Monday, May 23, 2011

When Greenberg Does a Zuckerberg and Both Do (well in) America – or the Values That Stanford Business School Imbues

You must have heard of Charlie Wilson’s comment that what is good for GM is good for America. Wilson was the CEO of GM in the mid 1950s and there is some question as to what he actually said. But regardless, the statement caught on because it summed up a relation that defined a system. It was a goose-gander type relation with a bit of dark undertone. It implied that the U.S. government had to adopt policies favoring GM – which it did.

Dark undertone or not, the fact remained that you could go to work for GM after high school, like your father and uncle had done before you, and retire after 30 years with a decent pension and medical insurance. In the intervening years, you bought a house, several cars and supported your stay-at-home wife and three kids through high school and at times, college.

And it was not only the jobs. The modern American management system that conquered the world was a GM creation. MIT’s Sloan School of Management is named after Alfred Sloan, a long time GM chairman and CEO. The school was housed in a science and engineering university because GM thought of management as a scientific discipline; it could not be otherwise with an industrial conglomerate whose products manifested scientific and engineering principles.

That was then.

A couple of weeks ago, the New York Times ran an article on how the Stanford Business School became the hotbed of application development for Facebook. If you are a Times subscriber or have not yet exhausted your 20 articles per month ration, you can read the article here .

For the rest, I am quoting selective passages, starting with the “lesson” that students learned. I suppose you could call it the moral of the story:
By teaching students to build no-frills apps, distribute them quickly and worry about perfecting them later, the Facebook Class stumbled upon what has become standard operating procedure for a new generation of entrepreneurs and investors in Silicon Valley and beyond. For many, the long trek from idea to product to company has turned into a sprint.
So the message from the Stanford Business School which has now become the guideline in Silicon Valley and beyond is this: put together a crappy doodad – it doesn’t matter what, as long as you are first out of the gate. There is a lip service to “perfecting it later” but that merely shows what is really important. To wit:
“The students did an amazing job of getting stuff into the market very quickly,” says Michael Dearing, a consulting associate professor at the Institute of Design at Stanford, who now teaches a class based on similar, rapid prototyping ideas. “It was a huge success.”
Note the “stuff” – not software, not even app, but stuff. What the stuff is does not matter. And when the stuff itself does not matter, its quality cannot possibly be of any serious concern, as Johnny Hwin discovered for himself:
Johnny Hwin and his Stanford class team set out to build an app ... It never took off.

Seeing his classmates strike gold with simpler ideas proved to be a valuable lesson. In 2009, he began working on, a Facebook marketing tool that helped bands and musicians connect with fans online.

It opened last June and was acquired in January by FanBridge, where Mr. Hwin is now a vice president, for a few million dollars, he say ... “[Previously] we wanted to be perfect,” he says. With Damntheradio, he found his first clients by showing mockups of the product. “We were able to launch within weeks,” he says.
Seeing his classmates strike gold with simpler ideas, Johnny learned a valuable lesson at Stanford. “We wanted to be perfect,” says twenty-something Johnny with the air of a man recalling foolish youthful idealism. But Stanford made him grow up, wise up. He is now rich.

With America’s best and brightest simultaneously creating and being thrown into this entrepreneurial pressure-cooker, the school itself could not help but change:
“It really felt like an incubator,” says David Fetterman, a Facebook engineer who helped develop the applications platform.
“Incubator”, in case you are not in-the-know, is a facility that houses a group of start-up businesses which share the resources in order to minimize the expense. The incubator the Facebook engineer is talking about is the Stanford Business School.

Now, if your school is a business incubator and you felt you could survive on your own, you would have no reason to stay in it, would you now? For App-happy Danny and his daddy this was a no-brainer:
DAN GREENBERG was sitting at the kitchen table one night when he and another teaching assistant decided to get into the app game. Mr. Greenberg … hadn’t planned to get app-happy. But the students’ success whetted his appetite.

Four weeks into the quarter, he and his colleague, Rob Fan, set out to create an app that would let Facebook users send “hugs” to one another.

It took them all of five hours.

