For a few months now, I’ve been reading Hardcore Software, a “sub stack book” that’s being written by Steven Sinofsky, about his time at Microsoft. In one of the “episodes” (the book is literally being written in public chapter by chapter, the same way I would go if I were to write another book), he introduces this spectacular concept called “cookie licking“:
Microsoft developed a vocabulary that to this day dominates discussions between alumni. Cookie licking is when one group would lay claim to innovate in an area by simply pre-emptively announcing (via slides in some deck at some meeting) ownership of an initiative.
Cookie licking is one of those concepts where once you’ve seen it you “can’t unsee”. Now that I’m aware of the concept, I keep finding it all over the place. And thinking about it, it is literally all over the place.
And it can happen in many ways. One way is how it happened at Microsoft – where multiple teams might have “been eligible” to work on a particular project, and one team tries to grab the project by “licking the cookie”. It is a pretty common corporate tactic. “Oh, why do you want to work on it when the XXXX team is already working on it?”.
Then, I also see it happening in the startup space. You go to a potential customer or mentor or investor with a certain idea. And then they tell you “why do you want to work on it when XXXX is already doing it?” (usually XXXX is a larger or better known company, but not always). And many a time you fall for the bait, assume that the cookie has been “jooThaafied”, and try to do something else. In a large number of cases, though, the licker of the cookie would have done nothing to consume it apart from the act of licking itself.
I don’t know how exactly to describe cookie licking from a game theoretic perspective, but I can imagine concepts such as “cheap talk”, “game of chicken”, “option value” and “bluffing” coming into play there. The question is if you will fold or call (yay, I made a poker analogy) when you are shown this licked cookie.
And while I was talking about this wonderful concept with someone earlier this evening, I realised that there also exists this concept that I will call “accelerated cookie licking”. Here, you not only lick the proverbial cookie, but also get paid for doing so.
For this, you need to have an independently built reputation (either a successful corporate career, or an exit from an earlier startup, or having been a VC, or some such). And thanks to this reputation built elsewhere, all you need to do is to say that you are licking the cookie, and people will come forward to pay you to do so.
And once you have licked the cookie and raised money for your company, you have an automatic moat – anyone else who wants to eat the same cookie will be told by any potential investors “why do you want to get into this when <this hifunda person with an independently built reputation> is already doing it, and is so well capitalised? Do you really want to take him on?”.
Thinking about it, in poker terms, this is equivalent to bluffing with a really large raise. Even if the opponent knows you are bluffing, it takes a lot for them to be able to call your bluff. And so it is with “accelerated cookie licking”.