Interview date: November 11, 1994

Interviewer: John McLaughlin, Historian and President of the Santa Clara Valley Historical Association

Interviewer’s question:  “If this was going to be viewed forever by young high school kids and college kids — young entrepreneurs who want to go out and do something while they’re still young. You know, the advantages of doing that. It opened up a whole new gate for other young entrepreneurs. What advice would you give them?” 

Transcript: “. . . The thing I would say is, when you grow up, you tend to get told that the world is the way it is, and your life is just to live your life inside the world. Try not to bash into the walls too much. Try to have a nice family life, have fun, save a little money. But life, that’s a very limited life. Life can be much broader once you discover one simple fact, and that is: Everything around you that you call life was made up by people that were no smarter than you. And you can change it. You can influence it. You can build your own things that other people can use. And the minute that you understand that you can poke life, and actually something will, you know, if you push in, something will pop out the other side, that you can change it. You can mold it. That’s maybe the most important thing is to shake off this erroneous notion that life is there and you’re just going to live in it, versus embrace it. Change it. Improve it. Make your mark upon it. I think that’s very important. And however you learn that, once you learn it, you’ll want to change life and make it better. Because it’s kind of messed up in a lot of ways. Once you learn that, you’ll never be the same again.”

So there’s a great essay written by Sigmund Freud called
“On Transience.”
And in it, he cites a conversation
that he had with the poet, Rilke,
as they were walking along this beautiful garden.
And at one point, Rilke looked like he was about to tear up.
And Freud said, what’s wrong?
It’s a beautiful day.
There’s beautiful plants around us.
This is magnificent.
And then Rilke says, well, I can’t get over the fact
that one day all of this is going to die.
All these trees, all these plants,
all this life is going to decay.
Everything dissolves in meaninglessness
when you think about the fact that impermanence
is a really real thing.
Perhaps the greatest existential bummer of all is entropy.
And I was really struck by this, because perhaps that’s
why, when we’re in love, we’re also kind of sad.
There’s a sadness to the ecstasy.
Beautiful things sometimes can make us a little sad.
And it’s because what they hint at
is the exception, a vision of something
more, a vision of a hidden door, a rabbit
hole to fall through, but a temporary one.
And I think, ultimately, that is the tragedy.
That is why love simultaneously fills us with melancholy.
That’s why sometimes I feel nostalgic over something
I haven’t lost yet, because I see its transience.
And so how does one respond to this?
Do we love harder?
Do we squeeze tighter?
Or do we embrace the Buddhist creed of no attachment?
Do we pretend not to care that everything and everyone we know
is going to be taken away from us?
And I don’t know if I can accept that.
I think I more side with the Dylan Thomas quote that says,
I will not go quietly into that good night,
but instead rage against the dying of the light.
I think that we defy entropy and impermanence
with our films and our poems.
I think we hold onto each other a little harder and say,
I will not let go.
I do not accept the ephemeral nature of this moment.
I’m going to extend it forever.
Or at least I’m going to try.

