Learnings from the GAFA hearings to product people

11 min readAug 24, 2020

While COVID-19 was changing the world and the way we do business forever, another incident was rocking the technology boat pretty hard.

On July 29th, lawmakers were set to face the chief executives of the tech industry’s four most powerful players: Google, Amazon, Facebook, and Apple (a.k.a. “GAFA”). The US Congress gathered more than 1 million documents to support his case against the tech giants accusing them of antitrust and monopolistic behaviour.

Amazon’s Jeff Bezos, Facebook’s Mark Zuckerberg, Apple’s Tim Cook, and Google’s Sundar Pichai all laid out their defense strategies in a public hearing that provided tons of food for thought.

Anyhow, this article is not about capitalism, free market, antitrust laws, business models, or any other hot topic that has plenty of literature about it and in which I don’t feel comfortable writing about. I do believe that capital has the tendency for concentration and centralization in the hands of richest capitalists and that this systemic issue of the capitalist system has led to a crisis of over-accumulation (as a very famous philosopher explained it 153 years ago). But again, this is not about that.

So, what is this about? It’s a collection of learnings about product strategy.

The documents exposed in the hearings provided several examples of how the leading tech companies do product strategy and planning. Having the chance to see these private conversations is a once-in-a-life-time opportunity.

So, with no further introduction, these are the learnings that I was able to extract after hours of reading the documents.

Learning #1: Be able to identify your point of inflection

In an internal Google memo of 2007, there is a call on “A commitment to reinventing ourselves”. On this point, they expanded:

“Observation: The threat of becoming “our father’s oldsmobile” is very real and, due to the accelerated timeline of the web, it won’t be along the same timelines (i.e. a generation), it will happen in a matter of years. On the whole, we have become too conservative and anti-change. There have been many observations of this trend — tremendous pushback from Googlers on small changes like the more box, resistance to things like left nav because they seem big but not compelling enough, etc.
Remedy/Initiative to address: In order breakthrough this, we have to be comfortable with reinvention and change for changes sake. To do this we need to set aggressive goals around user experience changes -even if the changes made are ultimately mistakes- the beauty of running a service is that we can revert those changes or iterate to something new quickly.”

The first thing that came to my mind when I was reading about the struggles these huge companies were having was “this has Clayton Christensen written all over”.

“(…) the essence of strategic technology management is to identify when the point of inflection on the present technology’s S-curve has been passed, and to identify and develop whatever successor technology rising from below will eventually supplant the present approach. Hence, as depicted by the dotted curve in Figure 2.5, the challenge is to successfully switch technologies at the point where S-curves of old and new intersect. The inability to anticipate new technologies threatening from below and to switch to them in a timely way has often been cited as the cause of failure of established firms and as the source of advantage for entrant or attacking firms.”
Clayton M. Christensen
“The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail”

Figure 2.5 from “The Innovator’s Dilemma” — Clayton M. Christensen

In his thesis, Christensen explains three fundamental lessons:

There is disruptive technology and sustaining technology, and innovation works differently for the two. It’s almost impossible to do well in developing both sustaining and disrupting technology from one source.
When the resources, processes and values of a company don’t match the target market, even the best management won’t help. Market champions are loaded with resources, but have very hardened processes and a fixed set of values, which rarely matches the new target market of a disruptive innovation.
The way market leaders solve the innovator’s dilemma is through equipping independent subsidiaries with what they need. You should accept the limitations of your processes and values. Don’t try to win a regatta with a transatlantic.

Therefore, the challenge is to survive and succeed as a company with a sustaining technology in a field that is extremely disruptive. And as you can imagine, the bigger the company, the harder it gets. To this, Christensen proposes a very simple solution:

Found or acquire a subsidiary company with the right values and processes, equip it with the necessary resources, and let it do its thing.

The moment Mark Zuckerberg felt threatened by Instagram, he didn’t even hesitated on what he had to do:

“These businesses are nascent but the networks established, the brands are already meaningful, and if they grow to a large scale they could be very disruptive to us.”

