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Return to the Little Kingdom: Steve Jobs, the Creation of Apple, and How It Changed the World · 13 of 13
Return to the Little Kingdom: Steve Jobs, the Creation of Apple, and How It Changed the World
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Success Breeds Arrogance & Underestimating Incumbents

Return to the Little Kingdom: Steve Jobs, the Creation of Apple, and How It Changed the World Michael Moritz
arrogance execution incumbents distribution product-failure

Key Principle

The gravest threat to a winning company is its own swagger, not its competitors. Cultural success — press wonder, clones, global user groups — is a leading indicator that masks lagging organizational rot. Believing it was "top dog," Apple "became intrigued with the notion of empire, and an aggressive conceit threatened to unravel much of the earlier success" (Founder-as-Brand & the Apple III Failure). Arrogance is not a mood; it propagates into operations — schedules, partner relations, and competitive reads — and it blinds the leader to a slow incumbent competing on a different axis.

Why This Matters

Success bred overconfidence that produced specific, compounding failures. "The Apple II had been so successful that everybody was walking around thinking they could do anything" (Jerry Mannock). That conceit drove the Apple III: a hobbyist ten-month timetable for a corporate product, design-by-committee feature bloat on an underpowered 6502, and a bad-news filter where escalating ship pressure silenced the people who knew the truth — "the people at the top would say, 'It will be okay. Let's ship'" (Raskin, Founder-as-Brand & the Apple III Failure). The root method was intuition-over-process: "There was nothing he believed in more deeply than his own intuition," and the same instinct that produced taste-driven hits rejected "analysis, focus groups, decision trees" and made underlings "wary about speaking their minds." "But his strengths were also his greatest weaknesses" (Moritz).

The arrogance also turned outward — "audacity inside, arrogance outside." The disregard for convention that let a tiny company dare to out-build Xerox was productive internally but corrosive when aimed at the partners, dealers, and press Apple depended on. Confidence is a tool, not a posture: contempt blinds you, and Apple's derision of IBM and Japan hid real, accelerating threats.

Good Examples

  • A launch is a commitment device. The Apple III was announced with spectacle (rented Disneyland, ~20,000 free tickets) before it could ship reliably; the public promise overrode engineering judgment and units shipped flashing "SYSTEM FAILURE." The reintroduced III became "a sound, reliable workhorse" — the technology was fine, the launch killed it. Don't announce before you can ship. (Apple III / Lisa / Xerox PARC)
  • Institutionalize founder-era capabilities as you scale. Garage QA was "crude, yet competent" but no department formed; with no component-evaluation engineers, Apple had to "listen to the salesmen and believe what they said," importing defects like the National clock chip that failed after ~3 hours. (Apple III / Lisa / Xerox PARC)
  • Productization beats invention. Xerox PARC invented the GUI, mouse, and bit-mapping and spent over $100M, yet shipped no "golden egg"; the Star "execution was poor." Apple's contribution was editing and integration — mouse buttons cut from three to one. "Simplicity is the ultimate sophistication." (Apple III / Lisa / Xerox PARC)

Counterpoints

  • Audacity inside, arrogance outside corroded relationships. Apple soured Visicorp and withheld technical info from software partners, told a departing engineer "if we wanted to we could squash you like a bug," used "muscle" on dealers ("We've got each other by the balls"), called a reporter "a criminal," and derided Japanese rivals as "dead fish" while depending on Japanese suppliers. (Apple III / Lisa / Xerox PARC)
  • Underestimating the slow incumbent. Apple dismissed the IBM PC; Moritz: "the leaders of Apple were grievously underestimating the power of their new rival." Markkula: "Short of World War III nothing is going to knock us out of the box," adding IBM "hasn't the foggiest notion of how to sell to individuals." The installed base was real, but treated as static rather than as the prize a better-distributed rival would target. (IBM's Entry / US Festival / Epilogue)
  • Closing the platform backfired. The Apple II won on third-party software; with the III, Apple tightened control and built software in-house, making it "almost impossible for independent software companies to develop programs" — starving its own machine of what made its predecessor valuable. (Founder-as-Brand & the Apple III Failure)

Key Quotes

"We don't think of it as an empire. We hire people to tell us what to do." — Steve Jobs, Founder-as-Brand & the Apple III Failure

"The Apple III was designed by committee... Everybody had certain ideas about what the Apple III should do and unfortunately all of them were included." — Randy Wigginton, Founder-as-Brand & the Apple III Failure

"It doesn't do much good to build a better mousetrap if the other guy selling mousetraps has five times as many salesmen." — An IBM competitor, IBM's Entry / US Festival / Epilogue

"The most impressive feature of IBM's introduction was not the computer but the nimble way this enormous company had moved." — IBM's Entry / US Festival / Epilogue

Rules of Thumb

  • Treat applause as a leading indicator that masks lagging rot; the louder it gets, the higher the risk.
  • Scaling product development is a different activity, not the same one bigger — don't run a garage timetable for a corporate product.
  • Kill the bad-news filter: under ship pressure, the truth stops climbing the org chart unless you protect dissent.
  • Distribution beats product — incumbency converts to complacency when you defend the moat you can see and miss the challenger's axis (channel, ecosystem).
  • Speed can come from outsourcing the parts that aren't the point (IBM shipped the PC in 13 months by buying OS, app, and parts).
  • Aim confidence inward, never outward — contempt for partners, dealers, press, and rivals blinds you to real threats.

Related References