Option B by Sheryl Sandberg & Adam Grant (Part 1)

Facing Adversity, Building Resilience, and Finding Joy

Introduction. I met Dave Goldberg in the summer of 1996. He was very comforting and lovely. It was love at first sight. He was assuring and very understanding. However, 11 years into our wedding, one day, he suffered from a heart attack while on a treadmill and passed on. I was in utter shock and disgust and didn’t believe that this was happening to me. My kids very truly upset too. I felt like I was in a void. At times, I felt like I could hear Dave calling out to me in my sleep. Ordinary events were painful to go through. I was worried my kids would never be the same again. The songs on the radio weren’t helping too. People encouraged to let grief run its course. Adam Grant gave me advice too. The fact is that many people who have lost parents turn out to be resilient. Time will heal the wounds, or so they said. I have no choice but to get over the shock. This book is about how to build resilience. Adversity is everywhere. I am fortunate for the support I have received throughout. It is possible to find greater meaning. Life is never perfect and sometimes we have live Option B.

Resilience is the strength and speed of our response to adversity – and we can build it. It isn’t about having a backbone. It’s about strengthening the muscles around our backbone. – Sheryl Sandberg

This book is about the capacity of the human spirit to persevere. We look at the steps people can take, both to help themselves and to help others. We explore the psychology of recovery and the challenges of regaining confidence and rediscovering joy. – Sheryl Sandberg

Breathing Again. A friend I knew was too trusting and gave a co-worker a ride home. However, he raped her in the end. I offered this lady help. If you don’t believe in all 3, you will find it easier to cope. It is never all your fault and there are things which you might not be able to do better. Learn to stop saying ‘sorry’ after a while. Not everything was terrible after all. We had access to grief counsellors. Working also helps with the pervasiveness bit. However, if you return to work too soon, grief can interfere with the performance. Employers should provide flexible arrangements and financial assistance etc. Humans tend to overestimate how long negative events will impact us. I tried to banish the words ‘never’ and ‘always’ from my vocabulary. The pain temporarily eased up after a while. Humans are also wired for grief. Deep breathing helps me to calm down. The second derivative thoughts were not pleasant at all. I learnt from Buddhism that suffering is inevitable. Over time, my kids and I learnt to respect our feelings. Sometimes, it is necessary to take cry breaks. Focusing on worst case scenarios also had me feel better. We also pray before every meal and thank God for the food. Counting the blessings in your life can make you happier and feel satisfied. We are also financially stable and that is very important to us all. Once, I went for a mammogram and I was alarmed. Thankfully, it was a false positive. Even heartache doesn’t last forever. When life kicks you under, learn to breathe again.

3 P’s can stunt recovery: (1) personalization – the belief that we are at fault; (2) pervasiveness – the belief that an event will affect all areas of our life; and (3) permanence – the belief that the aftershocks of the event will last forever. – Sheryl Sandberg

Part of every misery, is misery’s shadow… the fact that you don’t merely suffer but have to keep on thinking about the fact that you suffer. – Sheryl Sandberg

Dealing with grief was like building physical stamina: the more you exercise, the faster your heart rate recovers after it is elevated. And sometimes during especially vigorous physical activity, you discover strength you didn’t know you had. – Sheryl Sandberg

Kicking the Elephant Out of the Room. I went for a college reunion with some of Daves’ friends. Sometimes, asking someone about their illness can comfort them and show that you care. I felt miserable when friends didn’t ask how I was doing after Dave’s passing. People avoid asking because they want to avoid difficult questions. However, the fact is that people who have endured terrible things want to talk about them. Some parents who have lost children also want others to speak about them from time to time. ‘Mum effect’ is when people avoid sharing bad news. By remaining silent in your suffering, you isolate others. It would be good to have friends who ask you difficult questions but do not judge on your answers. People who have been through adversity can connect better with others who are suffering too. Cultural pressure to conceal negative emotions is common. The fact is that most people do not know what to say, especially when it comes to personal matters. I thought that I carrying an elephant around. A month after my husband’s passing, I shared my thoughts openly on Facebook. After that post, I received a lot of love and compassion. Not everyone will be comfortable about talking about personal tragedy. Opening up can improve mental and physical health. Instead of ‘How are you?’; ask ‘How are you today?’. I acknowledged the elephant’s presence and after opening up, many colleagues did reveal that they did not dare to speak up because they were afraid of saying the wrong thing.

I had failed to ask him directly about his health not because I didn’t care, but because I was worried about upsetting him. – Sheryl Sandberg

When life gives you lemons, I won’t tell you a story about my cousin’s friends who died of lemons. – Postcard

When someone is struck ill with cancer, you can ask ‘I know you don’t know yet what will happen – and neither do I. But you won’t go through this alone. I will be there with you every step of the way.’ Or ‘I acknowledge your pain. I’m here with you. – Sheryl Sandberg

The Platinum Rule of Friendship. Adam encountered a kid, named Owen. He had chronic traumatic encephalopathy (CTE) and later took his own life. When you are feeling stressed, you need an outlet. For instance, you can call a counsellor at any time of the day. Sometimes when we feel like reaching out to help, we might suddenly hold back because we fear saying the wrong thing or offending the person. This is like choosing escape over empathy. The trick is just to show up, showing up can make a huge difference in a friend’s life. It’s hard to put yourself in someone else’s shoes when you are not the one suffering. Instead of saying ‘I will do anything to help you’, you could say ‘let me get you a burger, let me know what you not take’. Specific acts are more useful for someone in need. Even holding someone’s hand can be a big help too. One can offer comfort to those closest to the tragedy and gain support for those further away from the tragedy. We all grieve differently. It is very rude to suggest that someone should be over their grieving period.

Growing up, I was taught to follow the Golden Rule: treat others as you want to be treated. But when someone is suffering, instead of following the Golden Rule, we need to follow the Platinum Rule: treat others as they want to be treated. Take a cue from the person in distress and respond with understanding – or better yet, action. – Sheryl Sandberg

Self-Compassion and Self-Confidence. Coming to grips with ourselves. Self-compassion is rarely talked about in our society. Everyone makes mistakes. These imperfections make us human. Self-compassion is the key to a faster recovery from trauma. Focus on the mistake and not the person’s character. Guilt and shame are completely 2 different feelings. Learn from your mistakes and own up to them. Writing down your thoughts in a journal might be useful and has much therapeutic effects. The more you acknowledge the negative emotions that you are feeling, the better you can tackle them. Talking into a voice recorder can have a similar effect to writing. Learn to understand that your worth is not tied to your actions. Self-confidence is the key. I am grateful to have a compassionate boss, Mark Zuckerberg. I start journaling and realized that it helped me tremendously. Even when you are really down, you can focus on 3 small wins and write them down daily. Just reminding that something had gone well that day can improve your day instantly. Learn to count your contributions too. Take one extra step even though you are afraid. Learn to treat those who are undergoing a tough time as regular team members and praise their work occasionally. The number of single mums are rising and a lot of them are having a tough time too. Over time, I journaled less. I want to move on and start living again. I am not alone.

Psychologist Kristin Neff describes self-compassion as offering the same kindness to ourselves that we would give it to a friend. It allows us to respond to our own errors with concern and understanding rather than criticism and shame. – Sheryl Sandberg

This loss of confidence is another symptom of pervasiveness: we are struggling in one area and suddenly we stop believing in our capabilities in other areas. Primary loss triggers secondary losses. – Sheryl Sandberg

Bouncing Forward. The one I become will catch me. When you can’t change a situation, you will have to change yourself. Some people can experience post-traumatic growth. This means bouncing forward. It can take 5 forms: forming deep relationships; discovering meaning in life; gaining appreciation; finding personal strength and seeing possibilities. One can walk away with greater resolve. The little things do not bother you so much anymore. If you can find your why to live, you can find meaning to live. I appreciate my close ones more. If you visit poorer communities, you might start to appreciate life more. Gratitude is the key to happiness. Now, I celebrate birthdays every year. You do not need to wait for special occasions to show your gratitude. One could write thank you notes. Every day is precious and should be lived to the fullest. Going through difficult times together can cause one to forge stronger bonds together. It is also important to find meaning in suffering. One could do so via spirituality and religious beliefs. It is important to stay hopeful in your darkest hours too. Trauma can help to build resilience. Work can provide a source of meaning. You can energize yourself with meaningful work. A brush with death can lead to a new life. Some believe in co-destiny, where bereaved parents view their child’s life in a larger framework. Parents can do good, which becomes part of their child’s impact on the world.

In the depths of winter, I finally learned that within me there lay an invincible summer. – Albert Camus

In prosperity our friends know us. In adversity we know our friends. – Old Saying

optionb-book

Schiit Happened by Jason Stoddard and Mike Moffat (Part 3)

Finally, the $99 solution. Mike was the one who thought that $99 gear was possible. In the past, it certainly wasn’t possible. I had my doubts that we could do it. I was very thrilled that we managed to do it. Audio is a seasonal business, where demand is strong between October to March. Magni and Modi were products we didn’t announce beforehand. The good thing is that you won’t miss your deadline. However, without a deadline, you won’t work as hard. If there are delays, you may miss your first mover advantage. As a result, we could have chased our vendors harder. The metal delivery was late. We missed CanJam as a result. The boards were late too. Thankfully, we just needed to switch out the capacitors before we could fit them in the new chassis. On Dec 13, 2012, we announced Modi and Magni. They outstripped the sales of all our other products combined. Nobody expected that we could deliver it at that price point. I saw the headphone market growing. I wanted to release something of value, and Schiit managed to do that. First time users could have excellent sound with the Magni and the Modi. Magni was neutral and had a ton of power. Modi didn’t need drivers and works well. Of course, there are better amps and DACs out there, however, with the quality of music that most people are listening, this would suffice.

Making another pricey product – no matter how advanced and innovative – is cool and all, and makes for good ego fodder. But making a good, solid product that almost anyone can afford, that’s a whole another thing entirely. – Jason Stoddard

And that’s what I wanted to do – to set the value bar, and the barrier to entry, much, much higher. – Jason Stoddard

Twilight of the Gods – the Ragnarok Saga from 2009 Until Today. Ragnarok was a big saga since 2009 We shipped a powerful speaker amp. If you pre-announce something, you will be wise to stop talking about it. Do not confirm that it will be a cool product. Speakers are very large. They need much damping factor. Our second Ragnarok was much better. It was solid state and used DC servos. However, it would get hot and we needed to find a solution. There are 3 ways to get rid of DC on your outputs: coupling capacitors; DC servo; Trimpots. I wanted a microprocessor to run everything on the Ragnarok. I released info on the product even before it was released. Software has a lot of bugs too. We ran into a shit load of problems. However, one day, the Ragnarok just smoked. It was really bad. Ragnarok didn’t work well at an audio show. It was nowhere near ready. The thing kept burning up because of too much current. We kept trying to write code for the firmware to prevent this. However, even after the power right, it didn’t sound good. There are plenty of other sagas than those mentioned above. Making great products requires a hell lot of pain at times.

