Founders - #208 Steve Jobs, Bill Gates, Michael Dell, Bill Gates, Andy Grove, Bill Hewlett

Episode Date: September 29, 2021

What I learned from reading In the Company of Giants: Candid Conversations With the Visionaries of the Digital World by Rama Dev Jager and Rafael Ortiz. ----Get access to the World’s Most Valuable Notebook for Founders at Founders Notes.com----A small team of A+ players can run circles around a giant team of B and C players. —Steve Jobs There are no shortcuts around quality, and quality starts with people. —Steve Jobs Usually people never think that much about what they're doing or why they do it. They just do it because that's the way it has been done and it works. That type of thinking doesn't work if you're growing fast and if you're up against some larger companies. You really have to outthink them and you have to be able to make those paradigm shifts in your points of view. —Steve Jobs ————Steve Jobs answer to What advice would you give someone interested in starting their own company?A lot of people ask me, "I want to start a company. What should I do?" My first question is always, "What is your passion? What is it you want to do in your company?" Most of them say, "I don't know."My advice is go get a job as a busboy until you figure it out. You've got to be passionate about something. You shouldn't start a company because you want to start a company. Almost every company I know of got started because nobody else believed in the idea and the last resort was to start the company. That's how Apple got started. That's how Pixar got started. It's how Intel got started. You need to have passion about your idea and you need to feel so strongly about it that you're willing to risk a lot.Starting a company is so hard that if you're not passionate about it, you will give up. If you're simply doing it because you want to have a small company, forget it.It's so much work and at times is so mentally draining. The hardest thing I've ever done is to start a company. It's the funnest thing, but it's the hardest thing, and if you're not passionate about your goal or your reason for doing it, you will give up. You will not see it through. So, you must have a very strong sense of what you want.You have to need to run such a business and know you can do it better than anyone else.————There are no safe harbors. The only safe harbor is competency. Competency at doing something. —T.J. Rodgers founder of Cypress SemiconductorThe first time someone says, “The product you've made has changed my life," is the biggest sense of satisfaction you get. It motivates me more than anything else, by far. —Charles Geschke, founder of AdobeBeing detached from the customer is the ultimate death. —Michael Dell The faster you experiment and get rid of things that don't work and keep doing things that do work, the faster you get to the winning business model. —Michael DellThe important things of tomorrow are probably going to be things that are overlooked today. —Andy Grove The best assumption to have is that any commonly held belief is wrong. —Ken Olsen ----Get access to the World’s Most Valuable Notebook for Founders at Founders Notes.com----“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast ----Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work.  Get access to Founders Notes here. ----“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast

The professor asked with a wide grin, So you want to write a book on high-tech CEOs? Well, gentlemen, it's a long shot. A huge long shot. And besides, no CEO knows why he's successful. It's all just luck. Coming from a well-known strategic management professor, a comment such as this seems somewhat ridiculous.

For if successful management were all luck, then why are we taking his class? Why, for that matter, were we in business school at all? Surely successful management was not entirely due to luck. There had to be some successful strategy and ideas at play too. Louis Pasteur once said that chance favors the prepared mind. If chance is a major factor in a company's success, as our professor believed, then we really wanted to know what successful entrepreneurs do to prepare their minds.

What are the crucial skills needed to run a successful company? To hire great people? To ship a great product? What skills should a potential manager try to develop? Why was one manager successful where another wasn't? Answers to these questions, in the words of the very people who have started successful technology companies, comprise this book. We chose to focus on the computer industry for two reasons. First and foremost, computers are dynamically changing the way people exist. They are causing generational change. Compared to our parents, who use computers for word processing or technical applications at best, many of us use the power of computers for surfing the internet,

communicating with friends and colleagues, and balancing a checkbook. Second, going to Stanford's business school put us in the heart of Silicon Valley. Steve Jobs candidly told us one night, well, if you're at heaven's gate, you might as well walk inside and take a peek. That is an excerpt from the book I'm going to talk to you about today, which is In the Company of Giants, Candid Conversations with the Visionaries of the Digital World. And it was written by Rama Dev Yeager and Rafael Ortiz. So just a few things before we jump back into the rest of the book. I just want

to tell you how the book is structured. So it's a series of interviews by two Stanford MBA students with 16 technology founders. And in each interview, they give the philosophy, their philosophy on company building, managing, developing new technology, and then advice to people, to future entrepreneurs. Some of the people, so this book, I guess I should tell you, it's a very old book. It's about 25 years old. And so several of the people that were interviewed in the book are no longer with us. So this book serves as a way for them to pass on their information and their useful information to us long after they passed away.

And then some of the book, a few of the founders in the book are actually still operating to this day. So the very first interview is with Steve Jobs. That's probably where I have the most highlights. And I actually wasn't expecting to read this book right now. I have two other biographies that I'm reading at the same time. And I just picked this up one day and I started reading. I read the introduction. I thought that that that quote from Steve was very fascinating. Well, if you're at Heaven's Gate, why aren't you peeking in and taking or taking a look? Right. And then I started reading the introduction and then I read his interview. I was like, okay, this is amazing. I just decided I'm just going to go through and finish this entire book.

So I just want to pull out one thing from the introduction or two things from the introduction before we get into Steve's interview, which is just mind-blowing. So this is the view from 1997. And so what's fascinating is they're all talking about and some of these people had been operating for, you know, a decade, some of them three, three, three and a half decades by the time they sit down for an interview. And so now they're having to grapple like the internet's becoming extremely popular, it's growing fast, but they really don't know they have a sense of what's about to occur um or they know something's going to change and they they repeat this over and over it's like listen these things are not predictable you can see the change on the horizon but you you can never predict the full outcome of a generational

change like this so what i found interesting is i'm always amazed at how some of the people how some people that we study on the podcast, they see opportunity years before other people. And one of the people profiled in this book that saw the change that the computer network, that you communicate with other computers, would bring is Steve Case. He's the guy that founded American Online. So this is a little bit about that. I'll go into more detail in his interview later, though. So this is the author's writing.

So what's the story for the future? The 90s have brought promise of a new era in computing. Simply put, the new paradigm of entrepreneurs to grapple with is the notion that computers connected to others, communicating and sharing information amongst them increases their value tremendously to users. Now think about how mind-blowing that is. They knew that in 97, right? The idea that if computers can communicate with each other it makes them extreme exponentially more valuable right and we live we we've now grown up in the world that they're seeing and so it says uh they're valued tremendously to users now this blue this one sentence blew my mind steve case founder of american online saw this in 1985

in case you've never used american online it was you can think of almost like a proprietary version of the internet before the internet. So it says it remains to be seen whether the the advent of the internet strengthens the giant's hold over the over computing, or undermines it to create an entirely new generation of successful entrepreneurs and leaders. Okay, so that is the view from 1997. Let's jump into the Steve Jobs interview. Each interview starts with a brief bio of the person interviewed, and then they get right into it.

This is really fascinating because when he sits down, when Steve sits down for this interview, he does the interview at the headquarters of Next. He's back at Apple, but he's not the full-time CEO. And so let me just give you a few highlights from the brief bio. And really, the note I left myself is the way I think about Steve is dogged persistence combined with delusional self-belief.

Many would-be entrepreneurs lacking money or strong business experience become stymied by the challenges of obtaining financing and recruiting people to join them in working for what is essentially an idea. Yet Jobs doggedly cajoled suppliers and retail outlets to provide Apple with low pricing and extended credit. His apathy for maintaining his outward appearance, he often showed up to meetings barefoot, didn't appear to lessen his zeal. And one of my favorite little facts about Steve and the fact that Apple today is a multiple a multiple a trillion dollar plus company is the very first sale for apple was made barefoot when he walked into bite shop he walked in there with no shoes and he made a sale but barefoot i thought it was hilarious instead his aggressiveness netted the help of several engineers marketing firms and venture capitalists and then this really through these three words it just really summarizes

him summarizes him jobs relentless ambition and then just two sentences on the next page i want to pull out in the very early days of founders i had this this segment every every podcast i called critics don't know shit and because it struck me as i started to go through and began reading a bunch of these biographies is that in every one, almost every one, maybe every one, there's always an example early in their lives of somebody telling them, hey, you can't do that. You're not good enough. So the example that pops to mind all the time is the fact that Sam Walton, way years, decades before he founded Walmart, he's working at JCPenney. He learned a lot about retail from JCPenney. At the time, the founder of JCPenney was actually alive and would visit the stores. But Sam's manager told him one day, Sam, I don't know how to tell you this, but, you know, you're just not cut out for retail. You should find something else to do. And, you know, in hindsight, that's humorous. Like, oh, I'm not cut out for retail. How about I become the greatest retailer that ever lived? How about that? And he had Sam had the same dogged determination that Steve Jobs had. There's another example in his autobiography where it might be in his biography because I've read two books on Sam for the podcast.

