December 28, 2017

Steve Jobs (Part 2)


  • HELLO and welcome to How to Take Over the World. I’m your host, Ben Wilson. This is part 2 of 2 about Steve Jobs. If you haven’t listened to part 1 you probably want to go back and do that. It’s just the previous podcast in this feed.
  • As a quick reminder of where we’re at, Steve has been kicked out of Apple, his next ventures, Pixar and NeXT are floundering, and he’s nearly broke. This time period is the early to mid 90s. 1995 is the year when things start to turn around for Steve Jobs. For the past ten years he’s basically had a string of one failure after another. And now he’s about to have an unparalleled fifteen year streak of successes. And how does he pull-off such a titanic shift in fortune? What was it that finally turned things around for him? Well, it started with a cartoon.
  • Pixar Redemption
  • Steve bought Pixar as a computer company and as a computer company its performance was dismal. The hardware they produced was a financial catastrophe and the software was only ever mildly successful and never made them profitable. But he didn’t give up on them, he kept pumping money into the company to keep them afloat. 
  • The original Pixar executives always wanted to produce a full-length 3D animated movie. They built this company to do that, and everything else they did (building the computers and creating the software and all that) was, in their minds, just a step, a way to make enough money so that they could make their movie. With that in mind, they had hired a very gifted animator from Disney named John Lassiter. And he was in charge of making little animations to help sell their technology. At first the executives at Pixar had to hide the fact that they had hired John Lassiter from Steve Jobs. They gave him bogus titles that made him sound like a technical employee rather than an animator. But once Steve Jobs saw the animations John Lassiter produced, he came to support his hiring, and he continued to fund the animation part of Pixar, even as he was forced to make cuts and slash budgets in other parts of the company.
  • Well as I said the executive at Pixar really believed that a 3D animated film could be successful. And they were passionate about the idea. They really wanted to make a 3D film. But they weren’t an animation studio and they didn’t have the human resources or money to pull that off, so they’re just chugging along, being a software company. Well John Lassiter, this animator they have hired, makes a short film to show off their technology, and it wins an academy award. Disney sees that this guy is really talented and they try to hire him back. But he thinks Pixar is the place for him so he says no, but Steve Jobs negotiates with Disney and they hash out a deal for Disney to help Pixar fund, make, and distribute a film. The world’s very first 3D animated film. Everything before this was 2D and mostly hand-drawn, like Snow White, or Lion King. This is the first film to use computers to animate objects that appeared three-dimensional. 
  • And Steve was supportive of this. Remember he’s way more hands off at Pixar than he ever was before. And this becomes even more true once they start making a movie. He really respected artistic people so whenever he had some criticism of their first movie, Toy Story, he always started it with “Now I’m not a movie guy and I don’t know what I’m talking about, but it seems to me…” and that could not be more different from his normal way of criticizing which was “This sucks. You’re stupid.” In fact, as far as I’ve been able to read, the only people who Steve was ever truly deferential to were artists. And the artists and creators at Pixar respond really well to this freedom and trust. They perform magnificently. They produce a masterpiece. It’s called Toy Story.
  • Steve sees an early cut of Toy Story and realizes it’s great. He shows it to some critics and they agree that it is going to be a hit. Which is of course amazing for both Steve Jobs and Pixar. But there’s a problem. They’re basically not going to make any money on it. The deal they had made with Disney gave Disney all the power and profits, because Disney had put up all the money to make the film. Pixar only gets 12.5% of the profit, and Disney has the option to make Toy Story sequels afterwards with or without Pixar.
  • So Steve realizes, hey we can’t keep relying on Disney for financing or we’ll never become a truly successful company in our own right. And that’s not the future he wants for Pixar. Here you see another instance of Steve questioning the hand he is dealt. Instead of just accepting the deal, he comes up with a bold plan. He wants to take Pixar public the week after Toy Story comes out. Taking a company public means you’re basically going to take a portion of the company and sell it on a stock exchange. You lose some ownership, but the company gets a bunch of money. The plan is to take the company public, and then take all the money they get from this, and go back to Disney and renegotiate their deal. They can say hey we don’t need you anymore Disney, we have the money to produce our own movies now. So if you still want a piece of what we’re making, if you want to continue to make movies with us in the future, we’re going to need more of the revenue from our movies. But this is a big risk.
  • Remember this is a completely new kind of movie that has never been done before. If it comes out and flops, no one wants to see it, then the Initial Public Offering of stocks could flop. They wouldn’t raise the money they needed and it would be a real problem for Pixar. On the other hand, if the movie did really well, then the initial public offering would raise a bunch of money for them because everyone would want to own their stock, and they could renegotiate their deal with Disney.
  • Well of course Toy Story isn’t just successful, it is one of the most successful movies OF ALL TIME. It made $362 million worldwide. So just the weekend after this massive success, Pixar has their initial public offering and it goes great. The stock doubles on its first day. And so in a year, Pixar has gone from a company that was basically worthless and almost dead, to being a massive success. And with the money they raise from the IPO, Steve is able to renegotiate the deal with Disney to get 50% of the profits. Which is obviously a lot more than 12.5%. This secures their financial future and ensures that Pixar is going to be able to continue and realize their vision of becoming a great animation studio on par with Disney.
  • From the Isaacson biography, quote “Earlier that year Jobs had been hoping to find a buyer for Pixar that would let him merely recoup the $50 million he had put in. By the end of the day the shares he had retained – 80% of the company – were worth more than twenty times that, an astonishing $1.2 billion.”
  • And by the way, this is an underrated success for Steve Jobs. He buys Pixar for $10 million, puts in $40 million more, and eventually makes billions off of it. Steve eventually sold Pixar to Disney, and when Steve Jobs died, he was the largest shareholder of Disney. He held more ownership of Disney than anyone else in the world. Few people realize that! In fact, while Steve is best known for leading Apple, when he died almost 80% of his wealth came from owning Disney stock. Pixar was the company that made Steve Jobs most of his money.
  • And more important to Steve Jobs than the financial success was what they created. As his wife would later say, Steve’s love of beauty pervaded his life. He was thrilled to have helped in the creation of something artistically great. Toy Story is acknowledged by most critics as an all-time great movie. It has a 100% rating on rottentomatoes.com. Steve loved that he was able to help make a masterpiece.
