Monday, June 07, 2004

The Reality Distortion Field

I've read many times about Steve Jobs' famous "reality distortion field," but never had the chance to experience it firsthand.

(Sidenote for investors: For a while, my friend Matt Josefowicz and I toyed with the idea of starting a hedge fund: We'd buy Apple before MacWorld, then sell afterwards when the Jobs RDF boosted the stock by 10-20%. Unfortunately, we never had any other investment ideas.)

I attended the Harvard Business School Alumni club of Northern California's annual Entrepreneurial Company of the Award dinner, honoring Apple and Steve Jobs. Steve was in his usual form, and had the entire audience eating out of the palm of his hand within the first 60 seconds. By Godfrey (as Teddy Roosevelt would say), that must be nice!


Steve: "We last won this award 20 years ago, which is pretty amazing. I guess that means in about two years I'll be fired again."

Q: Why did Apple stumble?
A: Apple is a recovering monopoly. We had a monopoly on the GUI for a decade. When that happens, the focus shifts from making great products to making money. The sales and finance people gradually take over the company, and you lose the ability to make great products.

We focus on making great products, and then on making money. We have a passion for making great products. We make money so that we can continue to make great products.

Q: What do you see as the role of MBAs at great companies?
A: How many of you out there are VCs? Raise your hands. (Approximately 50% of the 1,000 person audience raises its hands.) Your salads were poisoned.

In the old days, when you started a company, and you needed a CEO, you pulled someone out of HP to run it. Now all these companies have pulled all the good people out of HP. Sorry guys, no offense (to the HP table). That's why you had fresh MBAs running companies.

Let the product people focus on making great products. Then figure out how to sell and market them. Don't tell the product people what to make.

Q: What makes Apple different from other companies?
A: It's called taste. If people knew what they wanted already, they'd go to Dell and get it at the lowest price. They're willing to pay us extra to show them what's cool.


The funny thing about the whole evening is that Steve never mentioned Gil Amelio's name one time, despite referring to the previous regime many times. Poor Gil, it's as if he's been erased from existence!

P.S. Sorry about the infrequent posting--that's what the arrival of the second kid does to you! I'll try to get back into a steady rhythm soon.

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