Blazing a new path isn’t to be taken lightly. You should take a long, hard look at your capabilities and resources, and plan for how it will impact everything you do. – Jason Stoddard

You’ll Never Do Any Upgrades Anyway. Some audiophiles didn’t think we would do upgrades for the Bitfrost. Audiophiles can be very difficult sometimes. Mike was at the cutting edge of audio when he was at Theta. There was no standalone DAC at his time. Digital audio is new too. Mike measured jitter too. Audio in the 2000s is changing, but at a slowing rate as compared to the 1980s and 1990s. Most DACs are delta-sigma D/A converters. USB is a lot more mature and it is improving. DSD is not that hot now. WiFi digital audio is there. Bluetooth digital audio is also up there too. We didn’t know when we could upgrade the Bifrost. Pick your upgrades carefully and keep them to a minimum. For DACs, the chip AK4399 is our favorite. When you have upgrades, everyone wants to have it NOW, without hesitation.

Worst. Customer. Ever. The customer is always right. Is the customer always God? You can’t do well in business if you don’t love your customers. Amazon’s rule of customer service is that if you have to contact them, they have failed. How can you architect customer service? The smaller your customer service team, the more consistent their replies and the better it is for you. Prohibit the ‘hard sell’. Ban discussion of other manufacturers’ products. Don’t do promo, points, or sales. Less discounts means less complexity. If you have sales, some people will think they would be screwed if they missed the sale. Audio is subjective. Always maintain a high standard of customer service. You can’t take a day to reply emails, that is too slow. Choose your contact options. Choosing your feedback channels are important. However, do not pick too many or you will be flooded. If customers call you, it is bad as it is time consuming to answer calls. If you hire an audio expert to answer calls, it is going to be expensive. A nasty customer we encountered was when his item was a little late. He went into absolute berserk mode. We refunded him in the end. Yet, he was still raging. Believe me, not every customer is worth having.

If you’re going to get into business selling product direct to customers, you need to know two things: 1) You’re gonna get some buttheads; 2) You’re not gonna make everyone happy. – Jason Stoddard

We bend over backwards for our customers. But we won’t be bent forwards. – Jason Stoddard

Put enough information up about the product so most people can make their own decisions, but when they contact us, make the answers fast and simple. – Jason Stoddard

Anyone who emails us before purchasing is 8 times more likely to return the order. 2+ emails takes it up to 30 times. But again, are these bad people? Not at all. Merely indecisive. – Jason Stoddard

But you should be aware that you are talking to humans that can – and do – bend over backwards. But if you come in hot, that willingness to bend over backwards diminishes. – Jason Stoddard

Death of a Product. This will definitely happen some day. Should you cannibalize? It is important to understand product life cycle. No product can stay relevant forever. If you don’t cannibalize yourself, someone else will. It is easier to follow someone else’s rules rather than make your own. It is not smart to assume that sales slow down, it is time to upgrade. We killed the Asgard after the Magni was introduced. Asgard didn’t have gain switching and preamp outputs. The Asgard 2 was introduced and it was much better. It was dead silent on low gain. We had an absolute winner and knew it would be terrific. However, when we produced the Asgard 2, it had a hum. We swapped them.

R&D Sometimes Means, “Try it, See If It Works”. R&D can be very focused. However, at times, it shouldn’t be. Playtime is important. Let your engineers have fun as it will pay-off. We managed to get cheap tubes off eBay and we started tweaking to see how we could fit them into our products. This was the road to Vali. They were much better than the other tubes out there and required little power. The problem with tubes is that tube microphonics might happen and it appears as a form of noise.

But I strongly believe that R&D shouldn’t always be so focused. There’s value in making sure your engineering staff has time to play with crazy ideas. – Jason Stoddard

Name Me One Non-standard Format That’s Succeeded, Ever, Or, A Trickster Cometh. DSD was out in 2013. DSD requires a new type of filtering, which would create noise. We were initially not keen as our products would need a lot of upgrades. We were afraid of missing out on sales if we didn’t jump on the bandwagon. It’s a special software that will go nowhere. Many customers inquired on when our products will support DSD. Reluctantly, I managed to convince Mike to think about it. Our sales kept increasing though. We suddenly wanted to make the least expensive DSD DAC on the market. This would help to drive adoption. It would also have an option for PCM, where we could run a PCM DAC through it. It would be like an add-on. We didn’t have DSD capable USB receivers. We managed to develop a prototype that could play native DSD, using a crystal semiconductor DAC. It worked fine with the AKM DAC. We tried to bring it to market, if it did, we would work on 2X solution. Loki was introduced, where people could add DSD to any DAC for $149. However, it was received as well as we thought. Mike has mentioned no more DSD development until something big happens. However, the public didn’t seem interested in DSD all that longer. There are plenty of DACs out there that support DSD, but where is the software. DSD recordings are expensive for artistes and is it unlikely there will be happy. Also, the improvement in sound quality is marginal and may not be detected.

No Sample Left Unchanged: Digital Today. Let’s talk business philosophies. A typical AV preamp must have a lot of features. There are many standards, such as Dolby Atmos. It is hard to support all these formats. We have to pay licensing fee to put the logos on the box. Should we be at the whim of the standard-setters, like surround-sound standards? Would customers be okay with a processor that sounded good that didn’t support Dolby Digital or DTS? Digital audio has made steady progression over the years. The multibit technology has been improving. Jitter numbers have been decreasing steadily. 1-bit sigma-delta modulation is cheap and has good measurements. The phone DAC ain’t too shabby either. Today, it is a largely sigma-delta world. Lobby for better recordings in the studios, which will help us. DAC mostly upsample and use asynchronous sample rate conversion, affecting the original samples. Samples which have passed a digital filter are not the same. Yggdrasil aims to address that. We have the solution to retain the original samples, without oversampling. The more bits, the less the quantization error. The best DACs around can do only 20 bits. To achieve 24 bit linearity hasn’t happened yet. We have plenty of music in PCM format.

And “32 bit?” LOLOLROFLCOPTER. There will never be any 32 bit music. Because physics. – Jason Stoddard

Black Friday. It is important for a company to define why you do certain stuff. One day, the metal maker delivered us black chassis and we decided to sell them. We would make it a one-time special. In Nov 13, we announced a limited run of black Schiit products. However, there was no big wave of orders for them. The issue is because price and quality matter more than cosmetic colours ultimately. What has this got to do with Black Friday? Many companies participate in Black Friday sales. We choose not to participate. It is great not to stand against a trend sometimes. We don’t do fancy chassis to increase the cost. We do direct distribution too and don’t have a dealer network. A lot of audio experts and engineers have praised our products for our sound quality.

As a start-up, always remember clamor doesn’t always equal the demand. – Jason Stoddard

Niche features or functionality can evoke a lot of passion – and, while that passion may translate into many emails, it may not translate into sales. – Jason Stoddard

You Want to Pay How Much? Or, How We Moved Again. We were thinking of moving office. Someone else wanted to move into the building and we had to go. Good performers expect to be paid well. They also value flexible work hours. For instance, you can work from home etc. Our assembly team usually works at night. There could be a lot of problems. The owners could realize their profits are small or non-existent. When they exit, you have to buy back their shares and value the company. You will have to pay lawyers too to step in. There are also tax implications of giving away shares. Do not insult the intelligence of your motivated and engaged staff. Don’t minimize their worth. Don’t insult their intelligence. Tell the truth and keep your promises. If you can’t pay as well as some other companies, tell them that they might receive more benefits in the future as the company grows. Always keep to your promises. If not, things will get ugly. Provide personal motivation. The key is to get smart, motivated people to start with. We don’t have a sales department. We spend 0.2% of revenue on marketing. Always remember that your people matter and that your customers matter too. Motivated employees take the initiative to do things. We moved into a huge 5300 feet space. We started looking like a real company. Rina would sublease the space upstairs. We didn’t spend a lot of money on renovating or sprucing up the place. However, we bought a fridge, racks, desks and test equipment etc.

Exactly 2 things motivate high-performing employees: money and freedom. – Jason Stoddard

How do you pay good salaries when you’re just starting up and money is tight? Great question. Tricky answers too. Because the first temptation usually is to give away a percentage of the business. Which is exactly the worst thing you can do. – Jason Stoddard

If you don’t literally want to create everything by hand, yourself, you need great employees. Repeat after me: Don’t minimize their worth. Don’t insult their intelligence. – Jason Stoddard

Start with a livable salary, and add bonuses that are based on visible personal or company metrics. Number of products shipped. Number of products built etc. – Jason Stoddard

Motivated employees do not think that having a lounge matters. They think it’s funny. They’re thrilled to help us grow. And growth doesn’t come from Hermann Miller chairs and Steelcase desks and faux-finish paint and $600 LED lamps. – Jason Stoddard

A Real Company? It is end of 2013 now. Finding a niche is important. Be memorable and understand that not everyone will love you. Niche is where we want to be. We do not want to be like Beats, Bose etc. You have to love audio to be in this business. We have a unique sound at a unique value. It is important to run from both conventional advertising and social media both. It is hard work, but it is fun. There will be problems but we crack our head and solve them. There is still much work for us ahead. Remember that it is always important to be unique. Simply throwing marketing money at problems won’t work. Stay where we are, and get better at it. Do listen to your customers for their input. Continue to challenge the established wisdom.

9781514355022-us

Schiit Happened by Jason Stoddard and Mike Moffat (Part 2)

Isn’t the Symbol for USB the long flat rectangle? We transited from a headphone amp to a DAC/amp company. We are like both a hardware and software company. The problem with hardware are manufacturing while software is about service. A restaurant has both of these problems. When you talk hardware, you are talking stock. You will need capital upfront and also the added costs of personnel, facility, testing, shipping etc. For software, it’s about the salaries for programming staff, admin costs etc. However, distribution is easy. However, you must make sure your software can work with the existing OS. It is an ongoing business, where you need to keep upgrading. There are too many things that can go wrong with a restaurant. With Bifrost, we are a software company. We wanted 24/192, which needed Windows support as driver installation was a must. Firmware is not expected to change much. Software usually requires constant upgrading. Try not to allow pre-orders as if you can’t deliver on time, Schiit happens. The Bitfrost shipped out late. It was a nightmare as we ran into problems, one after another.

