#77 Steve Jobs (The NeXT Years)

What I learned from reading Steve Jobs & The NeXT Big Thing by Randall Stross. ---- Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work. Get access to Founders Notes here. ---- “I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth Be like Gareth. Buy a book: All the books featured on Founders Podcast

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00David Senra?

  When Jobs left Apple in 1985 to start another computer company from scratch, the next in its name referred to Steve Jobs' next bid to shape history, to present to a grateful world the next big thing. Intermittently, the world had heard from him and his company in press releases or in stage events for the media. But though eight years had passed and the fire of ambition burned as brightly as in Jobs' ever, another business miracle had yet to materialize. Reporters who wrote about NeXT would often forget when exactly NeXT had been founded, and as late as 1992 would still refer to NeXT as a company that was two or three years old. An error that Jobs, of course, was happy to let stand uncorrected.

• 0:44David Senra?

  The less attention paid to his failures to repeat at NeXT his earlier success at Apple, the more attention he could direct towards NeXT's future. Clean and untarnished, always bright with possibility. Better to look anywhere but the past record, where Jobs' attempt to build a profitable rival to Apple had led him from one strategy to another, from blunder to blunder, disaster to disaster. What makes his next story especially intriguing, however, is the gullibility of many others who lent money, careers, and prestige to Steve Jobs' quest. The greater portion of investment capital came not from Jobs' own pocket, but from

• 1:29David Senra?

  that of others. The amount of money that was sunk into the NeXT venture made it a story for the history books, but not in the way that Jobs intended. Well over $250 million of capital and royalties disappeared in NeXT without a penny of net profit to show for the investment. NeXT's dismal scheme of business misjudgments threatened to go down in the books as the most expensive flop in the history of entrepreneurship.

• 2:05David Senra?

  Okay, so that was from the introduction of the book that I read this week and the one I'm gonna be talking to you about today, which is Steve Jobs and the Next Big Thing by Randall Strauss. So I guess I should start right at the beginning. This is gonna be one of the most bizarre podcasts that I've ever done. Because I don't think, I think there's only one like good idea in the entire, that you get from reading the entire book. And that, that makes a lot of sense when you think about the book, let me grab it real quick, was published in 1993. So at the time the author is writing this, he burned through, as he just said, 208 years and 250 million dollars in capital.

• 2:48David Senra?

  And the book ends with the decision by Steve Jobs, it's not even by Steve Jobs, it was forced on him, which I guess I'll get to later on, to abandon manufacturing hardware and just focus on the next step operating system. So that, that's 93. And so as you can imagine, if you study, if you just look at the history of NeXT from the time it was founded to 1983, it's a giant failure. We know because we have the benefit of hindsight that the author did not, that about four years later, Steve Jobs somehow convinces Gail Emilio, the CEO at the time of Apple, to buy NeXT for 450 million dollars, which of course leads him to running Apple a few years, like a year later.

• 3:33David Senra?

  Now, I do want to say one thing though, because this is the fourth podcast, the fourth podcast I've done on Steve Jobs. So last week, if I could, I guess before I get, jump into the book, and I'll just say this real quick and then we'll get into the book, is every single one of the four books that I've read, not including the two that I do for, on the Revere Only podcast feed, which was just about product design at Apple, which is not necessarily just to focus on Steve Jobs. But I guess what I'm saying is if all four of the books, so you have Return to the Little Kingdom, then you have The Next Big Thing, then you have Steve Jobs by Isaacson, and then you have Becoming Steve Jobs. If I could do it over again, I would read all of them, but I would do it in the order of the time period that they study.

• 4:18David Senra?

  So I'd start with the book I did last week, which is Return to the Little Kingdom, because what's fascinating about that is the subtitle is Steve Jobs, The Creation of Apple and How It Changed the World. It focuses on a hugely successful company right at the beginning. So focus on the first few years of Apple. So if you haven't heard that podcast, listen to it, because I think it's good. Because then you have an understanding of what happens. Like what happens when you build a truly revolutionary product and it takes off? Like the Apple II computer did, okay? So that was really interesting, because it only focused on the first like seven years of Apple's corporate history. Now, this book, it only focuses on eight years of next history, and it's the opposite lesson. What happens when you have a product that no one wants to buy? Which is what the next computer was.

• 5:02David Senra?

  And then I would read the two other books, Steve Jobs and then Becoming Steve Jobs, because it's more of like a, it's a more of a typical biography. It takes his life in totality, I think is the word I'm looking for. Okay, so I just wanted to put that out there. I'm gonna jump right in. We're gonna still learn a lot, but most of it is, you know, studying the decisions and the strategies that Steve Jobs decided to go with, and realizing, like, basically learning what not to do. So going back into the introduction of the book, which has tons of really interesting information for us. So it's a, next is a private company. They take about three years from the time it was founded before they actually have a product.

• 5:47David Senra?

  And as such, Steve had to do like, they kind of, I think the author compares him to like the Wizard of Oz, like the man behind the curtain. Like kind of only letting you see what you wanted to see, but it's not a clear picture. And there's really no way for me to characterize this, other than just blatant lying. And it's something that still goes on to this day, which I find interesting. I was just reading this article about the company WeWork, which is still private and they come up with like their own way to determine. I think it's like community adjusted earnings before, just like a made up metric. Again, they got a lot of flack on Twitter and otherwise for doing so, but that's not really new. Steve Jobs was making up his own metrics and this is an example of that.

• 6:30David Senra?

  So companies making up profits by removing expenses is nothing new. That's the note I left myself. And it said, "The profits that Next wanted the world to notice were an accounting phantom and excluded interest payments for loans." Next had a loss for the quarter. Next did not, and so they're saying, "Hey, we had our first profitable quarter." So this is just the introduction. We're going to go back. So he's giving us like a, you know, general, like kind of like a summary for the book, if you will. And then we're going to go back in time till before they even have a product. But he says, "Next did not reveal that for the year, the company had fallen about $40 million short of breakeven." So let me give you context here. He says, "Hey, look, Next had our first ever profitable quarter." Steve was like a master at, you know, for lack of a better word, manipulation.

• 7:16David Senra?

  And especially manipulating the press and like the public image of the company, even though it was doing poorly for the, for basically all of its existence. He would highlight, you know, things like this, like, "Oh, we had a first profitable quarter." No, you didn't because you didn't, you excluded legitimate expenses that your company has. But not only that, who gives, who really cares if you have a one quarter that's profitable and you lost $40 million for the year? And again, that, to some people, that may not seem like a relatively big deal in isolation. But it, to me, it is a big deal because the problem is like, the problem occurs when you actually, when the actual company believes in bullshit. And that's exactly what happened with Next.

• 7:55David Senra?

  It says, "Next management was so persuasive in its denials of recent or imminent change and its serene pronouncements about profits that it fooled not only the public," again, that was Jobs's objective, I would guess. And he says, "but also the company's own employees." So that's a really big problem. Because now the author's talking about what's going to happen a few years in advance from this point. He says, "Hence, the news that leaked on Tuesday, February 9th caught almost everyone by surprise." And this is how the book ends. The company was immediately abandoning computer manufacturing and laying off 330 of its 500 employees, cutting not only in manufacturing and design, but also in sales, marketing and administration. Many, and this is so messed up.

• 8:39David Senra?

  Many of the affected employees learned of the layoffs in a fashion that made awful news all the worse. From the radio. The day would be remembered by victims and survivors alike as Black Tuesday. Here is a company that could claim that its business was healthy and profitable one moment, then announce, again, that's what it's saying to the public, right? Then announce the abandonment of its sole existing source of revenue, the hardware, and the decimation of more than 60% of its workforce. And then reassert with innocent equanimity that it was simply capitalizing on its assets. Steve Jobs offered no explanations of the discrepancy between the earliest sanguine announcements and the apparent need to change direction radically.

• 9:23David Senra?

  He directed attention forward to the future, to the beckoning opportunity of leading Next into the ranks of first-tier software companies. And that's interesting that he uses the word first-tier software company because at the very beginning, when he was starting Next and recruiting all the people, he said he wanted to be a first-tier hardware company. So now he completely changed. This actually was a decision, the right decision to make. Unfortunately, it didn't come from Steve Jobs. It kind of was forced on him from outside, not only from employees who kept badgering, "Hey, we need, the market has spoken, the hardware is not going to sell. We need to actually, the one thing we've actually built that has value is the operating system." So he had internal pressure and then external pressure from like people like Andy Grove, who was leading Intel at the time, which I'll obviously tell you more about.

• 10:07David Senra?

  Okay, so the reminder here, again, my goal with this podcast is not, it's not to criticize the business decisions of other people. Like, we're doing this purpose, like, the explicit purpose of this podcast is for like educational purposes, right? But it's not like a negative thing. Like, to me, this was very, like, you know, Steve Jobs, we don't have to worry about his place in history. Like, he... He came back and led the company that created the most successful consumer product of all time. But what I find motivating or inspiring is that, what I always say is like, these people are not idols. Like, they're flawed, just like you and I.

• 10:52David Senra?

  And the very fact that we have an entire book, 400 pages dedicated of mistakes to somebody, like, the mistakes are not fatal. Like, everybody is capable of making mistakes. So like, even great entrepreneurs are prone to strategic mistakes. I always go back to what Marc Andreessen describes, like, the act of starting a company. And he says it's a complex adaptive system. These things behave in ways that are unpredictable. They're not just gonna line up with your vision. Like, your vision, once it interacts with the real world, which is exactly what the book is about, like, Steve Jobs' vision for NeXT, and then was completely different than what it, like, when it interacted with the real world, what the result was.

• 11:34David Senra?

  So I think that the main takeaway for the book for me is like, okay, well, listen, you can make mistakes, if you, as long as you learn from them, which it took Steve Jobs many years to, and if you look back at how he talked later on in his life, he says, "Listen, man, I got hit in the," he calls getting fired from Apple and having to start NeXT, getting hit in the head with a brick. But he's like, "It's probably the best thing I needed." Because you're gonna see, like, he's, there's a difference between, like, being confident and then Steve Jobs' level of confidence, which I'm gonna pull out some quotes in the book that are just jaw-dropping. But anyways, let me jump back into this part where I left a note that says, "Listen, even great entrepreneurs are prone to strategic mistakes." And the very founding of NeXT, what the product they decided to build was a strategic

• 12:17David Senra?

  mistake, the market they went after was a strategic mistake, how they managed their resources was a strategic mistake, like, just over and over again. It's almost like Dr. Jekyll and Mr. Hyde. Like, the idea that you have somebody as skilled as Steve Jobs was later in his life is the same person as the person being described in this book, which, again, I think Randall Strauss said, "Okay, you know, it's clear, NeXT is a, it's gonna be a failure no matter what." He wound up being wrong about that, but he was right about making that decision at that time based on the information. I can understand why he reached that conclusion after you finished the book. All right, so it says, "Even with an accelerated schedule, NeXT still found itself in an unenviable predicament.

