Anecdote: I saw the Pigs Flying [and Companies Dying]
Before jumping on to Pluggd.in full time, I have spent a good amount of years in corporate life (right from being a hard core engineer to business consultant and then, product manager).
I have been to several all-hands, clapped to ‘we will win‘ speeches, have worked with some of the most amazing people in the industry and of course, have seen some of the companies/partners dying a slow death.
One of the things that I have strongly grasped is the time frame it takes for rolling out any major strategy implementation in the corporate world; I believe it takes a minimum of 3-4 years to do any strategic shift in the company. And most importantly,
Signs of death (or disaster) start showing up very early in the corporate world.Just that companies refuse to acknowledge it.
Without getting into an MBA style discussion on why companies fail, let me share 2 anecdotes where I sensed a loss of market understanding, an ego that said ‘I don’t care’. And 4 years later, the impact of those decisions is being felt these companies.
Who knows, it was possibly the first nail in the coffin which everybody chose to ignore, and that entrepreneurs would do well to look out for as they come to forks in the road.
Anecdote #1 – Holier than thou
In 2007, I was managing a desktop product (#1 in its category/very loyal user base worldwide – a small feature change and you will have mails flooding the inbox) that needed a runtime environment.
The company that provided the runtime environment, in its latest release started distributing a competitor’s product along with the installer. The latest release was a 2X performance improvement over the earlier versions and we actually wanted (our customers) to use that.
Since the desktop product was setup to install the runtime environment (if it were not present), it would do this with the latest version of the RE.
The obvious problem here was that the competitor’s product was bundled with the installer and we of course didn’t want to distribute that.
The Negotiation Game
So I started a discussion with the partner company, spoke with the APAC CTO. We worked out the requirement and even shared the piece of code that will solve the issue (we actually did their job).
The company had a long relationship with our firm and they were willing to work with us. So after 3 weeks of continuous discussion, this is what we got.
- Total cost of the project : A few million dollars.
- Release Date : 6 months from now.
Pissed off, I called up the guys at our partner company and shared my concerns – I had a budget approved for this project, but it was a fraction of what they asked for; we also wanted the custom version in a few week’s time and these guys were asking for 6 months!
Not much changed after further negotiations. So, in a very candid note, we said ‘
We aren’t getting any value add from this project.
In reality, we just don’t want to diminish value of our product by distributing a product that competes with us and pay X million dollar for something that adds not a single penny worth of value. Moreover, six months duration drastically impacts our release cycle which is not acceptable.
I understand that you have your own commitments with the other company, but going forward we will have to stop using your runtime environment.
In 1999, our product was one of the major consumer of this runtime environment and the product’s success laid the foundation of a lot of new innovation that came later (using the partner’s platform).
We could have worked around the cost, but 6 months is way too much in the Internet age. Even though we gave them the piece of code that was needed to get the damn thing going, the company had 6 months of bureaucratic process to make this happen!
In Steve Jobs words
We cannot be at the mercy of a third party deciding if and when they will make our enhancements available to our developers.
If you were distributing a platform, you can never hold others for ransom. and if you do, your partners will move on.
And we eventually did.
The company, 4 years later has lost the platform war and has been safely acquired.
Game over. Party over.
Anecdote #2 – Break the Chair
In 2006 or so, I met this company (I was planning to move to Delhi and looking for some really interesting job profile), probably one of the hottest technology company in the world and definitely a big brand in India.
During the course of our discussion, one of the top executive asked ‘So what extra feature will you add to Product X’.
I have been a firm believer that adding features (to a stable product) do not lead to nirvana [do check out the most used features in Microsoft Word for reference].
Yes, it does a lot of good stuff to Product/Engineering team and help them get good performance bonus, but the real business game lies in cracking the next market.
Flash of brilliance and I said ‘Maybe, this product needs to go online. Maybe, instead of $350/copy, you would want to distribute them to people who cannot afford $350. Why not take the piracy market head on and also, focus on moving to small users? Maybe a much simplified version of the current product?
Maybe it will be an ad supported model? For example, I would like to buy Microsoft Word for Rs. 100/yr kinda price and am ready to let them stuff ads.
[As a side note, read one of my earliest post, Piracy – Is it really that bad? where I have argued that open source is not losing out to “closed” products, but to piracy of these closed products]
The guy started laughing (and was almost about to break his chair) and he actually painted a scary picture of my suggestion
You mean you will write documents over the web? And you will see these ads while writing/reading the document? Naah..I don’t think it will ever happen. People aren’t ready for it. I will never use something like this.
By now, we all know where the new world is headed towards.
The guy (who is supposed to define the strategy) was clueless about the new new thing and was probably worried too much about his next performance appraisal. He refused to open up to new ideas and maybe, that was the DNA of the company.
The company, in this context is doing well, but is losing out on the platform war (currently involved in a big fight with Apple). Most of their ‘cloud’ initiatives have fallen flat and they will have to look back and change the basic DNA of the company, if at all they do not want to break their own chair.
Both of the above mentioned anecdotes probably didn’t mean much when the discussions happened. They were like ‘flying pigs’, i.e. impossible task (“We cannot change our release schedule! That’s impossible“, “Products over the web? That’s impossible!“.
None of the discussions meant anything to the company [heck! we are so big, how do these small things matter?] – and that’s the crux of the story.
Degeneration of the DNA in large corporate takes probably 3-4 years to show up in the body, but given their size they still have a good market share, a captive audience – so it is a slow death.
But as a startup, you just need to keep an eye on whose laughter is breaking your chair!
What do you think?
* I have masked the company names, as the names aren’t so relevant in this discussion (lesson is more important than the names).