Watch The Kids Play. Then Beat Them Up (or Eat Them).

Steve Hanov’s latest post discusses a recent conference he attended. He really caught my eye with his general observations of startups:

  • Disruption – Disruption is big. If you’re not disruptive, you might as well be selling mainframes and typewriters. Companies are disrupting each-other at an astounding rate. Sometimes, while one company is busy disrupting an industry, another one will sneak up behind it and try to disrupt it when it is not looking. That is why companies need to be agile and pivot frequently.
  • Metrics – The info-geeks have taken over. Founders are demanding dashboards for their business, updated in real time. But not only for themselves — every click of the web site, and every cancellation is streamed to every employee to give an accurate picture of the health of the company. A special version containing only the “Customer Happiness Index” and a huge happy face is streamed to the investors.
  • Crowd-sourced employee recognition – At least three companies are working on this. It can be hard for bosses to identify their best contributors to allocate bonuses. The idea is to crowd-source this from their workforce. “So we’ll give them a button — so whenever anybody does something nice, other people will just push it and they get a — a pony point — yeah! And then I just have to add them all up to find the best contributors!” If you’ve worked at a large company for more than a year, you already know what an awesome idea this is. Just rename “pony” to “stab”.
  • Skype – Ask anybody, in tiny or large companies. Odds are that they bypass their Enterprise Collabosoft GrouperWare system and secretly use Skype to communicate. Just a minute while I go privately Skype to people about why Microsoft should acquire my startup.

Great stuff, right? And no doubt smaller, nimbler, more tech-savvy (younger and geekier) companies are taking advantage of all these things. Do they make employees more productive? Perhaps. If they do, what’s going to stop a larger company from just doing this stuff anyway?

Nothing. Remember the tech trends. Everything else is just adoption, which isn’t really exogenous, but rather function of the rate of the other trends.

Anyway, remember Marc Andreessen’s investment strategy? Pick startups that will beat the big boys at their own game by being, well, better at computers.

Earlier I disagreed with this view. Still do.

Obviously this is true at some margin. There will be disruptive startups that take over big industries. But I think something else drives most innovation. Let’s call it the Cronus strategy.

Cronus, you see, had this problem:

Cronus learned from Gaia and Uranus that he was destined to be overcome by his own sons, just as he had overthrown his father. As a result, although he sired the gods Demeter, Hera, Hades, Hestia, and Poseidon by Rhea, he devoured them all as soon as they were born, to preempt the prophecy.

While the Greeks considered Cronus a cruel and tempestuous force of chaos and disorder, believing the Olympian gods had brought an era of peace and order by seizing power from the crude and malicious Titans, the Romans took a more positive and innocuous view of the deity, by conflating their indigenous deity Saturn with Cronus.

So call me a Roman and Marc a Greek, then.

Now I’m not saying that big companies are sitting back and chuckling to themselves at the silly little startups trying to nick their lunch. Quite the contrary. They are and should be terrified that they are missing the innovation boat and aren’t using current technology properly.

But corporates are conservative institutions: they have something to lose! And most startups fail for good reason. Their ideas are bad and Keith Richardses are hard to come by.

And most importantly…

MOST NEW THINGS ARE FADS

Oh, yeah. Just because the kids are using facebook doesn’t mean that you can use it to sell insurance or dishwashers, or make dishwashers for that matter.

My hunch is that it’s usually a cheaper strategy to let the startups sort out which technologies are disruptive to which industries and then either pull a Cronus or just steal the idea.

The question, of course, is which ideas are worthy of theft?

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One Response to Watch The Kids Play. Then Beat Them Up (or Eat Them).

  1. Chris says:

    Great article! The ticket here is Tech Savvy, Perhaps start-ups will lack sufficient resources to topple the dishwasher manufacturing giants, however the smaller niche markets are getting hammered by tiny companies that know how to market online better then them. In many ways, the Mom-and-Pop shops that still shy away from the “internet-fad” are failing, not from corporate behemoths, but from even smaller shops that simply sell online. For youngsters fresh out of school, it’s a great time to start a business because many companies are failing to keep up online.

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