As he helped steer Cirrus through its IPO, Elahian and his cofounders secretly mapped out another startup, Momenta Corp. Momenta promised to be his biggest success. But he learned that in the all-or-nothing world of fresh starts, failure is inevitable -- and invaluable.
Now 47, Elahian still isn't finished making fresh starts. He is chairman of 10 Silicon Valley organizations and one venture-capital fund, Global Catalyst Partners. He didn't fall victim to the dotcom crash because he failed first and he failed smart. When dotcom mania was at its height, he kept his head.
The world is Elahian's stage. His various business cards are printed in Japanese, Chinese, and Arabic as well as in English. His travel schedule keeps him in perpetual motion. But in his office in Redwood Shores, California he is almost preternaturally calm. And he is unflinching as he recalls the failure that gave him a shot at a more meaningful success. In the early 1990s, pen-based computing was the Next Big Thing. As chairman, president, and CEO of Momenta, Elahian was at the vanguard. The company's pyramid-shaped computer, which could recognize a user's handwriting, made the cover of 20 magazines.
There was just one problem. No one bothered to build a market for pen-based computers. In three years, Momenta burned through $40 million. That's pocket change by dotcom standards, but back then it was real money. For a while at least, Elahian held the Valley's title for burning the most capital in the shortest period of time. Momenta was a monumental flop.
Still, Elahian was unprepared for the sight that greeted him when he walked into work on April 1, 1992. Momenta's board -- his board -- was holding a meeting. He was not invited. In fact, the board had just voted to oust him.
Months after he was fired, Elahian realized that his most spectacular failure was his most precious gift. It toughened him for even greater risk taking -- in his life as well as in his career. Failure steeled him to eventually launch six Internet and telecommunications startups from 1993 to 1999. Failure propelled him to start Global Catalyst. And failure spurred him to embark on his most audacious mission: to wire every school in developing countries and countries in conflict -- including Bulgaria, Cambodia, and Israel -- for the Internet. But none of that was apparent on the day he was fired. "I put three years of my life into that company," he says. "I felt like I'd lost my child. I went numb."
More to the point, Elahian went into deep denial. The next morning, he dressed for work, grabbed his briefcase, and headed for the door. His wife called out, "Where do you think you're going?" Only then did it hit him. His tenure as CEO was over. He would have to build something entirely new.
What propels someone to abandon a fast-track career and risk everything for an unproven venture? Twenty-two years ago, when Elahian was a hotshot software engineer at HP, the answer was clear: He was getting promotions, but he wasn't getting ahead.
Elahian arrived at HP after earning a master's degree in computer graphics at the University of Utah, a pioneer of that industry. He started in the corporate-engineering group, developing design-automation software. Within his first year, he asked to lead a project. But his boss rebuffed him, arguing that it would take five years for Elahian to land a managerial title.
He was determined to find a shortcut to the top. Acting on the advice of Silicon Graphics and Netscape founder Jim Clark, who had earned his PhD at Utah, Elahian enrolled in an advanced course in integrated-circuit design at Stanford. He kept his day job at HP; at night, he attended classes. After nearly a year, he produced a design. He sent the chip to be fabricated, but when it came back, it failed to work.
Elahian was dumbfounded. "I confronted my professor: 'I thought you said that any software engineer could become a chip engineer.' The professor replied, 'I said that any good software engineer could design a chip. You're a lousy engineer.' "
Elahian chuckles. "My professor was right," he says. "I was not a great engineer. I still believed I was a winner. But that darn chip helped me discover my weakness. It set me on a course that would let me build on my strengths."
Working with a team of four top-flight software designers, Elahian mapped out a company -- CAE Systems -- that would use computer graphics to help systems engineers design chips. After nearly three years at HP, his life in the corporate ranks was over. He would become an entrepreneur.
Still, it was tough for Elahian to leave HP. "My boss's boss took me to lunch at a Chinese restaurant and pushed hard to get me to stay. I had a lot of respect for him. I second-guessed myself. But then I opened my fortune cookie. I burst out laughing. It read, 'Don't listen to bad advice. You will be successful.' After that, my mind was made up. I never looked back."
Fear of failure is one of the biggest barriers to making a fresh start. But not for a moment did Elahian think about devising an escape plan in case CAE Systems crashed. If the startup flamed out, he figured, he would learn from the experience and become even more valuable to a big company like HP.
There was every reason for Elahian and his partners to whiff. They knew nothing about business. They had no idea how to solicit venture-capital firms. Elahian was equally clueless about writing a business plan. His pitch was rejected again and again before it was finally accepted by a rookie investment firm. After nine months of wandering in the wilderness, the founding team received $2 million in funding for CAE.
