Welcome to the third edition of In Search of Stupidity: Over 40 Years of High-Tech Marketing Disasters. (As opposed to 20.) When I wrote the first edition of the book, one of my chief motives was revenge against In Search of Excellence by Tom Peters and Robert Waterman and its successors. Like many others in high-tech, I’d been forced to read the books and attend the seminars that preached the cult of excellence while most of the firms profiled in Excellence crashed and burned. I decided that since I was never going to reclaim all those misspent hours, I might as well have some fun with the experience.

To my great satisfaction, In Search of Stupidity has transcended my petty resentments. Since the release of the first edition in 2002, In Search of Stupidity has become a best-selling worldwide business classic, with editions having been released in several languages, including Chinese, German, Italian, Hebrew, Polish, Korean, and Japanese. As one commentator remarked, “In Search of Stupidity is high-tech’s version of Charles Mackay’s Extraordinary Popular Delusions and the Madness of Crowds, only more relevant.” (By the way, if you’re interested in reading the prefaces to the first and second editions, the forewords, as well as other material that was removed from this edition in the interest of brevity, they’re available online at www.softletter.com.)

That’s high praise, but since the release of the second edition in 2006, high-tech has undergone massive change. Mackay had the luxury of writing about stupid events and thinking in an era when societal and technological evolution took decades and even centuries. I don’t have that luxury; in the 21st century, 14 years is an eternity. We have a lot to review!

Before I begin, I want to reassure you that the primary mission of this book remains unchanged. Within this third edition you’ll find a carefully curated collection of only the best of the worst and the newest of the stupid (and all of them completely avoidable). Similar to Dante’s Inferno, this book is designed to embark you on a grim journey to the hot stygian depths of Marketing Hell, where your soul will be riven by scenes of woe and suffering. There’s Steve Ballmer lashed to a rock for eternity as hordes of Windows 8 users devour his liver while screaming “Where’s the Start Button!” Next to him we can see Jeff Bezos endlessly stacking unsold pallets of Fire Phones in a warehouse that always adds a new level just when it seems the building is full. Not far away, Sundar Pinchai is strapped to a chair and forced to explain forever (or until the Department of Justice finishes its anti-trust probe, whichever comes first) how Google search algorithms work to zombie-eyed members of Congress who immediately forget everything they’ve just been told.

But not to worry. As with Dante and Virgil, I’m here to guide you safely around the horrors and tragedies that inhabit this place. Let’s head past the crackling flames and leave the horrid screams and moans of despair behind us as we ascend to the world of light and sanity. We need to get cracking on catching up, but we’ll be returning soon to learn more. 

The SaaS Revolution

When I wrote the first edition of In Search of Stupidity, people did the following:

  • Trudged out to their mailboxes or driveways to pick up their daily newspaper.
  • Unloaded mailboxes stuffed with flyers and advertisements.
  • Sent business documents via fax.
  • Listened to dial tones on their land line phones before dialing out.
  • Went to bars to meet dates or mates.
  • Bought paper books, either hard-covered or paperbacks.
  • Wore Japanese and Swiss wristwatches all the time.
  • Read magazines such as Time, Newsweek, PC World and many others.
  • Navigated to new locations via paper maps in their laps while driving.
  • Used dial-up modems which made strange squealing sounds before logging into AOL, Compuserve, Prodigy, etc.
  • Installed software from CDs/DVDs packed in boxes. 
  • Listened to music on CDs.
  • Carried Sony Walkmans to the gym.
  • Took pictures cameras loaded with Kodachrome (film).
  • Went to Blockbuster to rent movies.
  • Watched TV shows at set times on set days.

In 2020, people do the following:

  • Abandon newspapers.
  • Wonder when the Post Office will shut down as paper mail fades away.
  • Sell their fax machines at yard sales.
  • Cancel their landline service.
  • Watch TV and movies whenever they want.
  • Meet dates and mates via Match.com, Tindr, and other online dating services.
  • Don’t read magazines because very few are still for sale.
  • Navigate to new locations via the GPS embedded in their smartphone.
  • Don’t wear Japanese and Swiss wristwatches very much.
  • Buy increasing numbers of digital and audio books to read and listen to on smartphones and tablets.
  • What’s a Sony Walkman?
  • What’s film?
  • What’s AOL?
  • What’s Blockbuster?

The above lists just scratch the surface of the changes rippling through society.

The reason for the changes is the SaaS (Software as a Service) Revolution. When we first met SaaS in the first edition of Stupidity in 2002, it was called ASP (application service provider) and was melting down. In 2006, for the second edition, I noted that the ASP movement was reviving under the rubric of SaaS and used the book’s disruption model to analyze its chances of success. In 2006, Softletter introduced the first report that provided hard statistics on the movement’s growth and performance. In 2007, I hosted the industry’s first SaaS conferences, an educational series that continued through 2015. In 2012, I wrote SaaS Entrepreneur: The Definitive Guide to Succeeding in Your Cloud Application Business, the most comprehensive book about running and operating a SaaS enterprise.

The SaaS market revived for two main reasons. The first was that they addressed industries and markets not accessible to on-premise applications. For example, imagine you are a U.S. state and by law have specific election practices and standards you must follow. Imposing and managing rules and regulations on a statewide basis using desktop or even client/server software was difficult. Many municipality or polling stations were unable to properly support a desktop computer or terminal station. But today, everyone has access to a computer with a browser, enabling a uniform set of rules and regulations to be uniformly deployed across a widespread geographical region.

The classic example of this syndrome is one of the oldest. Salesforce became a SaaS superstar because many sales managers had used desktop packages such as TeleMagic to manage the prospect contact cycle and loved them. Unfortunately, mounting networked versions of these packages on company servers was difficult and often never happened. Well-publicized failures by companies such as Oracle and Siebel Systems to deploy enterprise-wide client/server versions of what had evolved into customer relationship managers (CRMs) were widely publicized. But when Marc Benioff and his browser-based CRM appeared, there was a built-in audience ready to buy. And they did.

Of course, SaaS was also critical in driving the worldwide acceptance of smartphones. Until the virtual high-speed digital pipes necessary to support SaaS existed, the concept of using your phone as a supercomputer in your pocket wasn’t feasible. By 2008, it was, and the smartphone market began exploding exponentially.

The second reason was that SaaS systems concentrate their subscribers and users into virtual data pools and communities. Once a SaaS system went live, it could track every aspect of a subscriber’s interaction with the system, including what features were used, how often, which were unused, how long they remained online, their login location, and literally hundreds of other data points. As a result, SaaS-based software companies could discover information and trends about their market and subscribers at speeds never possible for on-premise products. That alone was enough to ensure their ascendancy over their rivals. By 2013, SaaS had become the de facto means for bringing new software products to market and investment capital for other products disappeared. Every major software company still selling on-premise software is frantically jumping on the SaaS bandwagon…