What Happens When the Lights Go Out?

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While Carol Gebert was deciding to start Central Dogma, Owen Johnson and John Immel were launching Internet consulting companies in different parts of Cambridge. Johnson and Immel started their companies as undergraduates at MIT and Harvard, respectively. Both enjoyed a rapid increase in the demand for their consulting services, and both were obliged to move out of their university-sponsored housing shortly after they received their diplomas. When the time came to establish new corporate headquarters, both entrepreneurs chose to move their growing businesses into apartment-based offices in the greater Boston area.

Johnson and Immel were extremely pleased that the demand for their consulting services continued to grow and grow, and both entrepreneurs worked extremely hard to manage their growing businesses. Both became so engrossed with meeting their customers' needs that they forgot about how much they were straining the electrical systems of their ancient apartments.

On separate days during the hottest parts of the summer, both Owen Johnson and John Immel blew fuses.

Johnson's fuse blew in the middle of a standard workday. "The house didn't have a breaker box; it had an old-style fuse box, so we had to hunt down fuses at a local hardware store," Johnson remembers. "We found one old and dusty box of fuses that looked like it would work, and we were lucky that it did."

Realizing that the company's ever-increasing fleet of computers had exceeded the capabilities of the old house's electrical system, Johnson and his coworkers rearranged their office layout so that the computers would draw from different electrical circuits. But this solution was only temporary: After the power outages occurred several more times, Johnson resolved the situation by installing a proper breaker box and hoping for the best.

"Luckily, power wasn't an issue that winter," Johnson recalls.

The lights went out on John Immel while he was interviewing a prospective hire. He had just turned on the air conditioner when the house went dark. Immel was a bit surprised to have the lights go out during the middle of an interview, but he tried to appear nonchalant. "I guess we'll have to go downstairs to find the fuse box," he said.

Before coming to interview with Immel's company, the candidate had never set foot in a high-tech start-up. He had spent his entire professional life inside a major corporation, well shielded from the peculiarities of start-up life. Since he had no experience with young companies, he had no way to evaluate whether it was normal for an apartment-based Internet consulting company to experience a power outage during the hottest part of the summer. All the interview candidate knew was that he was dripping with sweat, he could barely see, and John Immel had just invited him to go down to the basement to hunt for a fuse box.

The candidate was surprised, but he was also curious. So he followed Immel down the stairs.

As he approached the darkened basement, he started to feel skepti cal about the job he was walking into. When Immel stumbled around the dusty basement in search of the fuse box, the candidate had a chance to evaluate some of his own existential issues. So this is what people mean when they say that start-ups are wacky, the candidate thought. He hadn't expected the job to involve stumbling around a darkened basement, but that's exactly what happened.

As Immel searched, the candidate tried to gauge whether he wanted to deal with the rigors of start-up life.

In the end, he decided he didn't.

I did not spend four years in college, two years in grad school, and four years inside a major corporation so I could wander around a basement in search of a fuse box, the candidate thought. He was annoyed, and he was hot, and he was frustrated. He didn't see the light at the end of the tunnel in the same way that Johnson and Immel did. There was no gleam in the candidate's eye. When he looked around the darkened basement, he saw nothing but darkness.

If he had been on the train with me and Pehr, he would have borrowed my travel guide, taken out his cell phone, and called ahead to make reservations.

At a high-tech start-up there is no such thing as making reservations. The kind of person who is comfortable with the experience of entrepreneurship lives his life from minute to minute. A person who needs the security of a well-constructed itinerary would be better off inside a well-established corporation.

When the interview candidate stared into the blackness of Immel's basement, he became much more comfortable with his present job. The big company might not give him any stock options, but at least they provided electricity.

When the lights were back on, the candidate thanked Immel for his time.

And then he left.

And that was fine with John Immel.

At a high-tech start-up, it's extremely important for every single employee to feel comfortable dealing with things like blown fuse boxes. And it's far better to discover this during one's job interview than after one has made a serious commitment to the new organization.

Making Educated Guesses

The personality traits that make a person feel comfortable taking a risk on a high-tech start-up are very similar to those that make one comfortable with other forms of gambling, including blackjack. And at MIT, the blackjack players have organized themselves into an underground community that is very similar to the community of entrepreneurs that exists at the Muddy Charles Pub.