Elahian believes that in any new venture, whether you're embarking on a new job or a new career, you must zero in on your weakness -- and then adjust your plan so that it plays to your strengths. He learned this lesson the hard way at CAE. His partners voted him CEO, but he was less than successful. "I knew a little about technology and a little about people," he says. "But I knew nothing about sales or marketing."
Elahian worked hard to get up to speed. But he knew that a fresh start depends on teamwork. His willingness to surround himself with people whose strengths compensated for his weaknesses saved the company. He put his ego on hold, relinquished the top spot, and hired a new CEO -- "a salesman extraordinaire." The move paid off big time. Three years after the company's launch, the CEO sold it to Tektronix Inc. for $75 million.
Elahian brought that same attitude to Cirrus Logic. As plans for the company were hammered out, the founders decided that they had two options: Make Cirrus a next-generation software firm, or make it a semiconductor company. Elahian thought that the better choice was for Cirrus to become a chip company. He went on to help pioneer the fabless semiconductor model that is used by many chip makers today.
There was one drawback to that plan. Elahian's background was software. He came to a tough conclusion: He was ill prepared to lead a semiconductor company. Elahian stepped aside and hired a new CEO, Michael Hackworth. Elahian was prepared to sever his ties to Cirrus altogether, but Hackworth convinced him to stay on as executive vice president. "It was a great opportunity to learn from a pro about how to run a company," says Elahian. "Cirrus was my school of entrepreneurship."
For five years, Elahian dug into every aspect of the firm. He headed up sales for nine months, until he recruited a VP of sales. He put in two years as CFO. He also learned something about himself: Deep within his DNA, he was meant for a life of starting new ventures, then starting over. "Even though I spent five years at Cirrus, never for a moment did I think that I would stay there for the long run," he says. "When a company hits $200 million or $300 million in revenue, I go on to something else."
That's exactly what he did when Cirrus issued its IPO. This time, the Valley's high-tech elite were waiting for him. After scoring two big wins, Elahian seemed invincible. Investors rushed to sink money into his next company, Momenta. That's when he made his most perilous mistake: He let hubris cloud his ability to calculate his strengths, his weaknesses, and his prospects for success. "We set out to create a computer that would be incredibly easy to use," he says. "I was absolutely convinced that we would revolutionize the PC industry."
Elahian was shattered by Momenta's downfall. He retreated from the business world and watched as the company went under. Six months after he was fired, Momenta filed for bankruptcy. It was one of the biggest high-tech flops of its time. "You shed a lot of tears," says Elahian. "And then, after the grieving, you confront a frightening question -- frightening because you don't have an answer: What do I do with the rest of my life?"
Elahian was 38 years old. He had left Iran to become a free man; he had left HP to become a company builder. Now he was embarking on a new beginning that was not of his own choosing. He was convinced that because of Momenta's spectacular collapse, the Valley's business community would reject him. And so he began a yearlong exile from the world of work.
He took away some hard-won lessons. He realized that much of what had mattered to him in the past held little meaning now. Money? Having made his stake with Cirrus, he chose to live simply -- his one extravagance was his fire-red Ferrari. Fame? Momenta brought him all the notoriety he could handle. Independence? He'd been on his own since the age of 18.
A bigger challenge was to figure out what really mattered to him. Over time, a notion began to emerge. Much of his year in exile was spent on the road: Europe, Russia, and the Middle East. He immersed himself in four languages and delved into religious study. After a few months, he realized that the old cliche was true: Scratch away at the twin veneers of nationality and ethnicity, and you'll find that people are fundamentally the same. "We all have the same needs and aspirations," says Elahian. "Everyone wants a secure life and meaningful work. We all want to achieve things and build something.
"But then I recalled my youth living under the Shah in Tehran during the 1960s. We were intellectually isolated, cut off from the rest of the world. And I realized that people will never act like citizens of the world if all they know is their own world."
In the past, Elahian had helped fashion mission statements for his companies. Now he decided to craft a mission statement for the rest of his life: Go to the world's outback regions, and give people the tools to connect with one another and to learn from one another. Maybe then they would develop tolerance.
First, he vowed to build Internet-based technologies that would help people connect with one another in ways that were cheaper, faster, better. His second tack would be to build organizations that wouldn't have to wait to get big before they could go global. Instead, he would create a fund for startups that from day one would pursue the global marketplace.
