Founders - #76 Steve Jobs: The Early Years of Apple

Episode Date: June 16, 2019

What I learned from reading Return to the Little Kingdom: Steve Jobs and the Creation of Appleby Michael Moritz. ----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

I have developed what I hope is a more refined perspective on the extraordinary accomplishments of Steve's business life. One that deserves to be ranked amongst the greatest of any American, living or dead. There is no greater distance known to man than the single footfall that separates a CEO from a founder. CEOs are, for the most part, products of educational and institutional breeding. Founders, or at least the very best of them, are unstoppable, irrepressible forces of nature. Of the many founders I've encountered, Steve is the most captivating. Steve, more than any other person, has turned modern electronics into objects of desire. Steve has always possessed the soul of the questioning poet,

someone a little removed from the rest of us who, from an early age, beat his own path. It's hard now to appreciate the dire straits that Apple was in after it brought Next at the end of 1996 in a desperate effort to revive itself. The Silicon Valley cynics chuckled at the way Steve was able to sell Next for more than $400 million, even though it had only sold about 50,000 computers. Steve returned to Apple hardened by years of commercial adversity. Many are familiar with the re-emergence of Apple. They may not be are familiar with the reemergence of Apple.

They may not be as familiar with the fact that it has few, if any, parallels. When did a founder ever return to a company from which he had been rudely rejected to engineer a turnaround as complete and spectacular as Apple's? While turnarounds are difficult in any circumstances, they are doubly difficult in a technology company. It is not too much of a stretch to say that Steve founded Apple not once, but twice. And the second time, he was alone. Okay, so that is from the updated introduction of the book that we're going to be studying and learning from today, which is Return to the Little Kingdom, Steve Jobs, the Creation of Apple, and How It Changed

the World by Michael Moritz. At least I hope that's how you pronounce his last name. So Michael wrote those words in 2009. But what is so special about this book is it was written and published in 1984. So I've done two other biographies of Steve Jobs, one by Walter Isaacson, labeled Steve Jobs, and the other was Becoming Steve Jobs. And Isaacson's, I think, was published in, I think, somewhere around 2011, and I think Becoming Steve Jobs was published in 2016. So it looks at the life of Steve Jobs as a whole, which is fascinating for its own reasons. But what's interesting about this book is this book is about Apple from about 1976 to about 1983.

So the very, very beginning of the life of the company. And it goes through, you know, early life of Steve Jobs, early life of Steve Wozniak and all the other people that were integral in starting Apple. But because it limits, it has like the constraints of basically a seven year period. There's so much detail in this book that I haven't found anywhere else. And what's interesting about Michael Moritz, and I'm going to read this sentence to you, which is fascinating, because at the time he's writing this book in the 80s, he's a journalist for Time magazine. And he winds up meeting this guy named Don Valentine. Don Valentine is the founder of Sequoia Capital and an original investor in Apple. And so he appears in the book. Don winds up giving Mike a job. And then Mike goes

on. And as far as I can tell, and I'm no expert in the field by any means, becomes one of the most successful venture capitalists of all time. So Mike's own, maybe I should call him Michael. I don't know if he wants me calling him Mike. Michael's own career is fascinating, going from a journalist for Time Magazine, and I think a few other publications, to becoming a billionaire in his own right. So here's just one sentence I want to start with. It's also in the introduction, but it was just a random sentence that I thought was interesting. He said, had I not met Steve and Don, I would never have understood why it's best not to think like everyone else. And that sentence was especially important to me because now, as I've gone through 70

something books at the time I'm recording this, that's something I'm picking up that there's like a pattern that emerges that the people that we've studied together on the podcast, they do not think like other people. Now, that doesn't mean they're not normal people. And today we're going to learn a lot about the fact that you can be an incredibly flawed human being, as a young Steve Jobs was, and still build a successful company and a successful product. And I think that lesson is inspiring to anybody because you're not born a great entrepreneur and nobody's perfect. So regardless of where you're at in life, whether you're already running a successful company or you want to one

day or you're just interested in the topic, you could accomplish great things even though you have flaws just like I do and just like everybody else does. And I think that's a big takeaway. I just want to tell you right up front at the very beginning of the book, because, you know, the difference between Steve Jobs, let's say circa 2007, 2008, 2009, and Steve Jobs in the late 70s or mid 70s, I mean, it's a completely different person. As you know, of course, with experience, you're going to be a different person but i i guess what i'm saying is what michael did here was really smart and capturing the first like six to seven years of a company because it the as he's writing these words you know apple today we all know the outcome

um but it was not sure what was going to happen back then. And I think somebody going along and cataloging and documenting what was taking place as it was taking place is extremely important, especially as you can look back on it, you know, 30 or 40 years later. Okay. So with that said, let's go back into the words he wrote in the eighties. I'm back into the book. Um, this is just fascinating to me. Uh, let's see, this is the very beginning of Apple.

And it says within eight years, it had gone from a living room to a yearly sales rate of more than $1 billion, while the stock market had placed a value of more than $2.5 billion on its shares. And this is something I did not know. It took less time to reach the Fortune 500 than any other startup in the history of the index. So moving on, anybody that has ever encountered Steve Jobs obviously knows that he did not lack for confidence. A lot of people considered him extremely arrogant. This is an example of something that I'm a big believer in. I think you should be your own biggest fan.

You have one life. You and everybody that you know will be dead 100 years from now. You really have nothing to lose. And I'd rather be overconfident and believe, overly optimistic in myself and my life and try to do something great and fail than just, I think the default mode for most humans is like doubt themselves. But when you realize we're just temporary beings and everything around us is temporary, our work is temporary, everything that our entire existence is temporary. Like, why not go for it? Why not be your biggest fan?

And this is an example of Steve Jobs being his own biggest fan. It says, so he's at a meeting in Apple and somebody asked, somebody in there said, asked Jobs to tell the newcomers how he had silenced the founder of Osborne Computers, whose portable computer had been putting a dent in Apple sales. Tell us what you told Adam Osborne she employed. Adam Osborne is always, and this is now a direct quote from Steve. Adam Osborne is always dumping on Apple. He was going on and on about Lisa and when we would ship Lisa and then he started joking about the Mac I was trying to keep my cool and be polite but he kept asking what's this Mac we're hearing about is it real he started getting under my collar so much that I told him Adam it's so good that even after it puts your company out of business you'll still want to go out and buy it for your kids.

So that's obviously like a tongue-in-cheek kind of little funny little story. But I think the larger point here is, listen, pessimism is a self-fulfilling prophecy. If you don't believe that you can do something, then you definitely won't. Now, optimism can be a self-fulfilling prophecy. It's not guaranteed to like pessimism is, right? But being optimistic, being your own biggest fan, the first step in accomplishing something

is believing you can accomplish something. It doesn't guarantee that you will, but it's the first step you have to do. You have to at least believe you can do it before you even try to do it. As opposed to, you know, the cynics and the pessimists and the people like, oh, you just can't never do it. And I hear a lot about this.

Like, oh, it's impossible to start a company. Well, just in the United States alone, there's like 23, 25, something like 25 million entrepreneurs, let's say worldwide. I don't know, maybe the number is 150 million, whatever the number is. Like if 100 million other people have figured out a way to do something, then most likely you can too. The difference is most people never even believe they can, so therefore they never even try. And there's another story. They're in a meeting.

