A new movie came out this week called "Social Network" which is supposedly about the founder of Facebook.
Query: Why should I care about a guy who started a website? (sounds like a Netflix rental to me)
The answer is complicated. But the long and short of it is, it is a way of building brand identity and customer interest for a company and a product.
Chances are, you can name the guy who started Facebook, the former "head" of Microsoft, the dude who founded (or co-founded) Apple, and perhaps a few others as well. We bandy their names around as if they were celebrities or rock stars - which they have become, de facto, in our society. Web pages now feature photos of the CEO or videos of them giving their founder's philosophy. eBay is doing this as of late, as part of an anniversary celebration.
The tech pages of CNN and other websites, newspapers, and magazines, all fawn over these quasi-celebrities, following their every move - technological, financial, and personal. You can't have Geek Expo 5.0 without an opening speech from a famous tech geek, whose pronouncements on the future of our society are followed like those of a religious prophet. You can't have a tech company these days, it seems, without a charismatic leader.
It is, in a way, like a cult. And that is why the tech companies promote this scheme. You can sell cult followers ANYTHING.
You see, most of these Geek Gods are just average schmucks like you and me. Bill Gates? A Harvard drop-out (business school) who was classically the guy "at the right place at the right time" when IBM dumped a fortune in his lap. This is not to say he was an idiot - he negotiated a good license agreement and the IBM people failed to see the downside of it. But a tech visionary? Hardly.
And yet his expertise and acumen are sought out, as if he created the Internet and invented Windows. The reality is, of course, that Microsoft was late on the bandwagon for both, and has played catch-up all the time with all of its products. But since they make a lot of money out of the default operating system, they assume they own the software world. And of course, they will be in for a rude awakening shortly.
And some might say that Gate's retirement was to blame. After all, the departure of the Geek Genius and the decline of Microsoft will appear to go hand in hand. His successor (whatizsname) hasn't the Geek panache or name recognition of Gates.
Apple is another case in point. After some modest success with its early APPLE ][ computers, it became a niche player with its Mac series. The original founders were sort of forced out, and new management tried to take the company in a different direction (OpenMac), which failed. Emulating Microsoft only meant they would get creamed that much worse.
So they brought back Jobs, and everything was OK after that, right? Well, perhaps. How much of the ideas coming out of the company are his - and how much are those of nameless employees or collaborative efforts? I suspect strongly the latter. CEOs rarely come up with new ideas, even iconic CEOs. Jobs did not "invent" the iPod - the device which saved the company.
And having a Geek God as your CEO has its downside. The tech writers are all abuzz with speculation as to what will happen to Apple if Jobs passes away. His personal health issues are analyzed at length and speculation abounds. His pulse is literally viewed as the pulse of the company.
In a way, this cult of personality is a return to the early days of industry in this country, where millionaire robber barons were superstars - the Carnegies, the Rockefellers, and their ilk - where the antics of the very rich were followed on the "society pages" - they were the celebrities of their day. Today, there are no "society pages" in the papers any more. But there is usually a "tech" section.
It is a far cry from the "Corporate Man" of the 1960's, who wore an anonymous suit and kept a profile lower than the company's logo and impersonal corporate image. Times have changed - and people need celebrities to admire and worship. People are idiots.
So what does this have to do with finance? Well a number of things.
For starters, following any cult is bound to be a bad idea for you personally. When you submerge yourself in a cult, you end up doing things that are contrary to your own best interests and end up doing a lot of things that benefit the leaders of the cult.
And there are people who follow Apple with a cult-like devotion - buying any Apple product and hanging on every word Steve Jobs says, as if he were the second messiah. It probably is a better idea to minimize the amount of tech gadgetry in your life and to avoid being an "early adapter" when it comes to technology. The "bleeding edge" of technology is very expensive, and the first version of any product has a lot of "Beta" problems and also becomes obsolete rapidly (ask anyone who bought the first iPods - and whether they still have them).
Second, investing in a company because of a tech "guru" at the helm is probably a bad idea. In many instances, these "gurus" can tear a company apart, as their dictatorial vision - unchallenged - drives the company off a cliff. Ask anyone who works at HP how Carly Fiorina worked out. Even if the Geek Guru is as advertised (and they rarely are), if they leave the company - what happens? This is the speculation about Apple, and if Jobs leaves or dies, you can bet the stock will go down - even though the products and day-to-day operations will continue to be developed without his personal "Genius".
Third, taking advice from these idiots is not a very good idea. Bill Gates has written books on his vision of the future. I guess in the future, we all will be in the right place at the right time and have IBM drop a million bucks in our laps. Perhaps not. But the point is, most of these Geeks have no special insight into industry, finance, or the future. They were just lucky to have the right products at the right time, and now they are trying to piggyback off that random success by making themselves look like geniuses in retrospect.
Does the guy who started Facebook have some special insight into how the world works? Perhaps not. After all, it was only a few years prior that MySpace was considered the premiere social network. The guy who founded that site, pretty much drove it into the ground, trying too obviously to spam its users. And prior to that, there was Friendster. Remember that?
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A lot of these types of sites and products are based on a hipness factor - you have to have a critical mass before people will sign on to something. And they usually have a story arc as well. A "new" site becomes popular, usually with the kids, and then spreads outward. It grows exponentially, but still fails to make any money. They try to monetize the site, and then start pissing people off. Complaints and lawsuits start, and pretty soon, people move on to the next thing. Being on the "old" site is a sign of being uncool or unhip.
And I am sure there are a lot of kids in school these days who view facebook as the ultimate sign of lameness. After all, their parents are on it all the time! So facebook's time of hipness is probably rapidly drawing to a close. I find it useful for storing photos, and sometimes you can communicate (or mis-communicate) with friends. But most times, I log on, and all I see are my friend's latest accomplishments on farmville. The story arc has peaked and is fading fast. And whether there is an iconic "leader" running the company or not is really irrelevant to the product itself.
Similarly, Apple's time in the sun could be limited. The iPad will be successful, but the use of proprietary formats and a proprietary data site limit the scope of Apple products. The iPod was first to market, but often the first to market ends up on the trash heap of history - as the Apple ][ computer did when the IBM PC came out. Reader devices WILL become popular, but I suspect that a format agnostic reader, which is very cheap and can read any format of file, will be more popular than some reader that is tied to Apple's "library" of books and periodicals.
Also, Apple relies too heavily on the subscription model for its revenues. The devices are sold at cost or are nearly given away, on the premise that they will make up revenue on media content, be it iTunes or monthly iPhone subscription fees, or iPad downloads. Subscription fatigue could kill off this model, as people who are not "tech adapters" get tired of paying for airtime, apps, or iTunes. And it is a relatively easy business model to hack as well (which is why the record industry is in such a funk).
It is, in a way, like AOL (remember them?). They had a charismatic leader, too. I read the other day they are still in business. Doing what, I do not know - or care.