Wal-Mart is finally getting serious about e-tailing: For $300 million, the world’s largest retailer just purchased social media startup Kosmix and its ecommerce-savvy team, apparently in an effort to compete with Amazon and its ilk. But can Kosmix, whose founder is a Stanford graduate and runs a classically Valley, innovation-centric outfit, survive at the cost-cutting, results-driven retailing colossus that is regularly the target of labor lawsuits?
Here’s Kosmix founder Anand Rajaraman on his blog, talking about why even Google’s much-touted “20% time” isn’t enough to create a culture of real innovation at a tech company:
At Kosmix, we don’t specify a set fraction of time for people to spend on new ideas. Instead, we have focused on creating a culture that engenders new ideas and rewards innovators, encouraging them to tackle new projects above and beyond their 100% contribution to mainline company execution.
Kosmix’s all innovation, all the time model flows directly from the freewheeling graduate school culture in which many of its PhD computer scientists cut their teeth:
There’s something about the graduate school environment that seems to bring out great ideas. Many of the great technology companies (e.g.,Yahoo and Google) have been created by graduate students. We have strived to maintain a grad school environment at Kosmix. Wall around and you’ll hear plenty of heated hallway discussions and intellectual free for alls; nerf gun fights erupt over details of relevance algorithms.
Now try to imagine a nerf gun fight breaking out in the staid, low-slung corporate headquarters of Wal-Mart in Bentonville, Arkansas.
It’s hard to think of a more awkward corporate marriage since the ill-fated AOL/Time Warner merger. Proposing that Wal-Mart would buy a company like Kosmix is like proposing that Bank of America would be interested in buying Vice Magazine.
Granted, Kosmix is a tiny startup, barely a pimple on Wal-Mart’s backside, but the price it sold for indicates that the corporate parent is serious about absorbing many of the lessens learned by Kosmix’s core team in their many years developing ecommerce applications for everyone from Amazon to eBay.
Wal-Mart’s speciality is not R&D, however. Outside of supply chain management, it’s not in the company’s corporate DNA to think of new ways of doing things. For a company whose primary business model is being so big that it can demand ever lower prices from its suppliers, a startup full of eggheads who make a living dreaming up new ideas in between bouts of childlike fun could not be more alien.
Arguably, this is why Wal-Mart has been a follower and not a leader in the e-commerce space. Why even bother when its stores are so ubiquitous? Clearly, though, someone at Wal-Mart recognizes that even everyday purchases are increasingly researched on the web, and the online social graph is replacing all other forms of recommendation.
If Wal-Mart manages not to suffocate its newest acquisition, it’s hard to see how its corporate culture can remain unchanged. Maybe that’s a good thing?