  • This process of making a movie was more than just a massive success, it was a place where he learned a ton. Steve always thought he could do everyone’s job better than they could. He was a total control freak who always knew what was right. Well now for the first time something great happens that he absolutely loves, and he can’t pretend like it was his idea or he created it. He did help. But this was a new relationship for him. He was very hands off. He negotiated, and funded. He would meet with and cajole upper management a little bit. But otherwise he basically let Pixar do their thing and it paid off magnificently. And so I think this is when he starts to realize that he could be successful by being an enabler of great creators. And this was a major turning point for him and is one of the biggest contributors to his success when he returns to Apple. For the first time, he’s starting to see the value in loosening up his control-freak ways a little bit, and letting other really smart people do great work. And so you see a string of geniuses that just so happen to work under Steve Jobs: Steve Wozniak, John Lassiter, Ed Catmull, and later on Avi Tevanian, Jony Ive, Tony Fadell, and so on. No one finds greatness by doing it themselves, the great ones always enable a team of geniuses around and under them.
  • NeXT Sale
  • Well Toy Story would be just the first in a string of successes stretching the next fifteen years. The next place where he would, amazingly, figure out a way to turn things around, was at NeXT.
  • And things were DARK at NeXT. In 1993 they laid off about half of all their employees and stopped producing computers. They were still making software but, like Pixar, that software was nowhere close to making them profitable. NeXT seemed like an irredeemable blunder that was well on its way to failure. But remember how I said they had a great operating system? Well this is where that becomes very important.
  • In the beginning of the personal computer wars, Windows was viewed as the much lower quality but much cheaper alternative to Apple. Well during the 90s Apple is unable to innovate when it comes to their operating system, and the result is that it starts to become less and less clear how much better Apple is than Windows, if at all. And as the operating systems get closer and closer, fewer and fewer people are willing to pay the extra money it costs to buy an Apple. So market share has been consistently falling for Apple until, by the mid-90s, Apple was basically an afterthought. They have less than one percent market share and almost all the rest are running Windows. Apple tries to come up with a new operating system but, somewhat inexplicably, they are unable to do so. They had become so paralyzed, so unable to innovate, that they literally can’t even produce a new operating system, let alone a good one. And they’re so far behind at this point that in 1996 they realize they need to just buy a new operating system in order to keep up with Microsoft. Well who just so happens to have a company with an incredible, beautiful, innovative operating system? The one and only Steve Jobs. So Apple approaches Steve about buying NeXT from him in order to acquire his operating system.
  • And Steve may have harbored some ill-will towards some of the people back at Apple who fired him, but not so much so that he was going to turn down the opportunity to pull the rabbit out of the hat and make NeXT a successful venture. Remember it was basically dead before this. At the very least it was totally irrelevant. So they work out a deal. Steve was a great negotiator, and there weren’t many other potential operating systems to be bought, so Steve is able to get a good deal out of it and Apple buys NeXT for about $400 million. Pixar should have been dead and NeXT should have been dead but somehow, he turned them both around. Steve had officially pulled the rabbit out of the hat twice in a row.
  • Return to Apple
  • Well, since Apple had acquired NeXT, there was an expectation that Steve Jobs would take some kind of role at Apple. At first his position at Apple is poorly defined. They’re mostly thinking it will be an advisory role with no real day-to-day responsibilities. The first title they give him is “Advisor to the chairman.” Which doesn’t mean a whole lot. And it is in fact basically just a consulting role. The CEO of Apple at the time was a guy by the name of Gil Amelio. Amelio was not well suited for the job. He was not an inspiring leader, bumbling, and frankly kind of clueless.
  • There’s a great story that illustrates the kind of leader Amelio was. He meets a journalist, Gina Smith, at a party. And Gina asks how Apple is doing Amelio answers, quote “You know, Gina, Apple is like a ship, that ship is loaded with treasure, but there’s a hole in the ship. And my job is to get everyone to row in the same direction.” Smith looked perplexed and asked, “Yeah, but what about the hole?”
  • It really illustrates why Amelio was a failure and why Jobs succeeded after him. Amelio was focused on the people and what they thought of him and making sure they were doing what he wanted. Or in his analogy, that they were rowing in the same direction. He fell into the popularity pitfall. Trying to be popular is a stupid goal, but it’s also ineffective. People who try to be popular often come across as desperate and pathetic. People who focus on doing great things attract the most interest in the end. That’s something Steve Jobs understood that Gil Amelio didn’t.
  • Well Steve just couldn’t help but take control whenever he was involved with something. So as Amelio continues to stumble, Steve is taking over more and more control at Apple. Eventually, it becomes clear that Gil Amelio can’t lead Apple and he is let go. Steve Jobs is named interim CEO exactly twelve years after he had been kicked out. One of the first things he does as CEO is have an all-hands-on-deck meeting with all the employees in the company.
  • He comes on stage and immediately sets the tone for how he’s going to manage Apple. He says:
  • “Okay tell me what’s wrong with this place?” “It’s the products! So what’s wrong with the products? The products suck! There’s no sex in them anymore!”
  • So the first thing Steve Jobs tries to do is fix the products. And one of the main problems was that there were way too many of them! Apple was known for creating the whole widget in their early days. They produced the operating system as well as the hardware, the physical computer. Well in the time since Steve Jobs left they had started licensing their operating system to outside manufacturers. And the result was a big and confusing product lineup that was redundant and overwrought. Many of the computers being sold by outside manufacturers were poorly built and not up to Apple’s standards. Steve realizes they need to simplify this way down. So he tears up the licensing agreements. From now on Apple computers are only going to be produced by Apple. And he also does a giant product review. There were over a dozen computers in production. They were all called the Macintosh and then a number. And not easy to remember numbers! They stretched from the Macintosh 1400 to the Macintosh 9600. So he has someone come in and present about each product. 
