How Steve Jobs Became a Billionaire
fortune.com
fortune.com
Truly, for a bunch of very smart people, you'd think the tech community would be more aware of the dangers of working backwards from a pool of successful people, hoping to find a magic ingredient. Work from the broad population forward, not from the narrow population, back.
So Jobs was a billionaire in 1995. I wonder what would have happened if Microsoft hadn't invested $150 million in Apple in 1997?
It's more likely the undisclosed sum (well higher) that kept Apple from the brink of bankruptcy.
The hardware was a marketing mess, and the software was stuck in R&D hell with no prospect of escape.
There were some interesting ideas, but execution and management were all over the place.
I don't think Jobs is an example of survivor bias. I think Jobs was an extremely talented marketer with an unusual aesthetic sense.
Sociopaths are more likely to kill their companies than make them grow. They love drama, abuse, and terror for their own sake.
Jobs was more of a narcissist. He lacked empathy, but he wasn't constantly trying to destroy other people because he enjoyed it.
It was more that he knew what he wanted - his own vision of himself as a guru of consumer technology, aesthetics, and creativity - and he didn't care what it cost to get it.
Personal and business relationships were all disposable. The vision wasn't.
(Assuming that's the figure, I don't remember myself.)
But this was't completely luck. It was negotiated by Jobs.
Even within Apple there are stories of guys like Mike Scott, who was the 2nd CEO and took Apple public. He was there at the beginning, got super rich, but what was his long-term impact [1]? Have you ever even heard of him, outside of a Steve Jobs bio?
[1] He has arguably had a longer-term impact on the mineralogy of gems than in computing.
And yes, I had heard of Mike Scott, but I'm an old geek who's a Bay Area native.
I agree with that. I interpreted your comment above as over-emphasizing luck; perhaps a misinterpretation.
But not playing obviously results in not winning. And in the minds of the lottery-playing population, at least when you play, there's a chance of winning.
Pretty much anything really; the lottery is just a tax on people who can't math.
I figure the chances of winning a frivolous lawsuit are huge compared to winning the lottery.
Go read Good To Great and prepare to barf. Business schools adore this book. Look at the description on Jim Collins's web site [1]: "Start with 1,435 good companies. Examine their performance over 40 years. Find the 11 companies that became great. Now here's how you can do it too." That's literally Survivorship Bias.
1: http://www.jimcollins.com/article_topics/articles/good-to-gr...
Great link by the way.
Then interview that last person and ask her what her technique was, how could she possibly flip heads 6 times in a row? What hard work and practice did she do ahead of time to make her such a good coin flipper? What daily habits produced this proficiency? This is essentially what we do when we try to be successful simply by asking successful people what they did.
Ha! I have not, but that's a great exercise. I'd be interested in hearing the "winner's" responses to the questions.
So the truth lies somewhere between "it's entirely chance" and "it's entirely hard work/intelligence/participation".
Just thought I'd point that out given how there are some parallels to how many people play support roles within society while only a few make it to the pinnacle. Yet we still say that those at the pinnacle 'beat' all their peers.
I can't think of any specific citations, since it's such a general observation.
One case study is a woman who wins lots of newspaper contests - the point being that she wins lots because she puts in for lots.
Another point is perspective. You fall and break your arm. You can either perceive it as bad luck, you broke your arm, or as good luck since it could have been your neck.
The one part I loved about the book is when it provides tips on how to identify these "empty" claims. Things like "we spent 3 years putting this analysis together!", which does nothing to support their claims, but just creates the impression that "wow! this must be true!".
https://www.amazon.com/Halo-Effect-Business-Delusions-Manage...
Or are you saying that without a million dollars you can't afford to "give back" an occasional one-hour lecture on skepticism ? That seems ironic.
Edits: rant
Judging by her campaign and how she ran HP, I don't see a sign she's critically open in the way you need to learn from history.
Personally, I'd say knowledge of history is a very, very thin bullshit detector. It simply allows you to see more patterns; not how to evaluate them when they compose.
Survivorship Bias has a place but it is not the be-all-end-all.
Of course you can't just expect to follow Pixar's bets (or Apple's, or Google's, or ...) and expect to win big. But understanding the way they played is important, if you're playing the game too.
