Monday, November 19, 2012

3 things Mike Markkula did as a champion of “Apple Computer” idea

“The new idea either finds a champion or dies” goes a saying. Well, let’s test it. Did Steve Jobs, the “God of marketing”, need a champion for his “Apple Computer” idea? He did! In fact, Mike Markkula, the person who first championed the idea, played a significant role as a mentor to Jobs in the initial years. “Mike really took me under his wing,” Jobs has mentioned in his biography. What exactly did Mike do? Let’s look at three things in this article.

By the time Mike visited Steve Jobs and his partner Steve Wozniak in Jobs’ garage in the fall of 1976, the duo had already formed a partnership company named “Apple Computer”, had sold almost a hundred Apple I computers and made a profit and had designed a sleeker and improved version – Apple II. The problem was that Apple needed $200,000 to go into production. They had no credibility to raise the money. Their proposal had been turned down by Bushnell of Atari (Jobs’ ex-employer), Chuck Peddle of Commodore (potential competitor) and Don Valentine (founder of Sequoia Capital). “If you want me to finance you,” Valentine told Steve Jobs, “you need to have one person who understands marketing and distribution and can write a business plan.” Mike Markkula turned out to be that person.

Vision & business plan: At age 33 Mike was a millionaire after selling his stock options at Intel after it went public and was practically retired. He got impressed by seeing Apple II demo. He proposed to Jobs that they write a business plan together. “If it comes out well, I’ll invest,” Markkula said, “and if not, you’ve got a few weeks of my time for free.” Jobs took the offer and spent several evenings and some nights at Markkula’s house. For all practical purposes, it was Markkula who wrote the business plan. Markkula expanded Apple vision to go beyond hobbyist market. He visualized that personal computers will be used by “regular people in regular homes, doing things like keeping track of your favourite recipes or balancing your checkbook.”

Investment: At the end of the business plan exercise, Mike was convinced that Apple is a great idea. In fact, he said, “We are going to be a Fortune 500 company in two years.” It took Apple seven years to get there. But more importantly, Mike offered a line of credit of up to $250,000 in return of being made a one-third equity participant. It is interesting to see what Jobs thought of Mike’s investment at that time. Jobs recalls, “I thought it was unlikely that Mike would ever see that $250,000 again, and I was impressed that he was willing to risk it.”

Marketing philosophy: Markkula wrote a one-pager titled “The Apple Marketing Philosophy”. It had three things. The first was empathy, an intimate connection with the feelings of the customer. “We will truly understand their needs better than any other company.” The second was focus: “In order to do a good job of those things we decide to do, we must eliminate all of the unimportant opportunities.” The third was impute: “People DO judge a book by its cover. We may have the best product, the highest quality, the most useful software etc.; if we present them in a slipshod manner, they will be perceived as slipshod; if we present them in a creative manner, we will impute the desired qualities.”

“When you open the box of an iPhone or iPad, we want that tactile experience to set the tone for how you perceive the product,” Jobs says in the biography, “Mike taught me that.”

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1 comment:

  1. Nice simple story that shows the importance of a champion. Even Steve Jobs needed one!!