When I finished my U.S program, I joined a leading technology firm which plays at the heart of building electronic components used in practically any major electronic product in the world. In the specialty high-performing converter business, it commands more than 75% of the global market share. They awarded me stock options which appreciate in value as the stock price of the company does well in the market.  To illustrate: if a company awards you a stock option when the company stock is at $4, and the stock rises to $10, you have made $6 for yourself, if you sell at that $10 mark. You can only sell after the award has vested.

An employee stock option (ESO) is a stock option granted to specified employees of a company. ESOs offer the options holder the right to buy a certain amount of company shares at a predetermined price for a specific period of time.

Vesting  “is the process by which an employee accrues non-forfeitable rights over employer-provided stock incentives or employer contributions made to the employee’s qualified retirement plan account or pension plan”. Simply, it is an agreed timeframe you must wait before exercising the rights to sell the awarded stock.

For employees, the desire is for the stock to go high since your gain is the difference between the stock price position on award date, and the day you exercise your right to sell it.

So, for me, the prayer was for the stock to keep rising. It was a natural feeling because the Great Recession had battered the stock market and everyone was seeing the stock improvement as a moment of glory.

But somehow, I heard a sobering message from a Vice President in the company: he was worried that if the stock continues to improve, he will have empty seats to do the works. He explained that before the dotcom crash in late 1990s and early 2000s, people made so much money that they have no need to remain as employees. Then, he noted, the challenge was managing the exodus of staff who sold stock options and left.

In other words, they made money as stock prices accelerated, and companies could not keep them as staff. For companies, then, the problem was finding people to do the company works because men and women were resigning. The staff have made all the money they needed to retire early. So, when the stock price was rising, the management was worried that some of the top designers would leave. Typically, stock options are awarded to designers and top-performing technical members as incentives for them to innovate for the firm.

The AI Race and Wage Inflation

According to a recent piece in the New York Times, AI engineers are making tons of money. As companies compete for talent in computer vision, self-driving, AI engineers are arguably the best paid in the world today, notes Fintech Collective in a newsletter. Bachelor degree graduates of Carnegie Mellon University in the self-driving category begin with about $200,000 yearly. The top PhD graduates now command in the region of $500,000. Veteran AI experts are now paid on the same formats as athletes and actors with defined contracts and not the typical “as it is” or “at will” contract.

The NYT recently interviewed employees of the big tech companies on an anonymous basis, discovering that A.I.-focused PhD’s and employees “with just a few years of experience” can earn $300k – $500k in salary and equity compensation. Well-known A.I. experts are often paid millions and negotiate their compensation like professional athletes. And in a court filing earlier this year, Google revealed that the former leader of its self-driving division (now with Uber, the subject of a high-profile lawsuit) received over $120 million before departing the company.

The Paradox

As I have noted already, when you pay these elite engineers, they suddenly make so much money that the desire to work ends. Then quickly, they leave the doors and your business could be imperiled.

Early staffers had an unusual compensation system that awarded supersized payouts based on the project’s value. By late 2015, the numbers were so big that several veteran members didn’t need the job security anymore, making them more open to other opportunities, according to people familiar with the situation. Two people called it “F-you money.”

So companies like Google learnt a hard lesson: too much incentive could backfire by removing the needs to work. As Bloomberg noted, most of the early engineers that worked in Google self-driving car project, just packed the money and left, when the stocks vested. They have minimal incentives to keep working.

Yet, for business leaders, this is a tough call. If you do not pay, they will not come, and if they do not come, your competitors will hire them, and with AI at the center of modern technology race, you will not likely win in your sector. So what do you do? You pay along, and the party continues.

All Together

Africa is many years away from this type of problem.  We are yet to get in the real game of building these great pioneering technologies. But one day, it will happen. But largely, the AI wage inflation and the humans that make money and quit, will be exciting cases for research, in human psychology and employee compensation in coming years.

Many large technology companies are usually known by one product, out of many in their solution offerings. And that one specific product is typically their best product. Also, most times, the product is what gave them the new basis upon which they competed and became successful.  When they were startups, that product provided the elements that enabled market disruption or simply facilitated the capacity to take market share from incumbents. Also, in some cases, that product engineered their pioneering of a new technology category. It does not have to be the first product of the company, but most times, it is always the one that everyone comes to associate with the firm, over time.

