Wednesday, April 25, 2012

Bad business is just about money. Good business is about a great product.

+Mark Zuckerberg wrote in the Facebook prospectus: "we don’t build services to make money; we make money to build better services."

This is being presented by Nicholas Carlson at Business Insider in his article "The Problem With Mark Zuckerberg" as a problem, that shareholders should watch out. The implication is that the only reason a business exists is to make money. His words:

There is a nagging concern for potential Facebook shareholders: the guy running the company doesn't care that much about making money.
Mr. Carlson goes on to highlight this comment, from a co worker of Zuckerberg's, as a thing to cause concern:
if he had to choose, he'd rather be the most important/influential person in the world rather than the richest.
Doesn't this seem like a tremendous loss of perspective? Companies exist to provide a service - the money comes from the service or product provided. The companies that provide the best services are the ones that make the most money, with the money made a result of the service provided. People pay for a product, they don't just hand you cash.

Mr. Carlson tries to use +Larry Page and +Bill Gates as examples of people who built great services but who are primarily motivated to make money. I would challenge that point of view. It seems clear to me that both of these men have had success because they focused on building the best product in their areas: internet indexing & operating system software, respectively. I'm sure they thought to themselves at various points "I'm sitting on a goldmine with this!". Still, their focus wasn't about extracting cash from people, it was about providing people with outstanding services first.

It's the money-first mentality that has crippled big business for a long time. It's why the greatest companies of today have been founded by young, motivated people, like the Gates, Pages, & Zuckerbergs of the world - they challenge themselves with building a great product.

At what point did American business people suddenly transition from building great products to just making money? The two greatest recent examples of this mentality have been in banking and automotive industries. In one, the desire to make money off of people's poor decisions took the feet out from underneath the credit market. In the other, the desire to maximize profits at the expense of quality and product led to US government bailouts.

What was the motivation in both of these instances? Money. Just money. It wasn't about creating a good service or a good product. It was this mentality that the banks and the automakers were just in existence to make more money for the shareholders. This is not just bad business, it is the worst business.

Why doesn't big business make the connection between the success of Google, Amazon, Facebook, Apple, Craigslist, and Bill Gate's Microsoft and their intense focus on product? The disconnect is stark in an article like Carlson's on Business Insider. It's this same disconnect that echoes in our nation's politics around copyright and file sharing.

At what point did the perspective get lost? Is this some artifact of the '70's and '80's notion that business is war? Are we seeing the influence of a widely taught facet of business education? When will we see the influence of Arnoldo Hax and his Delta Model? Business is not about war or your competition or the shareholders.

It's about the product and your product's relationship with your consumer. Business is love. The businesses you love are the businesses you stay with.

Apple epitomizes this to such a great degree that I doubt you could find a better example. On Mr. Hax's Delta Model they have, without a doubt, targeted System Lock In. They want you in their walled garden. And you know what? People don't mind that walled garden because the products are outstanding.

Yes, they make money from those products. Yes, you pay a premium on those products. But the focus is always on the product. This quote from Steve Jobs sums it up best, I think:

Sure what we do has to make commercial sense, but it's never the starting point. We start with the product and the user experience.

You've got it wrong, Mr. Carlson. You've got it wrong, shareholders. It's about product first. Zuckerberg's obsession with building the best product is exactly where it should be. It shouldn't be just about making money - that would be Facebook's demise.

Bad business is just about money. Good business is about a great product.

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