• 12:58David Senra?

  The company pulled out of the computer business before it had its replacement product, the Intel software, ready for sale." They're saying they're gonna create before, of course, you know, Steve Jobs' MO, you most likely do, that he wants to control the hardware and the software. He would not write soft, he would not make NeXT's software compatible with other machines. Eventually, that's the exact decision that he's doing, so that's what we're talking about. He did a deal with Intel to do that. So it says, "All it had to offer in the interim was the older version of the software that ran only on NeXT's computers." The only potential customers, that is, those who owned a computer that could actually run it, had already been given the software when they purchased the machine.

• 13:38David Senra?

  So clearly, that's not, he didn't, he did not decide to do this well in advance. He was forced into this decision when the company was running out of resources, basically. "NeXT was an eight-year-old company that was attempting the most awkward of all possible transitions, going months without a single revenue-producing product." Hard to argue this is like a worse position the company could be in. This is a random line that I think is really interesting. So the author compares and contrasts what's happening in Steve Jobs' life with other people in the computer industry, like Sun, the huge success of Sun Microsystems. There's actually an entire chapter, I was thinking about doing like a standalone podcast,

• 14:19David Senra?

  because there's one chapter that the author compares the decisions by NeXT, and he compares, contrasts it with their main competitor, or I guess the one dominating the workstation industry, which was Sun Microsystems at the time. I might still do that, it's very fascinating. But they also do, they talk a lot about Bill Gates and just other people that are running computer companies at this time. So there is a line about Steve Jobs and Bill Gates in the early 90s that I believe is still true today and accelerating, and I just think it's a fascinating thing to remind ourselves. And it says, "Their personal fortunes," meaning Jobs and Gates, "their personal fortunes chart changes in the landscape of the American economy." And I would replace "American economy" with "the global economy," "the world economy."

• 15:01David Senra?

  "As money shifts from the solid, the bulky, the tangible, toward the transitory and rapidly obsolescent, the miniature, the cerebral." So. A lot of the people I've covered on this podcast made their money in atoms. Physical infrastructure, I think Cornelius Vanderbilt, Rockefeller. We just did, I, there's no we, it's just me, obviously. I just did a three-part series on Henry Frick and Andrew Carnegie. These are, they're the world of atoms. Gates and Jobs are in large part, especially Gates, are making money in the world of bits. And so I love how they talk about this. And he's writing this in 93, you know? So it says, "It's going away from the solid towards the transitory, the rapidly obsolescent."

• 15:45David Senra?

  Think about like your iPhone, if you had an iPhone that's like, did you still use iPhone 2? The iPhone 3? Probably not. "To the rapidly obsolescent, to the miniature, and to the cerebral." It's really interesting. And so now he's done to do a little like, he talks a little bit about like the psychology of Steve Jobs. Like why? You know, he's already been successful. If he would've just kept his Apple stock, he would've never had to work again in his life. Obviously, it's not what motivates Steve Jobs. But let me just read this part and then I'll tell you the note I left myself then, what I thought of when I came across this paragraph. It says, "This suspicion troubles entrepreneurs of all ages, and many have embarked upon a succession of new ventures."

• 16:26David Senra?

  These are, and this is interesting when he talks about this, like the desire to create new companies. Like, what is that? He says, "These are self-imposed tests that could confirm that it was their own internal resources and not luck that accounted for their first success. Almost all fail in their quest to repeat earlier history." And so this is a reminder that all good things come, all good things in life come from compounding. That if you have a business that's working, it's best to stick with it. A lot of people, you know, they have this, I always say like the Holy Grails, like your Von Schenard of Patagonia. Not only do I think his like, his philosophy and ethos on business is fascinating, but this has, this guy is a 40-year-old

• 17:08David Senra?

  private company that's made him a billionaire that he still controls and produces something that he loves. Like that he's proud of the product that he makes, right? Compare and contrast that to a lot of like literature on entrepreneurship. It's like, okay, get an idea, scale a company and sell it. And then you're not going to be happy sitting on your ass. So this idea that like, you just want to constantly be a serial entrepreneur. If that's what you are, you have to be who you are. I just think like, what the author's saying is usually like- Your best idea, like if you're not working on your best idea, you're doing it wrong. And then like usually when you have, you've built up a company that other people want to acquire, like it's kind of in some senses of validation of that idea.

• 17:49David Senra?

  It's probably better to stick with it in more of the sense of like a, of like a Yvon Chouinard. That's what I mean by all good things come, come, all good things in life come from compounding. Imagine Warren Buffett and Charlie Munger sold Berkshire Hathaway 15 years ago. If you look at the net worth, the, the chart of Warren Buffett's net worth, it's skewed to the right. Like he would have given up 50%, 60% because all good things in life come from compounding of his net worth if he would have sold it. So anyways, that made me think of this, this tweet I saw on Twitter a long time ago. It just stuck with me. And I guess it was a, I forgot who, who wrote the, the tweet, but they were, I think their mentor, one of their mentors had like died recently or whatever the case is.

• 18:34David Senra?

  And he talks about some advice that he was given. And he's like, he told, he told the younger person, he's like, stick with what works. And he said, rabbit eye, rabbit eyed kid, stop jumping, focus. And I think that's really good advice in general. And it's interesting that out of all the advice that, that person was given over the, the, the relationship he had with that person, like that's the one thing that, that really like stuck out. This could be a one sentence summary of the book. For eight years, he pursued at next a quixotic quest to conjure back the elusive magic that had borne Apple. About the same amount of time as Jobs was at Apple with nothing like the same results. So his first stint at Apple was about seven, eight years, hugely successful.

• 19:19David Senra?

  Apple two prints hundreds of millions of dollars constantly. And then yet I just found it fascinating, like it's time is clearly not the.

• 19:30David Senra?

  Like it's not, it's not all things are like you're, the way you spend your time and what you're working on, of course, it's not just, oh, I gave you eight years, I should expect the same results. Like, no, he had literally like the most successful product, one of the most successful products ever made in the Apple II, and one of the least successful products made in the next cube. Okay, so if that's a one-sentence summary of the book, this is probably a one-paragraph summary of the book. So it says, "The plotline is simple. Our central protagonist introduces a new product, and carrying it proudly runs straight into the wall of customer indifference. He picks himself up and tries and tries again, each time with a new approach and a new set of supporting characters, and each staging is a bit different. An infamous temper, a

• 20:11David Senra?

  mulish will, and a capacity, when needed, to apply a mesmerist charm, gives Jobs numerous opportunities to dominate all scenes in which he makes an appearance." So here's actually, I guess there's two good ideas in the book. Jobs did what you're doing this very second. And that's, he studied from the entrepreneurs that came before him, and he learned from them. And then their ideas obviously influenced and enhanced his ideas. Now, you could say that he should have studied, like, he only studied, like, people like Henry Ford, and, you know, because he wanted to be like, if there was a, if there was such thing as like a Mount Rushmore of entrepreneurship, like, he would definitely wanted to be on

• 20:54David Senra?

  it. So, that was, you could study people like that, definitely learn from them, certainly, but you could also study from people, like, smaller successes, which he fails, or smaller failures, rather, which he fails to do later on, which I'll tell you about in a little bit. So, this is him, well, just let me read it to you. "He likened his own introduction of the easy-to-use Macintosh computers to what Alexander Graham Bell had done when he filed patents for the telephone in the 1870s. He was replacing existing technology with a new way of accomplishing the same task much more easily." That's actually a good way to build, if you're able to find something that you can do that, that's a fantastic way to build a business. "Without blushing, Jobs compared Bell's breakthrough, which was replacing the hard-to-learn code of the telegraph, with a telephone that anyone can use immediately without training, to

• 21:38David Senra?

  its own replacement of the hard-to-learn commands of the IBM Personal Computer with his Macintosh, which anyone could also use immediately. And just as the telephone permitted greater range of expression than dots and dashes of Morse code, even permitting one to sing, Jobs' Macintosh permitted greater expressiveness too."

• 21:54David Senra?

  The historical comparisons that fill Jobs' mind are all of grand scale. Another recurring favorite is to compare his work with computers to that of Henry Ford, when the automobile industry was in its infancy. In 1986, after he'd left Apple and started NeXT, Jobs looked back to Ford and said, "It must have been the most incredible feeling to know this was going to change America." Thing is, I'm not sure they knew that at the time. I'm pretty sure they didn't know it at the time. Referring to NeXT, he said, "If we can create the kind of company..." And I only based that off the few books I've read on Henry Ford. I would say he didn't know the impact he was gonna have. I mean, he had the idea of making it so cheap that anybody could afford it, and maybe says, "Hey, if everybody could afford it, they're gonna buy this car."

• 22:38David Senra?

  But there's no way he could have predicted. Like, think about, if you live in America, think about the invention of the automobiles. I don't know if there's another single product that has ever shaped the geography of the country. It's mind-blowing. Okay, so it says, "Referring to NeXT, he said, 'If we can create the kind of company, I think we can, it will give me an extreme amount of pleasure.'" This is what makes Jobs unusual among the business gentry. The naked chasing of not money, but a place in history. And you have to ask, like, why did he believe that one single person can have such a huge impact? And so, this is Steve Jobs on the leverage technology provides a single individual. Jobs is correct. The computer industry is still at a young, formative stage.

• 23:23David Senra?

  And if its future development is imagined as a long arc... This is actually an interesting idea, too. So maybe there is a couple good things that he says in here. Maybe it's not just one or two. So it says, "The computer industry is still at a young, formative stage, and its future development is imagined as a long arc. Then a single individual, like himself, can exert significant, lasting influence by nudging the industry's path at an early point." And so, the metaphor he uses here is a really good illustration of his point. Jobs put it into the vocabulary of space shots. You have to move the vector a little bit in its first inch, and the swing will be enormous by the time it gets to be three miles long.

• 24:04David Senra?

  Okay, so now this is a lesson that Steve Jobs ignored. So now we're moving, well, let me just read this to you then. What saved Apple from financial catastrophe at the time was the primitive little Apple II. Though it belonged to the Pleiadesian era of personal computers, Apple continued to sell hundreds of millions of dollars with a machine every quarter, long after demand had been expected to drop. So that's what I mean why I recommend reading, listening to the podcast I did last week and then reading the book Return to the Little Kingdom because it's describing like what, like with a, with a real in-depth, like inside look at what, what happens to a company when they, when they create a product that's an unexpected massive success.

• 24:46David Senra?

