’When Apple was nearly bankrupt’

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17th May, 2023

OK, so Apple is the greatest company God ever created

Apple is now at the top of the world’s tech business. Hailed as the first American company to reach USD 3 trillion market cap, which it briefly achieved on January 3, 2022.

It has arguably changed the world many times in the past 20 odd years, with its iMac, iPod, iPhone and iPad, etc etc.

So it’s strange to recall Apple, when it was on the brink of bankruptcy.

That was in 1997, when the rest of the tech industry was on a never-before high.

Apple, on the other hand, had annual losses of over $1 billion. Apple co-founder and former chief executive officer (CEO) Steve Jobs said it himself in at least one interview in 1997 that Apple was 90 days away from going broke and its entire workforce going jobless.

Its board members were trying to sell the company, but there were simply no takers.

Instead, a spate of cruel jokes were going around, like: “Why is Apple changing its URL from Apple.com to Apple.org? Because it’s a non-profit organization”.

At that point in time, a group of Silicon Valley thought leaders were asked to make recommendations on ‘How to save Apple?’

Their proposals, made in all earnestness back then, make ironic reading today. Like:

• Get out of the hardware business and compete directly with Microsoft

• Sell yourself to IBM or Motorola

• Merge with Sony, which now wants to move up into the computer business

• Merge with Sega and become a computer game company

• Relocate the company to Bangalore and reposition it as ‘the cheap computer’

• Partner with Oracle, and combine its famous technology with your user interface

Other suggestions also reflected the hopelessness of Apple’s position, as generally perceived at the time. Like: 

• Rename the company ‘Papaya’ and focus on the South Pacific market

• Rename the company ‘Snapple’ and con Quaker Oats into buying you

• Get Ben & Jerry’s to name an ice-cream flavour after you, like ‘Apple silicon chip cookie’

• Pay Scott Adams $10 million to have Dilbert fall in love with an Apple repair-lady.

But the most interesting were the recommendations that sound strange today, but which is what Apple ended up doing (albeit laterally, rather than literally). Like:

• Licence out the Apple name and technology to appliance manufacturers and design user interfaces for every possible device — from washing machines to telephones. (Hmm. Isn’t that what Apple has, in effect, done, by transforming itself from a computer company into a consumer electronics company?)

• Re-launch your famous Mac Plus as a hip retro machine. (Isn’t that what, in effect the revolutionary iMac was?)

• Don’t lose your visibility: rent space in computer stores and flood it with Apple products. (Isn’t that what Apple has, in effect, done, by launching its own Apple Stores — scoffed at by everyone at first?)

• Hire a design group like Porsche /Philippe Starck / Giorgetto Giugiaro to design a really sexy-looking machine. (Isn’t that exactly what Apple did, except that Jonathan Ive did it in-house?)

• Work with a company like Casio or HP, who really understand power management, unlike you. (Isn’t that what Apple has, in effect, done, but by becoming a leader in power management itself?)

• Start wooing independent software vendors. (Isn’t that what Apple has, in effect, done, by creating platforms that developers find really, really attractive?)

• Create a new Special Projects Group led by some really passionate designer, like Steve Jobs, to create the next insanely great technology. (Isn’t that exactly what Apple did, except that they turned the entire company into one great big ‘Special Projects Group’?)

Since then, thanks to its strategy of marrying technology, design and intuitiveness, Apple has insinuated itself into the fabric of our lives, transforming business, as well as culture, like nothing we’ve ever known before.

From near bankruptcy decades back, Apple has proved its resilience and innovative sense, even in the midst of a pandemic economy. Apple learned long ago that the best technology out there did not necessarily become the most profitable.

And, in the process, it has increased its shareholders’ wealth approximately 750 times translating to a close to 40% CAGR in shareholder wealth over the last 20 odd years.

The question going forward is: Can Apple continue to innovate? That only time will tell.

However, the Excellent lessons to learn from the Apple experience are, Stick to your task, follow your dream, believe in yourself, Don’t worry about what the people say, have conviction in your ideas & the what may seem impossible also becomes possible.

Don’t be bothered by failure,  consider it as another step in the success journey, learn from the Apple experience & stay blessed forever.