360° Coverage : Steve Jobs and Ezra Cornell: Entrepreneurs

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Steve Jobs and Ezra Cornell: Entrepreneurs
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Steve Jobs and Ezra Cornell: Entrepreneurs

Apr 17 2014, 6:25pm CDT | by

More and more MBA students are choosing to major in entrepreneurship, rather than the traditional disciplines of finance and marketing. How has entrepreneurship changed over the past century-and-a-...

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22 weeks ago

Steve Jobs and Ezra Cornell: Entrepreneurs

Apr 17 2014, 6:25pm CDT | by

More and more MBA students are choosing to major in entrepreneurship, rather than the traditional disciplines of finance and marketing.

How has entrepreneurship changed over the past century-and-a-half? Or has it changed? Consider the examples of Steve Jobs and Ezra Cornell.

Everyone knows about Steve Jobs, the inspiration and driving force behind Apple Inc., one of the most successful startups of all time. Less well known today is Ezra Cornell, a co-founder of The Western Union Telegraph Company in 1855, where he earned the fortune that provided the basis for the founding of Cornell University.

Despite the differences in time frames, there are some interesting similarities between these two hugely successful entrepreneurs.

Modest beginnings

Both men were born in modest circumstances and spent the first years of their adult life searching for direction. Steve Jobs attended Reed College for only a few months, sleeping on the floor of a friend’s dorm room, before departing for seven months to India, where he became a serious practitioner of Zen Buddhism. Ezra Cornell worked as a carpenter and mechanic in Ithaca, NY before being laid off at age 30 during the Panic of 1837.

Communications pioneers

Both were pioneers in the communications business. Although Apple was founded as a computer company, its products today—the iPhone, iPad and even the iMac—are increasingly focused on communication via the Internet. And Western Union, formed by consolidating regional telegraph companies, grew to more than a million miles of telegraph lines by 1900, providing nearly instantaneous communications for the first time from coast to coast.

A successful communications business has an interesting and beneficial economic characteristic: increasing returns to scale. The more people who sign up, the more people who can be contacted, which makes the service more valuable to each individual user, which attracts even more customers. Engineers call this a positive feedback loop.

Non-technical background

Neither was a trained scientist or engineer. Rather they built on someone else’s inventions, extending and simplifying them for use by the average person. The first Macintosh computer was promoted as “the computer for the rest of us.” Steve Jobs encountered many of the concepts that distinguished the first Macintosh computer—icons, the bit-mapped screen, word processing, the mouse—when he toured Xerox’s PARC laboratory in 1979. According to Apple co-founder Steve Wozniak, “Steve didn’t ever code. He wasn’t an engineer…” But he had the vision of what the computer could become and the drive to make it happen.

Similarly, Ezra Cornell had the vision to see the potential for Samuel Morse’s patented telegraph machine as the basis for a vast network that could communicate over long distances, in his words, “at lightning speed.” His first involvement with the telegraph was to develop a special horse-drawn plow that could dig a trench for buried telegraph lines—a concept that proved impractical when the insulation on the wires broke down underground. Later he owned a regional telegraph company that became part of Western Union, which he co-founded and became the largest stockholder.

Major setbacks

Both men faced major setbacks that would have ended most careers. Steve Jobs’ first computer using the new concepts from PARC was the Lisa, which at a price of $9995 was a commercial failure. Jobs tried again, this time with the Macintosh, which was highly successful. But later in a corporate power struggle he was fired by Apple, whereupon he founded Next Computer in 1985, whose product gained very limited acceptance. But the Unix-based operating system for the Next Computer became the platform for part of the new Apple OS X operating system when Jobs rejoined Apple in 1997.

Ezra Cornell’s involvement with the telegraph could have ended with the failure of the concept of underground telegraph lines. Worse yet, the first telegraph line opened to the public was a financial failure. When the first commercial line was opened for public business between Washington and Baltimore, the price was set at one penny for four characters sent. At the end of the first four days, it had taken in one cent. On the fifth day it took in twelve and a half cents, and by the ninth day it had taken in $1.04. After three months it had taken in only $193.56.