MIT's Blackjack Team, or card-counting club, attracts new members by stapling photocopied flyers onto bulletin boards around the institute. While the club has no official affiliation with the institute, no one on the MIT campus bats an eyelash when ten or fifteen students and alumni commandeer an empty classroom and play a few games of cards. "It's definitely not superorganized," a current card counter tells me. "It's more of a fly-by-the-seat-of-your-pants kind of thing. There is no faculty involvement whatsoever."

Because of the necessity of keeping one's card-counting skills hidden from the dealers at casinos, who prefer to play with those people who are more likely to lose, members of the MIT card-counting club tend to keep a rather low profile, often drifting in and out of the club over time. "It's not really a club," my contact emphasizes. "It's more of a team-a money-making venture. I think for most of the students it's a way to have fun and get a little cash for school. You have to be either a dropout or an alumnus to make it a serious endeavor."

Serious card counters understand that if they want to get good, they must spend a considerable amount of time playing blackjack, practicing hand signals, and developing trust relationships with fellow team members. The trust relationships are extremely important in the business of card counting because the most difficult thing about playing organized blackjack is making sure that dealers never figure out what is actually going on. Once a casino has identified a person as a card counter, the person's name and likeness are immediately circulated on something called the Griffin list, which, I am told, has the power to keep people out of casinos for the rest of their lives.

Casinos have good reason to be wary of card counters, because if blackjack players reach a certain level of proficiency, they can actually tip the odds in their favor.

If a person goes out onto the casino floor without any understanding of the rules of blackjack, he is likely to lose an average of $2 or $3 each time he lays down a $100 bet. A person who uses a technique called "basic strategy" to decide whether or not to request a new card is likely to lose an average of 33 cents every time he lays down a $100 bet.

The game of blackjack becomes interesting, and even profitable, when a blackjack player realizes that the probability of being dealt a winning hand changes depending on which cards have already been dealt. If a skilled blackjack player can train himself to keep track of those cards that have already been dealt, he can use this information to determine whether or not he is likely to be dealt a winning combination in his next hand.

If a blackjack player determines that all of the tens, jacks, queens, kings, and aces in a given deck have already been dealt, he can choose to wager a very small amount of money or avoid betting entirely. If, on the other hand, a blackjack player observes that a great many ones, twos, threes, fours, fives, and sixes have already left the deck, he may choose to increase the amount of money he puts on the table to take advantage of the fact that the cards remaining are likely to be tens, jacks, queens, kings, and aces.

It takes a great deal of study and a great deal of hands-on training to get good enough at counting cards to tip the odds in one's favor. The city of Las Vegas is itself a sizzling, smoking, flashing-neon-light reminder that the vast majority of would-be card counters fail miserably. But there are some people who enjoy math for its own sake and who enjoy the applied mathematics of casino gambling in particular. These are the people who spend weeks, months, and even years studying blackjack and casino gambling in an effort to determine, in any given card game, whether or not the next hand is likely to be a winner.

Skilled card counters know that if they can avoid becoming distracted by the free drinks and scantily clad women long enough to count cards, calculate the odds of winning, and make informed decisions about how much to wager, they can tip the odds in their favor. Instead of losing $3 each time they put down $100, a skilled card counter can actually win money.

How much a card counter wins depends on the amount of money that is being put to work and the numbers of bets that the card counter is willing to make. My contact tells me that in recent years the MIT black-jack team was gambling with approximately $1.5 million, built up from an initial investment of some $200,000. At one point the club had so much cash to put to work and so few card counters that they were forced to "push the max," playing up to a maximum bet of $15,000. "You'd do maybe one hand of a grand to two hands of $10,000," my contact remembers. "We had more money than the casinos would let us play with."

As long as the casinos are convinced that the card counters are no more than ignorant hicks taking a break from betting on hog futures to play a few hands of blackjack, they will do whatever it takes to keep the card counters around. My contact tells me stories of free food, free booze, and complimentary hotel rooms offered in the vain hope that the high rollers' luck will eventually change.

A skilled card counter must work very hard to convince jaded blackjack dealers that it was nothing more scientific than their lucky rabbit's foot that caused them to win so much money and that they really are putting their life's savings at risk when they decide to play another $10,000 hand. For if a card counter should slip up and reveal that he is being paid to make bets with a bankroll of his own and other people's money, his card-counting career will come to an abrupt end.

