Culture

I’ve been thinking about culture a lot this week, sparked by Andy Jassy’s comments around Amazon’s layoffs — that the 14,000-person layoff was all about culture.  I’ll get to Amazon, but I wanted to share my own experiences.   I’ve been part of great cultures and not-so-great cultures, and I’ve helped create both.

Culture eats strategy for breakfast, so they say.   When companies don’t explicitly attend to culture, strategy is the victim.  And changing culture is so hard; it requires focus and daily perseverance.

Startup culture vs Lean Manufacturing culture

My last significant operating job was at Xevo, where we were building in-car software and cloud backends for major automakers.   Xevo operated a lot like many other modern SaaS high-growth software firms — we were growing revenue and spending ahead of revenue to capture future growth opportunities.   We were constantly building demos of potential new services and pitching the demos to automakers.  We emphasized innovation, hiring innovative people, and finding new opportunities.  We were also on the hook for operating the service backend for large fleets of OEM vehicles, so there was an emphasis on high-quality operations.  We had to organizationally separate these two efforts because the culture required to support high-growth, high-risk innovation is different from that needed to support robust, high-availability services.  Every successful software firm has to deal with this dichotomy.

Lear, a large automotive supplier, acquired Xevo.   Lear aspired to offer high-value, high-margin software services to automakers, adding another major line of business to its existing portfolio of car seating, car wiring, and car electronics.  The dream was that Lear could leverage its existing automaker relationships and help Xevo sell more services into more automakers.  

However, the Lear culture was dramatically different from the Xevo culture.  Lear was (and still is) great at building out dedicated manufacturing for their OEM partners and then managing the hell out of costs for the products they supply.  Lear doesn’t spend much ahead of revenues — they build out the capacity they need to service committed business, and they manage their costs to the penny.   You can read Lear earnings reports — they have a tight focus on financial results; they obsess over costs, margins, and financial efficiency — and good for them.  

Neither the SAAS culture or the Lear culture is “right”.   They are different and appropriate for different businesses.  Trying to operate both cultures with the same metrics, processes, and executive leadership — well, that is very hard.  Ultimately, most of the Xevo team left Lear, either voluntarily or involuntarily, and Lear abandoned its software growth goals, focusing instead on managing the existing software business to maximize returns.  

Microsoft's 1990s culture

I was lucky to work at Microsoft during the Windows 95 era.  Microsoft has never had a strong consumer focus like Apple does, but in the mid-90s, Microsoft, in its own way, was doing well with consumers.   Windows 95 was a retail phenomenon and brought modern GUI computing to affordable mainstream hardware.  At the same time, Microsoft was innovating quickly in desktop applications and was investing heavily in CD-ROM content.  Products like Bob, MSN, Encarta, and Microsoft Dogs were launched.   There was a strong focus on making PCs accessible to the masses, which was what drew me to Microsoft — the “PC on every desk and in every home” mission.  

The industry achieved this goal — PCs became ubiquitous.   Microsoft turned its attention more and more towards enterprise computing and put product leadership in the hands of people who were focused on enterprise adoption and enterprise issues.   And most of the people I worked with in the company moved on.  This was a fine strategy, but along the way, any nascent consumer focus was lost.   Microsoft missed the big consumer computing shifts of the 2000s — an organization focused on enterprise licensing, enterprise desktops, and enterprise developers just didn’t have the right DNA to captivate end users.  

I am not sure Microsoft leadership ever explicitly said, “That’s it, no more consumer focus, we only care about the enterprise,” but it was the slow death of creeping organizational and personnel changes.   Every change was another drip of water, eroding consumer focus.

Amazon

Back to Amazon.   Andy Jassy says that the massive layoffs this week are all about culture, about recommitting to acting like “the world’s largest startup”.   And maybe a kick in the pants is needed.  AWS growth is weakest of the  major hyperscalers.   It has been a long time since Amazon has had a breakout new success — Alexa is on life support, the Kindle is 18 years old, Amazon is not an AI leader, AWS is an ever-growing bag of incremental cloud features, the Amazon shopping experience is pretty moribund, and Prime Video is a second-tier streamer.  I can’t think of the last time I was excited about an Amazon product announcement.

Amazon is still a great business with some strong franchises, but it seems to be managed for cash flow and returns rather than for innovation.  When you are laying off 15,000 to 30,000 people, you are not going to recapture that startup vibe, no matter what you say.  Your best people are probably looking for planned exit paths rather than waiting for an unplanned exit.

National culture

I don’t know anyone excited about our national culture these days.  It is going to take focus and perseverance from all of us to push through and fix ourselves.  Noah Smith outlines the challenge well:

Our grandfathers are gone. We’re on our own again. If the next century is to be a time in which regular people can live in wealth and freedom and happiness, we’re going to have to struggle and persevere through some very nasty adversity. We are going to have to deal with the Groypers, with the leftists, with Chinese manufacturing, with low fertility and population decline, with the madness of social media, with the corrosive inertia of our own regulatory state, and with all the unexpected challenges that new technologies throw our way.

The investment world still thinks the US is better than almost any other alternative, but we’ve been coasting on the work of our priors.  

Turning the entire US around will be hard.  Some people are suggesting that the primary work should happen at the state level or through coalitions of states.   This has appeal.

Other cultural notes

Take weird ideas seriously — this is a great framing.  Almost every breakthrough starts as a bizarre idea; progress happens at the frontier of knowledge.  We need to embrace and support weirdness and the error rate it entails.

One man’s collection of truisms.  A lot of goodness in here — “To improve your mind, read fiction”, “It should concern you if you have never failed at something”, “Great things happen at the collision between fields”, “If you have not changed your mind about something important in the past ten years, you should be concerned”.   There are many gems in here.

Tech Shorts

A new X-ray lithography tool — man, this could be massive.

Metal Organic Frameworks — I love atom-scale materials science; there is so much yet to achieve here.