[Jurassic Park] The New Big (Company) Kid on the Block

I drove to my client, a company on the Peninsula, past what was formerly Genentech Inc. (acquired by Roche) in South Francisco, on the same day that General Motors filed for Chapter 11 bankruptcy.

If I had driven further south I would have passed buildings that formerly housed Bay Networks and 3Com, long gone former or diminished competitors of Cisco, and by a location that was Informix (subsumed by IBM), Sun Microsystems (acquired by Oracle), and Silicon Graphics , a leader in computer graphics in the mid-1990’s and a recent bankruptcy participant, acquired by Rackable Systems. If I taken a turn or two my path would have taken me by the former location of Excite@Home, as well as a struggling Yahoo trailing Google’s distant dust. On a good day you can almost imagine the buildings occupied by Fairchild Semiconductor,  the granddaddy of Silicon Valley start-ups.

Each of these companies that are long gone, or have gone long without much success, were market leaders in their day: respected if not feared, ambitious and expansive. The market leaders today will find that while it’s tough getting to the top, it’s far harder staying there. Those earlier leaders stumbled, perhaps in vision but more likely in execution and external market driven perspective.

Joseph A. Schumpeter’s "creative destruction" is alive and well in Silicon Valley and the rest of the country.

My former grade school through college classmate Susan Spezza worked for Wang Laboratories in the 1980’s when they were a $3 billion company (around $6.5B today), and owned – in the pre-PC days – the dedicated word processor market. If you as a company did word processing you owned a Wang machine rather than the electric typewriters they replaced. I remember Sue telling me that the solace Wang took, as it hit various bumps in the road to eventual bankruptcy was to think  “how can a billion dollar company go away.” The answer, as it turned out in Wang’s case, was one customer at a time, and a failure to anticipate and respond to fundamental technology and market changes.

Joseph A. Schumpeter’s "creative destruction " is alive and well in Silicon Valley and the rest of the country.

As I met with my client, I thought of his company and wondered if they would live up to their recent status as the new big kid on in their San Francisco Bay area sector block. While not blessed by some accidental discovery of technology that propelled them forward, they have organizational ingredients in their DNA that have, and likely continue, to serve them well; discipline and focus; real operational excellence, a nimbleness to adopt, and an external market and customer awareness that is frankly unusual.

The firms that will be winners in the post-bust of 2008-2009 are probably not unlike the qualities that define my client. Those that don’t will likely end up like the characters from Jurassic Park: long gone, and their presence only remembered in lore, but only seen in fantasies from Hollywood.