  It's really, I don't know if I've come across another book that's only kind of constrained itself to that period in a company's life. So it says, "How ironic that the Apple II with a microprocessor that was only eight bits, skip, skip, skip, proved stalwart," meaning lasting, "when the Lisa, based on a more advanced 32-bit microprocessor, faltered and collapsed." So the point they're making here is like, yeah, Lisa might have been technologically more superior than Apple II, but your customers might not care about that. "The lesson that one could draw from the Lisa debacle included these: Keep in touch with the intended customers and avoid the pitfalls of isolation. Do not assume that customers will pay any price to secure the latest computer technology.

• 25:31David Senra?

  Ease the way for customers to adopt a new computer standard by providing software and hardware bridges that help connect older machines to new ones. Rely less, rely upon less expensive products that have fewer features or less advanced technology to pay the bills, while the top-of-the-line flagship computer establishes a secure place in the market. These are hardly profound, yet Steve Jobs would ignore every one of these when he launched Next." And that's what's so, like, this book.

• 26:01David Senra?

  I was thinking to myself, like, how would you even describe it? And it's just like, what the hell? I think when I was reading the book, there's so many times where I'd pause and look up and be like, what the hell? What the hell did I just read? What the hell just happened? Like, what the author is describing there is ostensibly like firsthand lessons that Steve Jobs learned through previous experience. And yet, for whatever reason, he ignored them all. It's not like, it may be even like, shouldn't it be harder? It shouldn't be easier to learn from firsthand experience than it is from like secondhand experience? At least that's what most people say. But that's not at all like certain either. It's, it's, this is such a, like, we're gonna get into these decisions and you're just like,

• 26:45David Senra?

  what the hell is going on here? Okay, so he's, he founds next and he says, hey, we're not gonna build a cheap personal computer like Apple. We're not gonna build these huge mainframes like IBM. But, sorry guys, I'm getting over another little cold. I don't know what the heck's going on. But we're gonna build something like in between. And he calls it like a, so the, there was a category at the time called workstation. Eventually Jobs even narrows that down and he uses the term like personal workstation. But he's like, we're not gonna go after business, like, we're not gonna go after Fortune 500. We're not gonna go after individuals. We're not gonna go after small businesses. We're gonna go after universities. But selling universities is really, really complicated.

• 27:28David Senra?

  And again, this is another bad strategic move by Steve Jobs. He says, "Jobs did not have a clear understand, a clear idea of what universities needed, nor did he understand the collective nature of university decision-making. His own inclination was to go to lunch with the president of Stanford, lift a sheet," this is talking about comparing how they sold to universities at Apple compared to why he thinks this would work at Next, right? He's just gonna copy this. "Lift a sheet off the Macintosh and say, how would you like to buy a thousand of these for a million dollars?" But such a decision was not primarily the prerogative of a single person. Rather, it was a collective decision that involved varying combinations of computer center directors, deans and associate deans, academic vice presidents, university council and faculty committees.

• 28:13David Senra?

  Jobs did not have the skill or the patience for persuading the lower levels of the academic power structure. Which is really weird why he would choose that strategy moving forward. So it says Steve Jobs had many reasons, and the note I left myself is like, it's understandable why he would target the educational model, but he was just wrong. So it says Steve Jobs had many reasons to be grateful for higher education's early embrace of the Macintosh. And the reason I say it's understandable, it's understandable only in the sense that Apple, early Apple was very successful with like a guerrilla sales tactic to selling to universities, which I think like at the time, there was something like four or five salespeople that were all spread out throughout the United States like doing, selling on campus.

• 28:57David Senra?

  And they were doing like, something like, I forgot the exact number, but let's say it was like four or five million people and they were doing like 50 million in sales or 100 million in sales, something like disproportionate to the size of the team, right? But that's also misunderstanding that at first it's way less expensive, you know, talking about 2,000 or sub $2,000 at the time compared to when NeXT finally unveils its Cube, it's, you know, $7,000 for a really stripped down model, really it's like 10 to 12,000. So I guess what I'm saying is like he fundamentally misunderstood why that strategy was successful. And when he tried to duplicate it with NeXT, it didn't work. And we'll get into more, I'll get into more detail about that.

• 29:39David Senra?

  So it says it was universities that provided early purchase commitments even before the machine was introduced to the public. It was universities that were willing to support and improve computer standard, defying the overweening muscle of the standard bearer IBM. It was universities that had voted to support the Macintosh. So again, these are all lessons that he kind of ignored, or maybe misinterpreted is a better word, of why it would work at NeXT, even though he's selling a fundamentally different product. Even though it would be years before a wide variety of software could be available for it. Universities were flexible, appreciative of new technology, and not, incidentally, constituted a renewable market. The 1 millionth Macintosh was sold in early 1987, a mere, a mere three years after the machine's introduction.

• 30:23David Senra?

  And the author has a side note here and he says, "Keep this in mind when we look at, look at NeXT's subsequent history." He's going to compare and contrast that. I think in the entire history of NeXT, they sold like 50,000 computers over like eight years. So vastly different than the Macintosh. Jobs, so I guess I tripped over my own point, or I guess the author's point here, he says, "Jobs drew one lesson above all others from this experience. If universities back superior computer technology once, they could do it again for NeXT." So again, that's what I mean where I say it's understandable why he would target the educational model. It was, he was just wrong because he was selling a fundamentally different product.

• 31:00David Senra?

  Okay, so last week I talked about, Jobs had this idea when they're, they're creating the Macintosh, he took a small team and basically with, with what at the time his employees called his "reality distortion field," he gave them the impression that they wasn't a hugely successful billion dollar company already, but there's a small group and they're like scrappy and struggling and they're working in a garage, not an office. That was obviously not true, but that's the kind of environment that he cultivated. Now that the weird thing is, that was hugely successful, just like it was hugely successful when they made the Apple I, right? He didn't do that at all at NeXT.

• 31:40David Senra?

  He abandoned the frugal beginning, you know, the, the mythical like entrepreneur in a garage kind of ethos. And the problem is like this, the early forced resourcefulness of a company is partially responsible for its initial success. Because if it was just a matter of resources, big companies would obviously dominate forever. But, but he started another company and just skipped over that part. But you can't, that's like one of the fundamental like foundations that you're building your company on, right? So he says, "He was not about to return to the frugal circumstances of the beginning of his business career. He had started Apple in his family's garage and had invoked the image of the metaphorical garage when he later took control of the Macintosh Group. But this time at Next, he would start off not in a garage, but in a mansion, his home

• 32:25David Senra?

  in Woodside, which he'd purchased from the Gianni family, who are the founders of Bank of America, interesting enough. This served as the company's temporary office for four months until they could move into formal offices. The advance of age and personal fortune promoted his intolerance of anything but the absolute best. Instead of choosing the least expensive office space available in the area, like your parents' garage, for example, he chose some of the most expensive. But even if you don't want to work in a garage, like you don't have to go crazy like he does. And what I mean by that? Think about how ridiculous this is. You don't, what I'm about to, sentence I'm about to read to you, keep in mind, they don't have a product. They're like three years from having a product they can sell. And the only funding they have is $7 million that Jobs gave them himself, right?

• 33:06David Senra?

  This is the next decision, just like, what the hell are you doing? He hired a full-time interior designer as one of the first 10 employees at Next. Long before a computer would be ready for unveiling, Jobs talked with architects... Now, think about this. Long before a computer would be ready for unveiling, other, another way to put that is, "I have not built a product yet." There is no product. It doesn't exist. But this is what I'm doing with my time. Jobs talked with architects about designing Next's sales offices in major cities around the country. What? Jobs pursued his own set of priorities and the look of the Next offices took precedence over most everything else. Steve Jobs is not a stupid person. He's not a stupid person. But this was a really stupid decision.

• 33:51David Senra?

  And then, again, you have to be who you are. This is another weird thing I read. So he decides, "Hey, um, we're gonna have complete transparency, complete transparency of like all the metrics and everything in a company." So wait a minute, though. Like, I've read a bunch of books on Steve Jobs at this point. He's famous for being super secretive. So I read this point, I read this part and I left a note to myself. I was like, wait, complete transparency, transparency from a super secretive founder? Like, how long is this possible this will last? So I'm going to describe what he sets out at the beginning and of course it doesn't last long. So he says, "Jobs had adopted the policy of making all information internally available as a deliberate departure from standard operating procedure in business.

• 34:33David Senra?

  He reasoned that Next's individuals, employees, were like human cells. Each was specialized, but each one possessed a genetic code for the whole body. This organic model underlay his management philosophy," now this is a direct quote from Jobs. "We think Next will be the best possible company if every single person working here understands the whole basic master plan and can use that as a yardstick to make decisions." That makes sense if that's who you are, but you have to be who you are and that's not who he is. "The internal openness was virtually forced by the small size of Next. Starting with a handful of employees in an industry dominated by giants, Next could not begin to match the resources deployed by its much longer competition." By necessity, the company could only grow by what Jobs called "outthinking the others."

• 35:15David Senra?

  So you might ask yourself, like, how, why was Steve Jobs able to win over so many recruits against other companies like Apple, Microsoft, and IBM, all three of which were vastly more successful at this time than Next was? He says, "But here's the reason why. How many rainmakers had track records like his? An unemotional review of Jobs' past success led to the conclusion that remarkable success had been found in many people in his immediate vicinity in the past. And it was a simple step to assume that the odds favor the similar success would continue to come to those who stood by him in the future." So saying, "Hey, my success is insured just by proximity to this guy who has a great track record."

• 35:57David Senra?

  That's not really something, this is not, if you've listened to every single episode I've done, this isn't something new. If you remember Paul English, he was one of the founders of Kayak and a bunch of other companies. Tracy Kidder wrote this great book on him called Truck Full of Money. And the interesting part in the book, it's revealed, like, why did you call this book Truck Full of Money? Is because Paul had already sold, like, a couple of companies before he founded Kayak and you kind of like, they described him like falling ass backwards into success. And- He's trying to recruit a programmer who has his own company. And that programmer decides to leave the company he founded to join Paul. And he's telling his co-founder why, he's like, "Listen." He goes, "One day in the future, that dude's gonna get hit by a truck full of money,

• 36:42David Senra?

  and I'm gonna be standing next to him when it happens." So I thought, that's a story that stuck with me. It's been a long time since I read that book. And I think a lot of the people that joined Next, at its early days, assumed the same about Steve Jobs. This is a funny story, the fine line between charisma and lunacy. Because there's, you know, the book talks about, Steve Jobs did have a superpower. There is like this abstract trait that a human could have that's extremely effective with other humans. And it's charisma. But there's a fine line between charisma and lunacy. And we're gonna hear this great story about how you determine if you're following a charismatic leader, if you're following a lunatic.

• 37:26David Senra?