The third part of his plan came to him while he was watching CNN. A report aired on how schools were using the Internet. The story ended with a close-up of the principal of an inner-city school that couldn't afford computers. "I'll never forget the look of sadness on that principal's face," says Elahian.
He decided then and there that he would find a way to endow the world's poorest schools with a window to the Net. It would prove a daunting challenge. He had never had children, and his only experience with secondary education was what he knew from attending school in Iran. When it came to understanding the American education system -- or, for that matter, the schools of the world at large -- he was at best a D student.
Fifteen months ago, on the morning of Rosh Hashanah, the principal of an Arab junior high school in Israel awoke to tragic news: Thirteen people from his village of Uhm-El-Fahem had died in clashes with the Israeli police. The principal, a man named Bassam Jabarin, was heartsick. But he did something remarkable. He sat down and wrote an email to a forum of principals of Jewish and Arab secondary schools.
"There was darkness everywhere," he began. "Riots, deaths, killings, pain and violent anger .... Then my cell-phone rang and on the other side [were] the voices of support ... from my Israeli friends wondering about my well-being. Upon hearing these voices ... I felt hopeful. I got my teachers together and said 'There is no alternative other than co-existence.' " He ended his note by saying that he looked forward to meeting with six Israeli teachers for an upcoming workshop. "The very fact that they are meeting means that there is a place for hope and light," he wrote.
Jabarin's email would not have been possible without the work of Schools Online, a nonprofit organization that Elahian founded in 1996. He started small, outfitting an elementary school in Milpitas, California with computers and Internet access. Since then, Schools Online has connected more than 5,800 schools in 25 countries and provided computer training for thousands of teachers.
With a staff of 10, Schools Online is tough-minded about its prospects for success. Miki Frankovits, director of Schools Online Israel, says that real change in attitudes between Jewish and Arab students will only come through "long and peaceful collaboration." In the short term, he just wants to keep students in touch with one another. Still, Elahian knows that in this new phase of his life, he and his colleagues at Schools Online have chosen to follow the road less traveled. They are not about to retreat. If anything, Elahian is pushing even harder.
Not long ago, he returned from Tanzania, where he had helped set up an Internet learning center in a camp for Burundi refugees. One of the refugees, an architect, designed a building that uses solar power to run the center's PCs. Connectivity will come by way of satellite. "The toughest part of living in an African refugee camp isn't the conditions, which are bad," says Elahian. "It's that people must spend 5, 10, 15 years living in these places. It's like being in a big prison. They can't lead an honorable life. So we're giving kids access to computers. We're getting them education by connecting them with teachers and volunteer tutors. One day, when they return home, they won't have to live like refugees in their own country."
Elahian was less confident about his own journey home to a Silicon Valley community that had witnessed Momenta's very public crash. But he learned that sometimes, nothing succeeds like failure.
His return from exile began when he was approached by Prakash Agarwal, then a general manager at Cirrus Logic. Agarwal was leaving Cirrus to launch a multimedia-accelerator chip company called NeoMagic Corp. that would design modules for notebook computers. He asked Elahian to lead the company. Elahian agreed, on the condition that he would be chairman -- not CEO.
Getting back into business after the Momenta disaster was easier than Elahian thought it would be. Investment firms knew that he had scored two successes. Now, with that one big failure, he was a survivor. Betting that his chances for winning were much improved, blue-chip firms -- Kleiner Perkins, Sequoia Capital U.S. Venture Partners -- rushed to back him.
NeoMagic was a runaway success. Sony signed on to equip all of its VAIO notebook computers with NeoMagic's chips.
The startup went on to have its chips placed in 70% to 90% of Dell's and IBM's laptops. Within four years of its founding, NeoMagic received an IPO valuation of more than $300 million.
As Elahian looks to the future and considers his next move, he remembers the hard-won lessons from his past. The lesson from CAE Systems: Don't let fear or ignorance stop you from taking a risk that feels right. From Cirrus: Success depends on constantly evaluating your performance and choosing a role that plays well to your strengths. And from Momenta: Failure happens. What counts is how you react when it all goes bad.
Failure put Elahian on the road to a more meaningful life, and he has chosen to celebrate his greatest debacle. It's even stamped across the license plate that fronts his Ferrari: Momenta. "I get a dose of humility every time I get in my car," he says. "But that license plate also reminds me never to back down. You might lose, but you're only a loser if you don't try again."
How do you better the odds that you'll succeed at a new start? Serial entrepreneur Kamran Elahian has made a life out of starting over. Here are his hard-won lessons for starting fresh -- and starting smart.