What if the secret to finding winners was not to chase net profits, but to focus on sales growth? Steve Jobs’ 1997 mantra turned Apple around – and it’s a principle that every investor needs to understand to find the next compounder.
This quote is etched in my memory.
It underscores a simple but powerful truth: the top line is the engine that drives everything else.
Few moments in business history illustrate this as vividly as Apple in 1997. At the time, the company was teetering on the edge of bankruptcy when Steve Jobs returned. In an interview, he laid out his turnaround strategy with this remarkable insight:
«Somebody taught me a long time ago a very valuable lesson which is: if you do the right things on the top line, the bottom line will follow. And what they meant by that was: if you get the right strategy, if you have the right people, and if you have the right culture at your company, you’ll do the right products. You’ll do the right marketing. You’ll do the right things logistically and in manufacturing and distribution. And if you do all those things right, the bottom line will follow.»
Steve Jobs’ 1997 mantra turned Apple around – and it’s a principle that every investor needs to understand to find the next compounder. Add to that one of the most powerful financial levers associated with this concept. A metric that can supercharge stock prices over the long term:
Profit margin improvements.
Chart 1: Uptrend in the profit margins of the S&P 500
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