They're having to deal with having to recruit people because Apple's growing at the time. It's still a young company, and they're going back and forth, and Jobs is in a meeting with a bunch of other people. And so there's this guy, Elliot, who is working in human resources, and Elliot's trying to figure out a way to help with recruitment. So he says, Elliot, who is working in human resources and Elliot's trying to figure out a way to help

with recruitment. So he says, Elliot, it says he, which is Elliot, he suggested ways of coping with the need for recruitment. Elliot said his department was swamped with 1500 resumes a month and suggested panning recruits. I would use the word filtering, filtering recruits from the names of Apple's owner warranty cards so he's saying why don't we take the people that own apples that have filled out the apple warranty card and kind of use that as a way to filter down because i can't go through 100 1500 resumes a month and steve jobs is gonna say that's ridiculous that's really stupid so he says no one this is now jobs talking nobody any nobody any good sends in their warranty

card, Jobs said. He leaned over the back of his chair and addressed Andy Hertzfeld, one of the programmers, one of the best programmers at Apple, according to Steve. Andy, did you send in your warranty card? The dealer filled it in, Hertzfeld said. See, said Jobs, swirling around in his seat. What we should do job said is sandy is send andy out to the universities and let him hang out in the labs and find the red hot students so what steve is saying there's like listen we have we already have great people great people know uh other know when another person is great and there's this um there's this like reminder i keep to myself it's a quote that i found i think on instagram on Instagram or Twitter or something, but I took a screenshot of it. And it's just a reminder know why I connected the two but I'm just sharing with

you that I did when I read this section when I read that section I immediately thought back to that quote and it's a reminder of myself it's like when I'm waking up every day and I'm like trying to do like am I approaching my life again I just told you my own personal belief that we we have nothing to lose because we're temporary like our entire existence is temporary. So I don't want to go through life in like, you know, being average or being mediocre. And one way to like an anecdote to earn anecdote, excuse me, to mediocrity, I think is passion. Like, am I approaching my life with passion?

Am I trying to be like a, like a, like a well, like a well-qualified person? And I think what Steve's saying here is just it's actually really smart because he's already identified Andy as somebody that goes above and beyond, somebody that is really not even above and beyond because that's not equivalent of being really, really good at your craft. Andy is extremely good at his craft. He takes it very seriously. He invest at his craft. He takes it very

seriously. He invests in it. He practices it. He learns about it. And so Steve is like, we need more people like Andy. We don't need people that don't understand that your time is limited and it's probably not a good use of your time to sit there and fill out a warranty card. And again, that's just like a weird counterintuitive point that Steve picks up on. Again, this is the flawed version of Steve Jobs. But even in a flawed version of Steve Jobs, he had really strong intuition. And more than that, like he really believed in his intuition. Now we're going to find out next week when he's letting his intuition, like there's a dichotomy to any good trait. Any good trait you

have can also be a bad trait. So the good intuition that led him to begin at the beginning and end of his time at Apple, uh, that's exact same trait also led him astray for his like eight years in exile next. Um, so I think listening to this podcast and then combining it with next week's podcast, we're going to see the upsides and the benefits, uh, the downsides as well, rather. Um, okay. So, uh, Michael goes into a little bit about Steve's early life. I'm going to skip over a lot of the things. I'm assuming that you've listened to both my other podcasts on Steve Jobs, so I'm going to skip over any parts. I'm trying not to repeat myself, even though that is going to be somewhat inevitable, but I do want to cover some interesting parts of Steve's early life that Michael hit on that I don't think the other books did. So this is about his dad. Steve was adopted.

He said, after several years in the Midwest where Jobs, that's Father Jobs, Paul Jobs, worked as a machinist and a used car salesman, he and his wife returned to San Francisco in 1952. It was there that they started to raise their family and experienced the perils of parenthood. When their young Steve jammed a bobby pin into an electric outlet and burned his hand, they rushed him to the hospital. Some months later, they had his stomach pumped after he and a young accomplice built a miniature chemical lab from bottles of ant poison. The Jobses brought a carbon microphone home from his laboratory, that's his dad, hooked it up to a battery and speaker,

and immediately turned it into an electric pipe piper. Steve Jobs, who had picked up some elementary electronics from his father, was baffled by something that seemed to violate the rules that he had learned. The carbon microphone had no amplifier and yet sound emerged from the speaker. He reported this to his father who couldn't provide a satisfactory explanation and so this is the reason there's a

point to the whole story besides shining a light on what steve was like as a child is he had a trait from a very early age that he had as far as i can tell from his whole life and this is an example he reported this to his father who couldn't provide a satisfactory explanation. So he returned and badgered the expert from Hewlett-Packard. He was soon presented with the object under inspection and was frequently invited to dinner at the engineer's house where he learned some more rudiments of electronics. So what I mean there is he even talks about this later in his life. There's a clip on YouTube about this. But he's like, listen, if I didn't know something, he said it in a nicer way. He's like, I would just reach out and ask them. And he's like, more often than not, if you took

an interest in someone else's work, they will respond in kind and give you their, like, they're giving you their ideas and their time for free. So in this case, a young Steve Jobs reaching out to the person who made this a hula pack is like, well, how does this work? And then engineers in turn, taking the time and explaining it to him. He did this constantly. It's like, well, how does this work? And then engineers in turn, um, taking the time and explaining it to him. He did this constantly. There's an old anecdote that I covered before. I might cover it in the podcast. I don't know if I took a note on it or not, but he calls up, I want to say it's, I don't think it was David Packard. I think it was Bill Hewlett, one of the founders of Hewlett Packard at the time, back at this time in history,

you could just, everybody's name, there was no such thing as like an unlisted number. So he looked up this, Steve Jobs was 12 years old at the time. He looks up the, let's just say it's Bill Hewlett for simplicity's sake. Calls up Bill Hewlett. He's like, hey, I'm Steve Jobs. I'm 12 years old. I forgot what he's trying to build. He's trying to build something with the Hewlett Packard part.

Bill, I think, sits on the phone with him for like 30 minutes and explaining and answering all his questions and then gives him a job at the Hewlett Packard factory for the summer. So I would just say like if you're curious about something, if you have a question, reaching out to the people that may have an answer. I's i mean what's the the downside it takes a couple minutes to your of your time maybe they never respond oh well but the upside is virtually unlimited so um i think we should steal that job from the idea from steve jobs uh more of his personality talks about like he was sent to this elementary school that was kind of uh lower income there was a lot of fights they called it kind of lower income. There was a lot of fights. They called it ruffians, which I thought was a funny term.

And then Steve, even at a young age, shows you that he can exert his will. He says, after a year, Steve Jobs, who found himself miserable and lonely, issued an ultimatum. He would refuse to return to school if it meant another year at Crittenden. That was the name of the elementary school. Paul Jobs detected the firmness. He said he just wouldn't go. So we moved. This actually was really important because they moved to the Cupertino School District.

