Donald Luskin Read online

  Jobs had originally blackballed Raskin’s idea back when Jobs was still leading the Lisa team, viewing it as a conflict with his own project. Now, a project to call his own that would compete with and beat the Lisa was just what he was looking for. According to biographers Jeffrey Young and William Simon,

  Steve no longer had to subjugate his outlaw spirit to the corporate process, rewarded with little but his unceremonious booting off the Lisa project; here was the kind of dedication he understood, the kind he loved. These were crusaders like himself who thrived on the impossible. Steve would inspire this little-noticed team in a corner of a forgotten building. He would show them all—Scotty, Markkula, the whole company, the entire world—that he could lead them to produce a remarkable computer. . . . He set off with guns blazing to make the Macintosh the world’s next groundbreaking computer.25

  It was an internal struggle to reassert himself at Apple, but Jobs also saw it as a race to beat IBM and preserve a place for creative innovation in PCs in the face of an oncoming corporate behemoth. He drove his team with high demands, but also with whimsy and irreverence, carving out their own separate office space for the best talent, instilling a desire for hard work and long hours that would establish each member as part of an elite club that he often referred to as his “pirates.”

  By this time, Scott—whom Jobs had recruited as Apple’s president—had worn out his welcome and then some. His abrasive personality did him no favors among the creative technical teams, and after ordering a brutal series of layoffs in an event known as “Black Wednesday,” his days at Apple were numbered. Markkula returned from vacation and asked for Scott’s resignation. The board spent months searching for a replacement.

  It was not to be Jobs. He felt he was capable of running the company, but he was the only one who thought so. If the board wouldn’t let him run the company, at least he could find someone he could work with. John Sculley of PepsiCo seemed like an inspired choice. While considered a technological lightweight, he knew about running a consumer products company and could help support Apple Computer’s efforts to position itself as a name-brand product instead of a hobbyist’s box of components. Jobs met with Sculley in New York in March 1983 and posed the now legendary query: “Are you going to sell sugar water the rest of your life when you could be doing something really important?” Sculley joined Apple as CEO shortly thereafter.

  While Jobs and his pirates were feverishly working to make their Macintosh user-friendly and aesthetically pleasing, Bill Gates and his brilliant but pedantic programmers at Microsoft, working on IBM’s competing operating system, concentrated on power and technical fine points. According to Sculley, “The legendary statement about Microsoft, which is mostly true, is that they get it right the third time. Microsoft’s philosophy is to get it out there and fix it later. Steve would never do that. He doesn’t get anything out there until it is perfected.”26 And perfected it was, or as near as Jobs could make it, after a series of delays from the initial time line.

  To promote the Macintosh launch, Jobs commissioned film director Ridley Scott of Alien and Blade Runner fame to create an ad to run during the 1984 Super Bowl. It would be a million-dollar bet, significant if not unprecedented in the early 1980s—and it would prove to be one of the most famous and enduring TV ads in history. It depicted a stark Orwellian future filled with drab marching clones brainwashed by a black-and-white projection on a vast screen of “Big Brother” espousing a collectivist ideology. A blonde female athlete bursts through the crowd in vibrant color chased by a jackbooted Gestapo squad, only to hurl a flying hammer into the screen, shattering the collectivist image in a burst of individualist light. The tagline: “On January 24th, Apple Computer will introduce Macintosh. And you’ll see why 1984 won’t be like ‘1984.’”

  The ad was brilliant. It was unlike anything anyone had seen before. And the Apple board hated it. It was as if Jobs had become Howard Roark himself in the scene from The Fountainhead in which he sits in front of the architectural committee of a bank discussing his design for its new headquarters building. It was just too “stark,” too “radical.” It wouldn’t “please the public.” In Jobs’s case, perhaps the board objected to the commercial precisely for what Ayn Rand would have loved about it: its portrayal of the victory of the individual versus the collective. Indeed, for Jobs this is what the personal computer was all about: the empowerment of the individual user.

