Steve Jobs got a small part of the Giant Turnip at Apple and a large part at Pixar

Updated January 20, 2024

When Apple’s founder Steve Jobs died in 2011, Matt Yglesias said that he was a net-worth failure compared to other computer executives of his era like Michael Dell and Bill Gates:

The rivalry between Steve Jobs and Bill Gates… dominated the computer industry for decades… And it’s clear that [Microsoft founder Bill] Gates won. With his net worth of $66 billion, Gates still sits atop the Forbes 400 list of richest Americans, as he has since 1995… In fact, Microsoft’s victory over Apple was so decisive that current CEO Steve Ballmer and third co-founder Paul Allen, sitting on $16 billion and $15 billion, respectively, are substantially wealthier than Jobs… who must subsist on a mere $11 billion… Except of course, Microsoft isn’t a more successful company than Apple. Not even close. …Microsoft’s … $260 billion stock market capitalization is impressive. But Apple dwarfs those numbers with …a $400 billion market capitalization…

If productivity were related to pay, then Jobs should have been richer than Bill Gates because Jobs created a far more valuable company, but Bill Gates had six times more money than Jobs at his death. Jobs was more successful in business by every measure but his income was much lower — even several of Bill Gates’ underlings at Microsoft got more money than Jobs!  Jobs not only started Apple, the world’s most valuable company, but he kind of started it twice because Apple faltered after he left it in 1985, and nearly went bankrupt. Then Jobs returned to Apple in 1997, and he deserves considerable credit for helping resurrect it again to become the world’s largest and most profitable company. Whereas Microsoft was a copycat company that used its monopoly power over Windows to invade markets that competing entrepreneurs had invented, Apple was an innovator that created entirely new markets and changed the way we live and do business today. Jobs sometimes said that his goal was to, “put a ding in the universe” and he made a bigger ding that most CEOs. His company pioneered the microcomputer revolution, the smartphone revolution, the modern computer interface with icons and a mouse that we all use, tablet computers, digital music players, music streaming, the modern smartphone and many more innovations. Along the way, Apple’s digital audio systems revolutionized the entire music industry, bringing the world away from CDs into digital music with the Itunes store and created the podcasting industry.

Despite all of that success, Jobs got very little of his money from Apple. Most of Jobs’ wealth came from a lucky break on a relatively small investment he made in a business that he bought as a side hobby. After leaving Apple Jobs cashed out his Apple stock and in 1986, he bought the computer graphics division of George Lucas’ company for $10 million which he renamed Pixar. Pixar was a money loser for the first decade and Steve Jobs was only involved in a very part-time manner while he focused on his main business startup, NeXT, a struggling computer hardware company that never became successful. Tim Ott says that Pixar, “was only being kept afloat through [Jobs’] personal checks, amounting to some $50 million through 1991… Pixar remained something of a side project; day-to-day operations were left to Lasseter and CTO Ed Catmull, [Jobs] only showing up about once per week.” But then Pixar came out with Toy Story in 1996 which was hugely profitable and it produced five more movies after Jobs returned to Apple as CEO.  Then Jobs sold Pixar to Disney for $7.4 billion in January 2006, and that money grew to account for most of his $11 billion fortune when he died five years later.  Jobs did not earn billions from  Apple where he put a ding in the universe while sometimes only drawing $1 in salary per year nor from the NeXT company that he worked so hard to little avail.  Most of his fortune came from investing in an animation company that produced a mere six cartoons over the two decades he owned it.

If pay were related to productivity, then Steve Jobs would have been the richest man in the business world, but he was far from the richest businessman because pay is determined by bargaining power not productivity.  Jobs didn’t bargain for a large share of Apple’s wealth while he was frenetically putting a ding in the universe at Apple. Jobs got most of his wealth from Pixar which was only about 2% as big as Apple.  For some reason, Jobs used his bargaining power to extract a huge share of the value from the cartoons the Pixar company created and very little of the value of Apple.