and Its Consequences: Disruptors, Diplomats, and a New Way to Talk About Business
We admit it: we’re suckers for entrepreneurs and company builders who relish the chance to shake up the establishment and champion a different and better future for their industry. In a business world defined by too much strategic mimicry and too many lowest-common-denominator competitive formulas, it’s exhilarating to get immersed in a brash young company like ING Direct USA, to follow the unorthodox flight to leadership of a breakthrough innovator like Southwest Airlines, or to watch the creative and financial performance of HBO. If the new arena of competition is value system versus value system, there’s nothing quite like companies and executives who step into the arena convinced of the virtue of their values—and prepared to communicate their confidence in no uncertain terms.
We also recognize that it can be unnerving. Business history is littered with the corpses of hard-charging Davids who weren’t afraid to look squarely into the eyes of slow-moving Goliaths, but who couldn’t contend with the inevitable response. Fanning the flames of competition is a great way to energize a marketplace and generate attention for your strategic agenda. It’s also an invitation for a fierce competitive backlash. To put it in the “hardball” vernacular of George Stalk and Rob Lachenauer, tossing your industry a strategic curveball just might earn you a damaging beanball from bigger, richer, harder-throwing rivals.
Marc Andreessen and Mike McCue learned this lesson the hard way in one of the most famous David-versus-Goliath stories in modern business history—the rise, retrenchment, and eventual sale of Netscape Communications. Andreessen, of course, was the twentysomething programming genius who launched Netscape and became an A-list celebrity when the company went public in 1995. McCue joined Netscape in 1996 as the company’s vice president of technology after his outfit, Paper Software, was bought by Andreessen. The two were lead protagonists as Netscape grew explosively. They carried the hopes and dreams of a generation of programmers and entrepreneurs determined to challenge Microsoft’s chokehold on the computer business, but then watched helplessly as Bill Gates responded with a blistering counterattack, driving a chastened Netscape into the waiting arms of America Online.*
Over the last seven years, Andreessen and McCue have been leading new companies, both of which are well funded, aggressive, ambitious—and decidedly more circumspect than Netscape. At first blush, McCue, a thirtysomething technologist with a quick, lopsided grin, a flop of brown hair, and fresh-scrubbed pink cheeks—looks every bit the poster boy for the eternally youthful face of Silicon Valley. He could easily be mistaken for one of the young techies gliding around his company’s parking lot on a Segway scooter. As cofounder of Tellme Networks, McCue raised funds from the world’s top venture capital firms to pursue a strategic plan that he calls Dial Tone 2.0—the prospect of marrying telephones and the Internet to reinvent how people use the phone and how companies communicate with and market to their customers. Imagine picking up the phone, McCue says, but rather than dialing ten digits or navigating a maze of frustrating prompts and menus, just stating your business: “Call Mom at home,” or, “Is my flight on time?” or, “Has my FedEx package arrived?”
There’s no denying the scale of Tellme’s business goals, especially in a world where people place one trillion phone calls a year, more than 100 billion of which go to 1-800 services. “We have a lot of ambition,” McCue says. “We talk about placing and answering every single phone call on earth.”* But this bold agenda does not inspire brash rhetoric: McCue sounds more like a diplomat than a disruptor, like someone who has a clear point of view about how to reshape his industry but is not prepared to demean, diminish, or even decode what his rivals are doing.
“At Netscape, the competition with Microsoft was so severe, we’d wake up in the morning thinking about how we were going to deal with them instead of how we would build something great for our customers,” McCue says. “Basically, we ‘mooned’ Microsoft. And man, did we pay for it.”
What lessons did McCue take from Netscape to his new company, which is growing at blazing speed, generating healthy profits, and dealing with many of the familiar perils of success? “What I realize now is that you can never, ever take your eye off the customer,” McCue replies. “Even in the face of massive competition, don’t think about the competition. Literally don’t think about them. Every time you’re in a meeting and you’re tempted to talk about a competitor, replace that thought with one about user feedback or surveys. Just think about the customer.”
Andreessen, now in his early thirties, has emerged as an unlikely elder statesman in high-tech circles, a voice of experience and reason in an industry that still revels in grandiose claims and overcharged rhetoric. His post-Netscape company, Opsware, went public, with a market value in February 2006 of more than $750 million and a sharp focus on the arcane world of data-center automation. In July 2007, Hewlett-Packard paid a stunning $1.6 billion for the company.
Andreessen appreciates the power (the necessity even) of business strategies and value systems that challenge the industry’s established points of view. He’s just lost his taste for the fight-to-the-death spirit that tends to accompany these change-the-game aspirations. “My view is that the only new companies that end up succeeding are those founded on ideas that were considered pretty crazy at the time they were started,” Andreessen says. “Big established companies are really good at executing on the ideas that make a lot of sense. So if you’re going to start a company, you better have an idea so radical that most people think it’s crazy. Dell sounded crazy—a personal computer company started in the teeth of an enormous recession in the industry. People thought the idea behind Netscape was nuts—everybody told us we’d never amount to anything. Google sounded like a crazy idea—another search engine, started in 1998, growing right through the dot-com meltdown. It seemed like complete lunacy. Of course, the problem is that a lot of ideas that sound crazy are crazy. So for every Dell, Netscape, and Google, you get 300 companies with crazy ideas that fail.”
The other problem, Andreessen says, is that all too often companies with crazy ideas end up in crazed competition with the powers-that-be. Indeed, he watches with morbid fascination as the latest David-versus-Goliath showdown takes shape in Silicon Valley—a struggle with eerie echoes of his own battles at Netscape. “Google is being led through the nose into a direct confrontation with Microsoft,” Andreessen warns. “I’ve seen this before! Everybody loves the fight, everybody lines up for these all-out battles. It’s not clear to me why both companies can’t win. But ingrained behavior pushes both sides toward all-out war. The one thing it does is draw attention to you—a lot of people know your name. But one of the hardest parts of business is when everybody knows too much about your business.”
Early on in the growth of his new company, Andreessen encapsulated what he’d learned from his Netscape days in a document called “Ten Reasons We’re Going to Go Out of Business.” It was, he told an interviewer at the time, “a list of the ten most serious threats” to the company. “It definitely focuses the mind as much as the prospect of an imminent hanging.” Andreessen told us that he no longer maintains the list (“We’re on much firmer footing than at any point in the last five years”), but that he does work to instill and maintain the strategic modesty that the list implies. “Now we get to worry about lots of other things,” he says.1
The moral of the stories told by McCue and Andreessen: you don’t have to be a pugnacious leader or a combative organization to recognize the power of strategy as advocacy. The point is not to have sharp elbows. It’s to develop a sharp-eyed point of view about your industry and to present crisp and persuasive alternatives to business as usual. Sometimes the innovators with the most compelling strategic twists choose to broadcast them with a whisper rather than a shout.
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