Although I’m a foodie, I have exactly zero desire to ever open a restaurant. Why? Because restaurants combine the problems of manufacturing with the problems of service with an extra problem of the stock actually goes bad. No thanks. – Jason Stoddard

Technical Help via Time Warner, and the World’s Most Irritating Failure Mode. Tony was our second employee and our first technician. It was late 2011. We have 4 products, Asgard, Valhalla, Lyr, Bifrost. Mike recommended Tony. He was laid off. He was a fast learner. The problem with employees are that they only do things by the book, have a stunning lack of initiative, prima donna-it is. It would be better to ask why and how they did something, rather than what. Tony was a great employee. However, one day, he pointed out that the Lyr was popping. The problem only happened with the back chassis on. We used brute force to fix the problem. However, that was the only batch of equipment with that issue. We might never know what the problem is.

Because people can’t be distilled down to a 2 page resume and a 1 hour interview. There are a ton of candidates skilled in the art of looking good on paper. There are plenty who can be friendly, intelligent, and make all the right noises in response to the standard interview questions. – Jason Stoddard

Selecting people with potential and ambition beats experience every day. – Jason Stoddard

DAC in a Toilet Paper Roll. One day, Mike showed me a USB card, which had RCA jacks on it. It was a USB DAC. Although Mike wasn’t fond of USB, this was an excellent device. We could get the chassis cheap and sell it for USD 99. This is for people who really want portability. It would be simply plug and play. Modi and Magni showed up in Dec 2012. Developing simple products take a lot of time. Modi needed a new chassis design and had to be simple as possible. It required huge production time too. Most companies would have just iterated on existing products to milk the cash out of them. We’re not like that. We set a price target on the chassis. Assembly would be simple at all costs. In the end, we only used 7 screws instead of 16. Modi was built in a steel case. We chose to save our own money rather than borrow money to grow. It might not be the best, but that’s the direction we took. We decided on a Schiit stack, a little DAC that was less than $99 or less too.

Assembly time is a function of chassis design. The simpler the chassis, the lower the assembly time. – Jason Stoddard

Growth, Garage Style. We mostly worked from our garage too. I was a conservative businessman and did not take funding. People thought we were stupid. My plan was to grow organically. By being picky and conservative, we avoided the web bust and managed to thrive. Even in 2011, I didn’t lease office space. Understand what a lease means. Note the lack of any outs. Subleasing sucks as any issue with the property is your fault. You’ll have surprises, and they won’t be good. There’s less space than you think. If you don’t pay, the landlord will chase you to no ends. We ran out of stock very quickly, and that was good. We didn’t need a lot of space. Mike were planning Mjolnir and the Gungnir. These were balanced amp and DACs, higher end things. It was the start of 2012 now.

The lease doesn’t give two craps if your business is in the toilet, if your cash flow sucks, if your sales forecast was wrong, or if you’re late on your mortgage as well. Pay us. Every month. Until the end. – Jason Stoddard

Leasing a space is very much one of those invisible lines in business. Once you do it, you won’t go back. Nor will you back out. So you’d better be damn ready to do it. – Jason Stoddard

Resurrecting the Circlotron and Other Mid-Centuryisms. This chapter is highly technical. Designing a balanced amp was ambitious. Some people argue for single-ended while some prefer balanced. There are pros and cons to both, just like everything in life. Whys, wherefores and design goals. Every car has its disadvantages too, there is no perfect solution. There are trade-offs. Single ended has lower noise and easier to connect. However, high rail voltages are required for high power and balanced input is problematic. Balanced has 4 times the power for the same rail voltages. No us, balanced offers better sonic performance. First law of audio: you can never have too much power. Second law of audio: see the first law. More power usually means higher noise, greater need for protection and paralleled output devices. I have a soft spot for circlotron designs for amps. There were none in the market at the moment. Our company is contrarian and I liked it. Some of the designs include JLH, Lin/ Blameless, CFA/ Current Feedback, Supersymmetry, CSPP / Circlotron, Chip / Integrated. Circlotron uses only P channel, however, it requires a complex power supply. We focused on the high-voltage VFT front end and the MOSFET output. Class A amplifiers run on the time and never turn off. They are hot and big and heavy, and no more than 25% efficient. Class B isn’t used for audio, the output transistors turn off as soon as they cross zero, because they are completely unbiased. Class AB, with bias on the output transistors so they run Class A sometimes. This is the most popular audio output stage and more efficient, with good performance. Class D are switching or PWM amps. Class H are class AB with voltage rail switching. Mike challenged me to include single ended option in the amp too.

Today, orthodynamics are actually becoming more efficient, so the need for extreme power is abating. The headphone amp power war, which never really existed, will probably seem silly in a few years time. – Jason Stoddard

The Pinch-Off Problem. We were developing the Gungnir analog stage. We ran into problems of our prototype boards. We had a pinch-off problem. We chased down the source of the distortion. Swapping parts didn’t help. Analog isn’t the real story. It is important to segregate the analog and digital sections carefully. We needed to look at clock regeneration too. We use one stereo DAC per channel, giving balanced hardware. However, the components cost twice. Digital music has to be stored. There are different formats of music. Lossless audio preserves the original bits. These use the PCM (Pulse Code Modulation) format. DSD encodes using a pulse width modulated datastream (PWM). The DAC wants to see the bit clock, word clock and data. That means 3 or 4 BNC cables. However, nowadays, we only use 1 cable because the clocks are buried in the data. This is SPDIF. Optical is a flavor of SPDIF. However, it has its limitations and can sometimes can only accommodate up to 24/192. Coaxial is another flavor of SPDIF, however, it usually performs better than co-axial. USB is not a SPDIF, but a packet-based system. Bandwidth is no issue with USB 2.0 and up. There is a reception to process the signals. Some manufacturers choose to upsample everything to a specific data rate, this eliminates clock management. However, asynchronous sample rate conversion (ASRC) is not bitperfect. For a bitperfect DAC, clock management is needed. For digital filters, bit-perfect transfer dies. 99.9% of DACs use delta-sigma technology. It can support up to 24 bit or even 32 bit. However, it is not bit perfect either. Some DACs are analog also. Philosophy is the most important (why you do something). Without knowing your why, your company is rudderless. Therefore, there is a need to ask the why and there is a need to be very specific over your answer too. At Schiit, we want to make fun, affordable products that are as true to the musical source as possible. For delta-sigma, the best you can do is to reduce the jitter.

Every Road is a Dead End, Early Adventures with Magni. There is value in starting all over. There is a need to always be adaptable when coming up with new products. We wanted the amp to versatile for almost any headphone. We wanted an aggressive price point too. We planned a simple topology and a switching wall wart. We didn’t want Class A as there was too much heat for the chassis. The noisy power supply was killing my ideas. The Lin amp would work well with an AC supply. I turned to Alibaba for supplies. The AC wall warts were cheap enough. I played with many PC boards and found that they worked.

The HOA Problem. We were working on Magni, Modi, Gungir and Mjolnir. We were growing bigger now. HOA means Homeowners Association. The HOA prohibited operating a business out of your home. They would start complaining. We cracked 7 figures in sales. When you have your own business, you can’t say ‘That’s not my problem’. You have to deal with every problem. Everything becomes your problem when you start a business. It’s a ton of work, but it can be satisfying. We need to look to rent a space. I tried a space, however it was not meant for manufacturing due to zoning rights. Valencia, California is master-planned. It was zoned as a commercial space, not industrial. We are now in Valencia Industrial Center. However, I managed to convince the guy to let us look at his space.

We started this with $10k. 18 months later, we’re into 7 figures annually. In a garage. This isn’t interested to be bragging. This is intended to be inspiration for you. Starting your own business is absolutely doable – without taking loans, leasing tons of space etc. – Jason Stoddard

But don’t start a business because you think it’s going to be easy. Or because you think you’ll have more freedom. Because, if it’s your business, it’ll always be your problem. Until you decide to sell it and get out. And when you’re small, everything is your problem. – Jason Stoddard

You Catch a Cold, We Die: Bigger Products, Bigger Problems. It was the second quarter of 2012 now. Our supplier screwed up and couldn’t make the Gungnir and Mjolnir chassis. We had to learn to number the parts. We had to give specific revisions for the metal parts maker to edit our stuff. It is important to set up a parts numbering system that covers at least every custom part. You will also have to document your changes and revisions made. The chassis was too deep and they couldn’t bend it. Eventually, we settled on a three-piece chassis. Instead of pre-orders, we wanted to do an interest list instead. The metal was crap and the supplier disappointed us. They did a rush job but the quality was not good. The Mjolnir launch was delayed because of the metal supplier. Even with a big bugger between announcement and scheduled ship date, things still screwed up. We were not planning to do pre-announcements anymore.

When your vendors catch a cold, you get sick. When they have a problem, it’s your problem. Your customers don’t care about excuses or The Reality of Making Things Today. They want their stuff. When it was promised. Period. – Jason Stoddard

Introducing the Schiithole. We took a bit of risk in the commercial space. We got the space. In Feb 2012, we moved into the office. There are many hidden expenses in running a business which can bite you. DIY might be cheaper, but it is definitely different from production. When you run a business, there are expenses like liability insurance, facility lease, upkeep, equipment cost, bookkeeping, tax, sales or VAT. We needed to spend on renovating the new space. We were afraid that the city inspector might come. The place was incredibly dusty and messy. The place we leased was a Schiithole. Once you spend a lot on rental, it will kill you. You should only spend on the things you need. You need a functional space, effective places to work, equipment for your work, right connectivity for your business. Don’t buy high-end office chairs. Learn to pick the tolerable and cheapest chair. You must control your spending, or you won’t last long in business. Start-ups shouldn’t have private offices. I was burning out from doing 14 hour days. We needed to hire again.

The moment you build a palace is the moment you die. Now, it may take many years for that palace to kill you. You may end up with some very good years there. But the moment you start focusing on business wants, rather than needs, you’re dead. – Jason Stoddard

And that’s why we ended up with a space that was really nothing more than a large production floor, with no offices, in an ugly, run-down building. Because it had what we needed. And nothing we didn’t. And it was cheap. – Jason Stoddard

And I was quickly burning out from the long days. You can do 14-hour days for a while, but they’ll eventually kill you. – Jason Stoddard

‘I didn’t know people in the private sector were as lazy as incompetent as the people in schools’. We wanted to hire our first manager. Some level of management is necessary. You can’t do everything and you shouldn’t do everything. You can’t outsource everything enough. You still need to oversee some aspects to ensure things are going well. Hiring a manager will incur overheads. Why do companies have too much management? It is because of the 20/80 rule, where only 2 people are doing the work and the remaining 8 are hiding. Some people also think it ‘ain’t my job’. There is also a problem of title inflation. We needed to hire an operations manager. Rina’s own business was taking off and she had less time to focus on Schiit. Rina suggested Alex, Jen’s husband. I decided to give him a shot. He seemed smart enough. However, he worked in a school and I thought these people were lazy. Alex worked hard and suggested improvements and didn’t complain at all. He was the perfect candidate. Alex was an example of good management.