The app took off. So they moved on to apps for “kisses,” “pillow fights” and other digital interactions — 70 in all.

Their apps caught on with millions of people and were soon bringing in nearly $100,000 a month in ads. After the class ended, the two started a company, 750 Industries, named after the 750 Pub at Stanford where Mr. Greenberg and Mr. Fan where drinking when they decided to become business partners.

But juggling the business and schoolwork was too much for Mr. Greenberg, then 22. So he called his father.

“I said, ‘Dad, it is 10 p.m., and I’ve got so much stuff to do,’ ” Mr. Greenberg recalls. “ ‘We’re running this business, and I’ve got customers, and we are earning money, and we got financing and we have people to hire. But I have to write a paper tonight, and I just don’t have time for it.’”

His father advised him to pull a Mark Zuckerberg and drop out. The next day, Mr. Greenberg did just that.
Note the dialectical irony of an elite school teaching, fostering and imbuing values that negate school and education. In the age of speculative capital, speculative capital is not the only self-destructive entity around.

But, Nasser, aren’t you overreacting to the story? As long as there have been schools, there were students who dropped out. Bill Gates famously dropped out of Harvard more than 30 years go. Was that, too, a dialectical irony?! And isn’t the entire point of going to a business school making money? If so, what is wrong with a bit of early start? In fact, isn’t that what an elite business school supposed to do?

The answer is that Stanford’s “Facebook Class” is an institutionalized creation. It did not begin as an individual initiative. Nor did it spring in an ad hoc manner from the school’s Entrepreneurial Club. It was rather, funded, supported and nurtured as part of the formal curriculum of the Business School:
The Facebook Class was the brainchild of B. J. Fogg, who runs the Persuasive Technology Lab at Stanford. An energetic academic and an innovation guru, he focuses on how to harness technology and human psychology to influence people’s behavior.
Prof. Fogg no doubt thinks of himself as being on the cutting edge of “behavioral science”. But no matter how fancy his methods are, they are old hat; every Phoenician peddler of maritime goods would recognize his gig. Dale Carnegie would have smiled at his “harnessing technology and human psychology to influence people”. From the upcoming Vol. 4 of Speculative Capital:
[Selling] is the driver and creator of the culture, especially in the “Anglo-Saxon” U.S. and U.K., where the businessmen’s influence goes further than other nations. The culture in these countries is the salesmen’s culture, as it is shaped by the salesmen’s habits, sensibilities, tastes and priorities. The influence is in plain view in Dale Carnegie’s How to Win Friends and Influence People.

The book’s title is precise. Carnegie wants to win friends. Why? Because he wants to influence them. But he is not interested in showing people the righteous path and saving them. Carnegie is no religious zealot. He wants to influence people in order to sell to them. Friendship is a strategy, a means, towards that end. Note the word “win” – not finding friends or making friends but “winning” friends. The aim is to use them, after which “friends” become what they always were: people. It is a singularly cold-blooded and cynical title.

Dale Carnegie did not invent the ways of salesmanship. But he categorized them. His is the authentic voice of a salesman the way braying is the voice of a donkey.
What is being taught at Stanford is naked “pushing the product”, naked in the sense that intermediary steps of product development cycle, from the idea to production to marketing and sales, have been relegated to the back seat. The end result alone, conversion of product to money, has been made supreme, with the added benefit that there is not much of product to speak of; only junk Facebook apps. Give credit to Stanford B-School for truly cutting down to the chase in search of money, the way only speculative capital could.

But the intermediate steps, the means of getting money, are precisely the steps that require imagination and thinking. In doing away with them, the school has done away with teaching abstract thinking to its students. And that is precisely what sets apart a university from a vocational school. Abstract thinking is what “dissemination and assimilation of knowledge” is all about. Absent that, the destruction of the university that I spoke of.

The first victims of this academic retrogression are the students.

From the tone of the passages quoted here – and more clearly still if you read the entire article –you notice a remarkable absence of thinking on the part of the “Class”. The “attitudes” such as “curiosity, originality and integrity” that Webster defines as the essential in relation with the word “scholar” are just not there. Like rats looking for cheese in a maze, the students move and “stumble” – stumbling here, stumbling there – until they find money:
Three days before a presentation was due, Mr. De Lombaert accidentally deleted the computer code he was tinkering with. “We kind of freaked out,” he recalls.

