#76 Young Steve Jobs the Creation of Apple

Summary Notes


In "Return to the Little Kingdom" by Michael Moritz, the author revisits the inception of Apple and the pivotal role of its co-founder Steve Jobs. Moritz contrasts the conventional CEO with the nature of a founder, highlighting Jobs' unparalleled ability to blend poetry and technology, transforming modern electronics into coveted items. Despite initial skepticism about Jobs' managerial skills and his own doubts about leading Apple, his instincts and relentless drive were central in steering Apple through rapid growth and innovation. The book details Jobs' early years, his time at Atari, the creation of the Apple II, and his eventual ousting, setting the stage for his triumphant return to Apple, where he led a remarkable turnaround. Moritz emphasizes that the spirit of a company facing extinction can be a powerful catalyst for success, underscoring the importance of founders who act with an owner's instincts.

Summary Notes

Steve Jobs' Business Acumen and Legacy

  • Steve Jobs is recognized as one of the most captivating founders and is lauded for his contributions to modern electronics.
  • He transformed electronics into desirable objects and had a unique path from an early age.
  • Apple was in dire straits before Jobs returned in 1996, after which he engineered a remarkable turnaround.
  • The book "Return to the Little Kingdom" by Michael Moritz focuses on Apple's early years and provides detailed insights.

"There is no greater distance known to man than the single footfall that separates a CEO from a founder." This quote emphasizes the distinction between CEOs, who are often products of education and institutions, and founders, who are seen as unstoppable forces of nature.

The Impact of "Return to the Little Kingdom"

  • The book was originally published in 1984 and provides a detailed account of Apple's inception and early years.
  • Michael Moritz's career shift from journalist to successful venture capitalist is highlighted.
  • Moritz's encounter with Steve Jobs and Don Valentine influenced his perspective on thinking differently.

"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?" This quote underscores the rarity and significance of Steve Jobs' return to Apple and the subsequent revival of the company.

Steve Jobs' Early Years and Personal Traits

  • Steve Jobs had a questioning nature from childhood and was fascinated by electronics.
  • He demonstrated persistence and curiosity by seeking out experts to learn from.
  • Jobs' adoption and early experiences with electronics set the stage for his future endeavors.

"Steve, more than any other person, has turned modern electronics into objects of desire." This quote captures Jobs' unique ability to create products that are not only functional but also highly coveted.

Steve Jobs' Confidence and Optimism

  • Steve Jobs was known for his confidence and self-belief, which is evident in his interactions with competitors.
  • He advocated for optimism and being one's own biggest fan as a means to achieve success.
  • Jobs' approach to recruitment at Apple focused on identifying talent through passion and excellence rather than conventional methods.

"Nobody any good sends in their warranty card." This quote from Jobs reflects his belief that truly talented individuals are not always found through traditional means, but rather by seeking out those with a passion for their work.

Steve Jobs' Intuition and Approach to Problem-Solving

  • Jobs' intuition and belief in it were strong, even during his flawed periods.
  • His approach to learning and problem-solving involved reaching out to experts and being open to new ideas.
  • Jobs' persistence and determination were evident from a young age, as he sought to improve his educational environment.

"Had I not met Steve and Don, I would never have understood why it's best not to think like everyone else." This quote highlights the importance of unique thinking, as exemplified by Steve Jobs and Don Valentine, in achieving extraordinary success.

Steve Jobs' Influence on Apple's Early Success

  • Apple's rapid growth from a living room operation to a Fortune 500 company is chronicled.
  • Jobs' ability to identify and nurture talent, like Andy Hertzfeld, contributed to Apple's success.
  • The book provides insights into Jobs' early life and the development of his character traits that would later define his leadership at Apple.

"It took less time to reach the Fortune 500 than any other startup in the history of the index." This quote signifies the unprecedented growth and success of Apple under Steve Jobs' leadership in its early years.

