Why Big Companies Keep Failing: The Stack Fallacy
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I saw this happen with Skype where I worked a couple of years. The company succeeded because of P2P: we grew with little infrastructure to reach 200M+ people. P2P became our DNA, rooted deep within (almost) every core component.
Then came the new wave of mobile messaging apps. We reacted... with a P2P messaging solution. It was obvious this wasn't working - you sent a message to someone from Skype for iPhone, and they got it... sometime.
We knew to have a chance against Whatsapp and other messaging apps we needed server based messaging, so we built it.
It took 3 years. Yes, it took this long to get rid of the P2P code from just the messaging components from the 20+ Skype products - we had 1,000+ engineers and 50+ internal teams by the end which significantly slowed things down. When we were done and popped the champagne - no one really cared.
And yes, the source code is still full of P2P references and workarounds to this date.
Funny thing the company DNA, P2P is still haunting Skype.
1. You receive a message from someone.
(wait a few hours)
2. You open this tab/read the message
3. The number of unread messages counter doesn't update.
The linux client... well, for the longest time you could be lucky if it would even work. After years of not updating the bundled libraries, they stopped interfacing well with the ones in the system.
And then there was an update, which changed nothing, except for introducing ads on linux and disabling video chat for most cases.
The issue of skype might not be P2P, it sounds more like it was a lack of ability to provide a stable product of any kind. The Android app was also the worst app I had seen for many years. Who the hell seriously builds their own UI toolkit, and then makes it work worse than the one bundled with the OS?
However Skype had no history of running servers. Just keeping the login servers up and running (a handful of them) was enough of a challenge.
Plus when the company's success and revenue was driven by the P2P team and they said the same layer will work for messages... there was no one strong enough to argue.
And when it was obvious that Skype messaging was sub par, the company just went in denial. "We aren't really competing with Whatsapp, because they don't do video" got us another year or two of not doing too much about the root cause.
It was after the Microsoft aquisition when some MS architects told the engineers upfront that p2p and realtime messaging - forget about it.
Plenty of people knew it didn't fly, and it couldn't have been that hard to fix it if you really wanted to do it, if you were prepared to drop p2p. But still it was a hard descision to make.
Why do you think it's like that?
Skype got massive because of video (and audio) calls. That was our main differentiator, and what helped us grow. P2P really excelled there.
Messaging was built as almost an afterthought and supporting feature, piggybacking on whatever infrastructure we already had in place.
And of course it didn't help that there was no one person or team in charge of the user experience who would call out that we have far inferior messaging experience then... any of our competitors, really.
Even when we did - and aquired GroupMe to do something about it - we then still had the false sense of security and not needing to hurry, because user numbers were still growing upwards. And when they slowed down, it was too late.
How long ago was that exactly? From what I remember, ICQ had offline messaging around 1997.
All our email clients do is send it to our email servers. Try sending email out of your own machine. I doubt 10% would reach the destination inbox. The general assumption today is you don't run your own mail server. :(
Any, several couple months later they sold to AOL for something like $250 million. I was living in Chicago at the time and coincidentally the Hancock building had just sold for ~$280 million. I remember thinking that four guys had created as much value in a year as thousands of construction workers and real estate managers had created in three decades.
Their story is very interesting :) , the founders were Arik Vardi, Yair Goldfinger, Sefi Vigiser and Amnon Amir.
We talked to Yair, from what he told us, they were using dial-up at the time, and they had to disconnect or use another phone line to know whether the others were online, and so they discovered a need for a tool to find if somebody was online, and enable communication between connected users.
They weren't very finance-savvy, fortunately for them one of their parents was, and he handled all the fundraising and stuff.
The problem? We had it running 24/7 on work laptops and phones so the messaging issue was less obvious. The typical user started Skype on their desktop, and killed it after a video call. They also killed it from running in the background on their phone because it killed the battery. We just keep charging the phone.
And as we saw issues come up with Skype for our usage patterns, we did focus on those. Did you know that originally the limit of a group size was 300, a random constraint someone added in, and got hardcoded in all the apps? That size was basically chosen because we were pretty sure the largest company Skype group would not grow beyond it. Well, it did a couple years in and we spent more time and effort trying to solve this then a lot of the other stuff. I mean people could not get in to the Tallin office social chat channel and were missing the gossip!
