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.


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


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 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


Steve Jobs by Walter Isaacson (Part 1)

‘The people who are crazy enough to think they can change the world are the ones who do.’ – Apple’s “Think Different” commercial, 1997

Introduction. How This Book Came to Be. The author has published other famous biographies. Steve was an incredibly intense guy. He launched his ‘Think Different’ campaign. Steve was an extremely persistent guy. In 2009, he had to go on medical leave due to his cancer. Finally, Steve approached the author and wanted a biography. Thankfully, he was also brutally honest. Steve changed 6 of the following industries: ‘personal computers, animated movie, music, phones, tablet computing and digital publishing.’ He is the epitome of innovation and invention. Think differently.

I always thought of myself as a humanities person as a kid, but I liked electronics. Then I read something that one of my heroes, Edwin Land of Polaroid, said about the importance of people who could stand at the intersection of humanities and sciences, and I decided that’s what I wanted to do. – Steve Jobs

Chapter One: Childhood

Abandoned and Chosen

The Adoption. Paul Jobs was a mechanic and dated Clara Hagopian. Eventually, they got married. He was a calm and gentlemen. Eventually, Paul settled on being a used car salesman. Due to Clara being unable to conceive, 9 years after their marriage, they looked to adopt a child. Joanne was pregnant, but only wanted her child to be adopted by college graduates. Another couple rejected Steve Jobs as they initially wanted a girl. Steve got adopted by Paul and Clara eventually. He was named ‘Steven Paul Jobs’. Steve was aware from young that he was adopted. His parents assured him that he was the chosen one and was ‘selected’ and not abandoned. Because of this, Steve had the strong urge to be independent. Later in life, Steve also abandoned another kid (Lisa). Even in his life, he occasionally acted cruel to others. This stemmed from his tumultuous past. He saw Paul and Clara as his true parents, not the biological ones. Paul exposed Steve to mechanics and cars when young and Steve didn’t really like mechanical work. His dad thought him to do things right. Steve liked hanging out with Paul. However, it was electronics which got Steve very interested in. He was inspired by the housing designs by Eichler. Paul tried being a real estate agent but failed. Steve admired his desire to try. Paul had a very respectable and resolute character.The tech industry at Stanford University was very big.Intel moved from memory chips to microprocessors. Moore’s Law. Steve Jobs was inspired by how developed Silicon Valley was. Steve soon realized that his parents didn’t know everything and that he could be smarter than them eventually. Paul was very good at mechanical stuff. His parents accommodated for that fact. Steve hated reading and studying in school and did not respect authority. Often, he played pranks and got into trouble. To his parents, the school was at fault for failing to stimulate his interest. A teacher used bribes to make him do homework and it worked. The teacher known as Imogene Hill changed his life. Soon, he became to change and even do work without the bribes being present. He managed to skip a grade. However, he found it hard to interact with kids older than him. He was often bullied in school. Eventually he dropped out of school. He was also appreciative of organic fruits and vegetables. Steve Jobs hated church and never wanted to go back. Instead, he spent time studying and practicing the tenets of Zen Buddhism. Steve was fascinated when he saw that a calf could walk a few minutes after it was born. Soon, his pranks involved electronics. His parents instilled in him the fact that he could anything easily. The first PC he fell in love with was the HP 9100A. Soon, Steve worked in an assembly line for frequency counters. Steve also worked as a newspaper delivery boy. Since young, he had an entrepreneurial spirit. He got his first car at 15. He was fascinated by paying for something with his own savings. In that same year, he tried marijuana. He didn’t give up on that so quickly. Steve had an artistic side to him and listened to music, read Shakespeare etc. Jobs never respected authority and was deeply rebellious in nature.

Steve Jobs was usually off in a corner doing something on his own and really didn’t want to have much of anything to do with either me or the rest of the class. – John McCollum

Knowing I was adopted may have made me feel more independent, but I have never felt abandoned. I’ve always felt special. My parents made me feel special. – Steve Jobs

I love it when you can bring really great design and simple capability to something that doesn’t cost much. – Steve Jobs

Both my parents got me. They felt a lot of responsibility once they sensed I was special. They found ways to keep feeding me stuff and putting me in better schools. They were willing to defer to my needs. – Steve Jobs

I encountered authority of a different kind than I had ever encountered before, and I did not like it. And they really almost got me. They came close to really beating any curiosity out of me. – Steve Jobs, on his high school teachers

Odd Couple. This was the time Steve met Stephen Wozniak. Stephen was one of the top students and was very geeky. His dad was Francis Wozniak, a graduate from Cal Tech. Woz’s father explained a lot of electronic stuff to him when young. In a business sense, Woz was not brought up to be as ambitious as Steve. Woz spent a lot of time assembling stuff and reading electronic journals. He started building calculators. He was an extreme hardware guy who often played pranks on others. Similar to Steve, Woz was quite a loner at school. They both shared passion for music, esp from Bob Dylan. Their pranks included screwing the tv signals, so that it became difficult for their friends to watch TV. Woz designed a digital Blue Box from scratch. It was incredible. It worked and they could make overseas call for free by replicating the phone company’s signals. They even pretended to be Henry Kissinger and tried calling the Pope at Vatican City. Soon, they were thinking of marketing the Blue Box for cash. This Blue Box Adventure marked their success working together.

I remember him telling me that engineering was the highest level of importance you could reach in the world. It takes society to a new level. – Steve Wozniak

My dad believed in honesty. Extreme honesty. That’s the biggest thing he taught me. I never lie, even to this day. – Steve Wozniak

We had so much in common. Typically, it was really hard for me to explain to people what kind of design stuff I worked on, but Steve got it right away. And I liked him. He was kind of skinny and iry and full of energy. – Stephen Wozniak

Woz was the first person I’d met who knew more electronics than I did. I liked him right away. I was a little more mature than my years, and he was a little less mature than his, so it evened out. Woz was very bright, but emotionally he was my age. – Steve Jobs

The Blue Box adventure established a template for a partnership that would soon be born. Wozniak would be the gentle wizard coming up with a neat invention that he would have been happy just to give away, and Jobs would figure out how to make it user-friendly, put it together in a package, market it, and make a few bucks. – Walter Isaacson

The Dropout ‘Turn On, Tune in’. Chrisann Brennan was Steve’s first girlfriend. She was still a minor at that time. Steve’s crazy antics was what made him attractive. Steve introduced Brennan to marijuana. Steve also listened to Bach music at that time. He was a guy who was cruel sometimes to her. Patience was never one of Steve’s virtues. He was 17 and it was time to go to college. However, at times, he did not even want to go. All along, he wanted to do something which was both artistic and interesting. He insisted on going to Reed College. Eventually he got admitted to the school. Sometimes, he hurt his parent’s feelings and regretted engaging in such actions. Another of Steve’s friends was a guy named Daniel Kottke. Both of them were vegetarians. Steve soon met Robert Friedland. He was like a drug dealer. Robert also believed in enlightenment. Steve often stared at other people. It was like a reality distortion field to be able to mix with Robert Friedland. Robert taught Steve how to market himself and start selling stuff. Eventually, Steve realized Robert was a con man and lost respect for him. He was a gold miner. At Reed, Steve was bored of the classes he was forced to take. Since the college education was very expensive and it was not beneficial, he decided to drop out. Steve had a very curious mind. Soon, he attended a calligraphy class. He learnt about serif and sans serif typefaces and typography. His font was soon to be used in the Macs. Windows had it as well. Steve credited drugs for making him more enhanced.

