Hello War & Peaceniks!
Today, the second installment in our special series: MEDIA DEATH STARS!
When major media players get discussed, one of the most important is oft omitted: OG Tech Death Star, Microsoft. Look at how the industry describes the leaders in media tech: FAANG - Facebook, Apple, Amazon, Netflix and Google.
For perspective, Netflix is work approximately 10% of Microsoft.
Microsoft’s journey from Bill Gates’ software nerdom to Two-Trillion-Dollar Modern Media Death Star is useful, not only for understanding Bill Gate’s Frankenstein Baby but as a way of understanding the path forward for their fellow Death Stars.
In 1998, despite being one of the most valuable and powerful companies on the planet, Microsoft began a fifteen-year existential crisis, with numerous torpedoes shot down its thermal exhaust port, each with the capacity to blow the company to bits.
First, the company faced a landmark antitrust suit from the Justice Department due to their anti-competitive practices against Netscape, and their draconian business dealings with PC manufacturers. Microsoft also made disastrous investments in numerous products and endeavors, then missed the boat to mobile computing and nearly missed the shuttle to the planet Interwebs. To top it all off, from 2000 to 2014, Microsoft had an historically shitty CEO.
This last issue proves a big truism, which I learned from legendary business writer and guru Jim Collins: Most data shows that perhaps the biggest single-reason great companies fail is poor succession planning. In 2000, Bill Gates stepped down as Microsoft CEO and gave control of his company to his college buddy.
Pro Tip: Don’t do that.
Steve Ballmer (Gates’ bro and successor) is a great dancer, a mediocre sports team owner, and the absolute wrongest guy on earth to take over a company like Microsoft after its visionary leader stepped down.
Rather than evolving the business over his fourteen years as CEO, Ballmer lurched at a confusing array of products that took the company’s eye off the ball. Not to say they didn’t do anything right during his tenure, but there was an utter lack of focus that cost the company billions, saw them cede leadership in markets like mobile and email to Apple and Google and put one of the former leaders of American Tech into a follower’s crouch. When Ballmer took over as CEO in 2000, the company was at all-time high market cap of $620 Billion. One year later, the company was worth less than half that, and then bounced along at that low valuation for his entire time at the helm.
In 2014, when Ballmer stepped down, Gates chose a new CEO who was NOT just a pal. Satya Nadella previously ran Microsoft’s Cloud and Enterprise Divisions – so rather than driving the Zamboni in circles, he knew how to skate to where the tech puck was going. In the seven-plus years since Nadella took over, Microsoft has transformed itself from a single unit sales/physical product business, into a *rundle-based flywheel. It has also become just the second company in world history to be worth TWO TRILLION DOLLARS. (With a T. That rhymes with D. And that stands for Death Star.)
*A rundle is a Recurring Revenue Bundle (like the current iteration of Office 365 or Amazon Prime).
A Flywheel is a heavy wheel attached to a rotating shaft, that smooths out delivery of power from a motor to a machine that creates and stores energy which it uses to run more efficiently.
For a business flywheel , simply replace the word “power” with the word “money.”
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