If you've ever run a company or any sort of organization, you'll realize that walking around blind is the default. It takes effort to get information on what's going on. Because you can't wait forever for perfect information, you end up taking calculated risks like Netflix did with Qwikster where it's not clear in advance if it will pan out.
As the OP realized, this results in Monday morning armchair quaterbacking from people who ask "why didn't they make the right decision in advance, are they stupid or something?" When in fact, no, they are not stupid, they just don't have perfect information about what will happen.
Incidentally, this is the largest advantage of startups- the cost of a risky bet is much lower because you don't have to risk hemorrhaging hundreds of thousands of customers each time you make a bet. As a result, you can take many more risks and come to a better solution more quickly.
There is a another side to that though: you do actually see a lot of CEO's who made the right call without having "perfect" information making less and less effort to gather any information with every new decision on the mistaken believe that they have great "vision". They're no longer taking "calculated" risks, just risks based on their own illusion of infallibility.
At some point in that process, the question "are they stupid or something" becomes justified. And not just as a form of armchair criticism. A company's survival can depend on it.
Also even if the CEO isn't stupid and makes an effort to get accurate information, the middle managers might just give him inaccurate information putting politics ahead of company loyalty. Do not underestimate the magnitude of this problem.
BTW, one thing corporations can greatly improve with modern technology is the ability of the floor-level positions to talk with the CEO and share information as to what is actually going on.
> Also even if the CEO isn't stupid and makes an effort to get accurate information, the middle managers might just give him inaccurate information putting politics ahead of company loyalty. Do not underestimate the magnitude of this problem.
Also relevant is the inverse issue: Monday morning quarterbacks have the benefit of hindsight, but they don't have information that was and is available on the field. Hastings was clearly trying to solve a real problem that Netflix is facing–he didn't create Qwickster just 'cause he liked the name. Perhaps its licensing issues, perhaps its something else. Hastings gambled that the benefit of separating streaming from DVDs would be greater than the cost of the customers it annoyed. He was wrong, but that doesn't make him stupid.
Also a fantastic way to promote grudges. People who have been "publicly" ugly tend to want to justify it and are thus inclined to continue to be ugly as "proof" that they were right to do so to begin with. I would rather people have the chance to change their mind about me and move on. I have certainly changed my mind about some people and am less inclined to downvote their remarks than I once was (which sounds more personal and ugly than I mean it -- I am trying to say that getting to know someone better can change how you interpret something they have said). First impressions aren't always accurate.
no, it's a means to encourage those above the karma threshold to be more austere about their downvotes.
and only those below the karma threshold for downvoting should be able to see who downvoted them. this deals with the problem of grudges. and as someone mentioned below, the downvoter should also have the option of leaving feedback.
I don't see how this deals with grudges because I am talking about the psychological impact on someone who knows that it will be known they did the downvoting, not the psychological impact on the person getting downvoted (plus don't underestimate the long memories of some people who will still remember who downvoted them a long time later, after they have their own downvote privileges). Also, people who downvote currently have the option of leaving feedback by simply replying. So I don't really understand where you are coming from.
I hate to start a meta discussion but there seems to be a lot of karma police trolling around lately who think the downvote button is there to vote down opinions they disagree with. I think it's time to raise that karma limit on downvotes again.
Anyway, what you said is spot on. It's easy to be an armchair quarterback and quite frankly there's far too many people spewing commentary like "that was stupid because I don't like it" and far less helpful things, believe it or not. Those who can go out and make dumb moves every so often. Those who cannot troll the Internet and criticize while trying to make themselves feel important.
I can't characterize all critics this way but there are enough out there to warrant my disdain. But I thought this whole post was a perfect opportunity for you to bring up what you said about startups. We really should be out there taking huge risks because the stakes may seem high but they're actually not in a way. I myself have gone out on a limb and experimented with my business. I'm small enough to do it and I sure as hell pissed off a few customers because of it. But in the end the risk was worth it because while I lose a few fans I ended up attracting more and was able to charge more money in the process. It allowed me to grow. I'm still small enough to take some risks and boy am I doing it. Your point is exactly what the guys at 37Signals talk about all the time. It's in their book. It's the advantage to being small and young.