Taking LSD (Acid) was a profound experience, one of the most important things in my life. LSD shows you that there’s another side to the coin, and you can’t remember it when it wears off, but you know it. It reinforced my sense of what was important – creating great things instead of making money, putting things back into the stream of history and of human consciousness as much as I could. – Steve Jobs

Steve Jobs refused to go to the classes he was assigned and instead went to the ones he wanted, such as a dance class where he could enjoy both the creativity and the chance to meet girls. – Walter Isaacson

I had no idea what I wanted to do with my life and no idea how college was going to help me figure it out. And here I was spending all of the money my parents had saved their entire life. So I decided to drop out and trust that it would all work out okay. – Steve Jobs

Atari and India

Zen and the Art of Game Design. Atari was a game manufacturer. The founder was Nolan Bushnell. Alcorn was the chief engineer at Atrari. He was impressed by Steve’s work attitude. Steve refused to leave Atari until they gave him a job. Steve met Ron Wayne, a guy who had started a company that built slot machines. He became to realize that it was indeed possible to start your own company. Ron Wayne later admitted he was gay. Robert headed to India to embark on his spiritual journey. His company devised of a way to pay for his trip to India. Over there, he met Larry Brilliant, who later became Steve’s good friend. Steve stayed in India for 7 months, but failed to find a guru. Steve was now 19 years ago. People in India used their intuition. Steve felt intuition was more valuable than intellect. Through his mediation, he realized he could harness his intuition more than others. Steve kept meeting a guy called Kobun and embarked on mediation trips. The adoption had an impact on his and he wanted to seek his natural parents. Steve was super confident and wanted to inspire others to do things they thought were not possible initially. This was the good side of the reality distortion field. Woz was the better engineer. Bushnell wanted a single player of pong and got Woz and Steve to design them. Steve kept the bonus from the work and didn’t tell Woz about it. They were actually quite different people. Steve is actually a complex guy with a manipulative side. Eventually they let this issue go. Steve was a guy who didn’t accept no for an answer.

I learned the truth of the Zen saying that if you are willing to travel around the world to meet a teacher, one will appear next door. – Steve Jobs

Then he puts on a tape of Dylan’s Blood on the Tracks, lays his head in my lap, and goes to sleep. He had the attitude that he could do anything, and therefore so can you. He put his life in my hands. So that made me do something I didn’t think I could do. – Elizabeth Holmes

If he decided that something should happen, then he’s just going to make it happen. – Elizabeth Holmes, on Steve Jobs

There is something indefinable in an entrepreneur, and I saw that in Steve. He was interested not just in engineering, but also the business aspects. I taught him that if you act like you can do something, then it will work. I told him, ‘Pretend to be completely in control and people will assume that you are.’ – Nolan Bushnell

The Apple I (Turn On, Boot Up, Jack in)

Machines of Loving Grace. The 1960s were a time of cultural explosion. The hacker subculture were born. There was also a hippie movement. Steve Jobs practiced mediation in the morning. LSD aided Steve in the creation of the first PC. Hackers envisioned a PC and not everything under central control. The whole earth catalog inspired Steve. This was when he saw the phrase: ‘Stay Hungry. Stay Foolish’. Steve gathered a group to discuss about building a PC. Woz thought of a microprocessor and the idea of a keyboard, screen and computer all in one package. The problem were that microprocessors were often made by Intel and would later be incompatible with Apple’s. On June 29, 1975, Woz managed to type something on a keyboard and this was displayed on a screen. Steve wanted to try and sell this product. At first, Woz wanted to give the Apple I away for free. Steve rejected this idea. Bill Gates didn’t like this idea of charity too. Steve wanted to sell printed circuit boards. They had to raise money to fund it. Apple was thus born. They had to think of a name and eventually settled on Apple. Apple denoted simplicity and it attracted the attention of many. Woz left HP after some persuasion to join Apple. Steve-Woz-Ron had equity in the following percentage 45-45-10. As partners were liable for their debts, Ron backed out and received his money back. The two of them were too crazy for him. The audience, except a guy named Paul Terrell, was impressed with the Apple I. Terrell became Apple’s first customer. Woz was shocked by this news. Steve got their friends to help out with the order. The garage was converted into a lab. Woz wanted to sell at cost but Steve wanted to make a profit. In addition to the Altair, there were other competitors. At that time, their product was not as good as their competitors’.

The people who invented the 21st century were pot-smoking, sandal-wearing hippies from the West Coast like Steve, because they saw differently. The hierarchical systems of the East Coast, England, Germany, and Japan do not encourage this different thinking. The sixties produced an anarchic mindset that is great for imagining a world not yet in existence. – Bono, from the band U2

Steve is just that sort of person. I mean, he knew how to talk to a sales representative. I could never have done that. I’m too shy. – Steve Wozniak

Every time I’d design something great, Steve would find a way to make money for us. It never crossed my mind to sell computers. It was Steve who said, “Let’s hold them in the air and sell a few.” – Steve Wozniak

Even if we lose our money, we’ll have a company. For once in our lives, we’ll have a company. – Steve Jobs, to his co-founder Steve Wozniak

I was on one of my fruitarian diets. I had just come back from the apple farm. It sounded fun, spirited, and not intimidating. Apple took the edge off the word ‘computer.’ Plus, it would get us ahead of Atari in the phone book. – Steve Jobs

They were very different, but they made a powerful team. Jobs at times seemed to be driven by demons, while Woz seemed a naïf who was toyed with by angels. Jobs had a bravado that helped him get things done, occasionally by manipulating people. He could be charismatic, even mesmerizing, but also cold and brutal. Wozniak, in contrast, was shy and socially awkward, which made him seem childishly sweet. – Ron Wayne

I never wanted to deal with people and step on toes, but Steve could call up people he didn’t know and make them do things. – Steve Wozniak

We were participating in the biggest revolution that had ever happened, I thought. I was so happy be a part of it. – Stephen Wozniak

The Apple II

Dawn of a New Age. PCs need to be in a complete package, not just the processor. Woz tried to build the Apple II. He created colour this time. This was slow to be released to the market. Steve had to get new sources of funding to build it. Steve was hurt when Woz’s dad criticized him for not giving Woz more of the profit. Steve wanted Woz to take the whole Apple. But Woz refused and knew the power of the team. Steve would help package the Apple II. Steve got someone to design a plastic case for the PC. It was simple, yet elegant. He persuaded another guy to design the power source. They created a switching power supply (alternating current). The PC came with slots which allowed users space to upgrade. Steve looked weird and thin and this frightened off potential investors. Markkula thought about investing in Apple and was excellent at marketing. He was made rich after a stint at Intel. Markkula impressed both Steves and furthermore, he liked the Apple II. He had a strong moral compass as well. This guy had big dreams and wanted to bring the product into the mass market. Markkula pumped $250K into Apple and the shareholding was now Steve (25%)-Woz (25%) – Markkula (25%)- Future Investors (25%). Woz initially did not want to leave HP completely. Woz did not want to leave engineering. After much persuasion, he came on board Apple as an engineer. The company was incorporated in Jan 1977. Markkula was like a mentor to Steve. Mike wanted Apple to live by these qualities ‘Empathy, Focus and Impute (Creating a Good Impression + good marketing)’. Regis McKenna was a publisher for IT companies and had good outreach. Steve was persistent about getting Regis to publish about Apple. McKenna worked with the logo with a bitten apple. ‘Simplicity is the ultimate sophistication’. They spent a lot of marketing. Both Steves were given wardrobe makeovers. During a trade show, they got a first deal from Japan. Steve was becoming rude to his staff. Mike wanted to bring Mike Scott ‘Scotty’ as the new Apple president. He was brought in to manage Jobs. Steve wanted to be in control of everything. He took offence at not being #1 in the badge number list. Steve was a product perfectionist as well. Steve and Scotty had many conflicts regarding design. Steve was not practical at times regarding his demands. VisiCalc produced word and spreadsheet software for Apple II only.

