Although founding a company is always a challenge, there has never been a better time than now for starting a business. The acquisition announced last month of WhatsApp by Facebook for $19 billion illustrates this opportunity. It is not the size of the deal; there have been huge deals that have made founders incredibly wealthy for decades. What is exciting is how WhatsApp achieved this huge exit.
What is amazing now is that you can build a $19 billion business quickly without a huge investment because of cloud computing. When you look at Microsoft and Google (and even Facebook), it took them thousands of engineers to build their businesses. WhatsApp has just 32 software engineers, which means that each one supported about 14 million users.
Continue reading “The beauty of starting a company in this day and age”
One of the biggest problems I see in the San Francisco/Silicon Valley area is the fallacy that fast following is a way to build a successful business. For those not familiar with this concept, it is identifying a successful business model or product, replicating it quickly and bringing the new company or product to market. There are some successful examples, none probably worth more than Microsoft’s fast following of WordPerfect with Word, Lotus 1-2-3 with Excel and Freelance Graphics with Powerpoint. This strategy generated hundreds of billions of dollars for Microsoft and its shareholders. This example is the exception rather than the rule, as fast following is more likely to sub-optimize or fail.
A strategy built on arrogance
A key indicator that fast following is a flawed strategy is that it is built on arrogance. Fast followers are saying they can take an idea or product and do it better than the original company or anyone else. The question then arises, “Why are you going to be better?” Continue reading “The dangers of fast following”