Steve Jobs was Influenced By These Two Engineers Who Built a $28 Billion Tech Empire Without Taking Debt — Here’re Their Rules To Build a Company
Steal These Engineers Blueprint
We are in 2009 and Steve Jobs will die in the next two years.
He is so sick that he can’t even travel with his family on vacation.
At the time, one thing on his mind was how much Dave Packard and Bill Hewlett influenced him.
He recalls in his biography that when he was 12 years old he wanted to build a frequency counter. He could look up Bill Hewlett, the founder of HP, in the phone book and call him to get parts.
Bill gave a young Steve a summer job on the assembly line assembling the frequency counter.
“Jobs said that for the past 12 years of his life since his return to Apple, he had been most productive in terms of creating new products, but the more important goal he said was to do what Bill Hewlett and David Packard had done, which was to create a company that was so charged with innovative creativity that the company would outlive them.”
I wanted to know how they built a multi-billion dollar tech empire. I read books and watched videos to discover their strategies.
Here I’ve talked about five of their unusual rules for building a company.
1. Stop blindly trusting stupid colleagues and seniors
99% of the time the advice of your colleagues and seniors has a personal agenda.
This agenda can stop you from exploring your field of interest.
This is what happened with Dave Packard.
In the spring of 1934, Dave received a job offer from General Electric. Before receiving a job offer from GE, he and his Stanford friends planned to start their own business.
It was their professor Terman who motivated them to do something of their own.
“I remember Terman saying something like: “Well, as you can see, most of these successful radio firms were built by people without much education,” adding that business opportunities were even greater for someone with a sound theoretical background in the field. That got us thinking, and in our senior year, with Terman’s encouragement, Bill Hewlett, Ed Porter, Barney Oliver, and I were making tentative plans to try to do something on our own after graduation.”
After receiving a job offer from GE, he dropped his plan to do something on his own. At the time, the country was facing the harsh consequences of the Great Depression, which resulted in a shortage of jobs.
This made him accept the job offer from General Electric(GE).
He joined GE not only because he wanted a fat paycheque from GE, but also because he would learn more about radio and electronics at GE.
“The country was then in the throes of the Great Depression and jobs were scarce. Terman encouraged me to take the GE job, pointing out that I would learn a great deal that would prove useful in our endeavour.”
What happened when he joined GE?
When we join any new place, be it our university or a new company, we seek a sense of belonging. This is the reason why new employees start to trust colleagues and seniors when they join a company. They want to feel like they are part of the community too.
If you look deeply into human behaviour, you will find that in unfamiliar environments we don’t want to stand out. We want to feel that we are part of the community. Therefore, we either follow the instructions that we are given or try to mimic others.
An unfamiliar environment also means that we lack information about who to trust and who not to trust.
But Dave Packard was not like others who simply believed what his superiors and colleagues told him.
On the first day at GE, Dave met an engineer named Mr.Boring. Mr.Boring had interviewed him at Stanford. Boring knew that Dave's interest lies in electronics.
Mr. Boring told him that there was no future for electronics at GE. He asked him to focus on generators, motors, and other heavy components rather than electronics.
“On my first day, I met with Mr. Boring, who had interviewed me at Stanford. He knew of my interest in electronics but told me there was no future for electronics at General Electric and recommended that I concentrate my work and interests on generators, motors, and other heavy components for public utility plants and electrical transmission systems.”
We have all experienced this kind of random advice at some point in the past.
This has also happened to me in the past.
My experience with my university seniors
When I was in my sophomore year at the University. I became highly interested in studying computer science. My major was not computer science. I started studying the basics of programming on my own.
I had a habit of sharing what I was doing on the side with my batchmates and college seniors.
When I told them that I was learning to code on my own. Most of them started telling me, "You are wasting your time. You will never be successful in that field. You should focus on your major.”
I used to get sad after listening to their advice. Because of their comments, I stopped learning to code for a few months.
In college, I used to get easily manipulated by what my social group thought of me.
If I had to go back in time and give me one piece of advice, it would be:
Don’t blindly trust these losers. They have never written a single line of code themselves. They don’t know how beneficial it is to learn programming.
What would have happened if Dave had taken the advice seriously?
If you consider the advice that Dave Senior gave him.
It did not make sense.
“Electronics had no future.”
BS.
If David had taken the advice seriously, he would never have built a multi-billion dollar electronics empire.
If electronics had no future, devices like televisions, computers, printers, calculators or mobile phones would have never existed.
“I have often thought of the irony of Mr. Boring’s advice because our electronics firm, Hewlett-Packard Company, has become larger than the entire General Electric Company was at the time he gave me that advice.”
2. Don’t just pass out written instructions
This is how people think companies work.
The top management of a company passes written instructions to its employees for a particular project. All employees read the written instructions and begin to carry out the instructions.