  • One of the things that I love about Steve Jobs is he wouldn’t let them use PowerPoint slides. He said “People would confront a problem by creating a presentation. I wanted them to engage, to hash things out at the table, rather than show a bunch of slides. People who know what they’re talking about don’t need PowerPoint.” This is something I’ve tried to adopt. Powerpoint slides are almost never the answer when you’re the one being presented to. And it’s because, for some reasons slides let people create this alternate reality. I’ve been in some product pitch meetings where someone presents slides and you’re following the slides and as you go along this product they’ve come up with starts to make a ton of sense. And you’re like yeah, okay, yes, this is great! And then the presentation ends and you ask one question and you realize they’re trying to build absolute garbage. It’s interesting that Steve Jobs hated having slides presented to him, but he always used them when he introduced a new product. And that’s because he was TRYING to create an alternate reality. So slides are great if you’re presenting to other people, but when they are presenting to you, try to get them outside the slides, make them work without them if at all possible. It lays bare the truth really quickly and helps you cut to the heart of a matter.
  • Well in these slide-free product reviews he cuts out 70% of the computers they had been making. This made some engineers really mad because he was killing their products and sometimes laying people off. After a few weeks of this, killing off more and more products, he’s in another product review session and he shouts “Stop! This is crazy!” and he grabs a marker and goes up to a white board and draws a square grid with 4 sections. He labels the columns consumer and pro, and labels the rows desktop and portable. He then said we’re going to make one computer for each quadrant. A desktop for consumers and for pro users, and a portable computer for consumers and for pro users. The room goes silent. Some people actually gasp. Every time he presents this new product strategy it creates a stir. Some people think it’s genius. Others think it’s crazy.
  • Again, try to take yourself out of what you already know about Apple. Think of how this would sound. There’s a reason you have all these computers. They each appeal to a very specific customer type. It seems simple to say “We’re only going to make one desktop computer for normal consumers” but then you start thinking about it and it gets a little more complicated. What if it’s an elderly couple who just wants to send emails to their grandkids? They only need something cheap and inexpensive. Or what if it’s someone who’s not a pro user, but is nevertheless very tech savvy, maybe they’re really into photo-editing or movie making and they need a ton of power. Those are two totally different people with different needs but they’re both captured under the market segment of consumers looking for a desktop. So you can see why making only one desktop consumer computer would be a big risk. The Apple board of directors isn’t too sure about this new path. And many of the engineers aren’t sure about it. But Steve Jobs is, so they press forward.
  • And it actually is genius. It works. The result is you have all the intelligence, talent, and effort of the entire company focused on these four things and making them insanely great. And that’s what real focus is.
  • You know, I’ve already touched on focus as one of the key traits of Steve Jobs’ success but I want to point out one more thing. Many people think that focus means cutting out distractions and bad things. Things they know they shouldn’t be doing. And that is a start, but that is nowhere close to what true focus, the kind of focus that lets you achieve unbelievable, world-changing, Steve Jobs type results does not come from cutting out the obvious. There was this device that Apple had back then. It was a little tablet called the Newton. And listen to what Jobs said about cutting the Newton: “My gut was that there was some really good technology, but it was messed up by mismanagement. By shutting it down, I freed up some good engineers who could work on new mobile devices. And eventually we got it right when we moved on to iPhones and the iPad.” In other words, it was some pretty good technology, but we put if off for more than a decade because we had to focus on the most important things.
  • Real focus doesn’t come from cutting out wasting time on social media and drinking too much on the weekend or ending an abusive relationship, though obviously those are all things that you should definitely cut out of your life. Start with those things. But if you want to be a world-beater, you’ve got to achieve the level of focus that comes from cutting out things that are okay. For Steve Jobs that meant cutting out computers and devices that were perfectly good, profitable computers. Really focused people cut good things out of their life in order to be able to focus on the best and most important things. And for you, maybe that means quitting a club or a team, or eliminating an extra side-project that is a really good idea, but just not as good of an idea as something else you’re working on.
  • I see this all the time with morning routines. I see all these ideas of things you should do in the morning to boost your productivity. Work out, stretch, meditate, pray, journal, keep a gratitude diary, eat a certain type of breakfast, jump on a trampoline, read the Bible, drink tea, take a cold bath, go for a walk, the list goes on. The thing is if you do all these things, by the time you get started for the day it’s 10 AM and you’ve spent a bunch of effort on a whole bunch of stuff that doesn’t materially contribute to the main thing you’re trying to accomplish in life. So you’ve got to just pick a couple of those things for your morning routine and focus on that. Everything I mentioned is, I am sure, a perfectly good thing to add to your morning routine. I’ve tried most of them and they are perfectly good. BUT true focus means cutting out some of the perfectly good things in your life, so you can focus on the great. The most important thing. The thing that makes you special.
  • One more example from Steve Jobs’ career that illustrates this. There’s an exercise he would do with his top managers. He would take them on a retreat. And they would have a meeting where Steve was standing at the white board and he would ask “What should we be working on that we are not already working on?” and at first people could say anything. Anything that came out of someone’s mouth went on the whiteboard. That included crazy, wild, ridiculous, and stupid ideas. Then once all the ideas were there they would cut out the obviously stupid ones. Then they would get to work and argue and debate over which ten they should actually keep from that list. It would take them an hour or two but after a bunch of debate they would finally get it down to ten. Ten good, solid, realistic, ambitious, important things they should be working on. Then he would say, okay, we’ve got to cut it down to three. And at that point every idea they were cutting out felt like a great idea but they would narrow it down to the three things they should focus on. So many people and company’s stop at the ten, but the real power comes when you make the final cut.
  • Think Different
  • Well Steve has started the process of saving Apple. BUT, there’s a problem. He’s geot everyone focused and moving together on the right things. But producing new products takes time. A year at least. And he doesn’t have a year. Sales are slumping, the company has a ton of debt, it’s on the verge of bankruptcy. They need to stop the bleeding NOW. So he does two things.
  • Few people know this, but Apple would not have survived if it weren’t for one company that swooped in and absolutely saved them. What company swooped in and saved Apple, you might be wondering. Well it’s probably the last company you would think of. It was their rival, Microsoft.
  • There was a longstanding lawsuit against Microsoft from Apple, alleging that Microsoft had copied their technology and was impinging on their patents. So Steve Jobs rings up Bill Gates. In his own words, here’s what happened.