We assume, even, we know why we do what we do.
But then how do you explain when things don’t go as we assume?
Or better, how do you explain when others are able to achieve things
that seem to defy all of the assumptions?
For example: why is Apple so innovative?
Year after year, after year,
they’re more innovative than all their competition.
And yet, they’re just a computer company.
They’re just like everyone else.
They have the same access to the same talent,
the same agencies, the same consultants, the same media.
Then why is it that they seem to have something different?
Why is it that Martin Luther King led the Civil Rights Movement?
He wasn’t the only man who suffered in a pre-civil rights America,
and he certainly wasn’t the only great orator of the day.
Why him?
And why is it that the Wright brothers were able to figure out
controlled, powered man flight when there were certainly other teams
who were better qualified, better funded —
and they didn’t achieve powered man flight,
the Wright brothers beat them to it.
There’s something else at play here.
About three and a half years ago I made a discovery.
And this discovery profoundly changed my view
on how I thought the world worked,
and it even profoundly changed the way in which I operate in it.
As it turns out, there’s a pattern.
As it turns out, all the great and inspiring leaders and organizations in the world —
whether it’s Apple or Martin Luther King or the Wright brothers —
they all think, act and communicate the exact same way.
And it’s the complete opposite to everyone else.
All I did was codify it, and it’s probably the world’s simplest idea.
I call it the golden circle.
Why? How? What?
This little idea explains why some organizations and some leaders
are able to inspire where others aren’t.
Let me define the terms really quickly.
Every single person, every single organization on the planet
knows what they do. 100 percent.
Some know how they do it,
whether you call it your differentiated value proposition
or your proprietary process or your USP.
But very, very few people or organizations know why they do what they do.
And by “why” I don’t mean “to make a profit.”
That’s a result. It’s always a result.
By “why” I mean: What’s your purpose?
What’s your cause? What’s your belief?
Why does your organization exist?
Well, as a result, the way we think, the way we act,
the way we communicate is from the outside in.
It’s obvious. We go from the clearest thing to the fuzziest thing.
But the inspired leaders and the inspired organizations —
regardless of their size, regardless of their industry —
all think, act and communicate from the inside out.
Let me give you an example.
I use Apple because they’re easy to understand and everybody gets it.
If Apple were like everyone else,
a marketing message from them might sound like this:
“We make great computers.
They’re beautifully designed, simple to use and user friendly.
Wanna buy one?” “Meh.”
And that’s how most of us communicate.
That’s how most marketing is done, that’s how most sales is done
and that’s how most of us communicate interpersonally.
We say what we do, we say how we’re different or how we’re better
and we expect some sort of a behavior,
a purchase, a vote, something like that.
Here’s our new law firm.
We have the best lawyers with the biggest clients,
we always perform for our clients who do business with us.
Here’s our new car. It gets great gas mileage,
it has leather seats, buy our car. But it’s uninspiring.
Here’s how Apple actually communicates.
“Everything we do, we believe in challenging the status quo.
We believe in thinking differently.
The way we challenge the status quo
is by making our products beautifully designed,
simple to use and user friendly.
We just happen to make great computers.
Wanna buy one?”
Totally different right? You’re ready to buy a computer from me.
All I did was reverse the order of the information.
People don’t buy what you do they buy why you do it.
People don’t buy what you do they buy why you do it.
This explains why every single person in this room
is perfectly comfortable buying a computer from Apple.
But we’re also perfectly comfortable buying an MP3 player from Apple,
or a phone from Apple, or a DVR from Apple.
But, as I said before, Apple’s just a computer company.
There’s nothing that distinguishes them structurally from any of their competitors.
Their competitors are all equally qualified to make all of these products.
In fact, they tried.
A few years ago, Gateway came out with flat screen TVs.
They’re eminently qualified to make flat screen TVs.
They’ve been making flat screen monitors for years.
Nobody bought one.
Dell came out with MP3 players and PDAs, and they make great quality products,
and they can make perfectly well-designed products —
and nobody bought one.
In fact, talking about it now, we can’t even imagine
buying an MP3 player from Dell.
Why would you buy an MP3 player from a computer company?
But we do it every day.
People don’t buy what you do, they buy why you do it.
The goal is not to do business with everybody who needs what you have.
The goal is to do business with people who believe what you believe.
Here’s the best part:
None of what I’m telling you is my opinion.
It’s all grounded in the tenets of biology.
Not psychology, biology.
If you look at a cross-section of the human brain,
looking from the top down,
what you see is the human brain is actually broken into three major components
that correlate perfectly with the golden circle.
Our newest brain, our Homo Sapien brain,
our neocortex, corresponds with the “what” level.
The neocortex is responsible for all of our
rational and analytical thought and language.
The middle two sections make up our limbic brains,
and our limbic brains are responsible for all of our feelings,
like trust and loyalty.
It’s also responsible for all human behavior,
all decision-making,
and it has no capacity for language.
In other words, when we communicate from the outside in,
yes, people can understand vast amounts of complicated information
like features and benefits and facts and figures.
It just doesn’t drive behavior.
When we can communicate from the inside out,
we’re talking directly to the part of the brain that controls behavior,
and then we allow people to rationalize it
with the tangible things we say and do.
This is where gut decisions come from.
You know, sometimes you can give somebody all the facts and figures,
and they say, “I know what all the facts and details say, but it just doesn’t feel right.”
Why would we use that verb, it doesn’t “feel” right?
Because the part of the brain that controls decision-making doesn’t control language.
And the best we can muster up is, “I don’t know. It just doesn’t feel right.”
Or sometimes you say you’re leading with your heart,
or you’re leading with your soul.
Well, I hate to break it to you, those aren’t other body parts
controlling your behavior.
It’s all happening here in your limbic brain,
the part of the brain that controls decision-making and not language.
But if you don’t know why you do what you do,
and people respond to why you do what you do,
then how will you ever get people to vote for you,
or buy something from you, or, more importantly, be loyal
and want to be a part of what it is that you do?
Again, the goal is not just to sell to people who need what you have,
the goal is to sell to people who believe what you believe.
The goal is not just to hire people who need a job,
it’s to hire people who believe what you believe.
I always say that, you know,
if you hire people just because they can do a job, they’ll work for your money,
but if you hire people who believe what you believe,
they’ll work for you with blood and sweat and tears.
And nowhere else is there a better example of this
than with the Wright brothers.
Most people don’t know about Samuel Pierpont Langley.
And back in the early 20th century,
the pursuit of powered man flight was like the dot com of the day.
Everybody was trying it.
And Samuel Pierpont Langley had, what we assume,
to be the recipe for success.
I mean, even now, when you ask people,
“Why did your product or why did your company fail?”
And people always give you the same permutation
of the same three things:
under-capitalized, the wrong people, bad market conditions.
It’s always the same three things, so let’s explore that.
Samuel Pierpont Langley was given 50,000 dollars by the War Department
to figure out this flying machine.
Money was no problem.
He held a seat at Harvard and worked at the Smithsonian
and was extremely well-connected.