This is what happened to Semyon Dukach: He became so good at counting cards and won so much money that the casinos eventually caught on to his technique. Once Dukach's likeness was circulated on the notorious Griffin list-a report compiled by Las Vegas detective agency Griffin Investigations Inc.-he had no choice but to hang up his aces and look for a new game.

Dukach could still teach new kids how to count cards, and he was welcome to invest his own money in the club's communal kitty. But now that he was "burned out," the adrenaline rushes were reserved for the younger kids.

With card counting no longer an option, Dukach put some of his winnings into a high-tech company called Fast Engines, whose mission was to reduce the amount of time it takes to reach Web sites on the Internet. And the more time Dukach spent on his high-tech start-up, the more he began to like it. "You can't just make money," Dukach tells me. "You have to feel like you're doing something good for the world. I am very proud of creating this thing called Fast Engines."

The good work that Semyon did involved bringing together a group of really great people. "I had that in blackjack as well-a sense of teamwork with the people that we went to the casinos with and the people that I trained and organized. But there was nothing that we really created together. It was kind of like a quick thrill. We went, we played, we made money. It was fun, but we weren't creating real value. Whereas here, as a group, we can be proud of the product. We can be proud of the customers using the product, making their lives easier, making their Web sites faster. I mean, we have this thing that's really fast, and that generates pride as well."

Dukach has reason to be proud of the work he did at Fast Engines: in March 2000, the company was acquired by Adero, Inc. for an amount that the company's investors could feel very good about.

It's Only Dangerous If You Don't Know
What You're Doing

One bright afternoon, sometime before Fast Engines was acquired by Adero, Pehr and I ran into Semyon and his family at a Cambridge café. After Pehr and Semyon had compared notes about their various entrepreneurial ideas, Semyon asked us if we wanted to go hang gliding with him the next day. I told Semyon that I thought the sport sounded too dangerous but if Pehr wanted to go, I'd be happy to watch.

Semyon tried to allay my fears by explaining his philosophy of risk management, which went something like this: Very few people die in hang gliding crashes. Problems occur when people forget to strap themselves into their safety harnesses. Thus, if a person trusts himself to perform a few simple safety checks, hang gliding can be viewed as a relatively safe activity.

Semyon Dukach is the kind of person who can be relied upon to per form a few simple safety checks each and every time he decides to go hang gliding. And for this reason, the sport of hang gliding appears nearly 100 percent safe, within Semyon's frame of reference.

Semyon's speech about the extremely rational, and completely safe, sport of hang gliding was enough to convince Pehr to join him on the mountain. But when I think about hang gliding, I imagine people who are much less rational, and much less methodical, than Semyon Dukach. The hang gliders in my imagination get so excited about the prospect of soaring like birds that they rush toward the edge of a cliff without buckling their safety harnesses. And in so doing, they mess up the sport's otherwise immaculate safety record.

As skeptical as I was about hang gliding, I was also a bit curious. So when Pehr and Semyon drove up to New Hampshire, I went with them.

On the way to the cliff, Semyon explained what Pehr had to look forward to. First he would go to the hangar and learn to identify the different parts of the apparatus. Then he would haul his glider onto the grassy hill and practice pushing it back and forth. Next, he would spend a few hours learning the basics: how to start, how to gather momentum, and how to stop without crashing. Finally, he would haul his glider to the top, strap himself into his safety harnesses, and race toward the edge of the cliff.

People who are good at hang gliding can travel as many as 190 miles before returning to the earth's surface. On the first day, however, a student is unlikely to leave the ground.

Pehr had an unexpected bonus during his first day of hang gliding: As he was rolling the apparatus back and forth across the side of the cliff, he caught a sudden updraft and soared about three meters. Unfortunately, Pehr's flight occurred well before the instructor had given his lesson on how to land, and Pehr's landing was a complete disaster. He bumped, he tripped, and he fell into the grass. Pehr did not sustain any serious injuries during his unpleasant landing, but he was held up as an example to his fellow students. "Let that be a lesson," the instructor thundered. "You don't leave the ground until I give the signal."

It was hard for the students to pay attention to the instructor's advice when the sky around them was filled with so many colorful gliders.

Off in the distance Pehr could see Semyon Dukach, circling and dipping like a lark in springtime. He looked as if he were having the time of his life.

As Semyon soared and Pehr learned about the fundamentals, I sat in the hangar and read a book about shipwrecks. Reading about shipwrecks made me feel secure because I already knew what was going to happen.

With Pehr and Semyon, I had no idea.