Eating your own dogfood is a good thing - but it also leads to overusing your product and being less critical with it over time.
Also, on top of this the fact that our user base kept growing despite these flaws did give us a false sense of security.
This probably compounded the issue. If the battery-drain never presented itself, users would have been more likely to not turn the application off.
- Network drain - just how much data an app uses is nonobvious for most people, especially that it changes over time.
- System resources drain - low-to-mid-end Android phones are usually pretty underpowered; they can barely lift their OS. Any application running in the background makes using other applications more frustrating. Hence the popularity of auto-killers on Android.
Your friend now gets reception and will get your message... between a minute and a couple of hours. Most likely when you turn your phone back on, as the p2p network was not designed to store and propagate offline messages.
Meanwhile someone at Whatsapp built a key value pair on a server and if you had reception, you got the messages immediately and reliably. Oh, yeah, because the read and unread message states in Skype also propagated via the p2p network and also got took a while to arrive...
What saves some companies from this is a core DNA that can be interpreted in a very liberal and malleable fashion. For instance, Amazon is about distribution--be it products, bits, computing power. Facebook is about social connection (not P2P or a particular narrowing of tech). Of course, maybe that's just survivorship bias...no one keeps a good directory of the graveyard of corporate DNA that was as similarly broad.
Now whether that is a function of articulating flexible DNA, or the flexibility of the decision makers...I don't know. Either way, fixed mindsets close down adaptivity to new opportunities.
Except this never happened, GroupMe is still a standalone app and pretty much a standalone team. I am not sure why we didn't or could't integrate them, the Microsoft aquisition of Skype, and the subsequent integrating with Lync (and the birth of Skype for Business) probably had higher priority.
Unfortunately "the devil is in the details". Reuse, in this case, hurt the messaging app because of a fundamental difference between connection and connection-less communication. I'm sure the engineers working on the messaging app understood the problems. But, they were most likely not a key part of the decision chain.
You can do P2P on mobile and you can even do P2P with central server fallback without sacrificing reusable components and with standard network protocols. You just have to do the hard work at the lowest layers first and you have to think about the problem from an SDN perspective instead of an app-centric-P2P perspective.
(Intentionally cryptic response, yes. Grin.)
Beside skype has terrible ui on Windows, current version has a bug causes wrong message ordering.
On android, I have experienced all those message delivery/notification bugs and it works slow.
I don't know how the experience is like in IOS and MacOs. Maybe I should all switch to Apple to have the best experience from a microsoft product?
No-one here uses Skype any more though. It's all Flowdock for messaging and Hangouts for conferencing.
Sadly the increasingly forced updates always made the UI/UX worse, the phone client was a resource hog, and they weren't quick enough with a user-friendly web client. Meanwhile Slack showed us all how it's done.
I'm genuinely trying to get my friends to switch to AIM - as far as I can tell that's the free option that comes closest to getting it right.
It predates being bought by ebay too.
Give me MSN Messenger and IRC again -- you know things that actually worked.
(Skype IM is a joke, I agree)
Maybe it's a location thing? I'm in Scandinavia..
Dude you should try Hipchat video conferencing, it makes Skype look like the future.
I haven't experienced anything better, even if Skype obviously could be even better. With 300 mbit connections you would think we'd have somethin better.
I'm working with a "generic flavour of WebRTC" and they're still behind Skype and Hangouts, but they're getting better by leaps and bounds.
It is important to instead concede that you don't know the needs of the consumers in the higher level, and if you think you do it is because you are guessing. The only way avoid the problem is to not attempt to move into the higher level, at least not intentionally and not through business priorities.
This is extremely counter-intuitive because there are generally fewer expenses and greater market frequency at each higher level, which means superior revenue potential. Businesses exist to make money and to ignore moving up to the higher level means denying this potential (vast) revenue source.
This doesn't mean you can't move into the higher level of the stack and be really good at it. It just means you cannot do so both intentionally and as a business objective.
The solution is to double-down on where you already are with what you are already good at and focus on product quality of your existing products. Continue to improve where you are already good. Improvements and enhancements to existing products can gradually yield the next level as the improvements progressively open new potential in an evolutionary fashion. While getting to the next level this way is much slower it is also risk reduced and continues to associate your brand with quality and consume satisfaction.
