This Will Show You Why Quality Matters in Business

Products.

Product.

Product.

Product.

Product.

Product.

Product.

Our goal is to make the best personal computers in the world and to make products we are proud to sell and would recommend to our family and friends. And we want to do that at the lowest prices we can. But I have to tell you, there's some stuff in our industry that we wouldn't be proud to ship, that we wouldn't be proud to recommend to our family and friends. And we can't do it. We just can't ship junk. So there's, there's a, there are thresholds that we can't cross because of who we are. But we want to make the best personal computers in the industry. And we think there is a very significant slice of the industry that wants that too. And what you'll find is our products are usually not premium priced. You go— you go and price out our competitors' products and you add the features that you have to add to make them useful, and you'll find in some cases they are more expensive than our products. The difference is we don't offer stripped-down, lousy products. You know, we just don't offer categories of products like that. But if you move those aside and compare us with our competitors, I think we compare pretty favorably. And a lot of people have been doing that and saying that now for the last 18 months.

Do you think it's still possible for an upcoming filmmaker to go the route you guys went and still be successful?

That's a good question.

Make Reservoir Dogs.

That's a tough one.

Actually, no, I'm not even being a smartass. That was a fucking kickass movie, all right? You make a goddamn kickass movie, and you can take it all the way planet Earth. Not America, not fucking Los Angeles, not New York, the planet fucking Earth. And everyone will know it.

There is a lot more competition than there was when I was, you know, like kicking around with El Mariachi. So you got, you know, there's just a lot more to do these days. You got a lot more competition because everybody's got a camera now and everybody can edit and it's, it's just, it's tough. I don't know what the state of independent filmmaking changes.

But at the same time though, yeah, there's a lot more competition, but also those crappy movies aren't competition if your fucking thing is like fucking dynamite.

There you go, Tim.

All that shit is, yeah, there's a lot of people out there doing stuff, but it's like waves on the fucking beach, alright? You make a piece of nitro that you throw in an audience's lap, people notice.

I think the thing, the big differentiator with our company versus the other companies out there is they spend millions and millions of dollars on product development to make a product for 1 cent. They want to make the cheapest product, uh, as humanly possible, and they don't really look at the health, um, ramifications, um, or the healthiness of it. It's really just how cheap and high volume. And we're exactly the opposite. And so we spend a lot of money on product development, on high performance, on the best ingredients, the healthiest ingredients. But really honing in on performance.

We don't believe there's a tension between product and business. We believe there's a staging, which is in this industry you don't have a business until you have a product. And in particular, you don't have a business until you have a product that a lot of people want. We have this concept, we use the term product-market fit, which is basically you have a product that the market wants and you can tell because the market's pulling the product. And until you have that, time spent building the business around the product is pointless. 'cause it's not gonna go anywhere. Like, best case, it's gonna be a zombie. There's a lot of companies in the Valley, there's a lot of companies in the Valley and elsewhere that are, you know, 25, 50, 75 people. They've got a product nobody really wants it. They sell a few every quarter and they kinda eke out a living and they go on for year after year after year after year after year and they never get anywhere. They never go public, they never get bought, and people just basically collect salaries. And that's not what we wanna do. And that's not what super high potential entrepreneurs wanna do. So, what we basically say is if you want to build a big success, you got to nail the product. You got to like— it's got to be a killer product. It's got to be something that has product-market fit. When you have product-market fit, then you build a company around it, right? So then you build a sales force and then you start doing marketing and then you start doing business deals and then you start expanding internationally and you do all this other stuff. And it's at that point where you start to apply a lot of capital and you build a big board and you start hiring executives and doing all this stuff. But a full executive team with a sales force and all that stuff before you have a killer product is a complete waste of time.

We probably spend less money in marketing than any company our size in the world. We have a tiny marketing department, and everyone says, "Why, Oracle's all about sales and marketing." We are the largest employer of MIT and Caltech engineers in the world. We are the largest employer of Stanford and Harvard and CMU mathematicians in the world. We are overwhelmingly dominated by engineering. At Oracle. The idea that we are a sales and marketing company, which people will sometimes— will write about quite often, is ludicrous on the face of it because all of our customers who buy Oracle already have it. And if you already have Oracle, there's nothing a salesman can tell you about how great it is to make you buy more. GE already uses it. The Defense Department always— already use it. All of our customers, 98% of our sales or more are to existing Oracle customers. If we don't have the right product, people don't buy more. We will— before the acquisition, we spent $3 billion a year in software engineering. The company is all about engineering. It's the only thing that works.