  So charisma, when used today to refer to a business leader, usually refers to some form of magnetism. The charisma that Jobs had, however, was more than this. "It was the power that a leader, religious or not, possesses that derives from a perceived connection to the overarching questions of human existence." And this is how he frames his mission. It's not, "I'm just starting a company." He's like, "I'm on a mission." "Jobs was not engaged in the business of selling breakfast cereal or bathroom faucets. He was not even focused on pursuit of profits. Others could pursue the mundane. He was after the much larger quarry of changing the world. Rescuing computer users from the existing prison of mediocrity. Making a dent in the universe. Carrying out revolution. Claiming an enduring place in history.

• 38:09David Senra?

  It was the extraordinary scope of his ambition that was the ultimate source of his appeal. Charismatic power cannot exist in isolation, however, without followers."

• 38:19David Senra?

  So says this guy Bryant Wilson, a student of charisma, put the matter colorfully. If a man runs naked down the street proclaiming that he alone can save others from impending doom, and if he immediately wins a following, then he is a charismatic leader. A social relationship has come into being. If he does not win a following, he is simply a lunatic. I was listening, I was taking notes on this talks. I think it was a podcast, actually, that Elon Musk was on. And he made the point, it's interesting, because now, you know, you hear it's ad nauseam. Every single person starts a company, it's like, I'm making a dent in the universe. I'm changing the world. And Elon was kind of like poking fun at this. He's like, it's extremely hard and extremely rare for people, single companies to literally make it,

• 39:05David Senra?

  like to change the world. Yet you hear everybody that has like a dog walking app that says, I'm changing the world. So I just thought it was funny that Elon pointed that out. He's just like, this is ridiculous. And a lot, a lot of this comes, you know, a lot of people, rightfully so, try to, to like, replicates the word that's coming to mind, but it's not the right meaning. Like replicate certain traits of jobs. Or they're, maybe they're inspired by him. But again, like, we could just say, hey, I have a, I have a, I started a company. It solves a problem. It's valuable because it saves you time or money, or it's useful to you in some way. Like, there's nothing wrong with just saying that. You don't have to say that, you know, this guy's saying like, rescuing computer users from the existing prison of mediocrity. Like, it's just funny. I find it hilarious.

• 39:50David Senra?

  And the idea of, you know, that if you don't find any, it is, there is an element of truth in the sense that like, the size of the fact that you can convince other people to follow you does lend credence to your charisma, but that same charisma when rejected by society makes you crazy. I don't know, I guess that's why I said it's a fine line. Okay, so here's the problem. One of the problems, I shouldn't say the problem, there's multiple problems here. Next begins with too much money and no sense of urgency. So it says, next began its life with a major, if unrecognized, problem. It had too much money, courtesy of a single person, Steve Jobs, whose plans for the company were unformed and innocent of financial analysis.

• 40:36David Senra?

  Says, "Others may have envied NeXT and the $7 million that Jobs bestowed upon it." Again, this is, I would say it's maybe counterintuitive to a lot of people. I think if you listen to this podcast, you know it's now, you should know it's not counterintuitive that starting a company with no sense of urgency and a lot of money is usually not how any of these companies in the biographies that we've covered start. But it says, "So they may have envied this, but in fact, time would show that relying upon a founder benefactor like Jobs for its financing ultimately hurt NeXT because it meant that the company did not have to face the discipline of assembling financial numbers that made sense, looking hard at itself as a business proposition and defining milestones by which it could measure whether it was on track or not."

• 41:20David Senra?

  Again, like it's, somebody gave you that, the same thing with anybody raising money as opposed to getting money from customers. Like, somebody gave you this $7 million. Now, you may be able to turn that $7 million into a product and get a return for your investors and make the company profitable, but you can't confuse $7 million from an investor or your own personal bank account as $7 million given to you by customers who want what you're selling. Those are two fundamentally different things. So not only do they have too much money, no sense of urgency because of all this money, which is bizarre, but they're also like, they have too much, he recruited a bunch of people that were previously successful with him at Apple, but they had too much belief in their own infallibility. Now, there's again, another fine line just between charisma and lunacy, but it's also

• 42:04David Senra?

  a fine line between confidence and reality distortion. And this is not the only time I'm going to share a quote with you like this. So it says, "The founders proceeded by seat-of-the-pants instincts because of the underlying feeling of invincibility that their earlier success at Apple had instilled in them. At Apple and later at NeXT, they might have liked to talk about serving ordinary people, but they themselves were not mortals. They were the gods who had created a personal computer universe out of nothingness. Jobs, for example, displayed little modesty in NeXT's press releases, describing himself as a person who had overseen the growth of Apple into a $2 billion company." Now, here's the problem, something we've talked about a lot, where like, there's a lot of people, a lot of smart people out there that believe the most, the most important cause of a company's success is actually the market you're in.

• 42:48David Senra?

  And that even if you're just an okay company, if your, if your, if your timing is right and the market wants what you're, like, the market will pull a product out of a company, right? That's a- That's actually a good description of what happened with Apple II. Like, internal company forecasts were way lower than actual sales. NeXT's the reverse. Internal company forecasts were way higher than actual sales. So, the market you're in is the most important cause of success. It's something that other people believe. This is an example of that and why I included it right after telling you that the founders that came, the other co-founders with Steve Jobs from NeXT that came out of Apple, you know, like, "Oh, we did that. We were the cause of Apple's success."

• 43:31David Senra?

  You played a role undoubtedly, but maybe you didn't even understand what the success was caused by, right? So, it says NeXT was born at what now, and this is the point. The creation of the Apple II happened a very different time period in history than the creation of the NeXT Cube. It says NeXT was born at a time at what we now see was the twilight of the early era of the personal computer. Apple II was the beginning, this is the end, right? "The Apple exiles at NeXT were pumped with adrenaline and self-confidence and unaware of how the incredible growth that the industry had experienced obscured misjudgments, which would have been fatal in any other setting. Otherwise, the demand was so high that you could fuck up. And the demand is going to paper over some of these mistakes, right?

• 44:14David Senra?

  The market in its early 1980s had been forgiving because personal computers were in such demands." That's why this act of building, especially, it's hard enough to build one successful company, but doing it over and over and over again? It's very hard. These are complex systems, very hard to tell. When you have a complex system, it's very hard to determine cause versus correlation, like, or causation, excuse me, versus correlation. And we see some of these mistakes being made by, you know, even people that were widely revered to be, you know, quote-unquote, "the best in their field," or "best at what they do." Another huge flaw in their plan. I don't understand this at all.

• 44:56David Senra?

  I'll just read my note first. So, well, let me read it after, okay? "The next employees in the fall of 1985 were clear-eyed about the problems that they faced." Okay, so now the company's up and running. They know what they want to build, they know the target market, they just don't know if they're gonna be able to do it on time. "They knew that in order to break the allegiance of university customers to establish computer lines, the next computer would have to be more than just marginally better. It would have to be an order of magnitude better." They knew that time was working against them. "They had to deliver the computer to the market by the spring of 1985 in order to be considered for fall 1987 purchases." So again, goes back to that strategic mistake that you're targeting universities, yet they only make purchases in one time of year. So if you miss that date, you push back another year, which means you have to float the company.

• 45:41David Senra?

  "Universities usually make large purchase decisions only once a year." Oh, I guess I just ran over this thing I was gonna read. "If next was late, it would not have another chance until the following academic year's purchase cycle again." Okay, so, that's a huge flaw in their plan, right? We have to make something, we have to create something that's an order of magnitude better than what already exists from other companies that have way more resources than us, and we have to do it in 18 months. What? But this is a note of myself. "Given this, why would the founder focus on interior design of office space and $100,000 logo?" Which is, again, this is the objective of the company, but where is the founder's focus? On stuff that does not matter. The interior design of your office space is a moot point

• 46:25David Senra?

  if you don't have a product that's successful. You're confusing the order of operations here. You need the product, a successful product gets you office space. Jobs reversed it. It's, "I have the best office space in the world and no product." Well, what did you think the outcome was gonna be? Like, this is kinda, I mean, again, I say it's predictable because, to us, it's predictable because we know how it already occurred. It's not at all clear, I mean, I guess it is kinda clear. In the sense like his confidence was like, "Yeah, okay, oh, I'm a freaking product genius. I need to make the product an order of magnitude better than anybody else in 18 months with no resource. I could do that easily." Now, that's proved to not be true. And I guess the cautionary tale for you is like, you may be really smart and really successful at what you do,

• 47:10David Senra?

  then just stick with what you're doing. Don't get kicked out of your company, don't try to do it again.

• 47:16David Senra?

  And again, why bet the company, there's another note of myself. Why bet the company on one thing? That seems hugely irresponsible.

• 47:25David Senra?

  He said, "He returned to the idea of the opportunity of the present moment to deliver a machine that others could not. Next had an open window that provided the perfect entree to the university market." And this quote from him, "We have been given it, and thank God we have been given it. Nobody else has done it. It's a wonderful window. We have 18 months." I guess that's one way to look at it. If they failed to deliver the machine on time, he said, "The company would fail." So why are you doing that? Why are you betting your entire company on that? And now, so now I'm going to skip forward almost a year, and now you have Jobs bemoaning the idea that like, "We stopped acting like we needed to be resourceful." Never stop acting

• 48:08David Senra?

  like you need to be resourceful. Like, isn't that like a fundamental, like, premise of running a company? Like, why, when you get fat, we know what happens when companies get fat and happy. Inevitable decline. And it's weird it's coming from Jobs because he's the one making a lot of these decisions. So, it says, "If delivering a finished machine in the spring of, by the spring of 1987 had seemed difficult to achieve in the fall of 1985," remember the beginning of their 18-month window, "it seemed even more unlikely by the time the company held its second retreat in 1986." So he titles this retreat, "The honeymoon is over." "No longer would they be able to rest on past laurels," a lot has changed in a year, apparently, "or to seek the solace of feeling victimized by the lawsuit and lost time." Lawsuits, Apple suing them. "Bottom line is the world doesn't really

• 48:52David Senra?

  care," he said. "Next was just now just another startup and would be judged henceforth by what its product was, by what its product was, which doesn't exist, by the way, at this time, and in how timely a fashion it would be delivered to market, which is several years from now. Not only was time slipping by too quickly, but so too was money." This is like, this should have been obvious from the beginning. This is why I don't understand. It's so bizarre. Jobs complained aloud that, "We're not scrounging." Yeah, you hired an interior designer as your first 10 hire. Like, come on. The company had just bought new Macintoshes instead of finding friends at Apple to buy them for NeXT at a deep employee discounts. He complained. We stopped nickel and diming for all that stuff and it adds up. So that's, you never started. Now, what he's confusing is, and something that was unknown to me until I read Michael

• 49:36David Senra?