Management layers in a business is a necessary evil. Extra layers should be avoided at all cost. Like nuclear waste, you don’t want to get too much management on you. – Jason Stoddard

And that really is the challenge, more and more: not letting your company fall to the 20/80 rule, where a handful of good people do most of the work. Not letting the bozos on the bus. – Jason Stoddard

You can’t tread water. You can’t stand still. You have to sacrifice your babies. You need to look straight-on at cannibalizing your own products. You always have to be asking, “What can we do better, less expensively?” Even if it lays waste to your entire lineup. Because, you know what? If you don’t do it, someone else will. – Jason Stoddard

Getting Our Schiit Together. It was the summer of 2012. We now try to predict demand and buy ahead to meet it. The landlord wanted to spruce up the place. He suggested that I get the whole building. It was a reasonable and cheap price. I used to haggle in the past, but it has its disadvantages. To know whether someone is charging you fairly, you must know the general price of the product you’re looking for. You should do your research if you don’t know the general price. You should be aware of what is too good to be true. You have to be upfront too. I said yes to renting the whole building. The renovator hired by the landlord did a shit job. Finally, the space was ready and we were acting like a real company. Our space looked decent. Alex improved the business in the some aspects: 1) planning and scheduling; 2) facilities layout and production flow; 3) Shipping logistics and relationships; 4) General operations and vendor communication; 5) employee management, specifically hiring and training. However, on the planning front, we ran into some difficulties.

Dead Media Ain’t Dead: NYT Strikes. Learn to push the limits, common wisdom and experience. The Internet was a big push for Centric. We ignored much of the conventional press when we were at Schiit. We got money to do Adwords. Social media seemed like the leading edge of marketing. For an entertainment company, social marketing is definitely a must. However, if you are not, social marketing is dumb, with little returns. To capture your customers, you need a memorable brand and fast responses to queries. Invest in AdWords and constantly improve your product and not spend too much time on social media. If you are B2B, you need to focus even less on social media. You rather spend your money on advertising and PR. If you want social media, ask yourself, who’s going to create the content? Who’s going to respond to comments? Who’s going to decide what’s okay to say? Who’s going to measure and manage it all? Most of the content are posted by bots nowadays. It is more about crowd-sourced advertising. Paid advertising in big-name venues is here to stay. I said yes to the NYTimes, who wanted to review my product. After the article on NYT, customers posted a lot of newbie questions to us .It hit the print. Because of it, our Bifrost sold out and was on back-order. We had a huge backorder because of this news article. Old media isn’t dead, by any means. The mass media can be really powerful. The Magnis and Modis are targeted at first time audiophiles. One audio magazine gave a glowing review, but it didn’t bring much sales. Always stay open to traditional marketing.

Nobody is perfect. No matter how many degrees they have, no matter how high they scored on their IQ tests, no matter how many years of experience, no matter how many companies they’re launched. Period –  Jason Stoddard

And, while I’m absolutely for introducing everyone to great sound, we’re going to meet plenty of people who don’t care. And we have to be careful not to be tiresome proselytizers. – Jason Stoddard

Well, call me biased, call me old-fashioned, but I believe it will be done in only one way: with quality products made at a price that’s fair for its performance, construction, and looks. – Jason Stoddard

9781514355022-us

Schiit Happened by Jason Stoddard and Mike Moffat (Part 1)

Foreword – Christmas Presents Until the End of Time? We were wondering whether our products could sell. Schiit Audio is about following gut feelings and not following the herd. Firstly, the name of the company was impressive. They did a direct sales model with no outside funding. Everything is manufactured in the US. Jason is the co-founder of Schiit and Mike is the business partner. Mike has experience in entrepreneurship and in audio. I am a science fiction author and a veteran of the marketing wars at centric.com. The key to our success is that we picked the right niche. You don’t have to make everyone love you, you just need to make some people love you. Go direct in your distribution. If you want venture funding, this book ain’t for you. However, your one big idea might not get any funding and fail in the end. This book is for those without any venture funding.

Bottom line, there are plenty of billion-dollar ideas out there. Making one into a real company that succeeds isn’t just a lot of work. It’s about money, luck, connections, money, luck, money, and luck. And more luck. – Jason Stoddard

The Line is Down. Here’s an Undocumented Test Rig. Fix It. It was first day of work at Sumo in 1989. There were many resistors, capacitors on the workbench. I was asked to fix it. The MOSFET matcher was down and it was affecting production. There was no schematics also. Everyone was staring at me, waiting for me to complete it. I wanted to be in audio and I had a speaker company on the side. Business Lesson 1: Say you can do it. Then deliver – at all costs. I managed to fix is as the connection was faulty. In 2 years, I was promoted to be chief engineer in designing amplifiers. Once, their products was faulty as it might catch fire, I ordered them not to ship them as it would have safety implications. However, customers kept sending them back to us to service. Thus, this took up a lot of our time. Business lesson 2: Don’t ship stuff that blows up. Ever. Never sell anything you haven’t made yet. Don’t lose customer returns, or use them to fix other customer returns. Don’t try to go too broad. Business lesson 3: Don’t dwell on the negatives – learn from them. I believe in subjective-objectivism in audio. This means that measurements are important to some extent. Amps with similar specifications might not sound all the same. Business lesson 4: Don’t discount personal experience. Mike was working in Theta and their profit was at least 8 times of Sumo. Business lesson 5: Be open to meeting new people, and transformative ideas. I started moonlighting for Theta. We wanted to create an inexpensive DAC. We made the Cobalt 307, a combination of our expertise. It sold like hot cakes. Selling direct wasn’t feasible in 1993. Theta Gen 5 was the first discrete output DAC that was made by them. Business lesson 6: Take a chance, do crazy things… a lot of times it’s worth it. The magazines at that time only liked to feature expensive DACs and amps. Mike eventually went to start Angstrom, a company into Surround Sound.

Fifteen Years on the Marketing Front Lines. What has marketing got to do with engineering? I wanted to make audio stuff all along, but somehow I returned to marketing. I founded, Centric, which does marketing for tech companies. We certainly can’t afford those SuperBowl advertisements. Tech companies do not have huge marketing budgets. Advertising agencies primarily develop and place advertising. Interactive agencies can do the above but also some web and mobile development. There are also social and design agencies, PR agencies, marketing agencies. Why is marketing necessary, you may ask? I started Centric when I was 28. It was fun as Centric rode the dot com boom in the early 2000s and went into web development work too. The fact is that most companies are too terrified to be effective at marketing. Don’t be scared to stand out from your competitors. If you keep second guessing what your competitors do, you might think that you are not able to come up with anything better and do nothing instead. Don’t benchmark yourself into mediocrity. Most companies have no idea what to do in marketing. Marketing should make money and the effort should be focused on the most effective and measurable tactics. Fear is the mind-killer. Kill the fear before it spreads. It is not necessary to have the products with the best specifications. Marketing is important, but don’t do it blindly. Focus on the stuff that works only. Don’t simply believe everything an agency tells you. Forget about chasing new/ easy/ cheap. Your best bet is to stay online, measure, refine and do better. Microsocial almost always works, unless you’re a dick. Find the small passionate community that you are interested in. Measure everything you do. Your website and e-commerce system are the most important thing. Get featured on the press, online and offline. Online ads are tricky, but find those that you can track all the way to your sale. I am a published science fiction writer now after my wife pushed me to write books.

Pay lots of attention to microsocial, and be prepared to post, respond, meet new friends, piss some people off, delight some others, and become part of your specific niche. – Jason Stoddard

Who’s going to kick you in the can? When will you do your writing, or company-building, or adventuring, or whatever you want to do? – Jason Stoddard

From Death, Rebirth: Armageddon 2009. All Great Things Come to an End. Centric was in trouble. However, after Centric, we got Schiit. I started writing after Centric started to grow again after 2009. Writing means time without distractions. When I was at home, I paired a pair of tube amp with my AKG 701s and I listened to blissful music. Headphones didn’t need that much power and Class A was possible. I tried the Cobalt DAC too, and the music was a lot more detailed. Was it possible to manufacture something in the US? And how would you go about selling it? Selling direct cuts out the distributors/ dealers. 48% to 65% of the cost can be in distribution. The dealer route was old fashioned and it was easy to start an e-commerce site. Let’s make it work.

You Always Say You Have Schiit to Do, Why Don’t You Just Call It That? I was out of the audio game for so long. There were a lot of questions when we started Schiit. Thank goodness the cost of electronics came down in recent years. We wanted to start with 10k funding at the start. Google gives a lot of things away for free. Google is really an ad company. Only recently did we get into 3D CAD drawings. We designed our products in a cheap simple and minimalistic box. Amps need heatsinks, especially Class-A amps. Instead of a heatsink extrusion at the back of the amp, we used the chassis as a heatsink. In the end, we went for a fairly thick aluminum. How were we going to make the DAC inexpensive? We could have bought the machinery to make it ourselves, or contact with someone who can supply finished parts. However, the second option has its problems as the metal supplier might screw up. Furthermore, most of them did industrial instead of commercial products. My wife suggested that I call the company schiit. That name would certainly catch the attention of others. We wanted to be unforgettable. There, the name was born.

$800 in Screws? The failures of building prototypes never bothered me. We didn’t have all the parts we needed. We were reliant on a critical part from one company and that company screwed up. I wondered if people would think we were a joke? There will be days you feel like quitting. We would try hand-soldering ourselves. We would try doing it in our garage. We would start building inexpensive products first. My wife helped with the soldering too. We did a WordPress template to our own custom design. We linked it to an easy-to-integrate payment processor. Next, our website was up and we were thrilled. Selling online is getting easier by the day and is definitely worth trying. Now, let’s talk business. Business plans are a waste of time. This is because it often sounds too intimidating to start. Venture Capitalists also know that business plans are bullshit. Business is evolving too quickly that a business plan can seem obsolete very quickly. Learn to pay more attention to the market instead of your business plan instead. You can write a short business brief, which is okay. Just incorporate a corporation, not a partnership etc. You should do it because of limited liability. My partner and I decided that we would not draw salary for 2 years.

If you start a business, there will be doubts. Lots and lots of doubts – Jason Stoddard

Trust me, if you don’t have a working product that’s making money, you’re not getting capital even if your business plan was written by the clones of Hemingway and Rockefeller. – Jason Stoddard

What will this company do that no other can do? If others can do this, or are doing this, how are significantly better? Why would someone pay money for it? How will they find out about it? How much money do you need to start it –  Jason Stoddard

The First Order Is… For Something We’re Not Selling. You can pick the date to launch the product. When you launch something, you bare yourself to the public. You don’t know how the public will react to your product. It was June 15, 2010. Perfect the product before launching. Find your press contacts and get their emails. Write a short article to them. We got the audio sites to cover our product. Our products were well received and priced to be affordable. Jude from Head-Fi called us and had some questions for us. He was surprised how we managed to keep the costs down. Jude liked the Asgard. The orders kept coming in and we had to keep shipping. The Valhalla metal came in and we were in for a big shock.

