In the past technology startups raided old guard companies (Netscape went to FedEx’s Jim Barksdale, for example) to get management help. In a world where the Internet is ubiquitous, we are going to see old guard companies embrace Silicon Valley types as their leaders.

Five years ago, it seemed a bit farfetched, but today on the first work day of the new year, I was reminded of our tête-à-tête. Why?

Just, look at the two major news stories of today:

1. Google is working with car companies like Hyundai, Kia, Audi and others to embed some of its services inside their cars.
2. Avis is buying car-sharing pioneer, ZipCar for about $491 million, a 49 percent premium over the closing price on December 31, 2012.

Recently, I got a chance to ride with a friend who bought a snazzy new Audi S-6 car. Given that I don’t drive and am in the minority of people who have no desire to drive, the car seemed like a technological marvel on many levels. The speed and the power may not be to the liking of Jeremy Clarkson, but the multimedia panel will win his approval. The most luscious part of that panel is the navigation system — based on Google Maps.

Today, Google announced that it is working with other major car makers such as Kia and Hyundai, to embed their technologies including maps inside those cars. Google is an internet services company that is now finding a home in cars, just like Pandora’s Internet music streaming  found its way into Ford Motors.

Thermostats with live Internet connections that can be used to control the climate inside your home remotely was the stuff of science fiction until a few years ago. Now many utilities are playing with the idea of using such Internet-enabled devices, marrying them to data analysis technologies and turning them into tools for better energy management. A variety of startups born in Silicon Valley — like Nest, Opower and EcoFactor — are getting in on this trend.

These are early sign posts of a connected future where Internet technologies influence even the most mundane of industries. You know, like car rentals, or the power grid, or building climate systems.

At the turn of the century, the idea of sharing a car in increments would get you laughed out of a room. Car rentals were cheap and there were cars lined up outside of airports. Who would then want to rent a car by the hour? Antje Danielson and Robin Chase, two moms from Boston were crazy to have launched a company called ZipCar in 1999. It took awhile, but the world finally came around to their idea. It helped that the whole process of renting a car was convoluted, and the cars and technologies inside those cars very old fashioned.

Zipcar, instead focused on the casual renter — primarily a young Internet native, one who had grown up on the convenience of Google, Amazon and broadband. The car-renter 2.0 is less likely to have the patience to deal with the inefficient processes of Avis(es) of the world.

The Internet changed a generation’s expectations of consumer services. But the emergence of the iPhone (first) and Android allowed companies such as ZipCar to create an efficient car-sharing ecosystem, challenge the established guard and grow like a weed.

Here is a little comparison between ZipCar and Avis. In 2005, ZipCar had revenues of $13.7 million (according to their S-1 filing). In 2012, they are estimated to have revenues of $278 million, according to Yahoo data. In comparison, Avis sales for 2005 were $18.24 billion and in 2012, they are expected to bring in about $7.3 billion according to analyst estimates collected by Yahoo. Agreed there is a big disparity in those numbers — billions versus mere millions — but still, you can see the demographic shift is pointing to a market reality against Avis.

As my colleague Katie Fehrenbacher pointed out in her analysis of the Avis-ZipCar deal, the acquisition has wider implications for the fast growing trend of sharing stuff and resources. While hitch-a-ride service like Lyft or black-car sharing service Uber might feel scary for both the incumbents (taxi companies) and the legislators, the fact is that our constant state of connectedness is continuously changing the rules of the game. It is impossible to imagine life, business or society without this connectedness.

Many believe that Avis is going to blow it and ruin ZipCar. I am in that camp — not because I want either of those companies to fail – but because when large, lumbering and mostly technologically incompetent companies try to buy innovation, they often times kill the innovator. (Avis rival Hertz started its own Hertz on Demand, though I have not been able to assess their success or failure.)

For this deal to work out, here is some free advise for Avis CEO Ronald Nelson: make sure you sign a nice free-agent deal with ZipCar CEO Scott Griffith and his team. Then make him your chief growth officer: one who understands technology, data and demographics to beat the living crap out of your rivals. And give his technology team the liberty to reinvent both the in-car and car-rental experience at the airport.  Otherwise, in 2015, there will be another ZipCar-like company, beating the stuffing out of your profit margins.

His words were ringing in my ears when I turned on the computer this morning and read about Kodak’s bankruptcy. Shocking (and sad) as it might be, it is not all that surprising. People have been watching the company’s slow free fall for years. The Economist has a great rundown of what went wrongat the company — I recommend you read that and skip all the news-y nonsense – and my key takeaway from that wonderful piece: you cannot fight the future.

Companies that once were large and massive and failed to adjust to the new reality have been left behind.  Xerox that owned the photocopying industry is now a small player in what was essentially its core competency —  document management. AT&T used to be a giant wireline phone company that controlled how we communicated with each other. Now it is a cellphone provider and only a component of the way we communicate. Why? Because communication itself has since moved on to a new kind of network and isn’t limited by per-minute billing.

No coming back

Kodak Logo: through the ages

As my friend Pip Coburn says, turnarounds never turn. Kodak has been in restructuring mode for 15 years – cutting headcount, closing factories, tightening belts and squeezing rocks for blood. In other words — the company isn’t fat in a traditional sense.  But why none of its strategies worked was  because the company took too long and sat on its duff watching digital photography come and eat it for a mid-day snack even though Kodak R&D helped with the digital photo revolution when it launched the first digital camera in 1975.

