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6. Will Friis and Zennström Continue to Have Success in Business Life?

This chapter contains a selection of theories in sections 6.1-6.2 and some reflections on methods in section 6.3. My suggested answer to the research question is found in section 6.4.

6.1 Have Pity for the Rich

The British music critic Bob Edmands wrote in 1975 an article called "Have Pity for the Rich".

"After the first top album, what incentive does a rock millionaire have to work on his second? Is it good for musicians to earn all that, and is it good for us to help them? ... The idle rich have always had time on their hands. ... There's one problem a rock millionaire has to face - imprisonment. Life under mansion-arrest must be a debilitating experience." [Note 219]

It is not probable that Friis and Zennström will experience the social isolation of the rock musicians. They wished to make big business, and they succeeded. But suddenly they are so rich that will be meaningless for them to try to spend their fortunes in ordinary consumption. Staffan Linder published in 1970 his book on "The Harried Leisure Class", a lament for the wealthy man who suddenly finds himself ...

"... drinking Brazilian coffee, smoking a Dutch cigar, sipping a French cognac, reading The New York Times, listening to a Brandenburg Concerto and entertaining his Swedish wife all at the same time, with varying degrees of success." [Note 220]

Or, as Larry Ellison puts it:

"When I started Oracle, what I wanted to do was to create an environment where I would enjoy working. That was my primary goal. Sure, I wanted to make a living. I certainly never expected to become rich, certainly not this rich. I mean, rich does not even describe this. This is surreal." [Note 221]

6.2 Schumpeter on the Social Role of the Entrepreneur

Schumpeter has some interesting points in his description of the entrepreneur, not all of which are true in Friis and Zennström's case:

  • Entrepreneurs do not form a social class
  • The entrepreneur has none of that glamour which characterises other kinds of leadership (sic)
  • The entrepreneur has no cultural tradition or attitude to fall back upon, but moves about in society as an upstart, whose ways are readily laughed at

"Because being an entrepreneur is not a profession and as a rule not a lasting condition, entrepreneurs do not form a social class in the technical sense, as, for example, landowners or capitalists or workmen do. Of course the entrepreneurial function will lead to certain class positions for the successful entrepreneur and his family. It can also put its stamp on an epoch of social history, can form a style of life, or systems of moral and aesthetic values; but in itself it signifies a class position no more than it presupposes one." [Note 222]

"The entrepreneurial kind of leadership, as distinguished from other kinds of economic leadership such as we should expect to find in a primitive tribe or a communist society, is of course colored by the conditions peculiar to it. It has none of that glamour which characterises other kinds of leadership. It consists in fulfilling a very special task which only in rare cases appeals to the imagination of the public. For its success, keenness and vigor are not more essential than a certain narrowness which seizes the immediate change and nothing else. ...

Add to this the precariousness of the economic position both of the individual entrepreneur and of entrepreneurs as a group, and the fact that when his economic success raises him socially he has no cultural tradition or attitude to fall back upon, but moves about in society as an upstart, whose ways are readily laughed at, and we shall understand why this type has never been popular, and why even scientific critique often makes short work of it." [Note 223]

Also John Kenneth Galbraith is concerned with the suddenly wealthy in the first chapter of "The Affluent Society":

"Also, until he learns to live with his wealth, he will he will have a well-observed tendency to put it to the wrong purposes or otherwise to make himself foolish." [Note 224]

6.3 Are Predictions Possible?

Are predictions possible? According to Gareth Morgan, the whole history of organization and management theory is based on the idea that it is possible to organize, predict, and control.

Can we find rules that will predict the emergence of a pattern before it becomes reality? This is a quest that drives much of science and indeed much of the ideology of Western civilization." [Note 225]

Darrel Huff proposes that one must take care of "everything else being equal":

"Extrapolations are useful, particularly in that form of soothsaying called forecasting trends. But in looking at the figures or the charts made from them, it is necessary to remember one thing constantly: The trend-to-now may be a fact, but the future trend represents no more than an educated guess.

