Two years after tying its fate to Microsoft’s Windows Phone software, Nokia, which once dominated the global mobile market, sold its handset division to the U.S. software giant. It was a spectacular fall, one that should serve as a cautionary tale for any big tech company.
Nokia, a 149-year-old firm with a market value that topped $200 billion over a decade ago, had earlier proven that it could reinvent itself. It successfully made the transition from making rubber boots to the world’s largest handset manufacturer, a title it held from 1998 to 2012.
But Nokia never had much success in the U.S., even in its heyday when two out of every five mobile phones sold in the world were Nokia handsets. It made major mistakes in that market, missing clamshells, qwerty keyboards and touch screens. Downplaying the U.S. was not an issue when that country was a mobile backwater. But then the American market became the center of the mobile Internet and Nokia lost out to rivals like Apple.
Today the market is all about the ecosystem — the collection of companies and services that sprout up around an operating system. It is hard to imagine the iPhone being so successful without all the third-party applications available in the Apple App Store. That was Steve Jobs’s genius. When it comes to his legacy he will be remembered not just for beautifully-designed hardware but for transforming the entire telecom industry.
But post-Jobs there is speculation that Apple could lose its edge. With the pace of change quickening the challenge for tech companies is not just to try to build companies that last but to build companies that retain a start-up mentality and constantly reinvent themselves. That’s the legacy Evernote CEO Phil Libin, a scheduled speaker at Web Summit, wants for himself and his company.
“I am not sure I know how to do this,” says Libin (who is pictured on Informilo’s home page.). “But I know it is important to have a goal that is significantly epic that you can work on it for the rest of your life.”
There are about 3,000 companies in the world that have been around for 100 years or more “but most aren’t great places to work at. I want to build something durable that is 100 years old and still innovating,” he says. “It is a very meaningful, interesting challenge, a systems engineering challenge. What are the things that make a company durable and robust or brittle and short-lived?
Libin is one of more than 200 founders of successful companies that are scheduled to gather for F.ounders, a private invitation-only event immediately following Web Summit, an annual conference that this year is expected to attract 10,000 people.
“What’s my legacy?” is one of the topics that the industry stars will discuss among themselves. Tech entrepreneurs like to believe they are changing the world. The question is how many really are? And how many of them will be around 10 years from now, never mind 100? Disrupters get disrupted. It is the nature of the business.
Silicon Valley serial entrepreneur-turned venture capitalist Joe Lonsdale, says he believes it is the firms that own the network or the infrastructure that will have the biggest impact and staying power. “I think the interesting opportunities are to build platforms the right way for the right industries. It was Michael Milken who said there are five key industries in the world: finance, education, healthcare, government and energy. If you can fix these five industries you can impact the prosperity of the world as a whole, do some real good and have real impact so that is what I am focusing on,” says Lonsdale.
Niklas Zennström, co-founder of Skype, which gave the world free voice services and has now been folded into Microsoft, has his own theories about what it takes to build lasting companies. “I don’t want to call out specific companies, but there are three key characteristics that make it much more likely that companies will find lasting success, and which we look for when we invest in growth companies,” says Zennström, a scheduled speaker at Web Summit and cofounder of London-based venture capital firm Atomico.
“First is the combination of real technological innovation with a product that people keep coming back to, and a strong brand which is truly loved by users and customers — having all of these is really powerful, “says Zennström. “Second is the right company culture. You can immediately tell when a founder cares deeply and personally about creating an environment that will keep them and their team happy for a long time.”
The third is the right approach to international expansion, which is absolutely key to becoming a long-term global leader. “Japan has the highest mobile monetization in the world, China has the greatest number of Internet users in the world, Brazil is the number two country for social media. Success in those kinds of markets, as well as across Europe, isn’t easy — but it’s key,” he says.
“So when you ask how Europe can build more companies to last, I think having that global ambition is absolutely critical,” says Zennström. “That doesn’t mean you start finding customers in China on day one of your company, but it does mean thinking internationally from the outset. There’s no single center of gravity in the technology world, and wherever I travel, from Europe to Latin America to Asia I meet amazing entrepreneurs who are trying to disrupt established markets. We see companies from all over the world becoming global leaders.”
Libin says he wants Evernote, a suite of software and services for note-taking and archiving, to become a global leader with staying power by building a deep brand. “I want Evernote to be tied to an effortless level of productivity,” he says.
And, he wants his company to be infused with design thinking. While he used to think about design as visual appearance, Libin says he now understands that design is at the base of everything, from financial models to the way you run a board meeting. “So, he says, “I need to surround myself with people who are great at all those things.”
An outside perspective is equally key. The ability for companies to outsource specific R&D problems to teams from different disciples that self assemble in the cloud will play a big role in keeping companies innovative, predicts Nava Aviv, an Israeli tech entrepreneur with degrees in clinical psychology and computer science.
But unless management remains open and is ready to listen to outsiders, all is for naught. Aviv, who is now working on a stealth-mode financial services start-up, has at various points in her career been hired to help transform industries she knew nothing about — everything from water infrastructure to the diamond industry. She likes to tell the story of how she traveled to Switzerland to a global conference of diamond dealers. The boss kept telling her what to say and think so, feeling frustrated, she wondered off on her own, to another part of the conference where stone polishers from around the world were gathered.
Aviv spent four hours observing the polishers and which booths got the most traffic. Her take away? That small, colored diamonds would be in big demand. When she recounted this to an industry executive on the train ride back to the hotel he looked at her with astonishment. He had just paid a consultant $100,000 to do a study that took months and reached the same conclusion.
The moral of the story is that people on the outside can give companies a fresh perspective; they notice things that people within a sector don’t.
Those that fail to grasp the importance of being open to outside views risk failure and obscurity.
Diamonds may be forever. Tech companies? Not so much.