Electronic Kool-aid Acid Test
by Michael Wolff

Excerpted from Forbes ASAP, April 2, 2001

My assumption at that point in the '90s technology revolution was that drinking the Kool-Aid, or getting other people to do so, was just a sales technique, a motivational method-that it was a lot closer, in fact, to Dale Carnegie than to Jim Jones. Drinking the Kool-Aid was about communicating an essential optimism, confidence, and can-do attitude. It was, all in all, a positive attribute. It elevated business above bureaucratic and impersonal corporatism. It imbued people with a belief in their mission. It gave products meaning beyond mere function and profit. Good enough.

Apple was the model. People at Apple drank the Kool-Aid and came to have a unique pride in their product. Customers drank the Kool-Aid, too, and became extreme advocates of the Apple way. Steve Jobs, of course, drank it as well as served it and was the most extreme in his beliefs. The Kool-Aid factor, many people started to think, was an important ingredient in building a new kind of company. Kool-Aid was a management tool. You wanted people to think of their jobs as a movement, a club, even a social experiment. You wanted people to believe that if they worked for you, they could change the world-and themselves.

Viewed one way, it was just another form of company rah-rah. In an industry that likes to conform to nonconformity all down the technology corporation food chain, cultish corporate culture became the way to go. A new kind of business language, emphasizing the communal and the mystical, spread up the West Coast. We were all part of something bigger than had ever happened before.

Wired, launching a genre of business magazines more religious than financial in tone, articulated the difference between an old way and a new way, between us and them, between believers and nonbelievers. The first order of business, in the early Wired view of the world, was not profits but transformation. We were going to transform each other and the nation. A friend went out to Wired before it was a year old and reported back that there was something unsettling about its overnight success. "It seems," he said, "a lot more like a cult than a magazine." I went out for Wired's first anniversary party. There were a thousand bodies writhing in unbusinesslike ecstasy.

One distinguishing feature of a cult is a lack of free will among its adherents - a radical loss of objectivity. Part of this devotion involves the belief that what you do is of higher purpose than anything anyone else is doing. Other people are living, breathing, working, earning-but you are transforming. There is almost always a distinction, usually aggrieved, between us and them. We are righteous and you are doomed (we are the rising New Economy, you are the ash heap of the dying Old Economy).

This is, of course, the basis on which many religious movements and political groups grow. It is not often, however, the basis of business development and corporate strategy.

But you had strange and powerful forces in play.

Technology was a business, after all, that had grown up in Northern California with its '60s propensities and nostalgia and ever-reviving personalities. There was the nature of the product itself - dependent on relatively abstract notions of what technology, if financed right and created right and applied right, might do - which invited a near-mystical, certainly faith-based, explanation. You had legions of young people, without experience in the working world, eager to believe in the biggest picture and longest view. (Indeed, you had a population of engineers, techies, and nerds looking for a grander identity.) You had the need, in startup companies growing at frantic, unnatural rates, to impose what was widely called "corporate culture" - that is, a collective attitude. People like to know how they should behave. Then, too, you had the round-the-clock working thing, which, viewed in a different light, was not that dissimilar from the sleep deprivation strategies prevalent in more traditional cults. Likewise, you had the no-outside-influence thing. You worked together, you ate together (a subsidized lunch in the company cafeteria), you quite often lived together. And then, in the cultlike manner of economic commingling (what's yours is mine and mine yours) you had stock options.

Most of all, what you had was the dawning understanding up and down the value chain that this cultishness was good for business. It was a way to not only get people to work harder, longer, cheaper (the flip side of technology fortunes is that day to day, on a cash outlay basis, it's a low-rent business), but it was also the ideal way to sell the unproven, the intangible, the hypothetical, the projected, the fantastic.

You would work for it, you would buy it, you would invest in it, if you believed. What was being created was, therefore, not so much a product as a belief structure.

And, well, if that required a little brainwashing...

Vital to this process was the figure of the charismatic CEO, also known as the visionary. This was no small thing, because in the old business world the definition of a CEO was virtually that he be the antithesis of charismatic. In ordinary business terms, charisma was not trustworthy.

But the point here was precisely that this was not ordinary business. The value proposition was, fundamentally, about transformation. And you needed an entirely different kind of figure to represent this new kind of value. Jobs, Gates, Ellison, Jim Clark, Jeff Bezos, or Jay Walker would most likely not have succeeded in an ordinary business climate. In more normal, judgmental, skeptical, socialized conditions, they might well have been laughed out of town. Therefore, they had to create organizations that related to and valued their outsiderness, eccentricity, and flamboyance. They had to enable their own oddness.

Of note, seldom were these charismatic CEOs lovable or soft and cuddly. They were all control freaks. Often they were screamers, highly comfortable with acting out, or the exact opposite; they were remote, withdrawn, and uncommunicative.

It is one of the confounding things about a cult: People follow cult leaders, but they don't like them. Through fear, often mixed with incomprehension, you produce awe, which seems in turn to produce belief.

It helps, too, when you come before your people in big-screen video presentations.

Now, in order to create this new business environment, it should go without saying, you needed the assent of the financial people. The people with the money had to be willing to buy into this new corporate culture. They had to accept this new, decidedly uncorporate, business ethos.

It would, however, have been unlikely that you'd get the average Wall Streeter to understand the otherworldliness of technology people; you can't get much more show-me-the-money conventional than Wall Street. So in response to the value proposition of the new touchy-feely, believe-in-what-I-believe, profitless business ethos, a whole new class of financiers rose up. The venture capitalists, who in the past had been specialized investors, suddenly became all-powerful.

If there was a Jim Jones in this corporate-cult world, it was a role divided among a few hundred VCs on Sand Hill Road and in other well-appointed and anonymous office complexes across America.

Indeed, the VC is all-knowing. He possesses all information ("We see every deal"). He has total mastery. He understands all business variables ("What's your model?"). And he can manipulate those variables. Business, after all, is best left to financial engineers. And most of all, he has psychological control. This was the source of his real power: Once you became dependent on him, he could, at any time, withdraw his love.

If the CEO is the cult leader, the VC is the cult's religious leader or interpreter of the true faith or high priest or icon. If the CEO expresses himself through all manner of acting out, the VC is most identified by not expressing himself at all. Inscrutability is his key (or his lock).

Such cultishness, such unreasonable devotion, such trust in a higher authority, became so widespread and ingrained in the technology culture because it worked - for a while, anyway. It spread the word. It brought people in. It embraced. It reassured. It created a whole new secondary industry (the conference business) dedicated to spreading the word and propagating the faith. It was the antidote to skepticism and to a lack of proof. So many businesses took on a cultish aspect during the '90s technology boom that people started to believe - for a moment, anyway - that the nature of business itself had been transformed. Cults, however, are like pyramid schemes. Their unreasonableness is their attraction, and, in the end, the cause of their destruction. You can deny reality only so long - then the stock market wises up, or the Department of Justice comes calling. Just believing doesn't do it.

In the end, the Kool-Aid kills you.

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