(As you touch on too, tempering the natural tendency to give credit for success rather than chalking it up to chance is also important. But I can't believe that Jobs' success is survivorship bias alone.)
But they still fail to find out about what made them rich in the first place.
For example, there is a German real estate millionair, who does online courses to tell people how he got so rich.
He talks hours of hours about how he learned the right trade and how he invested his money in flats he bought and improved etc.
In his first lessen he talks a bit about his past and says "The only thing you got to do is to buy a flat and get someone to rent it! I did it like this, I simply put in 50k€ of insurance money I got from an accident."
The whole thing is done with this. I mean he literally told the audience "You simply need 50k to get rich!"
For someone with a talent for online marketing, it's almost the easiest money there is.
It's not a "get rich quick" scheme by any means, though, and managing properties is still work. I know more than one retiree who has built up 8-figure wealth this way. Of course, it took them a lifetime.
You get this in the UK all the time, property shows where people "do up" a dilapidated property over 6 months, then relist it. And guess what? It's gone up! It's gone up by labour cost + materials + background land price inflation. But they see it as a wise "investment".
If you put your own capital and work into something, and its value increases... that's what an investment is.
Also in most casts they are not putting capital in, they are borrowing from a bank who create the debt. They are little more than outsourced debt collectors.
This is similar to $BIGCOMPANY passed on $BIGIDEA see how they sucked and passed up a great opportunity!
Without knowing the thousands of other ideas that they passed on that never made it anywhere.
A small example is perhaps HP not taking Wozniak seriously. (Also assumes the presentation and pitch was done right and all of that...)
For example, if "risk-takers" both sometimes do very well and also often fail then you expect to capture the failed risk-takers in your initial sample, so you're not just biased by the successful risk-takers (said survivorship bias).
I'm not familiar with the book, but the snippet you reference describes something much closer to proper scientific method than most of the examples of this phenomena.
It's perfectly possible some traits of all 11 successful companies are also shared by most of the unsuccessful ones, too.
If you survey all CEO's of the Fortune 500 you might find that they are all workaholics. Do you conclude that being a workaholic will make you a CEO? Of course not. Did you look at how many workaholics there are that don't become CEO? That is survivorship bias.
You also need to look at cause and effect. Is it that you must be a workaholic to become CEO? Or is it that as you climb the ladder you end up working hard and harder because that is a requirement of each position. Maybe being a workaholic is an effect of climbing high.
1. Send e-mails to a bunch of people claiming to have a great stock pick. Tell half of them to buy and half to sell short.
2. Wait a week. If the stock went up, do the same thing but send your new pick only to the half that got your buy recommendation, and if it went down, send it to the other half. Anyone who saw your incorrect prediction never hears from you again.
3. Repeat a couple more times.
4. Now ask the people on your list to pay you to continue getting your stock picks -- after all, at least as far as they've seen, you've been 100% right on every pick you made.
The recipe is:
1. Cold call people on a lead sheet for people indicate interest on placing bets on sports games.
2. Sell interested folks with a "two week package" for $250; seems pricey, but the name of the game is to filter out the minnows catch gullible whales. You want folks who are "vested" on this and prove they have the cash to be scammed. Double-side your bets or smarter yet, side your bets by the probability implied by the Vegas oddsmakers (50% Team One Wins, 50% Team Two Wins or 70% Team One Wins, 30% Team two if spread is that way).
3. After a couple of weeks pass, call up the people who have won 4 or 5 games in a row, inevitable happenstance by sheer probability. Upsell them on a "weekend Vegas package" where they can gamble on higher stakes preferably $50K-$75K; because you're seem now as a infallible genius by the marks, you charge them a 35%-50% commission on their wins.
4. Doesn't matter if your client wins or lose. Take home the 50% commission on their churn and move onto the next one. Rinse and repeat.
The show is highly entertaining and enlightening not because of the extreme doucheness of the head scammer and his salesmen, but the marks who delude themselves as they lose game after game and gets scammed - all followed by the camera-men of CNBC and the spin-motivational commentary of the scammers.
My take on it is that people really really want to believe there isn't a measure of luck there.
The book was not totally useless but the above moment caused me to lose interest very rapidly.
