Case Study - MBA Techno Failures

During the early 1980s I applied for a job at a local company, Federal Express. The newspaper advertisement described quite vaguely a position entitled “Manager, Market Research.” I believed I was qualified and applied. Several weeks later I was informed I was one of the finalists and that I would have to submit written answers to twenty questions about how I would solve specific marketing and research problems and scenarios. Soon, I was informed that I was one of three finalists and would have a formal interview with several corporate directors.
I arrived at the appointed place and met the people. After the introductions I asked, “What’s the job about – why all the secrecy?”

The response was “ZapMail!”

It seemed that Federal Express had a large vendor account with NEC and could buy their computer equipment at a 60-65% discount. The ZapMail group would springboard this discount into a business, offering instant fax services to large companies. In a service agreement much like overnight delivery of packages, the ZapMail group would offer the fax service on a per-fax rate between any parties desiring the service.

I was greatly troubled by this revelation. When I was a cryptographer in the Navy, my crypto equipment was used to “fax” weather maps to Navy weather offices worldwide. The scanning equipment was not classified and could be purchased off-the­-shelf, and the communications equipment which was used following encryption was likewise publicly available to the technically informed.

I responded, “You fellows all have MBAs, right?”
They all answered affirmatively.
I said, “Don’t you remember that course in which they taught you about businesses built around technology?”
Again, they responded affirmatively.
I said, “If I recall it correctly, they said you must own or lease technology patent rights to protect your business investment. What is to prevent some proactive corporate customer manager from trying to reduce his Fedex fax bill by discussing the problem with a sharp company engineer? They could easily come up with a solution to eliminate your service. How will ZapMail survive under those circumstances?”

The response was, “We will make it happen.”

I had not been out of the Navy very long, and there was a six year moratorium on discussing with anyone the work I performed. I did not mention how easy it would be for me to do what they proposed. I informed them I did not believe their plan was viable, and we were all pleased when I withdrew from the selection process. I was a subject matter expert in how easy it was in those early days to fax information from one place to another (I saw weather maps being faxed daily with equipment right off the shelf). The corporate types were not technical and had either ignored or not received expert advice.

ZapMail failed completely soon afterwards – after losing $350 million!