I hate to start a meta discussion but there seems to be a lot of karma police trolling around lately who think the downvote button is there to vote down opinions they disagree with. I think it's time to raise that karma limit on downvotes again.
Or, someone on a phone fat fingered the downvote button while trying to scroll. I suspect that posts in certain positions on the page are more likely to have this happen, due to scrolling cadence at common phone resolutions.
Are you left-handed. On both mobile and desktop browsers I scroll on the right and the buttons are on the left; I'm right handed which probably makes a difference.
I could understand that you would up- instead of down-vote but surely if you choose the vertical area in which the vote buttons are to scroll then you'd be forever clicking the buttons by accident. I suspect most scroll actions begin either on a scroll bar or on the text of a comment - would be an interesting heatmap to see though.
I am right handed, but my thumb's length is close to the width of my phone's screen, so, when I'm scrolling, my thumb is closer to the left than the right. On the desktop I use the scroll wheel exclusively.
One of the important points I've heard Clay Christensen make is that incumbent companies often get destroyed (disrupted) by small players not because they're incompetent, or even because they're making bad decisions. Each decision along the way seems perfectly rational. Christensen frames it ultimately as a problem of measurement, that people are measuring the wrong thing, therefore optimizing for or solving the wrong problem.
I think this article correctly points out that Hastings isn't stupid, but he's in a tight spot, just because of the circumstances.
Even more grossly significant than this is the fact that "logical and/or beneficial at small / individual / short-term scale" need not equate to a best solution or alternative for a population at large or long-term timescale.
A classic case in economics is explained very clearly in Mancur Olsen's Logic of Collective Action, which explains why group-based decisions are often at odds with the interests of the group as a whole.
Another is Arrow's Impossibility Theorem, which hods that there is no method for constructing social preferences from arbitrary individual preferences. In other words, there is no rule, majority voting or otherwise, for establishing social preferences from arbitrary individual preferences -- so long as you also require unrestricted domain, non-dictatorship, Pareto efficiency, and independence of irrelevant alternatives. In other words: democracy not only may not, but cannot deliver an optimum outcome.
There are many other such paradoxes and conflicts, many of which I'm becoming increasingly convinced undermine key and manadatory assumptions of a properly functioning free market economy.
What changes might fix these is of course a rather longer discussion....
Winston Churchill was clear in his writing that America could not be trusted as an ally in anything that required steadfast determination over longer timelines. The winds of democracy make America a fickle ally. See 'The Gathering Storm.' Public schools don't often teach any of the shortcomings of a democratic society.
The US has often turned to dictatorships for its "friends indeed", though this doesn't always pay out particularly well.
While there's a limit to the amount of pain a democracy will shoulder, there's also a pretty strong tenacity to its true friendships. Such as, say, the "special relationship" much heralded between the United States and Britain. Once we got over some initial sore feelings, by the late 19th century, economic and cultural ties had pretty solidly cemented the two countries together.
By comparison, the USA' s dictatorial allies have been steadfast ... for roughly the duration of the dictatorship, if that. And the fall of same can leave a very long period of mistrust and poor relations: Iran, and much of Latin America are testament to this.
Public schools are indeed a fairly mediocre source, but fortunately we're not limited to the knowledge spooned out in them. I found university to be rather interesting in this regard, and have made some study of related matters since.
So: I'd take odds with Mr. Churchill's assessment.
Churchill was not speaking in regard to feelings and a relationship with another nation, but rather dependability in mutual long term pursuits. I think what he says remains true and a useful filter at times.
another problem is we might not be judging this companies by the correct metric. maybe the best outcome a company can hope for is dying and making a ton of money while dying but we will often see this as a failure of management. so instead we get companies that fight tooth and nail to stay alive but don't end up creating as much value than if they went gracefully into the night.