  The board ordered Jobs to sell back the advertising time, but it was too late. The ad ran only once, on January 22, 1984, but it was so unique, so stunningly original—just so cool—that stations across the country replayed it on the evening news, generating the first instance of the “viral” buzz, as well as the Super Bowl ad frenzy now commonly sought by advertisers. It was a fundamental innovation in the way mass marketing was done—not just for computers, but for everything—and it was Jobs who did it.

  Macintosh sales were brisk in early 1984, but slowed down later in the year. By the time of its first anniversary in 1985, 275,000 Macs had been purchased—an impressive number, but still short of Jobs’s 500,000 forecast, and not enough to meet critical revenue goals. Part of the problem was that there were few third-party software programs available for the machine, and the ones that did exist had difficulty running on the Mac’s scant 128K of memory. Jobs’s vision, it seems, was ahead of the technological capabilities of the day.

  Internal friction erupted within the company as financial stresses increased. Jobs was chairman of the board above CEO Sculley, while simultaneously working under him as head of the Macintosh division. It was a dysfunctional structure that a weak-kneed, conformist board would ignore until it was too late.

  For his part, Jobs felt he could run the company himself and, as its co-founder, railed against his powerful vision being overruled and stymied by a stodgy collectivist bureaucracy. In turn, Sculley came to liken Jobs to Russian revolutionary Leon Trotsky. In Odyssey, his memoir of this period, he called Jobs “a zealot, his vision so pure that he couldn’t accommodate that vision to the imperfections of the world.”27

  “Apple was supposed to become a wonderful consumer products company,” Sculley wrote. “This was a lunatic plan. High tech could not be designed and sold as a consumer product.”28 As it would turn out, Sculley was dead wrong.

  Soon an outright power struggle emerged, with various camps simultaneously trying to shift blame and secure their position. Marketing chief Mike Murray circulated a memo to the executive team under the heading “DO NOT CIRCULATE, COPY, OR SHARE,” lambasting Steve for “espousing vision . . . at the clear expense of corporate survival.” Then in April, early investor and taciturn board member Arthur Rock sensed weakness and instigated a boardroom coup. Citing poor financial performance, Rock, who was more interested in funding social causes than Jobs’s brand of youthful dreams, challenged CEO Sculley to take decisive action. Feeling the noose around his own neck, Sculley sacrificed Jobs, removing him as head of the Macintosh division. The ensuing reorganization consolidated operations and left Jobs conspicuously absent from the organization chart. Sculley refused to acknowledge Jobs or even mention his name at the company-wide meeting to announce the new structure.

  In September 1985, relieved of his daily responsibilities at Apple, Jobs tendered his resignation from the board. “The company’s recent reorganization left me with no work to do and no access even to regular management reports,” he wrote. “I am but 30 and want still to contribute and achieve.”29 In the same spirit as Rand’s greatest hero, John Galt, Jobs led a strike of the mind against Apple, hiring away some of its top talent to join him in a new independent venture. The board was furious and contemplated legal action in a petty attempt at restricting Jobs from competing with them at their own game. But Jobs’s mind would not be enslaved.

  The press at the time presaged the coming decade of Apple’s struggles without Jobs and the brains that Jobs took with him when he left. A New York Times article in September 1985 predicted, “Apple
, while having a solid management, still might miss Mr. Jobs. The company is weak in top engineering talent to guide product development. Moreover, more traditional managers like Mr. Sculley have often proved no more adept at running technology companies than the original entrepreneurs. Some analysts and former employees are worried that Apple is losing its spark and becoming stodgy, a process some refer to as ‘Scullification.’” They would prove to be dead right.

  The Granite Quarry

  The ensuing years for Jobs turned out to be like Roark’s time designing mere gas stations instead of great skyscrapers, and ultimately working as a day laborer in a granite quarry. Kept by the world from the work he loved, Jobs would live true to his own integrity, designing and building in areas where he saw value for his own sake. When they were ready to call him back on his own terms, he would be ready.

