Smarter is as Smarter Does

The desperation for eyeballs on news websites has led to a lot of “People” styled columns, especially in the NY Times. But I just couldn’t resist commenting on the “Who’s Smarter: Bill Gates or Mark Zuckerberg?” column, if only because I know something of the players and their backers.

I know journalists like to fancy that there’s something special about succeeding in this field – after all, they’re the ones who write the story *after* the success, but rarely bother to return calls about our “nifty new product” when we’re nothings. And since they come in late, they are rewarded with spoonfed twaddle by the PR guru, whether it’s “Pez trading made me rich” (EBay) or “We baked wafers in our oven and that’s that” (HP). Journalist eat up this stuff, because 1) you’ve done their work for them by writing a story any idiot can comprehend and 2) maybe any idiot – even someone like him – can steal an idea and become rich. But life is a bit more complicated and interesting than that.

So what’s it really about? It’s all about connections, and BillG used his most effectively. It was a lot harder in the late 1970’s / early 1980’s to get investment than today, and the amounts were a lot smaller. Bill made his initial win with BASIC – in fact, he got really mad when the HomeBrew Computer Club was giving out tapes of it for free and wrote a “cease and desist” letter demanding royalties. HomeBrew was the group where Woz showed off his nicely polished cherrywood box Apple prototype BTW. I believe it’s now residing in the Computer History Museum.

A lot of folks ask “Why is Bill Gates so cheap?” Since there wasn’t a ton of cash available like today, Bill ran the company pretty frugally, and revenues on sales were important from the beginning. It did help that his dad was an investor and had the connections in his home town. In Silicon Valley, getting a million was amazing for a computer company, much less software. In 1982, we got less than a quarter of a million in venture for a company that did an entire pre-Intel computer company (the processor alone cost $400) from motherboard to operating system and we did it and sold it (for those interested in ancient history, computer wise, this was Symmetric Computer Systems, and the processor was the National Semiconductor 32000). The point was you had to build fast and sell fast. There wasn’t a lot of cash in the kitty then, and you had to show you could *make* money.

FaceBook, in contrast, while a great concept, doesn’t have the same constraints. It isn’t capital-intensive like the computer hardware and software companies of the 1970’s-1980’s. They don’t have to demonstrate quick revenue (I doubt they know what a pro forma is, but you had to do up a good one and stick with it in the 1980’s). And they have access to huge amounts of cash unthinkable 20 years ago.

20 years ago, a typical venture fund was pretty small by standards today and investments under $100k were commonplace. Now $500M+ funds abound, but the number of companies they invest in are about the same. It’s ironic that it’s never been cheaper to do an Internet company but the amounts invested in them are hundreds of times that of companies like Microsoft. This also implies that home runs instead of base hits become the driving focus, with even more cash plowed in to win.

So who’s smarter? Maybe both, but for different reasons. BillG because he knew how to use his connections and make money quickly, and that mattered to his generation. And the Zuck, because he knows how to make a big noise with a lot of cash, and that seems to be what matters for his generation. You see, even in an age of deconstruction, context really does matter.

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Lynne

Lynne Jolitz is a startup entrepreneur, inventor, and creator of new innovative technologies. Lynne is also a writer on tech trends for publications like Byte and Dr. Dobbs Journal.

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