Excel Never Dies

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Hi friends 👋 ,

Happy Monday!

One of the places I learn the most is a group chat I have with my friends Dror Poleg and Ben Rollert. Dror, who writes about the history and future of work, cities, and finance, and Ben, who is the founder and CEO of Composer, are two of the smartest people I know.

Ben, the most technical of the trio (followed by Dror, then me), also happens to be an excellent writer. In late February, he released The Composer Manifesto, to make the case for investing as a creative endeavor. It’s tailor made for the two types of people who read Not Boring -- investors and tech people -- and you should read it:

So when Ben texted us about how underrated Excel’s power is, I asked him to write about it with me. He opened my eyes to so much depth I didn’t know existed in the product in which I spent every waking hour for the formative years of my career. We’ll try to do the same for you.

Let’s get to it.

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In the popular marketing book Alchemy, Rory Sutherland writes, “A spreadsheet leaves no room for miracles.” We could not disagree more strongly.

Most software we use at work exists in one of two categories:

  1. It’s new and we love it for now.
  2. It’s old but we have to use it and we hate it.

But there’s one software product born in 1985, before many of us were even a twinkle in our parents’ eye, that inhabits its own category: it’s old, but we love it, we always will, and you’ll have to pry it from our cold, dead, fingers. That product, of course, is Microsoft Excel.

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Anyone who has worked in finance or consulting grew up on it, learned to love it over thousands of hours of practice and improvement. Whether they realized it or not, they were becoming programmers, or at least no-code practitioners before the no-code movement took off. “Proficient in the Microsoft Office Suite” is so meaningless that it’s become a meme, but the ability to bend one specific Office program, Excel, to one’s will is a badge of honor.

But the enduring, passionate user fervor for the product isn’t even its most unique attribute. Excel’s most lasting impact extends beyond the spreadsheet itself.

Excel may be the most influential software ever built. It is a canonical example of Steve Job’s bicycle of the mind, endowing its users with computational superpowers normally reserved for professional software engineers. Armed with those superpowers, users can create fully functional software programs in the form of a humble spreadsheet to solve problems in a seemingly limitless number of domains. These programs often serve as high-fidelity prototypes of domain specific applications just begging to be brought to market in a more polished form.

If you want to see the future of B2B software, look at what Excel users are hacking together in spreadsheets today. Excel’s success has inspired the creation of software whose combined enterprise value dwarfs that of Excel alone. There are two main ways Excel has set the broad roadmap for the B2B software industry for decades, and will continue to for years to come:

  1. The Unbundling of Excel. Hundreds of B2B startups have been built by taking a job currently being done in Excel and trying to accomplish the job in more optimized, purpose-built B2B software. Every time you hear an entrepreneur say, “We’re replacing siloed spreadsheets and outdated processes with purpose-built software,” you’re hearing the Unbundling of Excel in real time. Many popular SaaS applications fall in this category. And yet, despite being “unbundled,” Excel keeps getting stronger.
  2. Inspired by Excel. That resiliency has inspired entrepreneurs to look more deeply at what makes Excel tick, and why. Adventurous builders are creating new software that doesn’t unbundle Excel, but is Inspired by Excel. Excel’s balance of usability and flexibility can be found in popular no-code and low-code products created over three decades since Excel first graced the screen. This source of inspiration is less direct and more meta; it is less about recreating anything concrete that happens in Excel, and more about capturing the essence of what makes Excel so successful.

We love Excel, everyone reading this probably loves Excel, and still, its impact is deeply underappreciated. Today, we’re going to fully appreciate it by covering:

  • The History of Excel
  • Excel as a Language
  • The Lindy Effect
  • Excel’s Limitations
  • No-Code and the Unbundling of Excel
  • Why Excel Will Never Die

A little competition isn’t new to Excel. It was born fighting.

The Spreadsheet Wars

We have Steve Jobs to thank for Microsoft Excel, and Microsoft Excel to thank for Apple. Spreadsheet software was the first truly killer app for the Mac and home PC, and the Mac’s graphical interface helped bring spreadsheets to the masses. The two propelled each others’ growth.

Excel wasn’t the first digital spreadsheet. When HBS student Dan Bricklin had to decide between doing spreadsheets for a case study by hand or on the school’s mainframe, he, like so many entrepreneurs, realized there had to be a better way. He launched VisiCalc, a “visible calculator,” in 1978. Computer Associates followed two years later in 1980 with SuperCalc. That same year, Mitch Kapor sold VisiPlot/VisiTrend to VisiCalc’s parent company, Personal Software, for $1 million, and joined to work as a product manager on VisiCalc.

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In 1982, Kapor left to build a yet-to-be-named product that combined the spreadsheet with graphing, and somehow convinced Personal Software to carve the product out of his non-compete. “I am not sure why they agreed to this,” he wrote in an email, “Perhaps they felt I lacked credibility to pull off something this ambitious. If so, they underestimated me.”

Kapor founded Lotus in 1982 and launched 1-2-3 in 1983. In its first year of operations, Lotus did $53 million in revenue and IPO’d. The next year, it tripled revenue to $156 million. SaaS has replaced discrete sales as the go-to business model for software because it’s better for the customer, generates recurring revenue, and can lead to a higher Lifetime Value, but no SaaS company has ever put up such big numbers as quickly as Lotus did.

The same year Kapor founded Lotus, Bill Gates and the Microsoft gang released its first spreadsheet software: Multiplan. It was notable for using R1C1 addressing (row then column) instead of A1 (the column then row we’re used to), for aiming to be the most portable spreadsheet application, runnable on over 50 different computers, and not for much else.

Lotus 1-2-3 crushed Multiplan, and Microsoft went back to the drawing board with “Project Odyssey.” They originally built Odyssey to be a better spreadsheet than Lotus 1-2-3 on the PC, but two critical things happened during development that would catapult the project into a lead that it still holds today, 36 years later.

First, was the team’s motto: “Recalc or die.” According to Jeff Raikes, Mutiplan’s product manager and the man behind Office, “A brilliant programmer named Doug Klunder figured out how to do the calculation algorithm in two dimensions simultaneously so that we could recalculate even faster than Lotus 1-2-3.” Klunder’s innovation meant that instead of having to recalculate (recalc) every cell every time a cell changed, Odyssey only recalculated the affected cells. That gave it a huge speed and performance advantage over 1-2-3, which created the magical experience that any Excel user is familiar with: change an input, and watch worksheets full of outputs respond immediately.

Second, Gates and Raikes decided that they needed to take advantage of the graphical interface, so they switched mid-project from building for the PC, which was operated via command line interface, to building exclusively for Mac.

Jon Devaan, who worked on Odyssey, credited Jobs’ machine’s broad usability: “That was really the important thing at the time, to bring software from PhD thesis mode into something that an average person could use.

Microsoft Excel 1 for Mac (1985), Source: Version Museum

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With those two innovations, Microsoft launched Excel in 1985 exclusively on the Macintosh. It was that counterintuitive decision to launch on its competitor’s computer while Lotus 1-2-3 was stuck on its own MS-DOS, that brought Excel into the mainstream.

If you want to go really deep on the history of Excel, watch this whole video:

Source: UT Dallas

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