You don’t deserve shit. You haven’t produced anything. – Jerry Wozniak, to Steve Jobs

Mike really took me under his wing. His values were much aligned with mine. He emphasized that you should never start a company with the goal of getting rich. Your goal should be making something you believe in and making a company that will last. – Steve Jobs

He became increasingly tyrannical and sharp in his criticism. He would tell people, that design looks like shit. – Mike Markkula

Steve was too tough on people. I wanted our company to feel like a family where we all had fun and shared whatever we made. – Steve Wozniak

Woz designed a great machine, but it would be sitting in hobby shops today were it not for Steve Jobs. – Regis McKenna

Chrisann and Lisa (He Who is Abandoned). Chrisann was together with Greg Calhoun. She and Greg also headed to India for a spiritual journey. Soon, their relationship soured. Steve got her pregnant. However, he didn’t care about it and didn’t know how to deal with it. He lived in denial. He knew he didn’t want to take care of the kid. Steve didn’t want her to place the kid up for adoption. Steve was 23 then. After the girl was born, Steve named her Lisa Nicole Brennan and left to go back to Apple. Steve, under law, had to pay money to support the girl. He kept admitting he was not the father. Looking back, he regretted how he handled the situation. Steve put aside drugs and his strict vegan diets. Still, he had the child-like streak in him.

I was all in favor of her getting an abortion, but she didn’t know what to do. She thought about it repeatedly and decided not to, or I don’t know that she ever really decided – I think time just decided for her. – Steve Jobs

Xerox and Lisa

Graphical User Interfaces. 210,000 units of Apple II were sold in 1981. Steve didn’t want to live in Woz’s shadow. He wanted to impress others as well. The Apple III was a failure. Jobs wanted to name a new computer Lisa. Bill Atkinson was putting life into ‘Lisa’. He created Pascal, a programming language for the Apple II and to develop a program for tracking a stock portfolio. Xerox PARC’s engineers began to create a GUI. Every pixel would be retained in memory and more computing power was required. Steve was interested in Xerox PARC. Steve allowed Xerox to buy Apple’s shares for a discounted rate and in return Xerox had to share their new idea. Apple went public a year later. Xerox got the worse end of the deal and revealed too much to Apple. Eventually, Steve was amazed by their technology. Smalltalk showed how computers could be networked and how object-oriented programming worked. Apple raided on their idea. It was how Apple used the Xerox PARC idea. If Xerox had commercialized their invention, the whole computer industry could have been theirs. Execution is just as important as innovation. Apple improved the GUI as well. The modern day desktop interface was formed. Atkinson designed windows that overlap with each other. Steve dismissed people who were not ambitious and doubted their abilities in life. Mike Scott and Mike Markkula aimed to control Jobs with a reorganization. This relinquished operational control from Steve Jobs. He was made non-executive chairman of the board.

The Apple III was kind of like a baby conceived during a group orgy, and later everybody had this bad headache, and there’s the bastard child, and everyone says, ‘It’s not mine.’ – Randy Wigginton

‘The best way to predict the future is to invent it. People who are serious about software should make their own hardware.  -Alan Kay

“Picasso had a saying – ‘good artists copy, great artists steal’ – and we have always been shameless about stealing great ideas.” – Steve Jobs

Everything you’ve ever done in your life is shit, so why don’t you come work for me? – Steve Jobs to 2 Xerox engineers

I was upset and felt abandoned by Markkula. He and Scotty felt I wasn’t up to running the Lisa division. I brooded about it a lot. – Steve Jobs

Going Public (A Man of Wealth and Fame). By end 1980, Apple was worth $1.79 billion. Daniel Kottke didn’t get stock options because he was paid by the hour. He pleaded with Steve Jobs to give him options. Steve didn’t bulge. ‘Steve is the opposite of loyal. He’s anti-loyal. He as to abandon the people he is close to.’ Steve lost a friend because of this. Woz, on the other hand, gave some options to his other employees so that they could be rich. He even gave Daniel and some others stock options. Morgan Stanley was the underwriter for the deal. By 25, Steve was worth $256 million. Steve was anti-materialistic when young when he pursued the Zen way of life. However, now he had a love for material objects. He tried his best not to let money change him. He set up his own foundation.

I never worried about money. I grew up in a middle-class family, so I never thought I would starve. And I learned at Atari that I could be an okay engineer, so I always knew I could get by. I was voluntarily poor when I was in college and India, and I lived a pretty simple life even when I was working. So I went from fairly poor, which was wonderful, because I didn’t have to worry about money, to being incredibly rich, when I also didn’t have to worry about money. – Steve jobs

I watched people at Apple who made a lot of money and felt they had to live differently. Some of them bought a Rolls-Royce and various houses, each with a house manager and then someone to manage the house managers. Their wives got plastic surgery and turned into these bizarre people. This was not how I wanted to live. It’s crazy. I made a promise to myself that I’m not going to let this money ruin my life. – Steve Jobs

The Mac Is Born (You say you want a revolution). Jef Raskin wrote the manual for the Apple II for $50. The Macintosh was born. It was a screen, keyboard and computer all rolled into one. Burrell Smith was a brilliant engineer who worked on the Mac. Raskin didn’t believe that if you just had passion, you could design anything you want. Raskin used the underpowered Motorola 6809 microprocessor. Jobs wanted to use the more powerful Motorola 68000 chip. Eventually, he got his way. Also, Steve wanted a mouse whereas Jef wanted a keyboard. Some engineers found Steve very difficult to work with due to his desire to introduce politics and tension. Mike sided with Jobs this time. Raskin was forced to leave. Andy Hertzfeld started to work on the Mac as well. Steve had a personality that convinced some of the top engineers to join the Mac team. Woz had a crash in an airplane and decided to take a break from Apple. Steve wanted to name the Mac the bicycle. This failed. A few weeks later, Jobs managed to push Scotty out as president of Apple. Mike Markkula took over as interim president and Steve was free to explore with the Mac.

I think he likes people to jump when he says jump. I felt that he was untrustworthy, and that he does not take kindly to being found wanting. He doesn’t seem to like people who see him without a halo. – Jef Raskin

Very often, when told of a new idea, he will immediately attack it and say that it is worthless or even stupid, and tell you that it was a waste of time to work on it. This alone is bad management, but if the idea is a good one he will soon be telling people about it as though it was his own. – Jef Raskin

The Reality Distortion Field (Playing by His Own Set of Rules). Steve had super ambitious goals and was living in his own world at times. It is not wise to get caught in his distortion reality field. It was like a force of nature. He had the power to transform others. It was almost hypnotic. He felt special and super rebellious at birth. Just like Gandhi. He felt rules did not apply to him. People’s work were either brilliant or totally shitty. You were either a god or a shithead. Although he might see your idea as being shitty, he might actually come back to you later and claim it was great. Steve could adopt your position as if he was his own. It was essential not to react to his extreme positions and be affected by it. Those who were criticized by him improved along the way. Steve actually respected people who stood up for themselves. ‘This is shit’ actually means ‘tell me why this is the best way to do it.’ Steve had the ability to look at the big picture. The Mac turned out to be a great product. He had a good way of motivating employees.