E.g.: in an election between La Roge and Grebe Sough, if Handle Parr's decision to run changes the outcome between Roge and Sough, you have a dependence on an irrelevant alternative.
Taking Stanford's Machine Learning course this fall has given me a couple of new analogies to explain the innovator's dilemma. Think of business strategy as the learning hypothesis, and the learning algorithm seeks to increase profits by minimizing the error between what value they capture and the available dollars in the market. Successful companies walk the surface, making stepwise reductions in this error rate. This often leads to a perfectly rational descent to a local optima. These local optima can be very deep and very profitable, which makes it even more difficult to turn attention to steps that will introduce loss and variance in order to find a more profitable (or global) optima.
"Randomizing" the starting points (the effect of hundreds of startups in a market) can increase the likelihood of a better optima being found, as can large companies attempting the same with lots of small bets (e.g., 20% time) which then are cultivated using the proven learning algorithm (i.e., management approach.)
True visionaries are able to hasten the process by scouting out where these new optima are likely to reside.
Or they're measuring or looking at things in the wrong way. It's easy to see the peaks and the valleys in a company but the truly important points are the inflection points.
If a big company waits until a small company has taken away 10% of its business it may still be too late to save the company, depending on how long it usually takes to change momentum. Often the reasons for differing degrees of growth come down to different fundamentals. A big company may not even realize that they've screwed themselves over by evoparating all of the best talent out of the company through boneheaded corporate decisions until revenue growth stagnates and then people start to wonder why they can't execute as well as they used to.
I still think it's the best/most insightful/most useful business book ever. The implications of truly understanding that book and disruptive innovation can be huge if you're a company founder or a CEO, Product Manager, etc. It's not so easy to internalize. I'm sure a lot of CEO's have read it by now, but I can barely spot some that follow it.
Btw, what do you think about Microsoft trying to apply its desktop OS, descendant of Windows NT, to tablets? Aren't tablets disruptive innovation to desktops (in Christensen terms) and therefore the entire plan is doomed? It looks to me they are making classic management mistake like ones the Christensen's book is full of.
I'm sure someone has done a study trying to account for it, but it seems you also have to take into account that the small companies, taken in aggregate, are trying out tons of things simultaneously, most of which will fail: often one big incumbent is being besieged by hundreds of startups who each think they have a new angle. So even though one small company might eventually win and look like geniuses who did it on a shoestring budget, the machine that produced them, so to speak, involved hundreds of companies and a lot of resources all gunning for the incumbent in parallel.
Or to put it slightly differently, the act of measuring a system changes it.
Pretty much any system, but for businesses this is especially true. As you measure, you respond to the measurements, and the response ends up being reflected in future measurements. Sometimes the new system created by this feedback path heads off into the hinterlands like a glider flying off the gameboard in Life.
A real world example was BYTE magazine. They were polling their readers to see what kind of machine they owned, more and more owned IBM PCs, so they started doing more and more IBM PC articles, which attracted more readers who had IBM PCs. But it left out in the cold people who came to BYTE for non-PC articles (who complained loudly). The key was that the metric 'what computer do you own' did not reflect accurately 'why are you reading this magazine' and yet it was driving what the magazine covered.
I'm a big fan of metrics, but I'm also a strong believer in re-assessing periodically how changes in response to a metric have changed the business and measuring that too.
The were defining (implicitly) their target market as their existing market. Unfortunately, this was serving not to expand but restrict the interest areas within their existing subscriber base.
This is a very common mistake. A canonical example would be the "when should we hold this meeting" question ... asked of a meeting's attendees (the answer will almost certainly be biased toward "when we're holding it now").
Yes, another, maybe even more important point that Christensen makes is that smart people get sucked into these metrics not because they haven't been educated well enough in the tools that business school programs give them, but because they fail to think critically, to ask the right questions, and to form the correct narratives.
