One of the recurring themes in the technology industry is that very successful companies become arrogant and start taking unnecessary risks or abusing customers — the two aren’t mutually exclusive. That behavior can accomplish what competitors have failed to do: It can kill them.
I was in IBM in the 1980s when it exhibited this behavior, and I wrote a report on Microsoft — using my IBM experience as a base — identifying this same behavior. Yet both of those instances are massively eclipsed by Google, which appears hell-bent on destroying its nearly invulnerable market position.
This suggests a theory: The more dominant and secure a company feels, the more it will do incredibly foolish things that could destroy it. It seems that dominant firms want to aggressively test their position, but I think it comes down to the fact that power corrupts. The more unchallenged power a firm has, the more likely it is to make a massive mistake because it feels that rules that apply to other firms don’t apply to it.
I’ll close with my product of the week: the amazing Kaleidescape video system for the home.
Standard Oil, RCA, IBM, Microsoft
Standard Oil, RCA, IBM and Microsoft once were massively powerful.
The original Standard Oil was the most powerful company of its time, but it attempted to control the U.S. Government and got broken up for its troubles. RCA cornered the early electronics markets and not only controlled radio and TV sales, but also owned most of the U.S. content. It got broken up and no longer exists other than as a brand.
In both cases, the firms were too aggressive about using their power to eliminate competition and discovered the hard way that the U.S. government was stronger than they were.
IBM initially was smarter. Rather than fighting a similar battle, it signed a consent decree and continued to grow after it got nailed for anticompetitive practices. However, IBM started to mine its customers in the 1980s. Those customers eventually rebelled, and IBM had to fire its CEO and do layoffs for the first time in its very long life.
Microsoft jumped with both feet into the gap left by IBM, and grew to own the technology market in the 1990s, but it got concerned about Netscape and lost track of its users and developers. As a result, Microsoft’s CEO is stepping down from a now far weaker company.
I often think Google looked at the mistakes made by those other companies and thought, “What wimps, we can do so much worse!” It started with CNET complaining that it was violating privacy rights, and CNET showcased its complaint by publishing private information on its then-CEO — having found it by conducting a search on Google.
Instead of fixing the problem, the very private Eric Schmidt (who should be pictured in the dictionary next to the word “hypocrite”), had CNET blacklisted — a practice that stemmed from the regicide, Nazi and McCarthy eras and was clearly an abuse of power.
Google then started driving its mapping vehicles around folks’ homes, taking pictures of things folks wanted to remain private and publishing them. This resulted in Google’s cars literally being chased out of neighborhoods with pitchforks.
That obviously wasn’t enough excitement. It then started probing folks’ private WiFi networks for personal information, and while this got it in some regional trouble, it still didn’t result in broad action.
So it started messing around with self-driving cars and putting them on roads without getting permission. No one was killed; no terrorist captured a car and turned it into a rolling cruise missile (yet), and eventually Google actually got permission to move forward.
Steve Jobs put Google’s CEO on Apple’s board and mentored the Google founders. As a unique way of saying “thank you,” they stole the iPhone and iPad designs, according to Jobs. Granted, that is more of a company-to-company thing, and because Jobs was dying of cancer, he wasn’t as scary as he once had been.
Still, for a company that made most of its money from Internet advertising — and still does — this seemed to be an extremely dangerous and unnecessary move to make. It wasn’t particularly honest or nice either, but behaving with integrity has never been a hard rule in business. Still, you’d think a firm that has not being evil as its credo might act a bit differently. (Clearly it doesn’t).
Google’s latest plan is to create a line of robots to replace manufacturing workers. While it is hardly the first — Baxter was announced last year with the same goal — why would a company that largely makes its money from selling information about workers who spend money want to destroy the income source for a huge number of them?
Having worked in and around manufacturing myself in the past, and having seen what can happen if you are responsible for putting a lot of folks out of work, I truly wonder if Google’s top brass should be institutionalized before someone blows up the company.
I get that robots are likely the next big thing, but you could focus initially on robots to help disabled people or function as home servants or reinforce security — all viable markets where the risks of massive labor revolts are far less likely.
Google didn’t go after commercial trucks with its self-driving technology, even though that is likely the lower-hanging fruit, so why is it moving to take line workers’ jobs? You could even slide into this through the back door and talk about robots in general and let partners go after different vertical markets — like manufacturing. Why announce you are planning on getting millions of people fired as redundant, given that your core revenue is tied to those people?
Wrapping Up: Power Corrupts and Makes Executives Stupid
The old saying that “Power corrupts, and absolute power corrupts absolutely” should be replaced by a new saying that might be more accurate: “Power corrupts and makes executives stupid, and absolute power corrupts and makes executives suicidal.”
Google is the poster child for this saying, and if this recent move to robots that are designed to take millions of manufacturing jobs doesn’t kill it, I’m very sure it eventually will come up with an idea that will.
The only real threat to Google is Google, and Google appears to be hell-bent on overachieving with its suicidal skill. It isn’t the first company to take this path, and it surely won’t be the last. I’m coming around to the idea that this pattern is unavoidable.
Success leads to arrogance leads to bad behavior leads to avoidable catastrophic mistakes made on purpose. In this case, taking your job certainly trumps stealing your information and kind of brings new meaning to the term “Scroogled,” doesn’t it? I think I can wait to see what Google does next.
Product of the Week: Kaleidescape One
There are three products in market that are magical but undermarketed and underappreciated. This is largely due to the fact that the companies behind them aren’t Samsung, Microsoft, Google or Apple. Sonos, TiVo and Kaleidescape are far smaller and nowhere near as well funded.
Sonos moves music around the home, TiVo offers the best PVR in the market, and Kaleidescape does for HD purchased movie and TV content what Sonos does for music. It distributes it around the home and is a critical part of any home theater.
This is the kind of system that someone like Michael Dell has in his home, and it is amazing. You see your entire library on the screen and can choose any of your movies you want. It integrates with Ultra Violet (critical for Sony movies). This is a system that originally came to market with home theaters running around US$200K, and it was viewed as a critical part of the huge home theaters that were going in at the time.
A full implementation is kind of amazing to see, but clearly most of us can’t afford that. Granted, the product is still one of the most expensive in the market, but it’s now a small fraction of the tens of thousands it once cost.
Kaleidescape still has its premium line, but with the Kaleidescape One, you can get into a product that billionaires buy at a cost someone who isn’t even a millionaire can afford.
If you have a lot of movies in your collection that you never watch because you have a hard time finding them, this could be the solution for you. Even a child can use it. Perhaps I should say even a boomer can use it, because kids seem to figure this stuff out more quickly these days. In any case, it is incredibly easy to use. If you enjoy movies, this is a killer product.
Just being able to tell Michael Dell that I too have a Kaleidescape system is worth making this my product of the week.