Saturday Jul 21, 2007

How can you tell when a company has arrived?

Many times I ask myself how companies define success? For most of the public companies, the share price is a direct reflection of their success. Generating cash, market capitalization or the dividend a company pays are other metrics that demonstrate success. I get this, however all of the above sound very "old school". 

How about when the name of the company becomes a verb (e.g. The American Heritage® Dictionary of the English Language, has the following definition: google)? How about being featured on the "desktop" of the hottest technology device of 2007 (of course I am referring to Apple's iPhone)? YouTube, is the company I am talking about. It's not that the iPhone would have needed a momentum boost and thus the association with YouTube, but when you've become an icon of popular culture it becomes natural for vendors to want to be associated with success (or the perception of success).

In the web 2.0 era, companies become successful and part of the popular culture within months. The question is whether it will last? The trend, for most of the social networking companies: YouTube, Flickr, Facebook, MySpace, seems to be an acquisition by established companies that are drooling over the number of users or web traffic these companies claim. Another question is whether the definition of success has changed? Many of the social networking companies have not been in business long enough to prove themselves with the investment community, build a track record, etc. It seems these companies are different than the plethora that was part of the late nineties bubble. Their biggest asset has been the adoption by the average Joe.

I can only conclude that the way we measure a company's success has been redefined. Here is a feeble attempt to quantify it:

  • The company name becomes verb
    • google
  • The company is in the business of saving people time, or make it more pleasurable
    • apple (iPod, iPhone)
  • Anything to do with social networking
    • myspace, flickr, facebook, youtube
If you have any comments, let me know and I'll be happy to expand the list.



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