In Built to last, they have compared what great companies had done different from their companion companies which went defunct. Of course, it neglects few aspects like luck, but it does explain a lot of things which are notably absent from folklore of "create a great app, disrupt a market and go count the number of 0's in your bank account", except that it rarely happens like this!
Besides, who wants to believe that we know so much less than we like to pretend, and in fact the books they might have read and loved are just... bull?
I think its okay to be sociopath-lite. I believe guys like Jobs were like this. I don't think he remotely was a full blown sociopath. He genuinely cared about the experience of his users. I also this we downplay the sociopathic tendancies of techies who may be on the autism spectrum like Woz. Woz is brilliant, but I don't think he could relate with non-techies. I don't think he ever really understood the benefits of usability while at Apple. He was all about code and hardware and gave no shits about grandmas who didn't want to learn basic or type in archaic commands. Jobs on the other hand cared about usability, but also gave no shits about people in his way.
I think there's a wonderful, dare I say, synergy between aspie indifference and leadership sociopathy. They're 80% on the same page and compatible personalities who can work together, but that last 20% is different and focuses on different but important problem domains. Gates/Ballmer is another good example. Or Jobs/Hertzfeld during the Mac years. Or Newell/Lynch at Valve. Or Page-Brin/Schmidt.
I'm not sure what was passive or aggressive about my reply. Feel free to explain it to me.
I'm not so sure about that. Having been around during the period when he was canned from Apple, founded NeXT/Pixar, and subsequently came back to Apple Jobs had changed considerably.
I think that (and he has stated) that getting canned from Apple was a bit piece of humble pie for him, that he was lost and had to do a lot of self-examination before he picked himself up and founded new companies.
Acknowledging his weaknesses and mistakes doesn't strike me as sociopathic, or as being an unfazed man. What he shared with the public regarding his personal struggles is a whole different story. He was never particularly public, especially after the Great Firing.
Your other points regarding survivorship bias are point on.
This is what makes me most sad about Isaacson's biography. He left out the one period that I was most interested in. The time at NeXT, combined with the developments in his 'family situation' seemed to have really changed him for the better (or at least better at running a company). I was so curious about that, and instead I got stuff I mostly knew about and too-frequent descriptions of Jobs' tantrums/meltdowns. Such a shame.
(btw, if anyone can recommend material on this period of his life, I'd love to know!)
NeXT brought him back to Earth, both in terms of being able to produce a product people wanted, and in terms of managing a team without being a total tyrant. It wasn't a smooth progression, NeXT did start out pretty out-there, but in the end it was more pragmatic. OpenSTEP and other efforts demonstrated that.
The Isaacson biography isn't worth the paper it's printed on. It's utter garbage. I can't believe someone has that level of access and churns out a book that's basically the Cliff's Notes version of all other books about Jobs already published.
I recommend you this book to read. https://www.amazon.com/Becoming-Steve-Jobs-Evolution-Visiona...
Total failure. If you squint hard enough with VC eyes, they can almost convince you that $70 million is a terrible amount of money.
And then ask Apple where OS X comes from. Ask any iOS developer about Objective-C (though not invented by NeXT, it certainly helped popularize it). Ask the wider world about object oriented programming.
If you can see past the bottom of the balance sheet and beyond the next quarter, NeXT lives on, despite not achieving commercial success.
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https://en.wikipedia.org/wiki/NeXT#1996.E2.80.9397:_Apple_me...
Apple paid $429 million in cash, which went to the initial investors and 1.5 million Apple shares, which went to Steve Jobs, who was deliberately not given cash for his part in the deal.
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(Look at the board/exec composition pre/post acquisition)
Not necessarily - after all, there was a man who was struck by lightning 7 times[1] through no effort on his part. You will never hear about the almost-Jobs who fail to succeed on their subsequent come-back attempts.
Yes but the 2nd time he had the advantage of having the first success. That would mean he was taken more seriously and would be able to hire and influence better than if he was not famous. And of course in the current culture having even a large failure is enough to put you on the map to get more attention for the 2nd time around. This is not the way business used to be by the way. Used to be if you failed you failed and nobody would touch you with a ten foot pole.
In my sample of people I know or know of, the people who took risks created more wealth.
The choice is between getting a seed round and going and working at Google making 200k entry level in total comp.