  Jobs formed a company called NeXT to create the next-generation personal computer packed with all of the latest ideas that he felt restricted from pursuing within Apple’s corporate confines. The device would use a powerful new Motorola chip, optical magnetic drives, a new breed of operating system called NeXTSTEP, and brilliant anti-aliased graphics, all housed in a 1 × 1 × 1-foot magnesium cube. He would target the higher education market with a computer powerful enough to run complex genetic research simulations while being simple enough for students to use in their dorm rooms.

  With investments from Ross Perot and Japan’s Canon, Jobs built out a lavish corporate headquarters, spending $1 million on a floating staircase designed by I. M. Pei and $100,000 for a logo from legendary graphic designer Paul Rand. He created a futuristic manufacturing facility filled with laser-guided robotics that outnumbered humans two to one.30 But ultimately, the amazing design and operating system for the cube failed to overcome its hefty $10,000 price tag. While the computer did sell an estimated 50,000 units over four years,31 it was a disappointing showing in an industry moving tens of millions of computers per year. Without the deep pockets of a public company and brand reputation in an increasingly mature market, NeXT had an uphill battle.

  Meanwhile, always on the lookout for new ideas, he made a trip north to see George Lucas and his Lucasfilm-ILM operation in San Rafael, California. What he saw there stunned him. Here was a group of the most talented graphic artists in the world quietly creating groundbreaking digital images and film sequences on some of the most sophisticated computer systems he’d ever seen. “It was a Xerox PARC moment,” according to biographers.32

  Even more stunning was that Lucas, in need of immediate liquidity in the aftermath of his recent divorce, was eager to sell the entire operation lock, stock, and barrel for $30 million. Jobs was salivating, but his shrewd negotiating sense detected blood in the water, so he decided to wait Lucas out in hopes of a better deal. With such a unique asset, finding a willing suitor on short notice would be next to impossible. Jobs ended up buying the company for $10 million in 1986 and christened it Pixar.

  Hearkening back to the early days of Apple, the company initially focused on selling hardware dubbed the Pixar Image Computer. The device was powerful, but found limited application mostly for complex image analysis in government intelligence services and medical markets. Disney Studios was also a customer. Though Uncle Walt’s team still prided itself on traditional hand-drawn animation, it was slowly adopting computers to automate certain tedious coloring processes. It was the beginning of a relationship that would prove fortuitous for both companies in the coming years.

  With Pixar in financial trouble from slack hardware sales, former Disney animator and then Pixar executive producer John Lasseter began creating computer-animated commercials for outside companies, generating a trickle of much-needed revenue. In 1988, Pixar also began licensing a software product it had developed earlier, called RenderMan, which allowed animators to quickly and easily refine complex 3-D scenes with appropriate shading and lighting. It remains the most widely used rendering standard in the industry today.

  Advertising animation and software generated critical cash flow to keep Pixar on life support, but the company was still hemorrhaging $1 million per month. NeXT wasn’t faring any better, and between the two Jobs spent tens of millions from his own pocket just to keep the companies alive. A man who was once one of the wealthiest people in the country now saw his fortune dwindling to perilously low levels.

  Despite heart-wrenching cutbacks at Pixar and a bottom-line temptation to close down the animation group altogether, Jobs personally funded the cash outlay to develop a short film to be shown at the SIGGRAPH computer graphics conference in 1988. It was a critical decision that would change the face of moviemaking forever. It was also the kind of move that a play-it-safe bureaucratic CEO would never have made. But an individualist like Jobs could make it, just because he thought the animated short called Tin Toy was so cool. It was indeed cool. It would go on to win an Oscar and eventually become the basis for the blockbuster Disney collaboration Toy Story.

  The late 1980s and early 1990s would spark an epiphany of sorts for Jobs, with curious parallels between NeXT and Pixar. Jobs began to realize that the hardware he had focused so much effort on since the early days at Apple would eventually become a “sedimentary layer”33 in the evolution of technology upon which others would build. His metamorphosis was to grasp a paradigm that transcended hardware and software. He began to see how technology unlocked a unique experience even more lasting than the computers or software used to create them. Chips and programs lived short lives in the relentless march of technological progress. Music and stories endured for generations.

