today we’re drawing a Gladwellian line between 3 companies to help entrepreneurs make better decisions. but first let’s bring out our contestants.
Myspace was founded in 2003 and quickly became the world’s largest social media website. it was acquired just 2 years later for $580 million by News Corp.
MapQuest was founded in 1967 as a cartographic service provider, then became the defacto tool for driving directions1 following its dot-com launch in 1996.
Microsoft was founded in 1975 and led operating systems development for several decades, going public in 1986. market cap has grown > 2,000x since IPO ($770M then, $1.85T now).
fates in hindsight
Myspace exited in the midst of an explosive and 1-time growth uptick. it’s unclear if the executive team feared Facebook, or if they simply got sick of reading cursive red font on customizable profile pages. regardless, Myspace’s valuation has since wreaked havoc on several new owners, hitting an all-time-low monthly visitor count in the single digit millions.
MapQuest saw a dramatic loss of market share with the advent of the smart phone, and today lives off the fumes of “late adopters” who prefer not being tracked online (respectable) as well as mapping provider partnerships with other legacy enterprises.
Microsoft is still a mystery. we aren’t sure how or when they will become a “technology company that existed at the time“2 but we have observed other tech companies (death of a thousand cuts?) chip away at their market share in several categories.
a few months ago i wrote down the names of these 3 companies and put a proverbial pen in determining what they have in common, besides starting with the letter M.3
specifically i wanted to figure out a) how Myspace “knew” to sell, b) how MapQuest “didn’t see” Google Maps coming, and c) how Microsoft had the balls to “not worry” about IBM, Apple, et al.
with the answers to these questions, maybe we can steer our own companies away from the 2nd fate (MapQuest): a fall from capitalism’s grace.
following are observations of these 3 firms that are guiding my own decision-making in professional projects. which means startups, farming, and web3 (whatever that is).
- founders set the culture
- innovation comes in 2 flavors
- customers are not created equally
the cogency of these arguments is of course up to you, but i find that sharing ideas in their infancy is a great way to make them grow. let’s begin.
founders set the culture
in my free time i spy on people who sold their company and got rich. for example, i’m fascinated by entrepreneur Markus Persson’s extensive writing on being lonely, bored, and depressed. Persson, known online as Notch, built and sold Minecraft for $2.5 billion.
Microsofts’ Bill Gates, on the other hand, retired long ago yet still works tirelessly to take over the world and tell you what you’re allowed to eat (spoiler: just bugs).
meanwhile Tom Anderson,4 founder of Myspace, has been a traveling photographer for the past 17 years, living an ostensibly simple life unburdened by status or power games.
takeaway: companies change hands when the founder says uncle. some people need far less than others to feel like they have enough,5 which in many cases makes them [ironically] more successful than “ambitious” peers. (see: crypto meltdown March 2022)
innovation comes in 2 flavors
the late Clayton Christensen’s masterpiece Innovator’s Dilemma teaches us the difference between “iterative” versus “disruptive” innovations. in practice this is the car with 10% better gas mileage versus a Tesla that uses no gas at all.
thinking back to Myspace’s heyday, i wonder if Tom heard about Mark’s all-nigher binge coding sessions. maybe they even grilled meats together in a backyard, providing Tom insights about Zuck’s extraterrestrial origins.
now pivot to MapQuest. how could they ever fathom that their demise would be a fleet of Toyota Priuses with cameras glued on the roof? sometimes leading indicators are invisible, or at best, in disguise.
takeaway: to build a sustainable business we either need to consciously disrupt ourselves, or compete in markets that only require smaller, iterative updates to stay relevant. when presented with a challenge to “piss or get off the pot,” don’t be your own worst enemy. kill the ego to survive the body.
customers are not created equally
one of my favorite company building strategies is the diddy called Staying Power. this is a measure of how likely your brand can breed loyalty and dependence by consumers. it does not necessarily correlate with customer satisfaction.
which brings us to the US government, and many others around the world: they all run on Microsoft. i bet your local school system, grocery chain, and international airport does too. this is staying power.
in other news, 15 year olds will join both Myspace and Facebook in the same afternoon with a fake birthday. i know a twentysomething girl here in Korea with 3 instagram accounts — 1 for family, 1 for colleagues, and 1 for “close friends.” the third account is where she posts bikini pics.
MapQuest, like Microsoft, managed to foster a base of loyal customers thanks to what Geoffrey Moore calls the Technology Adoption Life Cycle. in short there will always be late adopters, thus there will always be room for MapQuest. on the other hand there will never be room for lame, outdated, uncool social media platforms.
takeway: technology and IP are cool, but getting powerful people to depend on you is a better path to the promised land. would you rather serve teenagers, flip-phone holdouts, or the institutions changing the world?
putting it all together
fortunately all these companies achieved great outcomes for customers. the same cannot be said, however, for all their shareholders.
ergo the latter insight is a reminder to entrepreneurs to articulate the kind of outcome we want for ourselves. it’s all fun and games to be the best potato peeler salesman, until your back goes out and you can no longer put on a show.
for me, thinking through the 3 takeaways above means:
- speed and simplicity > complexity and more “commas.” selling Cross Sell, Fomo, a few smaller projects, and adding value daily is enough, vs maximizing every transaction.
- building to solve problems > building tech for tech’s sake. you won’t see me launch a research initiative to benefit mankind in 500 years. sorry, that’s not my purpose.
- serving reasonable people > profitting from psychopaths and vendor lock-in. essentially this explains why i oppose making $$ from services like OnlyFans or customizable Kung Flu masks.
what kind of company will you build? what kind of founder will you be? and when will you have enough?
i’ll take Tom Anderson’s beach cottage and a drone, please.
- i still remember browsing to mapquest.com in high school on our dial-up internet and printing out 4 pages of “turn left, turn right” instructions whenever my screamo band booked a faraway show.
- Nassim Taleb used this phrasing to describe Microsoft in one of his books, a funny and prophetic approach given his work will still be read 100s of years from now (Lindy)
- as a fan of wordplay, rhetorical devices, and oxford commas i’ll admit that alliteration was a good enough start.
- yes, the dude in a white t-shirt who automatically became your friend during signup.
- according to Kurt Vonnegut, Catch-22 author Joseph Heller reportedly said “i have something he will never have — i have enough” after being reminded of a hedge fund manager’s greater wealth.