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Silicon Gold Rush: The Next Generation of High-Tech Stars Rewrite the Rules of Business

Author: Karen Southwick
Publisher: New York: John Wiley & Sons Inc., 1999
Review Published: January 2000

 REVIEW 1: Ian Lewis Gordon

1999 has been a busy year for Karen Southwick. John Wiley & Sons have published two of her books and she has moved from Upside magazine to become managing editor of Forbes ASAP. Silicon Gold Rush is the first of her two books, the second High Noon: The Inside Story of Scott McNealy and the Rise of Sun Microsystems, appeared in September. Both books come heavily blurbed on the dust jacket by industry stars such as Yahoo's Tim Koogle, PeopleSoft's Dave Duffield and Autodesk's Carol Bartz. Duffield describes Silicon Gold Rush as a "clear look at innovative management styles and challenges." But I am not so sure that her vision is clear, or that what she describes innovative.

The story Southwick tells is familiar enough: smart young entrepreneurial type creates or discovers a product and sets to market it. Success or failure looms depending on whether or not appropriate strategies are adopted for building the business. The truly fortunate will be able to publicly float their company, or perhaps be bought out by an industry giant.

True, relatively young people are making millions seemingly overnight. Also, the business climate of the high-tech computer industry is familiar enough that it has been parodied in episodes of The Simpsons and the panels of Doonesbury. But the story I outline above could almost as easily be applied to an earlier wave of inventors and innovators: think Alexander Graham Bell, Thomas Edison, Henry Ford (admittedly not that young), and Asa Candler. That is, the new stars of industry are not rewriting many of the rules of business. The problems associated with building and managing companies has been around for some time and historians such as Alfred D. Chandler and Richard Tedlow have written extensively on these matters [1].

The issues at the heart of Silicon Gold Rush are how to do business in a rapidly changing world. Typically young entrepreneur-engineers who start high-tech companies will run into trouble as they grow because they do not necessarily have the appropriate skills to manage growing companies. Sudden growth puts pressure on corporate structures and requires decisive management. Likewise, shifts in the market, say from the desktop environment to the Internet or intranet environment, mean that management has to be swift in recognition and response or risk losing the whole shebang. Southwick gives us details of how these issues have played themselves out in the industry by drawing on more than one hundred interviews with executives at some twenty-plus companies.

This approach is the strength of the book, but it is also its weakness. Southwick does not so much make her points, but rather voices them through quotes. The opinions in the book are mostly delivered in quotation marks from industry players. So for instance on the subject of recruiting management talent one can read Yahoo founder David Filo's observation that "we didn't have the time to learn how to do this stuff, so it was in our best interest to bring in people who had grown a company before" (101). And to ensure the reader gets the point this quote is then repeated in the equivalent of a newspaper sidebar highlight. If this approach does not fulfill the reader's thirst for gems from the horse's mouth there are some twenty four and a half pages of undigested quotesdispensed through the book in special grey shaded sections bearing the heading "Expert Opinion." These pages, along with the thirteen pages of appendices, add some fifteen percent to the book's girth.

The picture that emerges of these high-tech companies is that despite generally more relaxed dressed rules, and greater earning capacity for some individuals through stock options, they are just as tightly managed as any corporation. Undoubtedly there has been a shift to more decentralized forms of management and business units, but these have occurred across the corporate scene. Debra Engel's, a senior vice president of corporate services at 3Com, belief that company CEO Eric Benhamou's penchant for extreme sports and adventure activities with his staff does not make the place a frat house, might be true, but these companies seem to have extended management styles adopted by university and college halls of residence to their work force. Witness PeopleSoft's "Taco Tuesdays" and service award programs that are straight out of residential management handbooks. Southwick also asserts that employees who can access their own personnel leave records and modify basic personal data such as addresses, or read the company's corporate mission statement and press releases, exercise a sense of ownership of the company for which they work. There may be a certain amount of ease and fun in accessing such things from one's desktop (I have been able to do it at my last two employers), but how that transfers into a sense of ownership is beyond me. There is just as much rigidity in this "fun" style as in that of the grey flannel suited day of the organizational man. But this is not Southwick's point.

In all of this effort to let us see what the industry thinks it is doing Southwick overlooks the important aspect of standing back and providing some analysis. Perhaps that is the difference between a reporter and a critic. In any case her book often reads like an echo of Gertrude Stein's maxim "that there is no there there" in Oakland, a quote Southwick applies to many technology companies trying to obtain mind share (consumer knowledge of a company and its product). Indeed Southwick's book seems to draw on Tom Siebel's strategy of publishing a book (Virtual Selling: Going Beyond the Automated Sales Force to Achieve Total Sales Quality) to position his company Siebel Systems in the market as the people who literally wrote the book on sales force automation. Southwick notes that by acquiring the title of author Siebel covered one of the mind share bases. Having acquired that title herself she has moved on to Forbes ASAP. The best piece of advice in the whole book is the reminder that in a gold rush, "with rare exceptions, those who make the real money are not the ones panning for gold but the ones who sell them the picks and shovels and bread and salt" (208).

1. Alfred D. Chandler, Jr., The Visible Hand: The Managerial Revolution In American Business (Cambridge, MA: Belknap Press, 1977); Richard S. Tedlow, New and Improved: The Story of Mass Marketing in America (New York: Basic Books, 1990).

Ian Lewis Gordon:
Ian Lewis Gordon teaches a course in American Business and Technology at the National University of Singapore. He is the author of Comic Strips and Consumer Culture, 1890-1945 (Smithsonian Institution Press, 1998). He is currently researching a work on stereotyped imagery.  <ascilg@nus.edu.sg>

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