That's where he's able to access and learn about electronics, software, computers. He meets other engineers. He meets other people interested in the same things. And that, of course, leads him to starting Apple a few years later. Okay, so this is the persistence and determination of a young Steve Jobs. Now, at this point in time, he's in high school. He's taking up a natural interest in electronics, and his electronics teacher is talking about the conclusions he drew from his time of teaching Steve Jobs. He says, he had a different way of looking at things. I put him down as something of a loner.

He would tend to be over by himself thinking. On one occasion when McCollum couldn't supply him with a part he needed, Jobs called, see, he's doing this again,

Jobs called the public relations department of the supplier, the name of the company is Burroughs, in Detroit. McCollum objected. I said,

you cannot call them collect. Steve said, I don't have the money for the phone call. They've got plenty of money. Now, some of you that listen to the podcast are too young to know this. I am certainly not because I did this when I was a kid. But phone calls used to cost money. And sometimes they can be really expensive, especially long distance phone calls. So one way around that is if you didn't have the money to make a phone call, like most kids don't, you can go to pay phone, you can call collect, you dial like 1-800 collect or something like that. And what happens is it completes the

phone call for you. But the person that picks up on the other line says, Hey, you got a phone call, a collect call from us a and then you say your name is like, you got a collect call from David, you press one to accept or you just hang up. And if you accept that means the price of the phone call is billed to you, and not the person of the phone call is billed to you and not the person making the phone call. So that's what Steve Jobs is doing.

Let's see. Still, we're going on. This is still continuing with the persistence and determination. It says after one lecture, Jobs buttonholed a scientist. So this was at, he attended meetings of the electronics club.

And they also had like the companies, the local companies at the time had these like outreach programs for people interested in it. One of them was called Hewlett Packard Explorer Group. So this is where this is taking place. Said after one lecture, Jobs buttonholed a scientist, wrangled a tour of Hewlett Packard's holographic lab and was given an old hologram. On another occasion. So I am going to talk about this. On another occasion, he called the home of Bill Hewlett, one of the co-founders of Hewlett Packard, and asked for some parts. Hewlett provided the parts and also gave Jobs the name of the

person to contact for a summer job. So at the end of his high school freshman year, Jobs spent the summer working on an assembly line, helping to build Hewlett Packard frequency counters. So I just think a lot of people, most people are not going to start a company. Most people are not going to do most things in life. And certainly most people are not going to reach out and have the audacity to just call to randomly cold call up people and ask for help. And I think those that do have a massive advantage in life. And this is, I'm talking to myself too, cause I don't normally do this and maybe I should do more of it. Okay. So note I left myself myself i don't know what this is about but it says jobs was willing to do whatever was necessary to get information he

needed so it's interesting to me too skipping ahead or going backwards this is a young steve jobs he's a freshman in high school um and he's attending lectures from the hewlett packard explorer group i wonder what like a young Steve Jobs would do. I think about like, what are podcasts, right? Podcasts are basically lectures. Like when you listen to, what you're listening to now is basically a lecture on entrepreneurship

or a lecture on the life of somebody that built a company. When you have an entrepreneur being interviewed on, because most entrepreneurship podcasts are obviously not like this one. They're mostly taking place in like conversation forums well what is that that's really like a lecture on entrepreneurship a friend of mine just turned i was texting him the other day he turned 36 years old and we were just talking about like if you could have anything for your birthday what i would say is like i wish i could be 18 again right now because especially

the people are listening to me are younger. You have so many tools and advantages that just were not there at my age and obviously people older than me. Now, that shouldn't stop you. Jobs did whatever he could to get the information. But my point is your access to information. The access for information like the access for information is not scarce scarce it's not scarce it's the desire to learn to go above and beyond to use what bill girley talks about like the the desire for professional research seeking

out knowledge that you can use in your job in your career in your craft um that's not what most people do. And I think it has so much... I mean, Steve Jobs is doing that. What does that tell you? Okay, so it says, Jobs was willing to do whatever was necessary to get information he needed. Oh, so this is interesting.

This is what he's talking about. So I'm not going to spend too much time on it because I covered it in other podcasts, But one of the first projects to see jobs and Steve Wozniak worked on together was this thing called phone freaking, which distance calls were really, really expensive. So they wind up reading like this article, I think in like Esquire magazine about this guy named Captain Crunch and some other phone freakers. So think of them like programmers, but for phones. And they try to track this guy down.

They call the guy that wrote the Esquire post. He wouldn't give up because his name was Captain, the person they, one of the people they they profiled this game with Captain Crunch they're like tell us who Captain Crunch really is we want to reach out to him so they keep looking and they wind up stumbling across this guy who worked at a radio station at Berkeley who's like yeah I know who Captain Crunch is I work with him so they they get Captain Crunch on the phone they're like will you come and talk to me and a couple friends that are interested in this and like they're like yeah and so uh this

is this is steve jobs and steve wozniak searching out captain crunch to get information that's in his brain so they can use it and now uh this is the meeting and it says what virtually amounted to a papal visit was treated as such wozniak opened the door to find a ragged figure standing at the corridor he wore jeans and sneakers and had hair that ran amok, an unshaven face, eyes that squinted, and several missing teeth. Wozniak recalled, he looked absolutely horrid, and I said, are you Captain Crunch? And Draper, that's his real name, replied, I am he. Despite his quirky mannerisms and his, I don't know what this word is, his crazy looks, Draper provided a full evening's education. Draper gave Jobs and Wozniak numbers

to other phone freaks, special telephone numbers, country codes, undersea cable codes, satellite codes, access code. He barraged them with details of toll switching trunks

and conference bridges, routing indicators, supervisory signals, and traffic service position stations. Draper warned Wozniak and Jobs never to carry a blue box around, that's what the devices are called, and to make blue box calls only from payphones. Wozniak thought it was the most astounding meeting we had ever had.

That was good advice. Draper didn't unfortunately adhere to his own advice. He winds up going to prison a few times for stealing, like, tens of thousands of dollars worth of phone calls. A little bit about Steve Jobs' personality. The thing that had struck me was his intensity. Whatever he was interested in, he would generally carry to an irrational extreme. I love people like that.

He had a very inquiring mind that was enormously attractive. You wouldn't get away with bland statements. He refused to accept automatically received truths, and he wanted to examine everything himself. That's probably also good for when you're designing products, right? That kind of frame of mind. Now a little bit about one of the little-known things about Jobs is he was one of the first 50 employees at Atari.