  • “I called up Bill and said, “I’m going to turn this thing around.” Bill always had a soft spot for Apple. We got him into the application software business. The first Microsoft apps were Excel and Word for the Mac. So I called him and said, “I need help.” Microsoft was walking over Apple’s patents. I said, “If we kept up our lawsuits, a few years from now we could win a billion-dollar patent suit. You know it, and I know it. But Apple’s not going to survive that long if we’re at war. I know that. So let’s figure out how to settle this right away. All I need is a commitment that Microsoft will keep developing for the Mac and an investment by Microsoft in Apple so it has a stake in our success.”
  • Here’s how Bill Gates described it: “It was classic. I’d been negotiating this deal with [Gil] Amelio, and Gil wanted six things, most of which were not important. Gil was complicated, and I’d be calling him on the phone, faxing him stuff over the holidays. And then when Steve comes in, he looks at the deal and says, ‘Here are the two things I want, and here’s what you clearly want from us.’ And we had that deal done very quickly.”
  • Microsoft invested $150 million in Apple and promised to keep developing Microsoft Office applications for Apple computers. This gave them enough money and investor confidence to stay alive. If it weren’t for this deal, Apple would have died. Steve Jobs really had to swallow his pride to make this deal with Microsoft but in this case swallowing his pride saved the company.
  • But he also had to restore confidence in the company among employees and consumers. They were losing employees to other companies, and losing customers who had given up on Apple and were now deciding to buy a PC instead. So Steve Jobs said that they had to, quote “prove that Apple is still alive, and that it still stands for something special.”
  • He calls up Lee Clow from his old favorite ad agency, Chiat/Day, and tells him he needs his help. They’re going to create an ad campaign to restore customer confidence and instill a sense of pride and confidence in their own employees.
  • Steve Jobs has a great quote about what they were trying to do and how they did it. “We at Apple had forgotten who we were. One way to remember who you are is to remember who your heroes are. That was the genesis of the campaign.” This was going to be an ad that wasn’t for sales per se, but was to rally the troops. They wanted an ad to celebrate not what the computers can do, but what people can do with the computers.
  • So they Chiat/Day comes up with this idea for an advertising campaign called “Think Different”. And it turns out to be really great.
  • Steve said when he first saw them present the idea for the advertisements, quote “Every once in a while, I find myself in the presence of purity – purity of spirit and love – and I always cry. It always just reaches in and grabs me. That was one of those moments. There was a purity about that I will never forget. I cred in my office as he was showing me the idea, and I still cry when I think about it.”
  • All it is, is a set of posters, with pictures of people. People like Einstein, Gandhi, John Lennon, Picasso, Bob Dylan, Amelia Airheart, Martin Luther King Jr. Risk-takers, innovators, rebels, misfits. And it’s a photographic portrait of them, and in the corner it has the apple logo and it says “think different”. And that’s literally it. They also created a television ad. It’s got footage of these people and Richard Dreyfuss narrates a monologue that Lee Clow and his team work with Steve Jobs to write. Here’s the monologue:
  • “Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world are the ones who do.”
  • I know that I already told you to go look up the 1984 ad in the last episode, but you should really look this up. It’s quite moving.
  • It’s another stroke of genius. Apple is beleaguered but with one advertising campaign they change the conversation and shape public perception. No longer is Apple failing, they’re holding out. They’re the rebel alliance. They stand for something. The conversation is no longer about which operating system is best, Windows or Macintosh, but it’s about who you are as a person. With one advertisement, Steve Jobs makes it unthinkable that any Apple fan would switch from a Mac to a PC, because “they’re the ones who think different”. It would be like debating between riding in the Millennium Falcon or a Star Destroyer. It’s not about the ship. As Larry Ellison would later point out, Steve Jobs is the first person to create a lifestyle brand in the tech industry.
  • Reboot
  • Well with these moves, Steve has bought himself enough time to make these four products. He has a meeting of his top managers and staff and he tells them, quote “What we’re trying to do is not highfalutin. We’re trying to get back to the basics of great products, great marketing, and great distribution. Apple has drifted away from doing the basics really well.”
  • And the basics are enormously important. This makes me think of John Wooden, the legendary basketball coach, who every season on the first day of practice would teach his basketball players how to tie their shoes the right way. Or Picasso. People don’t realize how good Picasso was at just drawing. But he could draw a figure with the best of them. He didn’t invent cubism right away, first he mastered the basic art of drawing and painting. You can’t skip to the high strategy, you have to get the basics right. In fact most high strategy is, in fact, figuring out how to execute on the basics better than your opponent. Look at fast food, a lot of fast food chains are struggling. And what are they trying? Tacos made out of bacon and new health food options and faster free wifi and all this strategic stuff. Meanwhile, you know what companies are growing? Companies like In-n-out and Five Guys, who make good hamburgers at a fair price and have clean restaurants. That’s what high strategy often amounts to. And that’s what Apple is getting back to. Great computers, great marketing, great distribution. Period.
  • Well that that might be simple, but it’s not easy. It can be really difficult to execute on the basics. And the pressure is enormous. Steve has bought himself enough time to produce this new line of products, but if they flop, Apple is still toast. So during this time period Steve is killing himself, working the hardest he has ever worked to make sure that all of this is going to work.
  • Steve is working all day. He said when he got home every night, quote “All I could do was watch a half hour of TV and vegetate” and then fall asleep. By the way, I like knowing that even Steve Jobs in his busiest time of life made time for a half hour of TV per night before he fell asleep. I guess I have a puritan streak in me but when I feel like I’m really busy with something that’s important, I feel bad taking any time at all to just veg out and surf Twitter or watch TV. Finding out that Steve Jobs vegged-out for just a half hour every night helped me to be more realistic and stop beating myself up. 
  • iMac
  • Well the first of these computers to come out is the desktop for consumers. And that’s going to be the flagship. It’s going to be the most important computer. Their flagship. And they decide to call it the iMac. For the design of the iMac, originally Steve wanted to work with an outside design firm. But he’s walking through the in-house design lab, and he sees this clear plastic clam-shell design that an Apple designer by the name of Jony Ive had designed. And he’s immediately drawn to it.