And this is a criticism that applies not just to business, but to engineering, product development, design, etc. You can be the best problem solver in the world and it won't help if you're solving the wrong problems. And this sort of thinking is something that a broader liberal arts education can at least encourage, which is why I'm still a proponent of the liberal arts, and wish people would find more value in them. (Yes, I was a Comp Lit major.) (Obviously, it has to be a well-executed program in any case, and an unserious student isn't going to learn anything in any case, either.)
This article ignores a very central tenet of becoming rich:
Luck.
Most people didn't get in the position they were because they were geniuses. Few individuals fill that role. They get there because they were lucky. Bill Gates certainly wasn't the best programmer of his day and he most definitely wasn't the most adept businessman and he wasn't the most brilliant thief.
He was lucky.
He turned out a product that everyone wanted at exactly the right time. Now, as businesses have evolved alongside technology there certainly is slightly less luck (I would personally contend only slightly). But the founders of Netflix probably weren't the first people to think about mailing rental DVDs to customers, they just had the money and the capital to make it happen when the market was just enough ready to accept their existence. They developed expertise in that particular business, mailing DVDs to customers, and killed an entire other industry (for all intents and purposes) in the process.
How the author relates this to their streaming model (what was motivated the change) is baffling to me. Her entire premise seems to try and imply that the wealthy are somehow more intelligent and that, pardon the frankness, is fucking idiotic.
Netflix didn't become a giant through streaming content. They parlayed DVD money into a streaming business because the whole industry was making a very obvious shift in that direction. I mean hell, if they were half the geniuses that the author makes them out to be they wouldn't have selected Silverlight as the backbone of their service.
All I saw was a group of lucky people in one industry try to jump into another industry that appeared deceptively similar, and just because Hastings is their CEO doesn't make me think he's intelligent. If anything he's demonstrated that he doesn't fully understand the economics of splitting media.
The Quickster Announcement came off to me as a very stubborn businessman, tricked into thinking himself intelligent and a captain of industry by his fabulous luck, making a rash decision to vindicate a strong opinion he had behind closed doors.
The only thing I can take from this article is that money does a very good job of making the rich think that they're intelligent.
If only more people knew this they would stop finding patterns where they probably don't exist.
We should scream it to the rooftops.
Skill + Luck = Success
Skill is probably necessary, but not sufficient for success.
All success is due to the confluence of differing variables:
capital/relations/knowledge/attitude/technology/society/education/opportunism/alliances/utility etc. etc.
over a long period of time.
Humans like to explain things away through single factor theorems.
Either "the rich are rich because they are intelligent", or "they are lucky". False dichotomy alert!
To become rich it is usually a combination of the two, with luck playing the bigger role in leveraging skill to the highest levels of success in noisy areas ( business vs. athletics ).
Wealth like stock market prices and other one bit measures of systems of ASTROUNDING complexity rarely tell you what it was that lead to it being the way it is.
It's like sound analysis.
The addition of various agents which produce a point in space over time, to which you do not know which percentage is violin ( skill ), and which percentage is the cymbal ( luck ).
Just because something has a low odds of happening doesn't mean the main attributing factor was luck. Skill, intelligence, and determination play a far more important role.
If everything was mainly luck based why don't China and India have most the world's richest people? They have by far more tickets in "rich lottery" than the rest of the world.
It's really more a matter of persistance if you ask me. you can have bad "luck" and fail 50 times. But you only need to get "lucky" once, to be successful.
Fall down seven times, stand up eight - Chinese Proverb.
It pays plenty of rent. It tells us to expect all the usual randomness results about Wall Street, traders, hedge fund managers, etc. It tells us to expect something that looks like a random distribution like a Poisson in most terms of business success. It tells us to expect plenty of leaders to flame out simply because they got where they were through random rolls of the dice and for once their dice came up snake eyes.
Luck plays a part in everything. It's lucky that we live on the third planet from the sun, which is habitable, so you were able to get your PHD.
