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How Software Companies Die (1995)

140 points| wh-uws | 15 years ago |netjeff.com

45 comments

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[+] jonnathanson|15 years ago|reply
A fun read, but a reductive and somewhat cliched thesis. Software companies don't die because they let the marketers take the reins. By the time that even happens, the disease has already set in. The influx of suits is a symptom and not a cause. Usually it's a symptom of one or more things:

1) The company has grown complacent;

2) The company has lost touch with its userbase, or with the landscape in general, or with the competition;

3) The company has reached its liquidity event, at which point it's no longer "cool," and cannot attract or retain top talent;

4) A bad investor, founder, or partner took control and started making poor decisions, or a great one ceded control and left;

5) The category is disrupted entirely.

There are many more root causes, but you get the idea. The suits don't actually kill the company; they are just correlated with the death.

[+] Figs|15 years ago|reply
It may be cliché now, but was it cliché in 1995 (when it appears it was written)?
[+] mweatherill|15 years ago|reply
I would love to read more articles about how mature companies are reinvigorated and revived. It is easy to point the finger at what went wrong and why companies often aren't sustainable but what about the counter-examples that we can really learn from?
[+] nhashem|15 years ago|reply
An amusing read, but there's been 15 years between this essay and the Social Network, and the stereotype of hackers as socially maladjusted, unshowered nerds hasn't changed much in 15 years (except maybe we're considered maladjusted, unshowered, rich nerds).

Will we ever get to the point where mass media realizes there we are capable of doing things like dating an attractive woman... without even needing to shower her with money we've scored big in our IPO?

[+] dkarl|15 years ago|reply
Stereotypes that have a kernel of truth will always persist, and there will always be a kernel of truth to the stereotype of the socially maladjusted hacker.

Why? Because hacking is relatively friendly ground to them. They can excel, and they will be much less handicapped by their social shortcomings than they would be in other fields.

If you want to end the stereotype, you have to make computer programming equally unfriendly to the socially maladjusted, unshowered nerds. That would be a loss. Not only would programming lose valuable contributors, we would turn some number of those talented people into sorry, helpless losers who don't contribute anywhere. And that's the endgame: if every field vigilantly safeguards its social reputation against infiltration by potentially embarrassing nerds, then it will be impossible for nerds to contribute to society at all. For various reasons, hacking is hospitable to nerds: why not leave it that way? If you're uncomfortable being associated with a field that is unusually accommodating of socially inept people, then leave hackerdom and join a field that does a better job of policing itself. There are plenty of those fields, and not many safe havens for dorks.

[Edit: I am praying that nobody starts a subthread on the semantics of "nerd" and "dork." Please don't. Just read my comment the way it makes most sense to you.]

[+] jonnathanson|15 years ago|reply
I've worked on quite a few teams of nerdy hackers, as I suspect you have and many of us have, and let's take a look around and be honest: for the most part, the stereotype still holds. For the most part. Are things trending, if slowly, in the other direction? Perhaps. But we have a long, long way to go in a galaxy far away before your average hacker is dating attractive women.
[+] ora600|15 years ago|reply
Some of us can even BE an attractive woman.
[+] Dylanlacey|15 years ago|reply
I agree with what you're saying 100%, but I think the stereotype is still re-enforced in some ways.

I have noticed that the "Management Types" Card is describing still treat their employees as lesser beings, not because they're hackers, but because they're employees. And they have the same outdated ideas, like "Pay them a bit more" or "give them a family fun day!", and other stuff that programmers are a bit more cynical about

[+] flatline|15 years ago|reply
"You keep these bees from stinging by paying them money. More money than they know what to do with. But that's less than you might think."

I remember thinking this in my 20s. The novelty of making more than your parents wears of relatively quickly though. Having a mortgage in an affluent area pretty much blows that all to pieces. That being said, my feeling is that being in the industry as a worker bee often does not pay equal to what you are worth = the money you are bringing in. But isn't this true of all professions where you work for someone else?

[+] wuputah|15 years ago|reply
Expecting to be paid what you bring in - or even remotely close (like enough to cover overhead) - is a frequent misconception of how capitalism works. Good companies have revenue of $1M/year per employee. Great companies have _profits_ of $1M/year per employee. Do you think you contributed $1M to your company's bottom line last year?