Launching a product isn’t like live theater in one respect: at the theater, you’ve got a play date. The show’s gonna go on, whether you’re ready or not. It doesn’t matter if all the costumes were lost because a drunk truck driver them down a ravine. You need to get on stage and do something. – Jason Stoddard

Metal Debacle, Valhalla Style. I hated the chassis that was made. They were all unsellable, some were cracked and the supplier tried to fix it. Your metal vendor will screw up eventually. I couldn’t find a metal supplier on such short notice. We started looking for a new metal shop. We finally found one that was suitable, but we had to wait for their products. There are many ways to finish metal, graining, bead-blasting, etching etc. It is important to work with an inexpensive chassis. We were facing back-orders for the Valhalla. Thank goodness the metal was great. The quality of the metal was acceptable and we were lucky. Now, we received positive feedback on the Valhalla. We were invited by Jude to showcase at CanJam.

If you’re looking for a get-rich-quick, work-two-hours-a-week-from-home deal, making things ain’t for you. Stuff will go wrong. You will have to deal with it. – Jason Stoddard

Bringing a product to market is like screwing a gorilla. You aren’t done until the gorilla’s done. – Mike Moffat

We Screw Up Sennheiser and Insult Some Big Guys. Trade shows are very tiring and have long hours. Setting up is actually very tedious. Even in this Internet era, trade shows are popular and people still like to visit. If you sell via distribution channels, trade shows are good for you. If you sell direct, then no. What could possibly go wrong at CanJam? We were late. I shipped the amps we were supposed to bring. However, Sennheiser couldn’t find them. The audio industry has grown a lot recently. Rina finally got the amps and we were all set. We had our fair share of interesting visitors. Schiit had its set of loyal followers. The ‘Made in USA’ label seemed very attractive. There was an anonymous guy who appeared to be jealous that our products were so good but they were not made in China.

Powering Up: Lyr. Product roadmaps are important. It is a product life cycle in the market. How would one product fit with the other? Is it upstream or downstream? You would need to refresh the product line also. We wanted the Lyr. There are Class A, Class AB amps. Class As are usually big, hot and heavy. Class AB introduces non-linearities in the end. Class A and Class B are well understood, but something in between is not. We looked to the past for inspiration and kept tweaking things. We didn’t have the capabilities to hand-make the products anymore.

Engineering is a lot of heads-down work. There’s not a lot of heroics or drama. You know, like everything in real life. – Jason Stoddard

Our First Employee, Our First Board House. Having employees is a line crossed, and it’s hard to go back. You can have a successful business without employees. However, it limits your growth. You have to meet payroll and have additional responsibilities once you have an employee. Can you afford employees?  With employees, you have more admin costs. We modified our house and added storage space. After Lyr, we needed help. I had a friend who wanted to help. He was Eddie. We hired him. He was meticulous and was okay being made the number of pieces he made. We wanted him as a contractor and not an employee, as being a contractor would mean we didn’t have to give so many benefits. Eddie was happy to work for us. Eddie also tried to improve our processes. He was a great friend. We outsourced the making of PCB Boards and they were in terrific shape. There are some things which you don’t have to do yourself.

USB Sucks! Or, Mike Joins the 21st century. We are in early 2011 now. It was time to talk about Mike. Mike was the guy who invented the DAC. We eventually invented Bifrost. Mike’s idea for a DAC was the Yggdrasil, one that costs 10 times more than Asgard. Mike didn’t like USB ports. However, most people only use laptops as their audio source and would need it. USB 1.1 and 2.0 were about the same. Sometimes going the grain is not the best idea. Mike was eventually ok with the USB, but he wanted an upgradable system. Like, you can upgrade the DAC when the technology changes. We got Dave on board to work on Bitfrost. It was a modular DAC and we went with the AKM chip. We took a long time over the USB input. The different type of USB modes concern data rate, not audio. 1.1 can transmit data up to 12Mbps and transmit audio up to 24/96. 2.0 can transmit up to 480Mbps and transmit audio up to rates like 32/768. USB Audio Classes are standards used by the industry and are not USB modes. USB Audio Class 2 usually requires drivers. 24bit is 144db dynamic range and the limit of the Stanford analyzers. Toslink is better than USB. Bitfrost was a truly unique DAC to be invented. You should be aware of what your competitors are doing and improve from there. However, how do you know your ideas are better than prevailing wisdom and can be realistic to implement? There are pros to doing what others are doing. You get the product out faster. However, if you do that, you expect disappointment from customers. You will just be like everyone else, with no ideas of your own.

Schiit Goes Evil? We received an email and it caused us problems. Schiit hit the fan on Head-Fi. NwAvGuy accused us of building dangerous amplifiers. He said our products were misguided and sloppy. There was some turn-on transient problem with the Asguard. We defended our products on Head-Fi. There was a discrepancy in our DC offset. Later, we added a relay mute on our Lyr. Anyone who wanted to return our Asgard to us could do so and we would give a refund. I wanted to pull the plug on Schiit as we weren’t making much money. Mike said we would add the relay and kill the current run. For future Asgards, we would add the delay. The problem occurred because we relied on a memory of a measurement that was incorrect. NwAvGuy’s complaint forced us to improve as a company and improve our products. We welcome feedback like those by NwAvGuy. We learnt that we don’t have all the answers.

We have a “live and let live” attitude at Schiit. We don’t think we know it all, and we don’t believe that our answers are always the best ones. We know how much work it takes to bring something to market, and we salute every company out there. – Jason Stoddard

Because no business, no matter how great the engineers, no matter how skilled the production team is, no matter how solid the logistics guys are, no matter how enlightened the management is, is infallible. You screw up. Bad things happen. And you make them good. – Jason Stoddard

9781514355022-us

IIA Magazine Feb 2017 issue

IIA Feb 2017 Issue

Internal Auditors need to provide maximum return on investment and audit the right things. They need to understand the company’s strategic mission, objectives and KPIs. More auditors need to base their work on the International Standards for the Professional Practice of Internal Auditing.

The 5 emerging threats are (i) global economic uncertainty; (ii) increased regulatory burden; (iii) significant industry changes; (iv) business model disruption; (v) cybersecurity threats. Global economic uncertainty seems to a bigger risk in 2017 as compared to previous years. In the compliance space, with the new US administration, enforcement areas could see some change. Trump could change the legislative, regulatory and executive actions under Obama’s reign.

Although most companies feel that they could detect a sophisticated cyberattack, many of them do not have an adequate communication strategy in the event of a significant attack. Also, some of the BCP might be lacking. The continuous monitoring of cyberattacks is also a challenge.

Data Mining. By leveraging data, internal auditors can address issues beyond the reach of traditional analysis techniques. It involves making use of data which had previously no formulated relationships, patterns. Artificial intelligence, machine learning, statistics and database systems all come into play. Some of the techniques auditors can use are predictive modeling (IF), data segmentation (data clustering), neural networks (artificial intelligence), link analysis (links between records), deviation detection (red flags). The use of email mining can identify red flags in fraud etc. Social network analysis is also possible. IA should continue to look for ways to innovate their audit testing.

Intelligent Assessments. Use cognitive technology to help identify high-risk areas. These are intelligent computer systems that can aid in the performance of risk assessments. For instance, this tool can extract and analyze text from audit reports and analyze trends and high-risk areas. Natural language processing (NLP) has the power to tap into every sentence of every report to churn out more information. The machine will convert text to a certain structure and add meaning to the text and teach the computer to understand audit concepts. Words like ‘fraud’, ‘finding’, ‘auditee’ can be flagged out.

Turning Up the Heat on Fraud. A fraud risk assessment can help auditors take the organization’s ethical temperature. There are many ways to do it, example, through surveys, focus groups, workshops etc. The focus is mainly on fraud risk. It works best in small brainstorming sessions with operational management. Using the ACFE’s Fraud Risk Assessment Tool can be useful as it provides a structured approach. Risk assessment is about identifying where fraud might occur and the potential perpetrators. IA can do surveys to measure the ethical climate and voting can be anonymous. The results of the survey can be discussed with management. If there are high risk areas with fraud risks, IA can pay more attention to them.

The Accidental Discovery. Small or remote locations can be more susceptible to embezzlement, especially when they are not audited regularly. Confront someone after the facts have been reviewed. Look at the big picture. Controls that aren’t operating effectively are as good as them not being there.

Auditing what matters. Add value by selecting audits that contribute to achievement of strategic objectives. Auditors now should start looking at this area. Look at where the company spends the most money, what their main programmes are etc. Find out who is responsible for the strategy and make them IA’s stakeholders. Traditional audit activities can move towards strategy too. IA should use the COSO ERM framework in its entirety. The aim is for IA to a strategic partner to management. Don’t fear failure and find out more from the auditee by talking to them. The trick is to engage with processor owners easy and evaluate control design. IA should do the following: (i) Identify and define the risks; (ii) rate the risks; (iii) address risks in detail. Getting management buy-in is also important. The CAE must convince the AC to highlight the need for a strategic approach. Most IA wants to be a trusted advisor.

Core Principles and the QAIP. The new IPPF in 2015 can be incorporated into the QAIP to show that the IA is aligned with the mandatory IPPF elements. Learn to develop a concept and approach that is easy to understand. Core principles are a mandatory element of the IPPF. IA need to have general conformance with the Code of Ethics and Standards. The 5 steps are (i) establish a maturity framework (ineffective, partially effective, effective, sustainable, world class); (ii) map core principles with the standards and code of ethics; (iii) Define characteristics of maturity in 3 aspects of standards and QAIP characteristics, infrastructure and process characteristics, core principles and specific characteristics; (iv) perform internal and external assessment consistent with requirements of QAIP; (v) Evaluate and report maturity levels for core principles.

Champion of Trust. By modelling high standards of ethical behaviour, IA can help shore up faith in the organizations they serve. How can IA be a trusted advisor that is well respected? One way is via ethical commitment. IA needs to model ethical conduct in everything they do. IA must have the courage to sound off before things get in trouble. Ethical commitment is the key to a well-functioning IA. Ethics should come naturally to all. We also need to build ethical resilience (integrity, courage, honesty, accountability, trustworthiness).

Infusing IT Auditing into Engagements via a three-phase approach. The tech sector is growing at a rapid rate. Internal auditors also need to develop IT-related capabilities. IA needs to think about the future of integrated auditing. For a start, IA can incorporate IT perspectives into current audit engagements. This can involve documenting down what are the IT automated controls. One can also read IT policies or those on change management. One should also identify resources and pinpoint where they are stored (example: servers). Map core IT resources and data to key business objectives. Respond to IT risks and identify audit objectives that can add value. An integrated audit can help in this. In the middle term, IA can build an IT audit team, understand the IT framework like COBIT, perform IT audits and also foster relationships with IT and management. In the long term, IA can leverage on data analytics and obtain professional certifications (like IIA and CISA).

