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"Professional Management"

From a couple of weeks ago, a wonderful column by Robert X. Cringely, "The Case Against Professionalism."

It is easy to forget that professionalism is the enemy of the high-tech startup. If these companies were operated by professionals, they would never have been founded. Nor would a professional tolerate the conditions necessary for startup survival. Michael Eisner never emptied a wastebasket at work, but I'll bet Walt Disney did.

Here is a scene that happens at some point in almost every young company. The founder/CEO/technical visionary meets with his board and finds him or herself out of a job. How could this happen? Well, the company has grown to the point where the board feels that "professional management" is required, so they are bringing in a new management team. The new team is composed of old friends and classmates of the board, and the new team costs five to 10 times as much, but that's okay because the company is "hiring for growth." This new team cuts staff, cuts costs and outsources everything that can be outsourced, with the result that earnings are improved and the stock goes up or the company makes itself look better for an Initial Public Offering. The professional managers get big bonuses, they exercise mountains of stock options, sell those option shares, then go on to some other, even bigger, job having "saved" the company, which then stagnates, goes into a slow decline, and is eventually acquired by a competitor.

In the PC industry, this is the path followed by almost every company. On the software side look at Borland, Broderbund, Personal Software, Lotus, WordPerfect and hundreds of others. The similarly afflicted hardware companies are so many that the names become a blur. All these companies, even though some of their names may remain, are effectively dead. Certainly, they bear no resemblance at all to what they once were. And every one of these companies had something else in common: At the time their management was displaced, they were profitable and had money in the bank.

This is reminiscent of conversations my co-founders and I had when starting up AirEight. We had all been exposed to the unspeakable evil that is "professional management," and we were all resolved not to experience it again. When I go into work every day, I'm going to work with people whom I've liked, trusted, and respected (with apologies to Alex Osadzinski) for 10 years or more. I'll take that over "professional management" any day.

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