This will only work, though, if the goal is improving the current product and not acquiring revenue in that desired higher level. Think evolution and not revolution. It has to be a gradual, almost accidental, increase of capability based on meeting current consumer needs.
I cannot see Oracle slowly adding extra features to its database until it becomes an actual CRM system. A CRM is not just a solution to a different business problem but also a logically different layer from a development perspective. You would have to build it as a product that sits on top of the database product.
But as a CRM system it has no value to the end customer unless it has a certain minimum level of functionality. So although you can add features gradually and evolve your CRM offering you will not have a single customer until you have actually added enough features that make it actually usable. Nobody will buy your gradually evolving system until several years have passed and it works for some actual customers. In which case you have already spend alot of money and effort.
This sounds a familiar argument - roughly what you're saying is that an eye cannot evolve, it has to be intelligently designed? :|
Nobody will buy your gradually evolving system until several years have passed and it works for some actual customer
The parent was assuming people were already buying Oracle as a database (for example), and continuing buying Oracle as a database, and gradually getting CRM features coming with it.
So people will always be buying the gradually evolving system, and it will always/increasingly usefully be working for some actual customer.
But as a CRM system it has no value to the end customer unless it has a certain minimum level of functionality.
"There's a minimum crew requirement"
"What's the minimum crew requirement?"
"Oh, er, one, I suppose".
It has value as long as it has any value at all, there isn't a certain minimum level of functionality unless you assume either 'absent' or 'broken' is involved. By the time a single shipping useful feature rolls into a production release, it has value to anyone who wants that function. Or, potential value, at least. Like a proto-eye that has value as soon as it's a light/shadow sensitive cell.
It wouldn't make sense to release one basic function as a CRM product - which is why the parent is talking about 'evolving' an existing product up to a higher stack layer, not trying to release a new product at a higher stack layer all at once.
So although you can add features gradually and evolve your CRM offering you will not have a single customer until you have actually added enough features that make it actually usable
Following the model where Oracle tries to build and launch a CRM product all at once, or Google try to build and launch a social network all at once - which is completely the opposite of the gradual improvement up to a higher level which the parent was suggesting. You're arguing "you can't gradually improve from where you are because that isn't releasing a finished product in one go", no it isn't, that's the point.
I agree with you on the problem with moving up.
Not so sure about the gradual move up. Another path is to acquire and let them lead. Another is to appreciate the nuance and hire great product people.
You need to find customer problems that you understand and can solve, not chase markets up the stack because they are bigger and "look easy".
If anything, large companies often miss out on new trends and changes in business and technology, but it's not solely because building that one new layer "up the stack" is so technically hard or different.
EDIT: Why the downvote?
So maybe it's not customers' needs, as much as their wants, but close enough. The customers wanted Facebook (because of chicken-and-egg/first-mover advantage and also the good-enough factor), so a me-too competitor just didn't have much hope.
It was similar with Apple under Jobs: they knew what customers really liked and wanted, so they made tons of money even when there were technically superior alternatives to their products.
Many products - even corporate products - are chosen for their social signalling implications, not for rational reasons of performance, cost, or efficiency.
Remember "No ever got fired for buying IBM"?
G+ had the technology, but it had no ability to manage the social signalling.
Apple is all about social signalling. That's possibly its primary product. The hardware is just a signifier.
Facebook doesn't have social signalling - it is social signalling. Same with Twitter, and all the other social sites.
Google has never understood how this works. Even when it has a pin-sharp social marketing message represented by extremely attractive shiny people, somehow it never quite makes it stick for specific products in the way that other companies do.
It's so often repeated, but this is silly. Sure, Apple is fashionable, but that is hardly the only reason anyone buys their products. Apple products are good - or at least good enough for their customers - and that is why people like them.
Many programmers here on HN use MacBooks, for example. That's not just because it has a shiny apple silhouette on it.
Actually, in my experience, it's because that's what the company offers them to use at work, and most people just go with the default. I have been told many times "And you get a shiny new MacBook!" And I thank them and mention that I prefer to work on a Linux machine. It is almost comical how many blinking stares I have gotten. It fucking is about the shiny apple silhouette on it. It is 100% about image and not utility ("Sorry! I have work to do and I'm not allergic to the GPLv3!"). Especially because when you buy an Apple, you are paying so much for mediocre hardware at best. I have had better luck with late-model Thinkpads than I have had with MacBooks! They're not magical. Well, not magical beyond that shiny Apple silhouette.
