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A product with 95% market share needs engineering a lot less than it needs sales/finance. As engineers, we see this as "business guys screwing it all up." But t

A product with 95% market share needs engineering a lot less than it needs sales/finance. As engineers, we see this as "business guys screwing it all up." But these companies are acting rationally give the environment they are in. Why the focus on sales? Because at that size of a market share the features of the product matter less. Adding feature X is very unlikely to get you more share. Additionally, the product has so much inertia that it can become bad, and you won't tank over night. The only way a company in that market can continue to grow revenue and profits is to reduce costs and increase sales. Hence the focus on sales guys who can talk the talk, bundle software and discount, and do everything to eck out more share. Meanwhile finance guys come in and look to see what they can trim, and often that's engineering. Now we can argue about the net effects that the enormous pressure to keep growing can cause. Or about how the stock market and C-level executive comp structure has promoted short term thinking over long term strategy (Just look at Michael Dell. He had to literally take his company out of the public markets to do the long term work that needed to be done to save Dell). These companies are acting rationally give the environment they are in. The environment is just screwed up. I don't fault Quark for being stupid. Instead I simple recognize that they were not exceptional enough to free themselves from this cycle. Very few do.

rayiner 13y ago
Isn't that a textbook example of the dangers of short term thinking? In any engineering field, it's irrational to think that the industry won't shift underneath you in a way that makes your 95% market share irrelevant. And when the market does shift, the incumbent that fired all its engineers will be easy pickings for the new breed of competitors. It's not just a tech industry issue either. When the U.S. auto industry was ascendent, Japan had a reputation for poor quality products and South Korea wasn't even on the scene yet. Well, Japan kept improving the technology and with that the quality, and not only caught up but blew past Detroit and the automakers did not even see it coming. U.S. automakers have spent the last few decades investing in the improvements Japanese companies had the foresight to be investing in all along. It's not "rational" for companies to mortgage their futures to goose profits in the near term. It might be "rational" for executives to do so, but not for corporations as a whole.
- galago 13y ago
  Yeah, this is what happened. I supported Quark users at the time, and everyone was just surprised and confused. In contemporary terms, it would be as if Zynga didn't ship Farmville for iOS 7 and everyone had to switch to something else. Maybe they made a weird bet that customers wouldn't adopt OSX, or migrate at a decades long WinXP-pace. Since Apple binds the OS to hardware, it happened in (only) about five years. Running Quark 4 and 5 under Classic was ugly and problematic. When Quark 6 finally shipped it was so buggy that it couldn't be deployed. By the time Quark 7 arrived, most people had switched.
ForHackernews 13y ago
> The only way a company in that market can continue to grow revenue and profits is to reduce costs and increase sales. Hence the focus on sales guys who can talk the talk, bundle software and discount, and do everything to eck out more share. Meanwhile finance guys come in and look to see what they can trim, and often that's engineering. Honest question from a non-businessperson: Why do you have to keep growing revenue and profits? Like, at some point, if you're making fucktons of money, can't you just focus on guaranteeing you continue making fucktons of money? Isn't it inherently unsustainable to have to be making even larger fucktons? If I'm traveling someplace, I accelerate until I'm going as fast as I want to be going, and then I don't have to keep accelerating anymore more.
- dreamfactory2 13y ago
  At that size you need to innovate to even stand still as the environment is changing around you, and this flux only gets magnified by your market share.
- icambron 13y ago
  The first question here is why there's a maximum speed you would like to be going. If you keep accelerating, you'll get there even faster! It's also not inherently unsustainable to make ever increasing amounts of money, because the economy can grow with you; it's not a zero sum game. That said, you're right that a lot of companies totally bone themselves trying to grow unsustainably, letting the stability of their company (like customer happiness, employee retention, that sort of thing) fall apart in the meantime, and then collapse under their own weight. While I think the parent is wrong about how it applies to Quark, they're quite right that the incentives for short-term growth are driven by how the stock market works. It may have even tilted our whole business culture to worship growth regardless of context. Here's how it works. Let's assume a simplified version of the stock market in which stocks are priced based on the current performance of the company [1]. So let's say I buy stock at IBM today for $188/share. IBM makes fucktons of money, which is great for IBM but useless to me. It's useless to me because that's what determined the price in the first place, so if it keeps on making the same number of fucktons then the price is going to stay at $188 and my money is just sitting out there doing nothing for me. What I need to happen is for the stock to be worth, say $200 so I can sell it and make some money. So I need IBM to grow. As much as possible. In fact, it's the only thing I care about, because after I sell the stock I don't care what happens to the company. So I vote to put people on the board who want to grow the company and they hire executives with that mandate (who are anyway paid in part with stock and thus have the same incentive) and the whole corporate culture aspires to growth at all costs. If they said "well guys, this year growth isn't really going to work and will probably just sink the ship, so we're going to spend our time making our customers happy and pocketing our billions in profits" everyone would sell the stock, the board would be fired, etc. So that's why you have to grow. [2] [1] That's not really how it works; expectations of future growth are baked into the current price. Sort of. The relationship between a company's performance, growth, dividends, and the overall economy is complicated, but it doesn't really change the point much, which is that as an investor, you want the stock price to go up, and to do that, you need as much growth as possible. [2] Following on from [1], there's the argument that in a world with perfect information and rational actors, if the expected future growth is priced in, then sacrificing long term sustainability for short term growth wouldn't raise the price. But we don't live in that world.
icambron 13y ago
Focus on selling what, and to whom? Remember, they were selling one-time licenses, not subscriptions, so 95% market share means 95% of users had their product, not that they sold something to 95% of them that year. One of the biggest challenges about being a dominant player is actually that you mostly compete against the previous version of your products. "Why should I upgrade? This isn't any better than the edition I bought last year." So the business isn't fighting to get that last 5% of the share; that only allows it to grow a measly 5%. Instead, it has to focus very strongly on finding ways to make its existing customer base give it more money. And you do that by improving your products and services so that you can get existing customers to buy more of them. It's the only lever you really have, so doing almost anything else is crazy. And here's a company failing to even address existing concerns with its products, so it's hard to construct a story on how it was acting rationally. It's not even clear how much money it was even making; how well did those new versions sell, given that they didn't seem to improve much? So I submit that even on a short-term basis, they weren't acting rationally at all. Not to mention the long-term basis. You should note that Quark was privately held, so the stuff about the stock market doesn't apply here. One of the big advantages of being private is that you can play the long game. But they weren't! If you're not making your customers happy, someone else will. It's easy to blame the environment, but the environment was actually giving them all kinds of feedback about what they should be doing and it's the environment that allowed a competitor to come in and eat their lunch.
pwthornton 13y ago
You could hire more sales people to try to eek out a few more sales, or you could spend your engineering money on diversifying your product line. XPress is essentially Quark. So much so that when people say Quark they mean XPress. The company should have looked to grow into new markets, rather than eek out a few more sales in a saturated one. In addition, while not sexy, at some point you need to modernize your software, and money should have been spent there instead of on sales. I switched from Quark to InDesign because of OS X. It's the OS I used, and Quark was only one program that I used, and I was never going to use OS 9 again. We're not talking about writing a native Cocoa app here, but just porting over a Carbon app. Quark couldn't even be bothered to give us a crappy Carbon app like Microsoft did with Word and Adobe did with Photoshop.