However, I'm really tired of people attributing success to mostly luck, which is what it sounds like in your post. Winning the lottery or gambling is mostly luck. A successful business takes about 1%-5% luck. The rest is skill and/or intelligence.
Everyone has potential opportunities that pass them by on a daily basis. The ones that can recognize them (with the skills/intelligence) and actually decide to act one them are successful. I had many at my last job and nobody else saw them because they just didn't have the skills.
"Netflix didn't become a giant through streaming content. They parlayed DVD money into a streaming business because the whole industry was making a very obvious shift in that direction. I mean hell, if they were half the geniuses that the author makes them out to be they wouldn't have selected Silverlight as the backbone of their service."
If it was so obvious why didn't someone else do it? It's not like they had the most money? Also, everyone makes mistakes, even "geniuses".
If it was mostly luck. I could sit here and do nothing and I would have a successful company tomorrow. You and I both know this won't happen.
"All I saw was a group of lucky people in one industry try to jump into another industry that appeared deceptively similar, and just because Hastings is their CEO doesn't make me think he's intelligent. If anything he's demonstrated that he doesn't fully understand the economics of splitting media."
Strange how "luck" as you say seems to follow them around. You get lucky in one industry and make millions of dollars and then you get lucky in another similar industry and have the most popular streaming service in the world.
"The Quickster Announcement came off to me as a very stubborn businessman, tricked into thinking himself intelligent and a captain of industry by his fabulous luck, making a rash decision to vindicate a strong opinion he had behind closed doors."
> A successful business takes about 1%-5% luck. The rest is skill and/or intelligence.
I'd put it considerably higher than that, especially in markets that have strong dynamical-system type effects (winner-take-all markets, strong dependence on feedback factors like visibility/brand, etc.), where small differences early on that are nearly impossible to predict can magnify arbitrarily to large differences later on. If I had to put a number on it, probably 60-70% luck, once you pass a baseline level of competence.
Even in my own personal endeavors, it's really surprising, and---even in hindsight!---seemingly random what stuff succeeds and what doesn't, and which factors turn out to matter. Especially true of any sort of online commerce, where the difference between successful and unsuccessful websites is in part the quality of the content or product, but also strongly dependent on the vicissitudes of information flow, "virality", etc. Nonlinear dynamical systems have complex dynamics, and they don't always correlate very strongly with anything except the system's internal dynamics...
After working in finance I've come to believe that most wealth is accumulated through brute force. You get money by using leverage to take other peoples money -- its actually very simple from an intelligence perspective. It may take some genius to gather the resources necessary to forcefully gather wealth, but the actual gathering of it is not a matter of 'smarts'.
No. Perhaps most of the wealth that you saw, working in finance, may have come from brute force (although I would disagree with that claim, prima facie, as well); but that doesn’t mean most wealth is accumulated that way.
You get money by using leverage to take other peoples money
No. That theory is called mercantilism, and we figured out that it’s wrong about three hundred years ago. You get money by bringing about the manifestation of value into the world. People who make money via leverage are doing that in a very specific way, but it’s far from the only way to do it.
The point still stand. Once you have created wealth, you need the ability to claim it and that is always a function of preexisting capital. The only difference when you "create" wealth being that you are in better position to negotiate with your various contenders than otherwise.
You need a citation that some guy once said that the amount of wealth in the world is not fixed? What would the world look like if it weren't true? There's no reasonable or useful definition of wealth for which the world of today has exactly as much wealth as the world of 10,000 years ago. (Or 1,000, or 100. 10, well, that can be successfully argued either way. It's not been a great 10 year run.)
I believe he's looking for a reference that Locke was a proponent of the idea, not that the idea is true. Similar to how you might ask for a reference if somebody suggested Shakespeare as the originator of the Theory of Relativity — it's not that you disagree with relativity itself, just the history given.
It's not a quote but the implication of Locke's entire discussion of property in his second treatise. He explains that value (wealth) is created by the labor expended to create products. It follows then that wealth is not fixed.
