iOS app Android app More

Featuring fresh takes and real-time analysis from HuffPost's signature lineup of contributors
Chip Conley

Chip Conley

Posted: June 4, 2010 02:14 PM

Steve Out-Geeks Bill

What's Your Reaction:

"What I can't figure out is why he (Steve Jobs) is even trying (to be the CEO of Apple)? He knows he can't win." Bill Gates said that in a Vanity Fair interview in June 1998 with journalist Robert Cringely for a Bill vs. Steve story that was never printed (but is on tape). At the time, Microsoft's stock market capitalization was $250 billion and Apple's was just $6 billion, and, in fact, Apple's capitalization was down around $2 billion a year earlier when Steve Jobs came back as CEO and Microsoft famously made a $150 million good faith investment in Apple and pledged to develop applications for Apple's operating system. Bill was seen as the benevolent, wise one. Steve was seen as the unruly maverick.

A lot has changed in a dozen years. Microsoft's market cap is 10% less than it was in 1998 and Apple's has grown by 40 times. Last week, Apple officially became the most valued technology company in the world with their market capitalization surpassing Microsoft. It wasn't just Bill Gates who counted Steve Jobs out. In 1997, Michael Dell suggested Apple should "just close up shop and return the money to shareholders." Today, Dell's market cap is worth about 10 cents on Apple's dollar. Apple is worth about the same as Dell, Oracle, and HP -- all put together!!! While market cap is not the only means of judging a company's financial health, it is a good indicator of trends and of where investors see a company is going. Based upon Apple's ascendancy and the trouble in big oil (likely new regulations due to the Gulf oil spill, dropping oil prices), there's a chance that Apple -- now the second most valuable American company -- could surpass #1 Exxon Mobil in the next couple of years.

So, what's to be learned from this remarkable story? "Your Potential. Our Passion." That's been Microsoft's enormous ad campaign for years, but it really speaks to Apple's positioning with its customers. I give 75 speeches a year and when I talk about Maslow's Hierarchy of Needs applied to customers such that some companies create self-actualized evangelists, I always ask my audience if they can name a few companies that have done that well. 80% of the time, the first company named is Apple, according to Fortune, the World's Most Admired Company. When Steve Jobs started the company, he saw the personal computer as a "bicycle for the mind" giving people the ability to "explore like never before." So, Apple's purpose had a lot to do with helping their customers realize their potential through the means of technology. It wasn't an ad campaign. It was the DNA of the company.

Of course, Apple's "think different" approach to opening its retail stores in 2001 was all about bringing the brand to the people, but most analysts thought is was a huge folly at the time. In fact, in 2001, the tech business was just in the early stages of its dot-com bust and Gateway was starting to close its stores while Dell was winning the personal computer war with its direct approach that had nothing to do with stores. Typically, retailers that sell you products you buy infrequently (like cars, appliances, and computers) choose low rent-locations, but Apple chose to locate their stores in highly centralized locations with expensive rent. The company designed stylish cathedrals that were a far cry from Radio Shack. These showrooms were more sleek than geek. And, of course, Apple hit a home run and they've continued to over and over again with their products that have moved more and more into the entertainment, mobile, and consumer electronics arenas.

In fact, it's a bit of a misnomer to suggest Apple is the most valuable tech company in the world. Heck, Apple ain't tech. It's a lifestyle company, one that uses tech to enable its customers to live better lives. I'm not sure we're going to see Apple Hotels or Apple Autos any time soon, but don't bet against them as they've truly broadened their horizons (just ask any record company that didn't consider Apple a competitor a decade ago). Legendary management theorist Peter Drucker's favorite wisdom for business leaders was to suggest they continually ask themselves the question, "What business are you in?" In fact, I suggest that people ask this question once. Give an answer. Then, ask it again and give a deeper answer. And, then again, and again, and again until you uncover the true purpose, potential, and passion that's at the heart of your relationship with your customer. I doubt that Apple has ever had to go through this exercise, but they're a case study for a company (as Simon Sinek suggests in Start With Why) that is more interested in Why they exist than What or How they do it. I think it's time for Microsoft to start asking why they exist.

A few years ago, I was on the computer at friend's house and their son asked me what I was doing as I purchased a book on Amazon's online website. I chuckled when the kid told me, "Amazon is such a big company that they named a river in South America for them." I wouldn't be surprised if our kids and our kids' kids some day think that Steve Jobs long ago licensed the rights to his company's name to farmers who plant trees with those shiny, red and green juicy fruits in them. There's no more powerful brand than Apple.

 
 
 

Follow Chip Conley on Twitter: www.twitter.com/ChipConley