But his landlord screws him over, winds up saying, I'm not going to renew your lease, and then copies Sam's company. Like the ideas he had for his shop and just said, hey, this guy is making so much money. I'm just going to tell him I'm not going to resign his lease. And then I'm going to do the same thing he was doing. And when Sam is in his lawyer's office finding out there's nothing he can do about it, there's a great story where he's just clenching his fist and unclenching and clenching his fist and unclenching. And he's like, I'm not whipped. That's fine. Like I made a mistake.

I fell down. I'm going to get up and I'm going to do it all over again. But that just dogged determination and that delusional, in some cases from the outside, at least, that delusional self-belief. But the reason I bring that up in this section is because we get to see the current state of current news at the time in 97. Twenty five years later, what I'm about to read to you is ridiculous. So it's talking about at this point, Apple has just paid over $400 million for Next. And it says many journalists had critical comments about Apple's strategy behind the acquisition. I mean, it's just an insane statement to read.

And knowing now what we know 25 years, almost 25 years later, it says fate rarely presents entrepreneurs more than one golden opportunity for commercial success. But Steve Jobs manages to defy the odds. And so if you study the career of Steve Jobs, he made insanely great products in the 70s, the 80s, the 90s, the 2000s, and the 2010s with the iPad right before he died. So let's go jump into this interview. And it talks about like, you know, what what talent like, why, how, why do you think you're successful? And so he says and uh this was steve talking i think that i've consistently figured out who really smart people were to hang around with you must find extraordinary people so remember everything that

we're reading here he's giving advice he's talking about okay this is what i learned in my career he's they're all speaking to future generations of entrepreneurs that is the point of the book i think that's why over the years this book has been recommended to me by so many people. I know a ton of people that have read it. So it says you must find extraordinary people. The key observation is that in most things in life, the dynamic range between the average quality and the best quality is at most two to one. Rarely you find a difference of two to one. Pick anything. So he uses an example like the best taxi driver, at most is, you know, two times the better than the average taxi driver. But there's domains, and there's areas in life

where this, this rule of thumb doesn't apply. And especially in technology companies, it doesn't apply. So he says, but in the field that I was interested in, originally hardware design, I noticed that the dynamic range between what an average person could accomplish and what the best person could accomplish was 50 or 100 to 1. Given that, you're well advised to go after the cream of the cream. That is what we've done. You can then build a team that pursues A players. And then the next quote I'm about to read to you, it's actually on the back cover of the book. It's one of it's just a fantastic quote. He says, a small team of A players can run circles around a giant team of B and C players. And you'll be amazed if you read this book how much time Steve talks about.

You have to recruit the best people. You have to have the best people. He says it in multiple different ways and answers to multiple different multiple different questions. I would say his main point of this interview is you must find extraordinary people. And then I think like embedded in that is that you must become an extraordinary person yourself as well. So they follow up the questions like, OK, so your account, your talent is in recruiting. He's like, it's not just recruiting recruiting after recruiting it is then building an environment that makes people feel they are surrounded by equally talented people and that their work is bigger than they are that is an idea he learned from akio marita and uh from sony your work must be bigger than you are it's also something that

jeff bezos talks about that he copied from akio marita as well if you haven't listened to that podcast that's founders number 102 uh the The feeling that the work will have tremendous influence and is part of a strong, clear vision. You have to do all of those things. And so he gets into his tactics, like how is he finding extraordinary people? And he says it's collaborative. I found that collaborative recruiting and having a culture that recruits the A players is the best way. Any interviewee will speak with at least a dozen people in several areas of the company, not just those in the area that he would work in. That way, a lot of your A employees get broad exposure to the company. The current employees can veto a candidate. And so he talks about it's like, you know, you could have nine people say, yeah, let's do it. And one person say no. And that veto stands. And so he's describing his process. And they're like, that seems very time consuming. And Jobs says, yes, it is. And remember a few weeks ago in that book Inside Steve Jobs Brain, he applies this this like don't shirk on quality spend the time go through the rigorous

standards that most people uh most other people most other companies won't to everything he's they spent six months on just designing the scroll bars in the mac operating system i can't remember which one it was six months just on the scroll bars till they got it to to the level of quality that steve deemed like acceptable six months so it's like yeah okay they got it to the level of quality that Steve deemed like acceptable. Six months. So it's like, yeah, okay. And then now this might be my favorite part of the entire Steve Jobs interview

because then he describes why is this so important? So it says, you know, this seems very time consuming. Yes, it is. And then there's another follow-up. And you remember, they're just business students at the time. They don't have a lot of experience. And so their point is just like, well, what you're telling us seems to conflict. And they say, yeah, but in a typical startup, a manager may not always have the time to spend recruiting other people.

And Steve pushes back on this question hard. And this is fantastic. I'm going to read the entire paragraph to you. I disagree totally. I think it's the most important job. Think about what he just said. The most important job. Now, why? When he lays out his logic, first of all, it's extremely clear. It's amazing he can talk like this off the cuff, right? But it's extremely clear. And then when you get to the end of the paragraph, yeah, okay, this is clearly the most important job. And then I'll give you a summary of what he says on the next page, actually. There are no shortcuts around quality and quality starts with people. So keep that in mind as I'm reading this section to you. I disagree totally. I think it's the most important job. Assume you're by yourself in a startup and you want a partner. You take a lot of time finding the partner, right? He would be half of your company. Why should you take any less time

finding a third of your company or a fourth of your company or a fifth of your company. Why should you take any less time finding a third of your company or a fourth of your company or a fifth of your company? When you're in a startup, the first 10 people will determine whether the company succeeds or not. Each is 10% of the company. So why wouldn't you take as much time as necessary to find all A players? So that's pushing back precisely on what they said. Well, you know, a manager in a startup doesn't have time to recruit other people. And Steve says, why wouldn't you take as much time as necessary to find all A players? If three were not so great, why would you want a company where 30% of your people were not so great? A small company depends on great people much more than a big company does.

And then a little later on, he says the same thing. There are no shortcuts around quality and quality starts with people. And so now they're asking a question. Okay, well, if a player is so important, like how do you like, how can you tell who's in a player who isn't? There's two different ways. One of them is a lot easier. So it says, as a matter of fact, that's how I find great people. I look at great results and I find out who was responsible for them. So this is something. Think about the very beginning of the advertising industry. We just covered this on the man who sold America, Albert Lasker.

He did this. He would read great ads. I'm like, OK, who wrote that ad? I need to find this guy. And then he'd push hard to recruit them. So that seems really straightforward, right? You can look at the work. This is high, obviously high quality work. This person knows what they're doing. I'm going to try

to get them on my team. Now, the other part is you got to find, especially in the early days of company, you have to find people that are not, it's not already known. So you're betting on their potential. And so Steve goes into this. Sometimes young people haven't had the opportunity yet to be in a position of influence to create such results. So here you must evaluate potential. It is certainly more difficult, but the primary attributes of potential are intelligence and the ability to learn quickly. Much of it is also drive and passion. Hard work makes up for a lot. And that sounds so that's coming out of Steve Jobs mouth. Right. That sounds a lot like Nolan Bush now who hired a 19 year old Steve Jobs who fit the description of what Steve Jobs is saying here. He's a young, young person. Right. He hasn't really had the opportunity yet to be in a position to create such results. But when Nolan picked out and he wrote an entire book about it, which I cover covered which is how to find the next Steve Jobs and what Nolan picked out is well this guy has a lot of passion he he does not listen when I say

no he just refuses uh he's like no you can't be hired I'm going to be hired I'm just going to stay in your lobby till that happens and then he obviously very smart if you talk to him and he's just willing to have a lot of drive and passion they'd stay up all night making games for atari wanting to sleep in the office you know this is very unusual so so nolan kind of picked out well you know most of talent comes from these kind of weirdos uh to use for lack of a better word and atari he says like we had a culture where we had these like misfits this land of misfit geniuses and the And the reason we would attract them is because the environment that they worked in acted as a giant job ad. And usually people like that know other misfits and they're like, hey, you should come work for this company. So he's going to go

into, this is all a very long answer, right? So he's still talking about how do you find A players. I'm going to skip ahead a little bit in this long answer. And I want to pull out his interview technique because this is very interesting. Many times in an interview, I will purposely upset someone. I'll criticize their prior work. I'll do my homework, find out what they worked on and say, God, that really turned out to be a bomb. That really turned out to be a bozo product. Why did you work on that? And then this is fantastic. He says, I shouldn't say this in your book and this is before i read this to you this is something i've seen over and over and over again every single person that we're