I doubt many startup founders beat "just go and work for Google full time"
In many ways he was lucky enough to return at a time computing power had caught up to realize the dreams cooking into his head.
In addition to this he didn't had a formidable competition as Microsoft didn't had the right leadership after Bill left. I remember Microsoft demoed Surface back in 2001 but then lost to mobile war completely.
As revealed recently, he denied Tim Cook's offer of a partial liver transplant. Something that can only be explained with empathy, a lack of which is the primary indication of what's called "sociopathy".
To name just a few more of the signs of sociopath that Steve Jobs didn't fit: inability to plan ahead, lower intelligence, delinquency, violence, financial irresponsibility,...
Basically, what people mean is "he could, at times, be a bit of an asshole". I'm not even sure about your assertion about risk-taking because I can't think of any events that deviate significantly from the risk-taking of similar companies.
It's also hard to say how much his "being an asshole" contributed to Apple's success. Getting people to work 80+ may be a strategy to lower costs, but I don't see how it helps, for example, with the iPhone, created at a time where money wasn't the limiting factor at Apple.
By the time he realized it wasn't a joke the effective treatments were too late.
He used his wealth and influence to get on organ transplant lists in numerous states. At the time doctors were publicly confused because the organ could no longer save his life, only extend it. This action likely cost another person their life.
With his final days he designed and built a super-expensive yacht...
Steve Jobs may not have been sociopathic but he wasn't someone that cared about the well-being of others. He was the first member in the cult of his own ego.
That strikes me as stupid / naïve more than sociopathic.
> He used his wealth and influence to get on organ transplant lists in numerous states. At the time doctors were publicly confused because the organ could no longer save his life, only extend it. This action likely cost another person their life.
That's selfish, true, but I could see myself doing something similar when faced with the fear of death. It's human. Not admirable, but human.
> Steve Jobs may not have been sociopathic but he wasn't someone that cared about the well-being of others. He was the first member in the cult of his own ego.
I'm not sure he was introspective enough to be a member of the cult of his own ego, but yeah, he wasn't a nice man. No argument there.
I'm not sure that I agree. I think he was very introspective but, because of being put for adoption and other traumatic experiences in his childhood, he focused on things that are atypical (hence the accusations of sociopathy).
These are not traits of (all) sociopaths. A highly functional sociopath could be defined as:
"People with sociopath traits that also happen to have a very high intelligence quotient. They are likely to be highly successful in the field they endeavor (politics, business, etc.). They plan very meticulously and the presence of sociopathic traits like lack of empathy, lack of remorse, deceptiveness, shallow emotions, etc. makes it very difficult for "normal" people to compete with them."
Same holds for famous artists: talk to their parents and they probably say that he/she was always singing with a fake microphone in front of a mirror. 90% of the kids do that...
Didn't listen when I told him that cleaning was all contracted out and the "boss" would never see me working hard as a cleaner.
That doesn't make it a recipe for success or a magic ingredient, but it's still interesting.
But - based on life experience - I believe the meme.
The real payoff for Jobs with Pixar was that it made the iPod possible. Others had done MP3 players, but nobody had a good deal with the music industry. Jobs was able to do that for a Hollywood reason - as a studio owner, he outranked the music execs, and they had to take his calls. Hollywood is very hierarchical like that.[1] At the time, Apple was a nobody in the music industry, had no consumer electronics products, and was not doing all that well in desktop computers. It was heading Pixar that got him in the door at Warner, Sony, and Universal.
[1] http://www.rollingstone.com/music/news/itunes-10th-anniversa...
Private equity investors that specialize in turnarounds and restructurings do that on a daily basis.
When an engineer spent a week overworking to be able to boot a system, he is the one guy that will say it is not enough and needs to go faster. That he had no respect for others, and considered his will the only important things probably helped quite a bit in enforcing his vision.
In revisionist history, if the founder was persistent and the product achieved a product-market fit, it was a vision. If the founder was persistent, and the product did not achieve product-market fit, it was a delusion and toxic work environment.
People are willing to put up with authoritarian assholes if they think their vision is worth implementing.
survivor bias.
One thing I've noticed in my life is that people first look at the conclusion and then come up with an explanation.
The explanation is just a story, not an actual prediction.
http://louisproyect.org/2015/08/28/steve-jobs
Particularly the part where he talks about commodities and products, and the process and relations of production at early Apple.