Remember that the goal of all for-profit companies is to generate profit, and that profit is either returned to its shareholders (known as dividends) or re-invested in the company with the hopes of raising the value of the company (and hence the share price). You can get a piece of that pie by taking your hard-earned money and investing in the company you work for. Some companies even let you do this at a reduced price (stock options) or, if you're lucky, include a stock award as part of your compensation. If you're not a shareholder, you shouldn't expect to see any part of the profit: you haven't taken on the risk of investing in the company. (Yes, some companies do have profit sharing as part of their compensation, but that's typically a different way of saying "you get a bonus if we can afford it.")

Granted, many of these concepts are non-existant when you're working for a start-up (where generating revenue, let alone profit, is stalled for months or even years), but the end goal is the same.

[+] chc|15 years ago|reply
It's true by definition unless that someone else is a sucker.
[+] drawkbox|15 years ago|reply
This essay is great and appears every so often like The Last Question from Asimov. It is one that is very true to the life of a company as it matures. It also shows why innovation will always happen at smaller companies with smaller teams just like everything good ever invented.
[+] oldpond|15 years ago|reply
So is sudden colony collapse the equivalent of off-shoring? I understand that's caused by a virus. Is that what we're calling it?

I remember back in 2006 being shocked and appalled at how a city councilor was making more money that me. Here I am fixing the most complicated systems ever created and some low level politician has a bigger salary than me! So I went independent and now make substantially more than your average politician. Problem solved.

Good thing there's a shortage of bees.

[+] mweatherill|15 years ago|reply
A problem that affects all software companies is how they manage their legacy. In a startup, everything is new and you are blazing frontiers. Once established, the legacy code just keeps growing and a bureaucracy is put in place to manage it. Developers are leaving Google for Facebook so they can get things done. You can then imagine where Amazon sits in this journey. Joining a startup is like rewriting everything from scratch.
[+] cancelbubble|15 years ago|reply
"You're building something intricate and fine."

Odds are, you're not. Well, intricate yes, but fine, no.

[+] pjscott|15 years ago|reply
That's "fine" as in "fine motor skills", or "fine sandpaper", not as a synonym for good.
[+] hillel|15 years ago|reply
I'm sure there are many writers that I like whose views I would disagree with if I knew them. That said, I just can't read anything this guy writes since he so vehemently opposed gay marriage.
[+] tomjen3|15 years ago|reply
Honestly - get over yourself. You don't have to pay him money, and he doesn't even mention sexuality in that article ('cept, if you really, really want to stretch it, he does mention underwear)

Yeah some of his believes are wrong, but this isn't one of them.

[+] cubicle67|15 years ago|reply
This seems to be an American behaviour I don't really understand; the inability to separate the things someone's said/written, from the person. If someone writes something you disagree with, why does that invalidate everything else they say?

Michael Moore seems to exemplify this perfectly. He holds strong opinions on a wide variety of (often orthogonal) topics, yet Americans seem to feel the need to either embrace everything he says as good, or be vehemently opposed to him on the basis of their disagreeing with him on one topic. Is it too hard to say "I agree on this" and "I disagree on that"?

[+] moshezadka|15 years ago|reply
I feel the same dichotomy. What people said below is correct -- he does not mention sexuality -- but it still tinges what he writes.

In thinking why this is, I have the following to offer: if it was "John Q. Random on Why Software Companies Die", there is a good chance it wouldn't rise to the top of HN quite so quickly. The accumulated reputation Card has is actually important for people reading this article. If this is so, then we must remember some of his reputation is being anti-gay-marriage: it is no less important to this article as is him being the author of Ender's Game.

[+] astrodust|15 years ago|reply
He's also vehemently opposed to good writing if any of his more recent books are any example. I have honestly seen better fan fiction.
[+] bryanlarsen|15 years ago|reply
The sad thing is that I really enjoy his books. His newer books aren't as good. Is that because they really aren't as good, or because my reading of them is tinged by my knowledge that the guy is a nutcase?