Steve Jobs' Early Resourcefulness and Persistence

  • Jobs would call collect to avoid phone call costs, demonstrating his resourcefulness in saving money.
  • He showed persistence by securing a tour of Hewlett Packard's holographic lab and obtaining a summer job there.
  • Jobs did not hesitate to reach out for help, displaying audacity and a proactive attitude.

"Jobs called the public relations department of the supplier... Steve said, I don't have the money for the phone call. They've got plenty of money."

This quote exemplifies Steve Jobs' practical approach to overcoming financial obstacles, such as the cost of phone calls, by using collect calls to contact companies.

"Jobs buttonholed a scientist... Hewlett provided the parts and also gave jobs the name of the person to contact for a summer job."

Jobs' direct approach in seeking opportunities led to tangible benefits, such as obtaining necessary parts and securing a summer job, showcasing his determination and networking skills.

The Value of Seeking Knowledge and Opportunities

  • Jobs was not afraid to cold call influential people, which set him apart and gave him an advantage.
  • His willingness to seek out knowledge and opportunities as a high school freshman is highlighted.
  • Jobs' actions reflect the importance of being proactive and persistent in the pursuit of information and experience.

"Jobs was willing to do whatever was necessary to get information he needed."

This quote emphasizes Jobs' relentless pursuit of knowledge and resources, which played a significant role in his later success.

Phone Phreaking and the Quest for Knowledge

  • Jobs and Wozniak were fascinated by phone phreaking and sought out Captain Crunch to learn from him.
  • They valued the information and skills shared by Captain Crunch, which influenced their early technical endeavors.

"They wind up stumbling across this guy... so they get Captain Crunch on the phone and like, will you come and talked to me and a couple friends that are interested in this?"

The quote illustrates Jobs' and Wozniak's enthusiasm for learning from experts in the field of phone phreaking, showing their dedication to acquiring specialized knowledge.

Steve Jobs' Intensity and Curiosity

  • Jobs was known for his intensity and extreme interest in subjects that fascinated him.
  • He questioned conventional wisdom and was driven to explore and understand things for himself.

"Whatever he was interested in, he would generally carry to an irrational extreme."

This quote captures the essence of Jobs' passionate nature, which led him to delve deeply into his interests.

Steve Jobs at Atari and Early Engineering Experience

  • Jobs was one of the first 50 employees at Atari, where he experienced corporate life.
  • Despite lacking formal training, Jobs excelled at Atari due to his natural abilities and intense work ethic.
  • His improvements to the game "Touchme" demonstrated his technical ingenuity and understanding of engineering principles.

"Jobs wasn't certain about what he wanted to do and was unhappy about one obvious path."

Jobs' uncertainty about his career path and dissatisfaction with traditional roles reflect a common sentiment among innovative thinkers, highlighting the importance of exploring one's interests.

The Dichotomy of Steve Jobs' Leadership at Apple

  • Jobs exhibited unpredictable behavior, which could be challenging for his team.
  • His leadership style included both criticism and praise, often for the same work, which created uncertainty among employees.
  • Despite the challenges, Jobs showed care for his team and celebrated their achievements, displaying a complex and multifaceted leadership style.

"Herzfield and Smith worked around Jobs' unpredictable nature."

This quote points to the adaptability required by Jobs' team members to navigate his changing opinions and moods.

The Inception of Apple Computer

  • Jobs and Wozniak initially planned to sell printed circuit boards for computer enthusiasts.
  • Their modest beginnings involved calculating costs and potential profits for a small-scale operation.
  • A suggestion from a computer store owner led to the idea of selling fully assembled computers, which expanded their market.

"Jobs entertain the notion of a fleeting, informal venture that would be more of a partnership between friends than a proper company."

The quote reflects the humble origins of Apple Computer and Jobs' initial view of the business as a casual collaboration rather than a formal enterprise.

Early Impact of Terrell's Order on Apple

  • Terrell's large order significantly expanded Apple's business scale.
  • The unexpected magnitude of the order marked a pivotal moment in Apple's history.
  • Steve Jobs's frugality and resourcefulness were highlighted as key entrepreneurial traits.

