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THE RESTORATION
The Loser Now Will Be Later to Win
Amelio calling up Wozniak as Jobs hangs back, 1997
Hovering Backstage
“It’s rare that you see an artist in his thirties or forties able to really contribute something
amazing,” Jobs declared as he was about to turn thirty.
That held true for Jobs in his thirties, during the decade that began with his ouster from
Apple in 1985. But after turning forty in 1995, he flourished. Toy Story was released that
year, and the following year Apple’s purchase of NeXT offered him reentry into the
company he had founded. In returning to Apple, Jobs would show that even people over
forty could be great innovators. Having transformed personal computers in his twenties, he
would now help to do the same for music players, the recording industry’s business model,
mobile phones, apps, tablet computers, books, and journalism.
He had told Larry Ellison that his return strategy was to sell NeXT to Apple, get
appointed to the board, and be there ready when CEO Gil Amelio stumbled. Ellison may
have been baffled when Jobs insisted that he was not motivated by money, but it was partly
true. He had neither Ellison’s conspicuous consumption needs nor Gates’s philanthropic
impulses nor the competitive urge to see how high on the Forbes list he could get. Instead
his ego needs and personal drives led him to seek fulfillment by creating a legacy that
would awe people. A dual legacy, actually: building innovative products and building a
lasting company. He wanted to be in the pantheon with, indeed a notch above, people like
Edwin Land, Bill Hewlett, and David Packard. And the best way to achieve all this was to
return to Apple and reclaim his kingdom.
And yet when the cup of power neared his lips, he became strangely hesitant, reluctant,
perhaps coy.
He returned to Apple officially in January 1997 as a part-time advisor, as he had told
Amelio he would. He began to assert himself in some personnel areas, especially in
protecting his people who had made the transition from NeXT. But in most other ways he
was unusually passive. The decision not to ask him to join the board offended him, and he
felt demeaned by the suggestion that he run the company’s operating system division.
Amelio was thus able to create a situation in which Jobs was both inside the tent and
outside the tent, which was not a prescription for tranquillity. Jobs later recalled:
Gil didn’t want me around. And I thought he was a bozo. I knew that before I sold him
the company. I thought I was just going to be trotted out now and then for events like
Macworld, mainly for show. That was fine, because I was working at Pixar. I rented an
office in downtown Palo Alto where I could work a few days a week, and I drove up to
Pixar for one or two days. It was a nice life. I could slow down, spend time with my family.
Jobs was, in fact, trotted out for Macworld right at the beginning of January, and this
reaffirmed his opinion that Amelio was a bozo. Close to four thousand of the faithful
fought for seats in the ballroom of the San Francisco Marriott to hear Amelio’s keynote
address. He was introduced by the actor Jeff Goldblum. “I play an expert in chaos theory in
The Lost World: Jurassic Park,” he said. “I figure that will qualify me to speak at an Apple
event.” He then turned it over to Amelio, who came onstage wearing a flashy sports jacket
and a banded-collar shirt buttoned tight at the neck, “looking like a Vegas comic,” the Wall
Street Journal reporter Jim Carlton noted, or in the words of the technology writer Michael
Malone, “looking exactly like your newly divorced uncle on his first date.”
The bigger problem was that Amelio had gone on vacation, gotten into a nasty tussle
with his speechwriters, and refused to rehearse. When Jobs arrived backstage, he was upset
by the chaos, and he seethed as Amelio stood on the podium bumbling through a disjointed
and endless presentation. Amelio was unfamiliar with the talking points that popped up on
his teleprompter and soon was trying to wing his presentation. Repeatedly he lost his train
of thought. After more than an hour, the audience was aghast. There were a few welcome
breaks, such as when he brought out the singer Peter Gabriel to demonstrate a new music
program. He also pointed out Muhammad Ali in the first row; the champ was supposed to
come onstage to promote a website about Parkinson’s disease, but Amelio never invited
him up or explained why he was there.
Amelio rambled for more than two hours before he finally called onstage the person
everyone was waiting to cheer. “Jobs, exuding confidence, style, and sheer magnetism, was
the antithesis of the fumbling Amelio as he strode onstage,” Carlton wrote. “The return of
Elvis would not have provoked a bigger sensation.” The crowd jumped to its feet and gave
him a raucous ovation for more than a minute. The wilderness decade was over. Finally
Jobs waved for silence and cut to the heart of the challenge. “We’ve got to get the spark
back,” he said. “The Mac didn’t progress much in ten years. So Windows caught up. So we
have to come up with an OS that’s even better.”
Jobs’s pep talk could have been a redeeming finale to Amelio’s frightening performance.
Unfortunately Amelio came back onstage and resumed his ramblings for another hour.
Finally, more than three hours after the show began, Amelio brought it to a close by calling
Jobs back onstage and then, in a surprise, bringing up Steve Wozniak as well. Again there
was pandemonium. But Jobs was clearly annoyed. He avoided engaging in a triumphant
trio scene, arms in the air. Instead he slowly edged offstage. “He ruthlessly ruined the
closing moment I had planned,” Amelio later complained. “His own feelings were more
important than good press for Apple.” It was only seven days into the new year for Apple,
and already it was clear that the center would not hold.
Jobs immediately put people he trusted into the top ranks at Apple. “I wanted to make sure
the really good people who came in from NeXT didn’t get knifed in the back by the less
competent people who were then in senior jobs at Apple,” he recalled. Ellen Hancock, who
had favored choosing Sun’s Solaris over NeXT, was on the top of his bozo list, especially
when she continued to want to use the kernel of Solaris in the new Apple operating system.
In response to a reporter’s question about the role Jobs would play in making that decision,
she answered curtly, “None.” She was wrong. Jobs’s first move was to make sure that two
of his friends from NeXT took over her duties.
To head software engineering, he tapped his buddy Avie Tevanian. To run the hardware
side, he called on Jon Rubinstein, who had done the same at NeXT back when it had a
hardware division. Rubinstein was vacationing on the Isle of Skye when Jobs called him.
“Apple needs some help,” he said. “Do you want to come aboard?” Rubinstein did. He got
back in time to attend Macworld and see Amelio bomb onstage. Things were worse than he
expected. He and Tevanian would exchange glances at meetings as if they had stumbled
into an insane asylum, with people making deluded assertions while Amelio sat at the end
of the table in a seeming stupor.
Jobs did not come into the office regularly, but he was on the phone to Amelio often.
Once he had succeeded in making sure that Tevanian, Rubinstein, and others he trusted
were given top positions, he turned his focus onto the sprawling product line. One of his
pet peeves was Newton, the handheld personal digital assistant that boasted handwriting
recognition capability. It was not quite as bad as the jokes and Doonesbury comic strip
made it seem, but Jobs hated it. He disdained the idea of having a stylus or pen for writing
on a screen. “God gave us ten styluses,” he would say, waving his fingers. “Let’s not invent
another.” In addition, he viewed Newton as John Sculley’s one major innovation, his pet
project. That alone doomed it in Jobs’s eyes.
“You ought to kill Newton,” he told Amelio one day by phone.
It was a suggestion out of the blue, and Amelio pushed back. “What do you mean, kill
it?” he said. “Steve, do you have any idea how expensive that would be?”
“Shut it down, write it off, get rid of it,” said Jobs. “It doesn’t matter what it costs.
People will cheer you if you got rid of it.”
“I’ve looked into Newton and it’s going to be a moneymaker,” Amelio declared. “I don’t
support getting rid of it.” By May, however, he announced plans to spin off the Newton
division, the beginning of its yearlong stutter-step march to the grave.
Tevanian and Rubinstein would come by Jobs’s house to keep him informed, and soon
much of Silicon Valley knew that Jobs was quietly wresting power from Amelio. It was not
so much a Machiavellian power play as it was Jobs being Jobs. Wanting control was
ingrained in his nature. Louise Kehoe, the Financial Times reporter who had foreseen this
when she questioned Jobs and Amelio at the December announcement, was the first with
the story. “Mr. Jobs has become the power behind the throne,” she reported at the end of
February. “He is said to be directing decisions on which parts of Apple’s operations should
be cut. Mr. Jobs has urged a number of former Apple colleagues to return to the company,
hinting strongly that he plans to take charge, they said. According to one of Mr. Jobs’
confidantes, he has decided that Mr. Amelio and his appointees are unlikely to succeed in
reviving Apple, and he is intent upon replacing them to ensure the survival of ‘his
company.’”
That month Amelio had to face the annual stockholders meeting and explain why the
results for the final quarter of 1996 showed a 30% plummet in sales from the year before.
Shareholders lined up at the microphones to vent their anger. Amelio was clueless about
how poorly he handled the meeting. “The presentation was regarded as one of the best I
had ever given,” he later wrote. But Ed Woolard, the former CEO of DuPont who was now
the chair of the Apple board (Markkula had been demoted to vice chair), was appalled.
“This is a disaster,” his wife whispered to him in the midst of the session. Woolard agreed.
“Gil came dressed real cool, but he looked and sounded silly,” he recalled. “He couldn’t
answer the questions, didn’t know what he was talking about, and didn’t inspire any
confidence.”
Woolard picked up the phone and called Jobs, whom he’d never met. The pretext was to
invite him to Delaware to speak to DuPont executives. Jobs declined, but as Woolard
recalled, “the request was a ruse in order to talk to him about Gil.” He steered the phone
call in that direction and asked Jobs point-blank what his impression of Amelio was.
Woolard remembers Jobs being somewhat circumspect, saying that Amelio was not in the
right job. Jobs recalled being more blunt:
I thought to myself, I either tell him the truth, that Gil is a bozo, or I lie by omission.
He’s on the board of Apple, I have a duty to tell him what I think; on the other hand, if I tell
him, he will tell Gil, in which case Gil will never listen to me again, and he’ll fuck the
people I brought into Apple. All of this took place in my head in less than thirty seconds. I
finally decided that I owed this guy the truth. I cared deeply about Apple. So I just let him
have it. I said this guy is the worst CEO I’ve ever seen, I think if you needed a license to be
a CEO he wouldn’t get one. When I hung up the phone, I thought, I probably just did a
really stupid thing.
That spring Larry Ellison saw Amelio at a party and introduced him to the technology
journalist Gina Smith, who asked how Apple was doing. “You know, Gina, Apple is like a
ship,” Amelio answered. “That ship is loaded with treasure, but there’s a hole in the ship.