In his presence, reality is malleable. He can convince anyone of practically anything. It wears off when he’s not around, but it makes it hard to have realistic schedules. – Bud Tribble, on Steve Jobs

His reality distortion is when he has an illogical vision of the future, such as telling me that I could design the Breakout game in just a few days. You realize that it can’t be true, but he somehow made it true. – Steve Wozniak, on Steve Jobs

It was a self-fulfilling distortion. You did the impossible, because you didn’t realize it was impossible. – Walter Isaacson

It’s a common trait in people who are charismatic and know how to manipulate people. Knowing that he can crush you makes you feel weakened and eager for his approval, so then he can elevate you and put you on a pedestal and own you. – Joanna Hoffman, on Steve Jobs

I’ve learned over the years that when you have really good people you don’t have to baby them. By expecting them to do great things, you can get them to do great things. The original Mac team taught me that A-plus players like to work together, and they don’t like it if you tolerate B work. Ask any member of that Mac team. They will tell you it was worth the pain. – Steve Jobs

The Design (Real Artists Simplify). Steve liked clean and simple designs. He poached Lewin from Sony. He really believed less is more. Once again, he was very focused on the packaging. He wanted bright and pure colours, and products with top technology. ‘Simplicity is the ultimate sophistication’. Soon, he was thinking of a flat laptop. He didn’t want a boxy Mac, but rather, a curvaceous one. Steve would keep improving on the model. He didn’t want ovals or rectangles but rectangles with rounded edges. Steve used his typography knowledge to design the Mac. He placed heavy emphasis on getting the fonts right. He also designed the Mac’s calculator. Hartmut Esslinger would be Apple’s designer. Even the circuit boards had to be designed well. Quality and design must be consistent throughout. He kept making people re-do their designs.

I want it to be as beautiful as possible, even if it’s inside the box. A great carpenter isn’t going to use lousy wood for the back of a cabinet, even though nobody’s going to see it. – Steve Jobs, on the circuit boards in the PC

Building the Mac

The Journey is the Reward. Steve dismantled the IBM’s PC and analysed it. Apple was overconfident and tried to taunt IBM. To him, IBM was not innovative. Steve wanted his Mac to compete with the Lisa. It became unhealthy. The people working on Lisa thought Steve was destroying Apple. His software etc was all over closed and not compatible with other products. For the Mac, a user could not open the motherboard. For the hacker, this was bad. He wanted utter control over the user’s experience. He didn’t want people to open the Mac up. Steve was soon featured on the Time Magazine. Lisa eventually died a natural death because sales dried up. Apple had to turn to Steve Job’s Mac. It was 1983. Steve asked weird questions at interviews at ‘Are you a virgin?’; ‘How many times have you taken LSD?’ ‘It’s better to be a pirate than to join the navy.’ He didn’t treat the Japanese well. Especially those who had crappy hard disk drives. Steve wanted a disk drive designed by Alps and not imported from Sony. Time was running short. Hertzfeld disobeyed Steve by using Sony instead of developing their own disk drive as the Mac was due for introduction soon. Steve thanked him for it.

If, for some reason, we make some giant mistakes and IBM wins, my personal feeling is that we are going to enter sort of a computer Dark Ages for about 20 years. – Steve Jobs

It would be as if someone off the street added some brush strokes to a Picasso painting or changed the lyrics to a Dylan song. – Walter Isaacson

No, because customers don’t know what they want until we’ve shown them. – Steve Jobs, on the need for market research

Enter Sculley

The Pepsi Challenge. Mike didn’t want to be president and started looking for someone else. John Sculley from Pepsi Co came to mind. He and Steve met a few times. John was excellent at marketing. Sculley was thrilled by Steve’s ideas and visions. Sculley was also a perfectionist by nature. They went on long tours together. Sculley realized he couldn’t reject him. Steve had the uncanny ability to say something which could convince others. Steve and Sculley were incredibly similar. Eventually, it became a recipe for disaster. Steve kept praising Sculley. However, when he couldn’t meet his expectations, things started to go downhill. Steve had big mood swings. The first disagreement was on how to price the Mac. Sculley priced it too high and Microsoft dominated the market then.

Do you want to spend the rest of your life selling sugared water (Pepsi), or do you want a chance to change the world? – Steve Jobs, to John Sculley (the future Apple President)

We’ll have to solve those problems, because you’re the best person I’ve ever met. I know you’re perfect for Apple, and Apple deserves the best. – Steve Jobs

We all have a short period of time on this Earth. We probably only have the opportunity to do a few things really great and do them well. None of us has any idea how long we’re going to be here, nor do I, but my feeling is I’ve got to accomplish a lot of these things while I’m young. – Steve Jobs



The Making of Donald Trump by David Cay Johnston (Part 1)

Introduction. I have been an investigative reporter since young and have freedom to report on what I want. I also happen to be good at what I do. In 1988, I met Donald Trump in Atlantic City. It turns out that he knew nothing about the casino industry. I have a trove of his documents with me. He first mooted the idea of becoming President in 1988. Trump would make a profit in his 2016 campaign. He is always thinking of how to make profits. Through the book, I hope to expose the things he has done. Trump is smart and can deflect enforcement investigations and threatens to sue others. Sometimes, he can come across as ignorant in the way he conducts himself. This book is a presentation of the facts. Trump even hired people to show up and clap during his campaign.

Family History. His family name was Drumpf and he has German roots. Donald’s grandpa was Friedrich and also flouted some rules in his life. He arrived in the US when he was 16. Friedrich started the Diary Restaurant. Trump did not vote regularly at elections. Friedrich’s foray into mining projects were a flop. He later headed for Yukon Territory and started a bar called the Arctic. The gold rush was present and he made some money. Later on, he met Elizabeth Christ, a 20 year old blonde. Later, the family headed back to Germany. Frederick returned to the US and started new ventures. However, he passed on the 1918 influenza pandemic. Donald’s father was Fred.

Trump men favouring busty blondes would become a family pattern. – David Cay Johnston

Family Values. Fred was charged for battling NYC policemen. However, Donald continuously denies the charge. He pretended that if he heard nothing, it meant there was no charges filed against Fred. The public should not know about crime and its implications. Later, Fred built single family houses and even a supermarket. He was a fast learner and turned in a small profit. Often, his buildings were built using cheap materials. To attract attention, Fred would hire beauties in bikinis etc. Fred was also investigated on whether he was into profiteering. He was a household name. Donald denied that his dad profiteered. Nothing came of the investigation though. Fred borrowed money from Tomasello, who was engaged in illicit businesses. Much of what Donald does is learnt from his father. Fred gave Donald much support when he was younger. Donald’s older brother tried to help with the business but didn’t do well. Donald attended the New York Military Academy as he was ill-disciplined when young. Later, he went to the University of Penn. Fred Jr became a pilot but subsequently had alcoholism problems. Donald claims that he was a good student in the University of Penn. However, he doesn’t know what Net Present Value is and how it is measured.