After a few days, the job is done. This kind of thinking is far from reality.
The real world is quite different from the ideal world.
In the real world, just written instruction alone can’t get the job done.
When David joined General Electric. He was put in various test departments. At the time, GE had a policy of hiring college graduates and putting them in different test departments.
“GE continued its policy, even during the depression of hiring some college graduates each year and initially putting them to work in various test departments.”
David was able to change several departments because of this policy.
Finally, he settled for the vacuum tube engineering department. His job was to make sure that the batch of twenty tubes passed the final test without any failure.
Before he joined that department, a batch of twenty tubes had failed the final test.
What did David do to make sure the tubes passed the test?
If you are in a situation where the previous attempt failed you need to try again. What are you going to do?
Of course, first, you will try to find out what could be the possible causes of the failure.
This is what David did.
David tried to find out the possible causes of failure.
He thought that the failure couldn’t be due to a management mistake, since they had passed a written instruction to the workers. He thought the failure must have happened due to the mistake of some factory worker.
He spent many hours on the factory floor.
He did different things to find out why the last batch of tubes failed to pass the test.
“I learned everything I could about possible causes of failures, and I decided to spend most of my time on the factory floor to make sure every step was done properly.”
While doing all this, David discovered a strange thing. He discovered that the engineering team’s written instructions to factory workers were not enough to ensure that each step was done correctly.
“It soon became apparent that the instructions the engineering department gave the factory people were not adequate to ensure that every step would be done properly.”
All the workers in the factory wanted to do their job properly and it was not their mistake. The tubes failed the test because the workers were missing critical information about some steps.
“I found the factory people eager to do the job right.”
That’s why David started working with both the engineering team and the factory workers.
He wanted to ensure that the engineering department's written instructions made sense to workers.
This may seem like a small thing, but it is often necessary.
Personal communication along with written instructions is always needed for a team to function properly.
The statement “Everything is mentioned in the mail” doesn’t work.
Just because one employee can understand a written instruction doesn’t mean that everyone on the team will understand it. Managers fail to understand this small but critical detail.
Two people reading the same instructions can draw two separate conclusions.
If you and I don’t understand the problem statement or come from different backgrounds, we may draw different conclusions at the time of the confusion of the same document.
Sometimes when you are working on a problem, circumstances change and written instruction needs to be tweaked and changed. But since the engineering team or senior management is not directly involved it becomes tough for a worker to make the right decision.
This is why personal communication is often necessary to support written instructions.
“That was a very important lesson for me — that personal communication was often necessary to back up written instructions. That was the genesis of what became “management by walking around” at Hewlett-Packard(HP).”
3. Unsupportive partner = = No business
“Start your own business and become a millionaire in just 30 days.”
“Start your own business and become a multi-millionaire in just 90 days.”
“If you want to own your own Ferrari, just take this course and build your next million-dollar business in just 180 days.”
You will often hear this type of start your own business and become a millionaire scam.
The reality is totally different from what these courses continue to sell us. Building a multi-million dollar business takes about 7–10 years. Sometimes you have to put in more than a decade to get a high return from the business.
In those 7–10 years, you will need constant support of your partner. If your partner doesn’t support what you are trying to build or do, you will fail. That’s why either go solo or choose a supportive partner.
When Dave and Bill were building the Hewlett-Packard company, Dave's wife supported them in building the business. Dave alone couldn’t have been able to run the entire business on his own.
There were times while building the business in which she supported him to an extent he would have never imagined.
“Lu had resigned from her job at Stanford but continued to work for the company.”
Why does a supportive partner matter?
You are going to build a business that will take more than 7 years.
The journey to build a business is not easy and is full of challenges.
Most people think they don’t need a supportive partner to build a business.
But when you’re on the journey, you’ll realize that most days you’re working alone on a computer. You won’t have friends to hang out with. You won’t be able to catch up with old friends. You won’t have time to make new friends.
There will be times when you will feel like this won’t work. At those times a partner will be there to cheer you on.
As you build a business, every small encouragement matters. Either from your customer or from someone you know.
When Dave and Lu decided to get married, Dave was still working at General Electric. Dave didn’t want to take time off because of his marriage. It was because jobs were scarce in 1938 and he didn’t dare risk his high-paying job.
Lu sacrificed her job for the marriage. She understood that to start a family together they will need Dave's job at all costs.
“She resigned her job as secretary to the Stanford registrar and took the Overland Express to Chicago, changing trains there to reach Schenectady. It was a four-day journey. It is a measure of how scarce jobs were at the time that I didn’t dare take time off from GE and risk losing my higher-paying job.”
Later, when Bill and Dave founded their company Hewlett-Packard, the growth of the company was slow in the early days. They didn’t have an adequate number of people to do all the work related to the company.