So it says, Jobs became one of Atari's first 50 employees and had his first prolonged taste of corporate life in a company where succession of novel ideas managed to withstand any number of managerial torpedoes. The company was started and dominated by Nolan Bushnell. I did a podcast on him. If you haven't listened to it, go back and listen to him. He's an interesting guy. Bushnell. I did a podcast on him. If you haven't listened to it, go back and listen to him. He's an interesting guy. Bushnell viewed business as a type of war and employed pinches of diplomacy and charm, cunning and force to cajole his employees and bamboozle the competition. Dressed in sharp suits, flowery shirts, and polka dot ties, he became Atari's 6 foot four inch juju man. I don't even know what that means. It was life in the fast lane with Nolan. He always wanted everything and he wanted

it at once. But for all the thrills and spills, most of Atari's employees were conservative and Jobs was considered peculiar. He poked his nose into other engineers' business and made no secret of his disdain. Bushnell recalled that Jobs regularly told a lot of the other guys that they were dumb shits. And Jobs himself said, some of the engineers were not very good and I was better than most of them. The only reason I shone was that everyone else was so bad. I really wasn't an engineer at all. Despite his lack of formal electronic training, Jobs quickly bridged the gap between being a technician and being an engineer. One of his early tasks was to add refinements to a game called Touch Me. Working with the

discipline of specified boundaries, Jobs tailored the performance of the chips to what was wanted on the screen. He understood the chip's subtleties, plotted out a new design, and made substantial And this is Nolan Bushnell. He says, Bushnell appreciated Jobs' sense of urgency. When he wanted to do something, he'd give a schedule in terms of days and weeks, not months and years. And so that echoes back to Bushnell's famous description of Steve Jobs, which he said, listen, Steve Jobs had book is you have a chapter or section that brings you into present-day Apple, so let's say late 1970s Apple, early 1980s Apple, and then the next chapter will be a flashback to an early part of Steve Jobs or Steve Wachs'

The Ex-Life, and then the next chapter will go back into modern-day Apple, modern, obviously, the time he's writing, and so on and so forth. So now we're going to go back into the early days of Apple, and you have that guy, Andy Hertzfeld, now talking with this other programmer named Smith. And this is, you know, listen, this is the dichotomy of Steve Jobs. He's going to lay out negative parts of working with Steve and positive parts at this time. So it said, Hertzfeld and Smith worked around Jobs' unpredictable nature. Hertzfeld

explained, he'd stop by and say, this is a pile of shit, or this is the greatest thing I've ever seen. The scary thing was that he'd say it about the same thing. The pair floated in, excuse me, the pair floated in the uncertainty of whether Jobs liked them

or whether he just liked them for the jobs they were performing. And Hertzfeld, three years after the start of his project, admitted, I like working for Steve because of Mac, but I don't know if I like him. One of the programmers who worked on the early stages of the Mac had nicknamed Jobs the reality distortion field, and the sci-fi moniker had stuck. Jobs had many of his group believing they were building another Apple apple 2 and his faith was almost strong enough to persuade them that they were working in a garage when all the tangible evidence suggested otherwise so that's when they're working on the macintosh and that's actually really

important um this idea where okay well the apple 2 is already um like it's already successful they're they're selling millions if not hundreds of millions of dollars worth of them at this time but steve realized and this is something he fails to realize when he's the next and i'll cover that next week um that it's really important so that section where he's like listen he made his group believe that they were building another apple 2 and that they were in a garage right working with they had to be resourceful because they had limited resources right that's even though the tangible evidence suggested otherwise. All great companies are built in environments like that.

You can't just throw a bunch of money at an entrepreneur and expect him to do something great. You have to find something. You have to have some kind of constraints. It reminds me of, there was this rapper, Notorious B.I.G big and on one of his albums he talked about this advice that he got from from puff daddy he calls him i think p diddy at the time or i forgot whatever his name was at the time and he said listen puff told me um that i should approach everything like it's my first project and that one sentence has a lot of actually good knowledge in it. Because when it's your first thing you're doing, right? Think about like if you're a first time entrepreneur,

your first time hip hop artist, like you're putting everything into that you're like, you're dedicated, you're hungry, you're focused. What happens with time, it's natural for people like especially after you're successful to like, you've now you're rich now or you know you could you can you could slack in areas where you don't and but yet if you uh that you couldn't not that you don't but you couldn't you could slack in areas that you couldn't otherwise at the very beginning right because now you have a buffer now you're you have more space like you've made it quote unquote um i think it's a very important piece of advice is like even when you've already made it, still treat it like it's your first project.

Still approach it with a seriousness and a love and a passion that is found when you're a beginner. I think it's extremely important. So it says, Like all employees, Smith and Herschel had grumbled about their boss. They complained that Jobs forbade them to show the Mac to their friends while he paraded visitors, including his one-time flame, the folk singer Joanne Baez, through the lab. Their irritation mounted when it took Jobs months to concede that the Mac screen and 64K bytes of memory were too small before he ordered a redesign.

They mumbled some more when Jobs refused to give them permission to sell a mouse interface for the Apple II. Smith worried that Jobs wasn't thinking boldly enough about future computers. Yet, and now we're going to see the things they like. This is the dichotomy of Steve Jobs and the dichotomy is found in all of us. Yet, Jobs exercised many paternal touches. He had presented Hertzfeld and Smith and other members of the Mac group with medals and helped make a ritual out of outings to sushi bars. When a programmer fell ill, he called the hospital frequently. He dropped by the Mac lab over the weekends and took evident pleasure in personally delivering the envelopes containing stock options. Jobs was shrewd enough to know that he could tantalize both Hertzfeld and Smith.

Okay, so at this point in the story, Jobs is still working at Atari, and him and Wozniak are starting, they have this idea that they're going to make a computer. At the time, they think they're just going to make a printed circuit board, i was uh struck by how uncertain jobs was so the note i left myself is it's normal to feel uncertain or unhappy about your path in life and in my opinion like the only thing you can do is like just keep learning keep going and and uh trust it'll work itself out so says job wasn't certain about what he wanted to do and was unhappy about one obvious path. I didn't see myself growing up to be an engineer. Instead, he fell back on his natural inquisitiveness and spent two semesters auditing a physics course offered by Stanford for gifted

freshmen. Jobs left his mark on Mel Schwartz, the professor who taught the class. And this is now Mel on Jobs. It says, very few people turn up who say they want to learn something. I was impressed by Steve's enthusiasm. He was really interested and curious. And so this time period, we're talking about 1976. And it says, during January and February 1976, Jobs started to badger Wozniak

about the possibility of making and selling some printed circuit boards so that others could build their own versions of the computer. It was Steve's idea to hold them in the air and sell a few. Jobs entertained the notion of a fleeting informal venture that would be more of a partnership between friends than a proper company.

And so what he's describing there, what the author is describing there, is the very beginning of Apple Computer. And that's just a reminder that all things start small. And to illustrate that point, this was their scope of their ambition at the very beginning. Jobs reckoned that it would cost about $25 to make each printed circuit board, and that if all went well, they might be able to sell 100 for $50 apiece. They agreed that they would contribute half towards the $1,300 they needed and Jobs reckoned that the printed circuit board would cost.

Neither had much money. So once they have that done, Jobs goes to the owner of this computer store called the Byte Shop and trying to sell it. And the owner of the store had no interest in that. And the lesson of this story is like when you make something easier for people, the size of the market that you can serve expands. So this is how the idea to make a full, like fully contained computer at the very beginning was actually a suggestion by somebody else. And that guy's last name is Terrell.

So it says, Terrell told Jobs that he had no interest in selling plain printed circuit boards. Instead, his customers didn't have any interest in scouring supply stores for semiconductors and other parts. Terrell said he was interested in buying only fully assembled and fully tested computers. Jobs asked how much Terrell would be prepared to pay for a fully assembled computer, and he was told anywhere between $489 and $589. And he told Jobs that he would be prepared to place an order for 50 fully assembled Apple computers. Jobs could not believe his ears or his eyes. I just saw dollar signs, he said. Wozniak placed Terrell's order in perspective.

