firms in Silicon Valley for each decade of the last sixty years. It’s a rare
firm that makes the list twice.
A more likely fate is that of Yahoo—a one-time superstar sold for a
fraction of its value a decade ago. Yahoo! (that exclamation point now
seems more ironic than descriptive) is stuck in the age of display
advertising—and has demonstrated no evidence it is able to do
anything else. With a pragmatist running the firm, it could have aged
gracefully, reducing the number of employees and divesting noncore
assets, producing gobs of cash for loyal investors. When a profitable
firm starts reducing expenses versus reinvesting in growth, it can
become massively cash generative. Oath is now the property of an old-
economy firm, a gray if not a white flag.
Botox
People who received a great deal of attention for their looks at a young
age are more likely to opt for cosmetic procedures when older. It’s the
same in business. Firms that garnered most of their confidence
(valuation) from the fact they were at one time “hot” opt for the
equivalent of expensive Botox procedures and eyebrow lifts—
acquisition of dubious start-ups (like Yahoo’s billion-dollar bet on
Tumblr), delusional strategies in mobile computing, hiring expensive
talent from younger firms who, like gigolos, take their money and
quickly move on—in the doomed hope of recapturing their lost youth.
The result is a freakish-looking internet company hopped up on Botox
and fillers. Firms in old-economy or niche sectors seem to have an
easier time coming to grips with aging and aren’t as susceptible to the
kind of midlife crises that are expensive and create a great deal of
misery for stakeholders.
It’s difficult to find pragmatists to run these companies at the end
of the alphabet, but they are out there. They can be activist
shareholders or partners in private equity firms who have seen firms
die and realize that there are worse things than death—specifically a
slow death where shareholders are bankrupted trying to give PopPop
just one more day. Pragmatists can make unemotional, even cold,