>He explains that value (wealth) is created by the labor expended to create products. //
This is not at all the same as:
>"You get money by bringing about the manifestation of value into the world." //
IMO value is created by labour enacted to process [raw] materials. You can get money however without creating value. Indeed a lot of trading appears to be a way to extract money without adding value. Optimisations to avoid wasted production are not creating value IMO. They can be beneficial, I feel, but I also find that we've gone way past the point at which financial markets are genuinely optimising the creation of value. The main mode of getting money appears to be exploitation of those expending labour to process materials.
Some poor unfortunate sell their kids to coffee plantations in Western Africa and a wealthy trader sits at a computer and extracts the value of the kids processing.
A company in the 70's sold 500 of it's restaurants (it's main source of revenue) and the "pundits" called them crazy. The stock took a hit but the CEO remained on course. He stuck to his guns.
30 years later, it is one of the most successful companies in its industry. You may have heard of them- Walgreens.
The CEO of Netflix is not dumb. He killed Blockbuster. He knew what he was doing when he split the company to save the future of his company.
I think you're missing my point. Netflix taking out BlockBuster does not prove they can do no wrong, merely that Reed Hastings a perfectly capable CEO, and smarter than the media would have you believe.
If you read about the history of the company, they started by SELLING DVD's. They barely made any money renting them. But, Reed Hastings made the decision to split that company because it wasn't the future. His 10,000 customers complained but he stuck to his guns. And look at them now. The largest streaming company in the world.
He was placed in the same situation this past year. Stick to a business model with no future (DVD's-a dying medium), or split the company to improve negotiating terms for streaming deals(the future) and hopefully sell off "Quickster." It was a brilliant plan that poised Netflix for the next generation of digital distribution.
Instead they backed down and changed direction, looking weak in the process.
Netflix was not originally an internet streaming company, that came later. I'm not sure I could call Netflix a "perfect communication of what the company does", given the name came around when the internet was only used to select your next mail-received movie.
From what I've read his goal was always to start a streaming movie company. He just did the DVDs by mail thing while he waited for technology to catch up.
I imagine there are quite a few people who would agree with you; had Jobs stayed on at Apple, he wouldn't have learned the hard-won lessons from starting Pixar and NeXT.
Yes, but the lesson learned should be "sometimes things unexpectedly wind up working out well", not "fire your CEO and you too could become the highest market cap company in the world"...
> Hastings wanted to get the DVD-only customers off of Netflix so that he wouldn't have to pay for streaming rights they weren't using (or paying for).
I've heard this argument multiple times now, but it flies in the face of the much more logical argument made in the very next paragraph that the content companies want to replace their cable income (no matter what). Meaning in this case if he splits the company in two then they double their prices on the streaming. Given this, splitting seems like a big step for a temporary reprieve.
Wealth accumulation roughly follows the process of "1. Earn money 2. Don't spend it" - It doesn't strain credulity that IQ might be correlated with the former, but not the latter.
I'm curious as to the effect on quality of life - measuring wealth in dollars is easier, but a pretty imprecise measure of the overall effect on someone's life of a few IQ points.
I'm even more curious as to the effects on happiness...
The phrase "does not necessarily correlate" needs some unpacking. I think anyone would agree that for N=2 that's true, but for higher numbers it would indicate sample error.
From your own link:
"Since the statistical results are not distinguishable from zero, this suggests IQ test scores and net worth are not connected." (em. added)
That's a common misinterpretation of the results of statistical tests. You can never conclude from that type of test that two things are not correlated, you can only conclude that the data you have does not suggest a correlation ("fail to reject the null hypothesis").
Intelligence already likely correlates well with being a stubborn bastard. It helps with the part where you obsessively study topics everyone else thinks are too boring or inaccessible.
Most of the most intelligent people I know are actually pretty bad at monetizing that, though, in part precisely because they're way too distracted by the constant drive to learn new things (rather than picking a few and building a solid market niche), and in part because many seem more interested in the mental challenge of understanding something than the actual profits from monetizing that understanding.
