Wednesday 23 October 2013

Companies and headquarters

Colosseum in Rome the fall of the roman empire

I very recently read an article at ARD which can be found here (unfortunately it is in German but the most important thing are the images/drawing that can be seen there and not the text as such.

In this article they were going through a couple of revenue giants that are currently on the top of the world (the links are to analysis that I have previously made of them): Apple, Facebook, Samsung, Nvidia, Google and Amazon.

Apple is building a circular spaceship (it is being built on the location of the previous HP headquarter... I wonder if there is some extra symbolic to that). This spaceship will be the workspace for over 14,000 employees so more or less as big as the hometown that I grew up in! I must admit that the building looks very impressive and I am sure that the employees will be proud working there.

Facebook is building what they in the article refer to as open office. They are more or less building a University campus with plenty of open space and recreation areas which makes me wonder if Zuckerberg managed to leave the college life behind him or if he expects to now when he is a bit older experience the college parties that he missed out on. Here I would say that it is very clever. If they will manage to recreate the college campus "life" they might also extract some additional innovation from the employees... or they end up with a bunch of drunks and drug addicts as employees.

Samsung are working on a green headquarter which means not only plenty of plants and trees growing all over the façade of buildings but also solar and wind power. They go for a good solid environmental concept that will look good not only in the eyes of the employees but also in the eyes of the world.

Nvidia is busy with a new headquarter that involves plenty of triangles which is of importance to hardware graphic design. Lets hope that in the next five years the graphic industry is not stepping over to a cubic design because then Nvidias headquarter with second grade design or maybe ancient design is better to say... in the entire building would be pretty sad to look at and work in. This concept I do not find very clever.

Google is building their Googleplex which is nine buildings with large roof gardens and all of them are connected with several bridges so that you can easily walk and see all your colleagues within a couple of minutes. So also Google is going slightly green and open with quick communication lines at least on the paper. I have heard that already today the Google employees are being shuffled in Google buses from San Francisco which means that directly when they board the bus they are able to start working efficiently. Too much efficiency?

Finally we have Amazon with Amazon-World which means that they are building round several stores high greenhouses that they employees can enjoy for relaxation no matter if it is winter or rainy outside. So also Amazon is going towards the green concept inline with the demand in the world today.

Unfortunately I am simply too stupid to remember which one of the clever guys in one of the books that I have read said something similar to: "When a company starts to build a fancy headquarter then it is time as a shareholder to leave because it is only downhill from there." I do not know how much experience the investor had with companies building new HQ and I do not know if he purely based it on history and how most cultures were building their most excessive ornaments at the peak of their existence probably simply because they did not really know what to do with all the fortune they had after which they then became lazy, too big and lost overview of the organization, too many internal fights and struggles when there no longer was an external enemy etc.

Either way I do believe that there is some truth to it. Even if the Colosseum in Rome in the picture above does not directly represent the fall of the Roman empire the fact that they had "Bread and Circus" as motto is still an indication of how they spent money to sooth the masses just like a company can spend too much money on visual things that does not build value to the company (flashy annual and quarter reports, fancy headquarters, extremely favourable conditions for their employees which to a certain limit can be beneficial but it is very easy to go too far, private jets for the management etc.) then I also believe that the downhill slope is soon to start.

For the Roman empire it lasted a couple of centuries so I would not say that Apple, Samsung or even Google will crash and burn within the next couple of years but at some point increasing the revenue any further will become hard and to double 50 billion USD in revenue is just not as easy as to double 2 billion USD and that is crucial in a stock market world that is dealing with %-age and not real numbers.

Am I looking upon this in a wrong way? Will they prosper for decades to come?

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