going to profile if you if you live a life so like you think the people every single person that we talk about on the podcast lived a life so remarkable that somebody wrote a book about that that is not a normal person by any stretch of the imagination. They are all formidable individuals. And a lot of them have this trait where they will know that they can intimidate other people. And most people just they just steamroll right over them. And the way to the only way if you come if you have if you come across these people, the only way to get their respect is to stand up to them. And Steve says that exactly. He's like, listen, I started this interview. Your work sucks. This product is bozo. You must be a bozo too. And so Steve says, I shouldn't say this in your book, but the worst thing that someone can do in an interview is agree with me and knuckle under. What I look for is someone to come right back and say, you're dead wrong. And here's why. I want to see if they just fold or if they have a firm conviction. And so there's two things that came to mind when I got to this section. Steve is talking about Steve. He is literally talking about a younger version of

himself. Let me go back to the book I just referenced. Nolan Bushnell in How to Find Steve, or How to Find the Next Steve Jobs talks about this. Perhaps, and this is a quote from the book, check this out. This is, I love this quote. And and this is a quote from the book. Check this out. This is, I love this quote. And I think about it all the time. I have it saved on my phone. Perhaps everyone has creative potential, but only the arrogant are self-confident enough

to press their creative ideas on others. Steve believed he was always right and was willing to push harder and longer than other, this is the most important part, than other people. So he's pushing, willing to push harder and longer than other. This is the most important part than other people. So he's pushing, willing to push longer and harder than other people who might have had equally good ideas, but who caved under pressure. Steve is saying the same thing. I want to see if they fold or if they have firm conviction. There's a great story that I've told in the podcast many times. I was watching this interview with Kobe Bryant one day. Maude Rashad is interviewing him and they're talking about

something that happened, you know, 15 years previously when Kobe was only 21 years old. Kobe's playing for the Lakers at the time. Phil Jackson's his coach. Phil invites Michael over to practice and Michael comes up there and he's talking to Kobe and he's like, all right, well, maybe we can play. Maybe we can find out what you got. And Kobe says, no, maybe I'll find out what you have. And then Jordan says, you can't guard me. And Kobe says, you can't guard me. So after they have that little meeting, that little talk, Michael's walking down the hall with Ahmad Rashad, and he pauses,

and he's like, man, I love that dude. That dude is a warrior. And Ahmad is now retelling a story to Kobe, and he's like, it's because you didn't step back and so that trait that michael jordan has that trait that steve jobs is talking about right here i don't want you on my team if you're just going to fold flat if you don't have any kind of conviction if you just let me roll all over you okay so let's skip ahead in the interview a little bit this is this part there's a lot of highlights here because really this entire section is Steve talking about this.

And people can't change their perspective. They don't actually know why they're doing what they're doing. They're just like, I'm doing this today because it's very similar to what I did yesterday. And he's like, if you're going to have a great company, you've got to stop and analyze every single section of what you're doing and ask, why are we doing this? And so we have him in this interview, he's having a conversation with Fred Smith, which is the founder of Federal Express. Actually, you know what I love? This is very fascinating to me. So there is like, there's got to be a dozen founders in this book that are that are mentioned in this book that I've actually done episodes on. And so Fred Smith is one of them. That biography of his is just crazy. If you read, go back and read, I think it's called

Overnight Success, which is obviously the opposite of what FedEx Fest was. I don't know if there's many businesses that were harder to create than that one. But Fred Smith's in this book, Thomas Watson, Bill Shockley, Bob Noyce, Andy Grove, Paul Allen, Bill Gates, Steve Jobs. It's just over and over again. All these people show up in this book. And, you know, there's tons of podcasts in them in the archive if you haven't gone back and listened to them. So it says, after the system was established, I once asked Fred Smith, the CEO of Federal Express, how much it would cost to ship a Mac anywhere in the country directly from Apple to the customer within two days. And so Fred's like, I can do that for $27 per machine. Okay. So then Steve goes, okay. I went back to Apple and

analyzed our current distribution system, which by this time took about three weeks from the factory to the customer. And even worse, we found out that it costs us $57. So Federal Express says, I can do it in two days and $27. It's taking us three weeks and $57. So why the hell are we doing this? So I proposed that we completely eliminate the distribution warehouses, have FedEx says, hey, I can do it in two days and $27. It's taking us three weeks and $57. So why the hell are we doing this? So I propose that we completely eliminate the distribution warehouses, have FedEx just pick up the Macs at the back of our factories, eliminate the paperwork and get the product from the factory to the customer within 48 hours. And so he's talking about Apple before he had complete control. Remember, the two times he was at Apple, the second time it's like, no, I'm going to do the same thing James Dyson taught us over and over again. If it's important to your business, you must be able to control it.

Control comes from a single individual. It's not done by a committee. It is by one person that has complete and absolute authority. And so Steve also talks about that in the Johnny Ive book that I did probably a couple months ago where he's like, you know, I needed something to be made. I was dealing with some of these engineers that were, that were at Apple before I'd come back. And they're like, no, we can't do this. And Steve looks him dead in the eyes. Like I'm the CEO. I'm the one responsible. We will do it. Meaning if you can't do it, I will find somebody else to do it. So you won't have a job here anymore, but it will be done. I'm not bending on this at all. So Steve talks about it. It's like, okay, well, this seems very obvious, right?

The customer gets the product sooner. They're going to be happier. We save $30 per machine. We're selling millions of machines. We obviously want to do this. And then the reduced complexity. But he says, but I got my head shut off because people couldn't change their perspective. And so the follow-up question is like, what do you mean people couldn't change their perspective. And they're like, so the follow up question is like, what do you mean people can change their perspective?

Can you explain a little more what's happening in this specific example? Well, generally, it's because people never know or forget what they're really doing. That is what the benefit is to what they're really doing. Our distribution centers forgot that what they were really all about was getting product from Apple to its customers really fast. They thought they were about a whole lot of other things like personal relationships with the customer. They even had some sales functions. It became a real mess. Eventually, the industry went the way of mail order.

Dell Computer was built on that model. And there's going to be a lot of highlights from Michael Dell, which is that I found that interview very, very fascinating. Apple could have done what Dell did, but much sooner. Usually people never think that much about what they're doing or why they do it. They just do it because that's the way it is. It has been done and it works. That type of thinking doesn't work if you're growing fast and if you're going up against larger companies. You really have to outthink them and you have to be able to make those paradigm shifts in your own point of view. And so he's asked about, you know, how did you learn management? Like where did you, how did you come up with the, like your philosophy

of management and the structure that you put in all your companies? And he says, HP, Hewlett and Packard set the tone for the modern intellectual property-based company. They did such a good job of it that the rest of us have only built on their foundation. Mostly, we just copied HP. When your primary product is essentially bits, your primary assets are human capital, not financial capital. Demand for people is greater than supply. Demand for, obviously, great people, A players is what he's for people is greater than supply. Demand for obviously great people, A players is what he's talking about there, than the supply. You must offer those

people something more than a paycheck and stock options. So they must believe in the mission. And why does he say that? Because if you're any good, you have a ton of people constantly trying to recruit you. So he says, if you don't like the way things are at one company, and if you're good, then you can leave anytime and go anywhere else. In fact, headhunters are calling you every week. So his point is, is if it's only about money, then those people would just be constantly leaving for better, more stock options, more money. Sometimes they obviously do, but you're able to compete on them if they actually believe in what you're doing and you can provide more value to the work that they're doing. And then he gets into the point where, think about this, he's saying this in 1997.

It is even more true today. So he says, the people with most power are the hotshot individual contributors. They work as pure individual contributors and have more power than anybody else because they come up with product. It would not be too distorted to say that the traditional corporate pyramid is completely inverted. That's the way it ought to be. Silicon Valley has pioneered the That's the way it ought to be. Silicon Valley has pioneered the way that many businesses will need to be run as we enter the next century, where more and more companies are pure intellectual property interests. So they get into him trying to self-identify. They're like, you know, what are your strengths or weaknesses?

He's like, I don't know. People are packaged deals. You take the good with the confused. In in most cases strength and weaknesses are two sides of the same coin so it's like okay well i can't you can't just pick certain parts of a person right it's a very subtle thing to talk about strength and weaknesses because almost always they're the same thing and so he thinks his one strength is the fact my strength probably is the fact that i've always viewed technology from a liberal arts perspective, from a human culture perspective. That's the same thing that Johnny Ive noticed about Apple. He's like, well, it's a very cold industry, but there's these little devices that I'm drawn to because there's a human element,

like an intangible thing that you get when you look at them and when you use them. He goes into a lot more detail on his weaknesses. In certain cases, my weaknesses are that I'm too idealistic. I realize that sometimes best is the enemy of better. Sometimes I go for the best when I should just go for better and end up going nowhere or backwards. I'm not always wise enough to know when to go for the best and when to just go for better. Sometimes I'm blinded by what could be versus what is possible. Balancing the ideal and the practical is something I still must pay attention to.

