Business Lessons for FAANG, from FAANG — Apple!
Wall Street is always buzzing with opportunities, scouting companies, and ventures to bet on making billions in the process. To develop a scientific hypothesis, they scrutinize each and every aspect of the company ranging from, but not limited to ,— leadership, product market fit, competitors, uniqueness and scale of the product/service.
Well, initially all these ventures have the same promises and the same nimbleness. Whether the venture is going to transform the lives of many and generate huge returns for the early investors is determined by the Permutations and Combinations (PnCs) of many factors. And every once in a while, these PnCs help craft exalted corporations — fondly termed as FAANG by the Wall Street.
Investors have a thing for using acronyms to express investment themes which led to the birth of FAANG — Facebook, Amazon, Apple, Netflix and Google. Very few companies have managed to garner this kind of attention from the Wall Street and derservingly so. After all, together with Microsoft, these companies accounted for 50% of the gains for S&P 500 in 2018, as well leading the recent declines.
Today’s unstoppable juggernaut of famous companies is the result of a mash-up of previously disconnected industries. Only a very select few individuals, even the legendary Warren Buffet failed here, were able to forecast these disparate areas culminating into new industries that rule our lives today and those who’ve been successful are in the league of Peter Thiels, Vinod Khoslas, and Sequoia Capitals.
A fundamental approach of attempting to predict this is to look for business use cases where there is a strong potential for technology to create significant operational efficiencies or tread into entirely new markets or both. This has been the lynchpin of their business models as well.
It will be my humble attempt to try and provide an eagle’s eye view of how the tech behemoths operate in the business world. Each member of the famous FAANG is a product of the FAANG’s school of thought and can be influenced by its most accomplished teacher — the FAANG itself.
Apple — the oldest member of the famed FAANG!
One of the oldest true blue technology company, Apple would be the savant if we’re considering tech titans to be humans. The most profitable company in the history of humanity, Apple was the first company to breach the $1 Trillion market cap, innovating some of the most iconic flagship products for us. Apple is (maybe was) known for its unflinching obsession, passion, and aggression
Like all great things, the core of Apple’s success can be owed to doing three simple things really well over many decades and believe me I’m not trying to quote The Magic of 3 principle from Mckinsey. Apple has always been about —
- Great Products (Think Different Campaign!)
- Great Marketing (One of the top 3 brands globally!)
- Great Distribution (Controlling their Supply Chain in China sitting in the US)
Each of the aforementioned bulleted points should sobre most other businesses.
Great corporations aspire to do more than simply accomplish their quarter objectives but as they say, greatness doesn’t require extraordinary ability, it requires ordinary abilities applied with extraordinary persistence. Until you sit down to dissect the foundations of Apple, you wouldn’t recognize how valuable the “more” could be.
One of the many banes of technology is that it’s made the world very noisy and complicated. The Internet facilitated blossoming of many many startups and it just made it worse by reducing the attention span of humans. Unless brands clearly convey to their customers who they are, it’d just be adding to the noise.
Over the years, Apple has retained its vitality and relevance because the focus was always on creating a brand, not just great but among the greats of the greats. It’s solemnly dependent on its vision and core values— “People with passion can change the world for better” — a statement so clear it gives me goosebumps every time I listen to it from their visionary founder.
“Although times have changed, markets and distribution strategies have changes and Apple’s position in them has changed, the core values of the company shouldn’t change.” — Steve Jobs
Albeit Apple’s vision and core values have remained the same, there’s been a stark contrast in the way they operated from their inception to 2011 and after the first decade of the 21st century.
With Jobs at the helm, Apple had a penchant for offering better products and solutions than its competitors. Some might argue they’re expensive but you definitely get the bang for your bucks. iPhones have the fastest processors available in the smartphone market with probably the most stable OS sporting the best industrial design at the same time. This killer trio lures in customers to standing in long queues during their product launches to get their hands on the best products ever. For long Apple had established, what became a norm, that only Apple can beat Apple.
This was the Steve Jobs era which became a techlore — one of relentless obsession with perfection and delivering delightful products which, in many ways, redefined the way people interacted with the internet.
And the baton was finally passed on to Tim Cook — the operational genius, to carry on the legacy established by his predecessor. With all the glory surrounding Jobs, it is easy to ignore the underlying facet. Under Cook’s ethical vigilante, Apple understood how user privacy is as important a feature as shiny industrial design or the best night camera.
For many reasons, the best product Apple offers is intangible, yet far more indispensable than a flagship hardware product. The best product Apple has — and probably the single biggest reason that consumers should choose an Apple device over the competition — is their regard for user privacy. (If you’ve been following me on LinkedIn, I highlighted this here).
2018 is the age where data is the new black gold and no issue is more important than user privacy — or the lack of it thereof. We’re monitored by private industries on an unprecedented scale, with major corporations gleaning most of it without our knowledge so much that they’ve rendered psychological lessons useless where they preach the best person to understand you is you.
What’s creepier — Target discovering you’re pregnant or Facebook predicting your future actions based on the decisions you haven’t made yet? The digital world built by tech titans and advertisers is, in many ways, a commercial surveillance state, to be a part of which you’d need to relinquish your right to privacy.
An Apple product a day keeps the chances of data breaches at bay!!
Apple’s devices and software resonate with the company’s ethos and are now steeped in cocooning user privacy to an extent other tech companies would never dream of embracing. It isn’t a recent stance — it originated under Jobs and has picked up rapid pace under Cook. Amidst the brewing storm over data privacy, it has secluded Apple’s shareholders from not only the damages in the form of rising costs and fines by various regulatory bodies but also from the significant declines in shareholder value due to users losing trust in management teams — due to the privacy issue. It seems almost magical that Apple seems to be the only major tech corporation that had the will and foresight to begin tackling these issues before they reached a crisis point.
Each release of iOS and MacOS made it harder for 3rd-parties to siphon data from us. In fact, Safari was one of the first browsers to block cookies by default. In their recent iterations, they’ve taken it a notch higher and implemented Intelligent Tracking Prevention, which reduces the ability of 3rd-parties to track user movements while surfing on the web.
This isn’t the end — Apple’s enforcing its strict privacy protection policies on third-party developers. In a public ultimatum, Apple has asked developers to strictly adhere to their publicly posted privacy policy if they want their apps to be available on the App Store after the next update. Furthermore, Apple denied a federal court order asking to break open the iPhone of a shooter who killed many in a ceasefire in 2015.
So far so good but to satisfy the curiosity of many who are amazed by their ability to strongly stick to their core ethos established decades ago before Big Data became the new fad. They quiz the DNA of Apple, which is a corporation and by all means, must strive to maximize them. The answer eludes us but fragments of that can be found in understanding the core business model of Apple — it’s a hardware company which doesn’t need to monetize user information. Most of its products are premium and have a very high markup.
The conclusion is evident. You don’t shell out those extra dollars on Apple products with superior industrial design or advanced underlying tech but rather for reserving the right to keep more information about you to you. In an era when leaks and breaches are creeping into every industry, data manipulation forms the core of the business model of multi-hundred billion dollar corporations and your online impressions are being monitored for siphoning and user-profiling — privacy is priceless.
This is the first in a series of five articles I’m planning to write over the next few weeks. I hope you enjoyed reading it as much as I did penning it down for you. In case you liked it, please don’t refrain from the appreciation it deserves and give it a few claps and help it reach a wider audience.
You can follow Pratyush Choudhury for breakdowns of the hottest technology trends, translations of the business use cases involving tech buzzwords, and analysis of the business strategies that power the tech industry.
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Views expressed in this post are my own and don’t reflect the views of my employers, present or past.