That was the biggest single episode in all of the company's history. Nothing in subsequent years was so great and so unexpected. Terrell's order entirely changed the scale and scope of the enterprise. The size of the business had expanded tenfold. Remember, they thought they were going to sell these boards for what, $50? And then he's like, no, I'll buy a computer from you for 500 bucks or $400 to $600. It's really interesting. And then this is Steve at the very beginning of Apple. And it says, Steve was always very, very tight with money. He always wanted to get the best value for the least amount of money.

So in other words, he was extremely resourceful. Steve always wanted to make things of high quality and have high quality equipment. He always wanted to do it right. sometimes the word frugal. I never thought of Steve Jobs like that, you know, because maybe I studied him, you know, like his entire life. And maybe there was instances in that in the other books that I just can't recall at the time. But as I was doing additional research for this podcast, I came across this essay that the author wrote, but he wrote it in 2015. And the title is Steve Jobs' Message to Unicorns, Count the Nickels. So I'm just going to read this to you real quick. It should only take me a few minutes. And it was

just surprising to me. And I guess he starts off with something that I definitely felt. He's like, it's easy to forget. So this like, it's easy to forget. So this is, it's easy to forget that when he was a student, the man who brought us the Macintosh, iPhone, and iPad, and with his little finger Pixar, collected bottle caps to make ends meet. The need to stretch every nickel informed the way Apple was run during the early days. That's what he was writing about in his book. And he's now writing about in his essay 25 years later, 30 years later.

It is on that spell, rather than the enormous public profile commanded by Steve Jobs in his later years, that would-be emulators should dwell. So he's saying, pay attention to this, guys. This is a lesson that is just as true back then as it is now. Lost in the millions of words devoted to Jobs since his sad and untimely death is what established Apple in the first place.

An approach to business far removed from the techniques employed by the managers of the three or four-year-old subprime unicorns that command billion-dollar valuations today. Peruse Apple's initial public offering prospectus, and these numbers are startling. In the year preceding its flotation in 1980, Apple recorded sales of $117 million and a pre-tax income of $24 million. It did this in a market cluttered with dozens of companies making personal computers and with a payroll of about 1,000, almost half of whom, believe it or not, were engaged in manufacturing. Apple's initial public offering, which raised $90 million, valued the company at about $1.2 billion. And then he just leaves a side note. He says, multiply these numbers by three if you're comparing them with current dollars. So that'd be what? $3.6 billion. And he raised $270 million to get to $3.6 billion. It's the

rough calculations. Apple's two founders and their chosen chief executive owned about 40% of their creation, largely because they had been so efficient and parsimonious with the small amount of outside capital they had raised. Apple became a public company in a month when the prime rate stood at 21.5% and the capital markets were bruising. All of this is most germane in the era of the subprime unicorn because the habits adopted during the formative years of a company have such an influence on its eventual operating performance. Apple's tone in its early years was influenced not just by jobs,

but by a management team composed of several alumni of the semiconductor industry. In Malou, where the consequences of an operating mistake are harsh. Some will argue that Apple's lineage is irrelevant, and in some respects, they are right. Open source software and Amazon Web Services make it far easier and cheaper to start a company or at least build a product than it was when Jobs co-founded his business. On the flip side, at least in Silicon Valley, it is also more difficult and expensive to build a company up than it was at the end of the 1970s and early 1980s. The fact that there were more technology behemoths, Apple, Amazon, Google, Facebook, Microsoft, than at any other time in history makes life tougher for the startups. These companies together with a raft of smaller rapidly growing profitable ones, and increasingly several Chinese businesses with Silicon Valley outposts,

are run by people eager to dominate new frontiers. That has had a dramatic effect on the cost of startup labor. Every capable person, whether their forte is engineering or sales and marketing, will be keenly fought over, and the large companies, with their ample profit margins and huge cash flows, are prepared to pay king's ransoms to retain their best and brightest or recruit the smartest graduates. And to that, a large rise in the cost of property and lookalike companies sprouting up all over the world. Add to that, by the way.

And it's clear Silicon Valley is more expensive in real dollars than 40 years ago. But this is where Michael's getting to his main point. None of this means that the laws of business have suddenly been reversed. That Apple is now the world's mightiest company is because its principal founder and reinventor was always aware that his large public profile rested atop a meticulous operating machine, something that those who aspire to replicate his success might bear in mind. So in other words, he's saying, listen, just because you have to be resourceful. You cannot forego the laws of business.

Be prudent, be resourceful, be frugal is how I interpreted his essay. And it's definitely something he talked about in his book that he wrote 30 years ago. Okay, so now back to the book. Again, I want to highlight that something that was surprising to me, how much this book pays attention to the doubts that were inside of Steve's mind. This is Steve talking. I didn't want to be a businessman because all the businessmen I knew I didn't want to be like. He wasn't sure if he wanted to still, like he wanted to create, like go forward with Apple. The private turmoil was the center of long discussions with those around him and one of his friends and co-workers says steve was searching

he seriously questioned whether he should pursue apple and then another person said in a different way steve was afraid of apple and i just put that in there, man, because I just, I feel, I've had several points in my life where I'm filled with doubts. I wasn't sure if I was doing the right thing, if I was wasting my time. What should I do? Like I kept flip-flopping. And I mean, I think Steve Jobs had those same doubts as well. And I think many other people, if not almost every single person that engages and chooses to do their own thing, it's inevitable that you're going to find,

you're going to experience those doubts. It's just like, can you push through them or not? Some people give into the doubts and they give up and others just keep going forward. So that's extremely hard. And I don't think any book or anybody else can teach you that other than make you aware that it exists, that it's probably normal that you're feeling that way. But it's up to you to overcome it. So something that happens, and I take a lot of notes on, you know, podcasts and talks with different entrepreneurs or whatever. If you're not on my private email list, make sure you, I'll leave a link in the show notes, make sure you, but in a, anyways, in a lot of these talks and podcasts and everything, like people bring up the point that like good ideas, truly unique, good ideas, like they're, the best ideas basically sound like bad ideas at the first, um, uh, when you first hear them.

And I think maybe it might be the same with people. And this little paragraph illustrates, like Steve Jobs is clearly gifted, a gifted entrepreneur, but like, so let's say he's one of the best entrepreneurs. I hate to use that, but like just the way best ideas can sound like bad ideas. Maybe best people can sound like bad people. So it says the entire Wozniak household was skeptical about jobs. Leslie Wozniak heard about him as this sklunky-looking guy with bare feet and dirty hair.

That's Steve Wozniak's sister. While her parents harbored more serious doubts about their older son's business partner. Jerry Wozniak, that's Steve Wozniak's father, encouraged his son to think about other allies and offered to put him in contact with some of his own acquaintances. We wondered about Steve Jobs, Jerry recalled.

We thought he was the type of person who felt he should always start right at the top and didn't care to work his way up. And now this is advice that Steve sought from Nolan Bushnell and then also with Don Valentine, the founder of Sequoia, thought of Apple. Jobs asked Nolan Bushnell for advice about where he should turn for more money.