He talks a lot about the role of CEO, the role of a founder. Like, what is your role in the company? This is probably the most succinct description. There's a lot more detail in the interview, though. But he says part of the CEO's job is to cajole and beg and plead and threaten at times to do whatever is necessary to get people to see things in a bigger and more profound way than they have and to do better work than they thought they could do it's funny now now i just thought just popped my mind as i read that because in the biography i think it's the biography written

by isaacson might be becoming ste Jobs, but he also applies that to vendors. I remember at the time they were looking for really high-quality glass for the iPhone, and the iPhone was still in development. I want to say that the glass was called Gorilla Glass or whatever the case is, but he's talking to the person, the founder and CEO of that company. They had stopped producing the glass for some reason, and then Steve's talking about, this is perfect perfect for my product this is what I need and this is how fast I need it and so they start having like this big argument because that guy

also is some gain Steve's respect because uh Steve gets up on the whiteboard and like drawing all this stuff out he's like you know what the hell you're talking about like I spent my entire life in the glass industry you're wrong and so anyways um he's like this is how much i need and you have six weeks to do this i'm going off memory so you know it doesn't matter if it's six weeks or eight weeks whatever it is but you have six weeks to do this and the guy's like this is impossible and steve just dead like locks eyes with the guy won't like uh won't interrupt like the the the like eye contact with them and says something to the effect of you can do it get your mind around it and then like a paragraph or two later i'm pretty sure it's isis then is interviewing the guys like

he was right we just did it i don't know how it's even possible but we did we did the impossible in such a short amount of time and it took steve just refusing to believe that we couldn't do it. And it's funny because go back, you know, that's happening. Let's say that's probably 2006. Maybe it's maybe 10 years after this book, maybe, no, maybe a little earlier, but, uh, in any case, like go back to what he just said here. He's like, at times you have to do whatever's necessary to get people to see things in a bigger and more profound way than they have and to do better work than they thought they could and now i'm laughing to myself because i keep telling you this is my favorite part of the interview and then i find another favorite part of the interview so this might be my favorite part of the interview i'm

going to read the whole answer this is fantastic and it's extremely extremely important because again this book is set up it's like i'm going to tell you my philosophy on starting a company and managing a company, developing new technology. But it's geared towards future entrepreneurs. So now this is Steve Jobs' answer. What advice would you give someone interested in starting their own company? And so here's what Steve said. A lot of people ask me, I want to start a company. What should I do?

My first question is always, what is your passion? What is it you want to do in your company? Most of them say, I don't know. My advice is go get a job as a busboy until you figure it out. You've got to be passionate about something. You shouldn't start a company because you just want to start a company. Almost every company I know of got started because nobody else believed in the idea and the last resort was to start the company. That's how Apple got started. That's how Pixar got started. That's how Intel got started. You need to have passion about your idea and you need to feel so strongly about it that you're willing to risk a lot.

Starting a company is so hard that if you're not passionate about it, you will give up. that you're willing to risk a lot. Starting a company is so hard that if you're not passionate about it, you will give up. If you're simply doing it because you want to have a small company, forget it. It is so much work and at times is so mentally draining. The hardest thing I've ever done is to start a company. It's the funnest thing, but it's the hardest thing. And if you're not passionate about your goal or your reason for doing it, you will give up. You will not see it through. So you must have a very strong sense of what you want. And so there's a follow-up question. I'm going to pull out one sentence from the answers to

that follow-up question because I think it summarizes exactly what he just told us. You have to need to run such a business and know you can do it better than anyone else. So now he gets into what he thinks went wrong at Apple in the 12 years that he was gone. His sentence that he's going to say here is really, do you remember that book, The Autobiography? The score takes care of itself. I think Found founders like 104, 106, something in there. But this is the main point of the book is exactly what Steve is talking about here. He says, I was taught by some wise people that if you manage the top line of your company, your customers, your products, your strategy, then the bottom line will follow. But if you

manage the bottom line of the company and forget about the rest, you'll eventually hit the wall because you've taken your eyes off the prize. So he always talks about when I was at Apple, our primary goal was to make the best products for our customers. And then when Apple started to be successful and all the professional managers were brought in, their goal was to make the most money as possible. And he always talks about that. That may seem like a subtle difference, but it's not because it affects every decision you make. And he gives examples here.

They changed from the conviction of making the best computers in the world to the convictions of making money. That's a very subtle thing, really. It was as if they boarded a rocket ship as it was leaving the launch pad, and they thought they made the rocket ship rather than having been just passengers. All these passengers were convinced that they made the rocket ship. That was fine until the company needed a new rocket ship. They needed a new one years ago, but the culture doesn't exist to know how to build rocket ships. And so you can think about that $400 million, $450 million that Apple spent on Next.

They spent it because they had to hire somebody that knew how to build a rocket ship. Apple had a wonderful set of values that was based on, in many ways, what Hewlett and Packard did. We copied a lot and tried to build upon it. You see, he repeats this over and over again. This is obviously very important. And it just obviously speaks to every single one of history's greatest entrepreneurs all learned from entrepreneurs that came before them. And Steve, what's fascinating about Steve is he peppers his conversation with this. He talks about what he learned from HP, from Bill Hewlett and David Packard.

Actually, Bill Hewlett is interviewed in this book right before he dies. And so I have some highlights from his interview as well. He'll talk about what he learned from Edwin Land, from Bob Noyce. He talks about other domains, talks about the importance of learning how to hire the best people from Robert Oppenheimer, how to have many different interests and combine those interests from Leonardo da Vinci. And so it's clear through his conversation that he spent, you know, this is one of history's greatest entrepreneurs speaking to us. And he's telling us through his conversation, through his actions, hey, you really should be studying the great people that came before you. So it says our values are about building the best computers in the world. A lot changed. They changed that to the value of the reason we make computers is to make a lot of money.

And so when you have that two different starting points, you know, things start to fall apart. So I think I've talked about enough of that. I think you get the point, right? I'm going to end this is the end of the interview. And the note of myself is this is so important. I don't know. The answer to the question, like remember, this is the internet's growing. It's clearly going to change things. But his answer essentially is, I don't know. I know something's going to change. You can't predict those things. And really the way you think about this section is like why you have to be able to trust your own judgment. And it says, speaking of great products,

what do you think the next great products of this industry are going to be? What is the future? To be honest, I have no idea. All you can see are the plate tectonic trends. The trend is that computers will move from primarily being a computational device to being primarily a communications device. Think about the device that he is going to create in this environment within the next decade that has changed all of our lives. The trend is that computers will move from primarily being a computational device to primarily a communications device. We've known that that was coming. The internet is certainly doing it on a larger scale than some people had imagined. But what this all

means, yet I don't know. I think there's room for a lot more breakthroughs. This is why I love reading these older books, because this is the perspective in 97. The mindset was there, right? The idea, the kernel of the idea is right there. I know something's going to change. I know the future is going to be different from the present. And I know I have all these other transformative technologies I can take advantage of. So how can I combine these and how can I make, how can I take advantage of so how can i combine these and how can i make how can i take advantage of that right i think there's room for a lot more breakthroughs i think when they happen they might spread very quickly much like the world wide web did meaning how dead on was he about this this is crazy meaning that in a period of five years

things could be very different but it's hard to say exactly what they're going to be it's very hard okay so that was just one interview and that interview with steve jobs was absolutely amazing i absolutely loved it highly recommend you're reading the whole thing i i'm gonna you know there's gonna be a long podcast man oh man okay so i'm gonna go on to this is going to be a long podcast man so I'm going to go on to this guy I didn't even know what I love I get a lot of feedback from listeners is like

you've introduced me to so many people I didn't know exist it's the same for me I didn't know I probably didn't know 80% of the people existed before I started reading about them and then you know books are original links they lead you to one idea to another one person to another so this is another example of this I didn't know 80% of the people existed before I started reading about them. And then, you know, books are original links. They lead you to one idea to another, one person to another.

