Found 4 comments on HN
IBM · 2018-08-06 · Original thread
I've wondered why Apple has been perpetually undervalued for many years and my theory is basically that the market has always viewed Apple against comps like Dell, HP, Nokia, Blackberry, etc. That is, a hardware company that is always at risk of being passed over by something that was cheaper (because hardware is allegedly a commodity).

Of course the reality is that Apple has a durable moat in being a platform company with differentiated products. I think what's changing now is that the growth of Services is basically forcing the market to realize this and the multiple is getting re-rated upward.

The book The Outsiders profiled a number of CEOs and companies where good capital allocation enhanced total returns over time [1]. I'm pretty sure if it were revised there'd be a chapter about Tim Cook and Apple. Being able to buy back stock in size for 5 years now, without the market figuring Apple out, is kind of absurd. It might be the biggest transfer of wealth from sellers to shareholders of all time.

[1] https://www.amazon.com/Outsiders-Unconventional-Radically-Ra...

dontscale · 2016-03-07 · Original thread
There's an excellent book (you're probably aware of) called The Outsiders. It compares the results of operations focused CEO's like Welch to capital allocators like Buffett, Singleton, and Malone. The thesis is that overtime, the good cap allocators just blow everyone else out of the water.

http://www.amazon.com/Outsiders-Unconventional-Radically-Rat...

“An outstanding book about CEOs who excelled at capital allocation.” — Warren Buffett

knes · 2015-08-10 · Original thread
It's almost as if they read "the outsiders"[0]

[0] http://www.amazon.com/The-Outsiders-Unconventional-Radically...

kapilkale · 2013-12-20 · Original thread
Hi Joel- thanks for being open to the feedback.

Like you said, you are in growth mode. To me, growth mode means reinvesting as much of the profits as possible back into the company. Paying yourself a large salary during this time is the same as taking money off the table.

There are some good reasons to take money off the table, like paying back personal debt or supporting family members. But paying yourself more because you're the CEO doesn't seem like a good one, because your equity position is so significant.

If you don't have a good reason to take money off the table, it signals to employees and investors that "Joel thinks the money is better spent going into his personal bank account vs. making the company's equity grow in value." That sort of logic doesn't work in a startup that is targeting high growth, where employees are hoping to receive some sort of payoff from their equity. Moreover, it casts doubt on your judgment in capital allocation, which is one of the most important responsibilities of a founder / CEO. *

Obviously, all of this logic falls apart if you're not working on a startup. Low growth businesses that have achieved much of their potential are a totally different story. But you aren't starting a restaurant. Even Uber, at its $4B valuation, is giving compensation packages that are weighted towards options vs. salary.

* http://www.amazon.com/The-Outsiders-Unconventional-Radically...

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