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oping solutions that worked for both companies. The ap-
proach paid off, as he noted in an e-mail to advisers in late
February 2007. “A key development occurred yesterday,” he
wrote. “Following a meeting between the Worldwide Devel-
opers Group and iPod Marketing, it appears that Apple is
comfortable enough with our current software solution to
work directly with us on distribution in the Apple Retail
Stores and in their online channels.”6 Mark’s partnership with
Apple would continue to improve and mature. Modality de-
veloped a reputation within Apple as a talented, trustworthy
partner, leading to a host of opportunities over the next few
years. Increasingly, Apple championed Modality and its
products, and recommended the Modality team to its insti-
tutional and educational partners.

9 Operational Risk.Every entrepreneur’s plan contains assump-
tions about how the product or service will be created and
delivered to customers. In the passion and haste of a launch,
these assumptions are often untested or unexamined, al-
though they are usually fraught with uncertainty and, in
some cases, pose tremendous risks to the venture. Gilbert
and Eyring note that these operational risks can often be
evaluated in surprisingly simple ways. They cite the example
of Reed Hastings, founder of Netflix, the movie-by-mail
business, who conducted a simple, early test of his concept’s
logistical viability: He mailed himself a CD in an envelope.
“By the time it arrived undamaged,” the authors write, “he
had spent 24 hours and the cost of postage to test one of the
venture’s key operational risks.”7
Operational risks can also involve reliance on key person-
nel. One of my startup clients began as a spinoff from an ex-
isting company, having negotiated a deal that allowed it to
transport nine major client accounts into the new venture. But
until the new company could develop its own technology
platform to service the accounts, a task requiring at least six
months to complete, the original company’s operations team

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