tv The David Rubenstein Show Peer to Peer Conversations Bloomberg June 16, 2018 9:00am-9:30am EDT
♪ david: you get a call from steve jobs. tim: there was a sparkle in his eye that i had never seen in a ceo before. david: did your friends tell you this was not a good idea? tim: they told me i was nuts. david: warren buffett still uses that flip phone. tim: i told him i will personally come to omaha to do tech support for him. david: you exposed your own personal life a bit. tim: i thought i was making the wrong call. david: why is it called the apple watch? and not the iwatch? tim: i like apple watch. david: well, you are the ceo, so. [laughter] >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alright. ♪
david: i don't consider myself a journalist. and nobody else would consider myself a journalist. i began to take on the life of being an interviewer even though i have a day job running a private equity firm. how do you define leadership? what is it that makes somebody tick? [applause] david: quite a reception you got here. tim: i thought it was you. david: no, it is for you. you have now been the ceo of apple since july 2011. the earnings are up 80%. have you ever thought you can't
do better than this and maybe you should just say, well, i have done a great job and i will do something else with my life? tim: we view the stock price, revenues, and profits as a result of doing things right on the innovation side, on the creativity side, focusing on the right products, treating customers like jewels, and focusing on the user experience. this is something that is not in my orbit, to be honest with you. david: when you announce your quarterly earnings, theysts always say, well, did not sell as much of this product as we thought you would. does that bother you? tim: it did at one time. it doesn't anymore. we run apple for the long term. and so, it always struck me as bizarre that there is a fixation on how many units are sold in the 90-day period.
we are making decisions that are multi-year kind of decisions. we try to be clear we do not run the company for people who want to make a quick buck. we run the company for the long-term. david: one of the recent shareholders who bought 75 million additional shares is warren buffett. are you pleased to have him as your shareholder? tim: i am overjoyed. i am thrilled. [laughter] tim: warren is focused on the long-term. we are in sync. the way we run the company is the way he invests. i could not be happier. david: warren still uses that old flip phone. tim: i know. david: he has no smartphone. have you thought how much more your stock could go up if he used the product? [laughter]
tim: i am working on him. i told him i will personally come to omaha to do tech support for him. [applause] david: you are in a building that was designed and inspired by steve jobs. tim: apple park. david: apple park. you moved in recently. tim: steve had the vision the workplace should facilitate people working together, having these common areas that people could work together and run into each other without planning on doing it, and the level of ideas, creativity, and innovation that would come out of that would be phenomenal, and we are seeing that. david: you are convinced that standing up is better than sitting down? we have given all of our employees, 100%, standing desks. if you can stand for a while, then sit, this is much better. [laughter] tim: yeah, we could stand up for a little while. [applause] david: let me ask you about how you came to this position. you grew up in alabama.
tim: a very, very small rural town between pensacola and mobile. david: were you a star athlete, star scholar, tech nerd? tim: i would not say i was a star anything. i worked hard at school and had some reasonably good grades. the benefit i got in my childhood was being in a family that was a loving family and a public school system that was good, and that is a huge benefit. honestly, the benefit that many , many kids don't have these days. david: you went to auburn. how did you do there? tim: i did pretty good. i did pretty good. i really got into engineering in a big way, industrial engineering. david: so then you went to work for ibm? tim: i did, yes. i started as a production engineer designing manufacturing lines.
at that time, robotics were beginning to take off, and so we were focused on automation. i would not say we successfully focused on it, but i learned a lot from going through that as well. david: you were there for about 12 years, then you joined another company called compaq, the biggest manufacturer of personal computers. tim: they were number one at the time. david: you were there six months and you get a call saying can you come and join apple. apple was modest compared to compaq. why did you take the interview? and why did you join apple? tim: yes, it's a good question. steve had come back to the company and was essentially replacing the executive team that was there at the time. i thought, you know, this is an a guy whoy to talk to
started the whole industry. and steve met me on saturday. it was like just minutes into talking with him, i want to do it. which i was totally shocked myself. but there was a sparkle in his eye i had never seen in a ceo before. he was sort of turning left when everyone else was turning right. it was almost in everything he talked about. he was doing something extraordinarily different than conventional wisdom. many people were abandoning the consumer market because it was a bloodbath. steve was doing the exact opposite. he was doubling down on consumer at the time everybody else and the conventional wisdom said put your money in storage and server. i thought it was brilliant. the type of questions he asked
were different. i did before i left, i thought, i hope he offers me a job. david: did yr friends tell you this was not a good idea? tim: they thought i was nuts. [laughter] tim: they thought i was nuts. again, conventional wisdom is you are working for the top personal computer maker in the world. why would you ever leave? you have a career ahead. it wasn't a decision you could sit down and do the engineering kind of analysis, saying here are the pluses and minuses, because that analysis would always say stay put. it was this voice in your head saying, go west, young man. go west. david: despite the fact there was no state income tax in texas, you said go west. you said this was the best professional decision of your life, i assume? tim: maybe the best decision.