Breaking Down The Standards. With the right strategy, practitioners can divide conformance into bite-size, easily digested portions. The standards consist of attribute standards (series 1000 to 1322) and performance standards (series 2000 to 2600). Some IA may neglect the attribute standards and focus on the performance standards instead. However, both are very important. IA should perform an assessment of how well they are conforming to the Standards. An external assessment must be conducted once every 5 years. The audit work program needs to be reviewed and approved by the CAE before engagement commencement. Ultimately, conforming and understanding the principles behind the Standards are important.

Auditing Organizational Governance. IA has an integral role to play in improving the organization’s strategic performance. This area is becoming increasingly important in recent years. Governance reviews can help prevent governance failures. Less than 1 in 6 IAs conduct reviews for their organization’s strategy. Sometimes, it might be difficult to conduct a separate governance review. Rather, it might be easier to incorporate it as part of routine audits. One can focus on both the governance structures as well as the organizational culture. Some of the soft controls can include management competence/style; mutual trust and openness; strong leadership; high performance and quality expectations; shared values and understanding; high ethical standards. However, for some of these measures, there are no hard data to analyse. Hence, it is important for IA to read the signs. IA can also provide a more advisory role, which is educating board about developments and trends in the industry and governance best practices. In terms of strategic reviews, IA has much to work on. There is a tendency to focus on weaknesses in financial reporting etc.

Good Governance is All About Quality. The 5 quality rules are (i) customer focus; (ii) management leadership; (iii) Teamwork; (iv) Measurement; (v) Total commitment to continuous improvement.

pic_internal_audit_big

 

IIA Magazine April 2017 issue

Business Resiliency is about the organization’s ability to quickly adapt to risk events such as these while maintaining continuous operations and safeguarding its employees, assets, and brand equity.

Malware, Ransomware and man-in-the-middle attacks are common security issues for organizations

Some organizations lack a clear risk management program and that is a problem. Lack of resources, complexity and inability to get started are some of the reasons cited.

  1. Communication errors/ misinformation over company performance through channels other than financial reports; 2. Environment, health and safety is an area which is high risk, but not many IA covers this.

Cyber risks are also a main area where IA needs to be concerned about.

Learn to work smart and not harder. Employers should 1) acknowledge the problem; 2) appreciate the employee; 3) identify the root cause; 4) define the roadblock; 5) Devise a solution (training, resource allocation, process improvements); 6) Circle back. Guiding an employee well will result in an increase in productivity and morale.

The Data Museum. IA can compile organizational data in structured exhibits. Auditors need to use data warehousing principles to clean the data and structure it once that it is ready for analysis. Before storing data, consider the following: relevance, reliability; reusability; rarity. For instance, SQL can be used to extract, transform and load the data. Learn to run SQL statements. As for audit tools, auditors can use data visualization and advanced reporting techniques. Use a relational database and start small. Ensure that there are audit trails and logs.

The Many Facets of Risk. Risk is always multi-faceted. Look at the product and market research life cycle. It is important to do the strategy and competitive analysis like via SWOT, Porters’ 5 forces etc. Financial Management like NPV calculations aid in project-making decisions. Operations Management is about maintaining the optimum amount of inventory, like the EOQ method. Forecasting sales and demand is also a risk. Human resource risks and quality management risks are also possible. IA can act to cross-pollinate risks via mathematical or management methods.

Life of Luxury (Embezzlement). When too much power, accounting and budgeting etc, resides with the head, too much risks exists and there is potential fraud risk. There were too many over budgeted accounts in this case. Also, a person spending excessively or leading a lavish lifestyle will arouse suspicion. There are many lessons that the IA can learn: include riskier businesses in the IA plan; question how beneficial is the whistle-blowing hotline; an audit on payroll can detect payment to ficitious persons/ other people; review the acceptable use policy for all corporate-issued credit cards.

Resilience Through Crisis. Organizations all need to overcome crises and emerge stronger. The BP oil-spill PR was handled badly. IA can audit the crisis management plan. A crisis team should be cross-functional and with each goal clearly defined. IA should also be part of the team to ensure that the team is addressing the appropriate issues. The team should identify potential crises and IA can chip in. Next, a comprehensive crisis plan should be developed. Effective communication is the key and there must be a plan to inform stakeholders quickly. It is also important to have a spokesperson to handle the media etc. General templates can be used for media statements. Experts can be used as well. Crisis simulations should be conducted, like table-top exercises etc. IA should be the observer in all simulations. After the crisis, the crisis management team should evaluate the effectiveness and the performance of the plan.

Hit the Ground Running. The trend is to convert interns in IA into the permanent establishment as they already understand some of the company’s operations. One option is to transfer existing staff to IA. Interns who perform well stand to be converted. Interns are also less costly and can be used during peal-periods. There needs to be a significant investment in developing a good internship programme. There needs to be a plan all along. When you plan, it is important to prepare a job description, program budget, hiring plan and schedule. Provide guidelines for the interns to do work and make the audit project interesting for them. Teach them soft skills in the audit. Give them real assignments. Stretch them and ensure that they can contribute and make their internship meaningful.

Climbing the Scale. Turn to maturity models. Maturity models can rank from 1 to 5. They can be expanded into many business areas nowadays. Maturity models can be more meaningful than a simple pass/fail. Using this can convey a more positive collaborative tone too. Acknowledge what the client is doing already to improve processes and controls. A maturity model also focuses more on processes than people and seems more non-threatening. The models you can use are CMMI, C2M2, COBIT, P3M3, RMM, TMMi etc. Develop a dynamic risk assessment approach. IA should provide both assurance and insight. One can use the ISO standardized frameworks to compare the organization’s maturity level against. At times, the highest level of maturity might not be required as a lot of resources will be required. Maturity models can be very judgemental indeed. To succeed, IA needs to choose the correct model and be flexible when applying it. Build the best model and find a project champion if possible.

From the Same Playbook. IA needs to align its work with the organization’s strategy. There are debates as to whether IA should provide assurance around risks affecting company strategy. It depends on the CAE. However, not all top executives will want to discuss strategy with the CAE. There can be a disconnect as IA usually does not audit the latest transformations and developments in the company. Some IA prefer to audit compliance, which they are more familiar with. Two big risks are not having effective strategy or not executing them properly. CAE should think like CEOs and think through different perspectives and figure out how to maximize shareholder value. IA can perform gross profit margin analysis etc. There needs to be a balance between strategic-level audits and compliance based audits. Have discussions with management and the audit committee on strategy. It is for IA to look into strategy risks and the risks of entering any particular strategy.

Three Lines in Harmony. A Centralized testing model will enable the 3 lines of defence to rely on each others’ work. Front-line management is the first line of defense, risk/compliance functions are the second line of defense, internal audit is the third line of defense. It is important to co-ordinate so as to ensure all areas are covered and there are no duplications. Relying on others can also provide an increase in efficiency. Ensure that there are proper service agreements if there is a centralized testing unit. Automatic testing preferred and desired. There is a need to document the risk framework.

Signature Audits. Auditors should try to identify and respond to emerging risks. Most IA confirm concerns already identified by management. IA can do a mystery shopper role, or perform simulations to test controls. IA now need to be more innovative and curious. Signature Audits refer to thinking out of the box to design appropriate test procedures (example: penetration testing or social engineering). IA can identify best practices or try to circumvent processes rather than test them.

Internal-Audit

Steve Jobs by Walter Isaacson (Part 3)

The iTunes Store. There were many illegal file sharing websites like Kazaa, Napster etc. Steve wanted a legal way to download music. The music companies wanted to copy protect their music. Apple decided to work with Sony on that (Warner-Sony). Sony backed out and worked with Universal to create Pressplay. This was a subscription service to music. Steve hated stealing and piracy. Steve wanted the top 5 record companies to sell through the iTunes store. Steve wanted 99 cents per song, with the record company getting 70 cents. Musicians were unhappy that Steve allowed sale of single songs. According to him, tech companies don’t appreciate artists, and music companies don’t know technology. Steve convinced the music companies to sell through iTunes. Doug Morris was head of UMG. Steve had the vision that music companies were lacking. Morris loved Steve. He agreed to join Apple, instead of partnering with Sony. Sony was a good company, just that their divisions never collaborated and there was no synergy. Andy Lack was head of Sony Music. He knew that if Sony sold music through iTunes, Apple would be making a lot of money. He was angry by that fact. Eventually, Sony agreed to sell through iTunes. Persuading the record companies was one thing, now Steve had to approach the musicians. He went to the major artistes, including Bono, Mick Jagger etc. iTunes was released in Apr 2003. iTunes provided smoother and faster downloads. This was the turning point of the music industry. Microsoft was amazed at how Apple had managed to convince the record companies. Microsoft wanted to compete with iTunes. Microsoft tried to copy, but this time they couldn’t. Apple allowed the iPod to work with Windows. Steve was very against this initially. Apple also produced iTunes for Windows, so that more PC users could own an iPod. iTunes for Windows was launched in Oct 2003. Microsoft introduced Zune in 2006, 3 years later. It had very low market share. Sony’s divisions did not co-operate. This led to their downfall. Apple didn’t have divisional P&L. It was one P&L for the company. Steve was not afraid of cannibalizing yourself. Sony Connect was introduced. It was similar to iTunes. It failed miserably. In Jan 2004, the iPod Mini was released in the market. The iPod Mini was a huge success. In 2005, the iPod Shuffle was also a big hit. People loved to shuffle songs sometimes. ‘Embrace uncertainty’. Apple got rid of the screen. By 2007, iPod sales were half of Apple’s revenues. The iTunes was also a huge success. By June 2011, Apple had a database of over 225 million users.