At that time, Lu quit the job she was doing at Stanford but continued to work for HP even while she had her first child. She used to do many things for the company, including interviewing potential candidates for different roles in the company.
“Lu and I began to build our family. Our first child, David Woodley, was born that October. Lu had resigned from her job at Stanford but continued to work for the company. She did everything, including interviewing prospective employees.”
When you have a supportive partner who is there for you when you are building a business, you can create a strong foundation for success.
Not only can you have emotional support, but you can also divide personal and household responsibilities.
4. Don’t build a me-too company
Take any mobile phone company out there.
Each of them is just busy copying the iPhone. Forget about any new kind of innovation. They are busy building a copy of the iPhone with a different brand name.
The marketing strategy of some of these companies is to simply compare the latest released phone to the iPhone.
They are saying things like:
“Take our phone. Our phone has all the latest features of iPhones. We’ll be launching our own watch in a year that will work with our phone just like the Apple Watch works with the iPhone.”
Losers.
How do you think our phones are going to get any better? In the coming years, every company's new mobile phone will just be a clone of the other with no added features.
It will be better if these companies try to build a phone that is different from the iPhone.
Imagine a phone that has environmental sensors. It can report on air quality, temperature, and humidity to let users know about their living environments.
When these companies try to build a different kind of phone that has new technology and is really useful. Why won’t people buy it? By designing these kinds of phones, they will push the entire industry forward.
This is what Bill and Dave did when they started Hewlett-Packard Company.
They wanted to build a company that would make important technical contributions. They wanted their company to keep innovating. They were committed to innovation.
“When Bill Hewlett And I put together the initial plans for our business enterprise in 1937, we hadn’t yet focused our interest and energies on the field of electronic instrumentation. What we did decide, however, was that we wanted to direct our efforts toward making important technical contributions to the advancement of science, industry, and human welfare. It was a lofty, ambitious goal.”
Why are companies trying to become a me-too company?
The top executives of these so-called innovative companies are not risk-takers. They are losers.
They are from elite universities who cracked some interviews and joined senior positions in these BS innovative companies.
They have not taken any risks in their lives.
Do you think that a person who has never done something new and innovative in their life will take risks with their job? No, my friend. They try to do things that have already been tried and tested. It’s the most easy way out.
Actually, it is not the mistake of the employees of these companies. These companies from the start don’t want to give jobs to risk-takers. They promote mediocrity. He who promotes mediocrity gets mediocre people.
When they copy other truly innovative companies, these things happen:
Since their competitor's product is already successful, their company can use the market validation and acceptance of the original product.
Their R&D costs get saved.
They will save money on their marketing efforts. The customer is already aware.
What happens when your company becomes a me-too company
Your company products will never stand out in the market.
Your company become just a small player in a big market.
Your customers start to think of you negatively. It’s because you’re not providing something new.
Your products will start to face strong competition. If you reduce the price of your product just to stand out. You take a step towards your death.
Bill and Dave knew from the start that they didn’t want to build a “me-too” company.
“But right from the beginning, Bill and I knew we didn’t want to be a “me-too” company merely copying products already on the market.”
They wanted to design instruments that had new technology and could be useful. For them, it meant that the new products they were going to build inside the company included new technology and could be easily marketed.
“This meant that the most important new instruments would combine new technology and demonstrate marketability.”
Many times they found themselves in situations where the product they were going to build included new technology but had no marketing capability. They sold those products to the companies that had the marketing ability.
“There were, from time to time, new development opportunities that included new technology in areas where we had no marketing capability. These we sold to firms that had the marketing ability.”
The HP company started a monthly publication in 1949 called the HP Journal. In the HP journal, the company used to describe the technology used in the development of new products. This information was helpful to their competitors, but they thought the journal's benefits far outweighed its drawbacks.
“We started a monthly publication in 1949 called the HP Journal.”
Think about this for a second.
A company literally began to give away its secret. Just because they wanted other people to know about the new kind of technology that is being used to develop products.
How much did both the two founders care about humanity? They wanted to push the entire human civilization forward by sharing technology.
“The Journal was published monthly, and often there were several issues describing a new development and its application.”
Both Bill and Dave actually wanted to contribute. They wanted to build products that had the capability to make a contribution.
They weren’t in business just for the money.
Just making money is the shallow reason for being in business. If a company is only focused on money it will never be able to make a contribution. Yes, you can make a bunch of money just by copying products like Mark Zuckerberg, but your company will never be loved.
Nobody cares about the products that Mark tries to build. Everybody secretly hates him.
If you have started a company or are going to start a company, never let your company become a me-too company. Don’t try to create another Twitter clone by copying all its features.
If you really care about blogging space, do something more interesting.
5. No investors sounds romantic — Be ready for the hellish road in the beginning
I have a habit of reading entrepreneurial books from my university days.
