How IBM and Yahoo made Microsoft and Google


Here is the five-step recipe for creating the most important software companies of the past 30 years:

  1. Convince the market leader to give you something big they don’t see the value in for cheap
  2. Innovate, innovate, innovate
  3. Make a ton of money
  4. Eat the market leader’s lunch
  5. Bet on everything big

Guess which is the most important step…

The case of Microsoft

About 28 years ago, IBM made one the biggest strategic mistakes in its history. Being a company primarily focused on hardware, it didn’t understand the value in the PC operating system. It outsourced that work to a, at the time, little-known company called Microsoft. From Wikipedia, the ancient lore of the computer industry:

On August 12, 1981, after negotiations with Digital Research failed, IBM awarded a contract to Microsoft to provide a version of the CP/M operating system, which was set to be used in the upcoming

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