With Andy, it was mostly about his big ego. He never really understood the music business, and he could never really deliver. I thought he was sometimes a dick. – Steve Jobs

With iTunes, it’s not stealing anymore. It’s good karma. – Steve Jobs

Steve Job’s ability to focus in on a few things that count, get people who get user interface right, and market things as revolutionary are amazing things. – Bill Gates

The older I get, the more I see how much motivations matter. The Zune was crappy because the people at Microsoft don’t really love music or art the way we do. We won because we personally love music. We made the iPod for ourselves, and when you’re doing something for yourself, or your best friend or family, you’re not going to cheese out. If you don’t love something you’re not going to go the extra mile, work the extra weekend, challenge the status quo as much. – Steve Jobs

If you don’t cannibalize yourself, someone else will. – Steve Jobs

It’s wrong to steal. It hurts other people. And it hurts your own character. – Steve Jobs

I don’t care much about computers, and kept telling him so, but he goes on for 2 hours. He was a man possessed. After a while, I started looking at him and not the computer, because I was so fascinated with his passion. – Wynton Marsalis, a famous jazz musician

Music Man (The Sound Track of His Life). Revealing your iPod to your friends can reveal what kind of person you are. Music reveals who you are. Steve liked the Beatles and Bob Dylan. He had a lot of artistes from the 1960s and 1970s. Steve liked Bach. Both the Brandenburg concertos and the Goldberg Variations. The second version was much darker and wiser. Steve also preferred the second version. Joni Mitchell was also his favorite artistes. Steve visited Dylan before one of his concerts. Steve was really nervous. Steve was really impressed with him. Artists knew that if they appeared in Steve’s ads, they would have added publicity. Dylan, to Steve, was still cool. After an ad featured him, he was top of the charts again. Beatles was still not on iTunes. Steve made sure they were eventually on it. Bono, from U2, wanted a riff from Vertigo played in an iPod commercial. iPod commercials featured silhouettes of artistes. Bono wanted a special version of the iPod released and royalties for each one sold. Eventually, Steve agreed to a deal with U2. Steve also like YoYo Ma, the famous cellist. He played Bach at Steve’s house. Steve teared by the sheer quality of his playing ability. Steve liked people who are pure. Pure with passion. He made YoYo Ma promise that he will play at his funeral.

He was one of my heroes. My love for him has grown over the years, it’s ripened. I can’t figure out how he did it when he was so young. – Steve Jobs, on Bob Dylan

The way we build stuff at Apple is often this way. Even the number of models we’d make of a new notebook or iPod. We would start off with a version and then begin refining and refining, doing detailed models of the design, or the buttons, or how a function operates. It’s a lot of work, but in the end it just gets better, and soon it’s like, ‘Wow, how did they do that?!? Where are the screws? – Steve Jobs

Steve (Jobs) can be sparky, but those moments have made us closer friends, because there are not many people in your life where you can have these robust discussions. He’s very opinionated. After our shows, I talk to him and he’s always got an opinion. – Bono, from U2

You playing is the best argument I’ve ever heard for the existence of God, because I don’t really believe a human alone can do this. – Steve Jobs, on YoYo Ma

Pixar’s friends and Foes. Lasseter set the tone at Pixar. He let the creative people do the work quietly and did not want to interfere excessively. Steve was more into deal making. Steve clashed with Katzenberg when he accused him of stealing the Bug’s Life from Pixar and adopting it for Antz at Dreamworks. Lasseter was super pissed with Katzenberg and didn’t speak to him. It was Lasseter who first revealed that Pixar was doing an animated film on insects. Antz was released in the market first. . The Bug’s Life did twice as well as Antz, thankfully. Although Steve and Katzenberg was still on talking terms, Steve never really forgave him. Steve wanted a HQ for Pixar. The building was Steve’s movie. The building was designed such that people would keep bumping into each other in a central area. Michael Eisner’s Disney started to get aggressive at Steve Jobs. Steve didn’t want to deal with Disney anymore. Finding Nemo became the biggest hit so far. Lasseter was upset with the breakup with Disney. Steve explained why they had to break up. To Steve, Eisner was a creative guy who performed well in his first 10 years when he had Frank Wells to run the operations for him. After he left, for the next 10 years, Eisner didn’t do such a good job. He had poor managerial skills. Treasure Planet and Brother Bear from Disney were poor performers. Now, Eisner realized how bad his animation team was. Both Eisner and Steve refused to compromise. Therefore, a divorce was inevitable. Eisner was soon axed and replaced with Iger. Steve now tried again at striking a deal with Disney. The iPod video was soon released. Iger and Steve struck a deal. The iPod would also be selling TV shows. This was collaboration between Disney and Apple. Since their animation team sucked, Iger explored the possibility of buying Pixar. Iger admitted they missed Pixar. Steve usually started negotiating by proclaiming the other party sucked. Lasseter was shocked when learning that Disney might want to buy Pixar. Disney produced to buy Pixar for $7.4 billion in equity. Lasseter did all the pitching in the acquisition deal. Eisner was against this and wanted the animation team to get their act together. Steve did the announcement to Pixar employees that Disney was taking over. Catmull would be head of Disney animation and Lasseter would be chief creative officer. It was like a reverse acquisition. Toy Story 2 was an even bigger hit.

My goal has always been not only to make great products, but to build great companies. Walt Disney did that. And the way we did the merger, we kept Pixar as a great company and helped Disney remain one as well. – Steve Jobs

There’s a classic thing in business, which is the second-product syndrome. I live through that at Apple. My feeling was, if we got through our second film, we’d make it. – Steve Jobs, on Pixar

There’s a temptation in our networked age to think that ideas can be developed by email and iChat. That’s crazy. Creativity comes from spontaneous meetings, from random discussions. You run into someone, you ask what they’re doing, you say ‘Wow’, and soon you’re cooking up all sorts of ideas. – Steve Jobs

The worst, thing, to my mind, was that Pixar had successfully reinvented Disney’s business, turning out great films one after the other while Disney turned out flop after flop. You would think the CEO of Disney would be curious how Pixar was doing that. But during the 20 year relationship, he visited Pixar for a total of about 2 and a half hours, only to give little congratulatory speeches. He was never curious. I was amazed. Curiosity is very important. – Steve Jobs

He has the absolute ability to make you believe. Suddenly, we all had the confidence that, whatever happened, Pixar would flourish. – Oren Jacob

One of the things that Steve and I are incredibly excited about is the intersection between great content and great technology. – Bob Iger

It’s night and day different from Eisner’s Disney. He’s straightforward, and there’s no drama with him. – Steve Jobs, on Bob Iver

Michael (Eisner), how come you say I can fix it, when you couldn’t fix it yourself? – Bob Iger

21st Century Macs. Setting Apple Apart. The iBook was released in 1999. The G4 was a huge success as well. Jobs wanted to mass market something to consumers. The Cube would not do so well as it priced too expensive. In 2000, Apple had disappointing revenue results. At one point, their share price fell to $15. Flat displays were the in thing then. Finally, Steve and Jony thought of a laptop design. Apple was the only company still trying to innovate. The PowerPC chips they were using was faster than Intel for a few years. Motorola could not keep us with chip development and Steve wanted to switch to Intel chips. The board decided that they had to move to Intel. They hammered out a deal which impressed Bill Gates. He was surprised that Apple’s PCs could transition so seamlessly with different chips. Steve was accused of taking excessive executive compensation with his stock options. It was never about the money for Steve. He wanted even more stock options. Apple tried to backdate his options. This was discovered by the SEC. Steve was eventually not charged for doing that.

Round One

Memento Mori. Steve predicted that 1997 was the cause of his cancer, when he worked on two jobs full time. His immune system was rather weak at that time. A CAT scan in 2003 revealed a tumor in the pancreas. Steve was in denial and didn’t want to do it. The doctor identified it as a tumor. It was a tumor which had a chance to be treated successfully. To everyone’s horror, Steve didn’t want to have surgery at first. He wanted to try other methods to cure himself. He was not ready to go for surgery. He thought he could cure himself by eating nutritious foods. Everyone kept advising him to take the surgery. Steve was still living in his distortion reality field. He liked to ignore things he didn’t know how to deal with. By July 2004, the cancer had spread. He underwent surgery in 2004. The doctors only removed part of the pancreas. Tim Cook took over the operations in Aug 2004. Because of the lack of protein in his diet, doctors advised him to take more meat. He refused. The bad news was that the cancer had spread. The cancer had spread to his liver. He underwent chemotherapy. He lied to his friends, saying that he was ‘cured’. He was 50 when he gave the commencement speech at Standford University. He wrote the speech himself. It was simply a graceful speech. Famous colleagues attended his 50th birthday. Cook was calm and decisive when he took over as temporary CEO. Steve made Cook COO in 2005. Steve let Rubinstein leave eventually. He hired a professor to develop case studies on Apple so that new executives could learn from top management. ‘Memento mori’: Remember you will die. This helped to keep things in perspective. Steve recovered temporarily and worked even harder. He became somewhat a better person after his cancer episode. Ive was still perplexed by his behavior. Steve felt the rules of social engagement didn’t apply to him. Gates and Jobs sat in for a joint interview in 2007.

I think Steve has such a strong desire for the world to be a certain way that he wills it to be that way. Sometimes it doesn’t work. Reality is unforgiving. – Laurene Powell

Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the big choices in life. Because almost everything – all external expectations, all pride, all fear of embarrassment or failure – these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason to follow your heart. – Steve Jobs

Some people resent the fact that Steve Jobs gets credit for everything, but I’ve never given a rat’s ass about that. Frankly speaking, I’d prefer my name never be in the paper. – Tim Cook, new Apple CEO

I realized very early that if you didn’t voice your opinion, he would mow you down. He take contrary positions to create more discussion, because it may lead to a better result. So if you don’t feel comfortable disagreeing, then you’ll never survive. – Tim Cook

The iPhone. Three Revolutionary Products in One. By 2005, iPod sales were skyrocketing. It accounted for 45% of total revenue. The next step was to create a phone. A good phone competitor could cause iPod sales to plunge. Steve thought about partnering with Ed Zander, CEO of Motorola, to create a RAZR that could play music. Eventually, hardware and software with not in sync and integrated. Steve decided to work on his own model. Most of the phones in the market were too complicated. There was a huge market for phones. They wanted to modify the iPod. Eventually, they did away with the click wheel. The idea for the iPad came before the iPhone. A Microsoft kept revealing information about the tablet to Steve. Steve never liked the idea of a stylus. He made one without a keyboard and a stylus. His engineers took 6 months to come out with one prototype. Steve liked the idea of multi-touch technology. Apple bought over FingerWorks, a company dealing with multi-touch trackpads. Steve wanted rounded rectangles for the shape of the iPhone. They used anodized aluminum for the case and gorilla glass. Steve was impressed with Weeks idea of gorilla glass. It was technology developed in 1960s, but never utilized. Once again, Steve decided to change the design at the last minute. Jan 2007 was the release date for the iPhone. ‘It was a 3-in-1 device’. By end of 2010, it sold 90 million iPhones.