Consider why these companies given employees MacBooks in the first place. (The answer is usually that Linux doesn't work well enough for them.)
To chalk it all up to network effects is to let them off the hook too easily, after all there is no reason you can't build other successful social networks concurrently with Facebook, you have your Twitters, Instagrams, Snapchats, etc.
The way I see G+ failing is because there was no soul or vision to the product, it was driven by a simple fear of Facebook, and it's implementation was a simple conglomeration of features that constituted a cool tech demo but was not shaped by real users or a real use case (Google does this often, see Wave, but at least in that case they were trying something novel). In short, G+ was not true to Google's DNA.
I think my view still supports your main point though—stacks simply are not the same for each company. Lower level stacks tend to be more similar, but at the top they are serving unique market segments, so they are simply not fungible.
Facebook annoyed many users each time a new update came. The privacy settings were constantly being reset. I do not believe facebook has a great UI to this day. Google+ is not great but it does not offend me the same way.
And I say that as someone that doesn't have Facebook account.
> The privacy settings were constantly being reset.
True. What privacy-minded Facebook critics often miss is that privacy settings seem to have been constantly reset towards "more private" mode. Hell, at this point Facebook is starting to get really annoying with those recurring reminders about visibility of my post. I post all-public because I like it that way, I hate the constant nagging about switching to more private mode.
Conceptually they had the core of a very good story, which was the idea I could have "Facebook where I segregated the people in my lives". It was even quite good timing, as it was mooted around the time people were starting to bubble up stories about "my boss started reading my Facebook and I got fired", "my family are upset by the politics my friends discuss" and so on.
The biggest problems with G+ from my perspective, around launch time, was other than Facebook's network effect, that the dribbling out of invites completely cut against the core success model for a social network, and the whole circles functionality ended up being one of those UI nightmares you get from Googlers who don't understand how normal humans actually work.
G+ positioned itself against Facebook sort of like DuckDuckGo went against Google: we made the same product, but fixed X!!!, where X is some gripe about the incumbent's product that only a small percentage of the product's potential userbase cares about (privacy, in both of these cases).
That was (and is!) a fantastic strategy for DDG, for whom a fraction of a percent of all search traffic counts as massive, life-changing success. Google is not DDG, though. G+ would have needed a much larger share of the social networking market to be considered a win for Google, and the initial differentiation was not anywhere near clear enough to get there against a rival as strong as Facebook.
I also agree about the UI mess, and all that, of course, it was not a great product to use out of the gate.
Like automatically creating a Google+ account for every google account without asking first? I can see millions of doormant accounts where you think you are following somebody when indeed there will never be an update from that account.
- http://techland.time.com/2012/01/20/want-a-google-account-no...
- https://marco.org/2013/01/03/no-avoiding-googleplus (the WSJ later changed that page)
- http://www.cnet.com/news/getting-gmail-now-you-get-google-to...
Not to mention Google+ was truly asinine about forcing users to merge their YT and G+ accounts (and even gmail, iirc), it was all just very confusing and obtuse. I don't want a SSO. I don't want a G+ account for every Gmail account.
I didn't want to have to fuck around with merging my accounts, tethering each YT channel to my social network, etc. I want -- and have business needs for -- a division between the sites I use. I frequently need several different usernames and identities on different sites, even if the sites are owned by the same company, as sometimes I am creating social accounts for clients.
Google was, IMHO, trying to be shady and act like every youtube comment was actually Google+ activity, simply so they could claim, "We have XXX million active G+ users each month!!" They weren't and you don't. I'm glad their shady network and backhanded business practices failed.
Two: G+ kept trying to hook into everything Google did. My Youtube account with all my embarrassing 80s playlists and WoW videos and cats and ... WTF? NO I DON'T WANT TO SHARE THAT. Pretty much every time I logged in I had to say "No I really don't want to do that" until they finally snuck it through at some point. Many people just weren't interested in establishing a network with somebody who didn't understand privacy at all and kept changing the rules for existing services. Coupled with previous missteps, I'm looking at you Buzz, this was a deal breaker for many. Facebook has a bad reputation but at least they are not trying to surface embarrassing info from other sources.
