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Apple Was Steve Jobs

I recently read with a chuckle that Apple was making a $1B investment in a Chinese company that is a version of Uber in China.  For a while now I’ve been saying that it is odd that a technology company, that is dependent upon constantly being cool and hip and relevant, is the most highly valued company on earth.  By definition, what is hip and cool must always change, and what was once hip and cool is absolutely guaranteed to not be that forever.  That is the nature of “hip and cool.”

Whenever I make this point and apply to Apple and its lofty valuation, which to me defies logic, the pushback I often hear involves pointing at Apple’s enormous (and still mostly untaxed) cash horde, which would seem to make them very strong and valuable.  However, I’ve seen many companies with huge cash hordes and have bought the stock of one or two when the market cap actually was lower than the cash position, only to learn the very painful lesson that the cash doesn’t really belong to the shareholders but instead to the management team who may have very divergent aims.  I have learned the hard way that company management would rather tear all their hair out than return cash to investors, in that the returning of cash both reduces the scale of their enterprise and thus their likely compensation, and may seem to the outside world as an admission of the limitations of their business model.  History has shown that management teams in this position will ultimately seek to deploy their company’s cash in ways that would expand their kingdom, often in areas that are at best tangential to their company’s core competency.  Unsurprisingly, this mostly ends in massive losses.

Finally, it is hard for many to grasp this, but very often a company’s greatness is tied to a specific individual, whose energy, passion, and vision is the essence of his company.  When that leader exits, it is very difficult for a company to continue as successfully.  Sometimes, as is the case with Wal-Mart and Sam Walton, the run can be longer, and sometimes as was the case with Steve Ross and Time Warner, the run is shorter, but almost always the company does not remain the same and is most often much worse off.  Steve Jobs was Apple, and his passing heralded the certain beginning of the decline of Apple.  Apple was always special because it was cool and it was visionary, and its products were simple and elegant.  The company was that because Steve Jobs was cool and visionary, and had a vision for simplicity and elegance (just look at his attire).  Tim Cook is not any of those things.

Apple valuation has declined a bunch recently.  With its cash horde it may take some time, and its stock price may bump up and down for a while, but its future is not looking rosy, and its destiny may ultimately follow that of Blackberry or Palm.

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