Personal Values. Trump was giving advice to a crowd on how to succeed in life and business in 2005. He was working with a convicted felon and swindler named Felix Sater. He did not prepare for the presentation. Trump did not show the audience any respect by not preparing for the speech. His mentality is to trust no one, even employees. He has been involved in more than 3,500 lawsuits. He has written more than 12 books. Once, he trusted a female employee and when he wanted her to call her friend at a big bank and she refused, Trump fired her. He hates disloyal people, like Rosie O’Donnell. This act of vengeance is certainly at odds with what the Bible preaches. He can’t remember his favourite Bible verse.

Get even. If somebody screws you, you screw them back 10 times over. At least you can feel good about it. Boy, do I feel good. – Donald Trump

I have to tell you about losers. I love losers because they make me feel so good about myself. – Donald Trump

I love getting even when I get screwed by someone – yes, it is true…Always get even. When you are in business you need to get even with people who screw you. You need to screw them back 15 times harder… go for the jugular, attack them in spades! – Donald Trump

A Sickly Child. His dad died in 1999, at age 93. William Trump had problems at birth and Fred Trump Sr would cover the medical expenses. After he passed on, William Trump’s family knew they were not collecting their anticipated share of the estate. The judge ruled that medical coverage resume until the matter could be resolved. Fred Jr sued Donald Trump’s father. Donald was obviously not pleased when someone sued his father. The will excluded Fred Jr and his children. Donald appears to be very vicious in his motto of vengeance. This caused divisions within his family. He also had a close relationship with the notorious Roy Cohn.

Making Friends. Roy Cohn was a notorious attorney and Donald Trump wanted to get close to him. They had a great relationship. Trump always wanted to join Le Club, a hottest club in the city. However, he didn’t know anyone. He hired Cohn to sue the federal government after Trump was investigated of racial bias when hiring operators. Trump allegedly didn’t hire rent out apartments to blacks. As a result, the Federal Government sued Trump. This was a high profile discrimination case and appeared to violate the Fair Housing Act. Cohn claimed that the government was unfair as they were trying to force Trump to rent to people on welfare. Cohn lost the case and the government could proceed with the investigation. Eventually, Trump folded and settled. When confronted by reporters in future, Trump claimed that the government couldn’t prove its case and that he only had to make a minor settlement. Trump learned to place loyalty over everything else. Trump knew he could count on Cohn. He was also associated with powerful Mafia figures who worked in the demolition and construction industry.

Trump’s Most Important Deals. Trump applied for a casino license in New Jersey in 1981 and his background was not thoroughly checked. The government didn’t want a mob-run casino on Atlantic City. Trump talked to the attorney general and told him there was no need to check his background thoroughly. Trump threatened not to bid for the casino if they wanted to check him in detail. Trump had indeed been under investigation before but there was no mention of it in the DGE report. No charges were filed. There were about 4 cases where Trump was involved in shady dealings but these were not reported. Trump did not tick the box for civil misconduct. Lying in his application would result in disqualification. The concrete he used was controlled by a concrete cartel. Roy Cohn helped to ensure that the Mafia bosses would not have the unions stop work on Trump Tower. Barrett was a reporter who managed to examine some of Trump’s business practices. Cody was another crook who knew Roy Cohn. Trump also took kickbacks from contractors etc. Soon, those contractors who fixed prices for concrete were convicted.

A Great Lawsuit. Football made Trump famous. He bought the New Jersey Generals in 1983. The attendance at the games were decent, but were nowhere that of National Football League. Trump was aiming the NFL league. Dixon started the USFL league to slowly compete with the NFL. USFL could celebrate the scoring of goals whereas for the NFL, players couldn’t. Trump held cheerleader try-outs at the Trump Tower to attract attention. He brought them to sleazy bars and some of the girls were offended. In 1984, Trump, together with the other USFL owners, sued NFL. The lawsuit for that NFL allegedly monopolised the tv contracts. Roy Cohn would represent Trump again. The USFL was awarded damages in $3. This was humiliating to Trump. Trump’s legal strategy backfired. USFL folded after that. The court also dismissed claims that Trump wanted to merge the USFL with NFL. USFL wanted to grow fast, but failed. One cannot disagree with Trump. It is like to be a loser.

Showing Mercy. Trump dealt with a drug trafficker named Joseph Weichselbaum. He did unusual favors for the felon, even putting his casino license at risk. When Trump met him, he was already a twice-convicted felon. He was arrested for grand theft auto and embezzlement previously. Joseph and his brother ran a helicopter service and ferried high rollers to and from casinos. Their main client was Trump. Trump also retained Dillinger Charter Services, whose owner was John Staluppi. The mysterious thing was why did Trump keep supporting Joseph’s team when he could have used other firms? Did Trump finance Joseph’s activities? In 1985, he was convicted of drug trafficking in Florida, Ohio and Kentucky. Trump kept paying $2 million per year for the helicopters. One of Joseph’s court case was also transferred to the state of New Jersey, where Trump’s older sister Maryanne Trump Barry was assigned to the case. When she was eventually replaced, Trump asked for leniency for Joseph. Joseph eventually only served a mere 18 months jail. The DGE did not ask deeper questions on Trump’s relationship with Joseph Weichselbaum. There are still things unknown about Trump’s relationship with Joseph. When asked to recall his relationship with Joseph, Trump said he barely recalled who he was.

Polish Brigade. Trump knocked down Bonwit Department store before he built Trump Tower. It was a really famous store. He promised to give the architectural treasures to the Museum of the Art. However, he didn’t keep this promise. He used a Polish contractor and the men need not wear safety gear. It was primitive. The workers were not paid in accordance with wage laws. They were underpaid and made to work like slaves. The crew had huge numbers and suffered. Trump was also known to delay the payments. Trump was told to fire them if he didn’t want to get into trouble with labour laws. Trump would always want to collect more money and not paid people. He was downright greedy and did not care about the workers’ welfare. Surprising, there was no safety inspection of the demolition. The union was under the main control of Roy Cohn, his lawyer. Only when the men threatened to not work, did Trump start to pay them more regularly. Trump testified that he had no knowledge that any worker was unpaid. The judge found that Trump wanted to cheat workers of their pay. Trump had to settle in the end. He also claimed that removing the art would cause a lot more, hence they would be demolished instead. The museum curators were furious. Yet, Trump claims to be an ardent philanthropist.

Feelings and Net Worth. Trump has given different figures when asked to present his net worth. Sometimes, a different figure could be quoted just within a few days. He sued Tim O’Brien after he quoted wrong net worth figures in his books. Trump’s image is really important to him. A lot of information was not disclosed in the financial statements, making it hard to determine how much Trump earned. Sometimes, Trump might even hide debts and other liabilities. Mortgages were not recorded. When estimating his net worth, values of properties are very high. However, when answering to tax authorities, he quotes very low valuation prices.

