The Curse of Culture
stratechery.com
stratechery.com
In 2014, when Apple bought an urban fashion brand that sells overpriced headphones, Google bought Deepmind for 1/6 of the price. That said it all about where both companies were headed. Steve Jobs is famous for quoting Gretzky's line about "skating where the puck is headed and not where it is" and it seems that Google's skating where the puck is going while Apple's skating backwards.
Apple's headed for a decade of stagnation... just like Microsoft was under Ballmer. My only question is: how long before Apple gets its own Nadella and who will be their savior? I don't see anyone in their executive ranks who's as good as Nadella.
In some ways, the depth of the search team needs to be replicated by their AI-research groups. As you stated, what is unclear is if the investments will be obviously lucrative (as search has been).
Similar happened to Balmer, he came in after the boom was over. But tried to push into new markets (and failed.) I don't honestly think Balmer was a bad CEO, he was just very bad at pushing into new markets...and they already had the FTC on their backs, so their strangle hold on the existing market was diminished. Doing walled gardens like Apple and Google did would draw FTC ire, so they couldn't really do it.
In the end, Apple doesn't have the FTC on its back, basically controls the supply chain. They'll be fine, but they are in a saturated market and their explosive growth is over. Investors are much more interested in explosive growth in tech than slow steady cash flow.
I'm more concerned about the Google model than the Apple model. Apple's margins will probably fall, but I think the Google PPC cashcow is soon going to hit a wall as millennials become the majority and their adblockers and immunity to online advertising drives down conversions.
Steve Ballmer joined Microsoft on June 11, 1980, before DOS on the IBM PC transformed the company. He was a big part of its success all the way through.....
> But tried to push into new markets (and failed.)
When he became CEO the company was under close US judicial supervision (which lasted more than a decade), under attack from the EU, and paying out $billions in fines. So he started with a mess and operated with one hand tied behind his back, but he still managed to triple turnover and double profits.
Ballmer had some spectacular failures on the new product front, but when he handed over to Nadella, Azure was already a success, Microsoft had an online Office suite better than Google's, and it was already moving into Android and iOS apps (of which there are now dozens).
Not the best CEO of all time, but he could have done a lot worse. He certainly beat the forecasts of the Linux/OpenOffice fans of the day, who reckoned the company would be out of business by 2007 ;-)
The systematizer may lack inspirational genius but makes up for it with analytical and organizational genius. They can turn a phenomenon into a movement, or a movement into a world power.
You see this a lot with religions and philosophies — if you have n systematizers who take up the leadership from the prophet, you probably end up with n religions (including n = 0).
What's the basis for this claim? Didn't Spotify just have to lower its family plan prices to compete?
Cook's legacy will be if Apple pulls off the bet on autonomous cars. Auto manufacturing is very much a logistics challenge, which plays to his strengths. It's too early to write him off.
I agree with you on cars though. Apple could strike gold on that one, and Cook may be the person to do it.
¹ http://www.statista.com/statistics/267808/net-income-of-micr...
Apple's stock price peaked at $132.54 just over a year ago and recently bounced from $90.
Over the past year, Apple is down about 20% on NASDAQ and the S&P 500....
SPX went from ~1280 to ~2080, so it's close, but not quite as much.
However, I note that my accurate and true comment has been downvoted anyway ;-)
It's hard to read too much into short term stock moves. To quote Warren Buffett quoting Ben Graham, "In the short term the stock market is a voting machine. In the long term it's a weighing machine."
Agree on the stock market. Luckily I don't buy stocks and shares or (a) I would have made big losses or (b) made big wins and been jailed for insider trading....
Likewise, it's a bit early to high-five Google on the Deepmind aquisition. The Go achievement is great, but how will it help Google's business? IBM holds the previous big AI-beat-human trophies (Deep Blue and Watson) and neither has done much to help their bottom line. And of course Microsoft Research did a bunch of interesting work under Ballmer.
Also, what successful new products has Nadella personally delivered with his "vision and tech expertise"? The biggest thing he has done for Microsoft is help them get over the loss of the Windows monopoly. He's like Obama in 2009--he gets a lot of credit for just showing up and saying "I'm the new guy, we screwed up, and we're going to do better now."