rayiner 13y ago

Isn't that a textbook example of the dangers of short term thinking? In any engineering field, it's irrational to think that the industry won't shift underneath you in a way that makes your 95% market share irrelevant. And when the market does shift, the incumbent that fired all its engineers will be easy pickings for the new breed of competitors. It's not just a tech industry issue either. When the U.S. auto industry was ascendent, Japan had a reputation for poor quality products and South Korea wasn't even on the scene yet. Well, Japan kept improving the technology and with that the quality, and not only caught up but blew past Detroit and the automakers did not even see it coming. U.S. automakers have spent the last few decades investing in the improvements Japanese companies had the foresight to be investing in all along. It's not "rational" for companies to mortgage their futures to goose profits in the near term. It might be "rational" for executives to do so, but not for corporations as a whole.

galago 13y ago
Yeah, this is what happened. I supported Quark users at the time, and everyone was just surprised and confused. In contemporary terms, it would be as if Zynga didn't ship Farmville for iOS 7 and everyone had to switch to something else. Maybe they made a weird bet that customers wouldn't adopt OSX, or migrate at a decades long WinXP-pace. Since Apple binds the OS to hardware, it happened in (only) about five years. Running Quark 4 and 5 under Classic was ugly and problematic. When Quark 6 finally shipped it was so buggy that it couldn't be deployed. By the time Quark 7 arrived, most people had switched.