♪ david: so you go there and what is your job at apple? tim: running worldwide operations. the company at that time was struggling in different areas. our economies of scale did not lend itself to us doing manufacturing in different places like existed in the company at that time, so we found partners that were experts in manufacturing and we maintained the intellectual knowledge of how, the process, and obviously all of the design. david: when you got there and you are working for steve was it better than you thought, worse than you thought, more challenging than you thought? tim: i found it to be liberating is the way i would describe it. you can talk to steve about something very big and if it resonated with him, he would just say, ok.
you could do it. and so it was like, you know, like a total revelation for me that a company could be run like this, because i was used to these layers of bureaucracy and studies, you know, studying the -- studying things is part of the paralysis that companies can get into. apple was totally different than that. i realized that if i could not get something done, i could go to the nearest mirror and look at it, and that was the reason. david: steve's health was such that he could not continue to be ceo. he told the board that. you were announced ceo around july 2011. something around there. when you became ceo did you feel steve would say here is what i was interested in doing and you fulfill my goals, or did you feel you had your own view on what you should do? how did you balance the two?
you are succeeding a legendary figure. tim: we have a really open company, so most of us could finish the other person's sentences, even though we might disagree with them, so it was not a matter of steve having a secret file or something. he was always sharing his ideas all the time, so very different than that. and i thought, honestly, my thought at that time, and i know people told me you are just not very smart, but my view at that time was he was going to be chairman and he would do that forever. that we would figure out the sort of relationship change there, and that is what i thought. and unfortunately, it did not turn out that well.
[applause] >> today apple is going to reinvent the phone. david: you have a product that is the most successful consumer product in the history of mankind, which is the iphone. tim: there was a sense that it was a profound product, a game changer. if you go back and watch the keynote in which steve announced it, you can feel his passion in the way he describes it. i remember it like it was yesterday. david: how many iphones have now been sold? tim: well over a billion. david: 7.5 billion people on the face of the earth, so one in seven have one. tim: some people bought more than one. [laughter] david: you do have new ones coming out every so often. if i buy a new iphone, should i expect another one in two years? tim: you should expect that
apple is going to keep innovating. [laughter] tim: and you should jump on the train now though. [laughter] tim: because life is so short, david. [laughter] [applause] david: well, ok, i -- [applause] david: i have my iphone here actually. i do use it and love it. in china i asked you to help me, and you said, look, i don't normally do tech support. it did work. ♪ david: you came out with the apple watch not too long ago. why was it called the apple watch and not the iwatch? did you ever think of that? [laughter] [applause] tim: well -- david: i'm sure you must've thought of it. i'm sure it's not a novel idea. i'm curious.
tim: we did think of it at the time. david: so it was not a crazy question. tiis not a crazy question. david: how, apple watch won out? so how are they doing? tim: they are doing fantastic. cellular is now on the watch. you don't have to travel with your iphone. you can just use your watch. one of the best moments of my day is to go through my emails from users. i get so many each week from people that found out they have a heart problem from the watch. it is alerting you if you have been sitting and your heart has climbed to a level that does not make sense relative to the activity you have been doing. david: suppose you don't want to know you have a heart problem? [laughter] tim: we think most people do, because then you can seek help. seriously, david, so many people have written and said the watch alerted me to a problem. i took an action and went to the cardiologist. he told me if i had not gone there that i would not be alive.
