In the mid-1990's, a fantastic documentary was created on the rise of the computer industry, hosted by Robert Cringley. The three-part series chronicles the rise from the Altair through Windows 95. Long interviews with all the big names: Jobs, Gates, Ballmer, Jack Sams (who? the guy who worked to get Gates and team to provide DOS, thus launching an empire). When I teach entrepreneurship, I often spent a week of class time watching and analying the three-part series. Its a timeless classic, and each time I view it I see a different angle, particularly in today's technology climate.
There's three things I like to point out when viewing this fantastic, though low budget, series:
1) No one discussed business plans. Three days of interviews and history, and not once did Gates say "we projected the market..." I don't doubt that they considered it. But, in emerging technology markets, the business plan helps discipline thinking, but any estimations and assumptions are driving by passionate commitment to a company's trajectory, not a drawn out business plan.
2) A key to Microsoft's success was a tacit understanding of complementary assets. Microsoft's goal was to sell applications, but a complementary product, the operating system, was necessary and Microsoft was willing to step in to ensure the continued progress of IBM on releasing the PC. Moreover, the business press has forgotten that Microsoft made very little money on their deal with IBM. Where they launched an empire was Microsoft's reservation of rights to distribute their software to other companies.
3) In turn, IBM was blinded by their own success: assuming no other company could make a PC once IBM entered, they never worried about competitors like Compaq entering. Larry Ellison pointedly stated the truth: it is suspicious that IBM could give the market away. Why not buy Microsoft and partner with Apple? Could an organization have been that dense to miss these opportunities? Yes, see the history of Xerox PARC.
Friday, July 25, 2008
Sunday, July 6, 2008
Happy 1 Year Anniversary!
It has been one year since I posted my last blog... exactly 1 year, in fact. After a 1-year hiatus, it is time to return to the blogosphere. Thanks very much for all the kind encouragement, both publicly and privately. So, I officially launch a committed (weekly) effort to "provide encouragement and advice for" / "make fun of" economics and entrepreneurship.
Wellpsring Worldwide's Managed Development Services incubator works with a number of technology start-ups. I'm not going to post inside information, for obvious reasons. Most importantly is the tautology problem: posting means its no longer insider information. Unless, I have just one reader.
Still, we can chronicle general learnings. Since landing at Carnegie Mellon 5 years ago, I've been fortunate enough to actively participate in 19 start-ups so far, which is enough to build points on a graph predicting what works and what doesn't. I've been a "related observer" in another 5 firms. These were mostly firms where I did not want to commit significant time to since each firm had something that indicated doom beyond the box office income of The Happening (M. Night, what happened?). Like the "entrepreneur" who repeatedly requested we not meet on weekends because he reserved them for hiking. Needless to say, there's a minimal level of commitment required in starting a technology company.
As a former business school professor, I blame the entire professorial profession for the proliferation of profligate prosaics-- that is, misleading homework and memorization exercises which aren't moving you closer to starting a company.
This year, the goal is to encourage entrepreneurs to see through the shallow rhetoric and understand at a deep level what it means to create an organization for the purpose of extracting economic rents or Schumpeterian entrepreneurial profits (that's the pointy-head academic definition of entrepreneurship).
So, please start looking around Monday mornings for a zap of entrepreneurship. We can't make anyone an entrepreneur, because anyone can be an entrepreneur. Its a matter of recognizing opportunity + unique resources to capture that opportunity.
Wellpsring Worldwide's Managed Development Services incubator works with a number of technology start-ups. I'm not going to post inside information, for obvious reasons. Most importantly is the tautology problem: posting means its no longer insider information. Unless, I have just one reader.
Still, we can chronicle general learnings. Since landing at Carnegie Mellon 5 years ago, I've been fortunate enough to actively participate in 19 start-ups so far, which is enough to build points on a graph predicting what works and what doesn't. I've been a "related observer" in another 5 firms. These were mostly firms where I did not want to commit significant time to since each firm had something that indicated doom beyond the box office income of The Happening (M. Night, what happened?). Like the "entrepreneur" who repeatedly requested we not meet on weekends because he reserved them for hiking. Needless to say, there's a minimal level of commitment required in starting a technology company.
As a former business school professor, I blame the entire professorial profession for the proliferation of profligate prosaics-- that is, misleading homework and memorization exercises which aren't moving you closer to starting a company.
This year, the goal is to encourage entrepreneurs to see through the shallow rhetoric and understand at a deep level what it means to create an organization for the purpose of extracting economic rents or Schumpeterian entrepreneurial profits (that's the pointy-head academic definition of entrepreneurship).
So, please start looking around Monday mornings for a zap of entrepreneurship. We can't make anyone an entrepreneur, because anyone can be an entrepreneur. Its a matter of recognizing opportunity + unique resources to capture that opportunity.
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