Photo: Peter Jackson via Flickr
There’s this idea going around that once a startup goes public — that’s it. It can’t innovate anymore. All it can do is ride its existing businesses until they die. (See Robert Scoble here, for instance) This is considered so obvious that many people, especially Silicon Valley, state it as a fact. And it’s an important question as big startups like Facebook, Zynga and others are putting off going public for as long as possible.Mark Zuckerberg in particular is told to believe strongly that once Facebook is public, it just won’t be able to innovate as much and be as nimble as it is now.
We just don’t see it.
And for the naysayers, we have just one word: Apple.
Apple is considered one of the most innovative companies on the planet, but it’s done pretty much all of the innovations it’s known for as a public company, from the original Macintosh to the iPad.
But it’s not the only one.
Google did Android, a phenomenally innovative product that is reshaping the mobile industry. What’s more, as an open source operating system, Android has no discernible impact on the bottom line and is a very long term investment in a future that may or may not happen when mobile computing is bigger than desktop computing — exactly the kind of long term, visionary endeavours that public companies are told to be so bad at. And don’t forget those self-driving cars.
Another phenomenally innovative public company is Amazon. As a public company, Amazon created one-click shopping, which has changed online commerce, Amazon Web Services, its phenomenally successful cloud operation, which is not obviously related to its core business, something else public company shareholders are thought to hate, and Kindle, which is redefining how we read.
So clearly, public companies can do game-changing innovations.
Maybe it’s a bit harder. Those moves that we talked about caused some public controversy. But how much did that matter, really?
So why the notion that public companies can’t innovate?
Because the things that cause companies to stop innovating often happen to public companies. Here’s what causes companies to stop innovating: growing too big, and losing their founders.
There are exceptions, but those are mostly the things that cause companies to lose their streak. The fact that many companies to which that happens happen to be public doesn’t mean that being public makes a company stop innovating.
Microsoft is a case in point: Microsoft came out with Windows and Office as a public company. Not bad. But it’s been adrift ever since Bill Gates left the day-to-day running of the company to focus on his philanthropy. It has nothing to do with being public.
Companies lose their edge all the time. But please don’t blame the stockmarket.