Failing Your Way to a Trillion Dollars

I have not failed 1,000 times. I have successfully discovered 1,000 ways not to make a light bulb.

We’ve all heard the famous quote from Thomas Edison – and whether it was 1,000 times, 5,000 or 10,000 (the quote varies) the message is the same: ‘he ‘failed’ any number of times but learnt from each failure until he successfully invented the light bulb.

Edison was born in Milan, Ohio in 1847. He spent most of his life in New Jersey and his inventions – the phonograph, the motion picture camera, the long lasting light bulb – have hugely influenced life today. But my question is simple: would he have been as successful if he’d been in the UK instead of the US?

Failure is celebrated in the US: it’s seen as a necessary step on the path to eventual success. In the UK, failure is all too often seen as failure. ‘Run your own business? Not working out? See, I told you it was too risky…’

I was thinking about that as I flew back from California, prompted by the news that Apple had won the race to be the world’s first trillion dollar company – that’s around £770bn, depending on this morning’s exchange rate

The Apple Computer Company was founded on April Fools’ Day 1976: 40 years later it is worth a trillion dollars. It’s tempting to airbrush the history, to think. ‘Oh yeah, they started with those cute computers and then moved on to Macs and iPhones.’

But along the way, Apple has had some spectacular failures. It’s been perilously close to bankruptcy. In the early 90s the company was in more or less continuous decline, only returning to profitability at the end of the decade. Does anyone remember the Apple Pippin? The Newton? The Macintosh Portable? The Apple Lisa, on sale for $9,995 in 1983 – the equivalent of around $25,000 (£19,200) today?

Apple’s record has not been one of continuous success: exactly the opposite. And as anyone who has seen the Steve Jobs biopic knows, there were a few personality clashes along the way…

What Apple has done so well over the last forty years is learn from failure. Every time something has gone wrong they’ve bounced back. There’s a constant drive to get better, to improve the product. Clearly it has gone wrong a few times: but it has gone right enough times to generate that trillion dollar valuation.

(Interestingly, Apple has achieved that trillion dollar valuation with the  shares selling at 15 times expected profits – that compares to 82 times expected profits for the Amazon shares which have made Jeff Bezos the richest man in the world.)

So what business lessons can we take from the company which – according to the most reliable estimates I can find – has supplied an iPhone to between 1 in 5 and 1 in 6 people in the world?

Clearly there are the obvious ones. Never stop innovating and – as with Jeff Bezos and Amazon – a clear, simple, unforgettable brand.

I was going to add a ruthless focus on delivering what the customer wants but – as Steve Jobs famously said – “People didn’t know what they wanted until I showed it to them.” Maybe the key lesson there is continuous improvement of the company’s core products.

But hidden away in the numbers from Apple’s latest figures are two other lessons we can learn.

First and foremost, the top end of your market is important: don’t be afraid to concentrate your efforts there. The recent rise in the share price came after Apple reported strong demand for its most expensive phones – that sent revenues up sharply, despite just a 1% rise in phones shipped.

Secondly, Apple had a 31% growth in their service business, which includes over 2m apps now available in the App Store. I’m going to cover the ‘subscription model’ for business in a future post, but there’s all the evidence you need. It may only be a pound or a dollar, but if a large number of people are paying it to you regularly, it can add up to something very significant.

By the time you read this I’ll be back in the States, ready for the annual TAB Conference in Denver. So once more I’ll be among people who – like Edison and Apple did – simply see failure as finding another way that doesn’t work.

I love the entrepreneurial, can-do, anything’s-possible enthusiasm in the States and the fact that the general attitude to failure is not schadenfreude but, very often, empathy. ‘Yeah, I was down there once. But I picked myself up, learned from it and look at me now. And if I can do it, so can you…’