More NewsThe Dot-Com Governance Model

The Dot-Com Governance Model

Every great business has a despot at the top of the org chart. This could be the founding entrepreneur, the rainmaker who becomes his business' image, or a great CEO. Yet, there's an inherent conflict between the way a good businessperson looks at the world, and the way the Internet must be governed, which is by consensus. Politicians see the Internet as a collection of businesses, not a vast collective that must be brought to consensus.

Yesterday I mentioned the idea that consensus rules the Net. It’s not enough to get a majority behind a law because unless the vast majority accepts the idea behind the law (as well as the law itself), you can’t enforce it.

There’s something very much like a marketplace in this. To have transparency and liquidity, everything within the market must be visible, and no one should be immune from the market’s reverses. When you trade a share on the NYSE or NASDAQ, you are assured that everything material to your purchase is public knowledge (that’s transparency), and there will be a ready supply of sellers or buyers (that’s liquidity).

But there’s another style of governance brought to the Internet by all good dot-coms: the controlled dictatorship.

If I’ve learned one great truth in covering business for 22 years, it’s that every great business has a despot at the top of the org chart. This could be the founding entrepreneur, the rainmaker who becomes his business’ image, or a great CEO.

Government by committee just doesn’t work in business. Someone has to be in charge. And that person must have an extraordinary feel for the market, as well as a willingness to act on that feel in order to succeed.

The best entrepreneurs understand the fulcrum on which their entire industry balances, and they direct all their corporate energies toward capturing it. For Bill Gates, it was the operating system, the software at the base of all other software. For Jeff Bezos, it’s fulfillment and delivery; he has placed all the capital Wall Street threw at him toward building systems that move massive numbers of orders to individual households.

This is why neither democracy nor consensus can run a winning corporation. To have a chance of success, a leader’s vision must be followed through good times and bad. These are pretty bad times at Amazon.com but there can be no turning back. A revolt by the board or investors would leave Amazon shareholders with no vision at all. So the high wire act will continue, as it should.

We have boards and other checks on entrepreneurs because despotism can also be a cover for knavery. If there was no vision, or if the vision was flawed, you get charts like that of Dr. Koop. So investors are told not to trust any corporate despot too much, to spread their money around to different kinds of businesses, even to different kinds of financial instruments.

That’s not the way business works. Internet businesses work on Mark Twain’s old maxim, “Put all your eggs in one basket and watch that basket.”

I mention all this today because there’s an inherent conflict between the way a good businessperson looks at the world, and the way the Internet must be governed. Despotism and consensus are completely different things, managing each takes completely different skill sets.

To manage consensus you need the skills of a diplomat, the willingness to compromise, and an ego that accepts defeat. Managing a business takes vision, drive, and an insistence on having things your own way.

Yet when politicians look at the Internet, they mainly see a collection of businesses, not a vast collective that must be brought to consensus. That’s probably why politicians don’t get the Net, and why they won’t during the current electoral cycle.

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