Archive for the ‘ycombinator’ Category

Dead MSFT

Lots of confusion, discussion, and vitriol around Paul Graham’s essay, Microsoft is Dead. Don Dodge asks the question “since when did $4B a year = dead?”

He even goes on to say, in an addendum that:

Just to put $4 Billion of growth in perspective, Yahoo’s entire revenue last year was $6.4B, and Adobe had revenues of $2.57B. Think about Microsoft growing almost an entire Yahoo in one year, or almost two Adobe’s. The numbers are staggering.

Well, those numbers WOULD be staggering if it didn’t amount to a YOY revenue growth of only 8.7% in the year of a new (major) product release. As a coworker of mine is fond of saying, “just barely beating the market isn’t a very good business plan.”

The acceleration of revenue and earnings at MSFT is negative. While this will allow the company to remain profitable for many years to come, it’s not exactly the juggernaut of growth it used to be. They can’t get much bigger, and their attempts at entering new markets have been clumsy, at best (XBox excepted, though, I don’t think MSFT has earned a penny from this effort).

It has always been foolish to ignore the predictions of technical early adopters. Like Paul says in the end of his essay:

The other half, the younger half, will complain that this is old news.

The perception of death is as bad as death itself. Most of all, it hurts recruiting for new talent. If MSFT isn’t seen as a great technical innovator, the best and brightest won’t want to work there anymore, and that is the beginning of the end for a technology company. Ask any bright young programmer about MSFT: they’ll probably agree with Paul.

MSPW – Make Something People Want

I’ve been thinking a lot about the YCombinator mantra: Make Something People Want. The idea is that startups should focus first on creating a compelling product, since that’s the hard part, and then on how it will monetize. If you build something people want, making money from it will eventually be easy.

I think the reason this mantra appeals to me so much is that my current employer (Pixar) is all about MSPW. What makes our films successful is that we make stories we want to watch. We don’t think too much about demographics or about what is popular – instead we try to make films that have great stories and expect the box office to follow. Instead of focusing on the kinds of films that will make money, we focus on the kinds of stories that are compelling. Then, we focus on great execution: everyone works towards the single goal of making the best film possible.

Apple does it too (notice a pattern?), but they’ve learned another important lesson: customers will pay (absurd) premiums for things they want to use. Marketing plays an important role, but you have to be marketing a compelling product, not just throwing lipstick on a pig.

Startups, like films, will often fail even if they have great stories and great execution. But, as people have more choice about what software they use and what films they watch, the ones that are sold solely through superb marketing will fail at accelerated rates.

People often ask what the Pixar formula for box office success is, and I think the answer is simple. We MSPW.

Startup Skool

I got into startup school, the one day free workshop started by Paul Graham et al at ycombinator. I’ve been a huge fan of pg’s writing for a while and think he has a great sense of how to foster innovation.

I’m most excited, though, about hearing/meeting Chris Anderson, since I’m reading his book and am really interested in how the Long Tail phenomenon will effect feature film production. I wonder what ideas he has about some of the ideas I outlined in my last post about Eisner.

As a related aside – I’ve really been digging the Y Combinator News site. Lots of great information from recent and older blog/news posts about starting companies and technology in general. Check it out.