Ever since the passing of Steve Jobs, one of the few legitimate investor concerns regarding Apple (AAPL) involves how everybody and everything, from the company's employees to the market, would react to the new CEO, Tim Cook. At the heart of this worry sits the question, Can the team at Apple, now led by Cook, continue the magic working in the spirit, but not the earthly presence of Steve Jobs?
While I have not necessarily shared that concern, I do not blow it off. I discount notions that AAPL is a trader's stock, not a buy-and-hold investment. I lament anxiety over an unknown future as a reason not to buy AAPL stock in the absence of a better set of alternatives. But, I do not think you're crazy if you at least fidget a bit when thinking about life after Steve Jobs.
In this article, I consider life at Apple after Jobs within the context of Cook's, presumably, different way of running things.
Steve Jobs: "An Effective (Expletive)"
That's how Stanford business professor Robert Sutton characterizes the former CEO in Adam Lashinsky's excellent new book, Inside Apple: How America's Most Admired - and Secretive - Company Really Works. Lashinsky quotes a passage from one of Sutton's books where the professor posits that Jobs managed in opposition to standard convention and the modern day corporate way of "empowerment." Citing former underlings of Jobs, Sutton notes that Jobs, at times, was downright "nasty" to fellow executives, other employees and vendors, but this nastiness, alongside "his tantrums" was "a crucial part of his success."
Now, Apple makes the transition from, as Lashinsky writes, "A narcissist" with "obsessive traits," whose "brutality in dealing with subordinates legitimized a frighteningly harsh, bullying and demanding culture at Apple" to Cook, a guy who appears to take a different, maybe even soft (I like to call it "human") approach.
Consider this Market Current published by Seeking Alpha editors Friday afternoon:
Friday, January 27, 12:42 PM Tim Cook reportedly sent an urgent memo yesterday addressing alleged violations of health and safety at factories of suppliers, following negative stories in NYT and elsewhere (I, II). Cook says Apple is "attacking problems aggressively" and that the company is leading the industry by planning to open up to the Fair Labor Association for inspection of suppliers' facilities.
This sort of response is not very Jobsian. Neither are all of the feel-good memos addressing the "team" and actions such as encouraging members to make charitable donations that Apple would proudly match. That's very San Francisco of Cook. And that runs in stark contrast to Jobs, who, while born in San Francisco, ended up being, according to Lashinsky's account, the farthest thing from a "do-good liberal," at least in the financial and business matters we think we know about via the media.
Let me be clear about a few things. As a human, I prefer the Cook style over the Jobs style any day of the week. I've learned from experience that you'll lead a better life doing things the Cook way. If my reading of reports of Jobs' experience of death are accurate, it's clear that he came to some pretty deep conclusions about life at the end. Maybe if he miraculously survived and came back to run Apple, he would have done things differently. I don't know. I'm not saying Jobs is a bad guy. I would never do that. It's less about respect (which I have for the man and his family), but more about the complexity of our psychology as humans. Who am I to judge Jobs for how he acted when I have little insight into the history, psychology and biochemistry that motivated his actions?
As much as I hate to say it, from an investment perspective, I prefer Jobs' way to the feel-good ways of Cook. Certainly, Apple's stock has suffered little, as in not at all, since Cook took over. It's up even in the face of escalation of the China labor story.
That said, I think Jobs would hammer Cook for what he's doing. At some point, Cook is going to write a memo or do the right thing one too many times out of concern for Apple's "values." One of these moves could end up harming the business and hurting the stock. Simply put, Jobs probably stayed much further away from this sort of thing than Cook does not because he was a bad guy with no "values," but because he did not want to wake sleeping dogs or tiptoe around land mines.
Social responsibility sounds great in theory. I'm all for it. Frankly, it stinks as an investment philosophy. Have a look at the performance of so many of the granola green and socially responsible mutual funds and ETFs. Often, it's not all that great. And it's surely not as good as the returns you get from Apple or companies who have been up against it to a greater extent than Apple (e.g., Starbucks (SBUX), Chevron (CVX), etc.).
I'm not saying Cook's way of being provides a reason to sell or not buy Apple stock. I am, however, pointing to an area of legitimate concern. People close to the situation seem to think that the worst in Jobs is what brought out the best in Apple. If that was indeed the magic, it's about to be gone.