#33/111: 1,000 Dollars & an Idea

What is it about?

Sam Wyly talks about his journey from a young boy in Lake Providence to a billionaire in Texas. Most of the book is dedicated to University Computing his first company which sold processing time to companies.

Key points?

Quality of the journey: Success isn’t how much money you made, it’s how happy you were. Sam Wyly dropped his job at IBM for starting his own company because he was restless. He gave up his security for uncertainty and debt but he was happy.

Hire complementary people: Although, he made his fortune in software, Wyly wasn’t really into programming but he knew how to sell. Sterling Software, a company founded after selling University Computers for $3.3bn, consisted of over 30 acquired software companies. These companies weren’t really merged into one big company. Rather they existed as own sub companies. Only financial planning, accounting, etc. was centralized.

Be in motion: A problem of IBM and other giants is that the are mostly rigid. This allows small companies/startups to penetrate new markets faster and often these giants are too slow to anticipate change in existing markets. Don’t become a rigid, stay agile.

Size doesn’t matter: The first big acquisition of Sterling Software was Informatics which was valued at $200m. Sterling Software, at this time, valued only about $30m but Wyly wanted to acquire Informatics. Sterling Software acquired Informatics because they raised about $180m in cash from issuing junk bonds. Sometimes size doesn’t matter.

Conclusion

It’s a refreshing book, especially because lots of people think that every successful software company started in California (Microsoft didn’t either, by the way). For readers without a small finance background it is maybe a bit confusing because Wyly talks a lot about financial instruments. All in all, a neat biography about a not so well-known billionaire.

Stamina and Simplicity

Yesterday, I’ve read an other chapter of Founders at Work. It was chapter 8 about Evan Williams founder of blogger.com, later twitter.
The story of blogger.com was really tough, especially after all employees and his co-founder left the startup because they didn’t have any money anymore. But Evan stayed and kept up the server and the service. In 2001 Evan started adding some paid-services for blogger. And two years later Google acquired Blogger.com.

“Simplicity is powerful.” – Evan Williams

He showed this with both blogger and twitter.
I think these are powerful ways of doing things: stamina and simplicity. Often it don’t have to be complex. Complexity has some bad side effects. I think everyone who had worked on a bigger project, source code or organization knows this.

“Il semble que la perfection soit atteinte non quand il n’y a plus rien à ajouter, mais quand il n’y a plus rien à retrancher.” -Antoine de Saint-Exupéry

Translation: “Perfection is achieved, not when there is nothing more to add, but when there is nothing left to take away.” -Antoine de Saint-Exupéry

This could be a way to get simple and great (business) ideas. Take your first sketch. Try to make it simpler. If it will remain too complex, maybe you can’t put it into practice. Then try another idea or think harder to make your old one simpler.

There are several pros of simple ideas.

  • Your idea isn’t so prone to small changes
  • You can manage it without 90 people in administration
  • More people will understand (and use) it
  • The chance to survive is higher

“Must I be an inventor?”

The idea is not that important. Google did not invent search engines. Apple did not invent mobile mp3 players. Microsoft did not invent operating systems. So you should/must be an innovator.

Google said “Hey, search engines are great, but the results suck. We need a better search algorithm.”
Apple said “Hey, mp3 players are great, but they are not stylish and easy to use, make them look cool and easy to use.”
Microsoft said “Hey, IBM is looking for a new operation system for their new personal computer, we know where to buy one.” Oops, bad example.