Haunted Empire

Apple After Steve Jobs

Yukari Iwatani Kane

• Publisher: William Collins
• Year: 2014
• ISBN:
  9780007479153
• Topic: Business
• Subtopic: Business General
• Index: Business

An insightful, behind-the-scences portrait of the technology giant Apple

1

The Disappearing Visionary

JUNE 2008

For a company at the epicenter of American business and culture, Apple’s headquarters couldn’t have been located in a more forgettable place. An hour’s drive south of San Francisco, the campus was situated deep in Silicon Valley in Cupertino, a quiet suburb where technology companies coexisted with relatively modest residential homes, big-box retailers, and chain restaurants like T.G.I. Friday’s. As cities go, Cupertino was nondescript. It didn’t have a downtown to speak of, nor did it have a major shopping mall. Many of Apple’s employees preferred to live in San Francisco, so the company ran luxury commuter buses for them with wireless Internet and leather seats. Every weekday morning, the buses rolled down Interstate 280 alongside the Santa Cruz Mountains to arrive at De Anza Boulevard. Occasionally, Jobs would be spotted cutting off other drivers as he turned onto the campus road in his silver Mercedes-Benz convertible. His car stood out because it had no license plate.

Apple’s many offices were sprinkled throughout the area. The iTunes team inhabited buildings on Valley Green Drive. The marketing and communications department worked out of a large office on Mariani Avenue. Passersby would not know that a building belonged to Apple unless they happened to spot the discreet sign with a small Apple logo. That is, if it had a sign at all.

It was only after visitors turned into a side street to the east of De Anza behind BJ’s Restaurant and Brewhouse that they could see a group of six buildings that together formed Apple’s main oval-shaped campus. It was Cupertino’s most famous address: One Infinite Loop. The four-story buildings, labeled IL1 through 6, looked mostly the same from the outside—concrete boxes with plenty of windows that gave them a clean, open feel. But the interiors were designed by different architects to give each building its own personality. IL2, which housed the iPhone software team, had a 1990s-style postmodern look with angles and curves. The industrial design studio, which shared part of the building, had a sleek interior with frosted glass and stainless steel. IL6, where the operations team resided, was more classic and subdued. The names of meeting rooms in each of the buildings reflected Apple’s playful culture. The developer relations team in IL3 named their rooms after evangelists like Tammy Faye and Pat Robertson. The product marketing team called theirs “Here,” “There,” and “North by Northwest.” The iPhone software team’s rooms were tongue-in-cheek. “Between” was literally flanked by two rooms called “Rock” and “A Hard Place.”

What the buildings had in common was that they forced people to interact. Offices were lined with windows. Hallways opened up into common spaces. The floor plan made it impossible not to bump into other teams. Longtime Apple employees swore that these informal encounters were part of the secret to its success because they fostered collaboration.

The first building that one saw when driving onto campus was IL1, also known as “Steve’s building.” Part of the ground floor was occupied by the company store, where Apple devotees could buy T-shirts that said, “I visited the mothership.” If they looked past the lime-green sign with the number “1” and the manicured evergreen hedge out front, they would see employees hanging out in an airy, glass atrium. The executive offices were on the top floor, but access was restricted. Jobs occupied a corner office facing the quad. It contained a huge desk, a couple of chairs, a sofa, coffee table, and a credenza. Piles of books, papers, and random items that people sent to him were strewn everywhere. It was so functional and devoid of character that executives who had spent time there struggled to describe it.

Jobs didn’t care what his office looked like. He was hardly ever there. He met most people in the boardroom by the floor entrance or in the conference room next to his office. Otherwise, he’d usually be walking around, hanging out with Ive, or visiting the industrial design studio, where there were always interesting projects and prototypes to look at. Jobs loved the studio. It was one of the reasons he had it moved some years ago from the other side of De Anza Boulevard to IL2, right next door to him.

One morning that summer, Jobs was sitting in the front row of Town Hall—Apple’s auditorium—doing one of the things he did best: terrifying others into outperforming themselves. The Worldwide Developers Conference, Apple’s annual meeting for developers, was coming up soon, and he was there to watch the rehearsals.

Every WWDC was important, but the 2008 meeting was particularly so because Apple was about to launch the App Store. The company needed to get developers excited about submitting apps. More than five thousand people would be attending, and many more would be following the event through blogs and media reports. Jobs needed to win over every one of them. To help him, he was inviting a few developers onstage during his keynote address to showcase their apps.

First, however, Jobs was vetting their presentations personally. He wasn’t about to allow Apple’s carefully crafted image to be bruised by technical glitches or a developer who stumbled over his words. The developer relations team had spent the last several weeks choosing the final candidates. After they had spent a couple of days refining their apps and polishing their two-minute demo scripts behind closed doors at Apple’s offices, the time had come for the developers to show Jobs what they had. The speakers had said their lines dozens of times, but this would be their biggest test yet.

