JT Foxx: Looking back, what made Apple a successful start-up?
Steve Wozniak: Everyone thinks that from the beginning we just made all these smart decisions, but the reality was that our funder was our biggest mentor. He explained that we needed to hire the right people to run a technology company, and that included a president to oversee the different departments, keep things moving in the right direction, and to get things done.
We hired professionals to run marketing, accounts and operations. I was already an accomplished engineer, but Steve Jobs was so young, so while I ran engineering, Steve just didn’t qualify for a title. His role was to participate in all the top levels of the company and learn it all.
In those early years we learnt why we should have a high profit margin on the product, and how this would help to fund the company as we grew. Our mentor taught us that marketing was more important than engineering, and that we needed to become a company driven by marketing if we really wanted to grow.
The result was that engineering obeyed what marketing decided the customers wanted, what they would pay for it and so on. This is where Steve really excelled. He understood these fundamentals, right down to the importance of perfection when it came to taking a picture of the product
Every line, every detail must be perfect, including getting the lighting right. Steve learnt that the quality of the box influenced how people viewed the value of what was inside the box. Even the experience of opening that box is important. All of these became key tenents at Apple, and of Steve in particular.
Was the key to a successful partnership that you were so different?
I was very lucky that Steve wasn’t an engineer or we would have been in competition with each other. And I didn’t want to do any of the business side.
This left us in control of our areas, doing things the way we wanted to. We could be ourselves and be unlimited in that sense. Partnerships work when there are complementary skills sets that don’t overlap too much.
Having said that, there were a lot of failures in our early years. Apple wasn’t an instant success. Steve was excellent at convincing people why they needed the Apple 2, but he also made mistakes. In a lot of ways, a great product carried us through.
I had developed the product, but Steve had a spirit and drive that powered us out into the market. We needed each other. Maybe someone else could have filled Steve’s shoes, but to be honest that was never a consideration. Steve was a lifetime friend. To me, a partnership is much more important at the personal level than what it means on the business level. We were lucky to have both.
How did you resolve your disagreements with Steve and who had the final say?
I’m a non-conflict person. I listen, I offer advice, and I only push for things that are really important to me. Steve was usually the smartest person in the room. In any discussion, he’d always have entered the room having spent time on the issues, and thinking through which path we should take and why.
It made him very hard to disagree with, and you’d really need a good, well thought-out argument to do so. I deferred to his judgement in many areas. As far as my own products went though, we rarely had disagreements. I remember one instance when Steve wanted to build our product a little bit weaker with two slots to plug extra things into. I wanted eight slots. Steve didn’t know computers.
As far as he was concerned you need to be able to plug in a printer and a modem. I stuck to my guns – I wanted the ability to plug in eight things. I won that one. I was the guy who knew computers, and he trusted that. It goes back to understanding your roles within the partnership.
Steve just wanted to get to market, I wanted the best products. I always saw myself as working on the best product in the world and it would take me a certain amount of time to perfect it.
I was meticulous about writing down how long a project would take, and it was always longer than Steve hoped it would be. He was incredibly impatient. He wanted everything done in a week, two weeks max. If a month went by and I was working on something that was going to take six months to do really well, Steve would start getting nervous.
He would say, “We have to go find somebody else to do this,” or, “We have to see if Bill Gates has something we can buy.” Ultimately, it was give and take.
What’s the secret to a successful start-up?
Passion. We started the company so young. We were convinced we would own the business forever. The secret was that it was a real passion. I would have done all of my work for no salary, without a company. I would have done the work at home on paper, just to prove I could.
When your passion is that strong, you go to bed thinking only about the product: How you can make it even better and more efficient. Steve liked to go for walks to think about things. He gave himself that creative and strategic space. We loved what we were doing.
What is the role of ideas in a start-up, versus execution?
Ideas are critical, but they’re also not the be-all and end-all of a great business. For every idea, there are probably about 10 000 people in the world who have the same idea.
It’s the very rare few that take the idea and realise it, meaning they turn it into something real that can be taken to market. The business that takes the idea and turns it into a product is the one deserving of results.
Is being first to market one of the most important strategic differentiators for a business?