And my job is to get everyone to row in the same direction.” Smith looked perplexed and
asked, “Yeah, but what about the hole?” From then on, Ellison and Jobs joked about the
parable of the ship. “When Larry relayed this story to me, we were in this sushi place, and I
literally fell off my chair laughing,” Jobs recalled. “He was just such a buffoon, and he took
himself so seriously. He insisted that everyone call him Dr. Amelio. That’s always a
warning sign.”
Brent Schlender, Fortune’s well-sourced technology reporter, knew Jobs and was
familiar with his thinking, and in March he came out with a story detailing the mess.
“Apple Computer, Silicon Valley’s paragon of dysfunctional management and fumbled
techno-dreams, is back in crisis mode, scrambling lugubriously in slow motion to deal with
imploding sales, a floundering technology strategy, and a hemorrhaging brand name,” he
wrote. “To the Machiavellian eye, it looks as if Jobs, despite the lure of Hollywood—lately
he has been overseeing Pixar, maker of Toy Story and other computer-animated films—
might be scheming to take over Apple.”
Once again Ellison publicly floated the idea of doing a hostile takeover and installing his
“best friend” Jobs as CEO. “Steve’s the only one who can save Apple,” he told reporters.
“I’m ready to help him the minute he says the word.” Like the third time the boy cried
wolf, Ellison’s latest takeover musings didn’t get much notice, so later in the month he told
Dan Gillmore of the San Jose Mercury News that he was forming an investor group to raise
$1 billion to buy a majority stake in Apple. (The company’s market value was about $2.3
billion.) The day the story came out, Apple stock shot up 11% in heavy trading. To add to
the frivolity, Ellison set up an email address, savapple@us.oracle.com, asking the general
public to vote on whether he should go ahead with it.
Jobs was somewhat amused by Ellison’s self-appointed role. “Larry brings this up now
and then,” he told a reporter. “I try to explain my role at Apple is to be an advisor.” Amelio,
however, was livid. He called Ellison to dress him down, but Ellison wouldn’t take the call.
So Amelio called Jobs, whose response was equivocal but also partly genuine. “I really
don’t understand what is going on,” he told Amelio. “I think all this is crazy.” Then he
added a reassurance that was not at all genuine: “You and I have a good relationship.” Jobs
could have ended the speculation by releasing a statement rejecting Ellison’s idea, but
much to Amelio’s annoyance, he didn’t. He remained aloof, which served both his interests
and his nature.
By then the press had turned against Amelio. Business Week ran a cover asking “Is Apple
Mincemeat?”; Red Herring ran an editorial headlined “Gil Amelio, Please Resign”; and
Wired ran a cover that showed the Apple logo crucified as a sacred heart with a crown of
thorns and the headline “Pray.” Mike Barnicle of the Boston Globe, railing against years of
Apple mismanagement, wrote, “How can these nitwits still draw a paycheck when they
took the only computer that didn’t frighten people and turned it into the technological
equivalent of the 1997 Red Sox bullpen?”
When Jobs and Amelio had signed the contract in February, Jobs began hopping around
exuberantly and declared, “You and I need to go out and have a great bottle of wine to
celebrate!” Amelio offered to bring wine from his cellar and suggested that they invite their
wives. It took until June before they settled on a date, and despite the rising tensions they
were able to have a good time. The food and wine were as mismatched as the diners;
Amelio brought a bottle of 1964 Cheval Blanc and a Montrachet that each cost about $300;
Jobs chose a vegetarian restaurant in Redwood City where the food bill totaled $72.
Amelio’s wife remarked afterward, “He’s such a charmer, and his wife is too.”
Jobs could seduce and charm people at will, and he liked to do so. People such as Amelio
and Sculley allowed themselves to believe that because Jobs was charming them, it meant
that he liked and respected them. It was an impression that he sometimes fostered by
dishing out insincere flattery to those hungry for it. But Jobs could be charming to people
he hated just as easily as he could be insulting to people he liked. Amelio didn’t see this
because, like Sculley, he was so eager for Jobs’s affection. Indeed the words he used to
describe his yearning for a good relationship with Jobs are almost the same as those used
by Sculley. “When I was wrestling with a problem, I would walk through the issue with
him,” Amelio recalled. “Nine times out of ten we would agree.” Somehow he willed
himself to believe that Jobs really respected him: “I was in awe over the way Steve’s mind
approached problems, and had the feeling we were building a mutually trusting
relationship.”
Amelio’s disillusionment came a few days after their dinner. During their negotiations,
he had insisted that Jobs hold the Apple stock he got for at least six months, and preferably
longer. That six months ended in June. When a block of 1.5 million shares was sold,
Amelio called Jobs. “I’m telling people that the shares sold were not yours,” he said.
“Remember, you and I had an understanding that you wouldn’t sell any without advising us
first.”
“That’s right,” Jobs replied. Amelio took that response to mean that Jobs had not sold his
shares, and he issued a statement saying so. But when the next SEC filing came out, it
revealed that Jobs had indeed sold the shares. “Dammit, Steve, I asked you point-blank
about these shares and you denied it was you.” Jobs told Amelio that he had sold in a “fit of
depression” about where Apple was going and he didn’t want to admit it because he was “a
little embarrassed.” When I asked him about it years later, he simply said, “I didn’t feel I
needed to tell Gil.”
Why did Jobs mislead Amelio about selling the shares? One reason is simple: Jobs
sometimes avoided the truth. Helmut Sonnenfeldt once said of Henry Kissinger, “He lies
not because it’s in his interest, he lies because it’s in his nature.” It was in Jobs’s nature to
mislead or be secretive when he felt it was warranted. But he also indulged in being
brutally honest at times, telling the truths that most of us sugarcoat or suppress. Both the
dissembling and the truth-telling were simply different aspects of his Nietzschean attitude
that ordinary rules didn’t apply to him.
Exit, Pursued by a Bear
Jobs had refused to quash Larry Ellison’s takeover talk, and he had secretly sold his shares
and been misleading about it. So Amelio finally became convinced that Jobs was gunning
for him. “I finally absorbed the fact that I had been too willing and too eager to believe he
was on my team,” Amelio recalled. “Steve’s plans to manipulate my termination were
charging forward.”
Jobs was indeed bad-mouthing Amelio at every opportunity. He couldn’t help himself.
But there was a more important factor in turning the board against Amelio. Fred Anderson,
the chief financial officer, saw it as his fiduciary duty to keep Ed Woolard and the board
informed of Apple’s dire situation. “Fred was the guy telling me that cash was draining,
people were leaving, and more key players were thinking of it,” said Woolard. “He made it
clear the ship was going to hit the sand soon, and even he was thinking of leaving.” That
added to the worries Woolard already had from watching Amelio bumble the shareholders
meeting.
At an executive session of the board in June, with Amelio out of the room, Woolard
described to current directors how he calculated their odds. “If we stay with Gil as CEO, I
think there’s only a 10% chance we will avoid bankruptcy,” he said. “If we fire him and
convince Steve to come take over, we have a 60% chance of surviving. If we fire Gil, don’t
get Steve back, and have to search for a new CEO, then we have a 40% chance of
surviving.” The board gave him authority to ask Jobs to return.
Woolard and his wife flew to London, where they were planning to watch the
Wimbledon tennis matches. He saw some of the tennis during the day, but spent his
evenings in his suite at the Inn on the Park calling people back in America, where it was
daytime. By the end of his stay, his telephone bill was $2,000.
First, he called Jobs. The board was going to fire Amelio, he said, and it wanted Jobs to
come back as CEO. Jobs had been aggressive in deriding Amelio and pushing his own
ideas about where to take Apple. But suddenly, when offered the cup, he became coy. “I
will help,” he replied.
“As CEO?” Woolard asked.
Jobs said no. Woolard pushed hard for him to become at least the acting CEO. Again
Jobs demurred. “I will be an advisor,” he said. “Unpaid.” He also agreed to become a board
member—that was something he had yearned for—but declined to be the board chairman.
“That’s all I can give now,” he said. After rumors began circulating, he emailed a memo to
Pixar employees assuring them that he was not abandoning them. “I got a call from Apple’s
board of directors three weeks ago asking me to return to Apple as their CEO,” he wrote. “I
declined. They then asked me to become chairman, and I again declined. So don’t worry—
the crazy rumors are just that. I have no plans to leave Pixar. You’re stuck with me.”
Why did Jobs not seize the reins? Why was he reluctant to grab the job that for two
decades he had seemed to desire? When I asked him, he said:
We’d just taken Pixar public, and I was happy being CEO there. I never knew of
anyone who served as CEO of two public companies, even temporarily, and I wasn’t even
sure it was legal. I didn’t know what I wanted to do. I was enjoying spending more time
with my family. I was torn. I knew Apple was a mess, so I wondered: Do I want to give up
this nice lifestyle that I have? What are all the Pixar shareholders going to think? I talked to
people I respected. I finally called Andy Grove at about eight one Saturday morning—too
early. I gave him the pros and the cons, and in the middle he stopped me and said, “Steve, I
don’t give a shit about Apple.” I was stunned. It was then I realized that I do give a shit
about Apple—I started it and it is a good thing to have in the world. That was when I
decided to go back on a temporary basis to help them hire a CEO.
The claim that he was enjoying spending more time with his family was not convincing. He
was never destined to win a Father of the Year trophy, even when he had spare time on his
hands. He was getting better at paying heed to his children, especially Reed, but his
primary focus was on his work. He was frequently aloof from his two younger daughters,
estranged again from Lisa, and often prickly as a husband.
So what was the real reason for his hesitancy in taking over at Apple? For all of his
willfulness and insatiable desire to control things, Jobs was indecisive and reticent when he
felt unsure about something. He craved perfection, and he was not always good at figuring
out how to settle for something less. He did not like to wrestle with complexity or make
accommodations. This was true in products, design, and furnishings for the house. It was
also true when it came to personal commitments. If he knew for sure a course of action was
right, he was unstoppable. But if he had doubts, he sometimes withdrew, preferring not to
think about things that did not perfectly suit him. As happened when Amelio had asked him
what role he wanted to play, Jobs would go silent and ignore situations that made him
uncomfortable.
This attitude arose partly out of his tendency to see the world in binary terms. A person
was either a hero or a bozo, a product was either amazing or shit. But he could be stymied
by things that were more complex, shaded, or nuanced: getting married, buying the right
sofa, committing to run a company. In addition, he didn’t want to be set up for failure. “I
think Steve wanted to assess whether Apple could be saved,” Fred Anderson said.
Woolard and the board decided to go ahead and fire Amelio, even though Jobs was not
yet forthcoming about how active a role he would play as an advisor. Amelio was about to
go on a picnic with his wife, children, and grandchildren when the call came from Woolard
in London. “We need you to step down,” Woolard said simply. Amelio replied that it was
not a good time to discuss this, but Woolard felt he had to persist. “We are going to
announce that we’re replacing you.”
