Well, with you being in venture capital
here, do you see this as a time for safety or more risk for companies?
Obviously, there's always a balance, but in what direction or another, what do
you think?
BG: Let's see. I think most people misperceive risk. On paper, Nintendo's
current success is from the Blue Ocean strategy with trying to go
someplace where no one else would consider going. Electronics Arts' launch on
the Sega Genesis when they had less than 5% market share was seen as
ridiculously stupid at the time, so sometimes going where no one else goes
creates big payoffs. But, you know, you tend to not hear about the explorers
who died along the way.
You see
this with customers: do you want to buy a sequel when you're pretty sure it's
going to be a good value, and you kind of know what you're going to get?
Or do you want to go out and try something totally new? I was one of those with
The Sims, John Madden Football, World of
Warcraft, and Diablo. When the
next version came out, I was dying to go and play it again. So, I didn't want
to take a risk with my own money and my next hours of play.
I like a
metaphor about risk from ice hockey. The thought is, in sports in general, the
teams that always make the playoffs never get a chance to totally rebuild. So
the powerhouse in the NFL, the 49ers in the '80s and the Cowboys in the '90s,
and then the Patriots more recently, had huge success after a decade of
spectacular failure.
So, the
49ers were kind of in last place for a decade, and so they got to draft and
rebuild and take a risk on a coach no one believed in, Bill Walsh. And the
Cowboys suffered and got to put together a couple good drafts. The same with
the Colorado Avalanche in the NHL.
They made one draft that
basically stood them in good stead for 15 years. And like a comparison to the
Boston Bruins, who went to the playoffs something like 21 or 22 years in a row
-- which is a record -- and they never won the Stanley Cup. In that case, the
good was the enemy of the great.
I think
it's the same with risk-taking. Great success often comes from amazing risk,
but most people would be more comfortable with a good outcome rather than a lot
of failures for a chance of a great outcome.
I think
psychologists would say that the emotion of failure -- a failure of one has
double the emotion of the success of one, so people don't tend to realize human
emotions [keep] us from maximizing expected outcomes.
So if we maximize our
hormonal outcomes, we tend to go for small success rather than a chance for a
big success or a small failure. And that's people. Unfortunately, all these
creations are done by people.
It seems like it's very difficult for
people to measure failure in that way sometimes because they have a lot of
people, stockholders, to explain things to.
BG: But if you think about your articles. So, you could go out and spend two
weeks to do an article that the magazine's never had before and that the
editors don't think they want, and you can say, "Yeah, but if this works,
I'm going to get promoted, and it's going to be a cover story." And they
say, "Yeah, but if it doesn't work, you're fired."
Most
people would say, "What I'm going to do instead is call up some dude I saw
at some conference and try to get him to say a couple new things that maybe
nobody else said, but it's not like wildly risky." And that again is more
normal. It's like stabilized success as opposed to continuous risk.
Again,
it's not just video games. It's hard to balance incentives so we will take a
chance of failure for an outside chance of success unless you don't have any
other alternative.
So, it's kind of interesting about bloggers, they can say,
"I'm going to try to create a story that's faster or different than
anybody else because if I write something that everybody else has, it won't get
linked to." But once you get a salary at a magazine, there is a lot of pressure
to do what the editors want.