If you’re a budding entrepreneur and the VC you’re pitching switches gears and asks you about your exit strategy that’s your cue to get up and leave, says Apple CEO Tim Cook.
Cook was speaking to an audience of students and would be entrepreneurs at the opening of the Foundry startup hub in Oxford, UK yesterday. During a Q&A session at the end of a hour long conversation an audience member asked Cook how entrepreneurs should handle investors who seem to be trying to steer them towards a quick exit to a tech giant like Apple or Google.
“If you have a VC asking you that you should get up and walk out of the room,” said Cook, qualifying himself slightly by saying that at least is what he would do if he were in such a position.
“You should not be attracted to that kind of money,” he added. “Because those people are not for growing your company and helping you — they’re for a quick buck and it’s not worth it.”
In a long and at times deeply personal conversation, Cook discussed his personal background, work philosophy and sources of inspiration, including touching on his early years at Apple and his relationship with co-founder Steve Jobs.
Another discussion point was how the current culture at Apple aims to encourage employees to challenge each others’ ideas. “I think you have to allow for different opinions — and not only allow but foster them,” said Cook, although he also said there’s a line to be drawn “if you don’t treat each other with dignity and respect — you need to leave”.
“If you’re in a position where you’re deciding people’s future and you’re deciding in a biased way, you need to leave,” he added. “But I think we have to allow for disagreement.”
He was also asked to share business advice on a range of topics including starting out building a career, leadership, and sustaining customer satisfaction at scale.
“Most people if you set up a focus group will tell you small changes to the existing thing,” he said discussing his approach to balancing product design and customer satisfaction. “And so if you want to go from the stagecoach to the car somebody’s not likely to come up with the car. If you want to go from the Sony Walkman to the iPod someone’s not likely to come up with the iPod.
“But the thing that you have to do is, your focus group is yourself — you should make products that you want to use. And not just want to use but you love. And you can bet that if you love it there are many other people out there that are going to love it too. And so that fundamental thing drives Apple.
“In addition to that — because we do make mistakes on some things that we ship — and so you always want to stay close to your customers and listen to them and be very accessible to them,” he said, adding: “One of the key reasons we have retail stores is to touch our customers and hear from them.”
Cook said he gets up early because he likes to spend his first hour going through customer emails — “because I want to know what they’re saying, I want to know what they’re feeling”.
For people in the audience thinking of setting up a startup, Cook also had this to say: “Recruit the friends of yours who are not like you. If you’re in engineering make sure you get someone in liberal arts. If you’re from the UK make sure you get someone from the Middle East or from China… or wherever.
“Find people that are different from you, where the common thread is they want to change the world and they want to change the world by creating the product or service that you also want. If you can find that collection of people… that is the kernel of a successful company.”
Responding to a question about how to figure out when you should stick at a product or piece of work which appears to be failing and when to scrap everything and start again, Cook pointed to Apple’s failed Cube desktop as an example of an instance when, even with a lot of time and effort invested, the company had made a quick decision to kill off a product.
“It was a very important product for us, we put a lot of love into it, we put enormous engineering into it… It was a spectacular failure commercially — from the first day, almost,” he said. “And within three months we withdrew it. We had to look at ourselves in the mirror and say we missed this one.
“I think it’s important to be able to do that — something that you were so passionate about — and this was another thing that Steve [Jobs] taught me actually… you’ve got to be willing to look yourself in the mirror and say I was wrong, it’s not right.
“I see so many people when they commit themselves to something their pride would not allow them to say this just doesn’t work… Failure is a common thing. It’s like the common cold.”
“Steve of everyone I’ve known in life could be the most avid proponent of some position and within minutes or days if new information came up you would think he’d never, ever thought that,” he added. “He was a pro at this. And at first I thought ‘oh he really flip flops!’ and then all of a sudden I saw the beauty in it.
“Because he wasn’t getting stuck — like so many other people do when they say I’ve got to keep going on, my pride. So be intellectually honest — and have the courage to change.”
I can see uses for it everywhere. I can see uses for it in education, in consumer, in entertainment, in sports. I can see it in every business that I know anything about.
Cook was also asked for his thoughts on the most exciting emerging technologies, with an audience member listing blockchain, AI, hyperloop and quantum computing as possible examples. Cook picked a different one: Augmented reality.
“I’m incredibly excited about AR, one that you didn’t mention,” he said, naming the tech that Apple is making a big bet on via a supportive framework in its latest mobile OS. “Because I can see uses for it everywhere. I can see uses for it in education, in consumer, in entertainment, in sports. I can see it in every business that I know anything about. I see it is wide, it’s horizontal in nature.
“I also like the fact that it doesn’t isolate. I don’t like our products being used a lot. I like our products amplifying us. And I think AR can help amplify the human connection. I’ve never been a fan of VR like that because I think it does the opposite. There are clearly some cool niche-y kinda of things for VR. But it’s not profound in my view. AR is profound.”
“We will look back on this moment, or the moment we announced ARKit earlier this year, and this will be one of those things in history, I think. It’ll take some time, it doesn’t happen overnight but this is big and it’s good for humanity,” he added.
A final question raised monopolies and how dominant elements in markets might be blocking entrepreneurs — and what could be done to help?
“I’m not a big fan of regulation but when there’s any move at all towards that side I think that regulation is necessary,” said Cook.
“For us we have low marketshare, we’re about the best, not the most. But I think it’s essential that competitive markets exist. And where it doesn’t I think that is a prime role for government to step in and not only protect the consumer but also protect society at large because sometimes it can be more than about the price somebody pays for something. Sometimes that can be the least issue.”
“You’re asking a huge question that’s obviously on a lot of people’s minds right now, me included,” he added. “The regulators have to decide where in that spectrum are different companies. Each company’s in a different position so each one has to be looked at individually, instead of as a group.”