Amelio resisted. “Remember, Ed, I told the board it was going to take three years to get
this company back on its feet again,” he said. “I’m not even halfway through.”
“The board is at the place where we don’t want to discuss it further,” Woolard replied.
Amelio asked who knew about the decision, and Woolard told him the truth: the rest of the
board plus Jobs. “Steve was one of the people we talked to about this,” Woolard said. “His
view is that you’re a really nice guy, but you don’t know much about the computer
industry.”
“Why in the world would you involve Steve in a decision like this?” Amelio replied,
getting angry. “Steve is not even a member of the board of directors, so what the hell is he
doing in any of this conversation?” But Woolard didn’t back down, and Amelio hung up to
carry on with the family picnic before telling his wife.
At times Jobs displayed a strange mixture of prickliness and neediness. He usually didn’t
care one iota what people thought of him; he could cut people off and never care to speak
to them again. Yet sometimes he also felt a compulsion to explain himself. So that evening
Amelio received, to his surprise, a phone call from Jobs. “Gee, Gil, I just wanted you to
know, I talked to Ed today about this thing and I really feel bad about it,” he said. “I want
you to know that I had absolutely nothing to do with this turn of events, it was a decision
the board made, but they had asked me for advice and counsel.” He told Amelio he
respected him for having “the highest integrity of anyone I’ve ever met,” and went on to
give some unsolicited advice. “Take six months off,” Jobs told him. “When I got thrown
out of Apple, I immediately went back to work, and I regretted it.” He offered to be a
sounding board if Amelio ever wanted more advice.
Amelio was stunned but managed to mumble a few words of thanks. He turned to his
wife and recounted what Jobs said. “In ways, I still like the man, but I don’t believe him,”
he told her.
“I was totally taken in by Steve,” she said, “and I really feel like an idiot.”
“Join the crowd,” her husband replied.
Steve Wozniak, who was himself now an informal advisor to the company, was thrilled
that Jobs was coming back. (He forgave easily.) “It was just what we needed,” he said,
“because whatever you think of Steve, he knows how to get the magic back.” Nor did
Jobs’s triumph over Amelio surprise him. As he told Wired shortly after it happened, “Gil
Amelio meets Steve Jobs, game over.”
That Monday Apple’s top employees were summoned to the auditorium. Amelio came in
looking calm and relaxed. “Well, I’m sad to report that it’s time for me to move on,” he
said. Fred Anderson, who had agreed to be interim CEO, spoke next, and he made it clear
that he would be taking his cues from Jobs. Then, exactly twelve years since he had lost
power in a July 4 weekend struggle, Jobs walked back onstage at Apple.
It immediately became clear that, whether or not he wanted to admit it publicly (or even
to himself), Jobs was going to take control and not be a mere advisor. As soon as he came
onstage that day—wearing shorts, sneakers, and a black turtleneck—he got to work
reinvigorating his beloved institution. “Okay, tell me what’s wrong with this place,” he
said. There were some murmurings, but Jobs cut them off. “It’s the products!” he answered.
“So what’s wrong with the products?” Again there were a few attempts at an answer, until
Jobs broke in to hand down the correct answer. “The products suck!” he shouted. “There’s
no sex in them anymore!”
Woolard was able to coax Jobs to agree that his role as an advisor would be a very active
one. Jobs approved a statement saying that he had “agreed to step up my involvement with
Apple for up to 90 days, helping them until they hire a new CEO.” The clever formulation
that Woolard used in his statement was that Jobs was coming back “as an advisor leading
the team.”
Jobs took a small office next to the boardroom on the executive floor, conspicuously
eschewing Amelio’s big corner office. He got involved in all aspects of the business:
product design, where to cut, supplier negotiations, and advertising agency review. He
believed that he had to stop the hemorrhaging of top Apple employees, and to do so he
wanted to reprice their stock options. Apple stock had dropped so low that the options had
become worthless. Jobs wanted to lower the exercise price, so they would be valuable
again. At the time, that was legally permissible, but it was not considered good corporate
practice. On his first Thursday back at Apple, Jobs called for a telephonic board meeting
and outlined the problem. The directors balked. They asked for time to do a legal and
financial study of what the change would mean. “It has to be done fast,” Jobs told them.
“We’re losing good people.”
Even his supporter Ed Woolard, who headed the compensation committee, objected. “At
DuPont we never did such a thing,” he said.
“You brought me here to fix this thing, and people are the key,” Jobs argued. When the
board proposed a study that could take two months, Jobs exploded: “Are you nuts?!?” He
paused for a long moment of silence, then continued. “Guys, if you don’t want to do this,
I’m not coming back on Monday. Because I’ve got thousands of key decisions to make that
are far more difficult than this, and if you can’t throw your support behind this kind of
decision, I will fail. So if you can’t do this, I’m out of here, and you can blame it on me,
you can say, ‘Steve wasn’t up for the job.’”
The next day, after consulting with the board, Woolard called Jobs back. “We’re going to
approve this,” he said. “But some of the board members don’t like it. We feel like you’ve
put a gun to our head.” The options for the top team (Jobs had none) were reset at $13.25,
which was the price of the stock the day Amelio was ousted.
Instead of declaring victory and thanking the board, Jobs continued to seethe at having to
answer to a board he didn’t respect. “Stop the train, this isn’t going to work,” he told
Woolard. “This company is in shambles, and I don’t have time to wet-nurse the board. So I
need all of you to resign. Or else I’m going to resign and not come back on Monday.” The
one person who could stay, he said, was Woolard.
Most members of the board were aghast. Jobs was still refusing to commit himself to
coming back full-time or being anything more than an advisor, yet he felt he had the power
to force them to leave. The hard truth, however, was that he did have that power over them.
They could not afford for him to storm off in a fury, nor was the prospect of remaining an
Apple board member very enticing by then. “After all they’d been through, most were glad
to be let off,” Woolard recalled.
Once again the board acquiesced. It made only one request: Would he permit one other
director to stay, in addition to Woolard? It would help the optics. Jobs assented. “They were
an awful board, a terrible board,” he later said. “I agreed they could keep Ed Woolard and a
guy named Gareth Chang, who turned out to be a zero. He wasn’t terrible, just a zero.
Woolard, on the other hand, was one of the best board members I’ve ever seen. He was a
prince, one of the most supportive and wise people I’ve ever met.”
Among those being asked to resign was Mike Markkula, who in 1976, as a young
venture capitalist, had visited the Jobs garage, fallen in love with the nascent computer on
the workbench, guaranteed a $250,000 line of credit, and become the third partner and onethird
owner of the new company. Over the subsequent two decades, he was the one
constant on the board, ushering in and out a variety of CEOs. He had supported Jobs at
times but also clashed with him, most notably when he sided with Sculley in the
showdowns of 1985. With Jobs returning, he knew that it was time for him to leave.
Jobs could be cutting and cold, especially toward people who crossed him, but he could
also be sentimental about those who had been with him from the early days. Wozniak fell
into that favored category, of course, even though they had drifted apart; so did Andy
Hertzfeld and a few others from the Macintosh team. In the end, Mike Markkula did as
well. “I felt deeply betrayed by him, but he was like a father and I always cared about him,”
Jobs later recalled. So when the time came to ask him to resign from the Apple board, Jobs
drove to Markkula’s chateau-like mansion in the Woodside hills to do it personally. As
usual, he asked to take a walk, and they strolled the grounds to a redwood grove with a
picnic table. “He told me he wanted a new board because he wanted to start fresh,”
Markkula said. “He was worried that I might take it poorly, and he was relieved when I
didn’t.”
They spent the rest of the time talking about where Apple should focus in the future.
Jobs’s ambition was to build a company that would endure, and he asked Markkula what
the formula for that would be. Markkula replied that lasting companies know how to
reinvent themselves. Hewlett-Packard had done that repeatedly; it started as an instrument
company, then became a calculator company, then a computer company. “Apple has been
sidelined by Microsoft in the PC business,” Markkula said. “You’ve got to reinvent the
company to do some other thing, like other consumer products or devices. You’ve got to be
like a butterfly and have a metamorphosis.” Jobs didn’t say much, but he agreed.
The old board met in late July to ratify the transition. Woolard, who was as genteel as
Jobs was prickly, was mildly taken aback when Jobs appeared dressed in jeans and
sneakers, and he worried that Jobs might start berating the veteran board members for
screwing up. But Jobs merely offered a pleasant “Hi, everyone.” They got down to the
business of voting to accept the resignations, elect Jobs to the board, and empower Woolard
and Jobs to find new board members.
Jobs’s first recruit was, not surprisingly, Larry Ellison. He said he would be pleased to
join, but he hated attending meetings. Jobs said it would be fine if he came to only half of
them. (After a while Ellison was coming to only a third of the meetings. Jobs took a picture
of him that had appeared on the cover of Business Week and had it blown up to life size and
pasted on a cardboard cutout to put in his chair.)
Jobs also brought in Bill Campbell, who had run marketing at Apple in the early 1980s
and been caught in the middle of the Sculley-Jobs clash. Campbell had ended up sticking
with Sculley, but he had grown to dislike him so much that Jobs forgave him. Now he was
the CEO of Intuit and a walking buddy of Jobs. “We were sitting out in the back of his
house,” recalled Campbell, who lived only five blocks from Jobs in Palo Alto, “and he said
he was going back to Apple and wanted me on the board. I said, ‘Holy shit, of course I will
do that.’” Campbell had been a football coach at Columbia, and his great talent, Jobs said,
was to “get A performances out of B players.” At Apple, Jobs told him, he would get to
work with A players.
Woolard helped bring in Jerry York, who had been the chief financial officer at Chrysler
and then IBM. Others were considered and then rejected by Jobs, including Meg Whitman,
who was then the manager of Hasbro’s Playskool division and had been a strategic planner
at Disney. (In 1998 she became CEO of eBay, and she later ran unsuccessfully for governor
of California.) Over the years Jobs would bring in some strong leaders to serve on the
Apple board, including Al Gore, Eric Schmidt of Google, Art Levinson of Genentech,
Mickey Drexler of the Gap and J. Crew, and Andrea Jung of Avon. But he always made
sure they were loyal, sometimes loyal to a fault. Despite their stature, they seemed at times
awed or intimidated by Jobs, and they were eager to keep him happy.
