Real and make believe

There’s a song by Three Doors Down that refers to the singers life as containing things that are real and make believe. The Singer is struggling to tell the difference between the two. I suspect that everyone has moments like that in their life, but that’s a little too personal for a BLOG like this. In this case I would like to reflect on how this concept has played out over the years in the tech community.

Tech companies have always had to play a game where they need to keep investors engaged long enough to buy the time they need to build the product. Investors have become increasingly impatient and I blame the culture that has evolved from the Internet for that. In the 80’s I often found myself being asked to demo a product at a point where it was barely booting, while I listened to the sales person talk about how it was ready to ship.

At the time I didn’t understand the pressures that promote this kind of behaviour. Those pressures have not gone away, in fact they have gotten much worse. I have had people ask me what happened to the tech community in Ottawa. They reminisce about the tech boom of the 80s and 90s and question why that sort of thing is not still happening. They blame off shore investment and have a laundry list of others to blame.

If there is to be any blame, it should be focused on the investment community. If you want to build a product that is going to be innovative and produce a long term ROI, it is going to take Research as well as Development. The investment community seems to want to put money into development and avoid research. You can’t have it both ways. Some products need more than two years to develop and I would suggest to you that those products will produce the best returns.

So what do tech companies do when they can’t get funded to build those products? They sell their ideas to off shore companies that have investors that are willing to wait or they build a product that is Make Believe while they work furiously on the product that is real.

Is that not misleading the investors? Yup, but there are many new laws to guard against this kind of misdirection. Companies have to walk a much finer line.

So what is the answer then?

I believe that setting expectations up front with investors would be a good start but the real change has to happen in the investment community itself.

Why were companies like Nortel able to innovate for so many years?

Because they were considered a Blue Chip stock and people made long term investments. Nortel had an awesome track record, was honest with their investors and hired only the top graduates. But they failed in a messy cloud of controversy you say. To that I would reply, read the book 100 days.

It would be nice to not have to “Make Believe” and just stick with what’s “Real”. In order for that to happen though, investors are going to have to put in the time to find out what their investments are doing and accept some risk.

What is a reasonable amount of risk and how can I tell real from make believe? Excellent question and the topic of a future post.