Everyone knew Jobs was a perfectionist with a fiery temper. Making a presentation in front of him was a challenge, even for veterans accustomed to his acid tongue. “What the fuck is that?” Jobs would ask when he saw something he didn’t like. It was rare for someone to actually reach the end of a presentation without Jobs jumping ahead to the conclusion or going into a tirade. “Your communication is so poor that I can’t even tell what you’re talking about,” he once told someone who was giving him a private demonstration. “Until you guys figure out how to communicate, I don’t know how we can even have a discussion.”

As Jobs’s intense brown eyes bore down on them, speakers stood onstage to practice their lines. The wait to rehearse in front of Jobs was torturous. One of the staff members tried to put the presenters at ease. “Don’t worry,” he said. “Steve’s a normal guy. He puts his pants on one leg at a time.”

It didn’t reassure anyone. A mistake at any point could cost the presenters their slot. When their turn came, speakers entered the auditorium and walked down the aisle, passing by Jobs. The air crackled with tension.

“Is yellow eBay’s corporate color?” he asked after its speaker finished his spiel. He didn’t like the color in the app, but when the answer was yes, he backed off. Occasionally, he’d provide small suggestions directly to the speakers, asking them to emphasize a particular point or change something on their app.

Most of them were prepared, thanks to the intense coaching from Apple’s team. Jobs, in a benevolent mood, smiled and told them they’d done a great job.

As the teams finished, they felt the weight slide off their shoulders. There would be two more dress rehearsals before they would make it onstage, but they had survived an encounter with Jobs, and they were elated.

That day, the developers were too focused on themselves to notice that the CEO was looking frail and gaunt.

Only fifty-three, Apple’s savior had already conquered much of the modern world—transcending the computer industry and redefining industries as varied as retail, music, and mobile phones. It was hard to believe he was mortal. Even in his daily life, he defied the natural order. The fact that he drove without a license plate demonstrated how he soared above the everyday concerns of his fellow humans. He got away with it by leasing an identical car every six months, within the grace period California state laws set to obtain plates for new cars.

Apple would never have been created or resurrected without Jobs, and it was difficult to imagine the place continuing to thrive without him. Through the years, the company’s hopes and aspirations had become completely intertwined with his continued success.

Apple had been officially founded on April Fools’ Day in 1976. A twenty-one-year-old Steve Jobs and his twenty-five-year-old friend Steve Wozniak started their computer business in the garage of Jobs’s parents’ home in Los Altos, California.

Jobs had a vision of computers as mental bicycles, a tool that helped make the most of a user’s intellect in the same way that bicycles helped make the most of a rider’s athletic ability. But the board of directors considered him too inexperienced to manage the company and asked him to hire a CEO. When he found John Sculley, a former PepsiCo president, he recruited him with the famous words:

“Do you really want to sell sugar water for the rest of your life or do you want to come with me and change the world?”

The following year, Apple launched the original Macintosh. An infamous sixty-second television spot on Super Bowl Sunday declared the company’s intentions, depicting a female runner bursting into a drab room and hurling a sledgehammer at a huge screen projecting Big Brother. In an Orwellian reference to IBM’s dominance, a male voice intoned, “On January twenty-fourth, Apple computer will introduce Macintosh. And you’ll see why 1984 won’t be like 1984.”

The next week, a proud Jobs stood on the podium at Apple’s annual shareholders’ meeting in a dark suit and bow tie and pulled its newest computer out of a bag. As the computer turned on and showed all the things it could do, the theme song to Chariots of Fire played in the background. Then the machine spoke. “Hello, I am Macintosh. It sure is great to get out of that bag.” The audience went wild, and a cult was born.

But that would be Jobs’s last moment of glory for a long time. His disruptive behavior and pursuit of perfection at all costs had wreaked havoc on the company, and the executive team wanted him out. A little over a year later, he was in exile.

Under Sculley, Apple flourished for many years as consumers paid a premium for the Mac’s unique mouse-based point-and-click user interface. But when Microsoft’s Windows software caught up and exceeded the Mac’s features, the kingdom crumbled. PCs running Windows soon proliferated, and Apple’s market share shrank.

By the mid-1990s, long after Sculley had left and his successor had come and gone, Apple was on the brink of bankruptcy, forced to cut prices and add new product lines to sustain its growth. The company was selling dozens of computer models that were confusingly similar but had incompatible operating systems. Employees began jumping ship. Three days after Gil Amelio, the former CEO of National Semiconductor, took over, BusinessWeek published a story with the title “The Fall of an American Icon.”

