In two new books, the authors present how within the fingers of careless leaders, know-how investments can play tips on you, upend grand claims and burn via capital with no significant outcomes.
Essentially the most valued corporations on the earth at this time are know-how companies. And nobody can deny the important function tech performs in shaping our lives.
However know-how guarantees can even go awry or by no means materialize, serving to to take down or critically impair in any other case good corporations alongside the best way.
In two new books, Billion Dollar Loser by Reeves Weidman and Lights Out by Ted Mann and Thomas Gryta, the authors present how within the fingers of careless leaders, know-how investments can play tips on you, upend grand claims and burn via capital with no significant outcomes.
There are a lot of instructive classes for residential actual property in these page-turners.
For one, the cash spent on know-how is just not a measure of success. Simply since you rent 50 engineers and put your know-how within the cloud doesn’t imply your new iPhone app will change something, assist anybody and even work.
Billion Greenback Loser facilities on the disastrous story of communal work house firm WeWork and its narcissistic founder, Adam Neumann. His know-how imaginative and prescient imagined a world community of inventive small corporations — WeWork tenants — sharing concepts, greatest practices and knowledge like a Facebook for work. That pipe dream by no means materialized and the corporate misplaced 80 % of its worth virtually in a single day. Heady know-how claims have been solely a part of Newman’s drawback; different shenanigans spelled his doom.
Neumann glommed onto one know-how concept after one other to seize investor creativeness, however steadily did not deal with fundamental tech wants like functioning wifi for his tenants. He was a grasp at articulating the know-how taste of the month however he strayed from his core enterprise, particularly, leasing massive business areas, renting out small workplaces and milking the unfold — a easy however sensible enterprise concept.
Although a extra buttoned-up enterprise chief, Basic Electrical CEO Jeffrey Immelt carried an equally inflated view of himself and thrived on laying out grand visions. However he might by no means ship the products when it got here to remodeling an industrial big right into a clean operating digital machine. Throughout his 17 years on the helm, the corporate’s market cap plunged 70 %, leaving a large number in its wake. Immelt uncared for GE’s core enterprise in his seek for the know-how holy grail. He wished to be a Silicon Valley know-how bro when he was an industrial firm CEO.
Neumann and Immelt expanded their enterprises into far-flung industries, however they have been sensible enterprise and private entrepreneurs. They may take management of a room, spinning convincing tales to help their visions. “Immelt was headed to the Small-Speak Corridor of Fame,” write the authors of Lights Out. Their know-how escapades have been simply a part of the issue. Buyers catching on to their fakery is what lastly doomed their ambitions.
The guarantees of actual property firm investments in know-how platforms are additionally fraught with danger.
Zillow’s Rich Barton is remaking his agency’s enterprise round iBuying with a daring promise to digitize the transaction. Gary Keller guarantees to create a know-how platform for brokers that may change how Keller Williams Realtors do enterprise.
EXp founder Glenn Sanford brags about his office-free work environment, utilizing a digital gaming know-how, Realogy CEO Ryan Schneider took his job with a promise of bringing massive information evaluation to an business the place the key sauce is private relationships. Compass CEO Robert Reffkin usually crows about his know-how investments, his tech hires and his increasing crew of pc coders.
None of those actual property CEOs are megalomaniacs — in actual fact, they’re all fairly humble. However they every provide transformative visions, and know-how has performed an enormous half in guarantees to their brokers, prospects and buyers.
Certainly, many of those tech claims could materialize, however dropping sight of their core enterprise stays the core danger.
Zillow executives, you’re within the enterprise of shopping for and promoting property.
Gary Keller, Glenn Sanford and Ryan Schneider, your job is to assist actual property brokers promote property.
Robert Reffkin, you’re a actual property dealer.
These highly effective males are good sufficient to know the significance of being reasonable about what enterprise they’re in. However we should always rigorously parse what they promise in the case of know-how.
Neumann and Immelt not solely fooled buyers, however in addition they dragged down many others alongside the best way.
And the tech lure applies to all of us.
Simply yesterday, I bought a name from a savvy actual property agent who’s hand-building a know-how product that she hoped would possibly change actual property. Certainly, her concept was an excellent one, even transformative, however she additionally had come to appreciate it was a distraction, costly and tough to construct. It was hurting her major enterprise, particularly promoting actual property.
I’m not a marketing consultant, however she wished my recommendation from a budget seats.
I requested her if she knew what a sunk price was? She stated sure. There isn’t a disgrace in abandoning a good suggestion simply as there isn’t any disgrace in submitting chapter when instances get robust. We should always pursue our desires with crazed abandon, however once they turn out to be follies, we should always transfer on, and rapidly.
Footnote: When Immelt left GE as CEO, he briefly stored his chairman title however his workplace was moved from lavish firm headquarters to a small WeWork house on the opposite finish of Boston. Each he and Neumann misplaced their fleet of pricy company jets. Humbled eventually.