by Anonymous Author

The Mythology of Business-To-Customer Startups

Jan 01, 20018 mins
BPM Systems

Do you know what paper snowflakes, presents under the tree, family gatherings and carols piped over the shopping mall intercom mean? That’s right! Another year shot to hell!

Now, I like the holidays. I particularly like the guiltless gluttony of Thanksgiving with its too much food and too much football, but then comes December, and for CIOs, December is a mixed blessing. Years wrap up with accomplishments noted and failures carefully catalogued. We dust ourselves off after yet another WWF-style budget slamathon and consider our prospects for a coming year, complete with too many projects and too little money. And these, by most measures, are the good times.

The year 2000 was a tough year.

It started out well enough. Most IT organizations did such a spectacular job correcting their Y2K problems that most people now believe there must not have been a problem to begin with. I suppose we should have conspired to zero out a few high-profile bank accounts just to keep them guessing.

Things seemed to go south from there. Windows 2000 turned out to be as big a bust as Windows 98. The usual collection of sad, lonely hamsters unleashed an unusually destructive series of viruses for us to contend with. Consolidation in the software business made it even less competitive and drove up prices. And every flight, on every airline, to every destination, all summer long (I’m not exaggerating), was late!

Worst of all, for the best part of this past year, the mythology of business-to-customer startups was still the conventional wisdom, and it sucked up available talent so hard that it bent light. In many respects, this single disgraceful phenomenon set most IT departments and their carefully documented development plans right on their undernourished keisters.

How did this happen to us? Why couldn’t we stop the exodus by simply exposing the utter fantasy of business plans based on a mountain of cow pies and delivered by high-handed financial promoters throwing around just enough technical buzzwords to intimidate breathless investors sporting more money than technical sense?

It should have been obvious long ago that the reason and the thousands of other online startups like it don’t (and never will) make money isn’t because of their bold move to achieve ubiquity. The reason they’re not making money is that they don’t know how! The difference between a company like Dell Computer, which does make money selling on the Internet in spite of stiff competition, and, which does not in spite of a virtual monopoly, is that Dell learned how to make money doing what it does long before it sold its first machine over the Web. For Dell, the Internet is not the strategy, it’s simply a natural extension to an already effective sales and support function.’s inability to fully integrate its supply chain in order to justify the discounts it offers and its ill-advised attempt to make an order-entry screen its core strategy are why it is, in essence, stapling a $10 bill to every book it ships out the door. Without a doubt, the stake through the heart will be the soon-to-come introduction of sales tax on items sold over the Internet. Jeff Bezos, on behalf of himself and the majority of wanna-bes he encouraged, owes thousands of investors and every CIO who lost talented programmers to this fool’s errand one of those bowing, sobbing, Japanese-style apologies. Don’t hold your breath.

The reason for the defections in the face of compellingly obvious common sense is, in small part, because of the comparatively low risk associated with hopping from one IT job to another. Mostly, though, it’s because of a character weakness only we adults fall victim to known as “buying into the myth.”

I say adults because children do not “buy in” to myths. They are not required nor expected to pass what they hear through the filter of reasonability. Children are, instead, entirely free to simply believe. Unencumbered by the fact that adults occasionally make things up, it seems perfectly plausible that a jolly version of pudgy Uncle Fred in a fur-trimmed leisure suit can visit a billion homes in one night and still take precious time to eat the cookies and milk left by the Christmas tree.

Buying in to myths is reserved for those of us who should know better. It is a sin committed by the desperate or the greedy who either want to believe or have a vested interest in the myth, even when there are no facts (or contradictory facts) in evidence. The Santa Claus myth is an apt analogy for how the B2C myth works.

Like every other kid, I believed in Santa Claus when I was very small. But I “bought in” to the Santa myth—for purely utilitarian purposes—when I was old enough to have small children of my own. It’s not that presenting the Santa Claus story as fact was all that important to the quality of the kids’ Christmas experience, but it did a world of good for mine by giving the little soap dodgers a reason to be good for a few weeks in December. “You better watch out or you’ll get coal and a copy of Oracle 8i in your stocking!”

Thankfully, and in spite of the cultural relativist’s view that there is no absolute truth, it is simply and irrevocably true that the desk this keyboard rests on is wood, my writing will never be mistaken for James Joyce (thank your lucky stars), and only business processes, not fundamentals, are changed by the introduction of the Internet. Businesses that have no chance of ever making money are not businesses; they are called hobbies, no matter how many people are employed or how much investor money is squandered.

So will 2001 be any better? I think it will. We don’t have Y2K consuming resources, and certainly some of the shine of the startups has worn off now that paychecks that don’t bounce are back in fashion. But it would be a mistake to think that the gold rush is over. It’s never over as long as there is an endless supply of prospectors with little to lose and so many fortunes to be made selling them shovels and picks. The digging has simply moved on to new fields like B2B, ASPs and exchanges, fueled by the latest and perhaps most blatantly abusive dodge, the technology incubator.

Now, in fairness, many technology incubators (particularly the early ones) are what they purport to be and have done a good job of getting good ideas that might otherwise have floundered off the ground. Many of the latest incarnations, however, are, by virtue of the conditions they impose on their victims, nothing more than a bunch of grifters working their marks by placing as many low-cost bets as possible in the shortest amount of time as possible in search of a payoff. Some incubator deals I’ve seen are little more than six months of free office space in exchange for 25 percent of the equity in perpetuity and rights to all kinds of financing deals should the idea eventually turn out to be something. God bless America.

I got a call from a headhunter a couple weeks ago looking for some help in identifying a candidate to fill the CEO job in a new technology incubator in Dallas. This incubator would be backed by (get this) an office furniture company. The recruiter told me that the company was looking for what the backers described as a “serial entrepreneur.”

Visions of a Freddy Krueger/Mary Kay love child flash through my head. We’re all still in a lot of trouble.

So, how best to survive the coming year? First of all, take as much time off over the holidays as you can get away with before someone notices cobwebs growing on your desk. Second, grab your calendar right now and block out at least a half day every week for the rest of the year for doing whatever it is that attracted you to IT in the first place. Finally, use the time off to come up with a set of New Year’s resolutions that, if adhered to, give you the best possible chance of finishing the year sane and still gainfully employed.

If you find that you can’t come up with any, you’re more than welcome to borrow mine. They are talk less, don’t whine, never communicate anger in an e-mail, and keep breathing.

Sure, they’re the same resolutions I had last year, but I broke three of them so early and so often, I thought I’d give them another try.

This is probably a good time for another one of my pointless contests. Send your best resolutions to the e-mail address below by, say, the end of January. I’ll select the winner, and we’ll share the best entries in some future column.

Rules? Rules are for sissies!

My best to you, your family and your organizations for the coming year.