I think the issue is more about timing your business decisions, not making smart or stupid ones.
Netflix is worried about the end of physical media, as they should be. They are looking 3 or 5 years down the road and trying to position the company to be successful then (as well as today).
However, for the average customer today, DVDs are still very important. And for the average investor, next quarter's earnings are much more important than earnings in 2015.
I think Netflix made the right decision for next year, or maybe 2013 -- but made it too early; they got ahead of their customers. (An easy thing to do when you live in Silicon Valley.)
>And for the average investor, next quarter's earnings are much more important than earnings in 2015.
I hear this all the time, and it's just not true. I see stock moves all the time based on the prospects for distant future earnings - Amazon is a prime example. So is any stock with a high P/E.
Investor sentiment is accurately reflected in the stock price. If investors were incorrectly letting short term thinking dominate their buy/sell activity, then a long term investor should be able to make higher-than-market investment returns by betting against those incorrect short term thinkers.
I don't see this happening, hence I don't buy the idea that investor sentiment is incorrectly biased towards short term thinking.
Consider Amazon again - its stock zoomed for many years after its IPO and despite losing vast sums every quarter and many predictions that it would never climb out of those losses. Obviously, investors were pricing the stock based on a very long term outlook (and were amply rewarded for their prescience).
I noticed that too. One explanation could be that many really smart people understand that "the game" is inherently stupid/degrading/unimportant and would rather not waste their intelligence and lives fighting other people to "win" it. Maybe they want to further human understanding in peace and not be a tall poppy that gets cut down all the time[1]
Also all the old Bell Labs people who're now at Google. I'm sure Rob Pike could get more money than he does at Google if he wanted to go into the startup game, but he isn't interested.
First, the video rental business was ripe for disruption once DVDs became sufficiently popular. Once you had a video medium that was small enough to cheaply ship through the mail and durable enough to keep in circulation for a while, it was inevitable that somebody would challenge the incumbent brick-and-mortar stores and win. Netflix may have simply been in the right place at the right time through sheer luck.
Second, intelligence isn't a single thing. It's a blanket term for a huge collection of disparate characteristics. The intelligence which lets me write code at a level well beyond most of the population is not the same kind of intelligence that would make me succeed in business. Perhaps the kind of intelligence that lets a person build a successful business from scratch is not the same kind that lets a person sustain an existing large business.
I think the article makes a good point, that we tend to ignore complication and subtlety in favor of simplistic explanations like "he's stupid", but I think it goes way too far in the other direction. Rather than assume the CEO is stupid because his company is having trouble now, the author assumes the CEO is smart because his company had success in the past, which is no better.
It was a good plan executed too quickly. First price increase to make mail less attractive, then split the companies down the road, then get rid of your part with mailing DVDs completely and then truly become the Netflix company you want to be. The only thing they seemed stupid about was how fast they could execute those steps. They did it too quickly and it unnerved customers and investors.
While I am opposed to blatant armchair quarterbacking, we must be careful to avoid the "appeal to accomplishment" fallacy (http://en.wikipedia.org/wiki/Appeal_to_accomplishment), or any derivative thereof. Analysts can be justified in critiquing a CEO's strategies, even if they've never been CEOs themselves. Critics can knock a bad movie, even if they've never personally directed a movie. Sports commentators can critique a basketball player's performance, or a coach's call, even if they've never played or coached. Etc. You don't have to have done something in order to form a cogent opinion of it.
Of course, it is certainly unfair to label Reed Hastings an "idiot," or to claim that Netflix, as a whole, has "no idea" what it's doing. History has proven both of those positions wildly untrue, barring a few hiccups here and there.
