Many people talk about the successes of the market. But what it really allows is failure.
Centuries ago, if you couldn’t pay your debts, you were put in debtor’s prison where you wrote letters imploring family and friends to bail you out. In ancient Rome, if you pledged yourself as collateral and didn’t pay the loan you would become your creditor’s slave. Colonial Virginia was settled by many indentured (i.e. indebted) servants working off their debts via labor.
In the US we abolished debtor’s prisons by the mid-1800s. Some notable people had been imprisoned, including Light-Horse Harry Lee, a Colonel in the Revolutionary War and Governor of Virginia. We replaced prison with bankruptcy, a way of starting over.
This came to mind as I reflected on Steve Jobs and his remarkable career. In many ways, he was the most successful failure in modern history. The list of his failures is lengthy. Jobs helped invent the Apple I and the Apple II—early computers that sold by the hundreds. The product didn’t take off until they added a floppy disk. Then came the Lisa, another flop. Jobs got so distracted he missed deadlines and got tossed, so he took a half dozen Apple employees and founded NeXT, which produced a computer which sold tens of thousands. It had some interesting software, though, prompting Apple to buy it, bringing Jobs back. He brought his lessons with him.
When Jobs introduced the iPod, iTunes, iPhone, and iPad he had an inexpensive alternative approach to a large-scale consumer need with a seamless software ecosystem. His early failures prompted his later successes. In these days of too-big-to-fail banks, auto companies, and (soon) hospital systems, it’s important to remember: we can either learn from our failures, like Jobs, or send them to prison. The choice is ours.
Douglas R. Tengdin, CFA
Chief Investment Officer
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