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OK Labs Story Epilogue

2014/11/04

What did I learn from this all?

Clearly, OK Labs was, first off, a huge missed opportunity. Missed by a combination of greed, arrogance and stupidity, aided by my initial naiveté and general lack of ability to effectively counter-steer.

That arrogance and greed is a bad way of dealing with customers and partners was always clear to me, although a few initial successes made this seem less obvious for a while. In the end it came back to haunt us.

Strategically it was a mistake looking for investment without a clear idea of what market to address and what product to build. We didn’t need the investment to survive, we had a steady stream of revenue that would have allowed us to grow organically for a while until we had a clearer idea what to grow into. Instead we went looking for investment with barely half-baked ideas, a more than fussy value proposition and a business plan that was a joke. As a result, we ended up with 2nd- or 3rd-tier investors and a board that was more of a problem than a solution. But, of course, Steve, being the get-rich-fast type, wanted a quick exit.

A fast and big success isn’t generally going to happen with the type of technology we had (a very few extreme examples to the contrary notwithstanding). Our kind of technology will eventually take over, but it will take a while. It isn’t like selling something that helps you improve your business, or provide extra functionality for your existing product, something that can be trialled with low risk.

Our low-level technology requires the adopter to completely re-design the critical guts of their own products. This not only takes time, it also bears a high risk. Customers embarking on that route cannot risk failure. Accordingly, they will take a lot of time to evaluate the technology, the risks and upsides associated with it, trial it on a few less critical products, etc. All this takes time, and It is unreasonable to get significant penetration of even a single customer in less than about 5 years.

So, it’s the wrong place for a get-rich-fast play. But understanding that takes more technical insight than Steve will ever have, and executing it requires more patience then he could possibly muster. And, at the time, I didn’t have enough understanding of business realities to see this.

What this also implies is that for a company such as OK Labs, it is essential that the person in control has a good understanding of technology (ours as well as the customers’). This is not the place for an MBA CEO (and Steve is a far cry from an MBA anyway). Business sense is importance (and I don’t claim I’ve got enough of it), but in the high-tech company, the technologist must be in control. This is probably the most important general lesson.

Personally I learnt that I should have trusted my instincts better. While not trained for the business environment, the sceptical-by-default approach that is the core to success in research (and which I am actively baking into my students) serves one well beyond direct technical issues. The challenge is, of course, that people not used to it can easily mistake it as negativity – particularly people who are not trained for or incapable of analysing a situation logically.

I’ve learnt that, when all a person says about stuff you understand well is clearly all bullshit, then there’s a high probability that everything else they say is all bullshit too. I should have assumed that, but I gave the benefit of the doubt for far too long.

As mentioned earlier, I also learnt that it was a big mistake to be a part-timer at the company. This could have worked (and could potentially be quite powerful) if the CEO was highly capable, and there was a high degree of mutual trust and respect and we were aligned on the goals. But I wasn’t in that situation, unfortunately, and my part-time status allowed me to be sidelined.

Finally, I always believed that ethics are important, in research as well as in business. The OK experience confirms that to me. Screwing staff, partners and customers may produce some short-term success, but will bite you in the end.


© 2014 by Gernot Heiser. All rights reserved.Permission granted for verbatim reproduction, provided the reproduction is of the complete, unmodified text, is not made for commercial gain, and this copyright note is included in full. Fair-use abstracting permitted.

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5 Comments
  1. Rupert permalink

    Thanks for writing all these blogs – I really enjoyed reading them. Fascinating.

  2. Carlos permalink

    Being there from the early days, I can say that this account is accurate and true. And that’s what makes it even sadder.
    Nevertheless, I learned a lot of what-not-to-do with Steve and his clone(s).

  3. Kitty permalink

    What a fascinating writeup! I have heard so much about OK Labs from friends who ended up working there (but never knew the whole story) and I still have fond memories of being one of Gernot’s student in his advanced operating systems class. It seems crazy to have a CEO who did not understand the product he is trying to sell! It would be fascinating to see what was in the business plan for OK Labs. Gernot – good luck to your next venture!

  4. Ding permalink

    Fascinating story and incredibly insightful. Thanks for sharing Gernot!

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  1. OK Labs Story (9): The End Game | microkerneldude

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