Growth Is Hard

Zuckerberg1The business story of the decade is one of insurgency: Every sector of our economy has spawned a cohort of software-driven companies “moving fast and breaking things,” “asking for forgiveness, not permission,” and “blitzscaling” their way to “eating the world.” For years we’ve collectively marveled as new kinds of companies have stormed traditional markets, garnering winner-take-all valuations and delivering extraordinary growth in customers, top line revenue, and private valuations.

But what happens when the insurgents hit headwinds? In the past year or so, we’ve begun to find out. The unicorn class has had its collective mane shorn. A quick spin through the “unicorn leaderboard” finds a cohort strewn with cautionary tales: Uber’s under continual attack by regulators and increasingly well funded competitors. Square and Box, both of which managed tepid public debuts, have consistently traded below their private valuations. Airbnb, SnapChat, DropBox, and many others have been marked down by their largest investors. And of course, there’s the cautionary tale of Zenefits.

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The NewCo-BigCo Shift or, These Nine Things Will Change Business Forever

VIP Dollar Shave Club
Addressing the crowd at Dollar Shave before interviewing CEO Michael Dubin during NewCo LA last November.

(cross posted from NewCo)

Thanks to NewCo, I’ve gotten out of the Bay Area bubble and visited more than a dozen major cities across several continents in the past year. I’ve met with founders inside hundreds of mission-driven companies, in cities as diverse as Istanbul, Boulder, Cincinnati, and Mexico City. I’ve learned about the change these companies are making in the world, and I’ve compared notes with the leaders of large, established companies, many of which are the targets of that change.

As I reflect on my travels, a few consistent themes emerge:

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Should a Company Have a Soul?

Much of the Republican debates have been expendable theatrics, but I watched this weekend’s follies from South Carolina anyway. And one thing has struck me: The ads are starting to get better.

This season’s debates have had the highest ratings of any recent Presidential race, and they’re attracting some serious corporate sponsorship. One spot in particular caught my eye:

This ad looks like a lot of others I’ve noticed coming out of large companies these days — dramatic, driving music, compelling fast frame visuals, an overarching sense that something important and world changing is going on.

The spot has one purpose: To make us wonder if a business can be alive. Here’s the ad copy:

Can a business have a mind?
A subconscious.
A power to store every experience, and call upon it through something called intuition.
Can a company have reflexes.
A nervous system.
The ability to react, precisely and correctly, faster than the speed of thought.
Can an enterprise have a sixth sense. A knack for predicting the future.
Can a business have a spirit?
Can a business have a soul?
Can a business be…alive?
THE ANSWER IS SIMPLE. THE ANSWER IS SAP HANA

Given our cultural fascination with evil, AI-driven corporations, I have to wonder how stuff like this gets through any big company’s Fear of Looking Scary filters, right? I mean, does the agency not watch Mr. Robot?

But somehow the spot resonates — if you work in a large company, don’t you want that company to be … alive? Don’t you want it to be fast, and smart, and nimble, and … soulful? Don’t you want to be part of something powerful and vibrant?

Clearly, the ad is working for SAP, they’ve been running it for well over a year, and they (or their agency) felt it was appropriate for the 13+ million folks watching the Republican debates on Saturday night. The ad leaves a pretty clear premise for the viewer: If you want your company to be alive, install our software!

But it begs a larger question: what is the role of corporations in our society going forward, if we’ve begun to accept that they are in fact alive? (And have the rights of people, to boot!)

I’d be curious if folks out there are buying this whole narrative. What do you think?

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The Waze Effect: Flocking, AI, and Private Regulatory Capture

Screenshot_2015-04-20-18-03-49-1_resized-738987(image)

A couple of weeks ago my wife and I were heading across the San Rafael bridge to downtown Oakland for a show at the Fox Theatre. As all Bay area drivers know, there’s a historically awful stretch of Interstate 80 along that route – a permanent traffic sh*t show. I considered taking San Pablo road, a major thoroughfare which parallels the freeway. But my wife fired up Waze instead, and we proceeded to follow an intricate set of instructions which took us onto frontage roads, side streets, and counter-intuitive detours. Despite our shared unease (unfamiliar streets through some blighted neighborhoods), we trusted the Waze algorithms – and we weren’t alone. In fact, a continuous stream of automobiles snaked along the very same improbable route – and inside the cars ahead and behind me, I saw glowing blue screens delivering similar instructions to the drivers within.

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