John Sculley was the President of PepsiCo between 1977 – 1983. After he quit Pepsi, John joined Apple as their CEO and continued in the role for a decade. After leaving Apple, John has been mentoring and investing in companies as a Partner at Sculley Brothers. At the recent Young Turks conclave, he spoke at length about Steve Jobs, entrepreneurship, brand building and opportunities for India. Below are the edited excerpts of his conversation with Shereen Bhan, managing editor, CNBC TV18:
Now that you are mentoring entrepreneurs, what are the mistakes that entrepreneurs commonly make?
Most young entrepreneurs make exactly the same mistake that I have made. And that is I can do it better myself. The most important thing you have to learn as an entrepreneur is building a team. It is about recruiting the best team and then get them to believe what you believe in. You have to get the people around you have the same passion as you do for the venture. It is also important to get the right people on the team sitting on the right seats on the bus. But the temptation that most entrepreneurs encounter is to do it all by themselves.
What are the challenges of building a brand around price? A lot of the entrepreneurs in India go down that road of building a brand around price.
The biggest challenge is low margins. If you want your company to survive, you need to have reputation. You need to have a business model that gives you enough flexibility to invest in customer experience. And if you try to cut too many corners to get things out at the lowest price, you will end up becoming a commodity and it is pretty hard to build a sustainable business around a commodity strategy.
What are some of the future technologies that you are excited about?
If you look at the consumer electronics industry, there has been tremendous innovation going on in the sector in the last one decade. I think wearables is going to be one area where all the existing leaders in the category will try to find a place in. I think we are in for a decade of innovation in wearable technologies, and these are not just about cool glasses or watches, but various products that can solve several problems.
You have worked very closely with Steve Jobs. What was he like? What drove Steve Jobs to make Apple what it is today?
I spent 3 years with him, 7 days a week. Very often I would go with him for walks at 1a.m. in the morning around Stanford campus, and spend hours together, and not once did he ever talk about making money. He was never interested in making any personal wealth. What he was interested in was, as he would call “a dent in the universe”. He had a noble cause and the noble cause was to change the world. He had an ambition, strategy and vision which shapes around the idea that he can build a bicycle for the mind. He had the vision of building very easy to use personal computers. He used to talk about Zoom Out: Connect the Dots and Zoom In: Simplify.
I remember we were working on Mac phones back in late 1984. Steve was thinking about those kinds of products back then. He used to say, the most important things are not the things you build but also the things you don’t build. He was rigorous in the discipline of simplifying. Bill Gates used to come quite often to see Steve that time, and both of them would sit for hours and argue over things. I would watch these two geniuses who have such different views about how the computer industry would evolve. Steve was all about perfection, no compromises, he was not concerned about being the biggest company in the world. He wanted to build the most perfect company in the world. Bill was all about land grab. Both of them were right though. Both of them built incredible companies. Here were two entrepreneurs, both knew where the world was going, but very different ideas of how to get there.
Today there is a lot of concern about Apple planning to do a cheaper phone or a laptop. Do you think that is a compromise of Steve’s vision?
I don’t think it would be a compromise to come out with a broader product line. I don’t think they will get into the $100 range of smartphones. What I would imagine is, and I have no insider information — they would improve their top range of products. One thing about Apple is they have these fanboys – as I always say sell to the people who love us. For example when they came up with iPad mini, everyone who had an iPad went out and bought a mini as well. If Apple comes up with a higher end phone with a bigger screen etc, you will see a lot of install base go and buy a further higher end phone. Now they also have a trade-in program, so they can start to sell those in markets where price is really important. Apple is like BMW, and BMW doesn’t compete with the lowest price brands. I think Apple will do just fine. Tim Cook has done a terrific job of setting up the stage for some exciting products next year. I don’t think there would be a creative leap in the smartphone industry, and the industry is maturing and is stabilizing right now. But I am sure we will see a creative leap from Apple maybe a TV or a wearable.
Who has the potential to be the next Apple?
I would say it in a different way. Is there anyone out there who is the next Steve Jobs. I think Jeff Bezos is pretty close. He is very smart. He is extremely creative. He has completely reinvented the way in which commerce is done online. AWS is a very smart move as well. Bezos is in a different industry, but he is probably the closest to Steve. And there tons of other people who are doing very interesting stuff. In fact, Apple has got great talent too. The media makes a terrible mistake by saying that Apple cannot be innovative anymore, they will all be proved wrong soon.
What is the opportunity for India?
I have been coming here 2-3 times a year since 1996. So I have seen the changes in India happen. The most exciting one is the emerging middle class. This middle class wants houses, cars, motorbikes, fashion clothing etc just like in the US or Europe. I think there are going to be many many successful businesses in India focused on this segment.
However, the hardest thing in India is to get working capital. That is one of the reasons why my partners and I are investing in India. We think we have some novel ways of bringing working capital to India particularly in supply chain and distribution industry. You can borrow money for infrastructure, for oil and gas, you can borrow money for real estate, but it is really hard to borrow money at reasonable rates for these kinds of products and services for middle class. Whenever I see these kinds of problems, I always say there has got be a better way.
Advice for Indian entrepreneurs
It is about doing the non obvious. It is about having big curiosity. It is about willingness to take risks. It is about failing and picking yourself up, trying again. It is about never giving up.
I think the reason why India has not yet seen its own Google or Facebook or Apple is because in Silicon Valley we give permission to fail. In Silicon Valley failure is a part of the experience. I am not sure if you have that much latitude to fail here in India.
I think it silly to think that innovation will only happen in Silicon Valley, we will see incredible innovation from Asia, this is where all the growth will be for the economy. I think lack of role models and cultural dogma about failure are two factors hindering the speed of this.