It’s easy to look at a figure like Steve Jobs or Bill Gates and marvel at the achievements they’ve accomplished. It almost seems superhuman, both in terms of the lives they’ve impacted, the wealth they’ve amassed and the power over our world they’ve leveraged. These individual people wield influence on a level approaching that of global organizations like Unicef and the UN.
A natural question then becomes: What separates a Steve Jobs from the hundreds of others who tried to do what he did? What separates Google from other web-based companies of that era of the early 2000s?
A careful study of economic history and modern and ancient philosophy shows that there are several individual circumstances coming together in each of these cases. To create a dominant and lasting company or business, it’s necessary for all the pieces to come together. What separates a Jobs or Gates from their competitors is that everything went right, from timing to talent to hard work to opportunity.
The History of Finance
The need for loans and commercial transactions has been a part of human history stretching back to Sumerian civilization, and probably back even further in some unrefined fashion. But the past 1,000 years have seen the world of finance grow from a niche market to the biggest industry in the world.
Of the top 10 companies in the world by market capitalization, 9 are some form of financial institution — 7 banks, a holding company and an insurance company. Banks, investment and insurance have become fully ingrained into the fabric of modern society, to the point where it’s impossible to imagine a world without them. Yet at one point in time, they were in their infancies.
The origin or banks and insurance came as a result of intercontinental trade in the Medieval and Renaissance eras, with the first massive banking powers being Italian merchant republics such as Florence, Genoa, and Venice. The original concept was simple — providing loans for trading expeditions and protecting investors against the potential loss of their cargo during the trading journey.
Gradually, over the centuries, the banking industry spread to more and more nations and attained greater prominence, and by the 1800s families like the Fuggers, Welsers and Rothschilds had accumulated tremendous wealth and influence through their financial companies with advanced business thinking.
The trend has continued up to the present day. If we need an indication of the extent to which financial institutions are inextricably woven into our society’s fabric, look no further than the US government spending over $1 trillion bailing out banks and financial institutions which had run themselves into bankruptcy though risky and poor decisions. Our government deemed it unthinkable for our financial companies to collapse.
The rise of the financial industry has many and complex reasons behind it, but what can’t be disputed is that the owners of banks and other financial service purveyors have become some of the wealthiest, most stable and most powerful families in the world.
Bill Gates and the Rise of the Personal Computer
Bill Gates is a brilliant businessman and programmer, and his success with Microsoft has much to do with his personal qualities. However, one could easily make the argument that Bill Gates is also one of the luckiest people ever to live. When analyzing the rise of Gates and Microsoft, it’s striking how a combination of his personal circumstances and prevailing trends in technology positioned Gates perfectly to succeed.
When Bill Gates was young, personal access to computers was incredibly rare, but Gates attended a private school that took the unusual step of purchasing an incredibly expensive early computer for its students to use. As a result, Gates was one of a handful of young people reaching maturity in the early 1970s who had extensive personal programming and computer knowledge.
Gates also timed the emergence of the personal computer impeccably. For decades, computers had been too large and expensive for personal purchase and use, but all that was changing in the mid 1970s, just as Gates was a launching his software company Microsoft. Had he been born a few years earlier, he would have missed that precise moment of time. And the same is true if he’d been born a few years later.
None of this is meant to diminish Bill Gates’ incredible business sense and intelligence, nor the brilliant people like Paul Allen and Steve Ballmer whom he surrounded himself with. But it frames a necessary context when trying to understand why Bill Gates rose to the top while others faltered or never had the opportunity.
The Early Days of the World Wide Web
In 1999, Altavista was the most popular search engine in existence and Geocities was the third most visited site on the internet. Now, it’s likely that a majority of people wouldn’t even have heard of or remember either of these companies. It’s a testament to how cruel markets can be for the pioneers.
In the mid to late 1990s, the world wide web was only beginning to enter the public consciousness. Still thought of as a niche domain, the web was going through its growing pains and trying to find its best, most user-friendly forms. For a time, certain early internet-adopting companies thrived, but in the end, were surpassed by more streamlined or better-developed products who had learned from some of the mistakes made by the earlier entrants to the market.
The diminishment and disappearance of once-proud leaders like Altavista and Geocities demonstrate that if the moment isn’t quite right or the internal business philosophies and practices aren’t optimal, it’s easy to fall from a lofty height in a relatively short period of time.
iPod and the Rebirth of Apple
The first portable mp3 player was released in 1997 by Seahan Information Systems. Companies like Rio Diamond Multimedia, Creative Technology, Cowon Systems, and Compaq all introduced mp3 players in the late 1990s and 2000.
Then, in 2001, Apple released the iPod. The former personal computer giant had been attempting to recover from a lull in the 1990s that saw them institute significant layoffs amid sliding stock prices. Steve Jobs returned to Apple in 1997 and began to steer the company in a different direction, and the iPod marked an inflection point not only in the history of Apple but the history of consumer electronics.
To say that the iPod dominated the portable mp3 player market would be an understatement. Over the time period of 2001 to 2007, iPods of various generations sold more than 100 million units, providing Apple with a massive cash cow and launching point for their transition into dominating the handheld portable device market which has become a titan in the worldwide economy.
But why was it Apple who dominated the portable mp3 market? They weren’t the first to the market — In fact, they gave their competitors a head start of nearly five years. Apple benefited from a number of advantages, some of which were within their control and some of which were outside their control.