  Moritz's book last week, was Steve Jobs was like a penny pincher like no other. He would negotiate on end with every single vendor and supplier and like he would just relentless about that at the beginning of Apple. Those are probably good traits to have at the beginning of a company. At NeXT, he didn't ever do that. And now he's complaining that we stopped nickel and diming. You never did. You're like, you did it at Apple, but you didn't do it at NeXT. And the author picks up on this. He says, "It is certainly strange, however, that the man whom Inc. Magazine would later name as Entrepreneur of the Decade, conserved his $7 million at NeXT no better than a child deposited at a candy store with a bulging piggy bank. Born too rich for its own good, NeXT was a startup that was privileged and crippled with fiscal complacency.

• 50:20David Senra?

  By the time Jobs and other senior managers awakened to the limits of the founding capital and tried to practice economies, try to basically lower expenses, it was too little, too late. The money was gone." And this is something I also didn't know. When NeXT had been founded, Jobs intended that the company would remain solely in the hands of himself and his employees. This was part of the pitch to the early recruits, that NeXT would always be employee owned. Well, when you run out of money, you can't. So now he goes around trying to get investment from venture capitalists. He wants like a $30 million valuation or something like that. Everybody says no. So he's, he's actually really screwed at this point. He's running out of money, doesn't know what he's gonna do. And there's this TV show that came and profiled him and a bunch of other entrepreneurs. It's called The Entrepreneurs.

• 51:01David Senra?

  And just how it happened, Ross Perot, the billionaire, the Texas billionaire that wanted to try to run for President of the United States as an independent like 92, sees the film and he didn't care. He's like, "I want in." And so he calls up, just as Jobs doesn't know what to do. He's getting declined for a $30 million valuation by everybody. No one wants to invest. Ross Perot's like, "Hey, I'll give you $100 million."

• 51:28David Senra?

  And this is what he said. This is Ross Perot's quote about investing in Next. And this all came from a TV show. Like, the world we live in is so strange, man. "He had made up his mind to invest on whatever terms were proposed. He did not care about the numbers. He would let the next people worry about such things. He told them, 'I pick the jockeys and the jockeys pick the horses and ride them. You guys are the ones I'm betting on, so you figure it out.'"

• 51:52David Senra?

  So, he winds up getting $126 million valuation.

• 51:58David Senra?

  Steve Jobs parlay's Ross Perot's investment. He throws in a little bit more money and then convinces

• 52:05David Senra?

  some colleges, Stanford and Carnegie Mellon, to join and invest. But, that's not the weird, I mean, that is kind of bizarre, but the weird part was this is like, he's gonna brag about something that I'm just not sure is something you should be proud of. It says, "Jobs bragged that the $126 million valuation was the highest for any company in Silicon Valley history without a product."

• 52:28David Senra?

  "Jobs' pitch was simple and impatient. 'We have built successful products in the past, and you can roll the dice on us if you want, but this remains our show and won't stand for extended investigation. What's surprising to me is a lot of people..." Ross Perot's not an idiot. He agreed to this. "Stans- ostensibly the people running Stanford and Carnegie Mellon are idiots. They also agreed to this."

• 52:48David Senra?

  "He did no better with universities than with venture capitalists, even a cursory grant, so that the valuation measured by any conventional ruler was far too high. However, Perot's blessing convinced two universities, Stanford and Carnegie Mellon, to join in and invest too."

• 53:01David Senra?

  And then, this is how Ross Perot saw Steve Jobs. To me, it's just a reminder that there's many different interpretations of the same thing and that a lot of, it seems to be like a a tenet of human nature is that we tend to see what we want to see. It's kind of dangerous when you're trying to build a company, right? I'm gonna close with a brief story, and this is Ross Perot speaking. I'm gonna close with a brief story about one interesting experience I've had. A young man, so, describing Jobs. So bright that they let him sit in the engineering classes at Stanford in high school. So poor that he couldn't afford to go to college. Working in his garage at night, playing with computer chips, which was his hobby. His dad came in one day and said, "Steve, either make something you could sell or go get a job." Sixty days later, in a wooden box that his dad made for him, the first Apple computer was created.

• 53:45David Senra?

  And this high school graduate literally changed the world. Well, that's not really what happened, though. And so the author says, "What are we to make of Perot's description of the impression that Jobs had made upon him? Smart, modest, and not of any kind of an ego trip? Steve Jobs, modest, able to contain his ego? Not even his closest friends would make such claims on his behalf." Or what about Perot's summary of Jobs vanquishing the evil giant? "This young man went up against IBM in a capital-intensive business and ate him alive." That was a quote from Ross Perot. But was that true? What happened to the instant success of the IBM Personal Computer when introduced in 1981 and a blow at Delta Apple? Who ate whom alive?

• 54:25David Senra?

  Or how could we join Perot in paying obscience to Jobs' business sagacity? The equivalent of what Perot called "50 years of business experience." When we can now look back and see that Jobs had committed the most dunder-headed? I've never even heard that word before. Blunder in modern finance. He sold off most of his Apple stock in 1985 at its absolute nadir. Instead of holding on for two more years, in which time its value would have increased eightfold. And so he talks about, he's like, "Listen, this is an interesting part." So that gave him $700 million in paper losses that could be attributed to the timing of the sale. And so he actually makes an interesting point there. He says, "Next would have to be very, very successful if Jobs were to simply recoup what he might,

• 55:07David Senra?

  what one might say he lost by liquidating his Apple holdings at an opportune time." So he could have made $700 million just by sitting on his butt and holding on to his stock instead of starting a company. But again, I don't think he was, I mean, that's an interesting point by the author's making, but I don't, it doesn't appear that Steve Jobs ever optimized just for, like, he wanted to be rich, but once you're, you know, a couple hundred million dollars rich, I don't think he was optimizing for the highest number from there. But it was an interesting, like, parallel reality for Steve Jobs if that would have happened.

• 55:43David Senra?

  Now here's more unclear thinking, which is weird because I always talk about like Steve Jobs, especially if you read like the book Creative Selection, which if you're designing products, I think you definitely should.

• 55:53David Senra?

  It's about like an Apple programmer that created, worked on creating Safari browser and then keyboard for the iPhone. But reading these books, you're like, wow, like I've never come across such clear thinking from a person. That's later Steve Jobs. This Steve Jobs is full of unclear thinking, which is really interesting. That's also inspiring in the sense that we can, this is a skill we can learn to improve. And I think it's like a meta skill. If you can, if you can clarify your thinking, like that affects all other parts of your life, you can apply it to other domains. So this is Jobs and Eschlinger, somebody worked at NeXT. "We're oblivious to the possibility that next prospective customers would be more interested in what the computer could do than how its sleek shape gave its claim to a place in Smithsonian,"

• 56:34David Senra?

  meaning they're optimizing for making the most beautiful computer on the outside. But because they've spent so much time in engineering this, they went over releasing something that was slower, it was black and white, it was, from a technical perspective, you're charging two or five, two to three times as much for something that's half as good. "Most important of all, the cube needed to be offered at a competitive price. Yet the very details that comprise its perfect appearance were chosen without heed to costs." So again, he meets with his prospective customers, which is a university, saying, "Listen, if we're going to be paying for this thing, it can't be more than $3,000. Cannot be." Steve Jobs tries to sell them a computer that's $10,000 or $12,000.

• 57:18David Senra?

  And they don't buy it because they told you it needed to be $3,000. But he spent a lot of money frivolously and that caused the price to go up when all they wanted, they really wanted like a little bit more powerful Macintosh. He could have just built that, but he wasn't interested in that. He wanted, again, make something of magnitude better, which again, it really wasn't better, though.

• 57:39David Senra?

  And I think if, if anything's been apparent by the biographies and the podcasts so far, yeah, if there was any fundamental laws of company building, I think one of them laws would have to be watch your costs, which Steve violates repeatedly in building NeXT. And here's a paragraph description of this. "Costs were not of primary concern." That one sentence sounds ridiculous. And so, "The cost of manufacturing and finishing a single cube case turned out to be higher than next's original estimates by a factor of 10. Costs escalated well beyond initial projections on all of the fronts, too. Yet Jobs could not be swayed from adjusting his course in the slightest."

• 58:23David Senra?

  So again, these are self-inflicted wounds. They told you. They're good. So here's the interesting part. In 1985, they say, "Hey, it needs to be $3,000." 18 months later, when they find out NeXT still doesn't have a computer, they're like, "Okay, that's okay. It'd be better if it was closer to $1,000." So he knew that. He was told both of those things. $3,000, and you know what? If you can make it close to $1,000, that's even better. And his estimates are off by a factor of 10 in the opposite direction. So the author makes the case. So one thing that Steve wanted to do, he was dismayed that all of electronic manufacturing was being moved from America to Japan at the time. And he's saying, "No, we're not going to do that. We're going to..."

• 59:08David Senra?

  He wanted like complete vertical integration. So he wanted to build a completely automated factory in the NeXT headquarters. And he invested heavily in this. And this is going to tell you why this is probably a bad idea, especially when you don't have a... Like, you want to manufacture your own product? You don't even know if that product's successful, right? Like, why don't you get to this later on in life? That may make sense, right? Not at the beginning. So the author says this, he calls this "the single most expensive and unwise commitment that Steve made," the fact that insisting on manufacturing computers inside NeXT. But this is how Steve Jobs goes around describing why he's doing this. And this is another "what the hell" moment.

• 59:52David Senra?

  So he said, "He compared the appeal of the NeXT computer to the appeal of purchasing a BMW. He explained to employees, 'If you're going to buy a great sports car, what's the best way to do it? You fly to Europe, go to the factory, and buy it there.'" So let me pause before I go any further. How many people on the planet are able to do this? Like, and your target market is...

• 1:00:13David Senra?

  College students. What? So you'll understand what I mean when I continue. Jobs imagined that future customers, reading college students, would do the same and fly to California so that they could watch the particular computer that they had ordered go through the assembly line. The decision to build an automated manufacturing plant in addition to simultaneously designing new hardware and new software led to an enormous drain of attention and money. So, those three things by themselves are next to impossible. He's doing them all at the same time. The investment in its own factory would also prove costly over the long term in another sense, and this is a hugely important point that the author's making. By creating a vested interest in computer hardware that would make... So you invest, you have all these sunk costs, right?

• 1:00:57David Senra?

  And we know from human psychology that it's really hard to overcome this and make a good decision. So he says, "By creating a vested interest in computer hardware that would make it much more difficult for NeXT to evaluate objectively the wisdom of continuing to market its own hardware instead of focusing on what would become its real strength, which is its software." It's weird. Who... Could you imagine? Like, how many people would want to be like, "Oh, I'm gonna order a computer. Okay, now I'm gonna fly across the country and go watch it be assembled?" What?