He knew all the big minds of the day.
He hired the best minds money could find
and the market conditions were fantastic.
The New York Times followed him around everywhere,
and everyone was rooting for Langley.
Then how come we’ve never heard of Samuel Pierpont Langley?
A few hundred miles away in Dayton Ohio,
Orville and Wilbur Wright,
they had none of what we consider to be the recipe for success.
They had no money, they paid for their dream
with the proceeds from their bicycle shop,
not a single person on the Wright brothers’ team had a college education,
not even Orville or Wilbur,
and The New York Times followed them around nowhere.
The difference was, Orville and Wilbur were driven by a cause,
by a purpose, by a belief.
They believed that if they could figure out this flying machine,
it’ll change the course of the world.
Samuel Pierpont Langley was different.
He wanted to be rich, and he wanted to be famous.
He was in pursuit of the result. He was in pursuit of the riches.
And lo and behold, look what happened.
The people who believed in the Wright brothers’ dream
worked with them with blood and sweat and tears.
The others just worked for the paycheck.
And they tell stories of how every time the Wright brothers went out,
they would have to take five sets of parts,
because that’s how many times they would crash before they came in for supper.
And, eventually, on December 17th 1903,
the Wright brothers took flight,
and no one was there to even experience it.
We found out about it a few days later.
And further proof that Langley was motivated by the wrong thing:
The day the Wright brothers took flight, he quit.
He could have said, “That’s an amazing discovery, guys,
and I will improve upon your technology,” but he didn’t.
He wasn’t first, he didn’t get rich,
he didn’t get famous so he quit.
People don’t buy what you do, they buy why you do it.
And if you talk about what you believe,
you will attract those who believe what you believe.
But why is it important to attract those who believe what you believe?
Something called the law of diffusion of innovation,
and if you don’t know the law, you definitely know the terminology.
The first two and a half percent of our population are our innovators.
The next 13 and a half percent of our population are our early adopters.
The next 34 percent are your early majority,
your late majority and your laggards.
The only reason these people buy touch tone phones
is because you can’t buy rotary phones anymore.
(Laughter)
We all sit at various places at various times on this scale,
but what the law of diffusion of innovation tells us
is that if you want mass-market success
or mass-market acceptance of an idea,
you cannot have it until you achieve this tipping point,
between 15 and 18 percent market penetration, and then the system tips.
And I love asking businesses, “What’s your conversion on new business?”
And they love to tell you, “Oh, it’s about 10 percent,” proudly.
Well, you can trip over 10 percent of the customers.
We all have about 10 percent who just “get it.”
That’s how we describe them, right?
That’s like that gut feeling, “Oh, they just get it.”
The problem is: How do you find the ones that get it
before you’re doing business with them versus the ones who don’t get it?
So it’s this here, this little gap that you have to close,
as Jeffrey Moore calls it, “Crossing the Chasm” —
Because, you see, the early majority will not try something
until someone else has tried it first.
And these guys, the innovators and the early adopters,
they’re comfortable making those gut decisions.
They’re more comfortable making those intuitive decisions
that are driven by what they believe about the world
and not just what product is available.
These are the people who stood in line for 6 hours
to buy an iPhone when they first came out,
when you could have just walked into the store the next week
and bought one off the shelf.
These are the people who spent 40,000 dollars
on flat screen TVs when they first came out,
even though the technology was substandard.
And, by the way, they didn’t do it
because the technology was so great, they did it for themselves.
It’s because they wanted to be first.
People don’t buy what you do, they buy why you do it
and what you do simply proves what you believe.
In fact, people will do the things that prove what they believe.
The reason that person bought the iPhone in the first six hours,
stood in line for six hours,
was because of what they believed about the world,
and how they wanted everybody to see them:
They were first.
People don’t buy what you do, they buy why you do it.
So let me give you a famous example,
a famous failure and a famous success of the law of diffusion of innovation.
First, the famous failure.
It’s a commercial example.
As we said before, a second ago, the recipe for success is
money and the right people and the right market conditions.
Right? You should have success then.
Look at TiVo.
From the time TiVo came out about 8 or nine 9 ago to this current day,
they are the single highest-quality product on the market,
hands down, there is no dispute.
They were extremely well-funded.
Market conditions were fantastic.
I mean, we use TiVo as verb.
I TiVo stuff on my piece of junk Time Warner DVR all the time.
But TiVo’s a commercial failure.
They’ve never made money.
And when they went IPO, their stock was at about 30 or 40 dollars
and then plummeted, and it’s never traded above 10.
In fact, I don’t think it’s even traded above 6, except for a couple of little spikes.
Because you see, when TiVo launched their product
they told us all what they had.
They said, “We have a product that pauses live TV,
skips commercials, rewinds live TV
and memorizes your viewing habits without you even asking.”
And the cynical majority said, “We don’t believe you.
We don’t need it. We don’t like it. You’re scaring us.”
What if they had said,
“If you’re the kind of person who likes to have total control
over every aspect of your life, boy, do we have a product for you.
It pauses live TV, skips commercials, memorizes your viewing habits, etc., etc.”
People don’t buy what you do, they buy why you do it.
And what you do simply serves as the proof of what you believe.
Now let me give you a successful example of the law of diffusion of innovation.
In the summer of 1963, 250,000 people showed up
on the mall in Washington to hear Dr. King speak.
They sent out no invitations, and there was no website to check the date.
How do you do that?
Well, Dr. King wasn’t the only man in America who was a great orator.
He wasn’t the only man in America who suffered in a pre-civil rights America.
In fact, some of his ideas were bad.
But he had a gift.
He didn’t go around telling people what needed to change in America.
He went around and told people what he believed.
“I believe, I believe, I believe,” he told people.
And people who believed what he believed
took his cause, and they made it their own, and they told people.
And some of those people created structures
to get the word out to even more people.
And lo and behold, 250,000 people showed up
on the right day, at the right time to hear him speak.
How many of them showed up for him? Zero.
They showed up for themselves.
It’s what they believed about America
that got them to travel in a bus for 8 hours
to stand in the sun in Washington in the middle of August.
It’s what they believed, and it wasn’t about black versus white:
25 percent of the audience was white.
Dr. King believed that there are two types of laws in this world:
those that are made by a higher authority and those that are made by man.
And not until all the laws that are made by man are consistent with the laws
that are made by the higher authority will we live in a just world.
It just so happened that the Civil Rights Movement
was the perfect thing to help him bring his cause to life.
We followed, not for him, but for ourselves.
And, by the way, he gave the “I have a dream” speech,
not the “I have a plan” speech.
(Laughter)
Listen to politicians now, with their comprehensive 12-point plans.
They’re not inspiring anybody.
Because there are leaders and there are those who lead.
Leaders hold a position of power or authority,
but those who lead inspire us.
Whether they’re individuals or organizations, we follow those who lead,
not because we have to, but because we want to.
We follow those who lead, not for them, but for ourselves.
And it’s those who start with “why” that have the ability
to inspire those around them or find others who inspire them.
Thank you very much.

