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Comment by GeekyBear | Hacker News Reader

> “I have my own theory about why decline happens at companies,” Jobs told me: They make some great products, but then the sales and marketing people take over the company, because they are the ones who can juice up profits. “When the sales guys run the company, the product guys don’t matter so much, and a lot of them just turn off. It happened at Apple when Sculley came in, which was my fault, and it happened when Ballmer took over at Microsoft.”

https://hbr.org/2012/04/the-real-leadership-lessons-of-steve...

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I keep this clip open in a browser tab so I can go back to it from time-to-time: https://www.youtube.com/watch?v=X3NASGb5m8s

It's the same basic message from Jobs, but this time about Xerox.

Wow. I had not seen this clip before. What an insightful couple of minutes.

Thanks for sharing!

How does this apply to e.g. the Bell System?

From what I understand, their network was overengineered and they generally put out a very high quality product, and didn't need to do a lot of marketing.

They put out a high quality, overengineered, extremely expensive product that, by government mandate, had no competition. After deregulation it was clear that customers wanted a little less quality for a lot less money.

Bronson said what is intended with my now deleted post.

And considering the landfills that are filled with things that replaced "expensive" goods like a Bell phone—maybe the tradeoff isn't worth it?

I doubt any consumers then had heard about 'economic externalities' (in fact, I'm not sure enough have heard about it now).

You don't need to do any marketing when you're a government-protected monopoly and customers have a choice between having phone service with you, or no phone service at all.

But why put out a quality product then?

You can still feel pride in your work while being granted a monopoly.

I'm curious when this was recorded, but my guess is early 2000s or maybe late 1990s?

With how Apple has avoided ever becoming a monopoly in pretty much any area, and instead tries to just take the top most profitable customers, it really meshes well with this idea of not becoming a monopoly and having the company rot.

Edit: looks like this might be from Triumph of the Nerds, a series released on PBS in 1996. So before Jobs' return to Apple and Apple's turn around.

That’s an interesting thought. I always assumed they went for the upscale market because that’s where the profit margin is. But also, it does seem to let them pull in a ton of profit while not ever becoming a monopoly or the dominant player.

I think they are only the majority in tablets, right? And tablets seem to be, oddly enough, a bit stagnant.

Yes, it's more than simply going for the most profitable customers, it's about avoiding the least profitable customers so that there's still a forcing function on the company to stay on top. And also direct immediate feedback trhough loss of the high profit margin customers, when starting to fail.

Of course, this could be overthinking a plate of beans, maybe Apple just aims for a high price point and high profit margin. But if you did want to take most of the current profits, and most of the future profits, you'd ensure you got enough feedback to not become a monopoly. You'd aim to take only the high profit margin customers and intentionally ignore the lower profit margin customers to let some form of competition continue to push on you.

Don't be a tonerhead!

Reminds me of Clayton Christensen's talk at Google or argument in this article.

"Because they were taught to believe that the efficiency of capital was a virtue, financiers began measuring profitability not as dollars, yen, or yuan, but as ratios like RONA (return on net assets), ROIC (return on invested capital), and IRR (internal rate of return)...

All of this makes market-creating innovations appear less attractive as investments. Typically, they bear fruit only after five to 10 years; in contrast, efficiency innovations typically pay off within a year or two. What’s worse, growing market-creating innovations to scale uses capital, which must often be put onto the balance sheet. Efficiency innovations take capital off the balance sheet, however. To top it off, efficiency innovations almost always seem to entail less risk than market-creating ones, because a market for them already exists."

https://hbr.org/2014/06/the-capitalists-dilemma https://www.youtube.com/watch?v=rHdS_4GsKmg

Is the upshot, then, that we can steer the arguably horrible course of capitalism by changes in the tax code?

Sounds like a plan to me. (Oh, wait, because lobbying. NM.)

[Yes, I'm a yankee.]

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