Bushnell, meaning to fund Apple, Bushnell gave him a tutorial on the world of venture capitalists, men who would supply money in return for a stake in a company, and told Jobs, the longer you could go without having to go to one of these guys, the better off you are. But Bushnell also suggested that Steve Jobs call Don Valentine, who was an investor in Atari.

And now this is a quote from Valentine. Talking about both Steve's, neither one knew anything about marketing. Neither one had any sense of the size of their potential market. They weren't thinking anywhere near big enough. Think about how crazy that is. What a statement. Again, this is stuff you learn to do. You're not born knowing how to do this, right? He's saying Apple became one of the largest companies in history. Yet at the beginning, they weren't thinking anywhere near big enough. It's amazing to me. Big thinkers often do big things. Small thinkers never do big things. Short while later, this is another example. Steve's still having doubts, even though the company's, like, they've raised money.

They've added other people. And it says Jobs didn't know whether he wanted to run the show or not. So it talks about this guy, Mike Marcullo, who's one of the, basically, co-founders of Apple. Like, kind of one of the first adults hired. And it talks about, well, he's talking to Steve Jobs. He says, Jobs listened. He balanced the promise of future contributions against the tangible loss of power. He was strong enough to admit that what he didn't know

and pugnacious enough not to get bowled over by men who were many years older. He was prepared to relinquish the sweat of a year, but he was also consoled by simple arithmetic. Since Wozniak, Jobs, and Markula controlled the majority of the company's shares, they could unseat Scott at any time. So I should have gave you some more background there.

They're trying to figure out, so he's like Jobs didn't know whether he wanted to run the show or not. They were trying to hire, Markula said, he was already retired, partially retired in his early 30s. He made some money from Intel. So he's like, I'll give you guys four years. I'm going to help you get started, but I don't have any long-term interest in running the company.

Jobs didn't know whether he wanted to. Obviously, Steve Wozniak didn't want to. So they hired this guy named Scott, and that's what they're talking about. He said, well, I don't know. Steve still had this idea, like maybe he'll leave Apple. He'll go do other things. He talked about, like, you know, becoming, like, a vagabond and, like, just hopping on, like, railroads and crossing the country and going to, like, dropping LSD and doing spiritual results.

Like, he just had—he was not sure at all about whether he should be committing to Apple, which is, again, crazy to me. Not crazy, like, I think it was wrong, just crazy that he had those doubts. Because he seems like a person that knew exactly what he wanted in life. But maybe those people don't actually exist.

So they've already made the Apple II. And this is just a reminder of what, people are like, oh, Steve Jobs wasn't an engineer. He didn't invent anything. This is his contribution to Apple. This is and it's it's you need somebody in the company that that kind of does what Steve did in Apple. Says Apple named its machine the Apple 2. The computer had appeared at the West Coast Computer Fair.

The computer that appeared at the West Coast Computer Fair was not one person's machine. It was a product of collaboration and blended contributions in digital logic, design, analog engineering, and aesthetic appeal. Now, this is his contribution, though. But behind them all, so saying, hey, you know, obviously one person's not building this, right? It's not just a, it's not a one-person company. But this is what Steve Jobs contributed. He says, but behind them all, Jobs was poking, prodding, and pushing.

And it was he, with his seemingly inexhaustible supply of energy, who became the chief arbiter and rejecter. He's the one that tied everything together, the one that kept pushing the ball forward. Oh, so I thought this was really interesting. They're talking about having to recruit people. And this guy, Wendell Sander, had a really interesting they're talking about having to recruit people and this guy wendell sandal sander had a really interesting um he's like why would i leave like how is apple which was like a tiny company at the time able to recruit so many experienced and and and skilled

people and it's because some of them looked at it this way. He says, others, meaning other people they recruited, came on their own accord. Wendell Sander, a shy engineer at Fairchild Semiconductor, had become intrigued by Apple after adding some memory chips of his own design to the Apple One. He wrote a Star Trek program to amuse his children, demonstrated it to Jobs while Apple was still in the garage, and eventually, after 13 years with Fairchild, decided to let his passion guide his star. Think of what he said. Let your passion guide your star. I love that. And this is how Sanders, or Sander, made the decision. He said, if they had folded, I could have just gotten a job the next day. There wasn't much personal risk apart from the chance of getting a bruised ego. My career would not have vanished. Scarcely anybody considered that the decision to join Apple was risky. Instead, they all seemed to feel that the greatest risk was to stay put and do nothing. So the note I left myself on that page was

one of my favorite quotes of all time. There's no security, only opportunity. And then a second thing I wrote myself was like, listen, in the age of infinite leverage, like the time we're in now, the greatest risk is in taking no risk. There's been very few people that have actually, a very small percentage of the population have actually internalized that truth,

that the greatest risk in this day and age is to take no risks. And this one's just a kind of like a selfish thing to include in the podcast because I just love smaller, more human companies. Inevitably, you lose stuff like this as you grow. So it's up to you if you want to build a, you know, there's no right or wrong

way to build a company. There's many different ways. You can have a tiny company, a big company, whatever. You've got to be who you are. But this is a story from when, you know, Apple was a smaller, more human company. It says, the setting formed a backdrop for a business that filled some emotional need for many of its employees. For the teenagers, and they employed quite a few teenagers. It's funny.

For the teenagers, the computer held the main allure. Wingington, who spent most of his time working on software with Wozniak, kept nocturnal hours of a youthful engineer. He worked between 3 a.m. and 7 a.m., disappeared for school and asleep, and returned to Apple late in the evening. My parents weren't super crazy about it, but they were starting to split up. Apple definitely replaced my family. When he graduated from high school a year early, almost the entire company took the afternoon off to attend his graduation and present So in the book, there's this quote from Tom Watson, which is the founder of IBM. And it talked about how at the very beginning of IBM, how they started to get the word out and to think about the branding of the company. He says, we are carrying the corporate image far out in front of the size and reputation of the corporation.

And Apple was doing the same thing. Now, think about how crazy, you know, how much press Apple gets now. But at the time, it's just, I think, Mike Marcola, Steve Jobs, and Regis McKenna, who's their founder of the PR firm they used. And they had to go and do it by hand to get notice, to get publicity. It said, McKenna arranged for several busy two- and three-day trips to New York with Apple and endured plenty of snubs and disappointments. They carded an Apple computer about New York, plotting from magazine to magazine, waiting in lobbies lugging

the computer up elevators snatching quick breakfasts with journalists from one magazine before dashing off to keep morning and lunch appointments it was an exhausting tiresome repetitive work that didn't lead to many immediate payoffs but yet they still did it and it was important in the long term um oh i love this idea of what uh steve jobs did he was a what apple was the only people the first company i should say to put a lot of time and effort into how the owner's manual looked and that was steve jobs idea and he goes back to this quote famous favorite quote of mine that says how you do one things is how you do all things and i noticed in my own life i'm starting to slack on something, it's inevitable that that's not the only place I'm

slacking. That means I'm screwing up in other places because I'm allowing a lower quality than I would apply in other areas of my life. It said, the general look of the company was tied up with the owner's instruction manual. Scott, that's the president they hired, was more eager to ship computers than to fuss over the graphic design of a manual and felt that all the company needed to distribute was data sheets. Jobs thought otherwise. Jobs wanted good manuals and he fought very hard for them. When the manual eventually appeared in August 1979, it set a standard that competitors like Commodore, Radio Shack, and Atari publicly admitted they would have to match. So, you know, one of the most famous things about Apple is that the inside of the computer

is as beautiful as the outside, even though you can't even see the inside. So how you do one thing is how you do all things. Now we're getting into more of the growth of an early Apple company. Apple II is basically the product that just turned Apple into a rocket ship. It also caused a lot of problems. That's what a lot of the book is about, are the problems when how do you take a small group of talented people and scale it? The answer is you don't. So at least you don't easily.

