The Misleading Business vs. Technology Argument - Tips for Startups
December 21, 2007 – 5:20 pm by coachwei | Category Tips, software business model | No Comments »In this high tech industry, one of the most misunderstood and potentially misleading conventional wisdom about startups is the separation of “business side” and “technical side” and “technical people should listen to the business people”.
This is the teaching from almost every business school textbook: don’t lead with technology, instead, should lead with business. You should look at things from a business perspective, not from a technology perspective.
Yes, I agree that the above is right and makes sense. But such teachings can be misleading, especially since that the other side of this argument is not mentioned enough. In particular, the evolution of this high tech industry is making such teachings more and more dangerous if not taught from a balanced perspective.
The reality is that our society has been tinted by the side effects of such teachings. All these well publicized examples of how various companies failed for being
technology-centric or being led by technical thinking instead of
business thinking have made people stay away from anything that sounds technology-centric. For example, most VCs wound’t invest in companies founded by technologists without a so-called “business person” on board. Or, even if they invested, the first thing the VCs would do after the investment would be to launch an executive search looking for a “business person”. The result of this separation of “business vs. technology”,
most of the time, is to bring in some “business people”
who don’t know the market and don’t have the foundation to understand and appreciate the subtleties of the market (otherwise they will be perceived as “technology people”).
Over the course of years, I have seen many promising companies failed, or struggling, due to the so-called “business vs technology myth”. The problem is not necessarily due to a particular group of people such as the VCs (though they often get the blame), but rather due to the misunderstanding of this “business vs. technology myth”.
We understand that the business of our high tech industry is technology. But what has not been well understood, and should have been widely talked about, is that “technology is business“.
In
this industry, technology and business are so intertwined that it is hard for anyone to make a sound business decision without thorough understanding of technology. In any segment of the high tech business, market landscape shifts are happening in shorter cycles due to the further and further penetration of technology into our business, our life and our society. Even for people like me who were trained as an engineer and quite a few well known/widely respected industry analysts that I had conversations with on this subject, we all acknowledge that it is not an easy job at all in understanding and reacting to market movements.
Take high definition content storage as an example: is it Blue-Ray or HD DVD? Yes, it is a technology war about storage format. But is it? In order to win this war, Blue-Ray team has to craft, and execute some strategy - a lot of which has to be the result of carefully technical considerations. For example, who to partner and why? Does it make sense to embed Blue-Ray into PlayStation 3? How to market the advantage of Blue-Ray against HD DVD? Imagine the business people in charge of Blue-Ray don’t have a deep understanding of the technical aspects of a technology war?
Remember the OS2 vs. Windows war years ago? Remember the PC vs. Mac war years ago (Note: the PC vs Mac war is “sort of” coming back as seem from the “PC guy vs Mac guy” TV commercial, but that is a different story)? Looking at things from the “business” perspective, the Mac approach made sense. Opening up the architecture means loss of monopoly, loss of design control and increased difficulty and cost for engineering and manufacturing, etc. How did PC eventually win in the end? At minimum, it took some serious understanding of the technology industry.
Take the software business as an example. Some typical business questions: why open source? What does open source mean both externally and internally to an organization? What does open source mean to product development and project management? How to evaluate whether someone is doing a good job or not if open source is part of the business? What kind of employees should hire? How should employees respond to the open source culture? Which part of a commercial product should be open sourced and why? How to make money from open source? How do the non-open source offerings play together with open source offerings? Why is the business sustainable? What if Google or Microsoft suddenly enters the field and offers a competitive product? -Can any of these questions be answered without a deep understanding of technology and the industry?
A few “web 2.0″ examples: would Google become Google if they hired a bunch of business people to run the business early one? Would FaceBook become FaceBook if they hired a bunch of business people to run FaceBook early on? For all these “web 2.0″ companies out there, can you react to “FaceBook API” and Google’s “OpenSocial” if you don’t clearly understand what they are and how to use them?
For young
technologists who aspire to start up companies, if I name one thing
that I would highly recommend, that would be “believe in yourself”. “Believe in yourself” specifically means that “do not listen to other against your own judgment - at least not do so just because you think they are more “business” than you”. Listen to your own intuition and
your own judgment. The chance that
someone else knows your business better than you is so small that you should
assume it is zero.
I greatly admire Mark Zuckerberg for publicly saying something to
the effect of “everyone at FaceBook needs to know how to code”. It shouldn’t be interpreted in a literal way,
but rather points out to the insight of “technology is business”.
Alex Iskold has a great post that touches this subject - definitely worth of reading: Software Engineering Tips for Startups. In the post, Alex says “It is misguided notion that business and technology are somehow separate and
that the first one is the king while the second is marginal. It is not, because
technology is what makes the business possible to begin with“. - I completely agree. Such statements, including the my post here itself, do not come from anything else but real world, in the trench, hard-earned lessons. Brad Feld responded to the post well too. See Brad’s post at Programming and Chocolate Chip Cookies”.
