As 2008 takes its final breaths, I am sitting in my apartment, which is enveloped in a thick fog that’s hiding both the ugly high-rises and the beauty that is the San Francisco Bay. The fog is also muting the sounds of the city — a good enough reason as any to ponder the year that was.
Many of us who obsess about the minutiae of Silicon Valley were slow to respond (at our own peril) to the credit crunch and the financial tsunami that it unleashed. After all, who could have imagined that within a few short months around the world, banks would be quasi-nationalized, capitalist governments would have to adopt socialist principles to save failing enterprises and seemingly astute soothsayers would turn out to be worse than than highway con men.
Whether or not the bailouts were needed remains up for debate. I will let others scream and holler in outrage about the immorality of the actions taken by our completely biased politicians. I will let those who are suffering tell their tragic stories on national media. All I am going to say is this: In 2008, U.S. society — from the very top (our political leaders) to the very bottom (our bankers) — came to embrace mediocrity.
In offering money to bailout failed bankers who couldn’t bank, car makers who couldn’t make good cars and chipmakers who have seemingly no business acumen, we stood on the top of the roofs and said: Mediocrity is OK. In the meantime, not one person has been held accountable for bringing fiscal, moral and social Armageddon to our doorstep.
Think of it this way: If a waiter spilled hot soup and scalded you, you would have him fired. A cab driver who had the nerve to take a longer route wouldn’t get his tip. And yet the bankers who turned out to buffoons are being paid to save institutions that in a free market should be left to die. Fox Business’s Cody Willard put it best here:
The liars and crooks who run the investment banks that are now the largest welfare institutions on the planet took out almost $2 billion of money JUST THIS YEAR that they should have been saving for the rainy day that’s now here and handed it to the 600 people they thought were most important to their companies’ well-being. And now they’re still driving around in corporate jets even after becoming welfare institutions?
We spent tens of billions of dollars to save a car company (Chrysler) that not only makes cars that are of questionable quality but also is owned by Cerberus, a vulture fund that has proven itself to be bad at its job — after all, only an idiot would buy something that’s already broken. Cerebrus also owns a big portion of GMAC, the financial arm of General Motors, that is anything but savvy about money. Never mind the fact that losing their money is a risk that goes with investing in distressed assets. They got a bailout from Treasury, too. (The Bush administration’s Treasury secretary before Henry Paulson, John Snow, is a big guy at Cerebrus).
Rewarding mediocrity by bailing out these companies is incredibly short-sighted. As my buddy Pip Coburn, a long-time technology investor, often says, companies that are in survival mode don’t do anything that would make them go from being mediocre to being great — because they are too busy just surviving.
Let us not wash off our hands as well. It is our acquiescence that has led to the spread of this culture of mediocrity. We accept dropped phone calls on our wireless networks, computers that constantly crash, broadband networks that are best effort.
Our acceptance of mediocrity is the reason why Apple’s iPhone hasn’t had a credible competitor. Today, RIM Co-CEO Mike Lazaridis, in a chat with CNET Asia, compared the BlackBerry Storm — an iPhone rival — to a netbook. I recently had a chance to use the touchscreen Storm and within an hour of using the device, it was more like a Touch Scream Storm. It is beyond bad! Any self-respecting company should think twice before putting that device into the market, but as I said, in 2008 we came to learn and reward mediocrity.
But why pick on RIM? After all they have made some great devices, among them the Pearl and the Bold. Let’s look instead at Dell, which today announced it’s rearranging its management to do something — I don’t know what! Dell embarked on a turnaround effort two years ago, but HP is still the No. 1 PC seller, Dell’s shares are down 60 percent on the year, and the company has slashed and burned its work force. It’s fighting a slowdown in demand for PCs with a product line that seems to be utterly forgettable. The company should heeds the words of Warren Buffet: “Turnarounds seldom turn.“
If Dell hopes to make a comeback, it needs to shed this mediocre mindset and instead strive for greatness. And why just Dell or RIM or our politicians — why not set that goal for ourselves? Let’s do that in 2009.
Happy New Year!