And in Apple's case, they obviously failed to do that over the long term until Steve Jobs came back later. So this is the Bozo. I'm not going to talk too much about it, but they call it the Bozo explosion. And it's a time—well, I'm going to read—let me read this part first. The gradual change from a bloated garage operation into something resembling a corporation was arduous and protracted. Once Apple announced its disk drive in the summer of 1978, orders increased. The backlog of unsold computers disappeared

and the pressure to grow mounted. The headquarters was moved to a building 15 times larger than the office Apple had occupied. When the nine-year-old employees wandered around their empty new building, most were convinced that it would last, if not for a lifetime, certainly for several years. Within three months, the packing cartons arrived, and again, Apple commandeered a couple more buildings. So think about that. They thought it was going to last for years. The growth was so fast, it was three months. The second shuffle was made in such a hurry that interior alterations were performed without any building permits,

and equipment was brought in over a weekend from trucks discreetly parked by some rear doors. So this is the beginning. They go to 90. They get to 600 people. Then they go from 600 to 1,200 people in three months. And that's what they call the Bozo explosion because they're hiring so fast that the overall average quality of employee lowers drastically. So let me read this. I'm trying to figure out what I was trying to tell myself.

What is past David trying to tell present David? Or I guess past David was trying to tell future David at that time, which is now present David. A natural inclination to find a better way is a good rule for life. And allowing your skepticism to be overruled means you know you don't have all the good ideas. Okay. So apparently that was my takeaway for this one sentence. Jobs allowed his skepticism to be overruled by his natural inclination to find a better way to do things. So that's actually a positive of a young Steve Jobs that he kept as an older Steve Jobs. I think obviously a good idea because the world is complex.

It's impossible for all good ideas to come from one person. And this is an example of what a hit product does to a company, does to company growth. Three and a half years after the introduction of the Apple II, 130,000 had been sold. Revenues had gone from 7..8 million to $117 million. What the hell? That's insane. That's three years. Let's say it goes from $18 million to $118 million.

And profits had risen from $790,000 to basically $12 million. And that fall, 31 months after the 30th employee had joined the company, and just 12 months after the 300th employee had arrived, Apple's payroll topped 1,000. So wait, 12 months. So they go from, what is that? Wow. So from 300 to 1,000 in 12 months.

And now the company occupied 15 buildings. And so now more of the negative part of a young Steve Jobs. There's this memo. Jeff Raskin had a really hard time. He's one of the people that started the Mac program. Had a really hard time working with Steve. And again, it's a reminder that you're not born with these skills.

Management skills of a large corporation are something that's unnatural. It's something relatively recent in all of human history. So therefore, you must learn them. In a four-page memo titled Working With and For Steve Jobs, Raskin suggested that Jobs get management training before being allowed to manage other projects. While Mr. Jobs' stated positions on management techniques

are all quite noble and worthy, in practice he is a dreadful manager. It is an unfortunate case of mout right ideas, of mouthing the right ideas, but not believing in or executing them when it comes to do something, when it comes time to do something. Raskin continued, jobs regularly misses appointments. He does not give credit where due. He plays favorites. He has favorites who can do no wrong and others who can do no right. He interrupts and doesn't listen. He doesn't keep promises. He's a prime example of a manager who takes the credit for his optimistic schedules and then blames their worker when the deadlines are not met.

This is also something interesting. So they're going to IPO. They've raised some money. But for a time, Jobs fantasized about keeping apple private and it's just temporary obviously but this is surprising this is why among apple's top managers there was some reluctant reluctance to head a public company jobs for a time was enchanted with the notion of emulating the enormous privately held san francisco's construction company betchel so i actually have a book i haven't got to yet,

but I ordered it sitting in my nightstand about Betchel. And I think I'm going to wind up reading a couple books about this company because it's so mysterious and it's still privately held today. It's one of the largest privately held companies in history, but that'll eventually turn into a founder's episode sometime in the future. He liked the idea of not releasing information that might help competitors, of running a multinational company without having to endure pressure from stockholders, and of avoiding taunts from the gadflies who make a pastime of appearing at annual meetings.

So obviously, the benefit of running a public company, you have access to a lot more money, you can become fabulously wealthy off the stock, but you also have the downside too, where you give up control. So it's really up to what you're trying to optimize for um so this is a little bit about how steve jobs designed products it says jobs had a little interest in laborious research this is what i was referencing earlier about it believing in your own intuition which is can be positive and negative there was nothing he believed in more deeply than his own intuition and his sense and touch for where the technology and markets would meet so he's right about the than his own intuition and his sense and touch for where the technology and markets would meet. So he's right about the Apple II, wrong about the next computer, and then right about the iPhone and other ones.

With the continued success of the Apple II, Jobs' development would amount to a religious faith in the strength of his instincts. He found Apple's prototype customer in the mirror, and the company came to develop computers that Jobs, at one time or another, decided he would like to own. So that's how he does his products. He says the Apple II had been so successful that everybody was walking around thinking they could do anything. So this is the negative part of it. It also came to seem as a test of Apple's ability to build a computer as a company, as opposed to an individual or a small group of people, right? The circumstances had obviously changed since the days when Wozniak made modifications to the Apple I and this is an important point building a computer as a company Apple soon discovered was far more laborious than knocking together a machine in a garage

the Apple III was designed by committee Apple felt that the way that that was the way a proper company should design a computer everybody had certain ideas about what the Apple III should do, and unfortunately, all of them were included, and that will end up being a big flop, as was the Lisa. And this is just a reminder, this is one of the most famous axioms, aphorisms, maxims you've ever heard,

is that, you know, arrogance or pride comes before a fall. And this is, you know, arrogance or pride comes before a fall. And this is, you know, they were making tons of money. Mike Marcola was getting cocky. And so was Steve Jobs. He says, Marcola could barely contain his irritation when asked how Apple planned to respond to IBM. We've been planning and waiting for IBM to get into the marketplace for four years. We're the guys in the driver's seat. We're the guys with one third of a million installed install base. We're the guys with a software library. We're the guys with distribution. It's IBM who is reacting

responding to Apple. He added, they'll have to do a lot more reacting and responding. IBM has the foggiest notion of how to sell to individuals. It took us four years to learn about it. They must learn about distribution structure and independent dealers. You cannot reduce time by throwing money at it. Short of World War III, nothing is going to knock us off the box. Oh, Jesus. That's so wrong. Jobs had his own clipped appraisal of the IBM announcement and predicted,

we're going to out-market IBM. We've got our shit together. Well, I think everybody knows how that ended. All right. So when the book ends, the original book ends, you know, Apple's in a good position. It's in the early 1980s. They're feeling cocky. They're feeling confident. It's not for a few years later until Steve Jobs gets kicked out of the company. And obviously you have that downfall that takes a while to happen. So the book ends, and you're like, okay, well, Apple, it's still unsure. They're a successful company. They grew fast, but its future is very much unwritten as now we have the benefit of living in the future that we saw the outcome of that. What I'm going to do for the remainder of this podcast is read from the epilogue. And the epilogue is written now in 2009. And it's a great,

I feel the epilogue is like a 15 minute read or 10 minute read. I'm not going to read all of it, obviously, but it's a good like summary of, you know, Apple in general. And he's just got some lessons for us. Let me just, I'm not, they don't have like a main theme or just pulled out some interesting ideas. And I'll close on this. But let me just get into it, because I think this is valuable information for you. Remember, he's writing this now, you know, more than a quarter century. It says more than a quarter, excuse me, more than a quarter of a century has passed since I wrote the previous page. So now we're in 2009.

