ability to know the difference between being lucky and being smart, vital as an entrepreneur. The ability to keep your ego in check will allow you to achieve this as your ego can be dangerous or useful. By using your ego wisely, it helps you to work hard, keep blind faith in your company and gives you the confidence to sell your start-up to investors, customers and partners. So, was Bo Peabody lucky? Yes, but he was also smart enough to realise he was getting lucky.