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Steve Jobs was one of the greatest entrepreneurs of the last 100 years. Not many entrepreneurs have double-unicorn-entrepreneur status, i.e. they built two billion-dollar ventures in sales and valuation from scratch. Others in this august group are Elon Musk, who is a triple, and Eli Broad, founder of Kaufman & Broad, and SunAmerica.
But even great entrepreneurs make mistakes and we can learn from them. From the perspective of unicorn-entrepreneurship, here are three super mistakes that Jobs made and lessons for entrepreneurs everywhere.
Mistake #1: Seeking VC too early and losing control of your venture.
There are many reasons why entrepreneurs should not lose control of their venture. By losing control of the venture, you relinquish control of the wealth created by the venture, the future direction of the venture, and the leadership of the venture. Among 85 unicorn-entrepreneurs, those who got VC early and allowed the VCs to control the venture, kept about 7% of the wealth created. Those who got VC late but stayed on as CEO kept about 16% of the wealth created. Those who avoided VC kept about 52% of the wealth created.
Importantly, only 6% of unicorn-entrepreneurs attained that status by getting VC early. The rest delayed VC or avoided VC. So delay VC or avoid it if you want to keep control of the venture.
Another problem with losing control of the venture is that you could lose control over the direction of the venture. This means you do not get to pick the strategy. This can be crucial because many emerging ventures pivot to find the fulcrum of the emerging industry and ride it to domination. If, for some reason, you get VC before you have decided upon the right strategy, there may be too many cooks – all seeking to stir the broth even though they may not be qualified. Uber switched from renting limos to becoming a platform for drivers and passengers. Microsoft switched from writing code to selling operating systems. Pivoting is common but may not be possible when there are too many chefs.
Steve Jobs got VC too early and lost control of the venture. When the Macintosh faltered, his days were numbered.
Mistake #2: Recruiting a CEO who could get you fired
Jobs also made the mistake of pushing the board of Apple to recruit a professional CEO. There is often a culture clash between strong-willed entrepreneurs and “professional” VCs and/or CEOs hired by the VCs. Professionals have a common language and a shared demeanor. Jobs was not liked and did not fit with the new culture of Apple’s leadership. The board fired him.
Mistake #3: Appointing Tim Cook as successor
Luckily for Jobs, all the CEOs between Jobs I (his first run at Apple) and Jobs II (when he returned to lead Apple from the abyss of doom) were not suited to the task. When Jobs returned, he pulled off one of the greatest comebacks and turnarounds in history. And when he departed from Apple, and from the world, he left Tim Cook in charge.
The problem was that even a talented unicorn-entrepreneur would have had a tough time matching Jobs’ exceptional talent at finding the next great emerging industry and dominating it. Tim Cook is showing us that he is a professional CEO who can explain why Apple has problems (with China, with his suppliers, with the new models), but has not introduced a single new billion-dollar, unicorn businesses along the lines of the iPod, iPad, and iPhone. The old businesses are mature and competitors have caught up. Should the board of Apple, and its shareholders, demand more?
MY TAKE: Jobs should have hired a unicorn-entrepreneur to succeed him. The problem here is that a unicorn-entrepreneur who had already proven his/her talent would not have come to Apple and bowed down to the great one. So Jobs settled. And the results are showing. It is a testament to the genius of Jobs that it has taken about 7 years from his death for Cook’s weaknesses to be evident. But they have. The board of Apple should take action before Apple becomes a GE.
January 7, 2019 at 12:52PM
Forbes – Entrepreneurs