Investopedia 20-01-2015 Andrew Beattie

Provided by Investopedia

In Oct. 2011, Steve Jobs passed away at the age of 56. He had just left the CEO post at Apple, the company he cofounded, for the second time. Jobs was an entrepreneur, through and through, and the story of his rise is the story of Apple as a company, along with some very interesting twists. In this article, we’ll look at the career of Steve Jobs and the company he founded, as well as some of the lessons there are for would-be entrepreneurs.

From Blue Boxes to Apple 

Steve Jobs got his start in business with another Steve — Steve Wozniak — building the blue boxes that phone phreakers used to make free calls all around the nation. The two were members of the HomeBrew Computer Club where they quickly became enamored with kit computers, leaving the blue boxes behind. The next product the two sold was the Apple I. It was a kit for building a PC; one that the customer needed to add a monitor and keyboard to before they could do anything with them.

With Wozniak doing most of the building and Jobs handling the sales, the two made enough money off the hobbyist market to invest in the Apple II. It was the Apple II that made the company. Jobs and Wozniak created enough interest in their new product to attract venture capital. This meant they were in the big leagues and their company, Apple, was officially incorporated in 1977. Steve Jobs was a month shy of his 22nd birthday and would be a millionaire by his 23rd.

The Roller Coaster Begins

By 1978, Apple was making $2 million in profits solely on the strength of the Apple II. The Apple II wasn’t state of the art, but it did allow computer enthusiasts to create and sell their own programs. Among these user generated programs was VisiCalc, a type of proto-excel that represented the first software with business applications. Although Apple did not profit directly from these programs, they did see more interest as the uses for the Apple II broadened. This model of allowing users to create their own programs and sell them would reappear in the app market of the future, but with a much tighter business strategy around it.

By the time Apple went public in 1980, the dynamic of the company was more or less set. Steve Jobs was the fiery visionary, with an intense and often combative management style, and Steve Wozniak was the quiet genius who made the vision work. The board of Apple wasn’t too fond of such a power imbalance in the company, however. Jobs and the board agreed to add John Sculley to the executive team in 1983. In 1985, the board ousted Jobs in favor of Sculley.

The Gap Years

Steve Jobs was rich and unemployed. Although he wasn’t working at Apple, he was far from idle. During this time, from 1985 to 1996, Jobs was involved in two big deals; the first was an investment. In 1986, Jobs purchased a controlling stake in a company called Pixar from George Lucas. The company was struggling, but their eventual success in digital animation led to an initial public offering (IPO) that earned Jobs around $1 billion at the time of the IPO.

The second was a return to his old obsession with computers, founding NeXT to create high-end computers. These were expensive machines with an operating system that represented the best attempt, yet, at making the power of UNIX fit into a graphical user interface. When Tim Berners-Lee created the World Wide Web, he did so using a NeXT machine.

Of these two deals, NeXT proved the most important, as it turned out that Apple was looking to replace its operating system. Apple bought NeXT in 1996 for its operating system, bringing Steve Jobs back to the first company he founded.

Getting Apple Back on Track

Unfortunately, the company Jobs returned to wasn’t in a very good condition. Apple had begun to flounder as cheap PCs running Windows flooded the market. Jobs found himself in the driver’s seat again in short order and took some drastic steps to turnaround Apple’s decline. The company asked for, and received, a $150 million investment from Bill Gates. Jobs used the money to ramp up advertising and highlight the products Apple already offered, while choking off R&D money in non-producing areas.

The NeXT operating system was used to create the iMac, Apple’s first hit PC in a long time. Jobs followed this up with a list of successes from the iPod in 2001 to the iPad in 2010. The years between saw Apple dominate the smartphone market with the iPhone, open up an e-commerce store with iTunes and launch branded retail outlets called, what else, the Apple Store. When Jobs stepped down as CEO, Apple was scrapping with Exxon for the world’s largest market cap.

The Bottom Line

It’s impossible to sum up Jobs’ career in a single article, but a few lessons stick out. Firstly, innovation counts for a lot, but innovative products fail without proper marketing. Secondly, there are no straight paths to success. Jobs did get wealthy very early on, but he would be a footnote today if he didn’t return to Apple in the 90s. At one point, Jobs was kicked out of the company he helped create for being hard to work with. Rather than change, he bided his time and then took over again, except that his attitude was seen as part of his genius.

There is much more that can be learned from the life of Steve Jobs, as there is in the life of every entrepreneur. The sheer hubris of the entrepreneurial spirit, the idea that you can do something bigger and better than it has ever been done before, always bears watching and studying, whether in order to imitate or just to marvel at what that hubris can create.