Pattern Recognition, by Ian Sigalow

The Steve Jobs Effect



Ian Sigalow

Ian is a co-founder and partner at Greycroft Partners in New York City. He has been a venture capitalist since 2001.


Hiring a Senior Associate for the Greycroft Albertsons Fund 17th May, 2019

A Love Letter to Akron 02nd July, 2018

The Steve Jobs Effect

Posted on .

Steve Jobs forever changed consumer electronics and software, and I expect we will appreciate his contributions more and more in the years ahead.

Many people, myself included, felt a personal attachment to Steve Jobs.  I am particularly sympathetic since he struggled in public with health issues for so long.  And I can’t help but be awestruck at how he captivated consumers with just a handful of products in such a short period of time.  In the process he took Apple from the brink of bankruptcy to the most valuable company in the world, creating an aspirational consumer brand that is known in every corner of the globe.  That is just remarkable.

As I walked home last night, past the shrouded Apple cube on 57th street and 5th avenue, I thought to myself that the genius of Apple lies in the company’s commitment to design. When you compare Apple to Microsoft, you see that Microsoft spends more in R&D than Apple, Microsoft employs more engineers than Apple, Microsoft spends more on marketing than Apple, and Microsoft is losing to Apple.  Take one look at the Apple store, where they are busy upgrading the glass panels in order to reduce the number of visible seams, and you get an appreciation for how committed the company is to having things done just right.  In the process Apple created something akin to a religious movement.  As a brand, Apple stood for the empowerment of the consumer against boxy, beige, complicated products.  And the pursuit toward the perfect design came at just the right time.

Fifteen years ago there was a major price/performance gap between Apple and Microsoft machines, and most people were unwilling to trade in their PCs for iMacs.  In the last ten years, third-party investment in chipsets and hardware made this gap less perceptible. Once the playing field was level, Apple systematically exploited Microsoft’s weaknesses as a consumer products business.  Then Apple did the same thing to Blackberry, Motorola, and Nokia.  And it is just a matter of time before they do it to Samsung, Sony, and Toshiba.

Design is the soft underbelly of the consumer products business.  Microsoft won the operating system market because of an alliance with IBM, not because consumers loved the look and feel of MS DOS. And consumers groaned as Microsoft pushed Word, Excel, and Internet Explorer through the channel.  People still go out of their way to use WordPerfect and Firefox because they are better designed applications – I am a lifetime Microsoft user and I still don’t know where to find half the tools I need.  Apple saw that RIM had the same vulnerability, wedded to a dysfunctional operating system and enterprise/security focus, and they exploited that too.

One astonishing fact is that Apple was able to win this battle without using a sophisticated marketing/CRM system.  Unlike Wal-Mart or American Express, Apple doesn’t track that I have an iPad2 and my wife has an iPod Nano.  Or that I listen to Paul Simon and she listens to Lady Gaga.  Apple doesn’t care.  They just build great products and assume that we will buy whatever product comes out next.

Design innovation is repeating itself over and over in other industries.  Tumblr improved on Blogger’s design.  Instagram improved on Flickr. Pinterest improved on Polyvore.  Venmo improved on Paypal.  I don’t want to diminish the differences between successful and unsuccessful consumer products, but usability and simplicity are two common lines of demarcation between failure and a billion dollar valuation.  Big companies have a hard time with this, because great design is never generated by committee.

I believe we are entering an age where the Steve Jobs Effect will become more common.  The best technology companies are increasingly behaving like fashion companies – investing in branding versus direct response, opening high end retail, and closely managing their interaction with the consumer. We will see if they can manufacture consumer products that match these ambitions.

This new world order has many ramifications.  The most noticeable is that companies run the risk of becoming unfashionable, which can mean going from dominant market share to out of business in 36 months.  The second will be the rise of superhero designers.  These figures have always existed, from Ralph Lauren to Frank Lloyd Wright, and we are seeing it with Jack Dorsey at Twitter and Mark Zuckerberg at Facebook.  Technology and globalization have given these individuals the ability to scale faster and reach more people.

So this is a thank you to Steve Jobs for ushering in this era.  You have shown us that design matters.

Sent from my ipad


Ian Sigalow

Ian is a co-founder and partner at Greycroft Partners in New York City. He has been a venture capitalist since 2001.

  • user

    AUTHOR AustinClements

    Posted on 5:25 pm October 6, 2011.

    Excellent. Steve Jobs carried an entrepreneurs spirit through to becoming the most valuable company in the world. The “stay foolish, stay hungry” quote that is being posted everywhere is great inspiration to most anyone, but Jobs lived this idea through and through. Surely he has inspired a whole generation of entrepreneurs to develop beautiful hardware and software, while simultaneously challenging them to meet the level of detail that we see from Apple.

  • user

    AUTHOR Dragon Blogger

    Posted on 4:06 pm October 7, 2011.

    Even his long time rival Bill Gates had decent things to say.

  • Leave a Reply

    You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

    View Comments (2) ...