Apple co-founder Steve Wozniak’s investment process, crypto thoughts

Apple co-founder Steve Wozniak's investment process, crypto thoughts

  • Steve Wozniak co-founded Apple, the first $3 trillion company, with Steve Jobs.
  • He broke down his critical investment criteria, including what he learned from his time at Apple.
  • Wozniak also shared his thoughts on cryptos, calling bitcoin “pure gold math.”

In 2018, Apple became the first company to surpass a valuation of $1 trillion. Just over three years later, in January, it made history again by briefly becoming the first company to achieve a

market capitalization

of $3 trillion.

Today’s Apple is a far cry from what Steve Wozniak and Steve Jobs built 46 years ago.

“Our story may not have appealed to much of the investment community when we launched Apple,” Wozniak said in an exclusive interview with Insider. “The big computer companies said we weren’t going to be big.”

After leaving Apple in the mid-1980s, Wozniak embarked on a series of other business ventures, both as a founder and an investor. Now the tech luminary has added another line to her lengthy resume – investment panelist on the reality show”unicorn hunters.”

“Unicorn Hunters” features hopeful entrepreneurs pitching their companies, which are primarily geared towards the health-tech sector, to a panel of seasoned investors such as Wozniak, Lance Bass of ‘N Sync, former US treasurer Rosa Rios and tech mogul Alex Konanykhin. The panel then asks the founders questions to uncover any risks or weaknesses before determining whether the idea is worth investing in.

For Wozniak, who draws much of his investment criteria from his experiences building Apple, the role of panelist is one he takes seriously.

“I’m very skeptical,” he said. “I want to ask the questions that investors asked me when I had small startups.”

On the trading side, Wozniak looks at a host of technical and operational factors, like product price equity or how the number of shares offered translates to percentage ownership. More importantly, Wozniak prefers to analyze the engineering behind inventions.

Basically, Wozniak said he looks at two things when investing: “the product and the people.”

The product

Wozniak said Hewlett Packard rejected his pioneering idea for a personal computer five times before he finally left the company and co-founded Apple. But his determination never wavered because he knew the idea was revolutionary.

“This market didn’t exist before – small computers that people could own. We had a product that was maybe five years ahead of what others were trying to do with microprocessors,” he said. Wozniak. “It was a singular product that I would have built myself, with or without a company.”

Today, he still stresses the importance of having a high quality product that meets people’s needs. Only when those criteria are met does he dive into the details.

“I look at the technology and I’m like, ‘Based on the cutting-edge technology in the world today, is this thing really going to be producible? Or is it going to run into issues with materials that are almost unreachable??” Wozniak said.

But sometimes having a good product that meets a need isn’t enough, and it can be difficult for even seasoned entrepreneurs like Wozniak to spot success before anyone else. One investment opportunity Wozniak missed was Uber, as he said he believed the Segway was an invention that “didn’t rock the world, but it should have”.

“The Segway was a big part of my life. A good thing – but for the price,” Wozniak said. “See, you have to compare this to the alternatives.”

He added, “Every product you create is good, it’s better. It’s good for someone. But if it’s not good enough for enough people, or the alternatives are too easy, he never really goes anywhere.”

Wozniak also values ​​research into new products that simplify and fit into daily life, such as UDP Labs, which creates sleep monitoring and pressure sensing pads. While the electrodes can provide complex readings on things like sleep patterns and heartbeats, Wozniak likes them for their simplicity and because they don’t need to be physically attached to the user.

“It’s like the days of computing hardware where you actually owned something when you bought it, not the people who provided the service through a cloud,” Wozniak said.

Moral considerations can also come into play when Wozniak invests, as was the case with GeneproDX, a Chilean startup featured in the latest “Unicorn Hunters” episode.

GeneproDX’s business centered on the development of vital thyroid cancer detection kits, which cost between $100 and $200 to manufacture but sold for $4,000, a markup of between 2,400 and 4,900%. After the seven panelists debated ethical concerns, Wozniak was the only investor to walk away, citing “uncertainties” and “personal feelings”.