And then he continued:

“These entrepreneurs don’t want to sell (…), but at a high enough price — like $500m or $1b — they’d have to consider it.”

I believe Zuck identified the point of inflection in the S-curve of his product Facebook and saw how it was being replaced by Instagram. There was no attempt for discussing how Facebook could evolve to compete with companies like Instagram, because he knew that it was virtually impossible to do so.

If you compare two products like Facebook and Instagram you can easily tell that they are substantially different. They have different mechanics, different audiences, and even different channels of distribution. Instagram challenged the status quo of social networks by proposing an absolute mobile strategy that made everything circle around pictures. And damn they were right.

When confronted by Ebersman (CFO of Facebook at that moment) on what were the reasons to buy competitors, Zuckerberg replied:

“There are network effects around social products and a finite number of different social mechanics to invent. Once someone wins at a specific mechanic, it’s difficult for others to supplant them without doing something different.”

So, from a product strategy perspective, Zuckerberg was doing the right thing. But of course, in the case of Facebook, the dilemma lays in the fact that they have a very dominant position, and therefore its behaviour is exactly the type of anti-competitive acquisition the antitrust laws were designed to prevent.

Again, by no means I’m justifying these huge companies, I’m just trying to unravel the logics behind their decisions.

Learning #2: Fast growth beats all

In the same email thread, Mark Zuckerberg explained:

“One way of looking at this is that what we’re really buying is time. Even if some new competitors springs up, buying Instagram, Path, Foursquare, etc now will give us a year or more to integrate their dynamics before anyone can get close to their scale again. Within that time, if we incorporate the social mechanics they were using, those new products won’t get much traction since we’ll already have their mechanics deployed at scale.”

One of the main worries of Zuckerberg is not only the time to market that would take to any product team in Facebook to build something similar to Instagram, but also the time it would take to reach such scale. The goal is to quickly become the first mover at scale.

So, why this obsession with fast growth?

In an interview by Harvard Business Review, Reid Hoffman, the author of ‘Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies’ answered the question:

“We’re in a networked age. And I don’t mean only the internet. Globalization is a form of network. It adds networks of transport, commerce, payment, and information flows around the world. In such an environment, you have to move faster, because competition from anywhere on the globe may beat you to scale.
Software has a natural affinity with blitzscaling, because the marginal costs of serving any size market are virtually zero. The more that software becomes integral to all industries, the faster things will move. Throw in AI machine learning, and the loops get even faster. So we’re going to see more blitzscaling. Not just a little more, but a lot more.”

Even though I might not completely agree with the philosophy of ‘blitzscaling’ and the implications it has, it would be foolish not to acknowledge that companies that don’t gain momentum quickly tend to die.

On top of this, there is a simple product principle that support this strategy: product shipped earlier is worth more to customers than product shipped at a later time. As Brandon Chu briefly explained in his article ‘Product Management Mental Models for Everyone’, anything that ship faster will automatically produce more customer value.

So, not only the ability to produce software fast but also the ability to quickly scale it and make it available for as many people as possible is definitely a winning strategy.

I know I’m not saying anything groundbreaking, but fast growth is something that most product managers tend to ignore. Product people are usually obsessed with building the perfect product, and the obsession with time to market is something that is usually reserved to upper management and investors. What I’m saying is: if you really care about your customers and their needs, and you trust your solution and want to see it succeed, then you also need to be obsessed with fast growth. Trust me, it’s not only business greed.

Learning #3: Sometimes it’s ok to copy

On a different email thread, Mark Zuckerberg points out how differently the things are being done in China:

“In China there is this strong culture of cloning things quickly and building lots of different products instead of just focusing on one thing at a time. This allows them to plant lots of seeds, and although it yields lower quality products in the short term as they’re cloning and the markets are growing quickly, as markets mature there seems to be less of a gap between the clones and the originals.”

And after enumerating all the features that competitors from China have built in a very short time, he concludes:

“Overall, seeing all this and the pace that new mobile apps seem to be coming out from other companies makes me think we’re moving very slowly.
If we were moving faster, then we might be able to build out more of the social use cases ourselves and prevent our competitors from getting footholds.
(…)
I wonder what we could do to move a lot faster.”

