Introducing Another Kool Aid Drinker
Posted on February 8, 2008
Filed Under Web 2.0 Kool Aid |
I asked for some hate, and it looks like I’m starting to get it.
It’s not unexpected. In some ways, the party is for more and more Web 2.0 companies and the most passionate kool aid drinkers want to make sure that no drop of kool aid goes unsipped. From Duncan Riley to Jason Ervin, as the clock ticks the kool aid drinkers seem to get more aggressive in their kool aid drinking. One of the kool aid drinkers that has come onto my radar recently is Hank Williams. Hank is a self-professed geek whose “professional career [has entailed] making products, Including Clickradio, an early Internet music service, and DayMaker, one of the first PIMs for the Mac.”
I spotted him when CenterNetworks published a post he wrote entitled “Does Your Company Have Geek Cred?” In it, he argued that all of the successful technology companies have this ethereal thing called “geek cred” and that “failing” technology companies don’t.
I point out the flaws in many of Hank’s arguments and specifically addressed the companies he used as examples, noting that 4 of the 5 publicly-traded companies with the highest annual profits were on Hank’s “Don’t Have Geek Cred” and “Losing it But Not Lost” lists. Obviously, an intelligent person would likely agree that the amount of profit a company generates is a better measure of how well a company is doing than how much geek cred Hank Williams thinks the company has.
But Hank is back with another pearl of beauty. In a recent blog post entitled “Why Are So Many Seemingly Great Companies Failing?” Hank enlightens the world by making the claim that:
What happens is that the geeks see the problems before the general market sees them. The geeks are the canary in the coalmine. The stock market analysts only see it after the product starts to fail in the marketplace. But geeks can see that a company is *going* to fail.
Of course, Hank fails to address just why 4 of the 5 publicly-traded companies with the highest annual profits aren’t companies on his “Have Geek Cred” list and instead continues to provide little more than opinion as to why everything boils down to geeks.
If Hank really was a true geek, he’d run his argument through the scientific method:
- Hypothesis: Hank believes companies with “geek cred” are successful.
- Test: Hank creates a list of companies that have geek cred, don’t have geek cred and that are losing geek cred. Profits are one of the best quantitative measurements of how “successful” a company is, so the companies on Hank’s list are ordered by profits generated.
- Result: Only one of the companies Hank idenitifed as having “geek cred” makes it onto the Top 5 list of companies with the highest profits. Therefore Hank’s hypothesis is clearly flawed and needs to be reworked.
Of course, Hank’s flawed hypothesis is not surprising. Because Hank is a geek, it’s understandable that Hank values his group’s role in society over the roles of non-geeks. Just as MBAs think they make the world of business go round, techies think that the world revolves around their geekdom. It’s not all that different from Ted Dziuba’s misguided perspective.
The problem with this short-sighted, simplistic philosophy is that it does not reflect the way the business world really operates. Hank does not seem to understand that companies are like organisms and that all the various parts of the organism need to work in concert for success to be achieved. Of course, since he’s apparently writing code all day, he can only look at the world from 10,000 feet instead of 50,000 feet.
So let’s give him a better view. In every industry, successful companies are succesful because:
- They offer a product or service that is of real value to stakeholders. Typically value is created when a product or service solves a real-world problem.
- They do a good job of marketing their product or service.
- They are well-managed by leaders who can execute.
Successful companies are run in a holistic manner. They are strong across the board (i.e. management, marketing, technology, etc.), not just in one area (i.e. technology). A company that overcompensates in one area lacks balance and eventually this will create problems. For instance, technology may be the engine that drives your business, but if you don’t have the rest of the drivetrain, you’re not going anywhere.
Case in point: a little over a year ago I had lunch with the CEO of a $3 billion technology company. One of my associates held, at the time, a fairly substantial stake in the company for an individual investor, hence my ability to get a lunch meeting. This company is the leader its field, is extremely innovative (has a considerable IP portfolio and invests significantly in R&D) and churns out solid earnings every quarter. Yet its stock price didn’t reflect a whole lot of investor enthusiasm and my associate complained that the reason behind this was that the CEO, who is an engineer by training, ran the company like an engineer. The end result: the stock was not reflecting the company’s true value because the company’s story wasn’t being told effectively and the leader didn’t make certain moves that couldn’t be rationalized with an “engineer’s mindset.” In other words, the company was not maximizing its value creation for shareholders because it was lacking in certain areas. During lunch, I came to the same conclusion: the CEO had blind spots and really wasn’t capable of seeing the big picture when it came to anything other than its technology.
The company in question has the foundation laid to become a great company, but, like its stock price, is stuck in second gear because it’s missing something. The bottom line is that great companies are great in every facet of their business. Techies who think that the world is driven solely by engineers are just as small-minded as MBAs who think that the world is driven solely by their bullshit PowerPoint presentations.
On an unrelated note, I will say that Hank is not yet completely drunk off the kool aid. Maybe he can avoid a hangover. On second thought, after reading this, this and this, Hank’s sobriety probably isn’t lasting long. Remember to take a Motrin, buddy.
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Drama 2.0 spikes the Web 2.0 kool aid by providing a critical analysis of Web 2.0 startups and the impact of Web 2.0 on the media industry. Other topics are explored when Drama 2.0 has a slight buzz. Read more about the Internet's version of Keyser Söze here.
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