A University of Illinois graduate moved to Silicon Valley with a great goal (perhaps inspired by the Illini commencement address) – develop security software for hot-selling handheld devices like the Palm Pilot. He assumed that enterprises were soon going to be using Palms as primary means of communication and sharing documents, and would need security to protect business secrets. "Any minute now, there'll be millions of people begging for security on their handheld devices," he thought. He was wrong – he never found a demand for handheld security software.

He could have kept trying to make his original idea work. Entrepreneurs that do stick to fixed goals are very good at least at one thing – wasting investors' money. An idea for an online grocery startup, Webvan, managed to go through $1 billion before finally pulling the plug.

Illinois Man was different. He shifted to Plan B. Sell his cryptography software. Still no takers. We can skip over Plans C, D, and E, which all failed.

Plan F was a system for securely transferring cash from one Palm Pilot to another. He put a demo on the Internet so people could see how great it would be for Palm Pilots. People liked the web demo and started using it for real transactions, while the demand from Palm users still failed to materialize. eBay users started asking if they could put the web demo in their ads for people to pay them. There was no demand for the product, only for the web demo.

Illinois Man finally realized what might succeed. He forgot about Palm Pilots. Plan G was a system for making secure online payments for sites like eBay. His Plan G company was called PayPal, and his name was Max Levchin. eBay eventually bought PayPal for $1.5 billion. The story is from a new book by John Mullins and Randy Komisar, Getting to Plan B.

Source: http://blogs.nyu.edu/fas/dri/aidwatch/2009/10/set_a_big_goal_give_everything.html

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Excerpt from: Dr T J Rodger's (Cypress Co-Founder and President & CEO) testimony to the US Senate

Europe's JESSI showered billions on the European semiconductor industry. It also "rationalized" the industry by allocating certain market segments to various companies. Siemens became the DRAM company for Europe--and has since gone out of the business. Philips became the SRAM company for Europe--and has since gone out of that business.

After inadvertently weakening its chip industry, Europe then established 14% import duties on foreign chips--the next logical step of desperate government policy. The import duty had precisely the effect we might expect: It raised the price of components to the European computer industry and virtually wiped it out as well. Today, there is no European chip industry or computer industry to speak of--thanks to the role of government programs like JESSI. European taxpayers gave up part of their income to wipe out two critical industries! We can't afford to emulate such failed experiments.