Apple is an iPhone company, Google is a search advertising business, and Facebook does its social connection. The old HP was a printer company and Amazon of today remains an e-commerce business, despite the Alexa (voice assistant), Echo (speaker),and  Whole Foods (grocery chain). While Google makes most of its revenue from advertising, Amazon generates most of its market capitalization due to its e-commerce operation even though it may be losing money on ecommerce. Yes, the Amazon ecommerce is a loss-making business but which is a very critical anchor of Amazon’s home run on market capaitalization.

At the end, Wall Street will push the stock upwards because the metrics for valuations are convoluted. Google parent company, Alphabet, made $7.8 billion profit on $27.8 billion quarterly revenue, largely from advertising. Google remains an advertising firm and that is what matters. Apple will remain an iPhone company and that is why iPhone X matters to Apple. Yet, at the same time Google was bringing billions in profit through its one-product company (search), Amazon had only $256 million profit on $43.7 billion in revenue. Yet, the markets cheered as Amazon beat analyst expectations. Now you know why staging expectations is more important than the actual results!

So, for all the leading technology companies globally, there is always the one product that defines that company. That one product is the best product that helps the company to drive growth. Sure, these companies are expanding and branching into new areas to create diversification, but when the quarterly statements are released, you will notice that the other things are simply to keep investors at peace. Go deeper into the financials; you will notice that nothing is really happening in those other products.

Very brilliant companies design their businesses so that new products serve that one product, at least initially. In other words, even when you diversify, you make sure that everything you do drive the success of that one product. That means that the one product is the first customer to the new products which are launched to drive diversification.

Let me give an example to explain: when Amazon built its cloud computing service, the first customer to that service was Amazon ecommerce operation which needed such capacities to deliver the best possible user experience. So, with that readily available customer, the cloud service had a reliable customer. Then, over time, the cloud solution was made public as a service: the Amazon Web Services. Today, it is the driving force to Amazon’s profitability.

Growing with One Product

Amazon wants growth and it moves into new markets with its best product: ecommerce operation. With that key product, it introduces new solutions, most especially the Amazon Web Services, to new markets. So, as Amazon pursues its market domination, it relies on its one product to drive it. The messaging to the world and media remains that Amazon is an ecommerce company. But when you look critically, Amazon does many other things. But that image is central to its ability to manage its messaging. That is something you must learn in your business: you must be known for something and let it be your best product.

Besides, when technology companies struggle as a result of competition, what usually happens is that the one product has been attacked. And when they need to overcome the stasis, they need to find another product. The old IBM was known for its computers but that was severely wounded by Dell and others. IBM is reinventing itself with a combination of AI powered by Watson. HP, the printer business, is looking for a new product for an edge in technology services.

Note that it does not mean that the company must have one product. What happens is that most times, it is one product that defines how we view most technology companies. SnapChat remains known for its disappearing posts despite efforts to diversify into hardware. We know that Microsoft will remain a Windows business despite anything it is doing with HoloLens and cloud computing. At any phase, we have a one-product company in most technology businesses. They always work for growths around that one product.

One-Product Amazon

Amazon is a great company that uses its main product (the ecommerce) to keep the expectations of investors low, but uses other products to turn quarterly surprises.  So, everyone expects losses, but with cloud and other services, Amazon comes up with small profit, and when that happens, markets rejoice. That has been the driver of the market valuation of Amazon. It is only Amazon that will make $256 million profit on $43.7 billion quarterly revenue without being punished by markets. For any other company, investors will shout that costs must be cut to improve the profitability. But Amazon understands one thing: ecommerce can deliver the huge revenue, even at losses, and investors will be fine, provided there is something that will flip those losses into profit.

Amazon is large and it is also efficient. I do think that it has no rival in its operational excellence. The way it does everything today is peerless. This company has been good in seizing the moments. Examples abound:

• It has superb marketing stunts where American cities competed for the opportunity to host Amazon second headquarters as though they were auditioning for American Idol, a singing competition. That stunt made Amazon more local as the news were everywhere in America. That was free publicity and marketing at scale. The message was an ecommerce company was coming into town.
• Few years ago, 60 Minutes, a TV program hosted on CBS, profiled Amazon’s drone distribution project, providing massive earned media. That was a technology that was not even ready but Amazon was able to inject itself into the most elite TV program in America as shopping season was about to start. The stage of this drone was the best product, ecommerce, and its efficiency.
• Another brilliant messaging by Amazon was tying its best product (the ecommerce business) with its low pricing and the quality of Whole Foods, a high quality grocery chain. For most Americans, the message they got was that Amazon was going to offer them the best possible grocery at the lowest price possible. Amazon took that home when it announced massive cuts that were largely marginal. Nothing of value really happened in the cuts but Amazon wanted some unbelievers to believe that the grocery chain, nicknamed Whole Paycheck because of its expensive products, is now affordable.