Being first is a big advantage, but it’s not enough. You also have to do things very, very well. Just rushing out to be first allows for mistakes. You still need to take the time to create something that works well and that the market needs.
The introduction of the mouse is a good example of something we did too soon. Steve was in a hurry, and put out the mouse too soon. Too soon means competitors can copy you and put out a better product. The Mac was also a rush; it wasn’t built the right way. We could have waited just five more weeks to have a great computer.
We learnt from that though. Steve didn’t show Bill Gates the iPhone before it was out. We took longer to launch the iPhone and it took the market by storm because it was such a great product. Being first in this regard was a huge advantage, but also because we didn’t rush it. With Apple 2 we were a leader as well, the product was so good. In this case it wasn’t that we were first, but better, and that’s first in a sense too.
Apple is a master of simplicity, from the products, to packaging, to what the brand stands for. How can other brands emulate this simplicity?
We found that if one person is in charge of a product, they can pay attention to market research, throw out a lot of junk, and build something that they would want to use themselves. This also makes it much simpler to describe the product, because it’s coming from a personal place.
When Steve came back to Apple he was great at simplifying what we did. He said no to a lot of ideas, but it meant that we left things out of a product to make it usable. The result was that our products didn’t turn people off because of their complexity.
They attracted people because they were simple, intuitive and usable. Don’t add complexity just because you can. Think about the user, that’s the lesson. Build everything you do with the fewest parts. That’s the secret.
Apple has always been masterful in touching consumers at their core. What’s the secret to successful marketing?
Steve and I launched Apple at a time when a lot of other companies were launching and creating computers. They were all explaining their products from a functionality perspective, in other words, saying it did x,y and z. Our marketing mentor taught us that people didn’t care about the tech of the product. Most didn’t understand the tech anyway.
All they cared about was what the product could do for them and their lives. If you could explain how your product was going to make their lives simple in areas where things used to be hard, you would touch your consumer on a personal level.
We did that right from the start.
What was Apple’s biggest fear during the start-up years?
I believe you shouldn’t have fear – do what you love with passion, that’s how I like to approach life. Steve’s biggest fear in our early years was big companies – he felt like they were all breathing down our necks, and that their big money would create better products than us. Our mentor disagreed.
He was constantly reminding Steve that we had great people, making great products, and that all we had to do was hold onto the same percentage of the market as we had – the market was rising, which meant our business was growing.
Apple has consistently created products that change people’s lives. What’s the secret to a game-changing idea?
Whether you look at what we did at Apple, or great products from other companies, they all have one thing in common – they’re the result of a strong gut feeling.
You have to believe that a product that appeals to you, and that you would use, will sell. It starts with the understanding that there are other people just like me, facing my challenges. Sometimes this means a product that builds on something already in existence, other times it’s something revolutionary. But the secret starts with building something for yourself, instead of building it for everyone else.
Of course you have to take other people and the market into account, but if everyone on your team doesn’t share your vision, and wouldn’t buy the product themselves, you need to go back to the drawing board. Find the reason behind wanting the product, and if you can’t, move on to another idea.
Nicolas Bereng Is Creating An Industry Where None Exists in SA
Nicolas Bereng is a young entrepreneur with dreams of creating not only a new company, but a brand new industry as well. Here’s his advice on pursuing big, audacious (and scary) goals.
- Player: Nicolas Bereng
- Company:Brand LAIKI
- Est: 2015
- About: Brand LAIKI aims to combine education and entertainment in order to create an interest in books and reading amongst South African schoolchildren. One of the company’s chief aims is to organise events where reading and learning can be promoted. These events will make use of modern technologies like virtual and augmented reality.
- Visit: www.brandlaiki.com
Nicolas Bereng is trying to create an industry that doesn’t really exist in South Africa.
“We’re trying to establish the concept of edutainment locally,” says Nicolas. “It’s really not something that exists or that people understand at present. Even people who I would define as ‘edutainers’ don’t necessarily call themselves that.”
So how do you create a new industry?
“It isn’t easy,” he says. “It’s driven me to tears at times, but ultimately, I’m so passionate about the idea that I’m incapable of abandoning it. If you really care about something, it carries you through the hard times.”