  • So he gets the idea that they’re going to design an all-in-one computer, and it’s going to have a blue see-through shell. He works with Jony Ive to come up with the design first. Johnny was sort of this Steve Jobs whisperer, he has an amazing way of calming his temper and working with him. He becomes one of the top guys at Apple. And he still is. If you’ve ever seen an Apple introduction video, he’s the British guy saying something about how the latest laptop was made with “the most perfect, top grade aliminium.” And by the way, Steve Jobs did make fun of Jony Ive for the way he said aluminum. 
  • And so Steve takes this plastic see-through design to the engineers, he said, quote “When we took it to the engineers, they came up with thirty-eight reasons they couldn’t do it. And I said ‘No, no, we’re doing this.’” The design was fundamental to him. It was non-negotiable.
  • I love how Steve described why design was so important to him. He said, quote “In most people’s vocabularies, design means veneer. But to me, nothing could be further from the meaning of design. Design is the fundamental soul of a man-made creation that ends up expressing itself in successive outer layers.”
  • The design meant everything to him. The plastic shell cost $60, three times what a normal case would cost. And at any other company that probably would have sunk the idea. How do you justify tripling the cost on something that will provide no tangible benefit for the customer, especially when you have no market research to prove that it will increase sales. But to Steve, it defined the way a customer would interact with the computer. The blue see-through case would make the computer exciting but friendly. Futuristic yet approachable. It would draw people to it and make them more eager to use it. So that’s why he makes his engineers work with the design they have come up with.
  • Well they develop this computer, the new iMac. Steve holds an event to introduce the computer. And when he is on stage, the whole world’s eyes are on him. They are watching to see if Apple going to make a comeback and become important in the computer world again, or if this is going to be their last death rattle. When he is finally ready to reveal the iMac, he shows a slide of some old PCs. They all look exactly the same, they’re these beige boxes. And he says “This is what computers look like today. And I’d like to take the privilege of showing you what they are going to look like from today on.” And he pulls off the cloth to reveal the iMac. The spectacle is breathtaking.
  • No one had seen anything like it. I remember when these came out, they were totally revolutionary. Everyone wanted to see one. It really was a statement and made a computer cool in a way they never had been before. I mean what kind of person would show off their computer? But I remember my across-the-street-neighbors were the first ones in the neighborhood with an iMac, and I went over there to check it out and there were about ten other kids from the neighborhood. It was like a piece of art. It was such a cool-looking machine.
  • It comes out in May 1998 and it sells 278,000 in its first six weeks and sells 800,000 by the end of the year, making it the fastest-selling computer in Apple history. With the success of the iMac, Apple no longer had to worry about their survival. They were going to make it.
  • Jony Ive
  • One of the big stars to rise from the success of the iMac is that designer I already mentioned, Jony Ive. Here’s what steve Jobs said about Jony, quote “The difference that Jony has made, not only at Apple but in the world, is huge. He is a wickedly intelligent person in all ways. He understands business concepts, marketing concepts. He picks stuff up just like that, click. He understands what we do at our core better than anyone. If I had a spiritual partner at Apple, it’s Jony. Jony and I think up most of the products together and then pull others in and say, “Hey, what do you think about this?” He gets the big picture as well as the most infinitesimal details about each product. And he understands that Apple is a product company. He’s not just a designer. That’s why he works directly for me. He has more operational power than anyone else at Apple except me. There’s no one who can tell him what to do, or to butt out. That’s the way I set it up.” Jony’s role is a sign of what design means to Steve Jobs, and to Apple, the high regard that Steve Jobs had for artists and artistic people. It also shows how being an artist isn’t enough. Jony was a superstar because he was an incredible artist, but was also savvy enough to understand all the business concepts that impacted his art and design.
  • iPod / iTunes
  • Steve’s next big breakthrough is the iPod. Music was undergoing a huge transformation. I remember this time period. It was a great time for music. MP3s were just becoming a thing. And there was no real official infrastructure around digital music to take advantage of this. This was the time of Napster, and everyone my age, myself included, we were all just illegally downloading all the music we wanted from Napster. And the way you discovered stuff was from mixtape CDs. A friend would create a CD with all the music they loved and hand it off to you. It was just an incredible way to discover music, but it was also totally disorganized. It was really the wild, wild west. I didn’t even know the name of some of my favorite songs. I had just gotten them off someone else’s MP3 CD and then was copying and burning them to other CDs but I didn’t even know who sang it or what it’s real title was.
  • And at this time there were already MP3 players. Steve and his team start to think about creating an MP3 player and so they go through all the existing ones and decide they all suck. And I was there so I can tell you, they were right. Those MP3 players did suck. They were extremely clunky and complicated to use. They weren’t worth it. So most people were still using CD players.
  • So Steve and the Apple guys decide to make their own. And Steve was obsessed and I mean OBSESSED with making it simple and easy to use. Steve applied a strict test: If he wanted a song or a function, he should be able to get there in three clicks or less.
  • And setting aside what you know about the solution they came up with, that’s impossible. Remember they don’t have effective touch screen technology yet, so they’re going to have to use buttons. And let’s say you want to get to the fifth track on an album. Then once you get to the album, you’re going to have to press the down button four times. Those are just the facts of life. Three clicks or less is impossible. But Steve is insistent that there has to be a way. And because they have no other choice, they achieve a breakthrough: The scroll wheel. You just spin it around to go up or down. It doesn’t count as a click and it’s way more efficient and intuitive than up/down left/right buttons. It’s a totally innovative and genius solution, and it’s the effect of Steve’s reality distortion field at work once again.
  • In order to make this work they have to outsource most of the functions to your desktop. For example, you couldn’t create a playlist on the original iPod, you had to do it on your computer and then transfer it over.
  • The iPod is interesting to think about because it was more expensive and less functional than most of the competing MP3 players out there. And yet it was BY FAR the most successful. It was a huge phenomenon. And that all comes down to user experience. It was much easier to use and more intuitive than the competition. It shows the power of great design.