If you'd like to see how you shouldn't design your UX, then try it out. It's by far the worst design I have ever used.
A greater observation about apple. From the outside it interesting to see it transition from a company that did computers differently to more of a luxury good brand. A bit sad really. Apple used to lead with expert implementation of innovation. Now its just meh.
Microsoft is really leading the pack with its outreach to the tech world of tomorrow with so much of its stack opensourced. Apple just seems to be making the black box even more inaccesible
Well, the culture of the company has completely changed, although, that culture was probably present but forbidden and just needed someone to greenlight it.
Oh, no question Tim Cook is doing the same job: operations, supply chain. And being good at that is nothing to sneeze at.
But it doesn't look like that job was "visionary," R&D, or product development. The question is: who's doing that at Apple now?
He's still listed on Apple's exec page but I have no idea what he does anymore.
I think the answer is more complicated than "Jony does what Steve used to do". I think the answer Apple wants to be true is that "what Steve did" was always way more than "just Steve doing stuff" and a lot of it was and is baked into the culture and institution (of Apple) itself. How accurate that is I can't say but there are a lot of companies I would bet against before Apple.
Doubtful. Cook seems well aware of his limitations in vision and abilities. You see a microcosm of this at the Keynotes: he wisely hands off to other experts as soon as possible.
You also see this in his handling of senior roles in Apple. He's not the visionary Steve was but he hires to keep the vision active in the culture by finding domain experts. This is true in retail, in industrial design, in chip design...
He's nothing like Balmer in how he actually handles the company and it's staff, and that's why I think you'll be surprised.
I mean, the "me too" thing is symptomatic of this line of thinking: Apple has always followed on; it's what they are best at. They see a market, see how it works, then take what works and distill it down to a product that is narrower in scope but "just works" for the general market.
First to market isn't a big deal, it never has been, it's getting the product right that's important. Apple is very good at that.
Their MO is that they bake other people's half-baked product ideas, and then make a killing on them while naysayers sit around scratching their heads trying to figure out why everybody else is acting crazy.
Whether Cook and Ive can do that I think remains to be seen. But just because they're producing a 'Me Too' product doesn't mean the party is over.
For me, I'll have my answer when version 3 of the apple watch comes out. If it's a flop, we're in big trouble. If it sells like crazy, then I'll know they still have it, or at least some of it.
If in the meantime they manage to pull off haptic touch screen interfaces or a curved phone, then I'll have my answer early.
A good example - the iPod and iPhone were both "Me, too" products. Apple just engineered, designed, produced, and delivered exponentially better versions of products everyone else was trying to build at the time.
Are there others out there? While Thompson does talk a lot about the intersection of technology with business strategy, he tends to focus on large, well-known technology companies that primarily have consumer facing offering.
I'd pay to read something like Stratechery for biotechnology, or enterprise software but to the best of my knowledge none of these exist.
I wish I could read an entire aggregator of different hybrid consulting+insight blogs.
His annual mobile deck is usually really good;
http://ben-evans.com/benedictevans/2016/3/29/presentation-mo...
FWIW, while I found this particular piece insightful in general, I think he ignored the huge importance of Android and iOS. Even if the future is voice, the medium for the voice is likely to continue to be the phone or other wearables connected to the phone for a long time (5 years or more). And hence Apple and Google are likely to remain dominant since they will be at the front of the funnel. Even if the actual intelligence is coming from other companies, they will still have to be packaged as "app/AI plugins" into Android/iOS, so the OS owners should be able to continue to extract their pound of flesh a.k.a. App store revenue cut.
Companies are typically founded by highly passionate and creative people, who care a lot about what they do and are both able and willing to steer their startup in the right direction.
Once they grow, they start hiring new employees, many of those will inevitably be the kind of people who only want to do their job and go home. Over time, the management too gets filled by people who apply mainly because it's a high status and well paid position, and are not at all that interested in what the company does.
Eventually, all the remaining creative people and even the founders themselves get bored with the routine and leave to do something else and the company becomes hollowed out. The remaining people may be highly skilled and competent in their respective positions, but they are generally unaware of the big picture and the reasons behind how things are done.