I would say when I publicly state my net worth, I base it on my general attitude at the time that the question may be asked. And as I say, it varies. – Donal Trump

Trump’s net worth is central to his public persona as a kind of modern Midas. – David Cay Johnston

My net worth fluctuates, and it goes up and down with markets and with attitudes and with feelings, even my own feelings, but I try. – Donald Trump

Government Rescues Trump. Trump made over $375 million between 1986 and 1990 (not profit). However, in 1990, he could not pay his bills. He lacked the money to pay for the construction for Trump Taj Mahal. His casino also risked being shut because Trump could not pay. Trump was bleeding dry fast. Cash was burning and he still had his private jet. The regulators also did not regularly monitor his finances. Lawyers and accountants started going over his books. The Leventhal report showed his net worth was -295 million. The DGE, despite this, did not ask very difficult questions of Trump. Overall, Trump owed $3.2 billion and it was terrible for his creditors. A deal was planned and Trump had to live on $450,000 per month. The press was not allowed to say the word bankrupt. The commission would approve the deal between Trump and his bankers and Trump would be safe. Many reporters did not know that Trump was on the verge of bankruptcy. Donald Trump was saved by the government. Because of this, Trump had to restructure and sell off stake in some of his enterprises. Investors lost more than $1.5 billion when he shrugged off 4 bankruptcies. He was lucky to have escaped.

Gold and Taxes. Trump gives variable values on his property values. Many civil settlements have resulted and these files are all sealed. He overvalued his Trump National Golf Course at more than $50 million. However, when talking to the tax assessor, he quoted the golf club to be less than $1.4 million. He told a reporter subsequently that the value was $9 million. When the town was flooded and covered in silt because of the golf course, Trump refused to pay. The storm water facilities at his golf course failed. The litigation between the town and Trump remains unresolved. Trump valued the National Golf Club Bedminster at more than $50 million and said it had annual revenue of more than $16 million. He paid lower property tax on it because he had goats on the active farmland. He did the same for another of his golf course. Often, he ends up suing the town.

Income Taxes. Jack Mitnick prepared Trump’s income tax returns. They had a close relationship. In 1978 and 1979, Trump paid no federal income taxes. His tax returns showed negative income because there was a rule in Congress that let big real estate investors offset income from salaries, stock market gains, consulting fees, and other income with losses from depreciation in the value of their buildings. A review by the tax authorities concluded that Trump owed more tax in 1984. Once, Trump’s returns showed zero income from the consulting business. The auditors demanded supporting documents for Trump’s large deductions. Penalties were levied against Trump because he could not substantiate. Mitnick claimed that he did not prepare the tax return. When I questioned Mitnick about it last year, he claimed he could not remember. How did his signature get on the tax return then? Judge Barrie ruled that the penalty be upheld. In 1991 and 1993, Trump paid no taxes too.

Empty Boxes. In 1983, Trump had 2 empty boxes mailed to him from an out-of-state address. This was to evade sales taxes on expensive items. Back then, the law was that under NY law, a visitor who buys good and has them shipped to her home state does not have to pay NY sales tax but then owe an equivalent tax to their home state, known as a use tax. But this was not readily enforced. The tax auditors uncovered this scam. There were other rich people involved in this scam. Adnan Khashoggi was an arms dealer who partied with Trump. He also evaded sales tax. It is amazing why billionaires would want to escape small taxes like these. A criminal charge like this would be sufficient to revoke his casino license. Howard Rubenstein defended Trump throughout this saga. The Bulgari staff and the master-mind would be jailed. Trump was let off.


How to Think Like an Entrepreneur by Philip Delves Broughton

Introduction. Most entrepreneurs fail. However, it is a good learning experience nonetheless. The main reason why people fail is that they become demoralized. Yet, the start-up scene is thriving and buzzing. However, one tends to only hear of the successful stories. This is a case of WYSIATI – What You See is All There Is. Optimism can be costly indeed. To succeed is a great achievement in itself. It is a way out of the corporate life. You are doing it for yourself. It allows you to innovate and to challenge what is already out there in the market. It gives emotion its proper place. Before starting, optimism might not be as useful as compared to when the business has been established. There will be ups and downs, successes and despairs. This book is a guide for those who want to take this path. You can also be entrepreneurial as an employee. Learn to pursuit a path of your own. Obama had his doubts before running for President. This book will describe the ways you need to think as you first decide whether to be one. There is a link between economies which thrive and the freedom of individuals to flourish. People must be free to use their knowledge and talents in order for society to grow. A modern economy can produce dreams into reality. There needs to be a balance between satisfying the corporatists and the individualists. We need to think about what is means to be an entrepreneur.

Entrepreneurship offers a way out of corporate life, out of a system of task-and-reward allocation run by others, to one run by you. You get to decide how to work, what to work on, and how to divide the rewards. – Philip Delves Broughton

If you are a chef chafing on the line, yearning to create dishes which exist only in your imagination, finding investors and opening your own restaurant is a way to turn that yearning into action. – Philip Delves Broughton

People with so much to protect are not always inclined to support those agitating for change. Yet to think like an entrepreneur is to be modern. To want change, to search for opportunity and then be willing to pursue it. – Philip Delves Broughton

The Entrepreneurial Mind. The Material Question. George Gurdjieff was the founder of Institute for the Harmonious Development of Man. He was taught to create new stuff since young. Through this, he was able to surmount many difficulties. He was tricky and pretended to repair other people’s goods for a fee. As a result, he became rich. This experience fortified him.

If you can find your customers’ pain and heal it, how you do it and how much you charge will scarcely matter. – Philip Delves Broughton

Cognitive Complexity. Some people say entrepreneurs are control freaks, risk addicts etc. The only common trait they all share is that they choose to be entrepreneurs. The two habits of mind is cognitive complexity and greed. You must be tolerant of new ideas and curious about the experiences which challenge you. You must trust that the world will take care of you. There is also a need to internalize different cultures. Your upbringing also plays a part. One way to learn is to be marginalized and to be forced into awkward social positions. Usually, difficult times will toughen you up for the subsequent challenges in life. Sometimes, over-specialization can cause you to lose sight of how to make connections between diverse fields. It would be good to have a mentally intensive hobby like music, painters, writers etc.

Wanting It. Entrepreneurs can have different attitudes to money. Some show them off and flaunt their wealth. Mark Zuckerberg wears the same T-shirt all the time. Bill Gates and Mark Zuckerberg all do something they are nuts about. Would you want to be ‘rich or king’? Would you want to be rich and cash out? Or retain control and manage a growing enterprise? Do you want to be a king over a smaller domain? There are 4 types of people: 1) Work for themselves and for no one else; 2) Join businesses and reach senior positions; 3) Work for others but unspectacularly; 4) Work for others but are not motivated to work hard or improve the organization. The first 2 possess the Millionaire Mentality. They know the value of a dollar and the importance of not to squander it. Some people only think of excess profits earned should be reinvested in the business. A greed for improvement and for success is nothing to be ashamed about.

An independent spirit and an appetite for success, of which money can be a significant market, is what sets the flywheel of entrepreneurial achievement in motion. – Philip Delves Broughton

Age vs Experience. Some of the tech geniuses are still in their 20s. Younger people have more resilience. They invest in the young. The average age of American entrepreneurs which started their first company is 40. VCs love younger people. The best time to start when you the right energy and competence. As you age, your energy level drops. Good businesses require credibility to attract investors and employees and managerial experience.

The Old Man and the Fish. One can get inspiration from old objects, like the oldest life forms. For instance, a designer got inspiration from the body of a fish to create a fish-inspired design. It was a unique architectural vision. Gehry was 69.