  • One of the main competitors to eventually come out was a Microsoft product called the Zune. But the Zune failed pretty hard. Here’s what Steve jobs said about why the Zune failed but the iPod succeeded, quote “The older I get, the more I see how much motivations matter. The Zune was crappy because the people at Microsoft don’t really love music or art the way we do. We won because we personally love music. We made the iPod for ourselves, and when you’re doing something for yourself, or your best friend or family, you’re not going to cheese out. If you don’t love something, you’re not going to go the extra mile, work the extra weekend, challenge the status quo as much.” It shows the power of proper motivation. This is one of the big themes throughout Steve’s life. He was always harping on the idea that you shouldn’t start companies or make things in order to make money. You should do it because you care and you love it. And I think the iPod really demonstrates how that can be effective.
  • The iPod is released in late 2001. And it was of course massively successful. In its many iterations, Apple would go on to sell over 400 million iPods, and counting.
  • Now truly, Steve’s run of producing great products is hard to wrap your mind around. There are so many of them that we don’t have time to go into them all, but I’ll give them a quick shout out before we move on to talk about his next truly transformative and world-changing product, the iPhone. Between 2001 when the iPod was released, and 2007, when the iPhone was released, Apple produced the Powerbook, the iBook, the MacBook, and MacBook Pro, all very successful laptops, they produced the Mac Mini, the Power Mac G5, and new versions of the iMac, all very successful desktop computers, they produced the iPod Shuffle, the iPod Nano (personally my favorite Apple device ever), and the iPod Mini, and they created the iTunes Music Store. And every single one of these things were successful, some of them wildly so. He also sold Pixar to Disney in 2006 for $7.4 billion. And before he did they had a similar string of successes. Before he sold them, here are the movies Pixar made, in order: Toy Story, A Bug’s Life, Toy Story 2, Monsters Inc., Finding Nemo, and the Incredibles. They were all extremely well reviewed. Personally I love all those movies, I think they’re great. And adjusted for inflation, the least profitable of those movies made $300 million. So these are good years for Steve Jobs.
  • iPhone & iPad
  • But as I said, the next truly world-changing product that Steve Jobs would create is one that in 2017, we’re all familiar with: The iPhone. Why did the iPhone come about? Well as Art Levinson, one of the board members of Apple, put it “He was always obsessing about what could mess us up”. And Steve realized that the thing that could mess up the iPod was the phone. So he decided to beat them to the punch and develop a phone himself.
  • Well they start to design a phone and they are trying two major approaches at the same time. One was a touchscreen, and the other was a clickwheel. Now a clickwheel was definitely clumsier to use and a worse user experience, but the problem with the touchscreen was that no one was sure if they could actually pull off the engineering or not. They could create a touchscreen device, but they weren’t sure if they could make it small enough to be a phone. And so they’re creating both, trying both approaches. There are two teams and Steve is basically pitting them against each other. They each make a presentation to him and the executive team once a week. Finally, after a few months of pitting the doable scrollwheel against the ambitious touchscreen and weighing the merits of each approach, Steve points to the touchscreen one and says “We all know this is the one we want to do, so let’s make it work.” Ah reality distortion field, it’s good to see you again.
  • Speaking of reality distortion, in order to produce the iPhone they need a type of glass for the front called Gorilla Glass. Only one company could produce it: Corning. And Corning says look, this is just a niche product we created we can’t mass produce it. There’s no way we could manufacture it on anywhere close to the scale you’re asking for. And what’s Steve Jobs’ response? He looks their CEO in the eye and says “Don’t be afraid.” The CEO then explains to Steve that, no, it’s not just fear, we really can’t do this. And Steve says “Yes, you can do it. Get your mind around it. You can do it.” And guess what? They did it. They had to put all their best minds and resources toward solving how they would produce the glass on this scale but they found a way to scrape by. On the day the iPhone came out, Steve Jobs sent the CEO of Corning an email. It was just one sentence. “We couldn’t have done it without you.”
  • Of course, to say the iPhone was successful would be an understatement. By many measurements it was the most successful product of all time. Let that sink in. The most successful product of all time, of any type. There have been more than a billion sold, making it the most sold product of all time and it’s not close. Second place is Harry Potter books at 450 million copies sold. It’s the most profitable device of all time, with Apple enjoying unheard of margins. It has incredible approval ratings among users. And it is one of those rare products, joined by the likes of the Model T, that truly revolutionized the world by changing the way people live.
  • Now iPhone is another example of design taking priority over engineering. But there was one instance in which this almost went disastrously wrong. When Apple released the iPhone 4, which by the way, I still think is the most beautiful and best designed iPhone, there was a problem with the antenna. They had built it into the steel encasing of the phone itself. In order for this to work, there had to be a tiny gap in the rim, and if a person accidentally covered this gap, the phone could accidentally drop a call. It occurred with maybe one in a hundred calls.
  • But the media got a hold of this information and turned it into a major news story. And it did start to become a story. So Steve had to respond. At the time it seemed like this could be a major issue that would sink the iPhone 4. Steve assembles a team of marketers, PR people, and trusted advisors and has a war room for an afternoon to figure out what to do. Regis McKenna suggested he just lay out the data, explain what was going on, and be confident. He said to not go into the press conference with his tail between his legs. Others thought Steve should be more apologetic and humble. Regis McKenna’s response to this is hilarious, he basically says “Yeah, I’m not sure making Steve seem humble is really an option.” 
  • In the end, Steve opted for McKenna’s straight-forward approach. He had an event to address the issue. At the event he got on stage and made a presentation. He said “This is blown so out of proportion that it’s incredible.” He also said “We’re not perfect. Phones are not perfect. We all know that. But we want to make our users happy.” He pointed out that every cell phone drops calls from time to time and the iPhone is actually better than other phones in that department. But yes, this one drops a tiny bit more calls than is normal for an iPhone. He said if anyone was unhappy they could return it no questions asked or get a free bumper case from Apple, which would resolve the issue. He was not apologetic, he was straightforward, and basically framed it as having the same problem as everyone else. 
  • It worked. The iPhone 4 had one of the lowest return rates of any iPhone. The wait time for the iPhone 4 jumped from 2 weeks to 3 weeks after his event. The iPhone 4 became their fastest selling product ever. People started talking about how much other phones dropped calls and comparing the models. It was a master class in effective PR. Some observers could barely believe it.
