Everyone is asking if we are in a tech bubble. I think we are not. But I also think that there is a bigger problem at play. In the race to be the next big thing we forgot that companies exist to fulfill a need. We got too consumed with our own numbers, our growth and hockey stick curves and who’s writing about us. ‘Oh they’re hot they got into Techcrunch’. We forgot to ask ourselves one key question: what is our purpose? Why do we exist as a business. If we disappeared tomorrow would it really matter?
Instagram is a good example. I for one think that Facebook was right in buying it and paying up. You may think ‘a billion dollars for a company with 15 people and no revenue… are you nuts?’ No. I think it’s a smart move. And here’s why: last year for the first time sales of mobile devices outstripped that of computers. Soon browsing on mobile devises will dwarf that on PCs . And Facebook sucks on mobile. So if you told me: hey, pay 1% of your business in stock to buy a company and a team that threatens your future, my reaction would be: where do i sign?
It makes business sense. And that’s why it’s not a bubble. Its rational exuberance. However, if Instagram (pre acquisition) disappeared would anyone really care? OK you wont be able to easily add some nice effects to photos you take while getting pissed with your mates on Saturday night and share them with some other bunch of friends getting pissed somewhere else. WHO CARES? How is the world fundamentally worse off if you can’t do that any more?
So here’s a simple reminder to all of us: great companies that have disrupted industries and achieved sustainable long-term value creation have a very clear sense of purpose. And they are fanatical about serving that purpose before their own. They serve a primal need that resonates with people. That people would recite to you on the street if you asked them randomly. IKEA – make furniture affordable to the masses. Starbucks: bring quality coffee to America. Nike: help athletes win. Four Seasons: deliver outstanding service. Apple.. Apple is a good one. It lost its sense of purpose when Steve Jobs left because the guys in suits took over. It was numbers there on. Delivering results. And it started selling whatever crap it could just to keep numbers rolling. Like printers and PDAs. And brought Apple to its knees. Until Steve Jobs rejoined and aligned it to what was their new purpose in the digital age: to become the digital hub for consumers. And like all these other great companies mentioned above he fully aligned everything they do with that purpose.
Ask a typical ‘rock star’ tech entrepreneur who is getting glorified in the press, (he’s like got Mike Arrington on speedial!) just ask them what their purpose is. You will hear answers like ‘to be the leader in..’ or ‘we are the biggest community of ’..’ or ‘our mission is to win’, ‘to kill the competition’, or ‘to IPO’.. or (my worst kind, these are the people I want to hit on the head with a stick) ‘to be the Airbnb of xxx’ or to be ‘the eBay of xxx’. Oh and the newest breed: ‘we are a Pinterest for [some crap]’.
None of these is a purpose. Its not even a strategy. They are all introverted, selfish goals. It’s vanity. If bubble is insanity, what we are living today is pure vanity. And its worse! So valuations aside (which I still think are reasonable for reasons I will explain in a separate post) this is why these businesses will eventually fail. It has nothing to do with whether we are in a bubble or not. It has everything to do with bad leadership. Leadership starts with instilling in a great team a very deep passion about the purpose you serve as a business. As to why you exist. If you get that right almost everything else doesn’t matter. It will sort itself out. Yet today – and this is where the frenzy and race to the top does in the end affect things for the worse – great leadership is confused with achieving goals. ‘Oh he grew the business 3x in like 6 months man the dude is a rock star’. I hear this crap from VCs and all sorts of other people and I want to throw up.
And the press has a large part to play in this. Techcrunch is like the holy grail, its supposed to be the one setting the standard. Yet everything they write about is how a Startup is acquiring users, their growth rate, who invested in them and who they should buy. What about the purpose these businesses serve? What are they here to do? Why do they even matter?
Don’t get me wrong, I think there are some tech businesses that have a great purpose. Etsy is a good example: if Etsy disappeared tomorrow, it would matter. There would be millions of talented people left without a voice and a channel to sell their stuff. Google: despite all the talk of Google being ‘evil’ Google does serve a primal need. It does make the worlds information more organised and accessible. Facebook: I’m a big believer in Facebook because it does make the world more open and connected. Sure they need to figure out how their valuation will stack up too. But first and foremost they serve a purpose. But then take Microsoft: what is their purpose today? To keep growing? Find new profitable markets to enter? Acquire anything that moves? Kill Google? None of these is a purpose. Fouresquare – ?? Oh, how cool im the Mayor of the Pret next door and i have some stupid badge on my profile. Who gives a sh*t? Zynga? Great it gives people a means to kill time by playing some ridiculous game on Facebook. Sure it’s a cash-making machine (for now). But it is at the end of the day, just a game. Yahoo! – I wont even go there.
So what we need as tech entrepreneurs I feel is to stop worrying about whether we are justifying our valuation, or whether we are growing fast enough, or the tech press loves us, or some follow-the–herd VCs want to offer us their left arm to invest in us. We need to start worrying more about the purpose we serve. We need to stop this self-celebration and remember why we became entrepreneurs in the first place: to make the world a better place. To make a dent in the universe. And for sure we won’t do that by blowing our own trumpet. We need to serve a purpose.
At PeoplePerHour this is what I am most proud of. We have a great team of really talented and very passionate people who really do live and breath our purpose: helping people fulfil their life-long dream of working for themselves, building up their own business. Sometimes I feel too much so: we have so much passion in the company and in our community that it creates an atmosphere of intensity. When PPHers are excited they are not a little excited. They are over the moon. When PPHers are pissed off they are not ‘a little bit’ pissed off 🙂 They are raging bulls. When we meet our users they don’t go ‘Oh yes PPH, you guys saved me money it’s a good service’. They are more like “Dude! I built my entire business through you guys you rock! Thank you!’. or “if it wasn’t for PPH my business would have never got off the ground’ . We inspire people and empower them to go live their dream, start a business and build it up one hour at a time. That’s a real purpose.
And that’s what matters the most. We exist for a reason. In our own little way we matter to the world. If we disappeared tomorrow I’d probably have to relocate to the jungle cos I can tell you some folks would be knocking on my door. We serve a purpose higher than our own. I’m going to repeat that: we serve a purpose higher than our own. And that’s why I know that come what may we will carry on. Some of these sexy cool products out there that VCs are drooling over … I can tell you a tonne of these will not be around when the froth comes off the cappuccino. Everyone is so myopically focused on the early adopters ‘ Oh oh you know maan this is an app that Google uses or Techcrunch and Mashable is all over this’. Who gives a F*CK ?? Yes early adopters are great for publicity and yes they have their place in the world but they also have a very short attention span and the moment something cooler comes along they are off.
Great companies on the other hand are solid, they are rooted to the ground, they dismiss all this hype as fluff and distraction. They are committed to long term value creation not hype. They are relentlessly focused on serving their purpose, and they have great leaders who put that purpose above their own self interest or self promotion. That’s who I aspire to be. And that’s the type of organisations I feel the world needs more of, especially today. It’s our duty as entrepreneurs and leaders to put that mission above all else.