iPod saved Apple from chapter 11 and there would be no iPhone with it either. Oh, and Jony Ive helped, a little, too!

Dave Young:

Welcome to the Empire Builders Podcast, teaching business owners the not so secret techniques that took famous businesses from mom-and-pop to major brands. Steven Semple is a marketing consultant, story collector and storyteller. I’m Steven’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is, well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. So here’s one of those.

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Dave Young:

Welcome back to the Empire Builders Podcast. I’m Dave Young and Steve Semple’s here and we’re talking about empires. When you told me the topic for today here just a few seconds ago, it’s like, “Oh, we’re talking about an empire inside an empire. We’re talking about an empire that changed lots of things.”

Stephen Semple:

Yes.

Dave Young:

So we’re going to talk about the iPhone.

Stephen Semple:

Correct.

Dave Young:

Oh, man. Man, did it change things?

Stephen Semple:

Well-

Dave Young:

I mean, so-

Stephen Semple:

Yes.

Dave Young:

… you think people that aren’t… Gosh, I keep thinking that, gosh, there were a lot of years I didn’t have a cell phone, let alone an iPhone.

Stephen Semple:

Correct.

Dave Young:

But cell phones changed everything, and then iPhone changed it more. And gosh, what year are we talking about? Early 2000s? 2000-ish-four, ’05, ’06, somewhere in there?

Stephen Semple:

Yeah.

Dave Young:

Is that about right? I’m just trying to think of when I got one.

Stephen Semple:

Oh, you’re talking about when it launched? 2007 is when I-

Dave Young:

Seven. Okay.

Stephen Semple:

Yeah. 2007 is when it launched. And when you think about it, we used to have our Palmpilot for our contacts, we had our dicsman for our music, we had our cell phone for telephone calls, and we had internet cafes for our internet access.

Dave Young:

For our laptops and all of that. Yeah. Yeah.

Stephen Semple:

Right.

Dave Young:

All these devices.

Stephen Semple:

And today, it’s both the bestselling phone of all time, the best-selling camera of all time, the bestselling music player of all time, the best-selling GPS of all time, and the best-selling game console of all time.

Dave Young:

Crazy, isn’t it? It’s a ubiquitous product, really.

Stephen Semple:

Yes. It’s the most profitable product of all time. 2.3 billion have been sold. One fifth of humanity has one.

Dave Young:

Man.

Stephen Semple:

Right?

Dave Young:

Yeah.

Stephen Semple:

It created a whole brand new economy called the App Store that did not exist before. And it was not an obvious product. Steve Jobs initially hated the idea. I want to say this again. Steve Jobs initially hated the idea. He thought smartphones would never take off and they were a dumb idea.

Dave Young:

Okay.

Stephen Semple:

This is how not obvious the product was.

Dave Young:

Yeah. Every now and then you hear somebody saying, “Oh, I wish I could go back to a flip phone.” And you think, “Yeah, that would be nice.” But then it’s like, “Well, no. No, I don’t know if I could get by without all this stuff.”

Stephen Semple:

Yeah. It’s really incredible. The birth of the iPhone, to really understand the birth of the iPhone, is you actually have to go back to the iPod. It’s predated the iPhone. And Tony Fidel invented the iPod. Here’s what’s really important about the iPod, is Apple was on the verge of bankruptcy, and the iPod saved them from bankruptcy. The iPod is what saved Apple. And basically Tony Fidel, back when he was 12, he bought an Apple 2, and it was really his first true consumer product. And in 1991, he graduated. And of course, that was the early days of the internet. We forget how even new the internet is. And a couple of people had left Apple to start a company called General Magic to build handheld computers.

Tony joins General Magic, and it’s amazing. There’s lots of ideas. But what he found is there was these tons of ideas and no focus, nothing ever made it to development. And that frustrated him because he actually wanted to develop things. So he goes over to Phillips, and Phillips had an MP3 player. And Napster came along, which was allowing people to download music, but it’s free, but it’s kind of illegal and maybe sketchy and all that other stuff going on. Basically he looked at it and he said he wanted to start to develop this unified digital music player in a site where people could download things legally, because he felt people wanted that. And Steve Jobs also felt people wanted that and Jobs got wind of what he was working on.

This is 2000 when the dotcom bubble happens. Jobs gets wind of this idea and is back at Apple at this point and reaches out to him and says, “Come on over and help us to develop this.” Now, Jobs had a bit of a windfall. The iMac comes out and the Apple is back because iMac had some pretty good success, but the iMac was still only 3% of the marketplace. So Jobs hires Tony to come and lead up this idea of music, right? So in 2001...