"That was his biggest single episode in all of the company's history. Nothing in subsequent years was so great and so unexpected."

This quote emphasizes the transformative impact of Terrell's order on Apple, marking it as the most significant event in the company's early history.

"Steve was always very, very tight with money. He always wanted to get the best value for the least amount of money."

This quote underscores Steve Jobs's focus on frugality and value, which were important aspects of his approach to building Apple.

Steve Jobs's Message to Unicorns

  • The essay titled "Steve Jobs's Message to Unicorns" advises startups to be frugal and resourceful.
  • Jobs's early struggles and frugality were instrumental in Apple's initial success.
  • Apple's IPO prospectus revealed impressive pre-IPO financials despite a crowded market and high prime rate.

"The need to stretch every nickel informed the way Apple was run during the early days."

This quote reflects on how Jobs's early life frugality influenced Apple's financial discipline, which was crucial for its success.

"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."

This quote highlights the founders' ownership stake, attributing it to their efficient use of capital and frugality.

Steve Jobs's Doubts and Resourcefulness

  • Jobs's internal doubts about becoming a businessman and leading Apple were significant.
  • His resourcefulness and quality-focused approach were key, despite his uncertainties.
  • Other entrepreneurs share similar doubts, suggesting it's a common experience.

"I didn't want to be a businessman because all the businessmen I knew, I didn't want to be like."

This quote reveals Steve Jobs's personal conflict about becoming a businessman, indicating his reluctance to conform to typical businessperson stereotypes.

"Steve was searching. He seriously questioned whether he should pursue Apple."

This quote highlights Jobs's doubts about continuing with Apple, showcasing his internal struggle.

The Perception of Steve Jobs and Apple's Early Challenges

  • Initial skepticism about Steve Jobs's character was prevalent among Wozniak's family.
  • Jobs sought advice from Nolan Bushnell on funding and was advised to delay venture capital.
  • Don Valentine's critique emphasized that the founders were not thinking big enough.

"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."

This quote reflects the skepticism surrounding Steve Jobs's ambition and his approach to business.

"Neither one knew anything about marketing. Neither one had any sense of the size of their potential market."

Don Valentine's assessment of the founders' initial lack of market awareness shows the learning curve they had to overcome.

Decision Making and Leadership at Apple

  • Jobs grappled with whether to lead Apple or not.
  • Mike Markula's role as an early advisor and stakeholder was crucial.
  • The founders' control over the company's shares allowed them flexibility in leadership decisions.

"Jobs listened. He balanced the promise of future contributions against tangible loss of power."

This quote describes Jobs's contemplation about his role in Apple and his willingness to consider relinquishing control for the company's benefit.

"Since Wozniak, Jobs, and Markula controlled the majority of the company's shares, they could unseat Scott at any time."

This quote explains the power dynamics at Apple and the founders' ability to change leadership if needed.

Apple's Recruitment and Risk-Taking

  • Apple's ability to recruit skilled individuals was due to the perceived low risk and high passion.
  • The company's culture valued risk-taking and seizing opportunities.
  • Wendell Sander's decision to join Apple was driven by passion rather than security.

"If they had folded, I could have just gotten a job the next day. There wasn't much personal risk."

This quote from Wendell Sander highlights the low perceived risk in joining Apple, suggesting that the opportunity outweighed the potential for failure.

"There's no security, only opportunity."

This quote encapsulates the entrepreneurial mindset of seizing opportunities rather than seeking security, which was prevalent at Apple.

Apple's Branding and Public Image

  • Apple's branding strategy aimed to project a corporate image beyond its actual size.
  • The company's efforts in publicity and marketing were relentless and meticulous.
  • Steve Jobs insisted on high-quality owner's manuals, reflecting the company's attention to detail.

"We are carrying the corporate image far out in front of the size and reputation of the corporation."

This quote, referencing IBM's early strategy, parallels Apple's approach to branding and public image, aiming to appear larger and more established than it was.

"Jobs wanted good manuals, and he was prepared to go to great lengths to make sure that they were well designed and user-friendly."

