The Grand Theory of Apple

Thanks to Squarespace for sponsoring this video, where you can create your own website in minutes. For many people, Apple is a confusing company: On one hand, it’s an unquestionable success – creating and then dominating entire categories of products, and making more money than any other business in the world. By far. But somehow it also seems unable to understand its customers: removing features we love, neglecting its own products, and making bizarre trade-offs we never asked for. So how can the world’s most profitable company also be so foolish? Many would say they can afford these mistakes because of their exceptional marketing.

Others see them as disorganized and distracted, really only coasting on earlier success. These feelings are everywhere on the internet, and frankly, they’re understandable. By being such a secretive company, they sacrifice the chance to explain themselves, leaving us to speculate from the outside. But theories like these only raise more questions: If the goal is simply marketing to maximize profit, why focus on so few products? They should be using their brand to sell anything and everything, like Samsung. And why remove things like the headphone jack? These are very deliberate decisions, yet they guarantee far more negative press than they make in sales of adapters. Foolish as they sound, there must be some kind of strategy here, it would take a miracle for a truly dysfunctional company to be this successful for this long. Which makes sense: companies this big aren’t driven so much by individual employees as institutional principles. So, you may hate their strategy, think they’re overpriced, and disagree with every decision they make, but by no means are they careless or arbitrary.

The only way to make sense of all this – to understand their success, predict their future, and even explain their mistakes is to figure out how they think. And just three principles are enough to explain almost everything. This is The Grand Theory of Apple. Apple is treated as a technology company, and anything else would seem ridiculous. But it would also be ridiculous to say its goals are anything like other technology companies. Their business may involve transistors and resistors, but from their perspective, this is only incidental. Technology is actually the enemy – a distraction, a source of confusion. In the ideal world, no-one cares about RAM, or even knows they’re using a computer: they’re just drawing, or reading, or talking. This may sound idealistic, but consider how much it explains: It’s why they’re obsessed with making devices thin, light, and minimalistic. Removing ports, bezels, and even buttons. It also favors some devices over others. Because from their perspective, each device is fundamentally competing in the same category. Which their executive Phil Schiller said quite openly: “The job of the watch is so you don’t need to pick up your phone as often, The job of the phone is to do more and more things such that maybe you don’t need your iPad, The job of the iPad is to be so powerful and capable that you never need a notebook, The job of the notebook is to make it so you never need a desktop” Each device has the goal of moving in this direction of smaller, less confusing technology by making it’s more bulky, confusing neighbor obsolete. They’ve been so slow to update desktops because, well, they’re the furthest from their vision of what a computer should be. There’s a huge group of fans and customers who think Apple has changed, that they’re now obsessed with making devices thinner at whatever cost. But this was always the goal, it’s just now becoming technically possible to do so. And their products may overlap with competitors now, but make no mistake: the second it’s possible to remove what they see as an unnecessary distraction, they will. And as it becomes easier to do so, they’re going to look less and less like a technology company at all. When Steve Jobs came back to the company in 1997, it was a mess: they were selling a million different products with no clear strategy. So he simplified the entire company into one simple chart. They would make only one computer for each market, but it would be really good. They’ve grown much bigger since then and they’ve had to expand that strategy. But compared to their competitors, they’re still extremely focused, to the point of leaving money on the table. Their brand alone they could sell just about anything, but they choose very selectively where to focus their attention. Even a good idea is not enough to justify their making it – they have to believe it’s huge. This constant fear of over-complicating things is what allows them to put so much time and so many resources into every project. They’re able to plan years and years ahead this way, investing in features that won’t see the light of day until far into the future. And if they decide something no longer justifies their time and attention, you wake up and poof, it’s gone. Someday that will be the iPhone. It’s not that Apple doesn’t listen to feedback, or even sometimes ask for it, but ultimately, they consider their judgement more important than yours. This may seem incredibly stupid, but it’s actually the biggest key to their success, because without it, they could’ve only been successful once. Many companies create a very successful product, but they milk it for as long as possible by giving whatever customers ask for. After Microsoft created Windows, they did exactly this. They’re obviously doing just fine, but it meant they weren’t ready when the smartphone took off. Apple does just the opposite, they’re constantly trying to compete with themselves. Any other company would kill for the success of the iPod, but Apple killed the iPod, with the iPhone. No one product lasts forever, so while it hurts to kill your own success, it’s necessary to stay on top in the long term. This means not listening to your customers asking for a better iPod, and instead creating what they don’t even know they want. This can be a really tough pill to swallow, especially in more tangible forms – the removal the floppy drive, CD drive, the old charger, home button, headphone jack, and USB-A. People were angry, often for good reason: these seem like needless sources of frustration. And you can bet Apple knows this. But they also know they’re powerful enough to survive these transitions. They can afford to lose some customers and receive some negative PR. Because the up-side is HUGE. Journalists write that these changes are signs of a problem, but the only true danger is if they stop. When they start listening to customers, they lose the chance to make the next big thing. When the iPhone is released, they’ll still be focused on improving the iPod. Because, frankly, you and I aren’t going to ask for the next big thing, we don’t know what it is. But Apple has to. To them, part of their job, the service they offer, is saying “No, we’re not going to give you what you think you want” And again, this can be incredibly frustrating, sometimes they’ve just wrong. The iPhone was late to the big phone market because for the longest time, they thought they knew better than we did. And this mentality can also create a bit of… insensitivity. But it’s a risk they have to take, because more often than not, ignoring the customer has really paid-off. A good theory not only makes sense of the past but also makes testable predictions about the future. So if these principles really are at the heart of Apple’s thinking, we can expect some specific outcomes. Firstly, if Apple is motivated more by these values than pure profits, we can expect them to keep making sacrifices that anger consumers. They’ll keep investing in the Mac until a point where they think the alternative is better, whether that be a more powerful iPad, a hybrid device, or something completely different. Before consumers are truly ready, they’ll pull the plug on perfectly profitable devices to push towards the goal of smaller, less complicated technology. And right now as we speak, somewhere in California Apple is working on something designed to kill their current bestsellers. Something designed to make their own business obsolete. This channel now has a website and it’s hosted with Squarespace. The truth is, I never really planned on making a website at all because I didn’t think I had the time: Either I’d spend a bunch of time learning HTML, CSS, and Javascript to make it look just like I wanted, or I could make it super quickly with a website builder, but it’d look nothing like I wanted. But Squarespace is the perfect solution: You don’t need to learn anything special, but they give you incredible control over the design. I’m a very picky person, I knew exactly how I wanted the website to look in my head, and I was able to make it using Squarespace. You can create an account, design your website whenever you have a few minutes, and only start paying when you’re ready to go live within two weeks. You can get 10% of your first purchase by going to Squarespace dot com slash polymatter – that’s p-o-l-y-m-a-t-t-e-r. If you already need a website, or have a project you want to get started on, this is a great way to support the channel. Thanks again to Squarespace!

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