  • Michael Wolff of newser.com wrote “This is a level of modern marketing, corporate spin, and crisis management about which you can only ask with stupefied incredulity and awe: How do they get away with it? Or, more accurately, how does he get away with it?”
  • Scott Adams, the cartoonist behind Dilbert, wrote “Apple’s response to the iPhone 4 problem didn’t follow the public relations playbook, because Jobs decided to rewrite the playbook. If you want to know what genius looks like, study Jobs’ words. If Jobs had not changed the context from the iPhone 4 to all smartphones in general, I could make you a hilarious comic strip about a product so poorly made that it won’t work if it comes in contact with a human hand. But as soon as the context is changed to ‘all smartphones have problems,’ the humor opportunity is gone. Nothing kills humor like a general and boring truth.”
  • This incident is, I think, an underrated display of genius. It demonstrates what a masterful ability he had to persuade people, and what an effective communicator he was.
  • iPad
  • After the iPhone, the next major product Apple created was the iPad in 2010. After the unparalleled success of the iPhone, the success of the iPad looks modest. Truth be told, for most people if they released the iPad it would be the crown achievement of their career. It was a very successful product in its own right. There have been more than 350 million sold. And while it hasn’t revolutionized the way we live the way the iPhone and the creation of touch screen smartphones have, it has subtly shifted a number of industries, from retail to education.
  • This is the last major product release of Steve Jobs’ life. It makes a big splash, immediately sells well, and in the subsequent years continues to develop and become even more important in the public consciousness. It’s almost effortless. And to me it’s a huge contrast to his early career. Especially the effortlessness of it. It’s like changing the world wasn’t even hard for him anymore. Since the Apple II, all of the products he introduced before his return to Apple were impractical, too expensive, and ultimately failures. So what changed that he was able to introduce hit after hit after hit? I mean he was basically on fire for 15 years. We already went through his long string of successes. And now in addition to that he’s got four versions of the iPhone, the way he changed retail with Apple Stores, and the complete revolution of apps with the creation of the App Store. It’s unbelievable. So again, what changed that enabled this? Let’s take a step back and look at the things that changed and enabled this transformation.
  • The change
  • One thing we haven’t really talked about that I think was really important for him, was his family. Steve got married in 1991 and I think that’s something that really calmed him down and mellowed him out. I won’t go too in-depth about his wife, Laurene, other than to say that she is a woman who was smart and strong enough to go toe-to-toe with Steve Jobs, but secure and laid back enough to not always have to. I think she was a perfect match for him. I’d like to read what Steve wrote to her on their 20th wedding anniversary:
  • “We didn’t know much about each other twenty years ago. We were guided by our intuition; you swept me off my feet. It was snowing when we got married at the Ahwahnee. Years passed, kids came, good times, hard times, but never bad times. Our love and respect has endured and grown. We’ve been through so much together and here we are right back where we started 20 years ago – older, wiser – with wrinkles on our faces and hearts. We now know many of life’s joys, sufferings, secrets and wonders and we’re still here together. My feet have never returned to the ground.”
  • Steve and Laurene created a beautiful life together. It’s a little surprising, but they had a sweet, happy, normal, suburban life. It’s an oft-repeated axiom that creative geniuses often have boring personal lives, and that seems to be the case here.
  • Steve and Laurene had three kids, and they tried to give their children as normal a life as they could. They lived in a really nice Palo Alto neighborhood, but it was actually relatively normal. They lived on a street, not a gated community. They had no personal staff or body guards. No helicopters or stretch limos. There’s a story I love. As I have mentioned, Steve was good friends with Larry Ellison, who was another very famous Silicon Valley founder and billionaire. And Larry has a very extravagant lifestyle. And one day, Steve Jobs’ son, Reed, was talking and he referred to Larry as “our rich friend.” His dad was worth billions and billions of dollars but he didn’t really realize it because their life was so normal by comparison. To him, Larry Ellison was their rich friend.
  • I think creative geniuses often have a boring home life for a reason. In Steve Jobs’ life, I think the stability and comfort of his family life allowed him to be creative and adventurous in his professional life.
  • Obviously situations will vary, but for this reason I generally advocate for marriage and a simple and stable family life. Seeing as I’m not married I’ll avoid giving any advice here and just say that I find his relationship with Laurene touching and it seems to me that it was in some way instrumental to his success. It’s interesting to me that both Napoleon Bonaparte and Steve Jobs achieved enormous success while they had marital happiness and stability, and both faltered when they lacked marital happiness and stability. I’ll let you draw your own conclusions from that.
  • Another thing that helped mellow out Steve was his battle with cancer. I know that might sound weird to say. Jobs was first diagnosed with cancer in late 2003. He beat it back and enjoyed full health for a few years, but the cancer returned and eventually killed him. But he was changed after his first cancer scare. Andy Hertzfeld, one of those early engineers who worked with Steve for a long time, said about his first battle with cancer quote “Before, if you asked Steve for a favor, he might do the exact opposite. That was the perversity in his nature. Now he actually tries to be helpful.” I think it probably made him more willing to listen to others, and less head-strong. I also think it focused his mind, because he realized he had so little time left.
  • Another thing that changed was his willingness to let people do great work without him. I think Pixar taught him something valuable, which was that he could achieve success by relinquishing some control and enabling others rather than micromanaging.
  • Contributing to that was also the role Steve had at Apple. Steve was someone who couldn’t help but micromanage sometimes. But being the CEO removed him a little, and having some sort of distance between day-to-day operations and himself was really helpful. It’s weird to say but he may have been better qualified to be the CEO than he was to be manager of the Macintosh team.
  • One other thing is that Steve Jobs was just incredibly lucky with the team he had in later years. They were perfectly suited to complement his strengths and make up for his weaknesses. I think Walter Isaacson summed it up pretty well, “They all knew they were expected to be deferential to Jobs while also pushing back on his ideas and being willing to argue – a tricky balance to maintain, but each did it well. ‘I realized very early that if you didn’t voice your opinion, he would mow you down,’ said Tim Cook. ‘He takes contrary positions to create more discussion, because it may lead to a better result. So if you don’t feel comfortable disagreeing, then you’ll never survive.’” 