So this is another example of this. And what's amazing to me and why we have so many more books we can learn of in the future from is, you know, you're introduced to all these people. Like this guy, TJ Rogers, never heard of him before. He founded this company named Cypress Semiconductor. He ran it for 35 years. just another person that was wildly successful uh founder and entrepreneur that we can learn from i just want to pull out a couple quotes uh from again this is not going to be like a normal narrative podcast i'm just trying to give you like if you think of these interviews as like the highlights of their multiple decade career i'm giving you the highlights of the highlights, right? But I, so I, I spent probably 20 hours, 25 hours preparing for

this podcast, like reading the book, rereading my notes, then going on these rabbit holes, trying to figure out who these people were, reading about them, studying about their companies. And so it was funny because in TJ Rogers, Wikipedia page, it says, uh, he's known for his brash personality. And so I didn't see that till after I read his interview. And I'm like, I have all these highlights. Like, who is this maniac that I'm reading from? Because his personality jumps right off the page. So I'm just going to give you some highlights of some highlights. And a lot of this is like a lot of people are a lot of primary motivations for people starting their own companies, surprisingly enough, is frustration.

And so that was his case. He's working at a company called AMD. He has a good idea. They won't let him build it. And this is not a kind of person that you're going to be able to stop from doing what he wants to do. So he says, why did you leave AMD and start your own company? And so he answers their question with a question. Well, why do people actually start their own companies?

The standard entrepreneurial answer is frustration. You see a company running poorly. You see that it could be done a whole lot better. You realize that the other guys really aren't that good. All of a sudden, you understand that you could go build something bigger and more important than where you are. That is a big deal. And so this idea is that you realize the other guys really aren't that good i think reading james dyson's autobiography

either one of them that i've covered on the podcast is a good example of that because he he he talks about this over and over again he's like there's so many industries where hundreds of millions of people's people are using this product and it sucks. It could be improved. It's doing an okay job because people just don't care. They're making money. If you can make money putting on an okay product, it's very hard to incentivize that person to continue to improve that product because they're already making a bunch of money. Now you can make even more money. In James's case, he showed like the people would pay four times what they were paying for a vacuum cleaner if it was better.

One of my favorite stories about this is the idea of people always pay for qualities. Yvon Chouinard, founder of Patagonia, before he started Patagonia because he was a blacksmith. He was making pitons, I think, or pitons, I think is how you pronounce it. It's those things that mountain climbers use to support themselves as they climb the mountain. At the time, they're 20 cents. He's like, these are cheap pieces of garbage. So he starts making them out of old like axles like ford model model a ford axles and he winds up um he makes a the highest quality piton in the world he charges 20 times what his competitors do and he takes 75 on the market all right Right. But this idea is like, I'm frustrated. This product could be better. Why are we not like fulfilling the full potential of what's happening?

And James applies that to wheelbarrows and vacuum cleaners and hair dryers and all kinds of stuff. And so TJ, he's like, I'm a technologist. I applied this to semiconductors. Right. And this is he founded this company, where? 1980s, maybe? 82, actually. So it says, okay, so, you know, you could be doing, that's a big deal to understand that frustration is usually an opportunity. And then we're going to get to his personality. You see it jumps off the page.

And they ask this question to a lot of them. Does the idea have to be original to start a business? No, I think that premise is total bullshit. If you look at HP, their first two products were automatic urinal flushingers and bowling pincetters. And so then he uses that as a segue into, you know, I was, it's not that AMD didn't know I had a better technology, that we had a better technology. It was politics. The weird, you know, big companies operate in very strange ways. And it's the fact that it becomes so rigid is that's the opportunity for entrepreneurs. In 1979, I knew exactly how to do it. And at AMD, I was prevented from doing it by internal politics, by superiors who had no clue about technology. I looked at the semiconductor

business and I saw wonderful opportunities. I concluded the same thing that the Japanese did about the same time in 1979. The American semiconductor industry was really weak. The powerhouses, Intel, advanced micro devices were arrogant. They were riding a wave they no longer had earned and they could be taken apart by superior technology. And we see this again. This is a Dyson did the same thing. He offered his idea for a cyclonic vacuum to the company he was working for. And they said, no, TJ does the same thing here. He says, I explained the idea. I explained the idea and, and, and hired a group to do the research and development. Those guys were political. He's talking about the people that prevented him. Those guys were

political cretins. Their boss was a moron. They assumed that because Intel couldn't do it, that they couldn't do it that they couldn't do it it infuriated me and so he talks about he's like they had a billion dollar there's a billion dollar company he had all this money to spend r&d how the hell do they lose the large companies routinely cannot crunch little companies so something's got to be wrong large companies must be screwing up a lot of stuff to lose when they're that big and so eventually tj is like forget this i'm annoyed he says my life was too short for that kind of crap they were not proficient they were pathetic

that's why the japanese kick their asses and so let's pause in his story right he's like okay i he sounds extremely arrogant right at this point he's just like this giant company i'm working for succeeding the market and yet you yet they've missed this opportunity. They're idiots. They're political cretins. They're morons. He's using all this language. And really, there's two things that pop to my mind because he goes on.

I'm obviously just giving you highlights, but he talks about this a lot. And there's something that I think is fundamentally, if you're going to work with entrepreneurs and obviously you probably have this mindset yourself. It's something that was stated explicitly a few weeks ago in the book on George Dorio, the world's first venture capitalist. And something that Ken Olson, who's also in this book, was somebody that George funded and mentored. And George had a fundamental understanding of the mindset. I think part of the reason he was so successful and able to pioneer his field is because he understood who they are on like a psychological level.

And in that book, there's a quote, let me pull it up real quick. He said, this is, they're describing George. He says, he knew that if entrepreneurs weren't self-driven and a bit egotistical, they would be punching the clock for IBM or General Electric. And we see the same thing, the same kind of, again, they're all, these traits are just, they reappear over and over again.

We see the same trait from TJ. You know, he is self-driven. He is definitely egotistical. And if he wasn't, he would have stayed. And the point I want to bring to your attention is like, he is supposed to think that way. He is, it's not something that needs to be changed, right? I was listening to this interview, uh, Jay-Z gave, it was a few years ago. He was about to play, uh, um, Yankee stadium. Uh, it's a legends of the summer tour. And he

gives this hour long interview with this guy named Elliot Wilson. And he's talking about the mindset. There's this whole thing about, you know, learning in that interview, he talks about, you know, I respect the people that came before me, like you have to respect the people that came before him. So he talks about, you know, learning from hip hop legends like Kool Herc, Big Daddy Kane, Rakim. And he says, like, I have respect for them. I'm competing with them, right? I'm competing with their legacy. I want to be better than them. That's why I'm doing this. It's like why I keep working. But I respect them because you have to respect the person that opened the door and laid some groundwork for you. And he talks about having that self-belief, the importance of having the self-belief saying, OK, I respect the guys that came okay i respect the guys that came before me the people that came before me that made that were

the pioneers of what i'm doing but i also have the self-belief to realize that i can build upon that and i can actually be better than them and then the person following me will be better than me and he said something so that i'm giving you the background to get to the main point of why i'm telling you the story is because he signed this guy named j cole and so he sees himself as like a mentor to j cole the next generation of hip hop artists. And they both were putting out at this time, at this point, when he's giving the interview several years ago, they were both Jay-Z and J. Cole were putting an album out at the same time. And Jay-Z said something that I never forgot that I think ties together with TJ's, the mindset he has, what George Dorio understood about

entrepreneurs, what Steve Jobs had. And he says, Jay-Z says, I'm sure J. Cole thinks his album is better than mine. I'm cool with that. He is supposed to believe that. Think about that sentence. He is supposed to believe that. Because I think what Jay-Z, George Dorio, TJ Rogers, Steve Jobs, and many others all have in common, they understood that belief comes before ability. You don't mistakenly become

great. At one point, you believed, hey, I could be good at this. Then you worked hard to be good at it. But you don't accidentally become great. So I just love the fact that he's like, listen, my life is too short. I see this opportunity. I'm self-driven. I'm a little bit egotistical and I have the belief that I can do it. And he jumps, he jumps from a great situation and he was right to do this because he founded a company and he was able to run that company for 36 years. So just a few more highlights from this interview. I love this quick idea. There's no such thing as a safe harbor. The only safe harbor is competency, competency at doing something well. Then he talks about the fact that he just repeated, you know, history doesn't repeat human nature does. So just like he accused all these other

people inside the companies getting fat and arrogant, he's like, I did the same thing. I did the same thing. I exploited the opportunity left open to me. I got super successful. And then I got high on my own supply. After having attacked the fat, arrogant major companies successfully, we went ahead and did exactly what they did. We read our own newspaper clippings. I got arrogant. That was a cultural problem because our attitude of manufacturing was we are Cyprus. How can we get left behind uh he's got two more ideas there are two more sentences are really about the same thing and that's the fact that you always have to be learning there's no stopping uh so he says it is brutal in that the difference between a ridiculous plus or minus two percent learning curve compounded over three years will put you out of business and he follows up and just kind of summarizes that point for us. Knowledge is profit. He goes into more detail about developing core values for your company.

