Tim Cook, Apple’s CEO, recently gave us some more Steve Jobs nuggets of wisdom courtesy of the All Things Digital D10 conference this past week. The one that resonated with me was that it was imperative to “own the key underlying technologies” of the business you are in. It’s why Apple created iTunes when there was Napster, why they are trying to build a music social network, and why they are dumping google maps for their own proprietary map product.
As a startup CEO, it’s often tempting to simply adopt the technology platforms of others to build your business. One of the most amazing success stories using this technique is Mint.com – having licensed the Yodlee online banking back end and dressing it up with a slick UI. They sold the business for $170M to Intuit. Good strategy, right? No.
To be clear, I’m no Apple fanboy. I own an android phone, and I’m the only guy in my office still running a windows machine, but I couldn’t agree more with Steve Jobs on this one. At the end of the day, every business is going to be defined, in part, by the technology they use. And if you use someone elses technology, you will never have a true tech advantage over your competitors. And if the technology is core to your business, you’d better own the technology and constantly improve it, customize it for your business, and train your team on how to get the most out of it. That is where you will find your competitive advantage.
I am not saying you need to own ALL of the technology that makes your business work. In fact, there are some areas where you do not want to own technology. Specifically around infrastructure and hosting. For this technology, let the engineers at Amazon figure out how to scale your infrastructure. They will without a doubt be able to do it for less money and less headache than if you did it yourself. Own the technology that is core, and outsource what isn’t. What Jobs said isn’t rocket science. And most tech companies get this.
But there are still billion dollar industries that don’t. I know firsthand because I see it every day in the real estate industry. It’s shocking to me how billion dollar real estate brokerages are outsourcing nearly all of their technology. Whether it is their CRM, their website, their lead generation or their advertising solutions, nearly all of them either use vendors that also work with their competitors, or have had their tech built by an outside third party.
I know that having great technology is not the only way to succeed in real estate. I get that it’s also about the team. However, as Inman News reported earlier this year, the best performers are attracted to the companies with the best technology. And it’s not just because they like shiny things – it’s because it generates business and establishes a competitive advantage. So if you are trying to build the best business you can, be like Apple; own your key technology, and make it great.