I think this boils down to the fact that if you look at historic proceedings the outcome seems obvious, because the details which make it obvious are the ones reported. There is a total bias to write what looks like a progressive narrative, when the reality is usually far from it.
i.e. A->B and B->C then CLEARLY A->C. Except when A went to B, A could also have gone to D, E, or F, but you don't write about that, because clearly covering all your bases would be ridiculous, and it's generally difficult to evaluate the likelihoods of any options except B, where the likelihood of B is 100%.
Because the idiots compromised my health before I knew better, or rather knew how to get away from and effectively avoid this.
This is the part of abuse that people persistently don't get: It often works, by chronically if not permanently disadvantaging the victim. There are people who succeed in spite, but you're down to talking about individual circumstances and variables, then.
Health issues and abuse (largely separate issue) are a big part of my story. I've been recovering from both, but at high cost -- like I'm deeply in debt and being evicted from my apartment. Perhaps not the best place from which to be giving "money" advice (not that this is really that). In my case, I'm clear my finances would be far worse if I had not recovered my health, that my current fairly dire situation is still an improvement over what I would face with conventional treatments/accepting the problem. I'm still trying to figure out how best to share information on how I accomplished that. It's possibly stupid (and often goes over very badly) to try to offer encouragement in that regard given the large gap between that encouragement and my ability to adequately convey what I did.
Suffice it to say you have my sympathies and agreement.
I... without trying too hard to find my own words -- understand, or experience for myself, the difficulty in trying to communicate about such a situation.
These days, I no longer try too hard, and I tend to keep things brief, myself. Only if someone seems both genuinely interested and capable of understanding, will I willingly go further. (I still kick myself for those times when I slip and say more than my intuition tells me is wise.)
I also should qualify my comment by saying that I don't want to cast myself and the worst of victims.
Such experiences are so personal. And it's difficult when someone wants to "lay them out on the table" with a measuring stick, and probably also whatever brand of Scotch tape they happen to carry.
Agreed: Trying to play "who's the bigger victim" does no one any good. Just saying that one can heal more than most people seem to be aware and I try to gently spread the word, where possible. Even though that journey has been quite the challenge, I feel it has been well worth it.
The answer to that question is simple, but unpopular: ready access to capital (i.e., being rich). There's a reason why all the money in the world is held by less than 1% of the people, and this has nothing to do with the 1% being the smartest.
A very rich man was asked by a journalist how he made his first million.
The rich man answered that he started off with just a few pennies, put them in a pay phone and made a phone call: "Dad, can you please lend me a million dollars?"
MS. McArdle is a journalist with strong insights in tech and finance. Her blog is a good read, if you skip the politics content, which isn't so bad either.
Just to take the headline without the context:
being rich and being smart are not necessarily synonymous and one never required the other.
In other words, smart people often do NOT aim to be rich. They have more interesting goals and they usually either sacrifice "common wealth" for them, or are just ok with a decent amount of money. Money's nothing. Money's not a goal. Never been.
Smart evil people go after power control and knowledge. Money is a side effect. Dumb people only go after money (which comes and go, really).
Well, smart people also choose to pontificate about topics on which they consider themselves smart. If your aim isn't acquiring wealth, you may not be the best authority on the topic of acquiring wealth.
This same principle often applies to reading others' code. It's common to look at it, see something inscrutable, and decide that the author was an idiot. Then you try to rewrite it, trip over all the same bugs that the author had learned to avoid, and maybe - if you're smart and honest with yourself - accept that you had unfairly maligned your colleague. I've written about this before, as have many others including Joel Spolsky. My favorite is this:
If you re-read the article with an eye toward how it describes the behavior of programmers even more than it describes that of business people, it becomes much more valuable.
As the OP realized, this results in Monday morning armchair quaterbacking from people who ask "why didn't they make the right decision in advance, are they stupid or something?" When in fact, no, they are not stupid, they just don't have perfect information about what will happen.
Incidentally, this is the largest advantage of startups- the cost of a risky bet is much lower because you don't have to risk hemorrhaging hundreds of thousands of customers each time you make a bet. As a result, you can take many more risks and come to a better solution more quickly.
edit: downvotes? what?