Bo Peabody is an author, serial entrepreneur, and venture capitalist who lives in New York. Bo founded his first company, Tripod, in his dorm room at Williams. Then he sold it to Lycos in the late 1990s and made a fortune on Lycos stock. Then he sold almost every share of that stock at the peak of the dotcom bubble and invested in bonds and a house.
Since then, for obvious reasons, everyone has asked Bo whether he was lucky or smart.
Bo wrote a book about that question: LUCKY OR SMART: Secrets For An Entrepreneurial Life. It’s part “how to,” part memoir, and part philosophy. It’s an inspiring story that every entrepreneur should read.
Bo is now the managing partner of Village Ventures, a venture-capital firm based in New York. He has given us permission to print his book for you, chapter by chapter, over the next several weeks. If you just can’t wait that long, you can buy the book here. There’s a Kindle version, too.
And if you’re not quite ready to start reading, you can take a quick photographic story of Tripod we’ve put together, called How To Start A Company In Your Dorm Room And Make $580 Million.
The INTRODUCTION to Bo’s book, LUCKY OR SMART, is below. Enjoy!
LUCKY OR SMART: Secrets To An Entrepreneurial Life
by Bo Peabody
My career from ages eighteen to 20-eight:
- In 1991, as a college freshman, I had an idea for an online service offering “real life” education to college students: practical advice about jobs, personal finance, and health. I made the simple observations that no one was teaching us these subjects in the classroom, and that computers—rather than books or TVs—had become the primary medium of communication and entertainment for my generation.
- During my sophomore year, Dick Sabot, a very smart Oxford-trained Ph.D. in economics and the professor of a class in which I received a B-minus, agreed to collaborate with me on my nascent concept. He did so not because I was his best student, but because he had had a near-death experience during which a higher power advised him to do “something different.”
- By 1994, when I graduated from college, our project had indeed become something different: an Internet start-up company we named Tripod. Despite the fact that 99.9 per cent of the American public had never even heard of the Internet, I decided to stick with Tripod. I graduated Summa Cum Nada, and it would have been impossible for me to get a decent “real job” with my not-so-decent but very real grades.
- Using what little cash I could raise from friends and family, I hired a team of computer programmers. I did this because I did not know how to install a web browser on my own computer, which is a significant barrier if you plan to run an Internet company.
- Unbeknownst to me, and surely with some sort of anarchic motive, these lawless, long-haired, multi-pierced, tattooed, incredibly charming and smart hacker hooligans built a piece of software on Tripod that had nothing to do with offering practical advice to anyone. Instead, this software gave individuals the power to publish their own “personal homepages.”
- By 1995, the popularity of the Tripod Homepage Builder was growing rapidly and had far surpassed my original idea to offer college students “practical advice.” It occurred to me that I might have a business on my hands. Having never written a business plan, I went to the local library and checked out a book called—you guessed it—How to Write a Business Plan.
- In August 1995, Netscape went public and proved that Internet companies had value. Or at least proved that Wall Street investment bankers had convinced the stock-buying public that Internet companies had value.
- One month later, I was able to convince New Enterprise Associates (NEA), one of the world’s most respected venture capital firms, to review the Tripod business plan. They agreed to do so only because Dick’s wife’s brother’s college roommate knew someone who knew someone at NEA.
- NEA liked the plan because it mentioned the Internet several hundred times.
- In November 1995, Tripod received $3 million in financing from NEA.
- I based Tripod in Williamstown, a six-thousand-person college town in the mountains of northwestern Massachusetts, not because it made much business sense, but because I really like to ski.
- Given the media frenzy in the late nineties surrounding “kids” and their “cool” Internet start-ups, the decision to locate in Williamstown resulted in thousands of newspaper articles, magazine stories, TV clips, and radio interviews about Tripod, most of which featured me either riding my mountain bike to work or using the word “dude.” The former of which I actually did only the half a dozen times my 1983 shit-box Volkswagen Rabbit was in the shop. The latter of which I still do.
- By the beginning of 1996, one year after it was launched, the Tripod Homepage Builder had fundamentally changed the nature of consumer media. For the first time, anyone with access to a computer and a connection to the Internet could publish pretty much whatever they wanted; and anyone else with access to a computer and a connection to the Internet could view it.
- By the middle of 1997, Tripod had attracted nearly one million registered members.
- Tripod never posted a profit.
- Tripod generated barely any revenue.
- On December 30, 1997, in the middle of the stock-market bubble, I was offered $58 million for Tripod.
- On December 31, 1997, I agreed to sell Tripod in exchange for $58 million in stock of a publicly traded company named Lycos, which at the time was an Internet company only slightly more stable than Tripod.
- I agreed to a “lockup” that forbade me to sell all of my Lycos stock for two years.
- Over those two years, I watched the value of my Lycos stock increase tenfold.
- By December 31, 1999, at the height of the bubble and just a few months before the market crashed, I had sold nearly every share of my Lycos stock.
- I invested the majority of those proceeds in bonds and real estate because they were the only two investment vehicles I could thoroughly understand. And because I needed a house.
When all this happens to you, and certainly when it happens to you before you turn 20-eight years old, you can be sure of one thing: Forever, often and always, you will be asked that loaded question, “Were you lucky or were you smart?”
In response, most people immediately give a two-part answer: They recite the trite adage “I’d rather be lucky than smart,” and then they sigh and say, “Well, you know, it was a little of both.”
I give a different answer:
“I was smart enough to realise I was getting lucky.”
And that’s the right answer. It might in fact be the only completely right answer I’ve ever given. Hey, even a blind squirrel finds a nut sometimes.
Over the past decade, through the bubble and the burst, I have co-founded six companies, all of which have survived, if not done fairly well. Along the way, I’ve learned some things that may be useful, but perhaps not obvious, to someone thinking of starting his or her own business. What follows are some simple observations that may help entrepreneurs get a little lucky, and therefore more successfully navigate the start-up process.