At one point he invited Arthur Levitt, the former SEC chairman, to become a board
member. Levitt, who bought his first Macintosh in 1984 and was proudly “addicted” to
Apple computers, was thrilled. He was excited to visit Cupertino, where he discussed the
role with Jobs. But then Jobs read a speech Levitt had given about corporate governance,
which argued that boards should play a strong and independent role, and he telephoned to
withdraw the invitation. “Arthur, I don’t think you’d be happy on our board, and I think it
best if we not invite you,” Levitt said Jobs told him. “Frankly, I think some of the issues
you raised, while appropriate for some companies, really don’t apply to Apple’s culture.”
Levitt later wrote, “I was floored. . . . It’s plain to me that Apple’s board is not designed to
act independently of the CEO.”
Macworld Boston, August 1997
The staff memo announcing the repricing of Apple’s stock options was signed “Steve and
the executive team,” and it soon became public that he was running all of the company’s
product review meetings. These and other indications that Jobs was now deeply engaged at
Apple helped push the stock up from about $13 to $20 during July. It also created a frisson
of excitement as the Apple faithful gathered for the August 1997 Macworld in Boston.
More than five thousand showed up hours in advance to cram into the Castle convention
hall of the Park Plaza hotel for Jobs’s keynote speech. They came to see their returning
hero—and to find out whether he was really ready to lead them again.
Huge cheers erupted when a picture of Jobs from 1984 was flashed on the overhead
screen. “Steve! Steve! Steve!” the crowd started to chant, even as he was still being
introduced. When he finally strode onstage—wearing a black vest, collarless white shirt,
jeans, and an impish smile—the screams and flashbulbs rivaled those for any rock star. At
first he punctured the excitement by reminding them of where he officially worked. “I’m
Steve Jobs, the chairman and CEO of Pixar,” he introduced himself, flashing a slide
onscreen with that title. Then he explained his role at Apple. “I, like a lot of other people,
are pulling together to help Apple get healthy again.”
But as Jobs paced back and forth across the stage, changing the overhead slides with a
clicker in his hand, it was clear that he was now in charge at Apple—and was likely to
remain so. He delivered a carefully crafted presentation, using no notes, on why Apple’s
sales had fallen by 30% over the previous two years. “There are a lot of great people at
Apple, but they’re doing the wrong things because the plan has been wrong,” he said. “I’ve
found people who can’t wait to fall into line behind a good strategy, but there just hasn’t
been one.” The crowd again erupted in yelps, whistles, and cheers.
As he spoke, his passion poured forth with increasing intensity, and he began saying
“we” and “I”—rather than “they”—when referring to what Apple would be doing. “I think
you still have to think differently to buy an Apple computer,” he said. “The people who buy
them do think different. They are the creative spirits in this world, and they’re out to
change the world. We make tools for those kinds of people.” When he stressed the word
“we” in that sentence, he cupped his hands and tapped his fingers on his chest. And then, in
his final peroration, he continued to stress the word “we” as he talked about Apple’s future.
“We too are going to think differently and serve the people who have been buying our
products from the beginning. Because a lot of people think they’re crazy, but in that
craziness we see genius.” During the prolonged standing ovation, people looked at each
other in awe, and a few wiped tears from their eyes. Jobs had made it very clear that he and
the “we” of Apple were one.
The Microsoft Pact
The climax of Jobs’s August 1997 Macworld appearance was a bombshell announcement,
one that made the cover of both Time and Newsweek. Near the end of his speech, he paused
for a sip of water and began to talk in more subdued tones. “Apple lives in an ecosystem,”
he said. “It needs help from other partners. Relationships that are destructive don’t help
anybody in this industry.” For dramatic effect, he paused again, and then explained: “I’d
like to announce one of our first new partnerships today, a very meaningful one, and that is
one with Microsoft.” The Microsoft and Apple logos appeared together on the screen as
people gasped.
Apple and Microsoft had been at war for a decade over a variety of copyright and patent
issues, most notably whether Microsoft had stolen the look and feel of Apple’s graphical
user interface. Just as Jobs was being eased out of Apple in 1985, John Sculley had struck a
surrender deal: Microsoft could license the Apple GUI for Windows 1.0, and in return it
would make Excel exclusive to the Mac for up to two years. In 1988, after Microsoft came
out with Windows 2.0, Apple sued. Sculley contended that the 1985 deal did not apply to
Windows 2.0 and that further refinements to Windows (such as copying Bill Atkinson’s
trick of “clipping” overlapping windows) had made the infringement more blatant. By 1997
Apple had lost the case and various appeals, but remnants of the litigation and threats of
new suits lingered. In addition, President Clinton’s Justice Department was preparing a
massive antitrust case against Microsoft. Jobs invited the lead prosecutor, Joel Klein, to
Palo Alto. Don’t worry about extracting a huge remedy against Microsoft, Jobs told him
over coffee. Instead simply keep them tied up in litigation. That would allow Apple the
opportunity, Jobs explained, to “make an end run” around Microsoft and start offering
competing products.
Under Amelio, the showdown had become explosive. Microsoft refused to commit to
developing Word and Excel for future Macintosh operating systems, which could have
destroyed Apple. In defense of Bill Gates, he was not simply being vindictive. It was
understandable that he was reluctant to commit to developing for a future Macintosh
operating system when no one, including the ever-changing leadership at Apple, seemed to
know what that new operating system would be. Right after Apple bought NeXT, Amelio
and Jobs flew together to visit Microsoft, but Gates had trouble figuring out which of them
was in charge. A few days later he called Jobs privately. “Hey, what the fuck, am I
supposed to put my applications on the NeXT OS?” Gates asked. Jobs responded by
“making smart-ass remarks about Gil,” Gates recalled, and suggesting that the situation
would soon be clarified.
When the leadership issue was partly resolved by Amelio’s ouster, one of Jobs’s first
phone calls was to Gates. Jobs recalled:
I called up Bill and said, “I’m going to turn this thing around.” Bill always had a soft
spot for Apple. We got him into the application software business. The first Microsoft apps
were Excel and Word for the Mac. So I called him and said, “I need help.” Microsoft was
walking over Apple’s patents. I said, “If we kept up our lawsuits, a few years from now we
could win a billion-dollar patent suit. You know it, and I know it. But Apple’s not going to
survive that long if we’re at war. I know that. So let’s figure out how to settle this right
away. All I need is a commitment that Microsoft will keep developing for the Mac and an
investment by Microsoft in Apple so it has a stake in our success.”
When I recounted to him what Jobs said, Gates agreed it was accurate. “We had a group of
people who liked working on the Mac stuff, and we liked the Mac,” Gates recalled. He had
been negotiating with Amelio for six months, and the proposals kept getting longer and
more complicated. “So Steve comes in and says, ‘Hey, that deal is too complicated. What I
want is a simple deal. I want the commitment and I want an investment.’ And so we put
that together in just four weeks.”
Gates and his chief financial officer, Greg Maffei, made the trip to Palo Alto to work out
the framework for a deal, and then Maffei returned alone the following Sunday to work on
the details. When he arrived at Jobs’s home, Jobs grabbed two bottles of water out of the
refrigerator and took Maffei for a walk around the Palo Alto neighborhood. Both men wore
shorts, and Jobs walked barefoot. As they sat in front of a Baptist church, Jobs cut to the
core issues. “These are the things we care about,” he said. “A commitment to make
software for the Mac and an investment.”
Although the negotiations went quickly, the final details were not finished until hours
before Jobs’s Macworld speech in Boston. He was rehearsing at the Park Plaza Castle when
his cell phone rang. “Hi, Bill,” he said as his words echoed through the old hall. Then he
walked to a corner and spoke in a soft tone so others couldn’t hear. The call lasted an hour.
Finally, the remaining deal points were resolved. “Bill, thank you for your support of this
company,” Jobs said as he crouched in his shorts. “I think the world’s a better place for it.”
During his Macworld keynote address, Jobs walked through the details of the Microsoft
deal. At first there were groans and hisses from the faithful. Particularly galling was Jobs’s
announcement that, as part of the peace pact, “Apple has decided to make Internet Explorer
its default browser on the Macintosh.” The audience erupted in boos, and Jobs quickly
added, “Since we believe in choice, we’re going to be shipping other Internet browsers, as
well, and the user can, of course, change their default should they choose to.” There were
some laughs and scattered applause. The audience was beginning to come around,
especially when he announced that Microsoft would be investing $150 million in Apple and
getting nonvoting shares.
But the mellower mood was shattered for a moment when Jobs made one of the few
visual and public relations gaffes of his onstage career. “I happen to have a special guest
with me today via satellite downlink,” he said, and suddenly Bill Gates’s face appeared on
the huge screen looming over Jobs and the auditorium. There was a thin smile on Gates’s
face that flirted with being a smirk. The audience gasped in horror, followed by some boos
and catcalls. The scene was such a brutal echo of the 1984 Big Brother ad that you half
expected (and hoped?) that an athletic woman would suddenly come running down the
aisle and vaporize the screenshot with a well-thrown hammer.
But it was all for real, and Gates, unaware of the jeering, began speaking on the satellite
link from Microsoft headquarters. “Some of the most exciting work that I’ve done in my
career has been the work that I’ve done with Steve on the Macintosh,” he intoned in his
high-pitched singsong. As he went on to tout the new version of Microsoft Office that was
being made for the Macintosh, the audience quieted down and then slowly seemed to
accept the new world order. Gates even was able to rouse some applause when he said that
the new Mac versions of Word and Excel would be “in many ways more advanced than
what we’ve done on the Windows platform.”
Jobs realized that the image of Gates looming over him and the audience was a mistake.
“I wanted him to come to Boston,” Jobs later said. “That was my worst and stupidest
staging event ever. It was bad because it made me look small, and Apple look small, and as
if everything was in Bill’s hands.” Gates likewise was embarrassed when he saw the
videotape of the event. “I didn’t know that my face was going to be blown up to looming
proportions,” he said.
Jobs tried to reassure the audience with an impromptu sermon. “If we want to move
forward and see Apple healthy again, we have to let go of a few things here,” he told the
audience. “We have to let go of this notion that for Apple to win Microsoft has to lose. . . . I
think if we want Microsoft Office on the Mac, we better treat the company that puts it out
with a little bit of gratitude.”
The Microsoft announcement, along with Jobs’s passionate reengagement with the
company, provided a much-needed jolt for Apple. By the end of the day, its stock had
skyrocketed $6.56, or 33%, to close at $26.31, twice the price of the day Amelio resigned.
The one-day jump added $830 million to Apple’s stock market capitalization. The company
was back from the edge of the grave.