Three: Google+ was tech heavy from the start, which meant it tended to drift "professional" and be considered "for the geeks". Friends and family were already connected to me on FB, G+ tended to be old colleagues who weren't close enough to be connected on Facebook. I just don't have much to share with those people that I'm not already sharing on LinkedIn. For a social network, geeky early adopters is NOT a recipe for success.
Four: Google+ started making other services worse. Youtube comments were a disaster and seriously broke content creators ability to have a dialog with their audience. Google Reader was gutted and eventually shutdown. New services were artificially hooked into G+ for no real reason. Basically, G+ became the punching bag for problems in it's other products.
For me Facebook is only useful for my personal life. Should I want to post about some programming stuff? Doesn't belong on FB. The reason is because FB ends up being a disaster if you combine your friends and personal interests with your professional network. It just doesn't work as it doesn't give you the tools to separate the two. And yes, I ended up silencing or unfriending folks for that reason as well, as an alternative to deleting the account altogether. And I have no acquaintances that use FB for non-personal stuff, unless they sell social media bullshit of course.
You're talking about circles being complicated. Not sure what it has to do with OOP, though those circles do represent a taxonomy. And they are complicated, but at least Google attempted solving the problem. The problem being that at home I'm a totally different person. And when I follow people I don't know, I follow them only to get stories on certain topics of interest and I don't really care about their personal life.
You're saying that G+ was tech heavy. I disagree because that's currently Twitter and G+ would have won if that were true. I don't know the reason, but my guess is that it had to do with shitty things like the real name policy. Or in other words, having FB's creepy restrictions without the network effect.
That was kind of my point #3. You already had Facebook for your friends so G+ became your network for your geek friends and geek co-workers. If you're not a geek, you were already using LinkedIn for that purpose. That's a small market.
OO Programmers (and biologists) are the only people who naturally think in terms of complex taxonomy.
Agreed, their real name policy made it completely unattractive for many purposes, including Mashable trying to set up an account and needing to rename it to Pete Cashmore (if I remember right). But Twitter is not tech heavy, it's tech/startup/entrepreneur/media heavy, including tech but not strictly limited to it.
That, and during the brief window where G+ had the most hype and the best shot and getting mainstream, which also happened to be right when Facebook had just recently made some pretty egregious privacy fuckups and pissed everyone off... they very strictly limited who could get an account. I forget the exact timings but it was basically impossible for a typical prospective user to get G+ until around 6 months after they had actually rolled it out. What the fuck, guys?
Then when they finally opened up registration no one gave a shit anymore.
I guess maybe they were trying to mimic the thing with Facebook where you initially had to have a .edu email in order to get a Facebook account - but it's very debatable whether Facebook succeeded because of that or in spite of it.
The the author doesn't dispute this. Building the site was "trivial," but determining what to build was the real challenge. And they failed at it, because they didn't understand the users' needs.
Users didn't need a "me-too" social network that was just a facade of the old social network with a fresh coat of paint. If you want to win over users, you'll generally need to either (a) provide something that users need and that the competitor has overlooked, or (b) provide a 10X-better version of something your competitor provides. Google+ didn't come close to doing either.
That's generous - users told them repeatedly and in no uncertain terms that they were extremely unhappy with numerous aspects of the platform. Google simply did not care if users liked the product. How they expected it to be a success with that attitude boggles the mind.
For example, the "Real-name only" policy was never customer-focused at all, but an incestuous favor to the advertising/profiling panopticon.
Similarly, the "forced collapse of all credentials" into G+ (like Youtube identities) probably made some things easier for Google (especially pushing its adoption as an identity-provider) but did a lot of things existing users weren't happy with.
First of all, I think it really bothered a lot of people how they retroactively converted a bunch of pre-existing accounts into social networking accounts. Especially for things like Gmail, I don't think people had any idea they were signing up for a social network.
I also think tying together a dozen disparate sites and services under a single account login bothered people. Nobody really wants their search results, chats, video watching, picture sharing, and email all smashed together into a big social network. Especially not when it's unclear how those things are related and how clicking "Like" or "Share" on one site will show up on the others.
On the other hand, just being logged into Facebook doesn't implicitly log you into a dozen other sites and it's pretty clear that if I click a "Like" button, I'm liking it on Facebook.