Here is Nicolas Bereng’s advice on cultivating a winning mindset and pursuing audacious goals:
Passion breeds passion
I’ve managed to get buy-in from some large businesses and partners, despite the fact that I’m young and the company is still new. I think the reason people have been willing to meet with me is largely because of my passion. They might not quite ‘get’ the concept of edutainment yet, but my passion is infectious. They can sense that this isn’t a business idea I’ll simply abandon when things get hard. I’m determined to make this work, and people can see this, which increases their passion for it as well.
Change your perspective
My parents moved overseas in 2006, and after I finished school in South Africa, I spent quite a bit of time with them in Europe. Although I loved South Africa and knew that I wanted to return and build a business here, the experience was still immensely valuable. Travel changes your perspective — it makes you look at things in a new way. It’s easy to get trapped in your own environment and to believe that there is only one ‘correct’ way to do things.
Changing your environment can spark creativity, and can even make you think on a big scale.
In the age of information, ignorance is a choice
Thanks to modern technologies like the Internet, we have access to unimaginable amounts of information, so I always tell kids that there is no excuse for ignorance. We all have the tools needed to gain knowledge, we just need to embrace them.
Reading is everything
To me, reading is one of the most important activities anyone can engage in, which is why Brand LAIKI is focused on inspiring kids to read more using urban music and new technologies. Like travel, reading has the ability to broaden your horizons and to make you look at things in a new light. We might not all have the ability to travel regularly, but we can all read.
After school, I spent about a year just reading. I went through dozens and dozens of books. The knowledge I gained has proved invaluable. As an entrepreneur, you can’t afford not to read. There are so many brilliant books out there that can help you along your journey.
Be committed but flexible
I’m very passionate about the business, so I always say that I don’t have a ‘plan B’. I’m completely committed to making this work. However, I still try to be flexible in certain ways. I won’t abandon my dream, but I’m open to change. Business ideas change and evolve over time. You have to be willing to adapt. If you’re too married to your specific concept, you’ll struggle.
Be willing to walk away from opportunities
While it’s very important to be flexible and to adapt your ideas as necessary, you should also be able to walk away from opportunities when they become too constricting. Don’t allow your ideas to be watered down or changed entirely. This often means saying no to short-term success, which can be hard, but it’s important to focus on your long-term goals.
If you understand people, you understand business
When you get right down to it, business is ultimately about people. When you’re doing business, you’re dealing with people. Because of this, it’s important to try to understand people. What are their aims? What are their concerns? How can you help them? I think empathy is incredibly important. You can’t just use people. That’s not how you create a successful business in the long term.
How To Build A Billion-Dollar Brand
Being an entrepreneur is one of the most difficult tasks you can take on.
Being an entrepreneur is one of the most difficult tasks you can take on. In fact, some people find it soul crushing if not done right. When done properly though, it can be the greatest thing you can do in your life.
Starting as an entrepreneur means knowing what you really want to do, what your passion is and how to deliver that to consumers. It’s not about pushing it on them but listening and seeing how you can serve them.
Most entrepreneurs stop as soon as they hit success and sell off their company, but not all of them. On this episode, we are joined by Michael Mente, who has been a massively successful entrepreneur since 2003 when he helped create the incredibly popular clothing company: Revolve.
Michael Mente dropped out of an entrepreneur program at the University of Southern California to become an entrepreneur by profession. He’s Currently the CEO and co-founder of Revolve and is set to bring in $400 million in sales this year. His company is considered the one-stop shop for clothing items designed by some of the hottest emerging designers.
Over the years, Michael began developing organic relationships with bloggers to represent the brand on a more realistic level. To do so, Revolve regularly holds trips for influencers to gather, relax and recreate the lifestyle of an ideal Revolve customer.
Michael saw a gap between affordable and high end items, which provided grounds for him to create an online shopping experience that falls in the middle. Supporting up-and-coming designers and digital influencers has become the core of Revolve’s growth and they decided to expand their digital offerings by launching a sister company, Forward, in 2008. Since then, Forward has grown to become a fashion powerhouse and go-to place for premier luxury fashion.
I loved Michael’s humble wisdom about what it has taken to create this kind of success in such a competitive industry.