  In his transition toward this experiential model, Jobs sold the Pixar Image Computer hardware division to Vicom systems in 199034 and retained fewer than 100 employees to focus on animation. Then in 1993, he withdrew NeXT from the hardware businesses and renamed the company NeXT Software to continue meeting a growing demand for their innovative object-oriented NeXTSTEP operating system.

  NeXT hardware was never a commercial success, but it was a notable influence in the history and lore of computing. Tim Berners-Lee created the first Web browser in 1990 on a NeXT machine, claiming, “I could do in a couple of months what would take more like a year on other platforms, because on the NeXT, a lot of it was done for me already. There was an application builder to make all the menus as quickly as you could dream them up.”35 John Carmack of id Software used a NeXT machine to develop the video game Doom—the landmark “first-person shooter.”36 It was the object-oriented NeXTSTEP operating system that would prove to be the crown jewel in Jobs’s kingdom, and his passport back to Apple.

  Meanwhile, Pixar was struggling to stay afloat, but saw a potential lifeline through an increasing dialogue with Disney. In an attempt to break its string of mediocre films, for the first time ever Disney was thinking about using an outside company to produce a computer-animated feature, but was meeting internal resistance. In their fight against obsolescence, Disney’s old-school pen-and-inksters claimed computer animation couldn’t possibly live up to Disney’s standard of quality. But some early—and secret—computer animation collaboration with Pixar on such classics as Beauty and the Beast built a level of trust among the Disney executives that it could indeed be done.

  Although in 1991 his company was running out of oxygen, Jobs negotiated with Disney a deal for not one, but three feature movies. Disney would pay for production and give a slice of the net from the films back to Pixar. In turn, Pixar would retain all rights to technology and its secret creative sauce. And in a negotiating flourish that was pure Jobs—and must have been very difficult for Disney to swallow—the agreement permitted Pixar’s animated logo to be displayed with equal prominence alongside Disney’s famous image of Cinderella’s castle at the beginning of each film.

  Based on the Tin Toy short, Disney approved the script for Toy Story in mid-1993, clearing the way for production. But months later, Disney’s head of feature films, Jeffrey Katzenberg, wasn’t satisfied with the character development. On No
vember 17, Pixar received formal notice that Disney was shutting down production.

  The dawn of 1994 brought dark days for Jobs. Exactly a decade after the glittering launch of the Macintosh, he was at his personal and professional nadir. He had fallen from grace at Apple and been trounced in the press over problems at NeXT, and now his personal investment in Pixar was sinking beneath the waves while Disney sailed off on the horizon. Jobs was depressed and withdrawn. It seemed to him that his previous success as a boy wonder might just have been a fluke.

  But he refused to give up or give in. Learning the ways of fickle Hollywood executives, he shrugged off Disney’s blow and picked himself off the mat to fight again. After challenging his writers to recraft the script, he repitched it to Disney. Katzenberg liked the approach and unfroze the project. Then came a moment when Jobs wondered if he was a victor or a fool. With all the resources poured into the film, he figured it would need to gross $100 million at the box office just for Pixar to break even—more than any other Disney feature in recent history. At one point during the ordeal he confided, “If I knew in 1986 how much it was going to cost to keep Pixar going, I doubt if I would have bought the company.”

  Toy Story opened in November 1995 to rave reviews and a weekend box office take of $29 million—nearly equal to the full cost of production. The movie would eventually gross over $350 million worldwide with an additional $100 million in video sales. Sensing good advance buzz, Jobs had timed Pixar’s IPO to coincide with the movie’s release, going public on November 29, 1995, at $22. Shares quickly shot up to $44.50 during the first hour in trading. Jobs had invested a total of $60 million in the company and nurtured it for nine years. He was suddenly worth over $1 billion.37