CHAPTER TWENTY-FIVE
THINK DIFFERENT
Jobs as iCEO
Enlisting Picasso
Here’s to the Crazy Ones
Lee Clow, the creative director at Chiat/Day who had done the great “1984” ad for the
launch of the Macintosh, was driving in Los Angeles in early July 1997 when his car phone
rang. It was Jobs. “Hi, Lee, this is Steve,” he said. “Guess what? Amelio just resigned. Can
you come up here?”
Apple was going through a review to select a new agency, and Jobs was not impressed
by what he had seen. So he wanted Clow and his firm, by then called TBWA\Chiat\Day, to
compete for the business. “We have to prove that Apple is still alive,” Jobs said, “and that it
still stands for something special.”
Clow said that he didn’t pitch for accounts. “You know our work,” he said. But Jobs
begged him. It would be hard to reject all the others that were making pitches, including
BBDO and Arnold Worldwide, and bring back “an old crony,” as Jobs put it. Clow agreed
to fly up to Cupertino with something they could show. Recounting the scene years later,
Jobs started to cry.
This chokes me up, this really chokes me up. It was so clear that Lee loved Apple so
much. Here was the best guy in advertising. And he hadn’t pitched in ten years. Yet here he
was, and he was pitching his heart out, because he loved Apple as much as we did. He and
his team had come up with this brilliant idea, “Think Different.” And it was ten times better
than anything the other agencies showed. It choked me up, and it still makes me cry to
think about it, both the fact that Lee cared so much and also how brilliant his “Think
Different” idea was. Every once in a while, I find myself in the presence of purity—purity
of spirit and love—and I always cry. It always just reaches in and grabs me. That was one
of those moments. There was a purity about that I will never forget. I cried in my office as
he was showing me the idea, and I still cry when I think about it.
Jobs and Clow agreed that Apple was one of the great brands of the world, probably in
the top five based on emotional appeal, but they needed to remind folks what was
distinctive about it. So they wanted a brand image campaign, not a set of advertisements
featuring products. It was designed to celebrate not what the computers could do, but what
creative people could do with the computers. “This wasn’t about processor speed or
memory,” Jobs recalled. “It was about creativity.” It was directed not only at potential
customers, but also at Apple’s own employees: “We at Apple had forgotten who we were.
One way to remember who you are is to remember who your heroes are. That was the
genesis of that campaign.”
Clow and his team tried a variety of approaches that praised the “crazy ones” who “think
different.” They did one video with the Seal song “Crazy” (“We’re never gonna survive
unless we get a little crazy”), but couldn’t get the rights to it. Then they tried versions using
a recording of Robert Frost reading “The Road Not Taken” and of Robin Williams’s
speeches from Dead Poets Society. Eventually they decided they needed to write their own
text; their draft began, “Here’s to the crazy ones.”
Jobs was as demanding as ever. When Clow’s team flew up with a version of the text, he
exploded at the young copywriter. “This is shit!” he yelled. “It’s advertising agency shit
and I hate it.” It was the first time the young copywriter had met Jobs, and he stood there
mute. He never went back. But those who could stand up to Jobs, including Clow and his
teammates Ken Segall and Craig Tanimoto, were able to work with him to create a tone
poem that he liked. In its original sixty-second version it read:
Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in
the square holes. The ones who see things differently. They’re not fond of rules. And they
have no respect for the status quo. You can quote them, disagree with them, glorify or vilify
them. About the only thing you can’t do is ignore them. Because they change things. They
push the human race forward. And while some may see them as the crazy ones, we see
genius. Because the people who are crazy enough to think they can change the world are
the ones who do.
Jobs, who could identify with each of those sentiments, wrote some of the lines himself,
including “They push the human race forward.” By the time of the Boston Macworld in
early August, they had produced a rough version. They agreed it was not ready, but Jobs
used the concepts, and the “think different” phrase, in his keynote speech there. “There’s a
germ of a brilliant idea there,” he said at the time. “Apple is about people who think outside
the box, who want to use computers to help them change the world.”
They debated the grammatical issue: If “different” was supposed to modify the verb
“think,” it should be an adverb, as in “think differently.” But Jobs insisted that he wanted
“different” to be used as a noun, as in “think victory” or “think beauty.” Also, it echoed
colloquial use, as in “think big.” Jobs later explained, “We discussed whether it was correct
before we ran it. It’s grammatical, if you think about what we’re trying to say. It’s not think
the same, it’s think different. Think a little different, think a lot different, think different.
‘Think differently’ wouldn’t hit the meaning for me.”
In order to evoke the spirit of Dead Poets Society, Clow and Jobs wanted to get Robin
Williams to read the narration. His agent said that Williams didn’t do ads, so Jobs tried to
call him directly. He got through to Williams’s wife, who would not let him talk to the actor
because she knew how persuasive he could be. They also considered Maya Angelou and
Tom Hanks. At a fund-raising dinner featuring Bill Clinton that fall, Jobs pulled the
president aside and asked him to telephone Hanks to talk him into it, but the president
pocket-vetoed the request. They ended up with Richard Dreyfuss, who was a dedicated
Apple fan.
In addition to the television commercials, they created one of the most memorable print
campaigns in history. Each ad featured a black-and-white portrait of an iconic historical
figure with just the Apple logo and the words “Think Different” in the corner. Making it
particularly engaging was that the faces were not captioned. Some of them—Einstein,
Gandhi, Lennon, Dylan, Picasso, Edison, Chaplin, King—were easy to identify. But others
caused people to pause, puzzle, and maybe ask a friend to put a name to the face: Martha
Graham, Ansel Adams, Richard Feynman, Maria Callas, Frank Lloyd Wright, James
Watson, Amelia Earhart.
Most were Jobs’s personal heroes. They tended to be creative people who had taken
risks, defied failure, and bet their career on doing things in a different way. A photography
buff, he became involved in making sure they had the perfect iconic portraits. “This is not
the right picture of Gandhi,” he erupted to Clow at one point. Clow explained that the
famous Margaret Bourke-White photograph of Gandhi at the spinning wheel was owned by
Time-Life Pictures and was not available for commercial use. So Jobs called Norman
Pearlstine, the editor in chief of Time Inc., and badgered him into making an exception. He
called Eunice Shriver to convince her family to release a picture that he loved, of her
brother Bobby Kennedy touring Appalachia, and he talked to Jim Henson’s children
personally to get the right shot of the late Muppeteer.
He likewise called Yoko Ono for a picture of her late husband, John Lennon. She sent
him one, but it was not Jobs’s favorite. “Before it ran, I was in New York, and I went to this
small Japanese restaurant that I love, and let her know I would be there,” he recalled. When
he arrived, she came over to his table. “This is a better one,” she said, handing him an
envelope. “I thought I would see you, so I had this with me.” It was the classic photo of her
and John in bed together, holding flowers, and it was the one that Apple ended up using. “I
can see why John fell in love with her,” Jobs recalled.
The narration by Richard Dreyfuss worked well, but Lee Clow had another idea. What if
Jobs did the voice-over himself? “You really believe this,” Clow told him. “You should do
it.” So Jobs sat in a studio, did a few takes, and soon produced a voice track that everyone
liked. The idea was that, if they used it, they would not tell people who was speaking the
words, just as they didn’t caption the iconic pictures. Eventually people would figure out it
was Jobs. “This will be really powerful to have it in your voice,” Clow argued. “It will be a
way to reclaim the brand.”
Jobs couldn’t decide whether to use the version with his voice or to stick with Dreyfuss.
Finally, the night came when they had to ship the ad; it was due to air, appropriately
enough, on the television premiere of Toy Story. As was often the case, Jobs did not like to
be forced to make a decision. He told Clow to ship both versions; this would give him until
the morning to decide. When morning came, Jobs called and told them to use the Dreyfuss
version. “If we use my voice, when people find out they will say it’s about me,” he told
Clow. “It’s not. It’s about Apple.”
Ever since he left the apple commune, Jobs had defined himself, and by extension Apple,
as a child of the counterculture. In ads such as “Think Different” and “1984,” he positioned
the Apple brand so that it reaffirmed his own rebel streak, even after he became a
billionaire, and it allowed other baby boomers and their kids to do the same. “From when I
first met him as a young guy, he’s had the greatest intuition of the impact he wants his
brand to have on people,” said Clow.
Very few other companies or corporate leaders—perhaps none—could have gotten away
with the brilliant audacity of associating their brand with Gandhi, Einstein, Picasso, and the
Dalai Lama. Jobs was able to encourage people to define themselves as anticorporate,
creative, innovative rebels simply by the computer they used. “Steve created the only
lifestyle brand in the tech industry,” Larry Ellison said. “There are cars people are proud to
have—Porsche, Ferrari, Prius—because what I drive says something about me. People feel
the same way about an Apple product.”
Starting with the “Think Different” campaign, and continuing through the rest of his
years at Apple, Jobs held a freewheeling three-hour meeting every Wednesday afternoon
with his top agency, marketing, and communications people to kick around messaging
strategy. “There’s not a CEO on the planet who deals with marketing the way Steve does,”
said Clow. “Every Wednesday he approves each new commercial, print ad, and billboard.”
At the end of the meeting, he would often take Clow and his two agency colleagues,
Duncan Milner and James Vincent, to Apple’s closely guarded design studio to see what
products were in the works. “He gets very passionate and emotional when he shows us
what’s in development,” said Vincent. By sharing with his marketing gurus his passion for
the products as they were being created, he was able to ensure that almost every ad they
produced was infused with his emotion.
iCEO
As he was finishing work on the “Think Different” ad, Jobs did some different thinking of
his own. He decided that he would officially take over running the company, at least on a
temporary basis. He had been the de facto leader since Amelio’s ouster ten weeks earlier,
but only as an advisor. Fred Anderson had the titular role of interim CEO. On September
16, 1997, Jobs announced that he would take over that title, which inevitably got
abbreviated as iCEO. His commitment was tentative: He took no salary and signed no
contract. But he was not tentative in his actions. He was in charge, and he did not rule by
consensus.
That week he gathered his top managers and staff in the Apple auditorium for a rally,
followed by a picnic featuring beer and vegan food, to celebrate his new role and the
company’s new ads. He was wearing shorts, walking around the campus barefoot, and had
a stubble of beard. “I’ve been back about ten weeks, working really hard,” he said, looking
tired but deeply determined. “What we’re trying to do is not highfalutin. We’re trying to get
back to the basics of great products, great marketing, and great distribution. Apple has
drifted away from doing the basics really well.”
