Failure Is an Option

On June 24, 1998, Rick Shriner hosted a barbecue at Poseidon Technology Inc., a startup that he now runs. Poseidon occupies the same space that once housed Exponential. An Exponential sign is still displayed outside the front door. Gordon Campbell, an investor in Poseidon, attended the event, and Shriner got to reminiscing about their previous venture.

"In the end," Shriner says, "it comes down to what we should have done and not done, what we should have known and acted upon. We should have started our Texas operation much sooner. We should have thought more globally and perhaps looked for more partners. Should we have gone to IBM and tried to get them to buy us? Should we have foreseen the ROM problem?''

Those are strategic points. What about the human fallout from the experience? "Some people were really angry at me," Shriner says. "Some people say that I was unduly optimistic, that I led them along." He pauses, trying hard to convey what he is feeling. "Really smart, dedicated, and loyal people with huge personal obligations were saying, 'Give it up, for everyone's sake.' But I just couldn't."

Ivonne Valdes offers her own epilogue. "People really have to understand that it's all or nothing,'' she says. "You can make it big, you can die a slow death, or you can die a quick and violent death. We died a quick and violent death. I'm glad that we didn't get that last round of funding."

Sidebar

Who: Stephanie Dorris
Role at Exponential: CFO
New role: Founder, Beans Plus Inc.
How could it have been different?: "I don't think that we could have done anything differently. We didn't realize that there was a disclosure issue with Apple concerning the ROM, and that became essential to whether we could go forward. How can you change something that you don't know about?"
What did you learn?: "Not to be so trusting. We were dealing with large, respected companies. We trusted them to behave properly."
Would you do it again?: "On advice from the attorneys handling our lawsuit against Apple, I have been advised not to answer this question."

Who: Paul Nixon
Role at Exponential: Engineering manager
New role: CEO, EVSX Inc.
How could it have been different?: "Given that Apple had a change in business direction, I'm not sure that things could have been different. We were smart in how we worked with our board to search out every possible way to survive. We poured our energy into making Exponential work until the very end."
What did you learn?: "How resilient people are. After the money was gone, very few people bailed out, either in San Jose or in Austin. We kept working to try to spin threads into cloth."
Would you do it again?: "Absolutely. There was a lot of value in the learning experience. We knew we were taking a risk. That's why we were granted stock options."

Who: Ivonne Valdes
Role at Exponential: Vice president of sales
New role: SAP account manager, Sun Microsystems Inc.
How could it have been different?: "I would have hired Rick Shriner to be president and CEO from the beginning. I would not have wasted time on working with Motorola as a manufacturing partner. I would have worked with the engineering team to make sure that the processor was independent of the ROM."
What did you learn?: "Startups don't have the luxury of time. You have to put your personal life on hold, and you have to dedicate yourself 200% to making your dream a reality. When you win, you usually win big. When you lose, you usually lose big."
Would you do it again?: "Yes."

Who: Rick Shriner
Role at Exponential: CEO
New role: CEO, Poseidon Technology Inc.
How could it have been different?: "I could have turned to Paul Nixon's Intel-compatible team earlier. When you realize that you have to develop a different strategy -- or, in this case, to enter a different market -- you have to do it with a real sense of urgency."
What did you learn?: "Don't squander great ideas and great people on trying to enter a shrinking market. Play in a big market, no matter how difficult the competition may be. That's why there's so much action with Internet companies today."
Would you do it again?: "I am doing it again! Poseidon is doing quite well. I just closed another round of venture funding -- for $5 million to $6 million."

Pat Dillon (pdwolf@aol.com) writes for Fast Company on the culture of Silicon Valley. His latest book is "Lost at Sea: An American Tragedy" (The Dial Press, 1998).