Again, Mark has an obsession with speed but he also starts a discussion that is usually a hot topic within the product community: is copying competitors right or wrong?

Immediately after Mark’s email, an anonymous writer agreed that “Copying is definitely much faster”, but he also added the following:

“(…) There would be costs on this approach in terms of how we are perceived in the industry (copying vs. innovating), our platform strategy (we would scare developers), etc… but the approach is not necessarily a failed business technique (Zynga built a multibillion $ company doing this…)”

In a following email, Mike Schroepfer responded:

“(…) We also need to make sure it is close enough into our core that it makes sense to do.”

And to close this marvellous thread, another anonymous writer pointed out:

“(…) When it comes to UI, we don’t believe “done is better than perfect”.
The WhatsApp UI sucks, but they took the hit on UI to focus on reliable sending and fast growth. Those are arguably the features that win over users, not UI.”

So, what happened here? What they did was to move away from the discussion of right or wrong (probably because it’s a dead end), and what they actually discussed is ‘if we are going to do it, let’s do it right’.

Something that is worth pointing out, even though not many people is willing to accept it, is the fact that in this industry we all copy each other up to one extent. It might be that your strategy is inspired in a book you read, your teams are organised ‘Spotify-like’, your business model is similar to others in your field, or maybe your features are a complete ripoff. Benchmarking or seeing what your competition is doing has always been a fundamental part of every discovery process, and many times this results in finding an optimal solution that somebody else already implemented. This shouldn’t be a taboo.

What is really important here is: if you are going to copy, do it right.

I bet you read it with Edward Norton’s voice 😏

Therefore, these are some of the concepts we can extract from this thread:

Do not copy something that is too far away from your core product.
There are many reasons why not to do that, but mainly because adding to your portfolio a solution of which you don’t fully understand the mechanics might create a problem in the future that is never a priority to solve. That’s how you end up building “The Homer”.
Do not copy something that is at the centre of your core product.
Again, for the same reasons as in the above point, putting at the centre of your product a solution that you don’t fully understand is not a clever idea. What stands at your core has to be also part of your value proposition, what distinguishes you from the rest.
Done is better than perfect, and nothing is faster than copying.
Focus on everything that it’s at your core, and relax on everything that is around. If you are going to copy, do it quick and dirty. Don’t try to reinvent the wheel.
Copying reduces risk but also adds some.
Even though is true that copying a solution that was previously validated might reduce some risk, it also comes with a cost. Not only you are adding something that you don’t fully understand, but you will also lose some credibility from your team or your potential team. Nobody wants to work for a copycat.
Bonus lesson: is paramount to understand what is your core business and what is not. In the conversations between the leaders of these leading players, everyone clearly understands what is core and what is not. They reached a level of maturity were this is not a discussion anymore. This is one of the aspects that makes these companies so efficient when it comes to planning and decision making.

In an interview of 2018, while all the fuzz about Instagram copying Snapchat by adding ‘stories’ was happening, the CEO of Snap Evan Spiegel said that “the one thing Instagram can’t copy is Snapchat’s philosophy”. Although there might be some true on these words, reality is that Snap still isn’t profitable nearly two years after its IPO and it’s struggling with -somehow dishonest- competition.

Conclusion

Abstracting the business model of a company from its product strategy is virtually impossible. I found myself many times leaving the “money decisions” to my CEO. I always felt in my bones it was a mistake but I wrongly thought it was something I didn’t need to take care and that I can just focus on the product. This is just being plain naive. Nothing escapes the dynamics of capitalism and your company lives in an ecosystem of companies ruled by those laws. Not understanding these dynamics will make you an incomplete product person.

Sources:

Learnings from the GAFA hearings to product people

Learning #1: Be able to identify your point of inflection

Learning #2: Fast growth beats all

Learning #3: Sometimes it’s ok to copy

Conclusion

Written by Miguel Carruego