25 years later, when people are as familiar with the names iPad, iPhone, or Macintosh as they are with Apple, or iPod, sorry, iPad didn't exist yet, it is hard to imagine a time when the company appeared to be just another technology firm that would be snuffed out or absorbed by a competitor. Since 1984, there have been plenty of technology companies that have faded to gray or gone to black. And he starts listing a bunch. The mortality rate makes Apple's survival,

let alone prosperity, even more remarkable. I've watched Apple first as a journalist and later as an investor for most of my adult life. Since then, I've developed a keener sense for the massive gulf that separates the few astonishing enterprises from the thousands that are lucky to scratch out an asterisk in the footnotes of the history books. In 1984, more immediate and mundane challenges confronted Apple. Faced with the challenge of managing a fast-growing company in an increasingly competitive business,

the board of directors of Apple were faced with the most important task that it confronts any board, selecting a person to run the company. Only in retrospect have I come to understand the immense risk associated with hiring an outsider, let alone a person from a different industry, to run a company whose path has been heavily influenced by the determination and ferocity of its founder. It is not an accident that most of the great companies of yesterday and today have, during their heydays, been run or controlled by the people who gave them life. The message is the same irrespective of industry, era, or country, and the name can be Ford, Standard Oil, Chrysler, Kodak, Hewlett-Packard, Walmart, FedEx, Intel, Microsoft, News Corp, Nike, Disney, Oracle, Ikea, Amazon, Google,

Baidu, or Apple. The founder acting with an owner's instincts will have the confidence, authority, and skills to lead. Sometimes when the founder's instincts are wrong, this leads to ruin. But when they are wrong, this leads to ruin. But when they are right, nobody else comes close. When corporate boards start to have misgivings about the condition of a company or the ability as a founder and have no plausible internal candidate, they will almost always make the wrong move. At Apple in 1985, the board's decision was complicated by the fact that there was no obvious successor within the company.

Jobs was considered too young and too immature. The oppressive weight of conventional wisdom tilted the quest towards a resume dripping with impressive-sounding titles and credentials. Experience is the safe choice, but it is often the wrong one. While pesky newcomers attacked, inventiveness withered inside Apple. The company that had led the industry with color on the Apple II, a graphical user interface with the Macintosh,

desktop publishing and laser printing, integrated networks, and stereo sound stopped leading. As Sculley departed, that's John Scully, the cupboard was bare. The spark of imagination, or more particularly, the ability to transform a promising idea into an appealing product, had been extinguished. In an autobiography published in 1987,

and this is going to get real ridiculous here real fast, Scully, in what now seems like a very accurate assessment about the gulf between his capabilities and the founder he displaced, savage Jobs' ideas of the future by writing, keep in mind he's writing this in 1987, Apple was supposed to become a wonderful consumer products company. This was a lunatic plan. High-tech could not be designed and sold as a consumer product. Think about the words that are coming out of the guy's mouth that the board of Apple thought it was smart to replace Steve Jobs. I mean, that's just silly.

Over the course of 48 months in the mid-1990s, the board included the company's own chief financial officer, a person who had built a riverboat gaming company, the CEO of an enormous European packaging company, the head of National Public Radio, and an executive from Hughes Electronics and Star TV. None of these people had experience in the personal computer industry, none had worked for any time in Silicon Valley, none knew the others well, and none, with the exception of Mark Kula, had a major economic or emotional interest in Apple. It is hard to imagine that they thought of themselves, let alone acted as owners.

Remember Jeff Bezos' famous quote, advice to his executives, act like an owner. While Apple shriveled, Steve Jobs endured his wilderness years, an arduous, painful journey that in retrospect was probably the best thing that ever happened to him. After being banished from Apple, he sold all but one share of his stock and at age 30, cast about for a new beginning. So that's the period of time I'll be talking about next week's podcast. In 1985, he formed a new company, Next. There began a tortured tale which culminated at the end of 1996 with the most unlikely of endings, an acquisition by Apple. By 1996, both Next and Apple had petered out. Jobs had been relegated to a cameo act in the computer business. Then, almost like a chapter out of a 19th century Victorian romance, Jobs convinced Amelio, which was the CEO of AppleTime, to purchase Next for $430 million in cash, and thus unwittingly issued his own exit visa. The Apple he, meaning Steve Jobs,

inherited in the fall of 1997 had lost its creative zest and leadership position in the technology industry, was almost out of cash, was unable to recruit bright young engineers, was drowning in inventory of unsold computers, and had nothing imaginative in the works. Jobs was unromantic. The marketing department, eager to announce a change for the better, wanted to run ads that said, we're back. Jobs would brook none of it. So I just want to pause real quick and think about all the stuff

we've been talking in the podcast. This podcast was focused on the young, flawed jobs, the jobs that was running Apple from, let's say, 1976 to 1984 or thereabouts. This jobs, 13 years later, that's a perfect example, a perfect illustration of how much he had changed and grown. And in what Michael Moritz is saying here, a large part of his growth came because he was enduring, you know, eight years of struggle. All right, so back to the book.

This is the results of him coming back from 97. They were going to lose. It says, one year later, in the fall of 1998, Apple reported annual sales of almost $6 billion and a profit of more than $300 million. Compare that to sales of $7 billion and a loss of $1 billion at the time he took the helm. At the end of Jobs' decade running Apple, an era which the growth of the personal computer industry had slowed to a pedestrian pace, its sales had risen from $6 billion to $32.5 billion, and the price of its

stock had, at its peak, multiplied 40-fold. And this is probably one of the most important sentences in the book, in my opinion. It is a tonic to realize that nothing is more effective than the spirit of a restless company threatened with extinction. As with all books about business, this has been a tale of yesterday and today. And as with all stories of success, this has been a triumph of human will. Now lies tomorrow.

And that is where I'm going to leave the story for today. As with all the podcasts I do, this is just a very tiny part of what I learned from the book. If you want the full story and you want to support the podcast at the same time, buy the book at amazon.com forward slash shop, forward slash founders podcast. I'll also leave a link in the show notes.

You can just tap that. If you use that link, Amazon will send me a small percentage of the sale at no additional cost to you. Thank you very much for listening. I will talk to you next week.