Killing Crocodiles

It is more costly to kill crocodiles nowadays. No, not because it is against the law or because it is hard to go down to Africa for a horrible killing safari.  I am talking about those companies that start so small and then over time become giant “crocodiles” that eat every other company in the ecosystem.

My mentor when I worked as a Lead Product Manager at Telefonica taught me that the best way to “kill” potential companies that could eat you is to kill them.  But how? Kill them when these “crocodiles” are still in their eggs. Crush them!

It seems as if a few million dollars was enough just a few years ago. Still many big companies pay just a few million dollars for star-ups nowadays. In any case, after FB acquired Instagram we saw for the first time a “B” instead of an “M”. Yes a Billion sounded like a lot for a small company; but 19 Billion sounds like the budget of a whole country.

As a matter of fact, you can see such a comparison here. Apparently, Paraguay, a country with 7.7 million people produces as much as a company with roughly 50 people. This is indeed interesting, to say the least. After all SMS and messaging has been around for so long, but FB had to pay such a high price to kill a crocodile egg named “Whatsapp”.

I am not sure if we need to think about jobs’ creation, as mentioned here by Reich, or focus on the potential of a new technology platform. For me it sounds mostly as just simple business accounting. Whatsapp will eventually charge every one of their (soon to be) 1 Billion users just $1 dollar… in less than 20 years, FB will get what they paid for it, without considering they could double such average revenue per user (ARPU) with new products and/or advertisements (which I can almost bet will happen).

I think we could still be in front of a case of inflated egos or just plain irrationality – an exacerbated system 2 (using Khaneman’s terms) – by assuming there is no hope to come with a simple messaging platform for others to take over the world. WE need crocodiles to grow, we need them to keep competition. Accumulation of power and competition only leads companies to inflated egos and bad management… we have seen this story over and over. So, maybe we need to help the FCC gain a new license to regulate crocodile egg killings so they can help some of those crocodiles grow.

At the very least, I hope FB’s value (with Whatsapp in their purse) is as strong as it should, and that these people with the “Bs” and not the “Ms” can actually become leaders and value creators rather than simple crocodile egg hunters. Personally I think I would continue learning from other leaders, those who are passionate about what they do and who have earned money at par to the value they bring to the world, so appreciating the value of other people and their efforts.

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