Implicit in it is "everything else being equal" and "present trends continuing." And somehow everything else refuses to remain equal, else life would be dull indeed." [Note 226]

6.3.a Future Business Possibilities

Where will Friis and Zennström continue their work?

  • Staying with Skype? For the time being both are working in Skype. But they can afford to stop any day and will probably only stay as long as they like their jobs.
  • Leaving Skype? If or when they leave Skype it will be a troublesome period for the organization. Their employees will feel loyalty both to the founders and to the firm. This is a typical situation as described by Kurt Lewin in his "unfreezing-freezing" theory. Lewin proposed to carry through a successful change by "unfreezing" an established equilibrium and then "refreezing" in a new state. The unfreezing period is dangerous for the organization, as the employees realize that the management will not fulfil the old set of promises, but instead provide a new set of promises. In general, many employees feel less attracted to stay in an organization if their manager leaves. After some time the situation is "frozen" with a new manager, and the employees are not so eager to find a new job anymore. [Note 227]
  • New projects? Probably Friis and Zennström will never find anything that will yield a profit like they experienced it from October 2002 till September 2005 or if they do, they will soon be owners of the whole world.

6.3.b An Unqualified Guess

Here is a guess that is at least partly seriously meant, if Friis and Zennström choose to stay with eBay and Skype:

  1. Downes and Mui have various proposals for business strategies in the Internet world. One of these proposals is to cannibalize one's own business before someone else does it. [Note 228]
  2. According to the rumours in section 4.5.e, Friis, Zennström and Jaan Tallinn are aiming on new peer-to-peer applications. Professor Linnar Viik narrated about peer-to-peer payment systems, where the network itself manages the customer base
  3. eBay has acquired the Internet payment firms PayPal and VeriSign in 2002 and 2005 for 1,500 and 370 million USD respectively. [Note 229]

It is possible that eBay will allow Friis and Zennström to cannibalize the newly acquired payment companies by converting them into a peer-to-peer banking company with a distributed database. If it is technically possible to reduce the traffic to and from the central servers in a bank system, then eBay will have a world-class banking system that easily can compete with all the legacy systems of the world.

6.4 Answering Research Question 2

Will Friis and Zennström continue to have success in business life?

As shown in section 5.7, Friis and Zennström had advantageous points of departure in both 2000 and 2003. Since then, their position has changed a lot: They have learnt more, and they have turned rich, famous, and successful.

Being rich means that:

  • You don't need to ask others you can just invest the money out of your own pocket. It means that the evaluation of risky business plans may be less strict. [Note 230]
  • You have no need to invest at all. You may just buy a Caribbean island and sit in the shade with a cold drink, if you want to.

Being famous means that:

  • You will always be good copy. If you want publicity for your new business idea, you'll get it, and when you want to act in obscurity, you'll get even more publicity. As mentioned in section 5.1.d, the press will report on Friis and Zennström's successes and failures for the rest of their lives even if they lose all of their money.
  • The Belgian professional cyclist Eddy Merckx entered 1582 road races and won 525. [Note 231] He was obviously very competitive, but anyway he suffered from being recognized by any other cyclist in the races. Once he complained to the press: "Every time I rise to start a sprint, anybody else rises and follows me."
  • You will be sieged under a barrage of less wealthy people's investment proposals

Being successful means that

  • You experience the favourable, desired, planned, or intended outcome (according to the definition in section 2.1)
  • It is only a success, if you meet or exceed your own or other's expectations
  • Problem: if you have success and want more, is it then a new success, or just part of the old one? This depends on the correlation of cause and effect as discussed in section 5.1.d

Being rich, famous, and successful is not always connected in a simple way. For example your own criterion for success may change to not being famous. For these reasons it is not easy to tell what Friis and Zennström may want now or in the future.

There are many reasons for Friis and Zennström's possible success in the future:

  • They have their unique cooperation for generating new ideas
  • They turn the ideas into big business by being uncompromisingly persistent
  • They have the "Star power" that attract the customers

I expect Friis and Zennström will continue to have success in business life if they want to. The open question is what they want.

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