But Cornell was confident of the telegraph’s great commercial future. He built lines throughout the Northeast, often taking a large part of his pay in company stock, which created financial hardship for his family. Many of these small regional telegraph companies operated at a loss. He invested in the first telegraph company that connected New York and Washington. When Rochester businessman Hiram Sibley proposed buying out many of the small regional telegraph companies that had sprung up, Cornell merged in a company he owned./>/>

The new merged company was named The Western Union Telegraph Company at Cornell’s insistence because of his vision of creating a dominant telegraph company extending westward to the Mississippi and then on to the West Coast. Cornell was the largest stockholder in Western Union. His confidence was well-placed—by the end of the century Western Union had more than four thousand telegraph offices, over a million miles of lines, and even two undersea cables.

Intense attention to detail

Both men paid meticulous attention to product design. Steve Jobs obsessed over the finest details on new Apple products, and his tirades were legendary. When Jobs decided to open Apple retail stores, it was widely predicted that they would fail. Instead, Apple retail stores have been a huge success, achieving the highest sales volume per square foot of any retailer, even exceeding Tiffany’s.

Ezra Cornell also was very much a hands-on entrepreneur, personally selecting the towns and cities for his new telegraph service, poring over maps to lay out routes for the lines, and spending much time in the field with his line crews solving difficult problems, such as how to string a wire high enough across the Hudson River so that it would not be struck by the masts of passing ships.

Potentially career-ending health challenges

Both men suffered serious health challenges that would have caused many to retire early. Steve Jobs was diagnosed with pancreatic cancer in October 2003. The cancer was surgically removed in June 2004, and Jobs continued working, although reported to be “thin and almost gaunt.” During this time Apple launched some of its most successful products—the iPhone, the iPad, the Intel-based flat-panel iMac, and the completely solid-state MacBook Air. In April 2009, he underwent a liver transplant but his health continued to deteriorate. He finally stepped down as CEO in August 2011, nearly eight years after being diagnosed with cancer, and died six weeks later.

Ezra Cornell at age 43 suffered attacks of stomach pain during times of anxiety and tension, which may have been early symptoms of the liver ailment that was to distress him throughout his later years. In the summer of 1854, while traveling by rail from Lafayette, Indiana to Indianapolis, he met with a painful accident that kept him confined to his room for several weeks. His son, Alonzo Cornell, described the accident:

“His arm, resting on the sill of the open car window, was caught by the frame of a bridge. The arm was drawn out of the window and pounded against the timbers, through the entire length of the bridge, fracturing the bones twice above and three times below the elbow, besides breaking three fingers. The flesh of the hand and arm was terribly lacerated, and the injury was extremely painful. Fortunately it was not found necessary to amputate the limb, and it was restored to a condition of usefulness, though the fingers were ever after stiff, and awkward for many purposes.” Alonzo B. Cornell, True and Firm: Biography of Ezra Cornell, A.S. Barnes & Co., 1884

Despite the challenges to his health, Cornell achieved his dream of founding a university that would teach practical subjects such as agriculture and engineering on an equal basis with the classics favored by more traditional universities. On October 7, 1868, Cornell University welcomed its first class of 412 students with the words of Ezra Cornell, “…an institution where any person can find instruction in any study.”

Changing the world

These two entrepreneurs changed the world. Steve Jobs revolutionized the design of computers and communications devices, both through Apple and through the companies that were forced to copy his ideas in order to compete with Apple. Ezra Cornell co-founded an international communications company, Western Union, and used the proceeds to establish a world-class university. Unlike products or companies, which may come and go, world-class universities have lifetimes that are measured in centuries.

Summing up

There is always risk in trying to generalize from just a couple of examples, but the lives of Steve Jobs and Ezra Cornell do offer insights about successful entrepreneurship:

  1. They were not born to wealth. From the earliest years they had to scramble to survive and move ahead.
  2. They chose businesses that showed increasing returns to scale, where the value to each customer increases as more customers are added.
  3. Jobs and Cornell were not inventors or technicians as such.
  4. Rather, they had the vision to see the potential of the inventions of others.
  5. They made these inventions easy to use by non-technical customers.
  6. They were not disheartened by failures of their early products. They didn’t quit—rather, they learned from these failures.
  7. Jobs and Cornell brought intense focus on designing and executing the details of their products to maximize the value to their customers.
  8. Despite major setbacks, including serious health problems, they kept going.

Theodore Roosevelt said it well:

“Far better is it to dare mighty things, to win glorious triumphs, even though checkered by failure… than to rank with those poor spirits who neither enjoy nor suffer much, because they live in a gray twilight that knows not victory nor defeat.”

 
Update
2

3 weeks ago

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Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

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Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
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3 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

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Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

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