Closing the Experience Gap. You have to think of the inverted U of productivity and where you currently fall along the curve. Larry Page and Sergey Brin were young when they started their first search engine. Being ambitious is important. Eric Schmidt was hired as the Google CEO. In 2011, he stepped aside to let Page be CEO. Sheryl Sandberg agreed to be Facebook CEO. In 2012, it went IPO. Both these companies realized that they needed to move up the inverted U curve of productivity and age by hiring. Sometimes, you can’t do it alone.

A Brief History of an Idea. What does entrepreneurship mean? It was associated with being a merchant. They were also innovators who struck out on their own. Ralph Waldo Emerson encouraged people to look inwards for inspiration. One has to be comfortable with solitude. The entrepreneur was more than just a manager of risk. John Rockefeller was the first billionaire. Business was about ‘survival of the fittest’. Schumpeter was an economist. He understood the importance of economics. Later, he lectured in Harvard. He was a very ambitious man indeed. He knew that growth in an economy was dependent on entrepreneurs. Because of them, entrepreneurship would be revolutionized. Change was the only constant. Peter Drucker had a similar career path to Schumpeter. To him, it was possible to learn entrepreneurship. He also identified entrepreneurship in other fields.

The entrepreneur always searches for change, responds to it, and exploits it as an opportunity. – Peter Drucker

Searching for Opportunity. The Adjacent Possible. Chris Blackwell was fascinated by Jamaicans after they took care of him. Later, he got inspired to write music. The Jamaica’s Rastafarians music became popular throughout the world. Sometimes, you might find ideas in areas which you might least expect. This is known as the ‘adjacent possible’, which is discovering opportunities in the work that surrounds them. Gillette the shaver was a great idea and created a near monopoly effect for years.

Nearly 75% of entrepreneurs find their ideas while in their current job. A fifth find them by chance and fewer than 5% by systematically searching for new opportunities. – Philip Delves Broughton

The Gossip Test. Francis Crick wondered what he should do after WWII. He didn’t know what to do with life. However, he realized the lack of qualifications could be an advantage. He knew a bit about physics and mathematics. Later he saw Kreisel. Later, he discovered his love for antibiotics. Later, he chose molecular biology. Later, he went on to win the Nobel Prize, for the discovery of the double-helical structure of DNA.

I had discovered the gossip test – what you are really interested in is what you gossip about. – Philip Delves Broughton

A bug Named Jim. Jim Collins often filled his notebook with observations of the world. He felt dissatisfied at HP. He observed bugs in a jar. Through time, he realized that he preferred academia and he eventually work many books on management and business success. Self-observation and self-awareness are very important indeed.

Shifts and Disruptions. Thomas Kuhn was a professor and a historian. To him, both Aristotle and Newton were right, just that they were in different paradigms. How do you figure out which paradigm is good for you. For instance, in sports, the paradigm might be discipline, strength and hard work. If you are not that fit, you could use another paradigm, this could be strategizing more on the field. This tactic might work over time as well. Disruption is a term which often means paradigm shift too. Not every star-ups need to disrupt in order to success. However, the start-up should understand the theory before you launch in practice. Too many layers in a company became self-reinforcing. This is why big companies are less creative and less nimble. IBM dominated in the 1965s but the mainframes were gradually less popular. The mainframe companies failed. Most companies who get disrupted could see it coming but didn’t do anything about it. Kodak was a failure who went bankrupt. Newspaper businesses suffered the similar fate. One needs to try to attack the prevailing mode of doing business. Even in surgery, balloon angioplasty revolutionized heart surgery. Now, the costs are lower as well. Disruption can occur in any field and we must be prepared for it.

The Slow Hunch. Inventions emerge from the mass of human experience. Every generation after should be better than the previous one. Someone figured out that freezing food fast could preserve the condition and taste of food. One’s curiosity of nature is important. Ideas packaged together in a new configuration is crucial.

Responding to Opportunity. Assembling Complementary Assets. You must consider which assets to keep in-house and which to outsource. You can self-publish or go via a publisher. In entrepreneurship, you will be involved in a lot of decision making.

People. Corporate executives spend days trying to manage volume. As entrepreneurs, you have to come up with your own options. Decision making is crucial as you must make decisions that also are in-line with the long term goal of the company. People are a huge factor. They may be difficult to fire if they turn out poor. Agents are employees but whose loyalty might be limited and be non-committed. You might issue some equity to employees so that they can work harder. You must also be able to be brutally honest to people. You cannot put off decision making as it is painful. Some things have to be done no matter what.

Loneliness can kill a start-up and the enthusiasm and presence of friends is reassuring in those early, uncertain days. But unless there is a sound business logic for their presence, you could be in for trouble. – Philip Delves Broughton

Entrepreneurs get to see their decision bear fruit. What they say goes, and that freedom, that actualization through action, is the thrill of what they do. – Philip Delves Broughton

Context. You must have a relationship with your landscape. Your success might not be easily measured.

It’s not about going where everyone else is going, where the contest will be fiercest and the rivalries intense. It is about going to the place where you will have a natural edge over every other sucker who rolls into town, where you can take the risk that others never could. – Philip Delves Broughton

Planning. You will constantly grapple between the questions of ‘how’ and ‘what’. It is like building the plane at the same time as your hurtle towards take-off. Your business plan that you created is unlikely to suit the market. Plans need to be adapted to suit circumstance. The aim of the business plan is to get the entrepreneur to think. You must think both short and long-term for your business.

The business plan can be an invaluable checkpoint for the rational entrepreneur. It allows you to think about what you might need before you actually need it. – Philip Delves Broughton

Exploiting Opportunity. The Struggle. Elon Musk was in bad financial shape in the end of 2008. He had ventured into SpaceX and Tesla. At that time, he thought he was doomed. Thankfully, his investors bailed him out at the last minute. Then SpaceX won a billion dollar contract with NASA. He managed to pull it off. Musk has a tremendous ability to take pain and be hyper-rational about decision making. Failure might inevitably set it for an entrepreneur. Most people are not strong enough to overcome their struggle.

Being and Becoming. Those who have followed Elon would have earned rewards. His engineers would work all day and night. The work culture was addictive. They also were ingenious and could improvise at rates inconceivable at larger companies. They managed to build engine within 3 days. They built rockets from scratch. Falcon 1 failed in 2006. Musk painted them an image that their work was worthwhile.

SpaceX is in this for the long haul and, come hell or high water, we are going to make this work. – Elon Musk

It is the difficulty of entrepreneurship that leads to the fullest imaginable life. Work provides the framework for self-discovery, for finding out who we can be when we meet great challenges. – Philip Delves Broughton

Failure 1 and Failure 2. There are two types of failures, there are trivial failures and soul-shaking ones. Failure 1 are failures intrinsic to the scientific method. However, this eliminates one possibility. This is like one of the materials that won’t cause the lightbulb to light. Nowadays, you can start something off as a prototype and gain traction. However, iteration is important and iteration is a form of beauty in itself. Failure 2 are those that tests you as a person. An example of this is being on the verge of bankruptcy and emerging from the abyss. You don’t want to mess around with Failure 2s.