As the result, the company slowly turns from succesful to dysfunctional as its ossified culture gets out of touch with the ever evolving reality, as there aren't any people left in the company who are able to notice practices that are no longer functional and care enough to change them.
Founders set the company culture, success ingrains that culture deep into a company's subconscious where it runs in the background regardless of whatever cultural reforms/artifacts are introduced - culture can only be changed when a new CEO (Jobs, Nadella) steps in and announces a huge change in culture, which usually stems from an otherwise unimaginable partnership (such as Apple/MSFT) that shows a concession to the realities of the market, which the company once thought it was above.
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Author singles out Apple and Google as companies he is worried about WRT current culture.
Apple - threatened by "big data AI services": Author calls for Apple to partner with Microsoft to get access to cheap backend services (Azure) and/or frontend services (Siri + Cortana), ostensibly to play in Amazon AWS (compute as a service) and IBM Watson's (AI/marketing as a service) markets, respectively. Alternatively, Apple should open iOS to enable customers to muck around with the latest and greatest Android developments and set Google services as defaults on their iOS devices.
Google - threatened by users spending time on social apps: Should partner with Facebook by building a bot for Facebook Messenger and a backend for Facebook Messenger developers.
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Questions/Comments
- It is unclear what unique advantages Apple would bring to the table for either the frontend/backend services market. Why break the intense in-house hardware/software coupling focus by leaning on MS for services? What backend services does Apple need to bring in-house through a partnership?
- What are the cool new Android services that iOS needs to integrate? I know the author says AI capabilities, but that is not a well-defined technology or use-case.
- I don't know a single person that likes using Facebook Messenger. Additionally, messaging applications have much, much lower barriers to entry than web browsers. Messenger is not comparable to Chrome. This is why Fbook purchased Whatsapp.
- Underlying premise: does Apple really need to play in the big data/AI space? Does Google really need to play in the social media space? Are these really going to be markets that drive future growth?
I'd much rather talk to Google than Siri. It works about 10x better. But I can't set a default assitant on my device. Nor can anything else interact with Siri, as it has no API. I'd love to see them open this stuff up more.
I love Apple's hardware and I like their mobile OS. Their software/services? Not so much. I hate iTunes, I find Siri worthless, notes is a bag of hurt, Calendar has syncing issues, the iWork suite other than Keynote is a joke for professionals since it was gutted a couple years ago, and on and on... I use alternatives for all of these things. But they cannot be integrated well.
Maybe Apple is betting that AI won't be achieved in the next 15-20 years.
If I were a betting man, I'd put my money on 10 years or less.
The next question is, can we put enough resources (money, smart people, computing power) to brute force? I bet no, because it's not an engineering problem but an ill defined one.
historically, major paradigm shift happened where major vendors ignored. there is no reason to believe google folks are smarter than the old generations. if they were, we as consumers are doomed.
Of course, that still leaves the question of access to data, and the best of today's AI algorithms get their power from data more than clever logic. Google and Facebook have a huge lead in customer data, but how much data is enough? Presumably it depends on the product, and for some products (say, image processing magic in a smart camera), Apple might be able to come up with all the data they need.
Like the business model, culture is certainly influenced by the people at the top, though I think it's defined by a somewhat larger number of early employees, and it's harder to change once established, compared to the business model. Both affect performance in the market, but it's not as straightforward to analyze, even in hindsight, how exactly culture affects market performance relatively to the business model where in hindsight it's perfectly clear.
("Tech culture", such as your example of code reviews, is usually an example of controls and processes. What controls and processes exist for creation and deployment of software? If we were making widgets on the factory floor instead, the fact that these aren't "culture" as being discussed would be more immediately obvious.)
I'm wondering how that will turn out. It looks like cars will be seen more and more as a service rather than as a product. And Apple has more experience in making products that people want to own.
http://www.marginhound.com/siri-will-virtual-assistants-disr...
Granted, Apple's recent market share numbers for mobile devices were down (and they are strong in US markets than globally; Android is doing better overseas). But they've got a legitimate shot at disruption as voice search grows.
For the curious, it starts at 28:36.