“The fact that this company is building something for a hundred dollars and selling for $4,000, that bothered me ethically. That’s not the way I would have approached things,” said Wozniak, who also cited the product’s pending approval by the Food and Drug Administration. as another reason, he passed on the investment.

the people

The most important driver of Apple’s success, Wozniak said, was “we were the company that didn’t stay two young.”

“We had really good professionals in all categories as we grew, and people were so important,” he said. “So I look at these companies that present the same thing to us and say, ‘Are these people really going anywhere?'”

On the surface, Wozniak is looking for founders with good business acumen, like in-depth knowledge of the market. He also thinks founders should be “good technologists” who understand where their products will succeed or fail, he said.

But sometimes, Wozniak added, startup founders fail to fully convey their potential through their pitches. When that happens, he urges investors to keep “an optimistic side”.

“They could be another Apple, and you can’t see it yet,” he said. “There’s no way to calculate it in a spreadsheet.”

That’s why Wozniak doesn’t base his investments solely on his product analysis — he also stresses the importance of applying pathos.

“It’s very subjective and very interpersonal in that sense. It comes from the human side of things,” he said. “A lot of it even comes down to emotions, how you feel about what they’re doing – and the people themselves have to be pretty good.”

According to Wozniak, consideration of the emotional side is even more necessary in today’s startup ecosystem to separate entrepreneurs with “intent” from opportunists.

These days, Wozniak said very few newly launched apps and products have the potential to make a “life-changing difference” – a problem he attributes to a company that has cultivated a culture of dispassionate founders. or who set up a business for evil. In these cases, engineers are often “hired after the fact”, which compromises the quality of the product.

“A lot of people think, ‘I have to start a tech business. The business is what’s important, not the engineering,’” Wozniak said. “It doesn’t work that way in reality, in life. To me, you’re in a place and by accident an idea pops into your head, and you have the right skills to maybe transform it. into something real.”

Keeping this distrust in mind, Wozniak said he reviews the founders not only for “internal self-confidence”, but also for the main selling point – “that they deeply believe in what they do and that it can be done”. Possessing that internal passion for your product is crucial, Wozniak said, to turning entrepreneurship into “the hardest, hardest, hardest fun.”

“People who think well and fail in a startup still have their minds up, and they can come up with other ideas later in life,” he added. “I don’t like to see people force themselves to do something because that’s the way to make a ton of money. I don’t believe in it.”

The motivation that drives an entrepreneur, Wozniak said, inspires everyone who looks at them — “even other young people, even if they fail.” For this reason, he said he was particularly “disturbed” by the Theranos fiasco.

“It’s going to put off a lot of 19-year-olds who have a good idea and might go somewhere,” Wozniak said. “That, I am against. I am for attempting the impossible.”

Cryptos are not trustworthy, he says

As a self-proclaimed geek, Wozniak has been a lifelong fan of the Metaverse. But he is less convinced of the merits of non-fungible tokens and cryptocurrencies, which for the most part are “so empty” and untrustworthy and have a history of “scams”, he said. declared.

“There are so many cryptocurrencies coming out now; everyone has a way to create a new one, and you have a famous star with it. It seems like they’re just collecting a lot of money from people who want to invest at the earliest stage, when it’s worth pennies,” said Wozniak, who also suggested that people often buy the coins just because they’re blinded by the potential gains. “Then they fold simply.”

“Unicorn Hunters” recently introduced its own cryptocurrency, unicoin, which provides holders with dividends and equity positions in the portfolio of startups the show invests in — much like a stock or exchange-traded fund.

“It really opens up the world of startup investing to the masses,” Wozniak said. But unicoin is more conservative than other cryptocurrencies, he added, because it is backed by investment decisions made by professionals.

“A token is flaky on its own. It could even be worth zero,” Wozniak said. “I hope unicoin will be very successful, but at least it’s not zero-based, just words and talk. It’s really based on investment results.”

Regarding the rest of the cryptocurrency market, Wozniak said he thinks there are a few bigger players that are acceptable for an economically conservative strategy, but called bitcoin “the only one that’s mathematics in pure gold”.

Besides its “mathematical purity”, Wozniak also likes the piece because of its inlay”science, mathematics, logic and computer programming” and supply caphe told Yahoo Finance in a maintenance in October.