Amelio was in way over his head. Apple needed a leader who could take extraordinary measures at breakneck speed, but Amelio was a classic, hands-off corporate executive, who preferred to supervise rather than take action himself. He hired image consultants, created new acronyms to describe business concepts, and put together white papers. He was also a bad fit culturally. He cared about executive perks and liked formality. He drove a Cadillac Seville and always ate his lunch on china. His executives mockingly called it “Gil’s special china.” According to rumor, it was Wedgwood. Each day one of his assistants had the unenviable job of taking his meal out of a takeout container and plating it.

For all the criticism about his tenure, Amelio had made one of Apple’s most critical moves—the decision in December 1996 to buy NeXT, Steve Jobs’s failing computer company. As part of the deal, Jobs became Amelio’s advisor.

Amelio’s tenure unraveled quickly, accelerated in part by a scornful Jobs, who had plenty to say about Amelio’s management decisions behind his back but offered little advice. He attended one executive team meeting, but he walked out in the middle of it and never returned. At a dinner party to celebrate the sale of NeXT, Jobs joked about creating a “Gil-o-meter” to gauge stupidity. “Two Gils” meant someone was being twice as stupid as Amelio.

After a famously disastrous Macworld speech in January, where Amelio was upstaged by Jobs, the CEO lost the board’s confidence. During his short reign, Apple had lost more than $1.6 billion. The company was so undesirable that no one even wanted to buy it. Its brand name would maybe fetch $500 million.

After the board begged him to return, Jobs overhauled the company’s culture. During his absence, Apple had fallen into complacency as everyone took more interest in celebrating their accomplishments than breaking new ground. There were team T-shirts to commemorate new projects and a garden of Macintosh icon sculptures and a display of an old Apple I to remember the company’s past successes. Employees took six-week sabbaticals every five years.

That changed overnight. Jobs ordered the mementos removed and the people on sabbaticals recalled. He forbade hard liquor, smoking, and pets, and replaced Amelio’s china with ordinary cafeteria dishes. He did away with anything that he perceived as corporatized and installed a meritocracy that rewarded agility, ambition, and boldness.

“The lunatics have taken over the asylum, and we can do anything we want,” Jobs joked shortly after his return.

Accustomed to a more laid-back work environment, many people left the company voluntarily. Others were fired. Stories circulated about Jobs going into meetings and terminating people on the spot. A rumor started that he had fired someone in the elevator. When a protective covering went up in the elevator of IL1 to shield it from construction work, one person quipped: “This must be Steve’s elevator since it’s padded.” To which a colleague asked, “Is it for him or for us?”

At some point someone made up a verb to describe such unfortunate outcomes: Steve’d.

Jobs also clamped down on secrecy. Outgoing email was monitored, and anyone caught sending messages labeled “confidential” received a warning. Employees, who were accustomed to wandering through open doors, were suddenly prohibited from entering many areas. Office windows were mysteriously covered, and engineers were asked to work on projects without knowing what the product was. Everything was on a need-to-know basis.

This was a complete turnabout. Jobs had once leaked so many corporate secrets that a colleague once teased him, “It’s a strange ship that leaks from the top.” But he had learned the power of mystery. If Apple had any hope of surviving, it needed to stay nimble and ready to modify its strategy without being hampered by public opinion. Product introductions were also more dramatic when no one knew what was coming. The media attention he received for them was worth millions of dollars in free advertising. Jobs loved the moment of revelation when he introduced a new product that no one in the audience had seen before.

In Jobs’s first months back, some employees rebelled. A prankster forged Jobs’s email address and sent out a memo. “You’ve all become lazy and only contribute to Apple’s current situation,” he wrote, according to one account. “You’re now going to have to pay for the water in our water fountains and we’re going to add a charge that you’ll find on your paycheck for the oxygen that you use for your eight hours on the job.” He added that employees would be charged three dollars a day for parking. “Only I will be allowed to park in handicapped spaces,” it said, making fun of Jobs’s well-known habit.

Twenty minutes later, the real Jobs sent out an email.

“I’m all for having fun,” it read, “but we need to be focused on the future in making the company a better place. Best, Steve.” The culprit was fired.

In September 1997, Jobs finally agreed to update his status from advisor to interim CEO. Though he wouldn’t be ready to permanently commit to Apple for another two and a half years, he started the hard work of rebuilding Apple, killing unprofitable projects and ridding the company of deadwood. He surrounded himself with brilliant lieutenants. Two of them had been with him since his NeXT days. Another two had been at Apple since the previous regime but had impressed Jobs with their eagerness to transform the company. Among his new hires was Tim Cook, who was put in charge of streamlining Apple’s operations.

Before Apple could put any more products on the market, it needed to brush up its severely tarnished brand image. To do that, Jobs engaged the creators of Apple’s “1984” ad at TBWA\Chiat\Day. This time, they came up with “Think Different,” which would go down in advertising history as an unparalleled campaign. Instead of showcasing its products, the...