Apple is a Bad Example

Eric Wiesen

Twice in the last 24 hours I’ve read interesting takes on a couple of key and timely issues around our space, but in both cases the author used Apple as an example that is presumed to be generalizable by the reader. I think this is going to be wrong more often than not. I’m not the biggest fan of argument by example to begin with – if you can only make your argument by putting another fact pattern next to it and saying “see, it’s like that!”, that tells me that you don’t truly understand the conceptual framework of the argument you’re making, and you rely on already-answered questions around analogous situations to make your point for you. But if you’re going to argue by example, pick an example that actually extends to cover situations your readers will likely encounter.

The first piece I read was a counterpoint to the often made argument that software companies should release as early as possible rather than try to develop a feature-complete, perfect product. While I generally agree with this premise (particularly for web-based b2c companies where iteration takes weeks if not days and can be pushed instantaneously), it was refreshing to hear the alternative point being made. Until, that is, they began to use Apple and the iPod as their game-set-match argument by example. Lost me there.

Why? Because Apple is different from other companies. Is that a hackneyed thing to say? Of course. But Apple has, in my view, a distinctive advantage over essentially everyone else in this area – an advantage that doesn’t fit at all well into any strategic framework you’d learn in business school. That advantage is Steve Jobs. Apple’s approach is (and always has been) the opposite of “ready, fire, aim”. They’ve always taken a long time to release product and always done it in a design-by-fiat way. But here’s what’s sort of funny:

• Early 1980s: Apple II family, original Mac family. Great products, happy users, explosive growth.
• 1985: Steve Jobs fired
• Late 1980s: Kill the Apple II, later pre-PowerPC Macs expensive, niche, market share begins collapse.
• Early 1990s: Market share continues to collapse, cedes essentially all markets but graphics and edu to WinTel. Newton = fail. Switch to PowerPC is a mess. Huge problems with endlessly delayed OS 8.
• 1998: Steve Jobs re-hired.
• Late 1990s: Original iMac released, company gains momentum and begins turnaround.
• 1H 2000s: Apple begins Intel transition. Iterates quickly on iMac. Releases compelling laptops. Streamlines product offerings. Launches iPod in 2001.
• 2H 2000s: Launches iPhone in 2007. Takes over music industry. Market share continues to grow. Company is worth more than Dell.

This is a long way of illustrating that Apple’s strategy has only worked when Steve Jobs was running the company. Whatever it is that he does differently than other executives has made this strategy work. So unless you have Steve working for your company, you probably shouldn’t look at Apple and try to do what they do. I think there is a cogent argument to be made that in some cases you can do more harm than good by releasing early and often, particularly in b2b contexts. But the success of the iPod shouldn’t be why you make that decision.

The second piece was a really interesting interview with Mike Moritz of Sequoia. Mr. Moritz is much smarter than I am and is a spectacularly successful VC, one of the best of all time. And I enjoyed the interview, so I don’t want to make this point more heavily than I should. But… he was talking about founders and the extent to which they do and don’t scale with companies’ growth. And the example (determined in part by the structure of the interview, which was around the updated version of The Little Kingdom) was Steve Jobs and Apple.

This is a challenging subject in the world of startups and venture capital. There are a handful of very high-profile founders who’ve taken companies from an idea to huge success. Everyone can name them: Steve Jobs, Michael Dell, Bill Gates, Larry Ellison, Jeff Bezos, Marc Andressen, etc… Most entrepreneurs (and the investors who back them) want to believe that they are the next name on this list. It’s a longer subject for another post (perhaps done collaboratively with a founder), but the reality is that some founders have the skills, orientation and INTEREST in running a large, operationally complex company and others don’t. In any event, I’m hesitant to apply the case of Steve Jobs, a unique individual and case with little generalizable value, to whatever situation a particular founder or investor might encounter.

The larger point is – arguments are the strongest when they are supported by internally consistent logic and don’t rely on external pattern-recognition exercises. But if argument by example is the way you want to go (either when trying to make a case to someone else or to make a decision for yourself), I’d think twice about relying on Apple as your example. Chances are, Apple is different.