• 1:01:29David Senra?

  So, this is interesting. Also, like, he was bad managing at this point because he wouldn't accept bad news. So what happens when you... When people give you bad news, but it's true. So the news is true but bad, right? And you penalize them for giving you true but bad news. What are they gonna do? They're gonna give you false...

• 1:01:51David Senra?

  Good news. Or false, like, timeframes in this case. So it says, "They kept..." Like, they're trying to do their chip design, and they need... The work would take at least another year. But they had to... But because of examples I'm about to explain to you, like, they would tell Jobs, "Oh, just one more month," over and over again. "One more month, one more month." Because Steve refused to accept bad news. And why did they have to lie to him? Because he'd do stuff like this. Screaming at the head of the chip design team, "Do you realize you're killing our company?" Jobs transferred responsibility for delays to his underlings and then smeared them with his contempt. Not much thanks for working 18-hour days for the previous year. The other NeXT employees witnessed this bloody spectacle and drew the appropriate conclusions.

• 1:02:35David Senra?

  From then on, no one dared to be the one who would deliver the bad news. That's the exact opposite conclusion that you would want, right? If you're running the company, put yourself in his shoes. Don't you want to know realistically how long it's going to take?

• 1:02:48David Senra?

  More unclear, weird strategic decision-making. They go to these educational conferences. This is 1987. "We still don't have a prototype to show you. The finished product won't come anywhere close to the price you have stated you're willing to pay. But hey, here's 18 pages on how our logo was designed." What? Question mark. That's the note I left myself. At the 1987 meeting of EduCom, NeXT kept details of the cube hidden and instead distributed a beautifully printed 18-page brochure about the NeXT logo. Academics accustomed to the mean penny-pinching of nonprofit organizations, economizing that Jobs no longer could even imagine were not a good choice of an audience for telling them in such lengthy form the tale of the $100,000 logo. Why would you do that?

• 1:03:33David Senra?

  Right? Isn't it bizarre? We're in... This is like Bizarro Steve Jobs.

• 1:03:39David Senra?

  Okay, so when NeXT was finally ready to sell computers, the price was $7,000. The response... And that's like a dumbed-down, like, basic. It was really not $7,000. And then the response from the universities was, "This is not the computer you promised us. This is not the computer we wanted." And so they're going out and trying to solicit pre-orders. It says, "NeXT was open to whatever number schools were willing to pledge. But even under pressure, the advisory board could not muster orders for more than a handful of machines total." Jobs was stunned. His best customer prospects were unwilling to commit. This is what happens when you're...

• 1:04:20David Senra?

  There's no urgency and you've isolated yourself from the real-world constraints of making a profit because you've raised so much money from Steve Jobs and Ross Perot. Eventually Canon, the Japanese company, throws up a couple hundred million dollars. I think maybe like 150 million in total. And because you're then you're like, what do you mean? We're like, we have beautiful offices. We have this great machine. No one wants to buy it? I'm stunned. And you realize that like, maybe he would have picked up on this earlier because Steve himself was even having trouble positioning the machine he was building. He wasn't really sure what it was. It says, "Jobs decided to try to finesse this by thinking of his machine as a never seen before hybrid, what he called a personal workstation, providing the ease of use of a personal computer and the power of a workstation," except it didn't have that.

• 1:05:05David Senra?

  "It was a beguiling idea that neatly ignored the reality that it would be too expensive to be a standalone personal computer and too technically deficient to be an attractive workstation." Right? He's in the messy middle. "By positioning his machine as a personal workstation, Jobs would in effect double his competition. He's not only would be, he not only would be taking on all the personal computer world, like the Apples, the IBMs and all the rest, but also the workstation world, too. It was like purposely whacking two hornets' nests instead of one." So this next part talks about like, the idea of computer companies targeting the education market was not anything, was not anything new. I was taking notes.

• 1:05:45David Senra?

  If you haven't got on my personal email list, I'll leave a link in the, in the show notes. But I was taking, basically I take note anytime, obviously there's like podcasts on entrepreneurship or I've been getting, going through a lot of talks on YouTube. Like I found one of Charlie Munger's commencement addresses, like from 13 years ago or 15 years ago, something like that. And I just sent it to my email list this week. And, you know, Charlie Munger is one of the most interesting thinkers I've ever come across. And he quotes Cicero in this, in this commencement address he's giving before a bunch of, I think graduating law students at USC. And he says, one of his serious quotes is from Cicero, it says, "A man who doesn't know what happened before he was born goes through life like a child."

• 1:06:27David Senra?

  So it's Charlie saying like, the benefits of studying history. Steve Jobs studied history in the sense of like, Thomas Edison, Edwin Land, Henry Ford. But he should have also looked to see if anybody done, tried what he's exactly doing because he would have found this story right here. He says, "The pattern continued where computers and education were matched in the 1960s, with universities and colleges such as MIT, University of Michigan and Dartmouth leading the way. American higher education was for a brief historical moment caught up in a blinding vision of computer-based revolution." Talks about they had, they wanted to develop all, they had hundreds of courses that would be put on the computer. You know, very similar to what people talk about doing now.

• 1:07:08David Senra?

  And at the time, and you see how extreme this got up, that this was taking place like the, the optimism at the time. And this is in 1960s, at about the same time, a new college in Michigan purposely built its library in such a way to accommodate only a few thousand books. Leaving room for the new media of the audio visual and computer age. "It's not that we don't like books," said the architect, "it's just that they aren't the best way to transmit information anymore." Jobs was too, and that's obvious, I mean, I would take the other side of the argument easily. "Jobs was too young to have any personal memories of this earlier period. This was unfortunate because he might have done things at NeXT a bit different if he had paid attention to the history of computers and revolutionary delusions found on campuses 25 years earlier."

• 1:07:52David Senra?

  So now we're going to find out, there's an individual study. Cause obviously Steve Jobs not going to do market research. And they find out the market that he's targeting is actually small and uninterested. "From the perspective of universities, the NeXT was not really a personal computer, it was a workstation. And this market was not as big, nearly as big as Jobs had assumed." So it's, the study comes out, it's called the Staples Study. Says, "The Staples Study concluded that given its hardware and software limitations, such as the lack of color and the unfinished operating system software, the NeXT cube would not be welcoming, welcomed in the engineering and computer science departments, where workstation spending was the greatest. They had already had workstations, workstations in place that they were happy with."

• 1:08:35David Senra?

  "The grandiose overestimate, overestimate of the education market was hardly new." Going back to 1960s again, in 1966, two decades earlier, American business had rushed into expensive schemes to make a buck in education with computer aided instruction, committing a similar error of latching upon the seemingly fat numbers in education budgets, and disregarding the fact that most spending went for, went for salaries and brick and mortar construction.

• 1:08:59David Senra?

  Okay, so not only is the market small and interested, the sales process doesn't make any sense either. So this is trying to sell tens of thousands of balkanized departments turned out to have absolutely nothing to do with a leveraged model. Meaning Steve wanted to, like, when you get attention from the press, he sort of leveraged for sales, right? Like, oh, they're gonna hear about my product because the press picks it up and then they'll come to us. But that's not what happens. They have to actually build this huge sales force and they have to go to all these different departments. There's tens of thousands in the United States alone. And so that's not really leverage. That's the opposite of leverage, right?

• 1:09:38David Senra?

  So Next faced an insurmountable problem of having to spend a lot of money dispersed across a bewildering number of academic fields in order to generate extremely modest sales. By the end of 1988, Next employees had absorbed the news that few in higher education were willing to buy the machine. It was a shock to most people. Again, when you're lying to the public, those lies are internalized by your company employees. They believe what you're saying and they're like, what the hell's happening? Well, it's three years later. We've spent all this time in it. Why is nobody buying this machine? I thought we were great.

• 1:10:13David Senra?

  So at this time, they make this huge decision, okay, well, we're not going to focus on education anymore, or not as much. We're going after businesses. So they line up with this hugely successful at the company at the time, a computer company called Businessland, which in itself is going to be out of business in a few years. It goes from like zero dollars to like over a billion dollar run rate in sales in like four or five years. And then three years later, it's three or five years later, something like that, it gets basically sold for nothing. And again, this is more unthoughtful strategy, like you're expanding to business customers, but with academic features. Business customers need to do budgets, not calculus. So, and the Businessland customers were also different from Next academic customers in their software requirements. They had little need of the software that was bundled with the Next Cube,

• 1:10:59David Senra?

  which allowed them to render three-dimensional models of molecules, or to write artificial intelligence routines in esoteric languages, or to blast through Shakespeare.

• 1:11:08David Senra?

  Instead, they wanted a database program. None was available. They wanted a computer-aided design program. None was available. They wanted a good word processing program. None was available.

• 1:11:19David Senra?

  They wanted a spreadsheet like Lotus 123. None was available. And then Businessland also has a leader that gets caught up in just like fairy tales. Because they forecast, Businessland forecast sales of 150 million in NeXT computers in its first year, that they signed a contract to be its like exclusive distributors. And so they say, okay, we're gonna do 150 million in sales, just for NeXT. This is the result. NeXT did not disclose to the public that the end of 1989, Businessland had sold a grand total of 360 NeXT computers. 360 computers on a projection of 150 million. This was painful to absorb, especially for the NeXT employees who had worked at Apple,

• 1:12:03David Senra?

  which sold more than 400,000 Macintoshes in its first year after its introduction. The NeXT, and then this is a problem. Remember that factory I talked about earlier? The NeXT factory had a run rate of a fewer than 100 machines a month. Not 100,000, just plain 100. It was created to develop, to produce 100,000 computers a month. More than four, now this is a summary of where we're at in NeXT's history. More than four years after its founding, 16 months after the cube had been unveiled, nine months after announcing its partnership with Businessland, and six months after receiving the massive investment from Japanese giant Canon, the marketplace was not cooperating with the script that Steve Jobs and his associates had written for themselves. And I chuckle, it's really not funny.

• 1:12:47David Senra?

  I couldn't imagine the heartache of being in this position if you like, think about all the time and effort and money you put into this, and you sold 360 computers after four years. It's devastating. It's not, I don't mean, I'm not laughing at them. It's just, yeah, I just couldn't imagine. Like, it's heartbreaking. I mean, it's their own fault, don't get me wrong, but it's definitely, it would be heartbreaking. More problems caused by overconfidence. On the public record, Jobs would speak eloquently about how he liked to hire self-motivated people. So again, this is a different level. I shouldn't even use the word overconfidence, this is a different level.

• 1:13:31David Senra?

