way for home owners to schedule hourly construction workers using text messaging. When the idea didn’t take off, Mellin and Fuentes studied the research they had done before starting WorkerExpress and realized it would be smarter to target their efforts at large contractors who needed temporary help on job sites. Their pivot worked and even in the teeth of the post-2008 construction bust they built a successful Web-platform company.
One of the examples of a pivot most cited by technorati is the story of Flickr, the photo hosting and sharing site. Flickr’s genesis was in 2002, when its founders, Caterina Fake and Stewart Butterfield, created a multiplayer online game called Game Neverending. Fake and Butterfield could see two revolutions happening in the technology world—the rise of social media and the rise of games. They hoped to cash in by putting them together. But Game Neverending failed and Ludicorp, the Vancouver company Fake and Butterfield established to create it, was running out of money. They had noticed, though, that one of the game’s features, a photo- sharing add-on they’d developed in just eight weeks, was popular. So Fake and Butterfield tried again, this time using the photo-sharing technology to create a stand-alone Web site. It worked. Flickr was launched in February 2004. In March 2005, just thirteen months later, Yahoo! acquired it for a reported $35 million. At the beginning of 2012, the site reported that it was hosting more than seven billion images, about one for each person on the planet.
The pivot is about recognizing when you are on the wrong track and changing course—and that, too, is central to Soros’s ability to respond to revolution.
Chanos, who leased office space from Soros’s Quantum Fund in midtown New York between 1988 and 1991, agrees. “One thing that I’ve both wrestled with and admired that Soros conquered many years ago is the ability to go from long to short, the ability to turn on a dime when confronted with the evidence. Emotionally that is really hard.”
“My conceptual framework, which basically emphasizes the importance of misconceptions, makes me extremely critical of my own decisions,” Soros told me. “I reexamine them all the time and recognize when I am on the wrong track…. I know that I’m bound to be wrong and therefore am more likely to correct my mistakes.”
“It’s an almost aggressive pessimism about his own ideas, that he is going to be the first person to find out what’s wrong with his theory, rather than what’s right with his theory,” his son Jonathan told me.
Pivoting is so hard for traditional Western companies that Jennings predicts they will be overtaken by bolder, more agile emerging market champions. “The businesses and institutions underpinning the economies currently going through economic transformation will not only be catching up with the West, but eventually taking over leadership,” he said. “At that point, it will be their business models and institutions that may have to be reexported.”
Already, the premium on responding to revolution has created tremendous upheaval in corporate America. A 2010 study by Deloitte, the tax and consulting firm, measures something it calls the “topple rate,” the speed at which big U.S. companies lose their leadership positions. Between 1965 and 2009, the topple rate more than doubled. Even in the C-suite, it turns out, life is more precarious than ever. “The group of winners is churning at an increasing and rapid rate,” the report found. “Nearly every advantage, once gained, is shown to be temporary.”
The winners of the entrepreneurial sweepstakes of the technology revolution like to think they are mostly smarter and harder working and more determined than everyone else. Tony Hsieh offered me a gentle version of this view. “I could start off anywhere in America with a hundred dollars and by the end of the year I would be a millionaire,” he said. “I really think I could. That is just how I am.”
Some of that is surely true. But part of winning from moments of revolutionary change is the lucky combination of having the right skills, the right character, and the right position in society at the right time.
Timing is equally important in the Silicon Valley gold rush. Consider Jonathan Kaplan, creator of the Flip video camera. Kaplan isn’t a scientist or an engineer. But from the time he graduated from college in 1990 he knew he wanted to be an entrepreneur; early on, he decided the technology industry and San Francisco were where his odds were the greatest. He spent a decade barely getting to first base, mostly with software start-ups that were good, but not great. Then, in 2005, a friend told him technology had advanced so much it was possible to make a video camera as small and easy to use as most regular cameras were at the time. From that powerful insight, the Flip camera was born. It was such a success that Cisco acquired the company for $590 million in 2009.
The Cisco deal turned out to be as well timed as Kaplan’s original epiphany—two years later, video technology had advanced so much further that smartphones had become video cameras, and Cisco closed down Flip, taking a huge corporate write-down.
Kaplan, a multimillionaire, had left his job at Cisco two months earlier. But that, Kaplan insisted, shouldn’t detract from the inspirational power of his initial ability to respond to revolution.
“There are a lot of young entrepreneurs who look at Flip as a huge success, and they should continue to,” Kaplan told the
Sheryl Sandberg, the world’s most successful female executive, is another example of the power of being in the right place at the right time. Sheryl is brilliant—she was one of Larry Summers’s smartest students—and one of the best operating executives around. But the skill that made her fortune is the ability to understand where the action is. She made the perfect, unconventional choice—twice.
The first was in 2001. She had just finished a stint as Larry Summers’s chief of staff at the U.S. Treasury—a high-profile job that gave her, with her MBA and a resume that already included McKinsey and the World Bank—a plethora of options in corporate America, particularly Wall Street. Instead, Sandberg chose to work for Google, a company the economists and politicos in her Washington universe had barely heard of. In 2008, she made another inspired, iconoclastic decision. Google was flourishing, but Sandberg had a job offer from the new kid on the block, Mark Zuckerberg, who wanted her to come in and be the adult who transformed Facebook into a real company. Again, Sandberg, by then one of the most high-profile women in Silicon Valley, had a number of safer, more prestigious choices. She picked Facebook, whose 2012 IPO made her among the richest self-made woman in the world.
If you are fastidious about taxonomy, you’d probably have to describe Sandberg as an outstanding member of the managerial aristocracy—she is a hugely talented executive, but she isn’t an inventor in her own right or the founder of her own firm. But her instinct for picking the right job at the right time is so finely honed that it surely qualifies as responding to revolution. As Warren Buffett put it in his 2006 letter to shareholders, quoting “a wise friend,” “‘If you want to get a reputation as a good businessman, be sure to get into a good business.’”
In his study of the Nobel scientists, Robert Merton discovered a similar talent for choosing the right work—a skill that was as important as the ability to do the work itself. “Almost to a man, they lay great emphasis on the importance of problem finding, not only problem solving,” Merton wrote in 1968. “They uniformly express the strong conviction that what matters most in their work is developing a sense of taste, of judgment, in seizing upon problems that are of fundamental importance.” In an echo of Buffett’s wise friend, Merton quoted one Nobel laureate who explained, “I learned that it was just as difficult to do an unimportant experiment, often more difficult, than an important one.”
The power of choosing the right work is equally pronounced for members of what Graeme Wood, writing in the
When the IPO comes, this group—the first few dozen employees of Microsoft, or Google, or Groupon—is also catapulted into the super-elite. Two California psychologists, Stephen Goldbart and Joan DiFuria, were so concerned by the psychological impact of joining the lucky job club that, in 1997, during the first Internet boom, they gave a name to its baleful outcome—“sudden wealth syndrome”—and set up an institute to treat folks afflicted by it.
When you make your fortune by responding to revolution, the one rule is that there isn’t One Rule. Getting out at exactly the right time may be the smartest business decision Jonathan Kaplan made. But at other times and places, the difference between the millionaires and the billionaires is the difference between those who cashed in early and those who held their nerve.
In 1993, when he had already made $100,000—an unimaginable windfall by Soviet standards—Viktor