Rebuilding the app would take too long. So, working around the clock over a weekend, they built another version, with a more rudimentary algorithm.

The stripped-down app took off. In five weeks, five million people signed up. When the team began placing ads on the app, the money poured in.

They had stumbled upon one of the themes of the class: make things simple, and perfect them later.
We kind of freaked out.

Here is a man in what is arguably one of the most competitive universities in the world. He no doubt had a perfect SAT score. He no doubt attended a good school and graduated with honors. He must be a reasonably intelligent fellow. Under the right circumstances and in a true institution of higher learning, he could have become a contender. He could have class. As is, he has become a moron, undisciplined, unorganized and with a thought process reflected in his speech that is indistinguishable from a Paris Hilton or Kim Kardashian. We kind of freaked out. He would not last a day in a GM assembly line.

They are all morons. Look at the name and function of their apps: hug me, kiss me, pillow fight. And you thought you could not get lower than Hollywood in producing “content” that could be fully telegraphed in a one or two-word name. They give the word low a bad name, these best and brightest of America. Maybe the love of money is the root of all evil.

My concern is with these morons’ value system. I know from Hegel that the thesis – their value system in question here – goes out of itself into its opposite and returns into itself in the synthesis. What is their value system and how does the dialectical process work in that regard?

Change the names in the article – Danny, Mark, Johnny – to Jamal, Lamont and Angel, change the location from Stanford Business School to any inner city ghetto of your choice, change the product from Facebook apps to drugs and change the role model and mentor from Prof. Fogg to neighborhood wholesale distributor and you will at once see the similarities of values in two camps.

The analogy is not exact.

Jamal, Lamont and Angel have no choice.

And “we” are “protected” from them by a flange of social and physical barriers. As I write in the upcoming Vol. 4:
The right-wing politicians blame “the rap singers” for the spread of profanities. But rap singers, mostly young black men in the ghettos, could have never had a cultural impact on suburban whites if the groundwork had not been prepared by the salesman – many of them suburban white men. The rappers simply followed a road that was paved for them by the real cultural trend setters.

Not so with the “Facebook millionaires”. By virtue of being rich, they become cultural trend setters and social movers and shakers. The media constantly promote them, reinforcing the message that wealth is wisdom. Think of Sage of Omaha; he is the man behind the Geico business model. Or the way a petulant fool like Mark Zuckerberg, a blind hen having stumbled on a kernel of corn if there ever was one, being constantly promoted as a visionary entrepreneur. (His business card read: “I am the CEO, bitch”.)

I returned to this two-week old article about Stanford app developers because in today's New York Times there was an article about how, through a maze of foundations, Bill Gates influences the education policy in the U.S. I have already written about the plans to privatize the public education in the U.S. It turns out that Bill Gates is one of main forces behind the initiative. A man who, at the tender age of 55, uses gee and gosh in his speech, sees himself fit to re-engineer the U.S. educational system. Here is a brief passage:
For years, Bill Gates focused his education philanthropy on overhauling large schools and opening small ones. His new strategy is more ambitious: overhauling the nation’s education policies. To that end, the foundation is financing educators to pose alternatives to union orthodoxies on issues like the seniority system and the use of student test scores to evaluate teachers.

Given the scale and scope of the largess, some worry that the foundation’s assertive philanthropy is squelching independent thought, while others express concerns about transparency. Few policy makers, reporters or members of the public who encounter advocates like Teach Plus or pundits like Frederick M. Hess of the American Enterprise Institute realize they are underwritten by the foundation.

“It’s Orwellian in the sense that through this vast funding they start to control even how we tacitly think about the problems facing public education,” said Bruce Fuller, an education professor at the University of California, Berkeley.
The Times also reported the happy news that in his endeavor, Bill Gates is receiving help from Eli Broad. Imagine: Bill Gate the engineer of the country's education system; Eli Broad, the arbiter of its culture.

That’s the good news.