Now that they've split up the product and made Photos a standalone app, they've got something. It's not a social network, but rather a simple concept that people can easily understand. Now if they could make the relationship between Drive and Photos a little clearer, they'd really have something. :)
However, I think the biggest reason for G+'s failure was that the spirit that permeated it was corporatism and inauthenticity. It's frustrating, because it could have been a great opportunity to thoughtfully integrate Google's services.
G+'s phoneyness often manifested in overriding user preferences. E.g., unthinkably, Eric Schmidt thought it was a great vehicle to get people to start using their real names. Coupled with forced signups, butchered product integrations, destruction of Google Reader, awkward promotion by Black Eyed Peas, and Vic Gundotra constantly posting Youtube videos that were clearly meant to appeal to "regular people", it has been painful to watch.
The public is not oblivious to motive, especially when it comes to choosing a social network. FB's key to its early success was an air of Ivy League exclusivity. G+ had Google's relatively sterling technical reputation, respect for privacy, and credence in the "don't be evil" motto, but squandered it to desperately imitate Apple and FB.
They failed because they didn't throw enough resources at something that wasn't that strategically important to them.
(cf. their entry into the music distribution business, a brand new "up the stack" market which was of huge strategic importance to them, where they ended up assessing customers' needs better than the existing players in that space)
Apple Maps certainly had serious quality issues at launch. Whether they considered building a mapping app to be easier than building an OS, I have no idea. I am sure that many at Apple were under no such illusions. But it was a product made for purely corporate strategy reasons.
Apple's networked services have often struggled. But are they really higher level than the things Apple succeeds at? Asking whether enormous distributed data stores are higher level than Mail.app just seems confused. It's different, and it brings new challenges, but are they part of the same stack? And is the data ingestion and sanitizing that Maps struggled with higher or lower level than the client that was basically ok? You can multiply these questions and I'm not sure you can get good answers.
In fact, Steve Jobs never even wanted third-party apps on the iPhone (http://www.theguardian.com/technology/appsblog/2011/oct/24/s...). So, it's understandable why Apple has struggled with their networking services, backend services, and apps: such concerns weren't even remotely a part of Apple's DNA.
His basic logic was that - Success depends on processes - Processes even though might be thought of as abstract in reality are function of people at top. - Company gets successful because some bright guy is the rebel, he questions status quo, persists and succeeds. - As time goes by, the rebellious ideas actually become conservative ideas. The rebel is now on top. As his ideas fade he struggles to stay on top. - He recruits people who see the world through him, he builds processes that enforce that vision. - This makes it difficult for the truth to be visible to the top management. - By the time failure is visible it is hard to turn around the ship. - IN SHORT: Companies/Nations fail because someone at top did not know when to quit. - In the end that rebel turned conservative becomes bitter. He thinks the world owed him something for what he achieved.
He explained who USSR examples. How a genetic scientist got promoted because his fake research re-enforced something that Stalin had said long back and his peers were scared to point out the fact because it might get perceived as anti-Stalin.
I observed Blackberry very closely and it resonated to me so much. The founders at one point blamed people for using iphone and not blackberry.
Best companies in the world are seem to be those where their top leaders quit at their peak to make way for their successor.
I don't think that manufacturing semiconductors are comparable to building maps. Apple should have done a better job with maps, and even though they do complex manufacturing, likely should have done worse at chip manufacturing.
Iirc they brought in 3rd parties to help with the chip fab, and certainly spent more money building that core competency than maps.
I believe the author is correct that the issues is companies not fully understanding, and consequently underestimate, what it takes to be successful in a different arena putside their cc.
Google sees people as articles in a db. They dont understand people at all, they dont understand design as it relates to people, and they didn't understand that nobody needed another social network.
They probably underinvested (initially) in G+ and it was not a great product. It didnt achieve critical mass quickly, and thus had no chance of growing as a docial platform ever.
However, google is a lot more capable of creating something like this because they have all the core conpetencies down.
I guess my takeaway is that the companies can in fact take these arenas, but they underestimate the challenge. So to use a drug dealing analogy, they try to start moving bricks amd kilos, instead of working their way up learning the market pushing dimes and quarters.
They start too big, and when you fail big, you dont get the recovery of a smaller failure which affords small relaunches and features.