And yet they failed to do what one of their major competitors – FujiFilm did — embrace digital with both arms and is now thriving. And when Kodak finally did embrace digital in 1993 it did with hesitance that comes when companies are afraid to cannibalize their existing businesses for the sake of the future. 

Today Kodak is experimenting with printers, commercial printing and other services as new ways to grow, but one wonders if that will be the path forward. I am pretty sure HP, Cannon and Lexmark have something to say about Kodak’s printing ambitions. And even if it succeeds and survives, it won’t be the Kodak of George Eastman. We might as well call it, a Corporation-Once-Known-As-Kodak!

Kodak, like many other businesses that have failed before it, made one fatal mistake – it forgot the true purpose of its business and instead focused on features, SKUs and products. (I have written about this before.) Kodak continued to define itself by “film” when all it should have done is define itself with “photos” or moments.

Who cared if the photos were on a slide, were printed and placed in albums, in digital cameras or on online sharing services. “The Kodak Moment” is what made that company powerful. Had it looked at the world from that lens it would be been an easy decision to adapt to new technologies and adopt them for benefit of their customers – us! In Mad Men, Don Draper tells the guys from Eastman Kodak when giving a pitch for their slide carousel:

This device isn’t a spaceship. It’s a time machine. It goes backwards, forwards. It takes us to a place where we ache to go again. It’s not called the Wheel. It’s called a Carousel. It lets us travel the way a child travels. Around and around, and back home again… to a place where we know we are loved.

Nokia’s Kodak Moment?

Nokia CEO Stephen Elop

There are many lessons for today’s companies in Kodak’s failure to adapt and eventual bankruptcy. Is Nokia the next Kodak? I hope not – for I like those guys – but Nokia is a likely candidate. Just as Kodak’s internal team was arguing for a digital shift that the top guys ignored, Nokia too, ignored all protestations from its resident experts who argued for an Internet-centric, touch-based and app-driven mobile device. Anyone remember the Nokia 770?

That phone could have been Nokia’s future, instead it is forgotten.  Nokia defined itself by a certain kind of a product – the 12-key phone. People at Nokia talked about a multimedia mobile computer, but it couldn’t look beyond those 12 keys. It took Apple and Google to show Nokia how to re-imagine the phone. In doing so they have defined how hundreds of millions view and what they expect from a smartphone. As I have said before – it is too late for the Finnish company.

Sure, Nokia has a brand, global presence and a sizeable marketshare. So did Kodak. It took 132 years, the last 15 of those spent in constant belt tightening, for the photo film company to sink. Having missed the big wave, Nokia doesn’t have the luxury of time.

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With the sun shining brightly, a walk along the Embarcadero to the office seemed like the perfect antidote. As Celine Roque writes on WebWorkerDaily, “Being exposed to images, sounds, and people that we don’t encounter on our daily routines can give us a fresh perspective we never would’ve gotten otherwise.”

I agree, and my walk got me ready for a spirited discussion with my good friend Pip Coburn, who was previously the technology strategist at UBS but now runs his own research and money management shop. His business is based in New York, but his company is as virtual as any, which in my book makes him a perfect web worker. He hadn’t seen me since before my heart attack, and wanted to catch up. And so did I. Why? Because Pip has the unique ability to look beyond the obvious. Our discussions almost never focus on corporate minutiae; we talk about the philosophy of technology instead.

As we sat and enjoyed the rare San Francisco warmth, we contemplated the issue of data deluge, whether it be from blogs, news outlets, Twitter or FriendFeed. We’re confusing noise with information, and information with useful information, he said (and I paraphrase), and he urged me to focus GigaOM on being not just another information resource but an actionable wisdom resource.

The conclusion of our chat — it’s not data that’s important but what you do with it — carried into my next meeting, with Robert Hohman, co-founder of Glassdoor.com, an online resource for job hunters to get accurate reviews of the companies they want to join

Glassdoor.com, which launched today, is like Epinions for the job market with the rating features of TheFunded added in. Hohman’s co-founders include Rich Barton (founder of Expedia and co-founder and CEO of Zillow) and Tim Besse (also previously of Expedia). The Sausalito-based company is funded to the tune of $3 million by Benchmark Capital, the same firm that backed Zillow (and where one ex-Epinions guy is an EIR).

As it stands, I think Glassdoor has an interesting yet marginal opportunity. But that doesn’t mean I wasn’t intrigued by the idea behind Glassdoor, and what it could eventually offer by analyzing its data in a more meaningful way. I asked Robert if we could take the information he has collected and put it to use. For example, to answer the question: What kind of a relation is there between the CEO’s rating by his employees and his company’s market performance? Robert was kind enough to run a little analysis, and indeed, despite the low input data, in the computer hardware sector there is “clearly a correlation between overall company rating, CEO approval rating and the price/earnings” ratio of the stock.

Obviously a lot more data is needed to get a sharper image of the overall trend, but it makes sense: Loyal and happy employees work harder, make a company better and thus increase shareholder value. This was actionable wisdom out of pure data. I also harangued Robert about his co-founder Barton’s other company, Zillow, and how it missed a huge opportunity to use its data to warn people of the mortgage crisis.

I think a lot of companies are failing to use the incredible resources of data that we have at our disposal with the Internet. I blame this on the marginality of ambition. Even Google, the number nerd’s utopia, as reflected by this post seems to be missing the opportunity to put its data to work. Still, there is light at the end of the tunnel, as some startups are beginning to take notice.

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