The biggest advantage outside of their control was that they timed the market perfectly. This wasn’t because they were waiting for the right time to strike with their first iPod offering — They simply happened to finish development and production at what in retrospect happened to be the perfect moment when the market was ready to mature.
But beyond their timing, Apple also executed its product design and support flawlessly. They simplified the interface to bring in a wide net of people for whom more complicated mp3 players were a turn-off. They ruthlessly streamlined the process of acquiring music and transferring it onto the iPod. In short, they created the perfect product and released it at the perfect time. Take one of those things away, and you don’t have the story of Apple, and perhaps Apple doesn’t become the largest non-financial institution company in the world.
Elon Musk and the Importance of Timing
Elon Musk has become a paragon for many, an entrepreneur willing to disrupt industries and challenge the status quo to push the world forward. And it’s hard to argue with Musk’s track record. Not only was he involved in founding e-payment leader Paypal, but his electric vehicle company Tesla (named for Nikola Tesla the inventor) is at the forefront of the emerging electric car market, as well as pushing the boundaries of self-driving cars, which appears to be a market segment that will revolutionize the world in the coming years.
Yet Musk’s story can offer two sides to the coin — In some cases, Musk undeniably struck at the perfect time. In others, the jury is still out. It’s quite clear that Paypal was a service which matured at exactly the moment when the world of e-commerce had developed enough to desperately need it. Paypal was a well-executed idea that hit the market at precisely the moment when the market was ready for it. And it made Musk’s fortune.
Tesla has seen a meteoric rise over the past several years, and public acceptance of and enthusiasm for fully electric cars have been largely spearheaded by Musk and Tesla’s efforts. However, the final reckoning on who will dominate the auto industry over the next couple of decades has yet to come.
For all of Tesla’s rise to prominence, it’s still a minnow compared to some of the established auto companies. To give some idea of scale, Tesla brought in revenues of around $11 billion in 2017. Meanwhile, Ford tallied over $150 billion and Toyota over $250 billion in revenues. Tesla is an amazing story at its current size, but the established giants in the field are racing for their own solutions both to the affordable, mainstream electronic vehicle and the self-driving vehicle.
Will Musk be able to continue his amazing run from upstart to the top of the automobile market? It’s very much an open question at this point. It may turn out that unlike his fortuitous timing with Paypal, Tesla will prove to be an early entrant who fades away before the true market champion’s emergence. Time will tell, but some troubling recent signs coming from Tesla suggest that the road to the top may not be smooth in the near future.
Observing the rise of a new technology or new way of thinking, if we pay close attention we can see the same patterns underlying the maturation of that market or industry. Each new technology that ushers in a brand new market will have a period of immaturity where it’s possible that a brilliant and disciplined entrepreneur can jump out ahead of the curve and seize the market. This is the lesson of Bill Gates with Microsoft or Elon Musk with Paypal.
Alternatively, if the early entries into the market are weak or have fatal flaws, it’s possible that the early leaders in the industry will serve as a test case before being surpassed by a company able perfect the product or service. This is the lesson of Altavista vs. Google, or of the early mp3 players vs. the iPod.
It’s worth noting that in all of these cases, entering the market too late means there’s no chance of success. Once Google sunk its teeth into search, there’s been no real daylight for competitors in the industry for over a decade, and in the tech world, a decade is like a century. And no operating system has realistically competed with Windows in the PC realm since PCs were being widely sold.
Timing is of paramount importance. Without the good fortune and keen vision to enter the emerging market at the right time, it’s simply not possible to have the kind of success that a Steve Jobs or a Bill Gates or an Elon Musk has had. Even with all the right business practices, great team and brilliant acumen, it’s not achievable to create a disruptive giant like Microsoft if the timing isn’t right. You can build a fine company. But not Microsoft.
But Geocities and the Rio Diamond mp3 player also show us that timing isn’t enough. Timing allows for the opportunity, but to follow through on the opportunity requires repeatable business foundations and the humility and wisdom to surround yourself with a team of elite minds who can work together to fulfill whatever goal is at hand.
It’s Steve Jobs and Apple zeroing in on exactly what a personal mobile device is all about for the consumer and delivering that. It’s Bill Gates assembling a team that would create multiple billionaires. It’s Google creating a measurably-better search algorithm. In all cases, these success stories are the result of the determination, discipline, consistency in practice, and the application of proven business principles. What the great ones possess is the ability to balance optimism with realism, to see what can be while recognizing exactly what it will take to get there.
Only the next Steve Jobs or Bill Gates is able to predict the future, but it seems fairly likely that we currently are right at the beginning of a few emerging markets and industries that have the potential to be as pervasive as a search engine for the entire web or a mobile device for every person. And in those markets, it’s almost certain that we don’t currently have a Microsoft or Apple.
The fields of deep machine learning and artificial intelligence have massive implications for nearly every sector of industry and daily life once harnessed, giving us a new way of learning that we’ve never possessed before. Maybe the existing giants like Google or Apple will master that field as well, but there’s plenty of space for a leaner, more focused company to be first to the spot.
Blockchain technology and the concept of a decentralized and guaranteed-integrity virtual ledger for data have immense potential, a potential that’s only being scraped on the barest surface by cryptocurrencies like Bitcoin and Ethereum.
And of course, there are the markets that haven’t made themselves apparent to anyone but the keenest of observers. What history teaches us is that the company that comes to dominate any of those markets will take advantage of precision timing in entering that market while possessing the kind of business principles and tactics that have been employed for a thousand years or more to build giants in the business world.