Estimated reading time: 11 minutes

Your technology is NOT your primary asset. Unless your company is in FAANG or your CEO’s world president, other teams are bigger assets. Your people and your networks are your true assets. An AI-driven world will make the ‘other teams’ even more important. It’s all about the people in the end.

I’m in Kathmandu for the winter. I’m at the home of a friend who’s several years younger…the last time I saw him a decade and half ago, he was a short, skinny child. Now he runs ‘some company’, his sister – also my friend and former classmate – tells me. I’ve waited for him for over two hours, he’s been rushing all over town apparently. The sister tells me she barely sees him anymore despite living in the same house. I’ve overstayed my stay by three hours this point. I shuffle around, ready to leave. Dogs bark downstairs, he’s here!

He’s not the young skinny dude I remember anymore. And apparently quite the businessman. He’s the founding CEO of a software company that sells to industrial clients. He’s taking calls throughout our conversation. He started the company right after college, turned his college research into a product, he tells me. Three years later, he has four dozen hardware and software engineers working for him. He has saturated the Nepali industrial base, and is making rapid inroads into the Indian market, I’m told. “I’m looking to get into South East Asia, that’s where all the new industries are, and they’re looking for innovative products to be more efficient,” he says to me.

Because he’s so busy, our conversation is rapid-fire and intense.

In his niche of industrial software, there’s two major vendors, he says. One’s a German company, and the other is based in Japan. Both are valued in hundreds of millions of US dollars. He explains what his exact niche is. I tell him he could probably reach a good proportion of his competitors’ valuation in a decade. He nods. He gives me a number, a round, chunky annual recurring revenue (ARR) number. And a growth rate quite comfortably in three digits. I meant ‘valuation in a decade’ as an encouragement. I understand a decade is a conservative estimate, even allowing for slower growth.

Kathmandu isn’t a great place to run a small business. Even if you do well – specially if you do well – you’re in deep trouble. Like spring mushroom, competitors will shoot up within months of your success, with no regard or understanding of total addressable market size. Nine months later, your customers are demanding you pay them. I joke, but competition gets cut-throat and wipes out any profits that might have been re-invested.

I know friends and family who opened internet cafes in the early-mid 2000’s. They saw the prices drop 70% in 3 years. The same thing happened to cheap 99 Rupee stores in early 2010’s, and cheap laptop vendors in mid 2010’s. Burger restaurants that popped up in late 2010’s suffered similar fate. It’s bubble tea joints for the mid 2020’s. I noted 9 bubble tea places on same 200-feet stretch in Durbar Square in Kathmandu, earlier in December. I counted¹. If you don’t have a moat, you better sell all you can ASAP. Because they’re coming for you, and they’re coming fast. Take your stash, and jump into the next trend before anyone figures out what’s up. That’s the lifecycle of retail businesses in Kathmandu.

Software industry is different, but not as much as one might imagine. In 2017, a friend told me there were a handful of software consulting companies who could do decent contract work. She tells me it’s now a few dozen. And they can each rustle up a couple dozen senior software engineers should the need arise. They’re all competing with each other, gunning for the same customers. They don’t have expansive customer networks or business development teams like larger Indian consulting companies do. Either they must spend big bucks to buy leads from American companies and take big swings on making large sales. Or they can take the smaller, less risky local-ish contracts. They don’t have the capital or stamina for the former. Thus, the feeding frenzy of small sharks going after small fish.

With that in mind, I ask my friend how he’s protecting his business. He is calm. He says he doesn’t have to worry about the competition at all. He’s got a tight network of sales agents in India and S.E Asia who he has worked with for many years. The end-customers trust them, and they trust him. They charge the end customers a multiple of what he charges them, but he’s never had to worry about sales. He’s growing at the absolute limit he can maintain. Eventually, one day, he’ll release direct-to-customer product and increase his margins, he tells me. But until then, it’s all his to take as far as the eye can see.

“If five really smart Ph.D’s got together and worked for six months, they’d come up with something better,” he admits. “But they don’t know the customers. They don’t know what they want. They don’t know how to talk to customers. They don’t know the organizational politics in these companies. I do. My agents do, “ he tells me. “The software is just the product I’m selling. But my biggest assets are my people. It’s my sales agents, and the people I trust to keep the agents on the line. Without them, I don’t make money, it’s all just a bunch of hardware and code sitting in a room.”

I’m deeply, deeply impressed. We plan on meeting again, but he’s too busy expanding into Vietnam to meet.

There’s this adage No one ever got fired for buying IBM. Engineers see it as proof of managerial dysfunction. They worked the managers, that’s how they sold the shit products, goes the grumpy rumble. Let’s that around. IBM was ‘somehow’ making boatloads of money despite making (supposedly) awful software. Clearly the customer was okay paying money for something beyond the software. Why?

Because they were so good with people!

It wasn’t, in the end, the bits and bobs and fancy algorithms and cutesy software Easter Eggs the customers cared for. They were being sold on the network, that’s how good the sales and business development folks were! Pity that poor software company that must have made much better software, but lost out on the contracts! How mad they must have been! The lesson to take away from the IBM example is not that management is awful. It’s that IBM’s business development (BD) and sales must have been really great, and we must aspire to go in that direction!

There’s an outrageous, ridiculous “Robert California” quote from tv show The Office (US). He says there’s no such thing as a product². It’s a comical exaggeration, based on a germ of truth. The product matters, but so does everything else. You’re selling for organizational politics, and personal preferences, as much as a technical suitability.

And that’s why people matter so much. Your product team understands your customers before, and as you develop your app. Your sales, marketing and business dev folks are selling to the people, to their actual needs. Unlike what engineers think, customers are often not looking for better technical specifications! Without the ‘support staff’ (hah!), the engineers are sitting on a bunch of files on their computer. The whole business is people business!

But NO, an engineer will object, that’s unfair! I’ve worked so hard on perfecting this masterpiece! People want it! And with genAI and LLM’s, software development will be so much quicker. The customers will get even better software! The ‘technical’ part of the stack will eventually win! Everything else will be updated!

Uh oh. Not so fast!

Yes. Software development is going to get faster. It’ll probably get easier. Customer expectations will increase. Software will look more like a commodity. More people will be able to get further, quicker. You sell a subscription service for 4000% profit, three months later there’s a dozen ai-assisted competitors targeting only 50% margin for themselves.

Many more people will find what it feels like to own a Bubble tea shop in Kathmandu in 2024.

But YOU will be better equipped!

You will know what to do. Create a tight network of marketers, product managers, researchers, and business developers. Tap into people’s networks. Understand their real needs. Understand that technology is just a way to solve customer problems. The winner in the mad dash shark-infested waters will be one with strong social networks (in the traditional sense) and customer understanding. The technology will be a sideshow. It won’t be an asset, the centerpiece, just a tool of achieving customer needs.