For a few more weeks Jobs and the board kept looking for a permanent CEO. Various
names surfaced—George M. C. Fisher of Kodak, Sam Palmisano at IBM, Ed Zander at Sun
Microsystems—but most of the candidates were understandably reluctant to consider
becoming CEO if Jobs was going to remain an active board member. The San Francisco
Chronicle reported that Zander declined to be considered because he “didn’t want Steve
looking over his shoulder, second-guessing him on every decision.” At one point Jobs and
Ellison pulled a prank on a clueless computer consultant who was campaigning for the job;
they sent him an email saying that he had been selected, which caused both amusement and
embarrassment when stories appeared in the papers that they were just toying with him.
By December it had become clear that Jobs’s iCEO status had evolved from interim to
indefinite. As Jobs continued to run the company, the board quietly deactivated its search.
“I went back to Apple and tried to hire a CEO, with the help of a recruiting agency, for
almost four months,” he recalled. “But they didn’t produce the right people. That’s why I
finally stayed. Apple was in no shape to attract anybody good.”
The problem Jobs faced was that running two companies was brutal. Looking back on it,
he traced his health problems back to those days:
It was rough, really rough, the worst time in my life. I had a young family. I had Pixar. I
would go to work at 7 a.m. and I’d get back at 9 at night, and the kids would be in bed. And
I couldn’t speak, I literally couldn’t, I was so exhausted. I couldn’t speak to Laurene. All I
could do was watch a half hour of TV and vegetate. It got close to killing me. I was driving
up to Pixar and down to Apple in a black Porsche convertible, and I started to get kidney
stones. I would rush to the hospital and the hospital would give me a shot of Demerol in the
butt and eventually I would pass it.
Despite the grueling schedule, the more that Jobs immersed himself in Apple, the more
he realized that he would not be able to walk away. When Michael Dell was asked at a
computer trade show in October 1997 what he would do if he were Steve Jobs and taking
over Apple, he replied, “I’d shut it down and give the money back to the shareholders.”
Jobs fired off an email to Dell. “CEOs are supposed to have class,” it said. “I can see that
isn’t an opinion you hold.” Jobs liked to stoke up rivalries as a way to rally his team—he
had done so with IBM and Microsoft—and he did so with Dell. When he called together
his managers to institute a build-to-order system for manufacturing and distribution, Jobs
used as a backdrop a blown-up picture of Michael Dell with a target on his face. “We’re
coming after you, buddy,” he said to cheers from his troops.
One of his motivating passions was to build a lasting company. At age twelve, when he
got a summer job at Hewlett-Packard, he learned that a properly run company could spawn
innovation far more than any single creative individual. “I discovered that the best
innovation is sometimes the company, the way you organize a company,” he recalled. “The
whole notion of how you build a company is fascinating. When I got the chance to come
back to Apple, I realized that I would be useless without the company, and that’s why I
decided to stay and rebuild it.”
Killing the Clones
One of the great debates about Apple was whether it should have licensed its operating
system more aggressively to other computer makers, the way Microsoft licensed Windows.
Wozniak had favored that approach from the beginning. “We had the most beautiful
operating system,” he said, “but to get it you had to buy our hardware at twice the price.
That was a mistake. What we should have done was calculate an appropriate price to
license the operating system.” Alan Kay, the star of Xerox PARC who came to Apple as a
fellow in 1984, also fought hard for licensing the Mac OS software. “Software people are
always multiplatform, because you want to run on everything,” he recalled. “And that was
a huge battle, probably the largest battle I lost at Apple.”
Bill Gates, who was building a fortune by licensing Microsoft’s operating system, had
urged Apple to do the same in 1985, just as Jobs was being eased out. Gates believed that,
even if Apple took away some of Microsoft’s operating system customers, Microsoft could
make money by creating versions of its applications software, such as Word and Excel, for
the users of the Macintosh and its clones. “I was trying to do everything to get them to be a
strong licensor,” he recalled. He sent a formal memo to Sculley making the case. “The
industry has reached the point where it is now impossible for Apple to create a standard out
of their innovative technology without support from, and the resulting credibility of, other
personal computer manufacturers,” he argued. “Apple should license Macintosh technology
to 3–5 significant manufacturers for the development of ‘Mac Compatibles.’” Gates got no
reply, so he wrote a second memo suggesting some companies that would be good at
cloning the Mac, and he added, “I want to help in any way I can with the licensing. Please
give me a call.”
Apple resisted licensing out the Macintosh operating system until 1994, when CEO
Michael Spindler allowed two small companies, Power Computing and Radius, to make
Macintosh clones. When Gil Amelio took over in 1996, he added Motorola to the list. It
turned out to be a dubious business strategy: Apple got an $80 licensing fee for each
computer sold, but instead of expanding the market, the cloners cannibalized the sales of
Apple’s own high-end computers, on which it made up to $500 in profit.
Jobs’s objections to the cloning program were not just economic, however. He had an
inbred aversion to it. One of his core principles was that hardware and software should be
tightly integrated. He loved to control all aspects of his life, and the only way to do that
with computers was to take responsibility for the user experience from end to end.
So upon his return to Apple he made killing the Macintosh clones a priority. When a new
version of the Mac operating system shipped in July 1997, weeks after he had helped oust
Amelio, Jobs did not allow the clone makers to upgrade to it. The head of Power
Computing, Stephen “King” Kahng, organized pro-cloning protests when Jobs appeared at
Boston Macworld that August and publicly warned that the Macintosh OS would die if
Jobs declined to keep licensing it out. “If the platform goes closed, it is over,” Kahng said.
“Total destruction. Closed is the kiss of death.”
Jobs disagreed. He telephoned Ed Woolard to say he was getting Apple out of the
licensing business. The board acquiesced, and in September he reached a deal to pay Power
Computing $100 million to relinquish its license and give Apple access to its database of
customers. He soon terminated the licenses of the other cloners as well. “It was the
dumbest thing in the world to let companies making crappier hardware use our operating
system and cut into our sales,” he later said.
Product Line Review
One of Jobs’s great strengths was knowing how to focus. “Deciding what not to do is as
important as deciding what to do,” he said. “That’s true for companies, and it’s true for
products.”
He went to work applying this principle as soon as he returned to Apple. One day he was
walking the halls and ran into a young Wharton School graduate who had been Amelio’s
assistant and who said he was wrapping up his work. “Well, good, because I need someone
to do grunt work,” Jobs told him. His new role was to take notes as Jobs met with the
dozens of product teams at Apple, asked them to explain what they were doing, and forced
them to justify going ahead with their products or projects.
He also enlisted a friend, Phil Schiller, who had worked at Apple but was then at the
graphics software company Macromedia. “Steve would summon the teams into the
boardroom, which seats twenty, and they would come with thirty people and try to show
PowerPoints, which Steve didn’t want to see,” Schiller recalled. One of the first things Jobs
did during the product review process was ban PowerPoints. “I hate the way people use
slide presentations instead of thinking,” Jobs later recalled. “People would confront a
problem by creating a presentation. I wanted them to engage, to hash things out at the table,
rather than show a bunch of slides. People who know what they’re talking about don’t need
PowerPoint.”
The product review revealed how unfocused Apple had become. The company was
churning out multiple versions of each product because of bureaucratic momentum and to
satisfy the whims of retailers. “It was insanity,” Schiller recalled. “Tons of products, most
of them crap, done by deluded teams.” Apple had a dozen versions of the Macintosh, each
with a different confusing number, ranging from 1400 to 9600. “I had people explaining
this to me for three weeks,” Jobs said. “I couldn’t figure it out.” He finally began asking
simple questions, like, “Which ones do I tell my friends to buy?”
When he couldn’t get simple answers, he began slashing away at models and products.
Soon he had cut 70% of them. “You are bright people,” he told one group. “You shouldn’t
be wasting your time on such crappy products.” Many of the engineers were infuriated at
his slash-and-burn tactics, which resulted in massive layoffs. But Jobs later claimed that the
good engineers, including some whose projects were killed, were appreciative. He told one
staff meeting in September 1997, “I came out of the meeting with people who had just
gotten their products canceled and they were three feet off the ground with excitement
because they finally understood where in the heck we were going.”
After a few weeks Jobs finally had enough. “Stop!” he shouted at one big product
strategy session. “This is crazy.” He grabbed a magic marker, padded to a whiteboard, and
drew a horizontal and vertical line to make a four-squared chart. “Here’s what we need,” he
continued. Atop the two columns he wrote “Consumer” and “Pro”; he labeled the two rows
“Desktop” and “Portable.” Their job, he said, was to make four great products, one for each
quadrant. “The room was in dumb silence,” Schiller recalled.
There was also a stunned silence when Jobs presented the plan to the September meeting
of the Apple board. “Gil had been urging us to approve more and more products every
meeting,” Woolard recalled. “He kept saying we need more products. Steve came in and
said we needed fewer. He drew a matrix with four quadrants and said that this was where
we should focus.” At first the board pushed back. It was a risk, Jobs was told. “I can make
it work,” he replied. The board never voted on the new strategy. Jobs was in charge, and he
forged ahead.
The result was that the Apple engineers and managers suddenly became sharply focused
on just four areas. For the professional desktop quadrant, they would work on making the
Power Macintosh G3. For the professional portable, there would be the PowerBook G3.
For the consumer desktop, work would begin on what became the iMac. And for the
consumer portable, they would focus on what would become the iBook. The “i,” Jobs later
explained, was to emphasize that the devices would be seamlessly integrated with the
Internet.
Apple’s sharper focus meant getting the company out of other businesses, such as
printers and servers. In 1997 Apple was selling StyleWriter color printers that were
basically a version of the Hewlett-Packard DeskJet. HP made most of its money by selling
the ink cartridges. “I don’t understand,” Jobs said at the product review meeting. “You’re
going to ship a million and not make money on these? This is nuts.” He left the room and
called the head of HP. Let’s tear up our arrangement, Jobs proposed, and we will get out of
the printer business and just let you do it. Then he came back to the boardroom and
announced the decision. “Steve looked at the situation and instantly knew we needed to get
outside of the box,” Schiller recalled.
The most visible decision he made was to kill, once and for all, the Newton, the personal
digital assistant with the almost-good handwriting-recognition system. Jobs hated it
because it was Sculley’s pet project, because it didn’t work perfectly, and because he had
an aversion to stylus devices. He had tried to get Amelio to kill it early in 1997 and
succeeded only in convincing him to try to spin off the division. By late 1997, when Jobs
did his product reviews, it was still around. He later described his thinking:
If Apple had been in a less precarious situation, I would have drilled down myself to
figure out how to make it work. I didn’t trust the people running it. My gut was that there
was some really good technology, but it was fucked up by mismanagement. By shutting it
down, I freed up some good engineers who could work on new mobile devices. And
eventually we got it right when we moved on to iPhones and the iPad.
