Griffin Kao, Jessica Hong, Michael Perusse, Weizhen Sheng
Turning Silicon into Gold: The Strategies, Failures and Evolution of the Tech Industry
2020, pp. IX, 194, PDF
More information in the catalogue of the German National Library.
Turning Silicon into Gold: The Strategies, Failures and Evolution of the Tech Industry is an accessible collection of case studies about the rise and fall of some major technology companies mainly from the iconic Silicon Valley. Covering a wide range of topics from brilliant strategic moves, but also utter failures, up to viral marketing campaigns, innovation and philosophic aspects of technology, this book can serve as food for thought for managers, entrepreneurs, students and consumers alike.
The book is divided into five parts, the first four parts presenting the stories of different tech companies and the challenges they met at different stages of development while the fifth part touches upon the implications of technology for the present day society and for the future. The number of chapters (25) is relatively evenly distributed among the five parts, indicating the authors’ attention to a balanced book structure.
Part I: Getting Started
The first part
- looks into “the second mover advantage” used by companies such as Facebook1, Apple and Airbnb;
- presents David Goldstein’s experiment in influencing the results of the 2017 Senate election in Alabama, showing the power of data mining and advertising technology;
- describes the huge success of M-Pesa, a mobile money transfer system from Kenya (obviously not a Silicon Valley example), which overshadows the efforts of other tech companies offering similar services (Apple Pay, Google Pay, etc.) and underscores why only some parts of the M-Pesa strategy are replicable in other corners of the world;
- depicts the difficult beginnings of YouTube, which was meant to be a dating platform but changed its strategy (it “pivoted” according to the authors) and became what we know today – a video sharing platform. The authors shortly introduce different types of pivots (product, customer, problem pivots but also technology, growth strategy or monetization pivots) and propose some ideas to keep in mind for a successful pivoting;
- shows how OpenTable and Amazon managed to solve the so called “the Chicken and the Egg” problem of a marketplace – deciding whether you attract first buyers or sellers. Both OpenTable and Amazon used a “single-player mode” and once they successfully targeted one set of users, they were able to go to a “multiplayer mode”, bringing together both sellers and buyers.
Part II: Gaining the Edge
The second part
- deals with the mechanisms of the secondary market and its possible effects aside from the immediate advantage of cashing out for stakeholders;
- outlines the idea behind Netflix’ original TV shows and films and shows the extent to which Netflix “can leverage massive user data to craft a perfectly tailored product” (p. 51). The reader is encouraged to think about whether she still wants to “continue watching” (p. 52);
- tells the story of Shigeru Miyamoto and how he succeeded at Nintendo to revive the gaming industry through his famous video game Super Mario Bros. Importantly, the chapter stresses the fact that innovation is not necessarily driven by technology: “But innovation sometimes just means bringing a new paradigm to the world, taking something that’s existed for years and finding a fresh application for it” (57);
- investigates the creation of what could have been just another instant communication platform, but instead became a fearsome player on the market: Slack. Through its strong product and a successful pricing strategy (freemium), the company has the highest paid conversion rate (30%) in the industry (p. 61);
- brings to the fore the histories of PayPal and Reddit, both companies facing “starting problems”, but both becoming the successful companies we know today. They managed to solve their initial difficulties, through a rather questionable tactic – they created fake demand (p. 70).
Part III: Extending the Lead
The third part
- explores the ways Amazon revolutionized retail through its online presence and how it is now entering the physical retail, one of Amazon’s aims being to tap into the grocery business. One advice from this chapter would be for companies, minding the context, “to integrate their online and offline strategies” and Amazon is certainly a very good example to learn from;
- investigates the “the last mile” delivery problem in the case of (again) Amazon. In spite of the short distance from Amazon freight stations to the customer, the transportation costs are according to the authors extremely high for this last section of the way. Amazon fights this problem in its attempt to achieve vertical integration (having the control over as many as possible parts of the supply chain) and the chances are high for them to find a solution. The disruptive effects are likely to be important for all the e-commerce actors;
- looks into the reasons why the initial public offerings (IPOs) of tech companies are sometimes a debacle. This was the case for Uber, Facebook, Pets.com, Groupon, or Zynga. The so-called “profitless prosperity model” is discussed in this context, as well as the idea that tech companies tend to come often under close public scrutiny;
- analyses Apple’s strategy in light of the pursued “market cannibalization”: “Apple ‘cannibalizes’ its market every time it releases a new model of a pre-existing product” (p. 92). As a consequence Apple appears to be its own competitor, but the authors show that there are also good reasons for doing so;
- describes how Wendy and WeChat went viral using very intelligent marketing campaigns and capitalising on “cultural memes” – “any cultural unit, such as an idea, belief, pattern, or behaviour, that spreads from person to person” (p. 101). Based on four questions, the authors explore how WeChat successfully integrated a viral loop into their product.