ForHackernews 13y ago

> The only way a company in that market can continue to grow revenue and profits is to reduce costs and increase sales. Hence the focus on sales guys who can talk the talk, bundle software and discount, and do everything to eck out more share. Meanwhile finance guys come in and look to see what they can trim, and often that's engineering. Honest question from a non-businessperson: Why do you have to keep growing revenue and profits? Like, at some point, if you're making fucktons of money, can't you just focus on guaranteeing you continue making fucktons of money? Isn't it inherently unsustainable to have to be making even larger fucktons? If I'm traveling someplace, I accelerate until I'm going as fast as I want to be going, and then I don't have to keep accelerating anymore more.

dreamfactory2 13y ago
At that size you need to innovate to even stand still as the environment is changing around you, and this flux only gets magnified by your market share.
icambron 13y ago
The first question here is why there's a maximum speed you would like to be going. If you keep accelerating, you'll get there even faster! It's also not inherently unsustainable to make ever increasing amounts of money, because the economy can grow with you; it's not a zero sum game. That said, you're right that a lot of companies totally bone themselves trying to grow unsustainably, letting the stability of their company (like customer happiness, employee retention, that sort of thing) fall apart in the meantime, and then collapse under their own weight. While I think the parent is wrong about how it applies to Quark, they're quite right that the incentives for short-term growth are driven by how the stock market works. It may have even tilted our whole business culture to worship growth regardless of context. Here's how it works. Let's assume a simplified version of the stock market in which stocks are priced based on the current performance of the company [1]. So let's say I buy stock at IBM today for $188/share. IBM makes fucktons of money, which is great for IBM but useless to me. It's useless to me because that's what determined the price in the first place, so if it keeps on making the same number of fucktons then the price is going to stay at $188 and my money is just sitting out there doing nothing for me. What I need to happen is for the stock to be worth, say $200 so I can sell it and make some money. So I need IBM to grow. As much as possible. In fact, it's the only thing I care about, because after I sell the stock I don't care what happens to the company. So I vote to put people on the board who want to grow the company and they hire executives with that mandate (who are anyway paid in part with stock and thus have the same incentive) and the whole corporate culture aspires to growth at all costs. If they said "well guys, this year growth isn't really going to work and will probably just sink the ship, so we're going to spend our time making our customers happy and pocketing our billions in profits" everyone would sell the stock, the board would be fired, etc. So that's why you have to grow. [2] [1] That's not really how it works; expectations of future growth are baked into the current price. Sort of. The relationship between a company's performance, growth, dividends, and the overall economy is complicated, but it doesn't really change the point much, which is that as an investor, you want the stock price to go up, and to do that, you need as much growth as possible. [2] Following on from [1], there's the argument that in a world with perfect information and rational actors, if the expected future growth is priced in, then sacrificing long term sustainability for short term growth wouldn't raise the price. But we don't live in that world.

icambron 13y ago

Focus on selling what, and to whom? Remember, they were selling one-time licenses, not subscriptions, so 95% market share means 95% of users had their product, not that they sold something to 95% of them that year. One of the biggest challenges about being a dominant player is actually that you mostly compete against the previous version of your products. "Why should I upgrade? This isn't any better than the edition I bought last year." So the business isn't fighting to get that last 5% of the share; that only allows it to grow a measly 5%. Instead, it has to focus very strongly on finding ways to make its existing customer base give it more money. And you do that by improving your products and services so that you can get existing customers to buy more of them. It's the only lever you really have, so doing almost anything else is crazy. And here's a company failing to even address existing concerns with its products, so it's hard to construct a story on how it was acting rationally. It's not even clear how much money it was even making; how well did those new versions sell, given that they didn't seem to improve much? So I submit that even on a short-term basis, they weren't acting rationally at all. Not to mention the long-term basis. You should note that Quark was privately held, so the stuff about the stock market doesn't apply here. One of the big advantages of being private is that you can play the long game. But they weren't! If you're not making your customers happy, someone else will. It's easy to blame the environment, but the environment was actually giving them all kinds of feedback about what they should be doing and it's the environment that allowed a competitor to come in and eat their lunch.

pwthornton 13y ago

You could hire more sales people to try to eek out a few more sales, or you could spend your engineering money on diversifying your product line. XPress is essentially Quark. So much so that when people say Quark they mean XPress. The company should have looked to grow into new markets, rather than eek out a few more sales in a saturated one. In addition, while not sexy, at some point you need to modernize your software, and money should have been spent there instead of on sales. I switched from Quark to InDesign because of OS X. It's the OS I used, and Quark was only one program that I used, and I was never going to use OS 9 again. We're not talking about writing a native Cocoa app here, but just porting over a Carbon app. Quark couldn't even be bothered to give us a crappy Carbon app like Microsoft did with Word and Adobe did with Photoshop.