The Hacker Way

Those damn kids!  Since ancient times, it’s been fashionable for people of a certain age to complain their era’s youth. Some things never change.

When I was born in the era of the Summer of Love, hippies were creating the counterculture.  My generation of latchkey kids then became “slackers.”  Today, the Millennials have caused so much confusion that they have inspired an entire cottage industry of consultants to instruct executives on how to deal with them.

Yet each successive generation also advances technology and business practice.  The hippies spawned the computer revolution and Generation X will be forever associated with rise of the Web.  The Millennials, most probably, will be remembered as the generation that widely embraced the Hacker Way.  Their contribution will likely be the greatest of all.

The Rise and Fall of Shareholder Value

On August 12, 1981, at the height of a severe recession, Jack Welch got up to speak to analysts at New York’s tony Pierre Hotel.  His message was that his company, General Electric, would focus their efforts on providing consistent returns.  The event is generally considered the moment that the shareholder value movement was born.

The strategy was monumentally successful.  GE became the world’s most admired and most valuable company and its stock rose an astronomical 4000% during his tenure. Welch himself became a celebrity CEO, mentoring and inspiring a new breed of corporate executives.  Shareholder value became the corporate mantra for a generation.

So it was somewhat curious, to say the least, that the prospectus for Google’s IPO included a letter in which the founders pledged to ignore investor concerns about consistent earnings.  Facebook’s prospectus had a similar section entitled The Hacker Way, which also stated that the primary purpose of the company was not profit, but a social mission.

The worm has turned to such an extent that even Welch himself has renounced the idea he came to personify, saying that “On the face of it, shareholder value is the dumbest idea in the world” and “Shareholder value is a result, not a strategy . . . Your main constituencies are your employees, your customers and your products.”

If the pursuit of profit is not a valid guide for running a business, what is?

The Curious Case of Jon Kleinberg

At this point, most people know the story of the Google guys.  Two brilliant young graduate students invent an algorithm, PageRank, that created a search engine.  It became such a roaring success that it nearly crashed Stanford’s servers.  A friend introduced them to Andy Bechtolsheim, who wrote them a check to start a business.

What is much less known is the story of Jon Kleinberg, who developed a similar (and many, including John Battelle, believe to be superior) algorithm called HITS .  He, however, never started a company and you won’t find his face gracing the cover of business magazines.

On the other hand, he’s not exactly been relegated to obscurity either.  He has won the Macarthur genius grant and the Nevanlinna Prize, equivalent to a Fields Medal for computer science.  He has published two definitive textbooks, one on algorithm design and another on social networks.  He is an immensely popular professor at Cornell, winning numerous awards for teaching.

So while not a billionaire, I imagine Kleinberg has an extremely comfortable (except, of course, for the nasty weather in Ithaca) and rewarding life, earning a good salary, generous research grants and, perhaps most importantly, the freedom to tackle the most interesting computational problems.

Hacker Meets Raider

A particularly telling example of the generational divide happened not in the boardroom, but in a federal prison, when the notorious trader Ivan Boesky met super hacker Kevin Mitnick one day in the yard.  As Mitnick recounted in his memoir, Ghost in the Wires, the exchange went something like this:

Boesky: “Hey Mitnick, How much money money did you make hacking?”

Mitnick: “I didn’t do it for the money, I did it for the entertainment.”

Boesky: “You’re in prison and you didn’t make any money.  Isn’t that stupid?

Point taken.  However, it’s hard not to recognize a certain role reversal.  Before his arrest, Boesky basked in the limelight.  He was hailed as a financial genius and was invited to speak at auspicious events (one of which became the inspiration for Gordon Gecko). When his crimes were uncovered, he was ruined; not only financially, but socially.

Mitnick, on the other hand, has become a rock star since leaving prison, working as a security consultant, writing books and hanging out with Steve Wozniak.  Now, he is the one who is hailed as a genius and given lucrative speaking engagements.  While financial crimes reek of excessive greed, we admire the moxie of hackers.

Why is that?

The Quest of Questing

It’s been a long held notion that compensation holds the key to motivation and motivation holds the key to success, but then what are we to make of Kleinberg and Mitnick?

As I wrote about in an earlier post, the strategy game has changed.  Whereas before, we thought in terms of poker or chess, the new breed thinks in terms of video games, where you never actually win, but are on a continued quest.  To get an idea what I’m talking about, take a closer look at Zuckerberg’s letter:

Simply put: we don’t build services to make money; we make money to build better services. And we think this is a good way to build something. These days I think more and more people want to use services from companies that believe in something beyond simply maximizing profits.

In other words, don’t bother him, he’s questing.  Much like Kleinberg and Mitnick, it’s the challenge he seeks.  He wants to push limits, solve problems and, above all else, create.  To paraphrase G.H. Hardy, his desire is to make a contribution that differs in degree, but not in kind, from that of others strive to make a difference in the world.

It is a sign of the times, as well as the generational divide, that investors looking to make a quick buck didn’t take him at his word.

Hacking the Future

The key to understanding this new generation, to be frank, is understanding that they are better than we are.  While earlier generations followed the rules and we sought to rebel against them, the Millennials want to change the rules beyond all recognition; to, for lack of a better term, cheat the system in order to make the world a better place.

They are much more purpose driven, more collaborative and, it must be said, much smarter than we are (according to the Flynn effect, about 10% smarter than those born 30 years earlier).  While we looked to position and affluence for status, they seek achievement.

While we sought to corner the market on scarcity, they’re focused on creating abundance, while we fret about gas prices, they’re driving towards a clean energy future.  Most of all, they are hacking: Iterating rather than planning,  sharing rather hoarding, building skills rather than resumes and trusting in themselves rather than authority.

If you can’t spot the sucker, then you are the sucker.

– Greg