Wang Goes ‘Gunning’ for IBM
WHY YOU SHOULD CARE
Because trying to shoot down Goliath in the tech world requires a lot more than a slingshot — or even an armored helicopter.
In the late 1970s, a brilliant but brash entrepreneur put IBM on notice, boldly promising to dethrone Big Blue as the world’s leading technology company within the next decade. No, this wasn’t Steve Jobs in Cupertino, California, but a Chinese immigrant and inventor named Dr. An Wang in Lowell, Massachusetts. Over the next few years, his company, Wang Laboratories, would unleash a series of “Giant Killers” television ads, culminating with one that featured a Wang attack-helicopter “gunning for IBM” outside a corporate office tower. And was it ever.
A savvy, bow-tied businessman with 40 patents to his name, Wang knew from the little scorecard he kept in his suit pocket that his company was worth only a fraction of IBM. But during the late 1970s and early 1980s, the scrappy computer-maker would enjoy a phenomenal rise — becoming a Fortune 500 company valued at more than $2 billion — until its founder’s attempt to even the score with IBM turned the small upstart into a giant cautionary tale.
Wang had reason to be confident. The son of a Shanghai schoolteacher, the ambitious engineer had earned a doctorate in applied physics from Harvard just three years after immigrating to the U.S. with almost no money in 1945. By 1951, he had invented the magnetic pulse memory core, a key component in early computers, and started his company over a garage in South Boston with an initial $600 investment. Wang was “a great example of not just an entrepreneur who rockets to success,” Sydney Finkelstein, a professor of management at Dartmouth’s Tuck School of Business, tells OZY, “but of someone who really had the intellectual firepower to go with the entrepreneurial acumen.”
Wang seemed to always be one step ahead of the competition … until he wasn’t.
As Finkelstein discusses in his book Why Smart Executives Fail, Wang was an innovative engineer who always seemed to be one step ahead of the competition … until he wasn’t. Following the memory core, he revolutionized the desk-calculator market in the mid-1960s, and when bigger companies invested in calculators, Wang shifted to minicomputers, targeting companies that could not afford IBM’s big mainframes. In 1976, he struck gold with his most successful minicomputer product — the word processor, which stored information and allowed users to edit text on a visual display, quickly rendering the typewriter obsolete.
By the early 1980s, Wang’s minicomputers were paying huge dividends, and the company was growing at an astonishing annual rate of 61 percent. Only IBM was spending more on advertising than Wang, and soon the bold firm’s management team started to believe its own hype. And rather than anticipating the direction that technology was headed, as Wang had so deftly done in the past, the team sank resources into growing Wang’s share of the word processing market, doubling down on an existing, and soon-to-be-outdated, product. Wang also loved his word processors, once calling the new personal computer “the stupidest thing I ever heard of” — while Time magazine hailed the PC as its Machine of the Year in 1983.
Wang Labs eventually entered the PC space, and when it did, it made the disastrous decision to develop a proprietary operating system rather than following other computer-makers that made their PCs IBM-compatible. The reason, it turns out, was likely more personal than business-related. “Wang didn’t like IBM, he didn’t respect them,” says Finkelstein, “and he wanted to show the world that his company was better.”
Wang’s grudge against IBM stemmed from the sale of his memory-core patent to the tech giant as a young man. In his autobiography, he claimed that IBM had encouraged another inventor to file a frivolous challenge to his patent to weaken his bargaining position in the negotiations. In response, Wang seemed determined to beat IBM and never be exploited by the behemoth again, even if it meant destroying everything he had worked to build. And it did.
“Wang Labs died of self-inflicted wounds,” says Finkelstein. And as other companies moved toward manufacturing PCs that were IBM “clones” running Microsoft software, Wang’s revenue went off a cliff, and the company filed for bankruptcy just two years after Wang’s death in 1990.
Rivalries and personal grudges can be powerful motivators for the competitive-minded individual. Just ask Michael Jordan, who used to trash-talk about his own teammates to fuel his performance. But if you go in with guns blazing as a company, the way Wang Labs did, then you’ve got to be nimble enough to dodge a few bullets in turn and not let the grudge dictate your entire business strategy.
“If you can control the grudge, that’s OK,” says Finkelstein, “but if you let it control you, then you lose that open-mindedness and adaptability, and that’s when the bad stuff happens.”