This is the last thing I'll read from this interview before moving on. And it gives you an idea. This is just this guy with psychopathic levels of drive and the fact that I'm going to win. I'm going to do whatever I can to push this forward. And so he made, he made winning his first, his first core, the company's core value. I just thought it was funny. If winning is not a core value, then you just say shit happens. You bumble along with mediocre performance until you get acquired or you get fired. But if winning is a core value, then you have a visceral reaction when you're violating that core value.

So summarize that as have a visceral reaction to losing. Okay, so I want to move ahead. I got just a few fast sentences here for you from the founder of American Online, Steve Case. And so this is the idea that you and I have talked about before that's extremely counterintuitive. I had a hard time wrapping my mind around that. It came from Peter Till. He's like, you know, 95 percent. I forget what it was, 90 percent, 95 percent of all the profits of these companies happen in the future. And I'm like, it just didn't fundamentally didn't make sense to me. And, you know, you see things like, oh, you know, first year Salesforce did five hundred thousand dollars in And then you see things like, oh, first year Salesforce did $500,000

in sales, 25 years later, 30 years later, whatever it is, now they do $500,000 in sales every 26 minutes. You see there's constant these kind of stats that pop up from time to time. And so Steve's talking about the danger of quitting a good idea. He says, most of the slow growth had to do with market timing. A lot of these technology-based markets just take a while, usually a decade before they hit their stride. And then he's got a great quote. The name of this chapter is It's the Customer Stupid. And so Steve's idea is just like everything starts with the customer experience. That should be, you should create the best customer experience and work backwards from that. Something we've seen over and over again. Steve Jobs uses that idea.

Jeff Bezos uses that idea. Edwin Land used that idea. Just a ton of people use that idea. And so he says everything else is peripheral to that core idea of creating a more compelling consumer experience that people can't get anywhere else. It must excite them so much that they'll run down the street and tell their neighbors and relatives to get online too, in his case, to buy AOL too. You combine the idea with not giving up, holding on, and holding on long enough to create a customer experience that's so good that people will talk about it because that is the only durable source of growth.

Okay, so let's move on to Scott Cook, who is the founder of Intuit. This part was really, this is called, it's the customer stupid part two. And so I only have a few highlights in here. I hope my reading comprehension is adequate for you because it sounds like he started this business. He's like, listen, we tried to get $2 million from VCs. We were only able to raise $151,000 from smaller investors. And it sounds like that's all he ever used. And I don't know if he maybe raised more after this book, because that's unbelievable to me. That's really quite impressive, actually. And another reason I would say the benefit of buying this book and reading it is because you'll see that there's

people that will give conflicting advice. And there's no one formula for entrepreneurship, to quote Peter Thiel again. And so some people say, you know, raise as much money as you can. Some people say don't raise any money, bootstrap. They just go back and forth. Some say, you know, this is the most important. Some people say this thing is the most important. And I think exposing yourself to the wide variety of that is like you've got, I don't think many people suffer from that delusion as if there's one right way to build a company.

Because in practice, you're kind of disabused of that notion rather quickly. But I do think it's important to expose ourselves to a wide range of thoughts. Go back to Charlie Munger's idea that ideas are tools and that you just constantly have, you know, your toolbox is full of these ideas and you just pull out the right tool at the right time. You know, if you've got to screw something in, you don't pull out a hammer. And so his point there is like it depends on the context of the situation. Really, I'm going to just pull out. I do find the founding story of Intuit interesting. I didn't know it before I read this book.

But I just want to talk about the fact that he's just on your ass about studying your customers, talking to your customers. Study, study, study. It gives you a massive advantage if you actually do this. His point is like, if you study your customers front and back, you know the problems they have exactly. And once you know the problems they have exactly, you know if you create a solution to that problem or not. And if you know that you create a solution to that problem or not, your customer will. Or your customer, obviously, it would be obvious that you've solved their problem. And if you know that you create a solution to that problem or not, your customer will or your customer. Obviously, it would be obvious that you've solved their problem. And if you solve the problem, you will constantly they'll constantly be coming back to you, giving you money, telling other people about that.

And so he says this in multiple different ways over multiple different pages. Here's the first example. The key to business success is knowing your customer cold. Another line from him. The key here is that great business breakthroughs occur at the intersection of what customers really want and what technology does well. True greatness lies in that intersection. The entire story he's talking about. Listen, we talked to our customers at the beginning and we talked to our customers today. It says the chapter title is It's the Customer's Stupid Part 2. It's really just talk to your customers. And so this interview is happening on like a bench outside of their

corporate headquarters and so they're going through talking about he just repeats the same thing in different ways it's almost like he has one idea right you don't need marketing budgets the most important thing is to get your people to talk to customers the most and skips a couple sentences the most important thing is for you to talk with customers. And it says, And so this is Scott following up on what Eric just said. It's the most important thing. Initially, we spent nothing on market research because we just had our people spend time on the phone interviewing customers,

spending time with them at work and spending time watching them in usability tests, just sitting there and taking notes. And so he makes the point, he's like, the reason that we were able to compete with other well, better funded competitors, because we understood the problem better because we talked to customers. So once we got people to try the product, it solved the problem they needed faster than our competitors, which gave us some money to grow. So we took the money from sales, and then we reinvested it in direct advertising. And I'm going to read this section to you because I thought the way he phrased this was really interesting. But it goes back to this idea.

I'm pretty sure I got this from Steve Jobs, too. He's like, listen, I want every single person on the planet to have an Apple device. And he does that not because he wanted to be extremely wealthy, because he genuinely believed that his product was the best product. And it made the lives of his customers better. And so his point was like, if I want that to happen, we must be a great marketing company. And so the idea I took, the insight I took from that is like, listen, you, if you truly believe that you've built something that makes someone's life better, you have a moral obligation to get good at marketing. So then Scott says, then we, then we learned how to get good at marketing. So then Scott says, then we learned how to get good at direct advertising. At that point in time, we had to get good at generating demand through advertising since we couldn't afford a sales force to cover the hundreds of thousands of stores around the

country. I got some people to teach me direct response advertising. We were sick and tired of running a little company and wanted to either grow the business or get out. And then we'll end this section with just a fantastic quote from Scott Cook. You must simply have a manic focus on delivering the best to your customer and taking the best ideas wherever you find them. Okay, so now I want to get to the interview with Michael Dell. I found this really, really fascinating. I have a decent amount of highlights for you.

And the note I left myself on the very first page, and I went back and did this after I read this really, really fascinating. I have a decent amount of highlights for you. And the note I left myself on the very first page, and I went back and did this after I read the interview, is like, he's building an empire from your dorm room just from better distribution. And so it definitely intrigued me. I want to see if he has a biography, an autobiography. Because he's been running this company. He's still running this company. I just looked it up. I knew he took it private. I didn't know. So it went public. Then he takes it private. I didn't know he went public again. So I missed that other sequence, I guess. So I want to, I don't know, it's just very fascinating how he started something when he was extremely young and he's still doing it to this day. Like that is admirable and very rare. And so I want to learn from that person if I can. So a little background.

In Michael Dell's first year of business, his company sales topped $6 million, all from selling computers. Michael Dell sold computers somewhat uniquely. He sold them directly to the customer. This means that Michael Dell didn't have a showroom where he sold computers. He sold them over the phone. He sold them from his dorm room. He helped revolutionize the idea that consumers could buy computers over the phone. This gave him higher margins and gave the customer a better deal than they would get at retailers. He did $6 million in sales in 1984. Three years later, he was doing $69 million in sales. And then in 1991, $546 million.

So let's say from seven years, let's go to the very end of that. So year one, six million. Year seven, almost 100 times that amount, almost $600 million. That's wild. So they ask him a question like you're in your dorm room. At what point did you realize that you had a potential to create a very large business? And so he says, I thought and he he's got some interesting ideas here too. I remember there was a point where I realized that I had the opportunity to sell in excess of a million dollars a month of computers.

And that this was a very reachable goal without a lot of obstacles. That combined with what I saw as an economic discontinuity with the retail computer dealers sprouting up all over the countryside with their high markups and low service. This just appeared to be a basic opportunity. And so he's saying my focus was completely reversed from the focus of the industry at that time. So he says my underlying thinking was to focus on economics first and then the customer and then the product, as opposed to product customer economics which is the traditional way in our industry and this kind of thinking has been fundamental to our success for a very long time so after this initial success he drops out of school and they're like well did

you like how did you make the decision to leave school he says well it didn't really seem very risky to me because i was already earning obscene amounts of money for what to me appeared to be a relatively simple work the worst thing that could happen was that I would discover something that I didn't know at the time and I would return to school. In fact, I thought the greater risk for me would be to stay in school in case the opportunity disappeared. And so I just paused over that paragraph because it's just, how is it possible that he's doing something that one appears easy to him, right? Two is making an obscene amount of money. And if you really think about it, like what is he doing so differently? He just studied the industry, realized you guys

are all copying each other. The end result for the customer, the fact that you're all copying each other is not good. You're offering them higher prices than you need to because you have all these other expenses and you have crappy service. And so he's like, if I can just solve those two things, if I can provide a better price and better service, I don't have to generate demand. Everybody at this point in history is buying computers, some of which are buying them for the first time. So let me just go ahead and fill that need in a way that is better for the customer. That is very fascinating. That the degree of difficulty does not have to be high.