Many of people remember Edison’s famous phrase: the one about genius being 99% sweat and the rest inspiration.

It’s wrong…
If you plod forward with diligence, in the end you’ll be left with nothing.

Edison was in fact too lazy to consider the real reason for his success- that is why he came out with the phrase and tricked the whole world.

It’s time for us to re-think the facts:

1. The richest man on Earth, Bill Gates, was a programmer who was too lazy to study at school, so he dropped out. He was also to lazy to remember all those complex DOS commands, so he build the graphic interface. The result the entire world now uses Windows.

2. Coca-cola is too lazy learning from Chinese Tea that has long and venerable history, or the delicious Brazil coffee.
He just put a little sugar together with some water, packed it in a bottle, sold it, and called it Coca-cola. The rest is history.

3. McDonald’s is too lazy to study the refinements of French cooking or the complex skill of Chinese cuisine. He just stuck a piece of beef in between two chunks of bread and as a result the world has this M sign all over it.

There are these people…
They were too lazy to climb the stairs, so they invented elevators.
They were too lazy to walk, so they invented cars, trains, airplanes.
They were too lazy to kill people one by one, so they invented nuclear bombs.
They were too lazy to work out every calculation, so they invented mathematical formula.
Too many examples. I’m too lazy to give any more 

– by Jack Ma, founder of Alibaba.com