Most businesses are the same, whether you're selling energy products or whether any consumer products. If it's useful to people, the rest is just business. So if you find something or invent something that's really useful, at that point it's really common. Whatever you're selling, the process is not that different. And our process is maybe a little bit different because we really don't have MBA-type processing. We basically common sense. You know, we look at businesses really in a simple way. You make good stuff and you sell it. You know, instead of all the highfalutin words which I really don't understand, like brand awareness and brand equity and, you know, all the fancy terminologies people use, that they don't have a product. So what we did was simply stick to fundamentals, which is you make a really good product, and 80% of marketing is making a really good product. And then you go out there, and if people like it, they agree with you, then they buy. Actually, you'll find most of the products that they say are good are marginal. Most of the folks that come up with products usually use some kind of a gimmick. In other words, "Gee, let's make it pink if it's for women," or "Let's make, you know, what's-his-name famous person endorse it." Products themselves are marginal. And then they say, "Well, no, it's a good product." Well, my question is, do you use it? If you're going to go out there and sell it, do you use it yourself? Does your family use it? And if they don't, why are you selling it? You know, so really you'll find most most of the fellows that say we have great products, we didn't get success, is they really don't use the product. They think everybody else should, but not us. We're superior to our own product. So there's a compromise amongst people about the quality of what they sell. And quality is also misunderstood. In other words, quality starts with— if the customer doesn't need it, it doesn't provide something that they're going to pay for. We have different technical terms I mean, our technical terms are slam dunk. You know, everybody understands what that is. You got a slam dunk product or do you have a good product? For us, we get pitched several products a week. If it's a good product, we don't go out there and sell it. It's got to be slam dunk. It's got to be where nobody will refuse it. And then you have a hard time with it. So the flaw is really they don't have good products. Definition of a good product is it will do well. Now, there's some amount of execution, but I would say that if you don't have a great product, any amount of execution is going to only buy you a little time. After that, everybody will figure out that this is not that good and not buy it anymore.

I think, look, you could be— I mean, the point is, is that there's the integrity and honesty As far as I'm concerned, goes without saying, and you can push that to one side at the moment because you can be honest and have a high integrity, but if you've got a lousy product, your prices are too high, it's irrelevant. So it's a mixture of spotting opportunities. I mean, starting from the top of your own business, spotting opportunities, products, services, that you want to offer that are, that do bring value to whomever you're going to sell them to, and then having the nous to go and sell them. I mean, again, this young man's question over there is very, very similar. You know, I get asked a lot in, a similar question in universities and places like this. You don't just jump out of bed one Monday morning and, "I want to be Richard Branson. I'm going to start an airline." like that. I want to start an airline tomorrow morning. Now, total nonsense. Right? Have you got any money? No, but I want to start an airline tomorrow morning. So there's a certain realism as to what one wants and needs to do. Secondly, you've got to look at— you've got to also have a realistic point of view. I'm new, I'm starting, I've got a new business. What do I offer somebody? What do I offer my potential customer? What have I got that they can't already get from 20 or 30 or 40 or 50 other people? Because if I'm not offering anything different, then I've got a tough job ahead of me. And I think you have to continually test yourself on that basis. I used to test myself with products. Is this a good product or not? Well, has anybody else got one? Or is it the same as what other people have got but half the price? Does it do more? Has it got different features on it? Does it look better? Is the market ready for it? That's the test. And from my point of view, um, and it, it, it, I can only talk from my experience, my products did the talking. You know, I could be the greatest salesman in the world, the most charming person in the world, whatever you want to be, You could advertise and do whatever you want. If the product sucks, then you got no business.

So what we grew up with was Mad Men. Mad Men was advertising and marketing were the same thing. If you spend enough money on advertising, you would succeed. But now that's over. So what we're left with is the product is the marketing. Look, we got Google, we got Facebook, we've got eBay, we got Amazon. None of them spend any money on advertising. They spend all their money on making something people people will talk about. So if you think about the Leaning Tower of Pisa, now they didn't make it lean on purpose, but if you ever go to Pisa, there's tons of tourists there because if you see the Leaning Tower, you can talk about it when you go home, right? Where it doesn't matter that just 100 miles away is the Parthenon, which is one of the most beautiful buildings in the world. It's subtle. It's not easy to talk about. So the question is, are you going to build something that's as interesting as Leaning Tower of Pisa? Are you going to make a product or a service that when people are done using it, they can't help but tell their friends about.

Entrepreneurship is taught as courses in all the colleges, and usually it's a business-level course. So you've got all these business guys that, oh my gosh, if I write some ideas down on paper, that's how you go about it, starting a company. And I— my principle is no. I'm— so many people in Silicon Valley got used to write ideas down on paper and then try to get some money, try to get some money, try to get some money, like we can just buy the engineering for it. No, I like the type of entrepreneur entrepreneurship that has actually created working models. Here is an example of something that works the way we want it, and we've built it, and we've got the talented technical people that know how to do it. And I think it should get to that phase. So the entrepreneurship, it's a combination of the business and the technical doers, the technology people.

I see the company as a part of my family, and I guess I see our cars like my children in one way. I have two sons. Which I love very, very, very much. But also the cars are my babies somehow. I really care a lot about them and it's like a part of myself somehow. I don't separate my own being from the company or the cars. We are really connected together and it's my life. And I don't see my work as work. I don't see it as my hobby. It's just It's just who I am and what I do.

Thank you guys so much for watching. I hope you enjoyed. For me, creating great products is about putting more of your love and effort and heart into it. You need to put a disproportionate amount of time that then makes sense into your product to make it great. When I put love and energy and effort into my YouTube channel, especially at the start, I put way more time and love and heart and energy into it than was worth it. That anybody would have looked at and said, you know, they would say, you're spending too much time on this. This is a waste of your time. And so that's what you need to do. You do it because you love it. And so if you can do that, if you can, you know, wake up thinking about your product and go to sleep thinking about your product and pour so much love and attention into your product every day because you want to create it, because it's going to help you in your life and you know it's going to help others. When you start really feeling proud of what you're making, and the effort you're putting in, that's when you start to create great products. So thank you so much for watching. I'd love to know how you create great products. Leave it in the comments below. I'd also love to know which of the clips that you saw here today had the biggest impact on you and what change you're going to make in your business. Leave it in the comments. I'll join the discussion. Thank you guys so much for watching. Continue to believe and I'll see you soon.