My Biggest Mistake: Regis McKenna

Regis McKenna, 53, is chairman of the Regis McKenna marketing consultancy, with clients such as Apple, IBM and AT&T. Mr McKenna, dubbed 'the Silicon Valley Svengali' by Newsweek, began his career in the marketing department of General Micro Electronics after Duquesne University. In 1967 he went to National Semiconductor as manager of marketing services, but left in 1970 to start his own company. In 1986 he became a partner of the venture capital firm Kleiner Perkins Caufield & Byers. His book, Relationship Marketing, is published by Century Business.

MY BIGGEST mistake was turning down a 20 per cent stake in Apple Computers. In 1976, Steve Jobs and Steve Wozniak, who had started the company in a spare bedroom, approached me and asked for help in launching what was to be the world's first personal computer.

I had worked with many technical companies in Silicon Valley, and I liked Apple's vision.

In addition to marketing consultancy, I also owned an advertising agency and a public relations company. So not only did we write their first business plan, we also designed the Apple logo and put together their advertising campaigns.

At this point, one of my senior managers wrote me a memo. He'd been talking to Apple, and suggested that instead of taking the money, we should exchange our services for a 20 per cent stake.

My company was only about six years old at the time. We were growing fast and had a turnover of several million dollars, but it was still a relatively small business.

When I was in high school I dated a young lady whose mother owned a candy store. Whenever the supplier came in she would open the till, and if there was any cash she would buy some new candy. If not, she didn't.

I always use that as an example: you have to run a business like a candy store.

So when I looked at the idea of swapping services for equity, instead of seeing a potentially multi-billion-dollar company, I was looking at my cash flow. And that's one of the reasons why I turned down Apple's offer.

The other is that what you think the value of your business is and what the buyer thinks the value of your business is are often far apart. I learned that from experience.

Many years ago, I was chatting to the owner of a restaurant in California, and when he found out what business I was in, he said he could use some help.

He suggested that we exchange services . . . food for thought, in other words.

So we did: we carried out market research, designed his graphics and did all sorts of things while building up this chit of what we thought was our value.

One night after work, about six or seven of us decided to go to his restaurant. We all ordered big steaks, and drank several bottles of his best wine.

The next day I got a call from him, and he was absolutely furious.

He felt that we had far exceeded the value of our work, and fired us on the spot.

It was no terrific loss, but it did teach us a lesson. When you exchange these intangibles, it is very hard to put a value on them, and that is why I will only provide services in return for cash.

If I had agreed to take 20 per cent of Apple, I would have made up to a billion dollars within seven years. But were I to dwell on past mistakes, I don't believe I'd get up in the morning.

I've had many opportunities to take equity in these hi-tech companies when they were just starting up, but if I want shares I prefer to pay cash. That's what I did with Apple - bought shares from Steve Jobs - and Apple is still a client 14 years on.

Meanwhile, our business is still doing well and we have maintained our integrity. That, actually, is worth more than dollars.

I don't think food for thought is ever a good concept. But I am always reminded of what I turned down, because my letter is on display at Apple's headquarters.

(Photograph omitted)

Voices
The Sumatran tiger, endemic to the Indonesian island of Sumatra, is an endangered species
voicesJonathon Porritt: The wild tiger population is thought to have dropped by 97 per cent since 1900
News
news
Arts and Entertainment
Story line: Susanoo slays the Yamata no Orochi serpent in the Japanese version of a myth dating back 40,000 years
arts + entsApplying the theory of evolution to the world's many mythologies
Life and Style
Popular plonk: Lambrusco is selling strong
Food + drinkNaff Seventies corner-shop staple is this year's Aperol Spritz
PROMOTED VIDEO
News
Gardai wait for the naked man, who had gone for a skinny dip in Belfast Lough
newsTwo skinny dippers threatened with inclusion on sex offenders’ register as naturists criminalised
News
Shake down: Michelle and Barack Obama bump knuckles before an election night rally in Minnesota in 2008, the 'Washington Post' called it 'the fist bump heard round the world'
newsThe pound, a.k.a. the dap, greatly improves hygiene
Arts and Entertainment
La Roux
music
Arts and Entertainment
Graham Fellows as John Shuttleworth
comedySean O'Grady joins Graham Fellows down his local Spar
News
people
News
Ross Burden pictured in 2002
people
News
Elisabeth Murdoch: The 44-year-old said she felt a responsibility to 'stand up and be counted’'
media... says Rupert Murdoch
Arts and Entertainment
tv
Extras
indybest
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

£350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

Java Developer - Banking - London - Up to £560/day

£500 - £560 per day: Orgtel: Java Developer FX - Banking - London - Up to £560...

HR Business Analyst, Bristol, £350-400pd

£350 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...

Account Manager - (Product & Account Management, Marketing)

£26000 - £30000 per annum + Benefits: Ashdown Group: Account Manager - (Produc...

Day In a Page

A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on
It's the best of British art... but not all is on display

It's the best of British art... but not all is on display

Voted for by the British public, the artworks on Art Everywhere posters may be the only place where they can be seen
Critic claims 'I was the inspiration for Blanche DuBois'

Critic claims 'I was the inspiration for Blanche DuBois'

Blanche Marvin reveals how Tennessee Williams used her name and an off-the-cuff remark to create an iconic character
Sometimes it's hard to be a literary novelist

Sometimes it's hard to be a literary novelist

Websites offering your ebooks for nothing is only the latest disrespect the modern writer is subjected to, says DJ Taylor
Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

Edinburgh Fringe 2014

The comedy highlights, from Bridget Christie to Jack Dee
Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

The woman stepping down as chair of the Heritage Lottery Fund is worried