Part IV: Failing
The fourth part
- investigates the reasons why voice assistants in spite of being on the market for quite some years are still far from offering “real value for users” (p. 117). Microsoft’s virtual assistant, Clippy, is presented and according to the authors some of its shortcomings still characterize today’s digital assistants;
- looks at the market for social messaging apps and after depicting its abundance, the authors ask “how much is too much? How many messaging apps must we constantly switch between just to navigate our social networks?” (p. 124);
- describes some controversial decisions taken by the giant companies Amazon, Microsoft and Google (for instance, a contract between Microsoft and the US Army) and the reactions of the companies’ employees. It remains open, whether employees disagreement and protests against certain decisions of their companies, can lead to change;
- presents different stages virtual reality underwent, some current use cases (e.g. medical training, military training) and asks whether virtual reality can surpass the previous ups and downs and go mainstream.
Part V: Society
The fifth and final part
- offers an insight into how the communist government in China dealt with the abolition of gender roles and the (positive) effects it now has on the presence of women in tech companies;
- inquires into the creation of mental health algorithms based on information provided by users on social media platforms and explores the questions whether tech companies such as Twitter, Facebook, Google are responsible for the health of their users (should they act and prevent a suicide for instance) or rather should be held responsible for breach of privacy agreements?;
- investigates how the classic rule “one share, one vote” has been slightly changed by some tech companies such as Google, Tesla, Facebook, Spotify, etc. There are different types of shares (shares with super voting rights, shares with no voting rights), the idea behind being for the founders of these tech companies to keep control over their companies. This confirms the “I made it; it’s mine” (p. 155) attitude and the “founder-centric image of big tech” (p.159);
- takes a look at population growth trends in the emerging markets and draws attention on the “next billion users” (p. 162) and how tech companies should prepare to take advantage of this huge market;
- explores the power of the “wisdom of the crowd” (p. 168) in the case of Wikipedia and the power of online crowdsourcing, the example discussed here being Luis von Ahn and his project Duolingo;
- discusses the nexus between technology and religion and introduces shortly the concepts of transhumanism (“the movement pushing for humans to enhance both their minds and bodies using technology” – p. 175) and dataism (“the growing dependence of humans on big data” – p. 177).
The name Silicon Valley stands for cutting-edge technology, entrepreneurial spirit and innovation and anyone curious to get an insight into the business landscape of the Valley and some of its mightiest corporations should read Turning Silicon into Gold: The Strategies, Failures and Evolution of the Tech Industry.
You might be reminded that there was once MySpace and you might find out how unsuccessful YouTube was at the beginning or learn that virtual reality has been around for quite a while. Should you be a start-up founder, you might want to digest some of the brilliant strategies adopted by the companies described in the book. Or maybe you could use the information and avoid doing the same mistakes others did. Should you be just a fan of Netflix series, you might ask yourself whether you still want to watch them. The authors recommend the book “to anyone exploring a career at the intersection of technology and business” (p. 1) but I suggest it can be interesting for a larger audience. It could even serve as a starting point for discussions in an undergraduate course.
Each chapter is built around one or two concepts, which are well explained and supported by the entire case narrative. The questions at the end of each chapter can motivate the readers to think further about the issues described or to transfer and apply the knowledge to a concrete situation. The glossary at the end of the book can help one to keep track of the concepts encountered in the book, though some of the explanations could be complemented with insights from other books. Worth mentioning is also the reflecting tone and the constant reminder of the importance of context and that there is no “one-size-fits-all” solution. Some comparisons might fall a bit short (the rise of the Roman Empire and that of MySpace), some graphics might be just “standard” knowledge for a marketing undergraduate, some abbreviation might be lacking, there is no conclusion and no reference list, but aside from all that, the book is entertaining and worth reading.
 The first occurance of a company’s name is emphasized so that the reader can tell at a glance which companies were discussed in the book.
Griffin Kao has a background in computer science, mechanical engineering and economics at Brown University. He works as an Associate Product Manager at Google. Griffin Kao’s homepage can be found here.
Jessica Hong has a degree in computer science from Cornell University. She describes herself as a product manager, developer and creator. Jessica Hong’s homepage can be found here.
Michael Perusse studied computer and mathematical sciences at Harvard University. He worked as product manager for both Google and Microsoft and at start-ups.
Weizhen Sheng has a master’s degree in data science from the University of Pennsylvania. She worked as a product manager and software engineer in the tech industry. Her homepage can be found here.
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