Innovation Denied With Billions Lost: What Brian Acton & WhatsApp Teach Us About Innovation, Leadership & Hiring Practices

By James Santagata
Principal Consultant, SiliconEdge

Well, if you haven't heard the news yet the Valley M&A buying spree continues unabated, this time with Facebook snapping up mobile messaging company WhatsApp for a hefty $16 to $19 Billion USD (depending on which news source you reference).

• Facebook Enters $16 Billion Deal for WhatsApp (New York Times)
  
• Facebook Buying WhatsApp For $19B, Will Keep The Messaging Service Independent (Tech Crunch)
  

There are many lessons and takeaways from this acquisition but allow me to focus on just a few.

1. Ignore The Cheerleader Tech Press:
WhosWhat? WhatsWho? WhatsApp! Personally, I wasn't aware of WhatsApp before this acquisition as I don't use the app and I'm mostly a user of Viber and Skype so I can be forgiven. However, within the Silicon Valley Cheerleader Press, especially Tech "Apple-Twitter-Quora" Crunch and even Pando Monthly and VentureBeat, I'm sorry but even as frequent if not habitual reader, I just didn't see the coverage. How could this be, how could they miss it, a huge multibillion dollar company? 

The answer is simple: Why would you expect the Cheerleader Tech Press to get it?

2. Companies Can't Pick Top Talent: 
It turns out that before co-founding WhatsApp, Brian Acton formerly worked at Yahoo in a quite senior / important position. After over a decade at Yahoo, he left to take some time off and then applied for a new position landing interviews with at least a few major valley tech companies such as Facebook and Twitter. However, he was rejected at both. Perhaps these rejections were due to Action being incompetent. Or perhaps Action interviewed poorly and no communication skills? Or is it perhaps more likely that these companies or at least the hiring authorities at these companies either (a) don't know how to select top-shelf talent and/or (b) allow office politics and threats to an incumbent employee's ego or career path to dictate who gets hired and who doesn't? Examples are where a senior person with top skills scares a younger or less experienced manager from making the hire -- doubt that? It happens all the time. All the time. And it costs companies millions if not billions per year.

Oh and it makes you wonder, if Facebook had hired Acton, would they have gotten him to build WhatsApp for a lot less than the $19 Billion USD they paid for it? Or would WhatsApp never be built and fall into the "Innovation Lost" point below?

3. Leaderless Rather Than Leadership and Innovation Lost:
Perhaps the biggest lesson is why Yahoo, which had him onboard for over 10 years didn't extract this value, this innovation  It's possible that Yahoo was simply so completely leaderless and rudderless that they didn't even know what to have him do. Or perhaps he tried to be innovative and got his hands slapped.  Whatever the reason, it's clear that Acton had some innovative ideas inside of him and more importantly he had the confidence and motivate to start and execute. But it's clearly not just a shame but a multi-billion dollar tragedy that Yahoo had him on the payroll all those years, had him suited up and yet would let him get in the game and swing for the fences.

If you can create a company with the proper culture that has strong leadership, embraces innovation, empowers employees and hires top talent or solid talent, especially talent that either scares other firms (because it's too good) or is good inside but is a bit dinged on the outside, you're firm will do very, very well.


http://techcrunch.com/2014/02/19/how-things-change/