Discover all of that and much more, on Episode 583.
This article was originally posted here on Entrepreneur.com.
What Top Venture Capitalists Are Looking For In Your Start-Up
Keet van Zyl, one of South Africa’s top Venture Capital investors unpacks what he looks for in a start-up, what your pitch deck should include, and the red flags that investors walk away from. Would your start-up make the cut?
- Player: Keet van Zyl
- Company: Knife Capital
- Claim to fame: Keet is a Venture Catalyst with extensive high-growth investment experience. In 2010 he co-founded growth equity fund manager Knife Capital.
- What they do: Knife Capital is an independent growth equity investment firm focusing on innovation-driven ventures with proven traction. By leveraging knowledge, networks and funding, Knife Capital aims to accelerate the international expansion of entrepreneurial businesses that achieved a product/market fit in a beachhead market. They have offices in Cape Town and London and invest via a consortium of funding partnerships, including SARS section 12J Venture Capital Company: KNF Ventures and Draper-Gain Investments.
- Visit: www.knifecap.com
Why would you choose to back Gazelles over Unicorns, and what does this investment strategy mean for start-ups looking for investment in South Africa?
Unicorns are start-ups (sometimes without an established performance record), valued at $1 billion or more, normally pre-public listing (IPO).
Gazelles are young post-commercialisation phase businesses that are able to scale and maintain a high revenue growth rate off a decent base over a prolonged period. In the US, this is usually well in excess of 20% year-on-year for a period of three to four years or more, starting from a revenue base of at least $1 million. My view is that in South Africa this range should be a sustainable year-on-year growth rate of 30%+ for three years or more off a revenue base of at least R5 million.
Related: Is Venture Capital Right For You?
If I could know for sure that a start-up was going to turn into a Unicorn, I would obviously choose to back it over a Gazelle. But that is just the thing: The risk/return ratio of chasing mythical African Unicorns with a very low probability of actually achieving Unicorn status is not necessarily a viable investment strategy. There are enough entrepreneurs out there who are building sustainable high-growth businesses requiring opportunity funding to accelerate growth through access to knowledge and market access networks.
Many South African start-up investors require businesses to have proven traction to de-risk investments to some extent (and many of those who don’t, do so after gaining a few battle-scars). Start-ups looking for investment should first bootstrap to some extent or get enough funding from the so-called ‘three Fs’ (friends, family and fools) to gain some momentum in one or more key traction verticals before approaching the more formal early-stage investors.
As an investor, do profitable businesses that solve real, meaningful problems attract your interest? Why?
Absolutely — profitable businesses that solve real, meaningful problems attract our interest for investment as long as they are still in their growth phase (as opposed to maturity/ harvesting phase). At the core of any successful start-up lies a good product/service and a large addressable market for that product/service. This enables a start-up to grow or scale and become sustainable. Businesses that solve real, meaningful problems have a better chance of aggressively penetrating their identified target market and profitability is a great traction milestone. Too many start-ups focus on building a solution looking for a problem to solve — instead of the other way around.
What separates a good pitch from a great pitch?
I’ve seen thousands of start-up pitches through the years, and unfortunately most of them miss the mark by a long way. The better ones contain all the key components of a pitch, but the really great ones tell a brief but engaging story that follows a ‘Hearts — Minds — Wallets’ narrative in a true authentic way.
This includes first appealing to the ‘hearts’ of potential investors by taking them through a journey to get them excited about the opportunity. Then the entrepreneur has to augment the story with facts and a solid business case to win their ‘minds’, concluding with a clear ‘ask’ of the funding requirements and how this investment could positively affect their ‘wallets’.
How can an entrepreneur determine whether their business is funding ready or not?
Venture capital should not be the go-to funding choice for everyone starting a business. It is an inspirational metaphor at the bleeding edge of entrepreneurship. There are many other credible funding mechanisms out there across the debt/equity spectrum, and entrepreneurs should assess the criteria based on where they are in their business growth cycle, and then gauge their funding readiness.
A venture backable business has a high growth trajectory of at least 30% to 40% year-on-year for the foreseeable future with a clear exit strategy for investors to realise returns of at least five to ten times the money invested (in South Africa this is most likely a trade sale to a large strategic investor that can scale the product, intellectual property or team by utilising its already established distribution channels).