  So he's saying, "Hey, I only hire self motivated people. I point them in the direction they need to go and get a hell of a way." But that's not how he actually managed. In fact, Jobs could not resist doing the opposite of what he prescribed. He reserved all decisions for himself, interceding in every trivial matter. So let me give you an example of that. He's walking into the next headquarters with a group, I think that might be from Businessland, executives having a meeting about the sales process for Apple. As they're walking in the pathway, before they get to the front door, Jobs notices some gardeners outside of NeXT doing something he doesn't like. So he spends 20 minutes telling them exactly where he wants the sprinkler headers, sprinkler, like the sprinklers to go, while he just makes the executives wait.

• 1:14:13David Senra?

  Again, you're not selling any computers. Those 20 minutes, probably a better idea to work out why, like how you could do a better job in the sales process, than where the sprinklers are going to go. So that's what I mean about every trivial matter. That's just one example. Perhaps Jobs' behavior is best explained by his egoism. If no one was his equal, then it would be best to have all decisions made by the most competent person available, that is himself. But we know that it's impossible. It's impossible for one person to have all the great ideas. He believed his grasp of all functional areas of business was as sure as it was intuitive. And he saw himself as a self-taught creator of an entire industry in the same way that Henry Ford and the Wright brothers had had no formal business background.

• 1:14:54David Senra?

  Now, this is maybe arguably the craziest example of his level of confidence in himself. On a hot summer day during a hike in the Stanford Hills with a fellow employee that took them up to a vantage point from which the sprawl of Silicon Valley could be glimpsed beneath the thick smog, Jobs could look out and say, "In all apparent seriousness, I feel responsible for that." And a great description by somebody that used to work at NeXT and then left, talked about what one of their main problems was, in the sense that they would over-focus on things that don't matter and not focus at all on the things that actually do matter.

• 1:15:38David Senra?

  And he said, "They were doing little things down to the gnat's ass, while other more important matters remained out of our control." Another serious flaw in the Steve Jobs of this era is that he had, he took no ownership. If anything went great, it was his, his idea. He was the reason for success. If things went poorly, it was everybody else's fault. That's a, this is a terrible, like, no one would want to work under a person like that. So, um, after nine months of really crappy sales, he decides, was it my fault for designing a product nobody wants? Nope. It's not. It's Businessland. They're the problem. He convinced himself that he had set up a quality organization that produced a quality computer.

• 1:16:22David Senra?

  At the same time, he could not avoid seeing that his intended customers were not nearly as delighted and surprised as the company's mission statement said they were supposed to be, and that sales failed to take off even after the operating system was completed. So the only possible explanation left in his mind was that his new business partner, Businessland, was bungling the task of selling the machine. In the spring of 1989, Businessland had been hailed by NeXT as the very best of what it did. By the fall, Businessland was hopelessly incompetent, inept, incapable of selling without NeXT holding its hand in every way. Well, the question, that naturally begs a question, like, if Businessland is so incompetent, then why did you pick them? And what does that say about you? We'll never know the answer to that question, right?

• 1:17:05David Senra?

  So what do you do when your product is not, is not selling? What would, what did Steve Jobs of NeXT do at this time? Spend more frivolously, of course. Susan Barnes, which is also one of the co-founders of NeXT, in charge of finance, had voiced a heretical thought. Since the cube was not selling, perhaps it would be best for NeXT to shift back to research and development mode, pull the product from the shelves, concentrate on writing a new one, and conserve its money in the meantime. But Jobs would hear nothing of it. He felt it was best to maintain an image of success. NeXT's sales representatives were always dogged by questions concerning the company's viability, and Jobs sought to provide reassurance that the company was healthy and would be long-lived by spending in the manner of a healthy company. More buildings were leased, even though some would remain unoccupied. Weird decision, right?

• 1:17:50David Senra?

  NeXT's own direct sales force was greatly expanded with an experienced cadre of computer salespeople. Um, the travel and entertainment experiences, the travel and entertainment excesses of the staff on the road soon became legend. Even at NeXT, where the word excess was not in anyone's vocabulary, and a single month's catering bill for the company's 24-member executive staff had come to $13,000 a month.

• 1:18:15David Senra?

  Next sales figures were kept secret so Jobs could point to outward appearances and say to the world, "Does this look like a company that's not going to be around?" Eventually Ross Perot figures out what's going on and they have a huge argument over NeXT having its own factory. If you create a factory that was created to manufacture a billion dollars a year in computers, when the actual sales were in the low millions, like we needed to ditch the factory. Steve Jobs wouldn't do that. Perot winds up resigning, but he says, "The bad news about the failure to achieve profitability had to be delivered to NeXT's small board of directors and Ross Perot did not take the news well. He interrupted the presentation. So what you're telling me is the cockpit's on fire and the plane is in a tailspin. Tell

• 1:18:58David Senra?

  me something I don't know." And then this is the inevitable outcome of a company that is not a good steward of the resources. NeXT should have been, it's amazing that Steve Jobs was able to keep it alive and then swing it in Apple because it should have been dead many, many times. He says, "The company that only two years earlier had gotten an injection of $100 million from the Japanese," remember this is after $100 million from Perot too, "were once again out of money. Perot, before he left, had become extremely unhappy with the way Jobs had burned through the money, as if he or Canon or another sugar daddy would always be on him to bail him out. Perot saw that paradoxically NeXT had been hurt, not helped, by the generous funding it had been given because Jobs never had to learn how to stick to a budget. I shouldn't have let you guys have all that money," Perot told NeXT.

• 1:19:43David Senra?

  "This is the biggest mistake I made. He was not about to make it again, so NeXT could not get any more money from him, nor could it get any more money from licensing fees from IBM. The only other major partner remaining was Canon, and Canon was faced with an unsavory choice. It could either inject additional capital into NeXT or watch its $100 million investment land in Chapter 11 bankruptcy. Whether NeXT lives or died depended on what Canon decided to do." Another bad position to put yourself in. "In too deep to shut the cashier's window closed, to shut the cashier window at this point, Canon came through with $10 million and inverted disaster. That money quickly disappeared, so another $10 million had to be put in." I think after that they had to lend him like another 40 million after this too.

• 1:20:25David Senra?

  So now we get to the point in the story where it's evident. Next, computer is, it's done. Like you, you, you have to find another course. And the weirdest thing is, the best decision they made was switching from selling hardware to just software, right? But that decision didn't even come from Steve Jobs. He was forced into that, which is another like surprising aspect of, that I found out by reading the book. And part of the reason was he, he wouldn't believe things that were true that didn't, that he didn't want to. So one of his partners, I think his name's Bud Tribble. Jobs resisted switching from selling hardware to software partly because he believed there's no money in selling operating systems.

• 1:21:10David Senra?

  NeXT was near financial collapse. Compare that with Microsoft's margins. That's what the note that I have in the self, it says, "In this particular matter, Jobs should not have accepted Tribble's presentation of the facts." So Bud Tribble tells him like, because people in the company and even outside the company, like, "Why don't you just sell me your operating system? Like, that's legitimately good. It has value. Sell it to me." And Jobs refused. He's refusing to sell something that has huge marginal profits. And even though his company's near financial collapse, it's bizarre. And the point was, not only was it bizarre, but Tribble's wrong. It says Tribble's just plain wrong. "Microsoft continued to prosper from its high-margin sales of the DOS operating system and the window environment that ran between DOS and applications. In 1991, no less than 36% of Microsoft's 1.8 billion in revenue came from its operating

• 1:21:54David Senra?

  system and language software." So they're selling, you know, what is that? Close to 600, 500 million, something like that, in, in, in operating systems. Its gross margins, and this is the main point though, its gross margins in the first quarter in fiscal 1983 were 83%. That's insane. "But Microsoft was not the company that NeXT would, would best be compared to, no matter how he wished that it, that it was otherwise. Job had no realistic hope of displacing Microsoft in the operating system business." But he had, there was somebody else they could compare to, right?

• 1:22:31David Senra?

  And he says, "A more practical comparison would have been to the privately-held Santana Cru... or, excuse me, not Santana, Santa Cruz operation." Now, this is very interesting. I'd never heard of this company before, and I was having a conversation with a friend last night, because looking for like, confused about like, all the different opportunities. It's kind of hard, like, this idea that the internet has massively broadened the scope of careers, and all kind of like, especially the leveraging technology, like what, there's people that you've never heard of, building hugely profitable businesses, and like, and enjoying, like, the product they make, and some people even call them lifestyle businesses, whatever, whatever the hell you want to call them, but, like, there's just, there's no limits, like, the opportunities are out there. We're just in a weird time period, a great time period. I mean weird in the most positive way possible,

• 1:23:13David Senra?

  but this is also, like, not relatively new, because look at what Santa Cruz was making back in the, what is this, late 80s, early 90s. So, this is the company that, the author's saying, "Hey, you might not be able to do billions of dollars in sales like Microsoft, but there's tons of other companies that are selling operating systems, and they're making tons of money at this time." So, it says, "Santa Cruz Operation was a small company which sold a version of the Unix operating system to businesses that needed Unix for computers built with the same microprocessors as IBM, something that IBM wanted NeXT to do. Compared to Microsoft's DOS operating system, the Santa Cruz Operation Unix was not well-known, but it was used by businesses..." This is my point, that there's all these weird niches out there that can lead to a very profitable, successful business. Not everybody has to build a Microsoft. "But

• 1:23:57David Senra?

  it was used by businesses that needed to write customized software for uncommonly demanding tasks, and which permitted the computer user to run many separate programs simultaneously." This was exactly what the NeXT software excelled at. And Santa Cruz had a tiny company, and they were generating annual revenues of 160 million, only selling software, at high margins. So, again, if you're Steve Jobs, you want to be like, you know, Henry Ford, then you're not going to do that. But you know how many people would love to run a business that was doing 100 million in sales, 160 million in sales at high profit margins?

• 1:24:32David Senra?

  So it says, "But there was little likelihood of high visibility and glory of the power to set standards of the mainstream computer industry, let alone the likelihood of collecting billions of revenue annually like Microsoft." So to step in that direction and become an obscure Santa Cruz operation, which I really find demeaning. Like, I don't think that's, again, like, there's only going to be a handful of huge companies. Let's say you have a generation, like, there's generations of those, right? Tiny handful, maybe a couple handfuls, whatever it is. There's just, what I'm saying is, like, the opportunity to do that is a lot smaller than the opportunity to build, you know, 100 million or 200 million, or whatever the number is. Like, Santa Cruz level businesses, is what I'm saying, which are still hugely successful.

• 1:25:17David Senra?