All Together

Every company must discover its one product and build its image around it. Using that one product, marketing and customer acquisition could be more impactful. Also, as the company diversifies, it is also critical to see how the one product can tax those new areas or products. In other words, you need to make the one product the first customer of new products. Doing that reduces investment risks and ensures that as funds are invested in new products, there will be positive impacts in the one product, even before the new products can make real financial contributions.

Nice Comment from a LinkedIn User

And Fasmicro – Zenvus, Interswitch – ATM; you can add your own. Perhaps deliberately or accidentally, the idea is to rally support and have a flagship product. It may not necessarily be the first product launched by the company, but somehow the lot is bestowed on one of the ‘shining’ products of the company. Just as P & G and Pampers are one and the same. Again it’s difficult for any company to do extremely well in all its products categories; so there will always be those ‘also run’, the ‘buy one and get one free’ families.

It was lyrics for the ages. The Fugees, an American hip hop group in early 1990s, recorded the masterpiece which connected lovers around the world. The beginnings of the lines were like pains, but the whole meaning of the stanza is a breeze.

Strumming my pain with his fingers
Singing my life with his words
Killing me softly with his song
Killing me softly with his song
Telling my whole life with his words
Killing me softly with his song

Across campuses, pubs and joints, the story was the same: someone was killing someone, softly. Of course, if someone is killing someone, even softly, it was a trajectory of doom. But waiting a little longer to finish the line, the dimples would broaden, and the eyes would roll. It was not really a death path, but an ephemeral passion of humanity where words weaken, but in ecstasy.

Take it all together, it is a breeze: “a light gentle wind” which is harmless but from afar may be mistaken to be painful. Apple is having a breeze. Yes, the breeze is blowing and Apple is certainly going to enjoy. But those not closely entwined in the Apple business may mistake it as a storm.

The iPhone X pre-orders begin in earnest. It is a more expensive product, with its expensive face-scanning capabilities. It is expected to be in short supply. And will replace the highly lackluster iPhone 8 which has struggled to leave shelves since it was unveiled.

The Apple Staging

Simply, Apple used iPhone8 as a forerunner to iPhone X by making it clear that iPhone X is superior. That makes it obvious that Apple has innovated, creating a new marketing tool with a feature which is not available in any other phone. Apple shortened the launch gap, knowing full well that iPhone 8 will struggle under the shadows of iPhone X for a fashonista brand. In other words, Apple never gave iPhone 8 any opportunity to succeed in its luxury brand. People that buy for luxury cannot invest money on a product which has a sequel on the day of its launch, especially when that sequel is coming in weeks. It makes no sense; so the wait for iPhone X, by Apple global fans, making it impossible to sell iPhone 8.

Apple Inc.’s iPhone 8 posted the weakest sales of any of the company’s new smartphones in recent years, according to estimates by two market-research firms, raising the stakes for the higher-priced iPhone X as advance orders start on Friday.

In the U.S., Apple’s largest market, the iPhone 8 and its larger 8 Plus version accounted for 16% of all iPhone sales in the September quarter, according to Consumer Intelligence Research Partners LLC

From afar, you may think it is a tempest, by looking at the beginning of the line, as iPhone 8 could not move from the shelves. But if you finish the stanza, it is a breeze, for Apple, because iPhone X will do well. Without the iPhone 8, the iPhone X will not be long-awaited. Now, it is heralded because its predecessor was for cavemen (and women) before it was even shipped from factories. In the minds of Apple fans, Apple has further created an element of supreme value in iPhone X.  That is what you want in a product.

