I bet you’ve made some pretty big mistakes. But have you ever made a billion-dollar mistake?
If not, then rest easy: the world’s smartest and most successful entrepreneurs have made mistakes far greater than yours. One even made a decision that cost him $45 billion. Learn from their mistakes today so that you don’t repeat them tomorrow.
#1: Steve Jobs giving up control of Apple
Today, we all know that Steve Jobs was one of the greatest CEOs of all time. Between 1997 and 2011, Steve Jobs’ charisma, leadership, and eye for new ideas helped Apple make a lot of money. But in the beginning, even Steve didn’t know that he was destined to be CEO of the company that he founded.
Jobs gave up executive control of Apple Inc. in 1977 as a result of that uncertainty, which led to his termination by the business he founded.
Slipping out of his grasp
Steve Jobs and Steve Wozniak were the only ones who owned Apple until Jobs talked Mike Markkula out of retiring in 1977. Markkula was an experienced business owner and angel investor who gave Apple the money and business advice it needed.
It was the beginning of Jobs losing control of his own company. By the time Markkula stepped down as CEO in 1983, Jobs wanted control back. He was ready to be CEO. The only problem was that it was no longer Steve’s decision, and the board at Apple Inc. wasn’t too keen on hiring a 28-year-old to run the fast-growing company.
Powerless, Jobs agreed to recruit John Sculley, who was currently the head of Pepsi-Cola. Sculley took the job, but a power struggle between the two strong-willed men ensued.
When the conflict reached a breaking point, Markkula sided with Sculley. Steve Jobs was fired from Apple Inc. in 1985. Sculley had this to say:
Looking back, it was a big mistake that I was ever hired as CEO. Steve did not choose me as his first choice for CEO. He was the first choice. The reason why I said it was a mistake to have hired me as CEO is that Steve always wanted to be CEO. It would have been much more honest if the board had said, “Let’s figure out a way for him to be CEO. You could focus on the stuff that you bring, and he could focus on the stuff he brings.” –John Sculley, former CEO of Apple Inc.
Without Steve’s unique vision, Apple soon began to falter. A string of failures in the early 1990s opened the door wide for competition, specifically from Bill Gates and Microsoft.
Steve Jobs wasn’t the most experienced choice for CEO of Apple, but he loved and understood his company better than anyone on the planet.
If you want your startup company to grow, you have to give up some control. But be careful about how much control you give and to whom you give it. But be careful about how much control you give and to whom you give it. You don’t want to be in Job’s position, betrayed by the very person you put in power.
#2 Bill Gates Ignoring Search Engines
Gates has shown himself to be a visionary by starting a computer software company (Microsoft) in 1975, creating the first graphical user interface (Windows 1.0) in 1985, and introducing millions of Americans to the Internet (Internet Explorer was included with Windows 95) in 1995.
But by 2005, it was clear that Bill had failed to predict a billion-dollar opportunity: the search engine.
Walking Past a Gold Mine
“Google kicked our butts.”
Bill Gates, former CEO of Microsoft
Microsoft introduced MSN Search in 1998, the same year that Larry Page and Sergey Brin founded Google. Google was fast, innovative, and good at delivering relevant results. MSN Search was none-of-the-above.
Microsoft hadn’t even bothered to develop a search engine of their own. They used results from Inktomi, an existing search engine. Searching simply wasn’t a priority. Microsoft was more focused on defeating Netscape Navigator in a battle of the browsers.
Still Searching for Results
By 2002, it was painfully obvious to Gates that searching had been a big missed opportunity. Google had earned $348 million in revenue that year. A year later, in 2003, Google almost tripled its revenue to $962 million. Finally, Microsoft started developing a search engine.
The company launched Windows Live Search in 2006, but it failed to compete with Google. In 2009, Microsoft rebranded once again and introduced Bing. Billed as the first “decision engine”, Bing has taken a small bite out of the search market, but it hasn’t been cheap. In the fiscal year ending June 2011, Bing cost Microsoft $2.5 billion more than it earned.
In 1998, no company had more leverage online than Microsoft. Imagine if Gates had prioritized the development of a great search engine back then: Google would probably be the world’s second-biggest search engine.