If you just stop and, again, ask, why are you doing this? Is there a better way to do this? So he starts that model in 84. He's talking about it in 97, 13 years later, and a lot of them are still not catching up, right? He says, let's focus on this question, rather. Let's focus on this model of direct-to-consumers. Why didn't your competitors try this earlier? They clearly saw you making so much money by eliminating overhead and offering customers a better deal. Why do you think they were so sluggish in responding? Michael's answer, they have underestimated the business model and continue to do so even today.

And so he talks about like all these other people like Compact and all these other competitors, they have this weird idea where it's just like, yeah, this is going to work, but it only works until you get to X amount, right? So Michael says, they didn't think that we could grow beyond $150 million in sales. And now that's about two days worth of orders. He laughed. I like how they put, he laughed in parentheses there. And this is not unique to Michael Dell, to Compact. You'll see people in existing industries, when they're confronted with a new model, humans, for some reason, they put these artificial limits

on what a new model is possible of, what it can do. And the best example of this is when Jeff Bezos, in early days of Amazon, he's constantly trying to recruit out of Walmart. And Walmart will tell the people he's trying to recruit, he's like, why are you doing that? You're going to jump on the ship of Amazon. It's going to fall apart because his model's going to, in the book it says, the Amazon model is going to fall apart at 100 million a year. There's this random arbitrary number said with such conviction.

And I'm pretty sure that was Lee Scott, if I'm not mistaken one of the the if it wasn't ceo of walmart's time there's one of the higher ups but again we see the same thing it's like okay well i'm just going to pick this dell's competitors i'm just going to pick this arbitrary number if he stays 149 million sales right he's okay but once he gets to 151 it's going to fall apart like what are you talking about and so dell dell's point is like my advantage was very clear. Like it's very obvious that you should stay as close to your customers as possible and that dealers are not your customer. For everybody else at his time, his competitors,

their customer that they sold to was the dealer. And so he says being detached from the customer is the ultimate death. And a lot of these guys, they think their customer is the dealer, which is still amazing to me. And then he has parting advice for new entrepreneurs. And it's really on why you have to experiment and you have to do it quickly. So he says, the challenge in a startup is that you almost have to spread your wings pretty far to see what will work. So the faster you do the experimentation and get rid of things that don't work and keep doing things that do work, the faster you get to the winning business model. Okay, so I obviously have to skip over very interesting people, by the way. So if you obviously want to learn from

everybody, there's 16 people in here, all of which built fundamentally great companies that we can learn from. I want to get to Bill Gates, though, because one of my favorite books I ever read for the podcast was Hard Drive, Bill Gates and the Making of the Microsoft Empire. It's like Founders 142 or something like that. But the reason I like that book is because it covers the first 35 years of Bill Gates' life and it ends with the Microsoft IPO. And so we really get to see by reading that book, who actually built the Microsoft empire, right? It's not the guy that, you know, the person we see on TV today or the person, you know, the philanthropist and, you know, the older version of Bill Gates, the much less hardcore intense version.

And so the name of this chapter is running the Panzer division. That of course is a, a reference to the Panzer tank, the German tank. It's an armored fighting vehicle intended as a primary intended primarily as an offensive weapon. And so one of the things I learned from Bill Gates and one of the things I wish to develop is his how fast, first of all, the way he was able to maintain focus on what was actually important for Microsoft's success, but the speed at which he moved. So it says anyone who drops out of college at 19 to start a company in Albuquerque, New Mexico, and turns it into an $8 billion software company is doing something right. One telling characteristic is Gates' penchant for reading biographies of great minds, people like Napoleon and Alfred Sloan.

It is not surprising that Gates reads these with the premise that perhaps one of the best ways to become a leader is to understand how others did it themselves. Gates' work ethic is as impressive as his intellect. And that's the crazy things. Like, you know, a ton of super smart people. There's a ton of super hardworking people. It's very rare that you have the combination of those two traits. And so let me just pull out some highlights. These are Bill's words. This is very fascinating. It talks about like why he felt he had an advantage at the beginning. And so his point is that everybody else in our industry was focused on doing the same thing. They both, they wanted to make hardware and software. And he says the key advantage that he had is like, why don't we just focus on software? And that's why he had

these gigantic margins. When, when Microsoft goes public, right. And they're doing $140 million a year in sales and 30%, excuse me, $31 million in profits the year before they went public. It's just wild. The insight to do a dedicated, this is Bill talking, the insight to do a dedicated software company was key because companies like Wang or DEC or IBM

who had lots of software expertise, didn't have that vision. So another example of my advantage is just doing something, analyzing my industry, not very different from what Michael Dell just told us, and doing something that they missed, they're not doing. They didn't treat their software skill as a key business. And his point is that was our entire business. So we could focus on it. He also talks about the advantage of knowing what you compete with, not just who. Okay. So he says our sales approach was to go to companies and say, if you had to write software in-house, your fixed engineering budget would be X and Microsoft's price is less than half what you dreamed you could do it for

and far better than you could do. We competed against in-house engineering budgets. Notice he didn't say we're competing with this company. This is what we're competing with. This reminds me of the founder of Southwest, Herb Keller, did a podcast on him a long time ago. And Southwest, the company he founded was the only successful, the only airline that was ever, that ever turned a profit for like something like 40 years in a row. And there's a great story in that, in the book that I read where he's, they're making profits. This is fantastic. They have low fares. Right. And so some of their investors come up and they're like, Herb, Herb, you're killing it. But you know, your price is too cheap. Like, I know we're making a profit at this cheap price.

But look, our competitors, like they're charging. You could fly. I'm making up the numbers. But it's like, you know, we could fly to Dallas for 40 bucks. We charge 16. He's like, why can't we just charge 18 or 19 and squeeze a little bit more profit up? And Herb's point is like, you don't even know who we're competing with or what we're competing with, rather. We're not competing with other airlines. We're competing with ground travel.

In other words, he knew what he was competing with, not who. And if I keep increasing my price now, the people that would have flown can just it's cheaper to drive. So I'll just go ahead and drive because at that time, Southwest was only in they did interstate flights, like flights throughout Texas. So the follow-up question to him saying, this is, you know, we're competing against, we know what we're competing against, and that's in-house engineering budgets. So your sales pitch was to outsource? Yes. What they got from us was more powerful than if they had done it themselves.

And so one of the most surprising things is if you look at the early days of Microsoft is how financially conservative Bill Gates was first 30 employees. It was Bill, his secretary and 28 programmers. Bill answered the phones, checked the mail, did all the sales. And then he would just he would constantly obsessed with. Well, I'm not going to run over my point because he says the same thing here. Software is a very unusual business. Software is a very unusual business. Software is a very unusual business. The development work is not that capital intensive.

In the first year, we generated cash like mad, even though we had many customers who went bankrupt. In other words, we had a wide margin for error. I always wanted to have enough money in the bank so that if nobody paid us for a year, we'd be okay. I thought this was a unique idea keep a list of your mistakes and make sure everybody in the company remembers them i used to have this memo that i updated every year called the 10 great great mistakes of microsoft and i would try to

make them very stimulating for people to talk about lessons for the company's future many of our mistakes relate to markets we didn't get into as early as we should have so you're saying we didn't move quick enough in that case a couple times we didn't get into as early as we should have. So you're saying we didn't move quick enough in that case. A couple of times we didn't really accurately assess the complexity of a project. So we thought it was gonna be easier than it was. And we had a few cases where we compromised in terms of the quality of the people we hired. I just got one random sentence here that I think is actually really profound to understand like the psychological impact that you're going to have when you're building a company. Because if you want to do a company, you have to be slightly crazy, right? It was a real challenge because the demand for our capabilities exceeded what we could do.