This ability to focus saved Apple. In his first year back, Jobs laid off more than three
thousand people, which salvaged the company’s balance sheet. For the fiscal year that
ended when Jobs became interim CEO in September 1997, Apple lost $1.04 billion. “We
were less than ninety days from being insolvent,” he recalled. At the January 1998 San
Francisco Macworld, Jobs took the stage where Amelio had bombed a year earlier. He
sported a full beard and a leather jacket as he touted the new product strategy. And for the
first time he ended the presentation with a phrase that he would make his signature coda:
“Oh, and one more thing . . .” This time the “one more thing” was “Think Profit.” When he
said those words, the crowd erupted in applause. After two years of staggering losses,
Apple had enjoyed a profitable quarter, making $45 million. For the full fiscal year of
1998, it would turn in a $309 million profit. Jobs was back, and so was Apple.
CHAPTER TWENTY-SIX
DESIGN PRINCIPLES
The Studio of Jobs and Ive
With Jony Ive and the sunflower iMac, 2002
Jony Ive
When Jobs gathered his top management for a pep talk just after he became iCEO in
September 1997, sitting in the audience was a sensitive and passionate thirty-year-old Brit
who was head of the company’s design team. Jonathan Ive, known to all as Jony, was
planning to quit. He was sick of the company’s focus on profit maximization rather than
product design. Jobs’s talk led him to reconsider. “I remember very clearly Steve
announcing that our goal is not just to make money but to make great products,” Ive
recalled. “The decisions you make based on that philosophy are fundamentally different
from the ones we had been making at Apple.” Ive and Jobs would soon forge a bond that
would lead to the greatest industrial design collaboration of their era.
Ive grew up in Chingford, a town on the northeast edge of London. His father was a
silversmith who taught at the local college. “He’s a fantastic craftsman,” Ive recalled. “His
Christmas gift to me would be one day of his time in his college workshop, during the
Christmas break when no one else was there, helping me make whatever I dreamed up.”
The only condition was that Jony had to draw by hand what they planned to make. “I
always understood the beauty of things made by hand. I came to realize that what was
really important was the care that was put into it. What I really despise is when I sense
some carelessness in a product.”
Ive enrolled in Newcastle Polytechnic and spent his spare time and summers working at
a design consultancy. One of his creations was a pen with a little ball on top that was fun to
fiddle with. It helped give the owner a playful emotional connection to the pen. For his
thesis he designed a microphone and earpiece—in purest white plastic—to communicate
with hearing-impaired kids. His flat was filled with foam models he had made to help him
perfect the design. He also designed an ATM machine and a curved phone, both of which
won awards from the Royal Society of Arts. Unlike some designers, he didn’t just make
beautiful sketches; he also focused on how the engineering and inner components would
work. He had an epiphany in college when he was able to design on a Macintosh. “I
discovered the Mac and felt I had a connection with the people who were making this
product,” he recalled. “I suddenly understood what a company was, or was supposed to
be.”
After graduation Ive helped to build a design firm in London, Tangerine, which got a
consulting contract with Apple. In 1992 he moved to Cupertino to take a job in the Apple
design department. He became the head of the department in 1996, the year before Jobs
returned, but wasn’t happy. Amelio had little appreciation for design. “There wasn’t that
feeling of putting care into a product, because we were trying to maximize the money we
made,” Ive said. “All they wanted from us designers was a model of what something was
supposed to look like on the outside, and then engineers would make it as cheap as
possible. I was about to quit.”
When Jobs took over and gave his pep talk, Ive decided to stick around. But Jobs at first
looked around for a world-class designer from the outside. He talked to Richard Sapper,
who designed the IBM ThinkPad, and Giorgetto Giugiaro, who designed the Ferrari 250
and the Maserati Ghibli. But then he took a tour of Apple’s design studio and bonded with
the affable, eager, and very earnest Ive. “We discussed approaches to forms and materials,”
Ive recalled. “We were on the same wavelength. I suddenly understood why I loved the
company.”
Ive reported, at least initially, to Jon Rubinstein, whom Jobs had brought in to head the
hardware division, but he developed a direct and unusually strong relationship with Jobs.
They began to have lunch together regularly, and Jobs would end his day by dropping by
Ive’s design studio for a chat. “Jony had a special status,” said Laurene Powell. “He would
come by our house, and our families became close. Steve is never intentionally wounding
to him. Most people in Steve’s life are replaceable. But not Jony.”
Jobs described to me his respect for Ive:
The difference that Jony has made, not only at Apple but in the world, is huge. He is a
wickedly intelligent person in all ways. He understands business concepts, marketing
concepts. He picks stuff up just like that, click. He understands what we do at our core
better than anyone. If I had a spiritual partner at Apple, it’s Jony. Jony and I think up most
of the products together and then pull others in and say, “Hey, what do you think about
this?” He gets the big picture as well as the most infinitesimal details about each product.
And he understands that Apple is a product company. He’s not just a designer. That’s why
he works directly for me. He has more operational power than anyone else at Apple except
me. There’s no one who can tell him what to do, or to butt out. That’s the way I set it up.
Like most designers, Ive enjoyed analyzing the philosophy and the step-by-step thinking
that went into a particular design. For Jobs, the process was more intuitive. He would point
to models and sketches he liked and dump on the ones he didn’t. Ive would then take the
cues and develop the concepts Jobs blessed.
Ive was a fan of the German industrial designer Dieter Rams, who worked for the
electronics firm Braun. Rams preached the gospel of “Less but better,” Weniger aber
besser, and likewise Jobs and Ive wrestled with each new design to see how much they
could simplify it. Ever since Apple’s first brochure proclaimed “Simplicity is the ultimate
sophistication,” Jobs had aimed for the simplicity that comes from conquering
complexities, not ignoring them. “It takes a lot of hard work,” he said, “to make something
simple, to truly understand the underlying challenges and come up with elegant solutions.”
In Ive, Jobs met his soul mate in the quest for true rather than surface simplicity. Sitting
in his design studio, Ive described his philosophy:
Why do we assume that simple is good? Because with physical products, we have to
feel we can dominate them. As you bring order to complexity, you find a way to make the
product defer to you. Simplicity isn’t just a visual style. It’s not just minimalism or the
absence of clutter. It involves digging through the depth of the complexity. To be truly
simple, you have to go really deep. For example, to have no screws on something, you can
end up having a product that is so convoluted and so complex. The better way is to go
deeper with the simplicity, to understand everything about it and how it’s manufactured.
You have to deeply understand the essence of a product in order to be able to get rid of the
parts that are not essential.
That was the fundamental principle Jobs and Ive shared. Design was not just about what a
product looked like on the surface. It had to reflect the product’s essence. “In most people’s
vocabularies, design means veneer,” Jobs told Fortune shortly after retaking the reins at
Apple. “But to me, nothing could be further from the meaning of design. Design is the
fundamental soul of a man-made creation that ends up expressing itself in successive outer
layers.”
As a result, the process of designing a product at Apple was integrally related to how it
would be engineered and manufactured. Ive described one of Apple’s Power Macs. “We
wanted to get rid of anything other than what was absolutely essential,” he said. “To do so
required total collaboration between the designers, the product developers, the engineers,
and the manufacturing team. We kept going back to the beginning, again and again. Do we
need that part? Can we get it to perform the function of the other four parts?”
The connection between the design of a product, its essence, and its manufacturing was
illustrated for Jobs and Ive when they were traveling in France and went into a kitchen
supply store. Ive picked up a knife he admired, but then put it down in disappointment.
Jobs did the same. “We both noticed a tiny bit of glue between the handle and the blade,”
Ive recalled. They talked about how the knife’s good design had been ruined by the way it
was manufactured. “We don’t like to think of our knives as being glued together,” Ive said.
“Steve and I care about things like that, which ruin the purity and detract from the essence
of something like a utensil, and we think alike about how products should be made to look
pure and seamless.”
At most other companies, engineering tends to drive design. The engineers set forth their
specifications and requirements, and the designers then come up with cases and shells that
will accommodate them. For Jobs, the process tended to work the other way. In the early
days of Apple, Jobs had approved the design of the case of the original Macintosh, and the
engineers had to make their boards and components fit.
After he was forced out, the process at Apple reverted to being engineer-driven. “Before
Steve came back, engineers would say ‘Here are the guts’—processor, hard drive—and
then it would go to the designers to put it in a box,” said Apple’s marketing chief Phil
Schiller. “When you do it that way, you come up with awful products.” But when Jobs
returned and forged his bond with Ive, the balance was again tilted toward the designers.
“Steve kept impressing on us that the design was integral to what would make us great,”
said Schiller. “Design once again dictated the engineering, not just vice versa.”
On occasion this could backfire, such as when Jobs and Ive insisted on using a solid
piece of brushed aluminum for the edge of the iPhone 4 even when the engineers worried
that it would compromise the antenna. But usually the distinctiveness of its designs—for
the iMac, the iPod, the iPhone, and the iPad—would set Apple apart and lead to its
triumphs in the years after Jobs returned.
Inside the Studio
The design studio where Jony Ive reigns, on the ground floor of Two Infinite Loop on the
Apple campus, is shielded by tinted windows and a heavy clad, locked door. Just inside is a
glass-booth reception desk where two assistants guard access. Even high-level Apple
employees are not allowed in without special permission. Most of my interviews with Jony
Ive for this book were held elsewhere, but one day in 2010 he arranged for me to spend an
afternoon touring the studio and talking about how he and Jobs collaborate there.
To the left of the entrance is a bullpen of desks with young designers; to the right is the
cavernous main room with six long steel tables for displaying and playing with works in
progress. Beyond the main room is a computer-aided design studio, filled with
workstations, that leads to a room with molding machines to turn what’s on the screens into
foam models. Beyond that is a robot-controlled spray-painting chamber to make the models
look real. The look is sparse and industrial, with metallic gray décor. Leaves from the trees
outside cast moving patterns of light and shadows on the tinted windows. Techno and jazz
play in the background.
Almost every day when Jobs was healthy and in the office, he would have lunch with Ive
and then wander by the studio in the afternoon. As he entered, he could survey the tables
and see the products in the pipeline, sense how they fit into Apple’s strategy, and inspect
with his fingertips the evolving design of each. Usually it was just the two of them alone,
while the other designers glanced up from their work but kept a respectful distance. If Jobs
had a specific issue, he might call over the head of mechanical design or another of Ive’s
deputies. If something excited him or sparked some thoughts about corporate strategy, he
might ask the chief operating officer Tim Cook or the marketing head Phil Schiller to come
over and join them. Ive described the usual process:
This great room is the one place in the company where you can look around and see
everything we have in the works. When Steve comes in, he will sit at one of these tables. If
we’re working on a new iPhone, for example, he might grab a stool and start playing with
different models and feeling them in his hands, remarking on which ones he likes best.