Tldr big companies try to enter at the top, cant recover from huge public failures, and either exit or buy in
Yes. And their core mistake is not understanding the real needs of the customer because they make assumptions in a familiar territory.
Apple is a fantastically successful software and industrial design company. The vast majority of their production is outsourced. This is not vertical integration.
Additionally, actually, Apple has tremendous amounts of hugely successful and popular software.
Though I dig the underlying point of this article, that product management is hard, I think the examples are less than good.
You don't need to own all elements in a vertical stack to be vertically integrated.
I'm not saying you're wrong... but it doesn't look like you're right.
Apple has operated a factory in Ireland since the '80s.
Current usage of the database uses it as a loose, adhoc, difficult-to-maintain, polling-based API between multiple applications.
The future perspective looks back on our time, shaking its head at the way people use databases for everything in the same way that we shake our heads at bloodletting.
Oracle's business model is (1) convincing people to use platforms they shouldn't be using and then (2) selling the victims ongoing hacks and services to work around the limitations of the model.
Amazon's software services won't be build on a database. They'll be built using a decentralised messaging platform.
Well for one thing we know that Intel spends several $billion to open a new semiconductor plant and has a dozen of them already. https://en.wikipedia.org/wiki/List_of_Intel_manufacturing_si...
Whereas SAP is, well, a lot of software. Which is something, but Intel needs to make a lot of software too, and chip designs are in some ways a specialized form of software.
So I think in some sense Intel is strictly more challenging to replicate than SAP. (But this is probably just my misunderestimation talking. :-)
The best open source projects are ones where engineers are the end users (customers).
Maybe this is another form of the "solution looking for a problem" phenomenon.
Of course, they did go out of business while flailing about wildly, but to my mind that simply underscores the importance of knowing how to gracefully exit a market. Ironically, perpetually-beleaguered Yahoo isn't a bad model for that.
Because even the author references competency-based views of competitive advantage, but for some reason ignores resource based views, and ignores the fact that companies might be aware of their competences. That is to say, I'm sure that large companies tend to mostly be aware of what their competences are based on the resources and knowledge that they have. If they don't have marketing departments that have analyzed the ERP market, sales teams with ERP training, tech departments with key HR, key knowledge etc etc, then I'm certain they are very well aware of this.
Maybe some companies have had marketing missteps and have made poor strategic and competitive decisions, however, but I really doubt that it's due to a lack of introspection or simple analysis as described.
Also, IBM didn't "think nothing much" of the software layer. They misunderstood the nature of power in the supply chain, and most importantly, didn't solidify their position within the supply chain while they were dominant.
(I am the author of the TechCrunch post.)
"What the article is referring to as stack fallacy is the work of Physics Nobel Laureate Philip Anderson: https://web2.ph.utexas.edu/~wktse/Welcome_files/More_Is_Diff...
Let's give credit where it due please."
A related factor is that larger companies tend to be more specialized (formalized processes, specialists, focused teams/departments, and so on), meaning they can be prematurely optimized with respect to new goals and poorly equipped to conduct the necessary roaming.
Wasn't IBM a classic case of not trying to build the layer above them on the stack?
The Wikipedia page on IBM PC DOS even claims that their "radical break from company tradition of in-house development was one of the key decisions that made the IBM PC an industry standard".
Didn't stop Microsoft from going out of their way to sabotage them, though.
Here let me make an article... wait wait... ah... "Big Companies FAIL" that sounds like nice click bait. Now... hm, let's invent some stupid word to pad it out how about the 'Stack Fallacy'. Programmers will dig the 'stack' part. Yeah. Ship it!
Seriously, this article is content free.
People make products. Sometimes they work... sometimes they fail.
If you pretend you have some magical insight into why they fail or succesd with gems of wisdom like:
found it very difficult to succeed in what looks like a
“trivial to build” app — social networks.
The stack fallacy provides insights into why companies keep
failing at the obvious things — things so close to their
reach that they can surely build. The answer may be that the
what is 100 times more important than the how.
Really? What you build is important?
No kidding.
Why is the top of the list this morning?
If you want to go down the tech stack, though, you might be successful because you're part of the market for that tech.
THIS! +1000! I would even leave out "often", or at least replace it with "usually".
All of us are competing with "17 people under 30"... listicles.
And in what order.