Late last week, Apple (AAPL) reported $13.5 billion in revenue for the first quarter of the year. You might be forgiven for thinking that it’s a huge multinational corporation. But here’s why – despite its impressive earnings – Apple is more like a startup than you might think. In fact, it’s the key to its success.
- It takes risks and is willing to absorb failure. Apple takes big leaps, and is OK with a fair bit of scepticism. We’re seeing it now with the iPad. But that’s not the only one. iAds is also untested. Like a startup, Apple is risk-seeking. It’s willing to release not completely finished products to test out markets. Often times, it works out. When they released the iPod in 2001, there was no shortage of critics. It was too expensive, it wasn’t compatible with Windows. Apple stuck to its guns and pushed ahead.To say that the media has come around is an understatement. The iPod is widely credited with revolutionizing the music industry. Successful startups can also be ahead of the market. When DoubleClick entered the ad space with third party ad serving technology, there wasn’t a lot of awareness about the importance of a single platform for buying, managing, and optimising display ads. Why not buy directly from individual publishers? Now, you’d be hard pressed to find anyone in the industry who doesn’t agree that third party ad serving and analytics have been instrumental in the maturity and validity of online advertising.
- It does more with less. Like startups, Apple’s innovation isn’t scattered. It’s focused on creating a strong, adaptable foundation to grow from. It uses flexible, open technology to build what it can, and only develops proprietary versions of products when it needs to. Among big companies, Apple’s support and leveraging of open source products and standards is matched probably only by Google (e.g. instead of developing their own proprietary version of a browser engine for Safari they leveraged WebKit; the original OS X is based upon the Mac kernel which is itself based on open source FreeBSD). Unlike Microsoft which created proprietary versions of web server (IIS), web browser (Internet Explorer), and mail server (Exchange), Apple provides open source version of those development tools: Apache web server, Postfix mail server, etc. Apple’s philosophy of open technology and selective proprietary development is very startup like – pick your battles, focus on those that count.
- Its CEO acts like the founder. Startups tend to be centralized and personified in the media by their founders. When you think of Apple, you immediately think of Steve Jobs. He’s not just the public face; he’s singular visionary behind most of its innovations, and its operations. Like a startup founder, Jobs is involved in product design and all company divisions. Picture the startups that have recently turned into big companies and more often than not, there’s a strong connection between that company and its founder. Take Hunch and Chris Dixon, Demand Media and Richard Rosenblatt, or AdMob and Omar Hamoui. All of these companies have strong, passionate leadership who have a commanding media presence. In contrast, most big tech companies are faceless. IBM, with more patents than any other U.S. technology company, was at one time associated very strongly with the Watson family. Today, IBM is not synonymous with a particular person – it’s a huge corporation whose identity comes more from its products than from any one spokesperson. Obviously there are downsides to the cult of personality. But for a startup traversing the minefields that lay between obscurity and broad adoption, having one bold leader often trumps watered down decisions by committee. (More on the importance of Co-Founders in a future post).
- It has “vision” and creates new categories. Startups see holes in the status quo. They disrupt current categories and create new ones. They exist to be game changers. Apple does the same thing. It saw a gap in the mobile market and, instead of working within existing confines, it created a brand new market of consumer smart phones with the iPhone. It’s rare to see an established company create new categories. More often than not, they do it via acquisition of startups (e.g. Google’s acquisition of Android). It’s this ability to see an opening and use that to create entirely new categories that sets Apple apart from its competition. We see the same thing in the startup community: Pointroll with rich media, Etsy with handmade goods, and so on.
So there’s more than one reason (actually four) why Apple is a startup. And as for the $13.5 billion in revenue? Sometimes, numbers don’t tell the full story. But unlike most startups, I guess they won’t be needing to raise capital any time soon…
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