The bad news is that Bill Gates is the grand daddy of successful college dropouts. Thanks to passage of time perhaps, he manages at times to be coherent.

Imagine now the near future with the Facebook millionaires. Imagine their view on social services, the country’s direction, value of education (they know from personal experience it is a bunk) and the lesson they have learned: that one has to aim low, not worry about perfection and money comes to people who get there first.

Imagine these people setting the country’s social agenda and having the means to push it through.



uair01 said...

A bit off track from your post, but I was reminded of this critique of simple apps. The writer does not think it's a sustainable strategy in the long term:

--- Making simple, 20% products is an excellent bootstrapping strategy because you can create them with limited resources and build an audience. It's a judo strategy, using your weakness as a strength, like the way The Blair Witch Project, filmed by kids with no money at all, used the only camera they could afford, a hand-held video camera, but they invented a plot in which that was actually a virtue. So you sell "simple" as if it were this wonderful thing, when, coincidentally, it's the only thing you have the resources to produce. Happy coincidence, that's all, but it really is wonderful!

What works for bootstrapping, I believe, will not work as a good long-term strategy, because there's very little to prevent the next two-person start-up from cloning your simple app, and because eventually you can't fight human nature: "The people want the features," says Norman. Just because hand-held video was perfect for The Blair Witch Project doesn't mean every Hollywood blockbuster will use it.

If you're using the term "simplicity" to refer to a product in which the user model corresponds closely to the program model so the product is easy to use, fine, more power to ya. But if you think simplicity means "not very many features" or "does one thing and does it well," then I applaud your integrity, but you can't go that far with a product that deliberately leaves features out. ---

From: Joel Spolsky - More Joel on software - Simplicity

uair01 said...

Another "off tangent" comment triggered by your remark about rap music, from a book I'm reading:

... the assumption he [Michael Lewis] makes is a wrong one: Finnish schoolchildren did not invent instant messaging. What they did was use existing features in a perhaps unexpected way. An interesting detail is that SMS is a relative low-tech feature. Nokia anthropologists picked up on this informal mobile phone use in their marketing strategy. In short, Finnish youth neither invented nor further developed the SMS standard. It found new social uses in close feedback with the corporate (research) sector. The loops between marketers and "cool" rebels were stunningly subtle and banal at the same time. Such dynamics were perhaps too complex for Lewis, and so he set out to merely celebrate them ...

Geert Lovink - My first recession - Critical Internet Culture in Transition

David said...

The philosophy seems pretty simple and is absolutely old hat. "No permanent friends,no permanent enemies,only permanent interests". In this case making money,as much and as quickly as possible and damn the ethics! Fairness and morality do not enter the business model which is why a countervailing entity is needed. That entity is government which in the case of the U.S. is determined to return to the 19th. century as quickly as possible with the essentially "laissez faire" economic policies of the last 40 years!

Nasser Saber said...


Joel Spolsky's general point about the Facebook apps not being sustainable is of course correct. The model is too simple and counts on too many simpletons using idiotic apps to work.

But his analogy of the Blair Witch Project is incorrect. That one, as he correctly observes, was an innovation, born of whatever: ingenuity or lack of means.

The boys at Stanford, by contrast, intentionally, consciously and purposely aim low. A better analogy, I think, now that movies are mentioned, could be directors and actors in Hollywood. Many of them are technically capable people. Under better circumstances, they could have been a contender. As it is, they intentionally aim low and thus, produce trash.

Geert Lovink, on the other hand, is right on the mark. I especially liked his description of Nokia's adopting the cool Finish kids' texting as "stunningly subtle and banal." Quite so. If you know him, please convey my compliments.

Nasser Saber said...


I know what you are saying when you describe the "Facebook Class's" business approach "absolutely old hand", but I must warn you that you are not technically correct. Dialectics never --EVER! -- returns to its old place. Rather, it replicates it at a higher plane and in a qualitatively different stage.

Making money any which way and damn be the ethics and other considerations is indeed an old hat. But it was never taught that way at Stanford Business School. That's what is different now. I intentionally began the post with GM and Sloan School of Management to drive this point home.