He’s always believed that thin is beautiful. You can see that in all of the work. We have the thinnest notebook, the thinnest smartphone, and we made the iPad thin and then even thinner. – Tim Cook

Round Two (The Cancer Recurs). In early 2008, the cancer was spreading. The pancreas failed to produce enzymes to digest proteins. He also still kept to a strict vegetarian diet, which made it worse. Their family hired a cook. His eating disorders got worse. The media soon was attacking Steve Jobs at hiding his health condition to the public. During the 3G iPhone launch, he was super thin. Apple said was it due to a common bug. Apple share price kept falling when Steve’s health got worse. Steve based out of an interview with Bill Gates, Andy Grove and Michael Dell. He also cancelled the Mac product show. In early 2009, he defended his absence by saying he wanted to spend more time with his family. He tried various forms of therapy overseas. It didn’t work. He decided to take medical leave in early Jan, 2009. Tim Cook would take over the daily operations. SEC wanted to accuse Apple of withholding material information about Steve’s health. The board at Apple was torn as to whether to reveal more information about his health. Fisher was now saying that Steve needed a liver transplant. However, there was a long waiting list. Steve was placed on 2 different states’ waiting list at the same time. The liver transplant was a success. There were tumors throughout his liver when it was removed. He nearly died at that time. Even when doctors tried to put the mask on him, he commented that the design sucked. Steve recovered from this episode and he was still as grumpy as ever. Apple’s stock fared well in the time that he was away. He faced the public again in Sept 9. He revealed that he received a liver transplant. He revealed the new iPod Nanos. At the beginning of 2010, it would be one of his more productive years.

To manage Steve, you have to be persistent. Eason managed Steve and forced him to do things that no one else could, things that were good for him that may not have been pleasant. – Tim Cook

The iPad. Into the Post-PC era. As usual, Steve kept tinkering with the design. Apple licensed the ARM architecture. They used the A4 chip instead, instead of dealing with Intel. Intel was too slow sometimes. The iPad was launched in Jan 2010. It was in between the iPhone and a laptop. Bill Gates and some of the media was not impressed with it. There were a lot of emails complaints that were sent to Steve Jobs. Steve wanted the next version of the iPad to emphasize on artistic creation. The response was mixed and there were some media groups who liked it. It was very intuitive and easy to use. Even a 6 year old could figure it out. Sales were extremely good. It was one of the most successful consumer product launch in history. Steve was angry with the quality of commercials and he wanted something better. It had to be a manifesto. It had to be big. The app store was becoming huge and it allowed people to do all sorts of things. They needed to empower develops to make lots of apps. Steve allowed outsiders to write apps, but they would have to meet standards and could only be sold through the iTunes store. The App store opened in July 2008. Apple was also competing with Amazon on ebooks. He allowed the publishers to set their own price but not the music companies to do so. Steve wanted to work with NY times to strike a deal.Steve refused to give out subscriber info to the NY times. He didn’t want the publisher to develop their own app and sell it through the iTunes store. He also succeeded in convincing a few magazine or newspaper publishers. Rupert Murdoch and Steve became quite close. Steve now wanted to target schools and replace textbooks with his iPad.

The reason Apple can create products like the iPad is that we’ve always tried to be at the intersection of technology and liberal arts. – Steve Jobs

New Battles (And Echoes of Old Ones). Google created the Android operating system to compete with Apple in the phone market. Eric Schmidt was on the Apple board and Larry Page/Sergey Brin were close to Steve as well. He was pissed. Their multi-touch device was also similar to the iPhone. Steve tried to dissuade them from creating the Android. Apple sued HTC (as they were the first to create the multi-touch device). Steve wanted to destroy the Android. Google Docs was shit to Steve. There was always the debate between open and closed systems. Schmidt admitted that Apple always believed in a closed system. An open system would lead to more options and consumer choice. Apple want to ban apps that defamed people, were politically explosive or deemed to be pornographic. He had a verbal sparring with Tate regarding censorship of apps. Apple doesn’t want to be seen as restricting freedom by choosing the apps they wanted to display. Others starting seeing Steve and Apple as being very arrogant. Design vs engineering was a big problem at Apple. Whenever the engineers couldn’t do something, Steve would persuade them to keep trying. For the iPhone 4, if you held it in a certain way, one could lose connection. It became the Antennagate problem. Steve Jobs gave a press conference to the public to address this. He allowed people to return their phones. Only 1.7% did as the problem was not too serious. iPhone was the best selling product. The Beatles were finally released on iTunes in a special edition.

Adobe Flash is a spaghetti-ball piece of technology that has lousy performance and really bad security problems. – Steve Jobs

To Infinity (The Cloud, the Spaceship, and Beyond). The iPad 2. Steve wanted to add back and front cameras. He wanted it slimmer. He wanted a detachable cover that was magnetically controlled. It was a smart cover. This cheeky cover impressed many people. He was there for the product launch in Mar 2011. Globalization effects were everywhere, even in Turkey. He kept trying to design a boat again. He was determined to keep working on the boat’s design. It was his twentieth wedding anniversary. In 2008, he predicted that cloud computing would be the next big thing. He was right on that. iCloud was launched in June 2011. He was still on medical leave. However, he desperately wanted to give the speech. Steve looked weak. Everything would now be moved to the Cloud. Steve bought the Cupertino campus. He wanted a showcase HQ. Sir Norman Foster was the architect for the project.

It’s like a spaceship has landed. I think we have a shot at building the bet office building in the world. – Steve Jobs

It’s in Apple’s DNA that technology alone is not enough. We believe that it’s technology married with the humanities that yields us the result that makes our hearts sing. Nowhere is that more true than in these post-PC devices, – Steve Jobs

Living with a disease like this, and all the pain, constantly reminds you of your own mortality, and that can do strange things to your brain if you’re not careful. You don’t make plans more than a year out, and that’s bad. You need to force yourself to plan as if you will live for many years. – Steve Jobs

I’m very lucky, because you just don’t know what you’re getting into when you get married. You have an intuitive feeling about things. I couldn’t have done better, because not only is Laurene smart and beautiful, she’s turned out to be a really good person. – Steve Jobs

I want to leave a signature campus that expresses the values of the company for generations. – Steve Jobs

Round Three (The Twilight Struggle). He had a burning desire to see his son graduate from high school. Unlike his dad, Reed was empathic and affectionate. He loved Steve. The moment his Dad had cancer, Reed spent time at the oncology lab to study about cancer markers. Reed could interact with many of the famous doctors. Reed wanted to combine biology and technology. He had a playful and warm personality. He wanted to be a cancer researcher when he grew up. At his high school graduation, Steve was elated. Erin, Steve’s daughter, was not very close to Steve as she was sensitive and quiet. Steve didn’t want to take her for any important events. Erin was fine with Steve treating her this way. Steve took the whole family to Kona Village for holiday. He even took them to Kyoto. Steve liked sushi and soba. The trip to Kyoto was also a spiritual one. Eve, Steve’s other daughter, wanted to be a horseback rider at the Olympics and was determined to get there. She was also a very sensitive girl. In Feb 2010, Steve turned 55. His health was now better. Powell arranged for Steve to meet President Obama. However, Steve was unwilling to meet him as he felt it was very ceremonial. Eventually the meeting lasted 45 minutes. He wanted Obama to make things more business friendly as there were too many regulations. Also, the American education systems had too many union work rules. He also wanted interactive educational materials. Steve wanted foreign engineering graduates a visa to stay in the US. He also wanted more trained engineers. His third medical leave took place in 2011. He lost his appetite and felt pain in his body. In Nov 2010, he had to be fed through tube. However, he didn’t want his condition to be leaked out. He had no appetite anymore. He also became increasingly emotional. In 2011, there was evidence of new tumors. At this stage, he was moaning in pain. Since young, he knew he could induce euphoria and ecstasy by fasting. He was absolutely ignorant about the need for medication or to seek professional help. Tim Cook was once again put in charge of Apple’s operations. His treatment was not integrated but taken care by many different specialists. Steve had his genes sequenced. This molecular therapy was better than chemotherapy. Lisa got back in touch with Steve then. Lisa was 32 then. Steve Jobs even told Larry Page how to build great companies. Bill Gates also came to pay a visit. They had a nice warm chat. That Day Has Come. Steve wanted to create an integrated television set that would be synced on the iCloud. By July 2011, the cancer had spread to the other parts of his body. He spent almost all his days watching television. The author met him in Aug 2011. Steve was too weak to get out of bed. Steve showed a few family pictures to Walter Isaacson. Steve wanted the author to write about him while he was still alive so that he could project a better account of himself. He knew he would not be returning to CEO anymore. In Aug 24, he announced the decision to the board that he was stepping down. The directors praised his contributions to the firm. Resolutions were passed on who would succeed him. It was decided that Tim Cook would succeed Steve Jobs. The board gave Steve a hug.

She’s a pistol and has the strongest will of any kid I’ve ever met. – Steve Jobs, on Eve

Like many great men whose gifts are extraordinary, he’s not extraordinary in every realm. He doesn’t have social graces, such as putting himself in other people’s shows, but he cares deeply about empowering humankind, the advancement of humankind, and putting the right tools in their hands. – Laurene Powell

That’s how I’m going to spend part of the time I have left. I can help the next generation remember the lineage of great companies here and how to continue the tradition. The Valley has been very supportive of me. I should do my best to repay. – Steve Jobs

I’ve had a very lucky career, a very lucky life. I’ve done all that I can do. – Steve Jobs

Legacy. The Brightest Heaven of Invention. His personality was reflected in the products Apple created. He was super intense at times. This could be either charming or terrifying. He had a binary view of the world and of almost everything. He wanted end-to-end control of every product. Steve always looked to integrate hardware and software. ‘Open’ VS ‘Closed’ software. Steve also had a good ability to focus and to filter out distractions. Everything was about simplicity and elegance. He was a brutally honest guy. He had a nasty personality and was mean to others. This had an advantage when he got people to do things they never dreamed of. He was both good at sizing up the big picture and also the minute details. His inventions are as follows (The Macintosh; Toy Story and other Pixar blockbusters; Apple stores; The iPod; The iTunes store; The iPhone; The App Store; The iPad; iCloud etc). He was a genius at sensing what lay ahead. Steve can be placed alongside Edison and Ford. The products were the motivation, not the profit. Sculley wanted to make money. Figure out what the customer wants and not give them what they want. You need good foresight of that. Being closed allow you to control the experience. Bill Gates was more of a business guy than a creative guy. Xerox and IBM let the salespeople run the show. They didn’t understand the product well. I wanted a company to last. He wanted everyone to be brutally honest with each other.

I hate it when people call themselves entrepreneurs when what they’re really trying to do is launch a startup and then sell or go public, so they can cash in and move on. They’re unwilling to do the work it takes to build a real company, which is the hardest work in business. – Steve Jobs

What drove me? I think most creative people want to express appreciation for being able to take advantage of the work that’s been done by others before us. I didn’t invent the language or mathematics I use. I make little of my own food, none of my own clothes. Everything I do depends on other members of our species and the shoulders that we stand on. And a lot of us want to contribute something back to our species and to add something to the flow. It’s about trying to express something in the only way that most of us know how – because we can’t write Bob Dylan songs or Tom Stoppard plays. We try to use the talent we do have to express our deep feelings, to show our appreciation of all the contributions that came before us, and to add something to that flow. That’s what has driven me. – Steve Jobs

stevejobs