A couple of weeks or so ago, I was interviewed by NPR reporter Yuki Noguchi about so-called “big data” and how mathematicians are now trendy and highly in demand. One of her questions was how a smaller, less well known company like Cataphora could compete for talent in this market. I explained that one key advantage we have is that we can tell the difference between the really great candidates and the merely good ones, that this was not all that trivial to do in reality, and that it is often important to the really great ones to be understood by their management to be really great ones. Consider that the great artist, whether a painter, a chef, or a geek, always savors his or her work being appreciated by someone who truly understands it. This exchange, plus the recent Monaco Media Forum, have made me ponder whether the software industry may finally be taking a turn in a direction that I consider highly salutary.
For years I have been a big fan of Michael Wolff, a journalist who has also written a number of books such as Burn Rate, and more recently a biography of Rupert Murdoch. Recently in Wired he did a piece on Yuri Milner, the Russian financier who, with his newly minted firm Digital Sky Technologies (DST), now seems to be behind many of the really high-profile startups of the last few years. Such things are almost never random coincidences, and indeed this is surely not. Wolff in his article makes a fascinating assertion about Milner:
…Milner, in part through the lens of his own life’s experience, saw another level of value entirely if the world was being transformed by social media, it was more valuable than anyone thought. And, too, if technology companies had reached a certain level of value, that was a pretty good indication of their permanence.
Accordingly, he upped the ante and put social media and himself at the center of technological development.
Indeed, there is a different or further mission. He’s more beholden, he’s more in awe, than the Silicon Valley establishment blasè or cynical as any other establishment is of its geniuses. There is always something vaguely oppositional about the relationship VCs have with the companies they invest in. They are trying to maximize their positions, to pay as little as possible and cash out for as much as possible. Milner now the singular link between the major players of social media, Zuckerberg at Facebook, Mark Pincus at Zynga, Andrew Mason at Groupon, Jack Dorsey at Twitter, Daniel Ek at Spotify is not thinking about individual deals but is aligning himself financially and strategically with the founders and reaping the benefits.
This last is the really interesting part. As noted in the Wired piece, Yuri Milner originally studied theoretical physics. That’s right, theoretical physics. This in my view explains much, for three important reasons:
1) Theoretical physics, much like theoretical math, which is my own background, is one of those rare academic disciplines in which clear differences are visible between the really smart, the brilliant, the really brilliant, the geniuses, the great geniuses and so on. This phenomenon is captured amazingly well in one of my favorite scenes from the movie “Good Will Hunting” in which Matt Damon plays an urban toughie who is also a mathematician of truly extraordinary ability. In the scene in question, Matt Damon’s character sets on fire a piece of paper with a highly innovative proof he has done. An MIT math professor ably played by Stellan Skarsgaard tries to snatch the paper so as to put out the flame and save the work, which was well beyond his own capabilities to achieve. He then says sadly something to the effect that only a half dozen people in the world could tell the difference between the two of them, and that he wished he didn’t have to be one of them. Like this math professor, Yuri Milner can tell the difference between the really smart, and the really special ones. He therefore well understands who to align himself with in order to realize the maximum amount of long-term wealth. For him, I’m sure it is a no-brainer.
2) There is an utterly bizarre and very counterproductive attitude in the software industry to the effect that the technical visionaries can’t also be world-class, or even effective, operators. Every schoolchild knows that Steve Jobs was responsible for the iPod, iPhone and iPad. But how many adults know that Steve Jobs saved Apple from the brink of bankruptcy when he was finally allowed back in after having been unceremoniously ousted? As management tasks go, turnaround management is not the easiest thing in the world, especially at that scale, and given the seriousness of the situation. Yet Steve Jobs managed to do it, in part because he had the ability to both provide the vision and apply it to the daily operation of the business.
At the recently held Monaco Media Forum, the CEO of Twitter noted that his computer science degree as it happens, from my alma mater, the University of Michigan really helps him do his job. (As an interesting side note, he also noted that his study and work experience as an improvisational comic also made him a better leader because it made him a better listener, that all of the great improv guys were great listeners above all, very well attuned to their audience.) “Real world” companies generally require their executives to be domain experts. For example, at companies like Dow Chemical, most of the senior managers with line responsibility have PhDs in chemistry what a concept! Yet all too often in Silicon Valley, we see investors or lenders hellbent on separating the technical visionaries from operational roles, if not from the company overall. Sure, many technology visionaries can’t even manage a puppy who wants to please, but many can. At any rate, Yuri Milner, as someone who essentially did an MBA at Wharton, could not reasonably share this illogical view. He understands that great wealth is much more likely to be generated by doing just the reverse. Yes, the Zuckerbergs make some number of mistakes due to inexperience (if they are inexperienced), but at least there is more reason to believe that they can learn from their mistakes. Modern day John Sculleys will make different, and arguably worse mistakes worse in part because their choices will likely seem more reasonable and normal. Plus they are less likely to adapt.
3) Last year at this same conference, I actually asked Yuri Milner whether his theoretical physics background really impacted his decision. He indicated that it did, noting: ”This is the era of mathematicians. It’s not about social networking, it’s about math.” (You can read some of what was said during this interview at: http://eu.techcrunch.com/2010/11/11/dsts-yuri-milner-this-is-the-era-of-mathematicians-its-not-about-social-networking/.) Same principle again: real domain knowledge also really helps as an investor or board member.
I hope Yuri Milner becomes the richest man on the planet, because probably few other things would do as much to improve the state of the software industry. Thankfully he seems to well on his way.