Here are things to note:

• Apple has been leaking how hard it was to create the 3-D sensor. When you read that, what comes to mind is obvious: only the very best could have solved that specific 3-D problem, and Apple did that in iPhone. Oh yes, the believers will continue to expand.
• The media people have been writing how hard it was for the vendors to meet Apple targets. Simply, the fans will appreciate all the efforts everyone is putting to make the best phone, ever.
• The media world has been saying that Apple will produce iPhone X in limited quantity. If you are a fan and hear or read that, the best strategy is to simply go out and take action. And that means pre-order before Apple decides to phase out production, after completing pre-orders!
• Apple opens a pre-order system for iPhone X which means if you want this product, you need to go right away and pre-order. That creates a new level of demand since not many people will get it at the same time. When you do that for a luxury product, the product becomes more luxurious. Simply, Apple has a stage and it is playing it.

All Together

Apple has set the stage for iPhone X and it will be the best selling electronics product of all time. Apple created a breeze, never a storm, despite what some may think. The company knew what it was doing. The struggle of the iPhone 8 may appear to be a pain, financially, but when you finish the stanza of the quarter, you will see glory. Apple excels in that. The iPhone 8 is another genius strategy to launch something ahead (the iPhone X) that will delight a fashonista’s Apple world.

At the end, Wall Street will push the stock upwards because the metrics for valuations are convoluted. Google parent company, Alphabet, made $7.8 billion profit on $27.8 billion quarterly revenue, largely from advertising. Google remains an advertising firm and that is what matters. Apple will remain an iPhone company and that is why iPhone X matters to Apple. Yet, at the same time Google was bringing billions in profit through its one-product company (search), Amazon had only $256 million profit on $43.7 billion in revenue. Yet, the markets cheered as Amazon beat analyst expectations. Now you know why staging expectations is more important than the actual results!

Tips, all-in-one iPhone manager for you to manage your iPhone X photos, videos, songs, contacts, iBooks, voice memos and other important data.

I just accepted to keynote NIGERCON 2017 which is being organized by IEEE (Institute of Electrical and Electronics Engineers) Nigeria Section at the prestigious campus of the Federal University of Technology Owerri (Nigeria), my alma mater. Yes, it will be in FUTO where the finest Nigerian engineers are trained (lol). IEEE is the largest technical association in the world with membership in excess of 420,000.

IEEE Nigeria Section invites you to participate in the upcoming IEEE NIGERCON 2017. NIGERCON is a refereed international conference. The Conference seeks submissions of articles from Academia, Government, Industry, and Private Sectors on the following sub-themes: Engineering Education, Computing, Communication, Power and Energy, Internet of Everything, Engineering in Medicine and related fields.

The theme of the conference is “Electro-Technology for National Development” and it is scheduled for November 7-10 2017.

Date: 7-10 November 2017
Theme: Electro-Technology for National Development
Venue: Federal University of Technology, Owerri (FUTO), Imo State, Nigeria

I will deliver the plenary keynote and then run a workshop on artificial intelligence with applications in agriculture and active cybersecurity defense.  I will share more on the presentations later here on Tekedia.

Please I want you to attend. Register here. Support our schools, students and professors.

Come and let us have a technical festival by looking at atoms, electrons and data, and how we can combine them for national development. Because the venue is FUTO, you can count on the peerless quality of this conference.

We want to raise capital for our businesses to help us with resources to fix frictions in markets. In this video, I explain how founders can boost the valuations of their startups. The key element is that you must have a way to communicate why you are different from the incumbents because your ability to set a new basis of competition will unlock more value for your investors. It connects into the heart of your scalable advantage, providing new elements that set you apart. High scalable advantage means that you can grow with minimal costs, and most times, that happens because your marginal cost is very low. If that happens, investors will see your business from new angles, rewarding you with higher valuations. Cases abound with the following:

• Airbnb and hotels: Airbnb has practically no marginal cost compared to hotels
• Uber and traditional cabs: Uber is an aggregator with strong scalable advantage
• Facebook and media: Facebook does not create the raw materials of its business. Users do and that means it can grow without any limitation, theoretically
• WeWork and office leasing firms: WeWork is an aggregator with service, removing a pain point of dealing with landlords who remain stuck in the past.

But even with the promise of high valuation, you need to generate income because in realty that is what investors are investing in for. In other words, after all the nice sounding words, you must make profits; otherwise, the business will die one day. Sure, if you sell before going public, the acquirer will still have to deal with generating profit to make it a business.