Most attempts fail not because of lack of brains but because the investigator gets stuck in a cul-de-sac or gives up too soon – Francis Crick

Indifference and Lightness. Stoics recommend we contemplate the worst possible experiences in life. Always anticipate the worst. Seneca was a famous stoic. Zen is a form of emotional therapy which is useful too. Steve Jobs established Apple University. It was a leadership programme. Steve Jobs’ character defined Apple. They were focused on good design. Jobs was fascinated with Zen Buddhism. For people to practice this, the past does not matter. Building a business was for the passionate and persistent. Learn to trust your gut. Value your loss as it gives you time to work on your work and family. Sometimes, you will meet success along unconventional paths. The rewards of the work matter little to the work itself.

To think like an entrepreneur is to think in terms of change, often dramatic change. And to change anything, one must move lightly, unburdened by the drab expectations of others. – Philip Delves Broughton


Quitter by Jon Acuff (Part 1)

Closing the Gap between Your Day Job and Your Dream Job

Don’t Quit Your Day Job. I hated my day job and the feelings of Monday mornings. I felt that my dreams were crushed. I had 8 jobs in 8 years. Many employees are also looking out for new jobs. The average tenure of a job is only 3.1 years for the younger generation. Now, we converted from stayers to leavers. We hate our jobs and only see work as a means to pay money to fund our lifestyle. We often feel that work is miserable and that it is possible to separate our work from our personality outside of work. Quitting your job is one of the worst things you can do. It sucks when you have a lousy boss and the only person he can manage is you. We always assume things will be rosy once we quit. All your financial responsibilities will creep up on you. Your wife will start arguing with you. You will get scolded if you watch too much TV. Quitting your jobs might throw your relationship into chaos. You can get to your dream job, but that doesn’t involve you leaving your day job immediately. When you don’t have a job, you don’t have a good bargaining tool to get what you want. If you have a day job, you can still reject shitty offers. The cost of raising kids is very high nowadays. I got to earn some cash speaking in front of a crowd. You lose leverage if you quit without a job. At the heart of a dream is change. People do not like change in general. Financial commitments are tight and inflexible. Stay true to your dream and do not quit your day job. People with jobs have more creative freedom than those without jobs. Once I started a diet, I realized that other aspects of my life was improving as well. Discipline begets discipline. Men need to work and need a project/ need progress at all times. Money issues are very sensitive. Humans need to work. We need to learn to be successful at work. Having a day job will stabilize your marriage.

The unfortunate truth is the escaping the land of bad bosses is just a fantasyland. The second you quit your bad boss you get dozens of new bosses. And some are more demanding than the one you just left. – Jon Acuff

You effectively lose that option when you quit. You lose that freedom when you jump without a net. You lose the power of the walkout or the shredded contract. – Jon Acuff

When you keep your day job, all opportunities become surplus propositions rather than deficit remedies. You only have to take the ones that suit your dream best. – Jon Acuff

Discipline begets discipline. When you step up to a challenge before you, your ramped-up resources rub off on other areas of your life. You wouldn’t think eating less ‘fat’ would impact how closely you monitor your family’s financial budget, but it’s all tied together. – Jon Acuff

Quitting a job doesn’t jump-start a dream because dreams take planning, purpose and progress to succeed. That stuff has to happen before you quit your day job. Often it should occur months and even years before. – Jon Acuff

Removing the ‘I’m’ From Your ‘But’. It feels sexy to quit. We usually label quitters as winners. This is the “I’m, but’ generation. This means that ‘We don’t know what we want, but this isn’t it’. People seem to know what they want to do without even trying that thing. There are ways to find out what your dream job is. For instance, one could work on personality tests. The truth is that most of us don’t know what our dream job is. So ask yourself, so what do you want to do? We often think that what we want to do is going to be a revelation. The author believes that it is more a process of recovery. Somehow, you lost it along the way. Everyday distractions are bad and divert us away from our dreams. Being busy is an excuse. Do not simply discount your dream. You will always meet people in your life who dismiss your dreams, who think that you are not good enough. Nothing can’t hurt you. Nothing is comfortable. Nothing is normal. We are embarrassed to share our big dreams. Don’t believe that you have no gifts in life and you have nothing. It is difficult to answer the question what do I want to do with my life because is a discovery question. Learn to look for hinge problems. Mercedes Benz redesigned the SLR range to appeal to the rich. They added a hinge to the ignition. You needed to open the cover and then press the ignition button with your thumb. It was like launching a missile. That made a tremendous difference to the car’s outlook and appeal. The lamination of your text makes it seem like you are a true published author. My dad also sent my book for publishing and that was great. My dad believed in me, that was one of my hinge moments too. However, most hinges are difficult to recover. Ask yourself the following questions to figure out hinge moments. 1) What do I love enough to do for free? 2) What do I do that causes time to feel different? 3) What do I enjoy doing regardless of the opinions of the people? 4) If only your life changed, would that be enough? 5) Are there any patterns in the things you like doing?

If you recognize that, if you admit that there is a chance that you are good, perhaps even great at something, you should feel a little uncomfortable. Because if your gift is not nothing, that means it is something. – Jon Acuff

A hinge moment occurs when you are planning to do something standard and normal, and then seemingly out of nowhere, a small detail usually hinges you in a different direction. – Jon Acuff

What Lies Between a Day Job and a Dream Job. Every dream has risk associated with it. When you stare at risk, you tend to make irrational decisions. We will now examine 3 risks associated with a dream. They are ‘The Magnifying Glass’. We blow things out of proportion. The next is ‘The Kaleidoscope’. Your dream is also connected to every aspect of your life. This is basically overthinking and thinking of all the worst case scenarios. The last fear is ‘The Telescope’. This is the best as you view from a safe distance and see the big picture. Risk is holding us back from pursuing our dream. Perfection is a real problem. This is because it tends to make you procrastinate and not do anything. Get organized and get things in motion. Perfect is not possible. This does not mean you should write half-hearted work. It is still better to pursue your dreams rather than leave it not pursued. Once you decide, just do it. We often like to say I could be so-and-so if I really wanted to. This leads to apathy. We ask ourselves ‘What if I try and I fail and it turns out I’m not really a writer?’ Apathy is about being a fake somebody. The chance of you failing to get your dream job and then rotting away and going to waste are extremely slim. If you do not attempt your dreams, you fail 100% of the time. We often say that we are too busy to pursue our dreams. However, most of us are also busy. However, everyone can set aside time for time management. Instead of time, learn to focus on the amount of tasks at hand. Financial foolishness is different from being committed to your dream. Do not take drastic measures. Money can be a huge obstacle if you are not careful. I hate the words ‘by now’. We say this when it is too late to pursue our dream. What if I did the wrong thing? Your past career can still teach you valuable lessons. Do not keep saying things like ‘It would be easier if …’ For instance, people say ‘It would be easier if I didn’t have a full-time job’. Having a lot of money will not save your life. Do not blame your kids, marriage for not being able to pursue your dreams. This is simply outrageous.

90% perfect and shared with the world always changes more lives than 100% perfect and stuck in your head. – Jon Acuff

Money will become a high-walled border around your dream if you don’t control it. It will limit what you can do and when you can do it, like a barbed-wire fence at a prison. If you can control it though, money can be a strong, stable place to jump from. – Jon Acuff

I know sometimes it’s scary to think that you might do the wrong thing. But let me assure you, nothing you do will be wasted. Every decision you make, every path you take, has the ability to contribute something you need to succeed at your dream. – Jon Acuff

We always assume that more free time will equal more productivity but often that isn’t true. I personally tend to get more done when I am busy. – Jon Acuff