Entrepreneurs have to ask themselves whether their growth goals can be achieved without venture funding — in which case bootstrapping is the way to go. And lastly whether the current founding team can embrace trading ownership (and thereby some element of control) in the business for a financial partner.
In order to facilitate the funding process, it is advisable for entrepreneurs to always have the following elements at hand: A one-page teaser document containing a summary of the business and funding requirements; and a business pitch deck, with a detailed financial model and a virtual data room containing key business documentation for investor scrutiny. (See table)
What do so many start-ups not understand about funding?
The largest deal origination sources of start-up funding in South Africa come through warm referrals. It is simply not good enough to find the email address of a venture capitalist and send through a cold email expecting a positive outcome. Study the investment mandates of potential funders, build an investor universe of preferred partners and do some homework to figure out a way to get referred.
And then: The 8020 principle is as alive in entrepreneurship today as it was in Pareto’s pea garden. 20% of start-ups have 80% of the disruptive solutions and will receive 80% of the funding. One only has to watch one episode of Idols to realise that many people have an inflated sense of their own abilities. There is a very fine line between a tenacious entrepreneur who does not take no for an answer where success is inevitable despite the setbacks, and a lost cause. Start-up entrepreneurs need to figure out on which end of this spectrum they are.
Lastly: Like it or not, at some level all roads lead to the assumptions behind your financial model. We’ve heard it all from the ever-present ‘these projections are conservative’ to ‘real life won’t mimic excel anyway so what’s the point of building a model?’… Build a model! And make it granular. We know there will be pivots, delays, underestimation of costs, corporates who pay late, and so on. But we need to agree on the basic set of metrics that reflect the commercial DNA of the business at this point in time.
Do you believe most businesses can be bootstrapped?
Yes and no — to some extent and at certain stages of the business. The one thing that start-ups who believe in themselves must jealously guard is the management team’s equity ownership in the business. Risk funding will generally result in the start-up founders having to share this equity with outside parties. The more one can bootstrap while increasing value, the better in the long run for the founders — but not to the detriment of the business.
What is the role of bootstrapping versus funding in a vibrant market?
Bootstrapping is a viable option for most lifestyle businesses where growth is slower, but a start-up is a high growth potential company in search of a repeatable and scalable business model. If the business solves a real, meaningful problem and the business model is scalable, it’s a question of time before competitors establish themselves in the market. This means that the window of opportunity for growth and market penetration is closing, and while bootstrapping could be ideal, by the time the start-up gets to ‘Point B’ — the goalposts may have moved. Funding in a vibrant market can accelerate growth and ensure that windows of opportunity are not missed.
Related: How To Get Venture Capital
What red flags immediately warn you off investment opportunities/start-ups?
My number one red flag is a culture clash. Either between us as investors and the entrepreneurs, or subtle politics within the entrepreneurial team. We’ve learnt the hard way that the one thing that you can’t fix with money is a toxic corporate culture. Most other fundamental business gaps can be closed with enough investment. Knife Capital has an internal [subjective] measure for assessing corporate culture in companies called the ‘Speed of Climbing Stairs Index’. The theory is that there is a direct correlation between staff morale/corporate culture, and the speed at which employees will climb a proverbial staircase at the office. If it’s not fast enough, we will not invest.
Other red flags include questionable ethics, lack of product/market fit, cash flow management issues and entrepreneurs betting on a product as opposed to building a multi-product sustainable business.
What specifically do you look for in your investments?
- A Solid Investment Case: This comprises a good product/ service with a competitive advantage; a large addressable market for that product, a strong management team, a scalable business model, funding to accelerate growth and an achievable realisation strategy.
- Awesome People: Start-up investment is a long journey to success and we feel that we may as well embark on that journey with amazing people.
- Strong Culture: The company culture needs to be solid in order to celebrate the successes as well as survive the setbacks.
- Execution Capabilities: The value of an idea without execution capabilities is zero. So we look for the ability to execute.
- Proven Traction: There needs to be some element of momentum that can be demonstrated or quantified.
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