I had a weird habit of comparing the entrepreneurs I read about to myself.
I used to read about them and in my mind, I used to think how I would have built the same business in a better way and made more money.
One thing I used consistently during my comparison was “I would have built the same business without taking outside funding.”
What I failed to understand was the struggles of not having an investor. No investor used to sound romantic to me. But after reading about the journey of many entrepreneurs, especially Bill and Dave Packard, I can say that the journey without investors at the beginning is not easy.
When both Bill and Dave started Hewlett-Packard Company. They had no investors to support them. They have almost no money. That’s why they started working together in a garage.
“Bill had found a two-story house on Addison Avenue in Palo Alto, and Lu and I rented the lower floor. Bill, who at the time was still a bachelor, lived in a little building out back. There was also a one-car garage, and that became our workshop. ”
Not only did they have to work together in a garage, but they also had to do their job to manage their expenses. Dave had recently been married, so he had to spend time with his wife.
Imagine being in this kind of situation.
You are working for a reputed company. At the end of every month, you get a fat paycheque. You quit that job. You are married to the love of your life. You need to move to a new city to start a job, which will give you some time to build the company on the side. You have to do the job till 2-3 a.m. and start working for your company in the morning in a garage. Also, you have to manage a newly married life.
“Beginning in the autumn of 1938, my schedule was to go to classes at Stanford most mornings, work with Bill and also find time to study in the afternoon, then go up to Litton Laboratories in the evening. It helped that Charlie Litton didn’t like getting started early in the day, but instead worked until 2:00 or 3:00 A.M. Otherwise, I’m not sure how I could have juggled all this work and study and still have had time for a home life.”
Oh, man.
That’s how they both started.
It wasn’t like he had to keep this schedule for his entire life. But still, he had to follow this kind of routine for years.
Why do people go the no-funding route?
On the Internet, you will find many people who promote the no-funding route.
They hate VC money. They don’t want to start a company using money given by investors. Either they have bad past experiences with investors or they want to stay flexible and creative.
Some founders don’t want external funding because they want to control their company vision, strategy and decision-making. They don’t want other parties to make decisions for their company.
I have found that most people who say no to funding do so because they don’t want investor pressure to achieve results. They like to work at their own pace. They want to run a business where they can afford to be creative.
In an investor-financed business, there is no room for creativity.
When Dave and Bill started their company. They also wanted to stay away from debt. They knew they were in a sector with a capital requirement, but they chose to do without it.
This is why both of them started small.
They started by building small electrical devices. In the early days, they developed an exerciser to activate the muscles using electrical impulses as a project for a local businessman named Moseley.
“Neither of Moseley’s projects was put into production, but his assignments provided a little income for Bill and me…These miscellaneous jobs made us more sure of ourselves and our skills. They also revealed something we hadn’t planned but that was of great benefit to our partnership — namely, that our abilities tended to be complementary. Bill was better trained in circuit technology, and I was better trained and more experienced in manufacturing processes. This combination of abilities was particularly useful in designing and manufacturing electronic products.”
What are the things they did in the initial days?
When both of them started running the business in 1938 they had no external support. Both of them were dependent on their skills and time.
In the first year, the journey to build the company was hard, especially for Dave since he was recently married. He has to manage his job, study on the side, give time to his wife and run HP.
After running the business for almost a year, they managed to sell products worth $5,369 and made a profit of $1,563. As their business grew, they needed extra space to run the business.
They rented a small building in Palo Alto. This was the time Bill Hewlett also got married to Flora Lamson. The new location had its own challenges.
They have to do things like:
Sandbagging the front door to keep the water out.
Building an oven from an old refrigerator.
Both Bill and Dave had to wear multiple hats during that period.
They had no external support and less money so they had to do everything on their own. They were building the product, pricing it right, packaging it, shipping it, and also doing customer support.
They learned many valuable lessons during that period.
“In those early days Bill and I had to be versatile. We had to tackle almost everything ourselves — from inventing and building products to pricing, packaging, and shipping them; from dealing with customers and sales representatives to keeping the books; from writing the ads to sweeping up at the end of the day. Many of the things I learned in this process were invaluable, and not available in business schools.”
If you are going to start a business in the future and you have no funding, you have to be very patient in the beginning.
You have to do a lot of things on your own.
You will not feel appreciated as no one will be there to appreciate you except your partner. Just know that once the money starts flowing into your bank account, you will feel less worried and things will get easier over time.
Summary
Don’t blindly trust anyone, especially seniors and colleagues.
Written instructions must be backed by in-person communication.
Your partner can make or break your business.
Say no to Me-too companies.
No investor doesn’t mean there is no pain.
Name of books that helped me write this:
The HP Way: How Bill Hewlett and I Built Our Company
Steve Jobs By Walter Isaacson
None of the above links is affiliated.