If you’ve ever read any business book, you’ve read an anecdote about Apple and, more notably, its founder Steve Jobs. You’ve heard the story about how he would allegedly fire people in the elevators after asking, “What do you do?”. You’ve heard the great turnaround story about how the iPod saved the company. You’ve heard how he brought it back from within 90 days of complete bankruptcy. How he demanded excellence and refused with dogged determination anything less.
It’s really bad advice.
There’s a solid corner of the Internet and filled with business writers, podcasters, Apple bloggers, developers, designers, and others that insist the key to business is to be relentless and emulate Apple-like qualities. The biggest being “charge huge profit margins”.
I routinely encounter people who may ignore everything about Apple’s existence, but insist on the high profit margin rule. To the tune of 30% or more on everything, even commodity items whether they’re any good or not. A guy selling a few hundred dollars worth of product a month could make thousands if they just upped the price.
That’s not inherently bad, but it’s also really bad advice. Most people rationally know this isn’t the whole truth. McDonald’s wouldn’t sell as many Big Macs if it cost $12. There are limits and realities to economics. You can charge only as much as the market will bear and how amazing your product is. Most products really aren’t that great.
This price-hiking advice ignores that Apple is an exception, not the rule. It ignores that some of the best and biggest businesses in America run in the exact opposite direction: McDonalds, Wal-Mart, and Coca Cola sell and distribute goods at incredibly low profit margins, often extracting additional savings out of their suppliers in the name of lower prices. In the case of Wal-Mart, lowering prices is ever more important to their success.
Apple’s ability to generate high profits comes from having an incredibly high-demand product that’s hard to beat, and from having the resources to stand behind it with retail and online sales, support, and marketing.
Your business probably does not have that. And that’s okay. It’s okay that you don’t have sexy ads on TV. Or a team of people capable of handling every question that gets asked about your product.
I counted myself in this group for a long time and felt miserable about it. That if I wasn’t securing money left and right through 50% profit margins, I wasn’t good at business. That I was doing it wrong. That I was doomed to fail.
Over time I’ve learned there’s a lot of success to be had in all kinds of businesses. That there’s not just 1 pie we’re all dividing up. I’ve learned that it is possible for the pie to actually grow for everyone’s benefit.
Over time I’ve started to feel like developing a business with the primary focus on upper-income, high-profit, customers is akin to developing some sort of scam. The high-end payday lender, but for people who don’t notice the cost.
Of course Apple isn’t a scam, but Apple’s success has clouded our judgement about what a business can be. We’ve spent so much time idolizing Apple and Jobs that we’ve forgotten that capitalism is about more than just being on top in profits. Part of what makes capitalism work well is how it increases everyone’s quality of life over time. How it enables new technologies and advancements to be available for everyone.
Capitalism allows Apple to be on top. But it doesn’t allow for everyone to automatically reject all business practices and models other than Apple’s.
I can’t help but feel many people look at Apple products and feel like they belong to a community. And that community is somehow inherently better than any other (Android, Microsoft, etc.). While the products may be better in some ways than their competitors, the rub comes when the people start thinking they’re better.
This thought process oozes into the notion that Android users are inferior because they’re the poor person’s phone. Microsoft users are inferior because PCs are for the poor, the unenlightened, those that don’t pay attention to things like details or design or class or materials or emotion.
When in reality it’s just people who have other things to worry about. They do other things. They care about savings, sure, but they also have to go to work and pick up the kids and cook a chicken and take the dog to the vet. They’re not inferior, they’re not even necessarily poor. They’re just other people with other concerns.
Today, no one starts a business that’s considered “cool” if its model is built to help people who don’t make upper-class incomes. Even established businesses aren’t hip or interesting if they don’t drive insane margins. Maybe the only entity playing in this space that could reject this description is Amazon, and they seem to be most interesting precisely because they flat out lose money on a bunch of categories.
Apple and Jobs should rightfully be admired for a lot. They’re excellent capitalists. But you’re not Apple, and Apple isn’t you. We’re a web design company that makes modest websites for modest people. You’re a consultant in a sea of people offering the same advice. You’re a plumber who has just as much ability to fix a toilet as lots of other people.
It sounds cynical, but just like not every kid can win a medal, not everyone can be famous and revered for their work. Not everyone can be on top of their market. Not everyone can be the best at their thing. There’s always someone better than you doing something cheaper that satisfies someone.
The one thing we should have learned from Apple that gets missed, maybe because it’s not so sexy: how to keep your head down, constantly refine your work, and be humble.