david: when you say you go through your emails, nobody emails you directly? tim: sure they do. david: how can you respond to all those emails? tim: i can't, but it doesn't mean i don't read a fair number myself. it is important to keep your hand on the pulse of the user. david: have you ever thought that maybe you could run for president of united states? [applause] tim: i think, yeah, you know, the president is something, you would love to the president, but not ever wrong. -- you'd love to be president, but not ever run. that should never happen in our country, so that kind of eliminates me. ♪
♪ david: today, let's talk about the values you have been espousing. one is privacy. tim: we believe privacy is a fundamental human right. so to us, it is right up there with other civil liberties that make americans what they are. it defines us as americans. we see that this is becoming a larger and larger issue for people. and so our position on this is we take a minimal amount of data from customers, only that which we need to provide a service,
then we work really hard to protect it, encryption and so forth. david: you have also talked about the importance of equality. why is that important to you? tim: as i look at the world, many of the problems in the world come down to the lack of equality. it is the fact, it is the kid born in one zip code who does not have a good education because they happen to be in that zip code. -- it is someone who may be in the lgbt community who is fired because of that. it is someone that has a different religion than the majority, therefore they are ostracized in some way. very simply, i think if one day you could wave a wand and everybody in the world would treat each other with dignity and respect, there would be
many, many problems that would go away with that. david: so you expose your own personal life a bit. you know, the privacy you said that other people should have you gave up some of your , privacy. why did you do that? tim: i did it for a greater purpose. it became clear to me that there were lots of kids out there that were not being treated well, including in their own families. and that kids need someone to say, oh, they did ok in life and they are gay, so it must not be a life sentence in some kind of way. we are getting these notes, it would tug on my heart even more. it got to the point where i thought i am making the wrong call by trying to do something that is comfortable for me, which is to stay private. that i needed to do something for the greater good, so that is
why. david: so no regrets? tim: no regrets. [applause] david: now you are obviously in the public eye. you recently had a meeting with president trump. what was the meeting with president trump like? tim: i would not want to say what he said. i talked about trade and the importance of trade and how i felt that two countries trading together make the pie larger. it is true, undoubtably true, that not everyone has been advantaged from that in either country, and we have got to work on that, but i felt that tariffs were not the right approach there. i showed him some analytical
kinds of things to demonstrate why. we also talked about immigration and the importance of fixing the dreamer issue now. we are only one court ruling away from a catastrophic case there. david: do you think you made progress on these issues? tim: i hope so. i hope so. david: apple has roughly $260 billion in cash. what do you intend to do with that cash? tim: we are going to create a new site, and campus, within the united states. we are going to hire 20,000 people and spend $30 billion in capex in the next several years. number one, we are investing a ton in this country. we are also going to buy some of our stock because we view our stock as a good value. david: did your parents live to see your success?
tim: my mother passed away three years ago, but my father is still alive. david: your mother lived to see you be ceo? tim: she did. david: did she say you are great and i always knew you would be successful, and can you help me with my iphone? [laughter] tim: i did get both of them on ipad. i convinced my father to start using iphone. honestly, they treat me like they did 20 years ago. david: does he call you with tips about what to do or tell you how to do things? tim: if i do something he does not think is good, he tells you about it. i saw you on that show. you weren't very good. [laughter] tim: i hope you edit this well. david: you are a public figure. you were not before. did you ever think you could run for president of the united states, because --
[applause] david: you have seen the president up close. tim: i am not political, right? i love focusing on the policy stuff, but in the dysfunction in washington between the legislative branch and so forth, i think i can make a bigger difference in the world doing what i am doing. i appreciate the comment, but i think, yeah, you know, the president is something that, you would love to be president, but not ever run. that should never happen in our country, so that kind of eliminates me. david: of all the ceos that i know who have run major companies, you are the lowest-ego, most self-effacing, person i have seen in this
position. have you ever noticed you are different than other people or ceos? how do you maintain the self-effacing demeanor when you're running the biggest company in the world? tim: when you work at apple there is a high expectation on everyone to perform and to contribute, and because of that high bar, and you never quite get there, including the ceo, including every job in there, and so i would never feel that way for very long if i felt that way. david: you are the first person interviewed without a tie on. [laughter] dave: this was obviously in your honor. tim: i bet you sleep in a tie, david. [laughter]
jonathan: from new york city, jonathan ferro with 30 minutes dedicated to fixed income. this is bloomberg real yield. ♪ jonathan: coming up, and optimistic chairman powell seeing a third of fourth hike this year. draghi delivering more dollar strength. emerging markets suffering another tough week. we begin with a big issue. the u.s. economy looking anything but weak. >> economy is very strong. strong and resilient. >> we see a very strong economy