  • And his team did feel comfortable disagreeing. They were able to push back just the right amount. I think the early Apple teams and NeXT lacked that. But he found it, or stumbled upon it, during his later years.
  • One more thing I want to say about how Steve grew and changed. He did change. He grew less petulant and bratty, more willing to compromise and listen, more pragmatic, less focused on his own ego and even more focused on creating insanely great products. But he did relapse. Often. He could still sometimes be completely bratty and petulant. Some people have taken that to mean that he didn’t actually change. They point to some incident of him acting like a jerk from 2008 and say, well see? He was still acting like this late in life, so he didn’t really change. And I think this is unfortunate because I think we often do the same thing to ourselves. We try to change, and then the second we mess up in any way we say “Well, I guess that change wasn’t real after all. I didn’t change.” At least I know I’ve done that before.
  • The other week I heard an alcoholic and former drug-abuser use a phrase that I had never heard before “relapse is a part of recovery.” He made the point that just because you relapse does not mean you’re not recovering. It’s just a part of the process and a small setback. And I think that applies beyond addiction. It’s helped me with forming new positive habits. Steve could relapse into his old ways. If you try to change and create positive habits then you’ll relapse too. But that doesn’t mean your change was ineffective or insincere. It just means it’s taking time. One of the last things Steve Jobs said to his official biographer was “I did learn some things along the way. I did learn some things. I really did.”
  • The Speech
  • One other thing I want to mention really quickly is his commencement speech. Steve didn’t really do public speeches for universities or conferences or anything. But he did decide to do one commencement speech. He gave it at Stanford in 2005. I think it was his way of giving back to the Silicon Valley community that had been so instrumental in his rise. It’s a masterful speech. I almost want to just play it in full, but that would be lazy. I will say, I know I keep referring you to YouTube, but if you have the time go search it out on YouTube it’s very worthwhile.
  • Steve started out by saying “Today I want to tell you three stories from my life. That’s it. No big deal. Just three stories.”
  • The first was of going to college at Reed. He talked about how he dropped in on classes that he found interesting. He decided to drop in on a calligraphy class where he gained a great appreciation for different types of fonts and writing styles. He said it was “beautiful, historical, artistically subtle in a way that science can’t capture, and I found it fascinating.” It had no practical application for him and his career, but years later when he was designing the first Macintosh, it came back to him and gave him the inspiration to include options for different fonts, which is something no other computer did at the time.
  • He concluded the story by saying “You can’t connect the dots looking forward; you can only connect them looking backward. So you have to trust that the dots will somehow connect in your future. You have to trust in something – your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.” I think this is very true. Steve didn’t look far into the future and have some master plan for his life. He trusted his intuition and was opportunistic. This lack of long-term, over-arching plan gave him the freedom to seize whatever opportunity was in front of him. He didn’t worry about connecting the dots, he trusted that the dots would connect in retrospect.
  • The second story was about getting fired from Apple. He explained how things worked out for him in the end with his eventual triumphant return, but, he said “I’m pretty sure none of this would have happened if I hadn’t been fired from Apple. It was awful tasting medicine, but I guess the patient needed it. Sometimes life hits you in the head with a brick. Don’t lose faith. I’m convinced that the only thing that kept me going was that I loved what I did. You’ve got to find what you love. And that is as true for your work as it is for your lovers. Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it. And, like any great relationship, it just gets better and better as the years roll on. So keep looking until you find it. Don’t settle.”
  • The third story was about being diagnosed with pancreatic cancer. He explained that it changed his outlook on life and refocused him on the most important things. He finished by saying “Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma — which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.” That’s a sentiment I strongly endorse, and won’t really try to echo because I’m not sure I can state it any more eloquently.
  • I’ll also read the final two paragraphs of his speech “When I was young, there was an amazing publication called The Whole Earth Catalog, which was one of the bibles of my generation. It was created by a fellow named Stewart Brand not far from here in Menlo Park, and he brought it to life with his poetic touch. This was in the late 1960s, before personal computers and desktop publishing, so it was all made with typewriters, scissors and Polaroid cameras. It was sort of like Google in paperback form, 35 years before Google came along: It was idealistic, and overflowing with neat tools and great notions.
  • Stewart and his team put out several issues of The Whole Earth Catalog, and then when it had run its course, they put out a final issue. It was the mid-1970s, and I was your age. On the back cover of their final issue was a photograph of an early morning country road, the kind you might find yourself hitchhiking on if you were so adventurous. Beneath it were the words: “Stay Hungry. Stay Foolish.” It was their farewell message as they signed off. Stay Hungry. Stay Foolish. And I have always wished that for myself. And now, as you graduate to begin anew, I wish that for you. Stay Hungry. Stay Foolish.”
  • Death
  • Well as I said, Steve ended up dying from cancer. It was pancreatic cancer. It took its toll on him for the last few years of his life. But it also gave him enough time to transition leadership at apple to other executives, and say goodbye to friends and family. Steve was obsessed with creating great things, transforming the world, creating a great company, and leaving a legacy. So I find it very interesting what he was living for in the end. He said he just wanted to make it to his son Reed’s high school graduation. And happily, he did live long enough to see it.
  • Conclusion
  • To wrap up, I hope I’ve given you a good enough feeling for who Steve Jobs was that you don’t need a summary of takeaways. But there is one more thing. I want to tell you one final story from his life. The final story from his life. In his final moments as he lay dying, he was surrounded by his family. He looked at his sister. Then he looked at each of his children. Then he looked at his wife. Then his eyes got wide and he looked beyond them, and said “Oh wow. Oh wow. Oh wow.” They were his last words.
  • Thank you for listening. Find more by going to httotw.com that’s the acronym for how to take over the world. Find me on twitter at HTTOTW. Or please provide any feedback by emailing me at HTTOTW@gmail.com. Thank you very much.

About Episode

The second episode on Steve Jobs explores his comeback and extremely successful second act. Again looking at his life, strategies, tactics, work habits, leadership style, and more.

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