The Ultimate MasterClass in Failure
How the CEO of General Magic invented the future and failed.
If you’re an entrepreneur and haven’t seen the documentary, General Magic, you need to watch it — tonight. The film is a MasterClass in failure on an epic scale depicting how a founder’s vision can be hijacked by well intentioned employees and partners.
General Magic was a Silicon Valley startup founded in 1990 by Marc Porat, Bill Atkinson, and Andy Hertzfeld. The company was spun out of Apple and employed many of the same people who built the Macintosh. Believing they were inventing the future of portable computing they hired a filmmaker to document their progress — much of that footage finds its way into Sarah Kerruish and Matt Maude’s film.
Marc Porat’s vision was to create a communication device that looked and functioned very much like the iPhone. Of course Steve Jobs wouldn’t introduce the iPhone for seventeen years. Marc’s drawings show a handheld computer that included a phone, a touchscreen, and multiple business and gaming applications. Remember, this was before the internet AND before the mass adoption of email. You can say a lot about Marc, but he was clearly a visionary.
The General Magic team was star-studded and included superstars like Susan Kare, Bruce Leak, Darin Adler, Phil Goldman, and most of Apple’s Macintosh 7 team. Apple made the first investment in General Magic and the company ultimately raised more than $300 million and was eventually valued at $1.5 billion in 2019 dollars. The company entered into corporate partnerships with AT&T, Motorola, Sony, and Philips — each of whom paid the company $6 million for a seat at the table (and, of course, a say). General Magic had everything going for it — an amazing vision, a rockstar team, and a lot of cash. So what happened? Why isn’t General Magic a household name? Simple, the founder’s vision was hijacked — just take a look:
Marc Porat convinced some of the best engineers and developers in Silicon Valley to join his team based on this vision. He convinced the largest technology companies in the world to invest millions based on this vision. He convinced investors to part with hundreds of millions of dollars based on this vision. The problem is that his vision was hijacked. Marc failed to safeguard his vision from well intentioned saboteurs. His team, working with their corporate partners, built a clunky device that was more like an Etch A Sketch than an iPhone. Compare Marc’s original vision and result to Steve Job’s original vision and result for the iPhone.
Fewer than 1% of startups ever raise venture capital and of those that do fewer than 10% are successful. The successful ones are lead by crazy people like Steve Jobs who won’t allow anyone to hijack their vision. This doesn’t mean you can’t pivot or change your business model — it simply means that your job as a CEO or founder is to ensure that you don’t allow other, well intentioned people, to waterdown your vision. The device that General Magic shipped had almost nothing in common with the vision Marc Porat had sold the world — they built a device that no one wanted. All of their sales (3000 or so) were bought by employees and partners and their family and friends.
The proof that General Magic’s failure lays at the feet of it’s CEO and founder can be found in the fact the team he assembled were able to execute on his vision and their own only AFTER leaving the company. Members of the General Magic team went on to build some of the most successful products and companies in Silicon Valley including the iPod, iPhone, Android, Ebay, and Nest. The General Magic team spent $300M over five years to ship their failed device. Compare that to the $150M Apple spent to create the iPhone in less than three years. Founders MUST ensure they ship a product/service that conforms to their vision — meeting a deadline for meeting a deadline’s sake is futile.
In the film it is obvious that Marc Porat left product development in the hands of his team who were at the mercy of their various corporate partners. After the company’s IPO the film reveals that Marc attempted to incorporate managers into the development process — efforts that were rebuffed — the team was certain they didn’t need any help to realize Marc’s vision. During the development process the internet became a thing and even one of Digital Magic’s interns knew that they ought to incorporate the web into their device. The problem? The internet had the potential to disintermediate AT&T and as a result of their partnership with the carrier they weren’t able to incorporate the web into their device. The device that Digital Magic built was basically useless and everyone knew it — sadly no one had the balls to admit it to themselves or to Marc. At the end of the day the fault is Marc’s and Marc’s alone — he knew the device was crap and should have never shipped it.
Your first job as a founder/ceo is to sell your vision to potential employees, investors, partners, and customers. Your primary job as founder/ceo is to be a good steward of your vision. If you don’t safeguard your vision from start to finish you’re going to fail — period. Marc was a visionary who allowed others to own his vision — ownership that resulted in the bastardization of an idea that would eventually change the world. Take a couple of hours and watch his story. Oh and NEVER hire a filmmaker to film the creation of your startup — some things aren’t meant to be documented. Building a company is a very messy affair. That being said, this movie it is worth every minute you’ll spend watching it (I watched it on Showtime).