But since Gates owed all of his success to software, it isn’t surprising that he overestimated the importance of Internet Explorer. Bill said it best himself:
Success is a lousy teacher. It seduces smart people into thinking they can’t lose.
As long as the world is spinning, your industry will keep changing. Just because a strategy worked for your business in the past, don’t count on it being the best method today.
#3 Larry Page Missing Out on Social Networking
Google has done so much right since Larry Page and Sergey Brin founded the search engine in 1998. They’ve monetized carefully, kept things simple, and expanded their services (e.g., Google Maps, YouTube, and Gmail).
But just as Bill Gates failed to capitalize on an opportunity to dominate search, Page missed an equally massive opportunity to dominate the coming web revolution: social networking. The worst part is that Page saw the potential of social networks, but he simply didn’t act on it.
Friendster: The Google Network That Wasn’t
Google had offered $30 million to buy the social networking site Friendster in 2003. But Friendster didn’t sell. Larry Page should have used his position as “president of products” to start developing a Google social network right then and there.
But he didn’t. Google didn’t roll out Google Buzz until February 2010. Buzz was discontinued in 2011 to make room for Google Plus, which has also struggled to make a dent in the market.
Looking back on the missed opportunity, Page has expressed regret: “I clearly knew that I had to do something, and I failed to do it.”
Can you imagine if Google had used its team of developers, mountain of resources, and hundreds of millions of users to launch a social network back in 2004? Facebook wouldn’t have stood a chance. Instead, Google is on the outside looking in.
Page says that he “knew he had to do something” with social networking. But after Friendster declined to be bought out by Google, Page temporarily gave up on Google having a social network.
Don’t make the same mistake. Next time you absolutely know your business is missing out on a big opportunity, stop at nothing to capitalize on it.
#4: Mark Zuckerberg Decides to Be the Face of Facebook
Nobody can call Mark Zuckerberg stupid. It took great vision for Mark to imagine Facebook in 2004; it took analytical genius to turn it into reality. But nobody can call Mark charismatic either.
Mark is a strong-minded individual. He tends to be very blunt and a little bit arrogant. That’s why it’s surprising that Zuckerberg chose to be the public face of his company.
Mistakes, miscues, and misunderstandings
“I just killed a pig and a goat.” Mark Zuckerberg, CEO of Facebook. The above sentence stirred up a small controversy when Zuckerberg posted it on his personal Facebook page in May 2011.
Animal lovers found it offensive—even though Zuckerberg was only killing animals because he wanted to reinforce that “a living being has to die for you to eat meat.” These types of misunderstandings have marred Zuckerberg’s PR career.
Of course, Zuckerberg’s most memorable (and perhaps most damaging) portrayal in the media was in the 2010 film The Social Network. The fictionalized account of Facebook’s rise to online dominance characterized Zuckerberg as ruthless, callous, and cocky—not exactly qualities you want associated with the face of your company.
“Basically, any mistake that you think you can make, I’ve probably made or will make in the next few years.”
Mark Zuckerberg, CEO of Facebook
Zuckerberg is getting better at PR. Lately, he’s been almost charismatic. And obviously, Facebook is doing just fine with him as the face of the company. People will continue to love Facebook as long as it’s the best way for them to connect with their friends online.
But had Zuckerberg stayed in the shadows and allowed a silver-tongued “Steve Jobs type” in the spotlight, Facebook would have had a clearer message and a better brand. The world’s biggest social networks would be more trusted, more loved, and, simply put, cooler.
So, as your company grows, remember that you may not always be the best person for the job. Play to your strengths and, in the words of Warren Buffett, stick to your “circle of confidence.”
What’s the common thread?
Steve Jobs’s mistake left room for Bill Gates to dominate the personal computer industry. Gates’ mistake left room for Larry Page to dominate the search engine industry. Page’s mistake left room for Zuckerberg to dominate the social networking industry.
Before long, we’ll be talking about the entrepreneur who capitalized on Zuckerberg’s mistakes.
That entrepreneur could be you. Start keeping a close watch on the leaders in your industry with an eye for the opportunities they’re letting slip through the cracks.
If you don’t, then you’re making a big mistake.