I think what much of what Holt says will go over the heads of people not in the milieu of Holt, Proyect etc. Not all of it will though.
One reason I find the Holt piece interesting is everyone else seems to come at the question from the same angle. Holt does not, but more importantly Jobs did not. Also Holt was there when Apple was incorporated, and had a very thoughtful sociological Weltanschauung back then.
You can tell everyone comes at it from the same angle by the OP title. How Steve Jobs became a billionaire. People who start from that point, a desire to get insanely rich and spend money and be admired, will probably never get to be be billionaire. I don't think that they'll get it either.
Most people like Mark Zuckerberg, Larry Page etc. don't seem to be focused on wealth. Even someone like Larry Ellison who seems to be focused on wealth gets more stirred up talking about engineering one of the first usable relational databases than he does about his billions.
The US is in such a homogeneous ideological fog that it is easy to miss the forest for the trees. Holt was around when Apple started, but was not a participant in what C. Wright Mills called the great American celebration, so I find his viewpoint interesting, and in my opinion, more insightful than any other I've heard.
Lazy = less successful than me
Not useful words, regardless of if it is true or not. There is no formula despite our brain desparately seeking one. My experiences with surfing the internet, sugar and other things suggest that seeking != the right metric for utility to you now or in the future.
Before Toy Story came out, when Ed was not even sure they would even get a film out the door, Jobs started planning the IPO. Catmull disagreed, but Jobs pushed it through, and Pixar IPO'd a month or two after the barn-stomrning success of Pixar. The IPO made Jobs a billionaire, and put pIxar on the finanical footing to its current success.
Jobs knew how to, and took risks that even a fantastic business-builder like Catmull was afraid too.
Its a skill, and a personality that is rare and it built the foundation for two world class businesses on the same IPO. Don't knock him ... too much.
You never hear about the thousands (millions?) that took similar level of risk and didn't make it. Actually billionaire stories are almost typical example of reckless behaviour. There is a bit a cognitive dissonance in society to strongly reject billionaire behaviour except when it all works out and your behaviour become instead aspirational stories to be emulated.
Few gamers of today recall VooDoo or SGI, for instance. And most consumers have no idea what a Tandy is (was?).
Apple made him the youngest tech multi-millionaire. Pixar a billionaire. Apple, again, where he built the world's most valuable company and insane profits.
More n than most billionaires, no? Only Buffet has a real n>5.
Key is he was not a one-trick pony. Real data to prove it.
Right now I'd put Bezos in that category with an n=2 (ecommerce, AWS).
To show a counterexample, Brin/Page have an n=1 - ads. Rest is cool tech, but not significant business and yes, I am adding Youtube into the ads business idea.
Same with Zuckerberg, both Instagram and WhatsApp were about adding eyeballs to the same business model - super ideas, but additive. If Facebook Workplace takes off as a paid-for business, he will have n=2.
Does PayPal count? How much relied on the others? I don't know.
Tesla, Solarcity and SpaceX are all on the verge, but not quite there yet.
5 years from now he either has a n=3+ or is known as a massive flameout. but yeah, good shot at being a SJ 2.0.
In the case of Steve Jobs, that takes a lot of good luck. Good luck repeated reliably over the course of his life.
It's funny how good luck falls more on people often who work hard...
There were at least a million other people who started in about the same situation, and worked just as hard, and made similarly risky calls. They didn't get heads all the way, and now you're not reading their autobiography or talking about them on HN.
Don't discard your priors.
It would seem Apple had several low level failures (Lisa, iMac mouse, G4 cube), but his big bets (iTunes, iPad, iPhone) always seemed to pay off.
"Chance favors only the prepared mind." Louis Pasteur
I'm not a big fan, but calling Steve Jobs a one-trick-pony with one good call is inaccurate.
edit: but if you like that kind of thing, then it's the kind of thing that you would like.
Part 1: http://thisweekinstartups.com/ed-catmull-pixar-disney-pt1/
Part 2: http://thisweekinstartups.com/ed-catmull-pixar-disney-pt2/
this is very cool ! thank you :)
Is the book too old? Not old enough? Why is the age of the book relevant here?
He likely covers it in the book.
i know i couldn't. what's your answer?