For many years, the final “gotcha” question to entrepreneurs during pitches was “well, that all sounds great … but what’s your plan for Amazon?”
The true power of this question was in leaving it purposefully opaque. The best investors resisted the urge to start answering their own question before they had finished asking it.
Entrepreneurs, therefore, were left to respond however they saw fit: where do they compete with Amazon currently? How might they handle Amazon entering their space in the future? What did Amazon’s growing dominance over tech services (cloud computing, e-commerce, devices, advertising, data) mean for pricing or customer acquisition costs?
Like the infamous Google interviews (“Estimate the number of tennis balls that can fit into a plane …”), there was no right answer to the Amazon question. The point was to assess how entrepreneurs approached impossible challenges and responded to pressure.
In many ways, Amazon was the biggest problem (or opportunity) for almost every startup. In fact, the only wrong answer was “I really don’t see how Amazon is an issue for our company.” That was a serious red flag for investors: not only were you naïve and incurious; you lacked humility.
One of the better answers I ever heard was “I think it’s crazy to try and compete directly with Amazon, so we won’t. But here’s what I love about their business and would want to emulate.” What followed was an insightful deconstruction of Amazon’s leadership principles, including customer obsession, frugality and bias for action.
As Amazon’s influence and appetite expanded, the question wasn’t just asked of tech companies. Today, all organizations — from the corner flower shop to the biggest car companies, from government agencies to community non-profits — are well-advised to understand how the biggest company in the world impacts, irritates or inspires them.
At the very least, they need to be self-aware. Forcing companies to think about Amazon, no matter how tangentially, was —and can still be — a healthy exercise. But, as with everything, moderation is the key. Single-minded obsession can be as deadly as ignorance. Remember, the point of the question wasn’t specifically about Amazon; it was about how you approached the challenge (and the opportunity) of a foundation-shifting presence.
What’s Your Plan For Tech?
And so it got me thinking about the past year, the similarly seismic pandemic presence, and the new obsession of realigning our professional, personal and societal ways towards the tech enabled, tech-centric or tech dependent.
Have we simply replaced the question “What’s your plan for Amazon?” with “What’s your plan for tech?” And is the question really “Is tech your problem … or your salvation?”
As before, there’s no single answer.
Without a doubt, the pandemic has forced a digital reckoning. For some, it has been a gift. According to a recent McKinsey Global Survey, top companies accelerated the digitization of internal operations by three to four years. Even more remarkably, they calculated that the development of digital or digitally enabled products was reduced by seven years. Tech stocks are at all-time highs and companies are on hiring sprees even as layoffs and bankruptcies continue to dominate other sectors.
Here in Victoria, we witnessed government transition to digital services in record time, led by B.C.’s Chief Digital Officer Jaimie Boyd and her team who understood this was a generational opportunity requiring agility and urgency. In the private sector, 2020 saw a number of local tech companies quietly raise capital, expand their teams or get acquired. It has been, somewhat oddly, business as usual — or better — for many in tech.
But in the same way that the pandemic revealed, and deepened, longstanding inequities in our society, the organizational gap within and among industries has widened exponentially. And it has a lot to do with who’s using tech — and how.
In a 2020 Bain & Company study, researchers found that most companies are less productive now than they were 12 months ago. “Companies that were stars before the pandemic have continued to shine,” wrote the authors in a Harvard Business Review report. “Those with less stellar performance have struggled mightily. ”The result is an ever-widening productivity gap. The heightened ability of the top 25 per cent of companies to use technology to drive productivity (especially to liberate employees’ time, talent and energy) combined with the failure of the bottom three-quarters to do so, has resulted in the productivity gap growing from 40 per cent to 50 per cent in less than a year. And this have/have-not divide will only expand with time.
To be clear, not every so-called tech company uses tech wisely, nor do all non-tech companies lag behind. And not all productivity gains are a result of technology adoption.
And yet the signs are there. Taken as a sector, tech in Victoria is in good shape due, in large part, to innate industry characteristics well-suited to a worldwide pandemic and lockdown: early adoption of remote work as an option; diversified global customers; low or flexible/scalable cost structures; and longstanding familiarity with digital collaboration tools.
In addition, the sector has also been exercising the critical muscles needed to thrive in these times through its work with VIATEC and Roy Group’s leadership training over many years.
Indeed, among the sectors represented on various recovery task forces working with the City of Victoria, SIPP, VIATEC and others, tech companies generally reported lower negative impacts and healthier prospects for recovery.
Not surprisingly, the sector has also been a valued contributor to the Victoria community’s responses to the pandemic. Whether it’s the annual VIATEC Food Bank Challenge, contributions to the Rapid Relief Fund or the numerous ways that I have participated alongside tech leaders in direct support of local businesses and non-profits, it is clear that our sense of community responsibility has been fortified.
And so, like the old question about the elephant in the room run by Jeff Bezos, our challenge today requires greater honesty, heightened curiosity and deeper humility. It asks us to acknowledge how lucky we are to be “in tech” (or just “in business”), using tools that we know in uncertain times, not dissimilar to the usual life of a startup.
Moreover, it demands that we look up from our screens, use any newfound whitespace in our calendars and any headspace in our brains to continue to giveback to the community that welcomed our presence and made success possible in the first place.
In the future, I expect investors will still ask tech entrepreneurs about Amazon. But they’ll also ask, “How did the pandemic affect your business?”
In amongst the remote work success stories and the lists of SaaS tools they adopted, I hope to hear this just as much: “COVID-19 made us a better company by being better people.”
Jim Hayhurst is a regular contributor to Douglas and a trusted advisor to purpose-driven organizations and leaders. He is currently active in six companies and social impact projects that elevate Victoria’s reputation as a hub of innovation, collaboration and big thinking.