  But for Jobs, it's like, he calls it the obscure Santa Cruz operation, or he's not calling it, but this is the author describing, like, what his opinion would have been, would be to acknowledge that NeXT would remain marginal, not in a business sense, but in a historic sense. I guess that's a better way to frame it. So he, they're not marginal business sense, it's hugely successful, but in a historic sense, you know, most people never hear them. Again, I just think optimizing for, to go down in history is like, I mean, Steve Jobs clearly did optimize for that and it wound up working out for him, but that's such a, like, a tiny percentage, like, you don't want to, we only have one life, I wouldn't waste it. Like, what, okay, so what I'm saying is, like, if you set that as your life goal, what happens when you don't hit it? You're just going to look back at your one life you have, the one experience you have

• 1:26:02David Senra?

  on this planet, as like a waste, like a regret? Like, I would just would never set myself up like that, that just doesn't make, seem to make much sense. So anyways, eventually, because he's running out of money and he's getting pressure internally and externally, the most important, this is a fascinating decision, or fascinating idea, the most important decision about the fate of NeXT didn't even come from Steve Jobs.

• 1:26:28David Senra?

  Now, this was the right decision. You could argue maybe years late, but definitely a right decision. And I just, it was amazing to me that it did not come from Steve Jobs. He would have to be pulled forcefully into ditching hardware and going to software. It says, "It took six full months of campaigning, including the appeals of Intel's Andy Grove from the outside and the continued lobbying by lower-level NeXT employees on the inside, before Jobs capitulated in the summer of 1991 and gave his blessing. He was not appreciated at the time, but it would turn out to be arguably the single most important decision that Jobs had made at NeXT, even though he didn't really make it. As sales of NeXT-owned hardware plummeted that summer and sputtered through the fall and onto, fall into, in the fall of 1992, sorry.

• 1:27:10David Senra?

  NeXT's hopes of a reprieve from oblivion shifted increasingly, later desperately, to the Intel project, which is doing software." And so that's where the book actually ends. And I could see why Randall was a little harsh on Jobs, even though I think we can learn from that. Because, you know, the book goes to publishing in 1983. And at this point, NeXT is a colossal failure. So it kind of, I guess those kind of constraints, limiting, just like I thought it was beneficial to limit the history in Michael Moritz's book, to the, you know, that seven-year window or whatever it is of the beginning of Apple. And what happens when you have a hugely successful product?

• 1:27:52David Senra?

  I think it was equally as important to do so on, literally the opposite end of the spectrum. I'm holding the Michael Moritz book in my left hand and the Steve Jobs and the NeXT book thing in my right hand, and they're literally on opposite ends of the spectrum. That's why I would read them both. Because it's fascinating to me. But I do want to end on a positive note. Because this is my favorite thing from Steve Jobs, that Steve Jobs said in the book. And it says, he's on a panel at this conference and they're talking about the computer industry. This is the early 90s and it says Jobs as the house philosopher for the for the personal computer industry, the one who made everyone feel fortunate to be working in a historically

• 1:28:37David Senra?

  significant moment. And so this is what he says. He talks about like, why is working in the computer industry a like, why should we feel for I like this perspective, by the way, feeling fortunate, like I feel the same way that I've said before, like, we're really, really lucky, especially for introverted people like myself, and I'm sure a lot of you, being alive and introverted and curious and wanting to learn, like, there could not be another more beneficial invention than the internet for that, right? And that's why I feel like we're really, really lucky to be alive in this time and being born 30 years early, like 30 years, if we were born, let's say, you know, 30 years ago, 40 years ago, like, it's completely different life. And that's a very small time in the in the

• 1:29:20David Senra?

  grand scheme of like, how long humans have been alive. So anyways, he's saying, listen, feel fortunate to be working in a historical significant moment. And I love this, this, this comparison he does here. He says, "The petrochemical revolution of 100 years ago freed mechanical energy," Jobs had said. "The information revolution just begun frees intellectual energy and will dwarf the petrochemical revolution in its impact." I think that's a beautiful thought. I don't think it's done that yet. Probably will in the future. But this is something, you know, he said this back in the 90s, which is like,

• 1:30:04David Senra?

  very prescient. Is that the word I'm looking for? Like, the idea that that he internalized this and was able to comprehend this at such a at such an early time, relative to the time we're living now is rather impressive. So that's where I'll leave the story. I can't recommend enough. I think it's really important to study this. I buy both the books. If you want to support the podcast, my work, at the same time, I'll leave a link in the show notes like I do for everything, or you can go to founderspodcast.com and you can obviously get everything there. But you can or you can go to amazon.com/4/Shop/4/FoundersPodcast. That's where I put every single book that I do for the podcast. If you buy through that link, Amazon sends me a small percentage of the sale, no additional cost to you. It's a great way to support yourself and the author and me.

• 1:30:48David Senra?

  So you support yourself by getting a great book to read. You support the author by buying their work because they spent a lot of time doing this. And you support me because Amazon sends me a small percentage of the sale and hopefully I made you aware of the book and everything. And some of the interesting things and keep in mind like, so I own the.

• 1:31:04David Senra?

  I owned the hardcover of this book, which is really interesting because I got a used copy off of, I couldn't find any new copies on.

• 1:31:11David Senra?

  On, on Amazon and I also own the Kindle version. And just to give you an idea of like that and every single podcast I do, I'm. I'm telling you about the, you're basically thinking about is like my notes and highlights is a tiny percent. I think I've been talking for like an hour and a half or something like that. And when I exported all my notes and highlights out of the Kindle version, it's 5%. It's like, it's such a tiny percentage. There's just so much information like in, in this book that it can't, and all the books. So it's, I guess my, my point is like, I've.

• 1:31:45David Senra?

  Found a lot of good books through podcasts and usually when I, when I listen to a podcast and I, and I like the podcast and I wind up buying the book that the podcast is based on. And usually, and I think it's a good proxy to determine if you're going to like the book or not, I guess is my point. So yeah, pick that up, buy as many as you want. I've been like, I basically only give books as like. If I buy somebody a gift, I'm very bad at giving gifts outside of like for my daughter and wife. But like friends, family members, they know like Christmas time, your birthday, whatever, I'm giving you books. I just think it's like the. And usually books I've read, no, almost always books I've read. So like, I don't know. I think that's a, it's like the best thing to give somebody. It's like, hey, I spent, you know, 10 hours reading this. I really enjoyed it. I thought of you for some sort of specific reason.

• 1:32:29David Senra?

  So if you have anybody in your life that you want to give gifts to, buy books and if you can, buy them from amazon.com forward slash shop, forward slash founders podcast. If you've gotten this far and you have not signed up for the misfit feed, you're missing out on half of my podcasts. I don't have ads in this podcast, so that means I rely. On the support of the people that learn from my work, they get value from my work. And the best way to support my work is just sign up for the Misfit feed. You'll get two additional podcasts every month from me, including the two free ones that I could do. Obviously, the people that sign up for the Misfits are, allow me to dedicate the time to do the free ones.

• 1:33:02David Senra?

  So in a sense, like you're getting two that no one else gets, but you also get all the free, you make it, the free ones available for everyone else.

• 1:33:08David Senra?

  And that's the best way to do it. It takes, I'll, I leave the, the link in the show notes. You can open up on your podcast player, 10 to 20 seconds. You don't even have to put in your credit card number. You can do Apple Pay, super fast. The software program I use will automatically generate the, the private feed and automatically install it into your podcast player of choice. You can be listening to all the Misfit feed podcasts in 20 seconds from now. So please do that if you get value from my work and you want to see this project continue. That's the best way. The more people sign up, the, the more the opportunity cost of doing the podcasts is basically eliminated. So if, God forbid, you're scared that this podcast would disappear one day, best way to avoid doing that is to tell your friends, sign up for the Misfit feed and then tell your friends to listen as well.

• 1:33:53David Senra?

  I would greatly appreciate it. What else do I need to talk about? So we talked about Misfit, we talked about buying books on the, the link. Oh, I haven't talked about this in, in a little while. If you, I'm so confusing.

• 1:34:08David Senra?

  Okay, so I have all these different podcast feeds, don't I? I have a Misfit feed. I have the, the main feed, the one you're listening to now. I also have a reviewer only feed. So for the life of me, I don't understand why, you know, I've been obsessed with podcasts for 10 plus years. Every, almost all of the podcast hosts will be like, hey, please rate and review because it does actually help. What I never understood is like, so a lot of people leave reviews and recommendations because they want to, but like, why don't you, we know. From studying human nature, from studying business, from studying history, like humans are governed by incentives. So why don't other podcasts further incentivize you for doing that, you know? And so my idea was like, hey, why don't I just make a private podcast feed? I'm not going to sell it.

• 1:34:51David Senra?

  I'm not going to give it away for everybody either. And it's for people that are willing to leave a review. And so if you, like, let's say you're listening to, most people listen to podcasts, like 90 something percent of the people listen to Founders. Do it on either Overcast or Apple Podcasts, right? There's other ones you can do this on, but let's say for, for Overcast. Overcast doesn't have a review function, right? But it does have a recommend function. And it's, when you're listening to this, you see that the, on your, on your podcast on the screen, you'll see like a little star. Once you tap that star, that means you're recommending this individual episode. So you tap the star, it turns gold. Take a screenshot of that, email it to me at [email protected].

• 1:35:35David Senra?

  And I will reply back with a private podcast feed. I have seven other podcasts that are available nowhere else. They're only available for people that are willing to take a minute or two out of their day to help me out. And what happens is, you know, you recommend that, Overcast will show that to more people. That helps the podcast grow, which essentially, if you don't want this podcast to disappear, you want to help grow, right? The other way, if you, if you're listening on, you know, other, other podcast apps, like Apple Podcasts, where you can leave a review. Leave a review, take a screenshot, email it to me. I'll send you that link as well with instructions on how to add it to your Apple Podcast player. You can do it really, really fast. So anyways, I'm asking you to do this because it really does help out. It helps other people find it.

• 1:36:17David Senra?

  Also, the people that actually leave detailed reviews gives me a good, like, indication of, like, I have an idea of what I'm doing here, but seeing how you interpret it is also really helpful, I guess, and how I think about it. I'm losing my voice. If you haven't already, join my private email list. You can just go to david'[email protected]. Or just click the link, enter in the email address. The email address is, or the email list is free. I'm doing an audio version now. If you want me to read my notes to you instead of read it yourself, you can upgrade. And then that actually turns into like this weird, like, mini podcast thing. I don't know.

• 1:36:58David Senra?

  People seem to like that a lot more. They like the idea of me reading to them than them having to do it. And I kind of like that, too. If I can get more information audibly. Where I can do other things, I definitely would, would, I'm doing that because I would want that as well. I guess is what I'm saying, like, that just makes more sense. It makes, it makes sense why people have said that they like it better this way, because I also like it better that way, too. All right, well, anyways, I've talked enough. I need to figure out what I'm reading for the next week, and I need to get on that as soon as possible, so we can keep this train running. Thank you very much for support. Thank you for listening. Thank you for telling your friends.

• 1:37:30David Senra?

  I guess that's it. I'll talk to you next week.