Startups Will Be Driven More By Business Models And Less By Raw Engineering Talent

Larry Page Sergey BrinGoogle cofounders Larry Page and Sergey Brin

Photo: ehud via Flickr

“Talent hits a target no one else can hit; Genius hits a target no one else can see.” –Arthur SchopenhauerLast month, America lost perhaps its greatest calligraphy student: Steve Jobs.  

The legend is already well told of then-slacker, pre-workaholic Steve Jobs dropping into a calligraphy class at Reed College and learning about font serifs, knowledge that would be later applied to Macintosh’s own fonts and elegant GUI design, and that anecdote is a good catch-all for theje ne sais quoi Jobs brought to Apple Computer and the computing industry as a whole, especially over the last decade.

Of course, Jobs, like his good buddy and engineer Steve Wozniak, was also something of a nerd and well known among the hacking community and computer clubs of Silicon Valley during the 1970s.

However, unlike Wozniak, Jobs was no deep-in-his-guts engineer or software developer, and had just enough knowledge to know how to make things right. And you know what they say about a little bit of knowledge: Jobs’little bit ended up being very dangerous for Microsoft indeed, among other competitors.

Steve Jobs and Steve Wozniak were the perfect team in Apple’s early, “start-up” days because, between the two of them, they had the raw engineering talent of Woz to make sure things actually worked, but the marketing, aesthetic and generally visionary genius of Jobs to turn all that nifty engineering into something that resembled a business model. This Mutt and Jeff pairing was the perfect combo to birth the personal computer as we know it.

It’s the kind of leadership tandem you don’t see in the most innovative, post-startup tech companies of today. Mark Zuckerberg at Facebook has uber-COO Sheryl Sandberg to put a friendly and business savvy face on things, but it’s hard for Facebook’s CEO to shake his image as the weird coder/loner-turned-king-of-the-world. Larry Page and Sergey Brin are two computer scientists who have built what has become the ultimate technology “campus,”one that has filled out the brain of the Internet, but not necessarily its heart.

However, despite these two prime examples, I think we’re going to see an interesting trend in the next decade: as the world becomes increasingly flat, globalized and outsourced, our great startups – as Apple, Facebook and Google were all once were – will be driven more by the genius of ideas and inventive new business models, as Apple created in the last decade under Jobs as a multinational giant, rather than its early-stage engineering talent or coders.

As I outlined in my report on the revival of venture capital, it has become easier than ever for start-ups to scale because of how cheaply they can now expand internationally. This is coming up against another trend: the rise of the global engineer. In the first five years of this century, China and India alone doubled their engineering graduates.

Over the same period, the United States saw only an 18% increase. (Issues in Science and Technology, Spring 2007) It only makes sense that, in this era of globalization, all this engineering talent will somehow match up with entrepreneurial genius, regardless of national boundaries. 

Given how cheaply engineering talent can be had in places like India and China, and how easy it is to now communicate with and do business in those parts of the world, startups will be able to outsource this resource more easily. Genius, however, will remain always impossible to outsource.

Other VCs differ with me on this point. Fred Wilson has said he wouldn’t invest in a startup that’s hired another company to write its code (A VC, September 13, 2010). Hey, look, if you’re a founder who’s a business visionary, marketing guru and a coding savant all in one package, you’re well ahead of the game and will definitely be getting some interest from people like me and Fred Wilson.

All I am saying is that of all those elements you need in a great founder or startup team, engineering and IT will soon become the easiest element to reproduce outside the founders circle. Maybe not on the same level as textile manufacturing or customer support, but it will definitely become easier to do, especially in later stages.

There will come a time when superior engineering talent will come at such a value that startups won’t have any problems hitting most of their code targets with offshore talent. The startups that set themselves apart in the next decade, the ones like Groupon (and its triumph of marketing, despite whatever other issues it might have) that will really pop off those salivary IPOs and disrupt markets, are the ones that, like Steve Jobs before them, know how to hit a target we can’t even see yet.

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