Thank you all for the encouraging responses to my review of Ari Paparo’s new book Yield. Looking back over the first ten issues of this newsletter, I’ve written a lot about the books that taught me about platforms and democracy. This seems to be resonating — I even got a reader request for more book suggestions. So, in that spirit, if you liked Yield, here are five classic business books about the stumbles of the tech giants of yore that are still relevant today.
These books are what you might call “Silicon Valley Classic.” They were all published before Facebook was even founded, none of them mention Google, and Amazon only comes up once as an emerging competitor to Barnes & Noble. They’re not even all available as eBooks. You might have to (shudder) buy a physical thing.
If anything, this sense of history makes them more important. While tech stacks and applications have changed dramatically, business is still business. Books are a cheap way to build your own knowledge of what has failed before, instead of learning everything the hard way.
I’ve used at least one insight from each of these books in my own business career. I hope you’ll give them a chance and that they’ll help you, too.
by Jerry Kaplan
Kaplan tells the story of co-founding GO Corporation in 1987, a pioneer in pen-based tablet computing, even before the much-mocked Apple Newton. As you can imagine, it didn’t work that well, and was acquired and killed before ever getting to meaningful revenue, or even a user base. It took another 25+ years for the iPad and the Apple Pencil to become ubiquitous, but GO had the right idea.
Lesson learned: your acquirer is not your friend. AT&T bought GO in theory to support their Hobbit chip design, but two weeks after the acquisition closed, AT&T decided to kill the Hobbit line entirely, and GO along with it. If you sell your company, accept that you’re not a special snowflake. You’ve just agreed to become a piece of someone else’s strategy.
Apple: The Inside Story Of Intrigue, Egomania, And Business Blunders (1997, updated 1998)
by Jim Carlton
With an iPhone in every pocket, it’s easy to forget that Apple almost died in 1997 after a decade of stupid business decisions such as overpricing the Mac, the Newton debacle, and letting the original Macintosh OS sink into a morass of bloat and decay. This book is 448 pages of glorious, non-stop cringe, with only a tiny glimmer of hope in the last two chapters, added shortly after Steve Jobs’ return.
Lesson learned: hubris kills. Well after Microsoft started working on Windows, the head of Macintosh development Jean-Louis Gasée snapped that “no one will ever catch up to the GUI.” [Editor’s note: they did.]
by Michael A. Cusumano and David B. Yoffie
This book is magnificently researched, covering all of the details of Netscape’s founding: how it caught Microsoft napping, redefined computing, and hit $500 million a year in revenue. Followed, of course, by Microsoft regrouping, launching Internet Explorer, and pretty much obliterating their upstart competitor. It’s like if the final Star Wars movie ever was The Empire Strikes Back. Of course, this book came out the same year Google was founded and only a year after Steve Jobs returned to Apple, so the authors couldn’t know that Chrome and the iPhone were lurking behind the next tree like vengeful, bloody-minded Ewoks.
Lesson learned: your strategy must never rely on your competitor failing to execute. Netscape placed a bunch of long-term bets, such as rewriting their browser (Navigator) entirely in Java and trying to break into enterprise software, that would only have paid off if Microsoft had stayed asleep. Once Redmond woke up, they deployed an army of developers that relentlessly improved Internet Explorer until it left Navigator in the dust.
by Louis V. Gerstner, Jr.
The once nearly-omnipotent computing giant IBM also had a near-death experience in the 1990s. Lou Gerstner, the non-technical CEO of RJR Nabisco, wasn’t an obvious savior. As he tells the story, he succeeded because IBM’s deepest problems were cultural, not technological. Bringing common sense and accountability to the company, plus a pivot into services, worked wonders. IBM might not be at the forefront of computing any more, but at least it’s alive.
Lesson learned: huge companies are where accountability goes to die. Gerstner bemoans IBM’s infamous “nonconcur” system that was theoretically about respect for colleagues, but in practice let anyone block anything. He tells it best:
At any level of the organization, if some executive felt that solution diminished his or her portion of the company – or ran counter to the executive’s view of the world – a nonconcur spanner was thrown into the works. The net effect was unconscionable delay in reaching key decisions; duplicate efforts, as units continued to focus on their pet approaches; and bitter personal contention, as hours and hours of good work would be jeopardized or scuttled by lone dissenters. Years later I heard it described as a culture in which no one would say yes, but everyone could say no.
Inside Intuit: How The Makers Of Quicken Beat Microsoft And Revolutionized An Entire Industry (2003)
by Suzanne Taylor and Kathy Schroeder
As a palate cleanser, the last book on my list is actually a success story. When Intuit launched Quicken, the financial software space was crowded, but their relentless focus on customers made them an industry leader. Microsoft came after them aggressively with Microsoft Money, but they survived and have continued to grow to this day. [I’m omitting a valid debate about the ethical issues of paid tax preparation software in the US.]
Lesson learned: in uncertain times, get closer to your customers. Intuit was always customer-centric, making all employees spend time answering support calls. When Microsoft came after them, they doubled down, with even more focus groups and going out to visit software retailers in person. This bear hug meant they understood customer needs much better than Microsoft, and built loyal relationships that offset Microsoft’s financial might.
Ideas? Feedback? Criticism? I want to hear it, because I am sure that I am going to get a lot of things wrong along the way. I will share what I learn with the community as we go. Reach out any time at [email protected].
