Hubris Is Blinding

A simple rule of basic management: Under-estimate your own market position and over-estimate the competition

Newspaper companies don’t have an exclusive lock on hubris and myopia. Television companies have always been a worthy match for them. So you can bet that CBS is still preoccupied with rival networks ABC and NBC even though that’s not where their audience has gone.

When Jeff Bewkes, the chief executive of Time Warner, was asked recently if Netflix was a threat, he said, “It’s a little bit like, is the Albanian army going to take over the world. I don’t think so.” Well, it won’t be long before streaming becomes so simple to do that consumers will wonder why they’re still paying Time-Warner for bundled television programming they never asked for and never watch. Thanks to Netflix and Amazon and iTunes, the balance of power is swinging away again from distributors to programmers and especially to viewers. More than a million cable customers have cancelled their Time-Warner video subscriptions already.

Silicon Valley is no slouch when it comes to self-importance, either. If newspaper companies lampooned the Internet bubble, companies out there preached sugarplum visions and easy windfalls and hollered the awful phrase “you just don’t get it” to anybody who disagreed. The successful in the Valley are very successful. They took risks, got lucky and got very rich. But lightening doesn’t strike twice, so success out there looks a lot your typical sex life, you know, a whole lot of talking, not a lot of frequency. There are a few exceptions to the lightening rule, Khosla is one, Leonsis, now influencing Groupon’s re-make, is another. But mainly the Valley is a place of rigid and uniformed one-hit wonders and wannabes, stampeding towards their current notion of the future in one vainglorious herd.

I was at church one Sunday morning not far from Sand Hill Road and in the middle of the sermon I saw a very well-known venture capitalist pull his phone out of his pocket. He looked at it and then headed for the church lobby, where he started to negotiate a deal point in a very loud voice, pacing backwards and forwards with his characteristic impatience, as if this place was his office. Swear to God.

And when I was out there last month I asked the young chief executive sitting across the table why he held a particular opinion. “I’m a student of history,” he said earnestly. “I learned from what happened in 2008.” In the Valley, apparently, “history” is what happened five years ago.

But success in business, especially any technology-based business, is never a consequence of one person’s unique insight. There is no shortage of good ideas but no shortage of mediocre ones either and more often than not the mediocre ones win out. Aside from luck and often accidental insight – as well as working your guts out – management expertise based on sound business instincts and experience is the crucial determinant of what ideas are successfully transformed into businesses that eventually make it. Ask Mark Zuckerberg.

He learned that from Sheryl.