This quote highlights Steve Jobs's insistence on quality and detail even in aspects like owner's manuals, showing his comprehensive vision for the company's image.

Apple's Early Growth and Design Philosophy

  • Apple set a high standard for product manuals in August 1979, influencing competitors.
  • The company valued internal aesthetics, believing in the principle "how you do one thing is how you do all things."
  • Apple II was a pivotal product that led to rapid growth and internal challenges.
  • The "bozo explosion" refers to a decline in employee quality due to rapid hiring during expansion.

"So 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 things is how you do all things."

"That's what a lot of the book is about, the problems when, how do you take a small group of talented people and scale it?"

These quotes emphasize Apple's commitment to excellence in every aspect of their products and the challenges that come with scaling a business rapidly.

The Bozo Explosion and Corporate Growth

  • Apple's growth was unexpectedly rapid, requiring frequent moves and expansions.
  • The company's workforce grew from 90 to 1,200 in a short period, leading to a decrease in the average quality of employees.
  • Rapid expansion is termed "bozo explosion" due to the dilution of talent.

"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."

"And that's what they call the bozo explosion because they're hiring so fast that the overall average quality of employee lowers drastically."

These quotes detail the rapid expansion of Apple, the resulting logistical challenges, and the negative impact on employee quality due to hasty hiring practices.

Steve Jobs' Management Style and Growth Mindset

  • Steve Jobs allowed his skepticism to be overruled by his inclination to innovate.
  • Jobs' management style was criticized internally for being poor despite having noble intentions.
  • Apple's rapid sales growth is highlighted, with revenues skyrocketing from $7.8 million to $117 million in three years.

"Jobs allowed his skepticism to be overruled by his natural inclination to find a better way to do things."

"While Mr. Jobs stated positions on management techniques are all quite noble and worthy, in practice, he is a dreadful manager."

The first quote reflects Jobs' positive trait of seeking innovation, while the second quote provides a critical internal assessment of his management skills.

Apple's IPO and Product Design Philosophy

  • Apple considered staying private, inspired by the privately held company Bechtel.
  • Jobs' intuition played a significant role in product design, leading to successes and failures.
  • Apple's product design shifted from individual creativity to a committee approach, resulting in less successful products like the Apple III and Lisa.

"For a time, Jobs fantasized about keeping Apple private."

"He found Apple's prototype customer in the mirror."

The first quote shows Jobs' initial reluctance to go public, while the second quote encapsulates his design philosophy of creating products that he personally would want to own.

Apple's Overconfidence and the Importance of Founder-Led Companies

  • Apple's leadership was overconfident in their position against IBM.
  • The book argues that companies are best led by founders with owner's instincts.
  • Hiring outsiders with impressive resumes but no industry passion can be detrimental.

"We're the guys in the driver's seat."

"The founder, acting with an owner's instincts, will have the confidence, authority and skills to lead."

The first quote displays Apple's overconfidence before the rise of IBM, while the second quote emphasizes the advantage of founder-led companies in the tech industry.

Apple's Decline and Steve Jobs' Return

  • Apple experienced a decline in innovation and market leadership.
  • Steve Jobs faced challenges after leaving Apple but returned following the acquisition of NeXT.
  • Jobs' return marked a turnaround for Apple, leading to significant profits and growth.

"The apple he, meaning Steve Jobs, inherited in the fall of 1997, had lost its creative zest and leadership position in the technology industry."

"It is a tonic to realize that nothing is more effective than the spirit of a restless company threatened with extinction."

The first quote describes the state of Apple prior to Jobs' return, while the second quote suggests that the threat of failure can be a powerful motivator for a company's revival.

Conclusion and Epilogue

  • The epilogue, written in 2009, reflects on Apple's transformation and survival in the tech industry.
  • It highlights the importance of founder-led companies and the risks of hiring outsiders.
  • The epilogue serves as a summary of Apple's history and the lessons learned.

"Since then, I have 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."

This quote from the epilogue encapsulates the rarity of a company like Apple achieving and maintaining success in a competitive industry.

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