In other words, Bill Gates is telling us that you're always going to be slightly uncomfortable. Something else I found fascinating that really speaks to this time period, Microsoft's already hugely successful. I think they're being investigated for a monopoly already. And he thinks even with 20,000 employees and a $20 billion net worth, Bill knew that He was right. There is a huge business out there in terms of getting to the market potential. It's all in front of us. There's an opportunity to make about $55 billion out there. And you ought to put that on the front of your book. Two sentences that both teach us the same thing. Keep the main thing, the main thing. In other words, what got you successful? Keep doing that. And he says, we sell software, not stock. And then the next page, he continues this sentence is the same thing. Same thing. He's like, I'm still focused on the most important

thing. I'm more committed to my job than most other people. Okay, so I'm going to move on to the Andy Grove chapter. He's obviously alive at this point. He was their professor. So he was teaching a class and they were in his class. So just a little bit about Andy Grove's bio. I cover this in his fantastic book, his memoir called Swimming Across, which covers the first 21 years of his life. It was unbelievable what this guy had to live through. After the 1956 Soviet invasion of Hungary, Grove escaped on a boat filled with refugees and landed in New York with only $20 in his pocket. Three years after landing on U.S. soil, Grove graduated first in his class with a degree in chemical engineering, paying his way through college by being a waiter. Three years later, he obtained a PhD and used his writing skills to craft physics

and technology of semiconductor devices, which is considered even today to be the seminal introduction to semiconductor engineering for students. So it says Grove left Berkeley to work for Gordon Moore and Robert Noyce at Fairchild Semiconductor, and then he followed them when Noyce and Moore left to found Intel. Okay, so just a few highlights from his interview. And this is just a fantastic quote, the important things of tomorrow are probably going to be things that are overlooked today. And then he goes into the fact that it's real easy to start something, but it is extremely hard to last. So he says everybody can start a startup and come up with one product. We see that

over and over again. But making the company into something of a self-sustaining institution with its own methods and mores and organization, that's tough. And the note I left myself right under that paragraph is really what he's saying. It's like, it's nice that you're alive today. That's not as impressive. Let's see who's still around a decade from now. Then he's given some background about early days of Intel and what other businesses can expect. And he's like, listen, it is difficult and not obvious. Our first successful product was enormously difficult to get into production. They were so difficult to make and test. The important thing to realize is that a lot of major business decisions are not obvious. Nothing, and he's going to give an example of right now,

Apple's, you know, not doing well, right? Nothing is obvious about Apple other than the fact that they're in trouble. That's very obvious. But what to do about it is not obvious. If you lined up three or four people in your book and gave them a blank sheet of paper and said, if I were the CEO of Apple, I would blank. Each would have a different answer. Another example of the dangers of artificially limiting the potential amount of customers that you think you can get. The markets are usually bigger than you think. He's talking about IBM, which just blew my mind. IBM thought that the lifetime production of PCs, meaning all the PCs that they will ever make, would only be 200,000 machines. And then they asked him, we loved your class, but why are you teaching? Aren't you busy? And this is another example we see over and over again, the fact that if you're

not teaching, you're not doing your job as a leader in the company, right? Why do you teach at Stanford? Because I enjoy it. It's very simple. I always like teaching. I taught both during my engineering days and during the period of time when Intel made the transition into more systematic management. I started teaching management practices at Intel, out of which came my book, High Output Management. And then he closes on the section with advice for people that want to start a company. What would you recommend to young people trying to start a company? Now, Andy says, first, a point about startups. I can't look at a startup as an end result. A startup to me is a means to achieve an end. A lot of your business school friends come up to

me and say, hey, Andy, I want to do a startup. I want to do an Intel. So what should it be? It just doesn't work that way. Instead, you should just first figure out what you want to do. You want to say you want to do semiconductor memory, for example. You want to do semiconductor memory so bad that it hurts. This sounds a lot like the advice Steve Jobs gave us at the beginning of the podcast, right? And you can't do it where you are. So you do it within a startup. Otherwise, it's such an ass backwards way.

People who did it exactly like that saw a mountain of opportunities that weren't there. Okay, so now I got to Ken Olson. This is the founder of Digital Equipment Corporation. This is the guy that George Dorio funded. It was the first big hit. I think they got like a 30,000% return or something. He also has a book that I'll get to eventually. It's called The Ultimate Entrepreneur. And it details, you know, how he started this and managed this crazily successful company. But what I found most interesting in this interview is the fact that he talks about, you know, we took off like a rocket and then we hit, like we could have went out of business. And at that point, he's like, I have to fundamentally change how I'm operating my company, right? So it's the note of myself as the company's future drastically changed, when I realized that the manager who insists on making every decision is a dumb manager. And so he's like, I found a blueprint, it happened to be

Alfred Sloan. This, this is by far one of the most influential books in American business management ever. That was Sloan's autobiography. I did it a long time ago. It's called My Years with General Motors. We have Ken Olson saying, listen, this is my blueprint. I copied it to the T. I can't tell you how many entrepreneurs I've covered that talk about how the impact this book had on them. In one case, it was like literally a billion-dollar idea that Henry Singleton found in that because it talked about the importance of having ownership and like a strong financial institution.

At the early days of GM, when Billy Durant was running things, they almost went out of business because they didn't have that. So Singleton took that idea and ran with it. And they talk about that a lot in the books about Singleton. But anyways, let me see if I can explain this to you because we're just going to jump right into the action. So it says we were very profitable and we were growing fast. Then the profits deteriorated. So I was doing well. Now I'm not doing well.

What the hell happened here? And part of this is his business got way too complex for him to make every decision. So he says, I now announced we were a new company as of that day. We were now following Alfred Sloan's model. Sloan broke his company up into business units and said that the management's job was to leave them alone. And so he's telling his plan to George Dorio. Call him General. Everybody called him General. General Dorio said, Ken, I'll support you, anything you do. But remember, no one ever succeeded at doing this.

I religiously followed Sloan. To this day, I don't think digital's board of directors understood the model. They'd say, Ken's a little funny. Real managers make all the decisions. The loneliness of my position cannot be exaggerated. But miracles happen. If you look at digital's growth and profitability after that decision, our growth accelerated. It was an absolute miracle. All of a sudden, I was no longer the terrible dictator

because I was now in a position to criticize the managers. Those same people who had been so dumb became geniuses. The people who before were frustratingly dumb, he's talking about how he viewed them, made the basis of digital success, saying they weren't dumb. The structure in which I had them in was dumb. And so he gets to the point here. Do you see the secret there? The genius on my part, I have to tell you this because you wouldn't notice it, was to follow Alfred Sloan's religiously. Leave people alone. Nobody at the top is smart enough to know everything. Nobody is so competent that they can do everything for everybody.

The problem is that very few people realize they can't do everything and can't make all the decisions. So then he talks about the dangers of success quite a bit, actually. And so there's ways to think about that. He says, when you say your prayers at night, pray for your profit and loss statement. That's the secret of success. When you're making too much money, you get careless. That's when the business falls apart. And so a little later on, they want to circle back to that.

He's like, let's get back to that comment you made about success getting to people's heads and destroying the company. Athletes, actors, politicians, even preachers, they can't survive success. And so it's like, well, how did you? He's like, I didn't. I didn't. That's how I know that you can't. I wind up just like they said, like they wind up what TJ was saying. Like they wind up, you wind up reading your own press clippings and you actually believe that you're just this genius and you can't fall. He's like, no, it's like you got to get back to what made you successful uh one thing he says that's really smart it's like you need to share the credit like i was you know he's talking about i was young brash egotistical like that's not an environment where talented people are going to stay

if you if they don't feel like they you understand and the company understands how integral they are to success and so so he has this great maxim here. Part of the secret is to avoid showing the world how smart you are. You're going to win no matter what because you own the company. You have a large ownership in the company. Just give away the credit. That's fine. Everybody else can think other people did.

It's not going to affect anything. Part of the secret is to avoid showing the world how smart you are. Goes back to this idea that you can really use teaching as a marketing method so he talks about we had a training group and says our training group was bigger than most universities it was huge if you think of that training group as a marketing tool can you imagine customers spending a week paying university level prices to be lectured about your products for a week or two, you couldn't beat that as marketing. Customers swarmed in.

And so his point is like, why would this be attractive to other people? Because your product gives your customers some kind of benefit, some kind of extra skill, right? And so if you can say, hey, come over here, I will spend a week or two in intensive training so you know everything that this product, every superpower of this product can give you. What is teaching from your perspective is skill development from their perspective. And smart people know that the more they develop the skills, the more return on that investment they'll get in the future. So that's really interesting that you can use teaching as a marketing tool.

And then he's just got a great quote to end his section. The best assumption to have is that any commonly held belief is wrong. And that is where I'll leave it. To get the full story, buy the book using the links that's in the show notes in your podcast player. And Amazon sells me a small percentage of sale. It's a great way to support the podcast and the absolute best way to support founders. Buy gift subscriptions for friends, co-workers, whoever you think would benefit from learning from History's Greatest Entrepreneurs. I'll leave a link in the show notes so you can do that. That is 208 books down, 1,000 to go,

and I'll talk to you again soon.