Then he will graze by the other tables, just him and me, to see where all the other products
are heading. He can get a sense of the sweep of the whole company, the iPhone and iPad,
the iMac and laptop and everything we’re considering. That helps him see where the
company is spending its energy and how things connect. And he can ask, “Does doing this
make sense, because over here is where we are growing a lot?” or questions like that. He
gets to see things in relationship to each other, which is pretty hard to do in a big company.
Looking at the models on these tables, he can see the future for the next three years.
Much of the design process is a conversation, a back-and-forth as we walk around the
tables and play with the models. He doesn’t like to read complex drawings. He wants to see
and feel a model. He’s right. I get surprised when we make a model and then realize it’s
rubbish, even though based on the CAD [computer-aided design] renderings it looked
great.
He loves coming in here because it’s calm and gentle. It’s a paradise if you’re a visual
person. There are no formal design reviews, so there are no huge decision points. Instead,
we can make the decisions fluid. Since we iterate every day and never have dumb-ass
presentations, we don’t run into major disagreements.
On this day Ive was overseeing the creation of a new European power plug and
connector for the Macintosh. Dozens of foam models, each with the tiniest variation, have
been cast and painted for inspection. Some would find it odd that the head of design would
fret over something like this, but Jobs got involved as well. Ever since he had a special
power supply made for the Apple II, Jobs has cared about not only the engineering but also
the design of such parts. His name is listed on the patent for the white power brick used by
the MacBook as well as its magnetic connector with its satisfying click. In fact he is listed
as one of the inventors for 212 different Apple patents in the United States as of the
beginning of 2011.
Ive and Jobs have even obsessed over, and patented, the packaging for various Apple
products. U.S. patent D558572, for example, granted on January 1, 2008, is for the iPod
Nano box, with four drawings showing how the device is nestled in a cradle when the box
is opened. Patent D596485, issued on July 21, 2009, is for the iPhone packaging, with its
sturdy lid and little glossy plastic tray inside.
Early on, Mike Markkula had taught Jobs to “impute”—to understand that people do
judge a book by its cover—and therefore to make sure all the trappings and packaging of
Apple signaled that there was a beautiful gem inside. Whether it’s an iPod Mini or a
MacBook Pro, Apple customers know the feeling of opening up the well-crafted box and
finding the product nestled in an inviting fashion. “Steve and I spend a lot of time on the
packaging,” said Ive. “I love the process of unpacking something. You design a ritual of
unpacking to make the product feel special. Packaging can be theater, it can create a story.”
Ive, who has the sensitive temperament of an artist, at times got upset with Jobs for
taking too much credit, a habit that has bothered other colleagues over the years. His
personal feelings for Jobs were so intense that at times he got easily bruised. “He will go
through a process of looking at my ideas and say, ‘That’s no good. That’s not very good. I
like that one,’” Ive said. “And later I will be sitting in the audience and he will be talking
about it as if it was his idea. I pay maniacal attention to where an idea comes from, and I
even keep notebooks filled with my ideas. So it hurts when he takes credit for one of my
designs.” Ive also has bristled when outsiders portrayed Jobs as the only ideas guy at
Apple. “That makes us vulnerable as a company,” Ive said earnestly, his voice soft. But
then he paused to recognize the role Jobs in fact played. “In so many other companies,
ideas and great design get lost in the process,” he said. “The ideas that come from me and
my team would have been completely irrelevant, nowhere, if Steve hadn’t been here to
push us, work with us, and drive through all the resistance to turn our ideas into products.”

next chapter

A Bug’s Life
When Apple developed the iMac, Jobs drove with Jony Ive to show it to the folks at Pixar.
He felt that the machine had the spunky personality that would appeal to the creators of
Buzz Lightyear and Woody, and he loved the fact that Ive and John Lasseter shared the
talent to connect art with technology in a playful way.
Pixar was a haven where Jobs could escape the intensity in Cupertino. At Apple, the
managers were often excitable and exhausted, Jobs tended to be volatile, and people felt
nervous about where they stood with him. At Pixar, the storytellers and illustrators seemed
more serene and behaved more gently, both with each other and even with Jobs. In other
words, the tone at each place was set at the top, by Jobs at Apple, but by Lasseter at Pixar.
Jobs reveled in the earnest playfulness of moviemaking and got passionate about the
algorithms that enabled such magic as allowing computer-generated raindrops to refract
sunbeams or blades of grass to wave in the wind. But he was able to restrain himself from
trying to control the creative process. It was at Pixar that he learned to let other creative
people flourish and take the lead. Largely it was because he loved Lasseter, a gentle artist
who, like Ive, brought out the best in Jobs.
Jobs’s main role at Pixar was deal making, in which his natural intensity was an asset.
Soon after the release of Toy Story, he clashed with Jeffrey Katzenberg, who had left
Disney in the summer of 1994 and joined with Steven Spielberg and David Geffen to start
DreamWorks SKG. Jobs believed that his Pixar team had told Katzenberg, while he was
still at Disney, about its proposed second movie, A Bug’s Life, and that he had then stolen
the idea of an animated insect movie when he decided to produce Antz at DreamWorks.
“When Jeffrey was still running Disney animation, we pitched him on A Bug’s Life,” Jobs
said. “In sixty years of animation history, nobody had thought of doing an animated movie
about insects, until Lasseter. It was one of his brilliant creative sparks. And Jeffrey left and
went to DreamWorks and all of a sudden had this idea for an animated movie about—Oh!
—insects. And he pretended he’d never heard the pitch. He lied. He lied through his teeth.”
Actually, not. The real story is a bit more interesting. Katzenberg never heard the Bug’s
Life pitch while at Disney. But after he left for DreamWorks, he stayed in touch with
Lasseter, occasionally pinging him with one of his typical “Hey buddy, how you doing just
checking in” quick phone calls. So when Lasseter happened to be at the Technicolor facility
on the Universal lot, where DreamWorks was also located, he called Katzenberg and
dropped by with a couple of colleagues. When Katzenberg asked what they were doing
next, Lasseter told him. “We described to him A Bug’s Life, with an ant as the main
character, and told him the whole story of him organizing the other ants and enlisting a
group of circus performer insects to fight off the grasshoppers,” Lasseter recalled. “I should
have been wary. Jeffrey kept asking questions about when it would be released.”
Lasseter began to get worried when, in early 1996, he heard rumors that DreamWorks
might be making its own computer-animated movie about ants. He called Katzenberg and
asked him point-blank. Katzenberg hemmed, hawed, and asked where Lasseter had heard
that. Lasseter asked again, and Katzenberg admitted it was true. “How could you?” yelled
Lasseter, who very rarely raised his voice.
“We had the idea long ago,” said Katzenberg, who explained that it had been pitched to
him by a development director at DreamWorks.
“I don’t believe you,” Lasseter replied.
Katzenberg conceded that he had sped up Antz as a way to counter his former colleagues
at Disney. DreamWorks’ first major picture was to be Prince of Egypt, which was
scheduled to be released for Thanksgiving 1998, and he was appalled when he heard that
Disney was planning to release Pixar’s A Bug’s Life that same weekend. So he had rushed
Antz into production to force Disney to change the release date of A Bug’s Life.
“Fuck you,” replied Lasseter, who did not normally use such language. He didn’t speak
to Katzenberg for another thirteen years.
Jobs was furious, and he was far more practiced than Lasseter at giving vent to his
emotions. He called Katzenberg and started yelling. Katzenberg made an offer: He would
delay production of Antz if Jobs and Disney would move A Bug’s Life so that it didn’t
compete with Prince of Egypt. “It was a blatant extortion attempt, and I didn’t go for it,”
Jobs recalled. He told Katzenberg there was nothing he could do to make Disney change
the release date.
“Of course you can,” Katzenberg replied. “You can move mountains. You taught me
how!” He said that when Pixar was almost bankrupt, he had come to its rescue by giving it
the deal to do Toy Story. “I was the one guy there for you back then, and now you’re
allowing them to use you to screw me.” He suggested that if Jobs wanted to, he could
simply slow down production on A Bug’s Life without telling Disney. If he did, Katzenberg
said, he would put Antz on hold. “Don’t even go there,” Jobs replied.
Katzenberg had a valid gripe. It was clear that Eisner and Disney were using the Pixar
movie to get back at him for leaving Disney and starting a rival animation studio. “Prince
of Egypt was the first thing we were making, and they scheduled something for our
announced release date just to be hostile,” he said. “My view was like that of the Lion
King, that if you stick your hand in my cage and paw me, watch out.”
No one backed down, and the rival ant movies provoked a press frenzy. Disney tried to
keep Jobs quiet, on the theory that playing up the rivalry would serve to help Antz, but he
was a man not easily muzzled. “The bad guys rarely win,” he told the Los Angeles Times.
In response, DreamWorks’ savvy marketing maven, Terry Press, suggested, “Steve Jobs
should take a pill.”
Antz was released at the beginning of October 1998. It was not a bad movie. Woody
Allen voiced the part of a neurotic ant living in a conformist society who yearns to express
his individualism. “This is the kind of Woody Allen comedy Woody Allen no longer
makes,” Time wrote. It grossed a respectable $91 million domestically and $172 million
worldwide.
A Bug’s Life came out six weeks later, as planned. It had a more epic plot, which reversed
Aesop’s tale of “The Ant and the Grasshopper,” plus a greater technical virtuosity, which
allowed such startling details as the view of grass from a bug’s vantage point. Time was
much more effusive about it. “Its design work is so stellar—a wide-screen Eden of leaves
and labyrinths populated by dozens of ugly, buggy, cuddly cutups—that it makes the
DreamWorks film seem, by comparison, like radio,” wrote Richard Corliss. It did twice as
well as Antz at the box office, grossing $163 million domestically and $363 million
worldwide. (It also beat Prince of Egypt.)
A few years later Katzenberg ran into Jobs and tried to smooth things over. He insisted
that he had never heard the pitch for A Bug’s Life while at Disney; if he had, his settlement
with Disney would have given him a share of the profits, so it’s not something he would lie
about. Jobs laughed, and accepted as much. “I asked you to move your release date, and
you wouldn’t, so you can’t be mad at me for protecting my child,” Katzenberg told him. He
recalled that Jobs “got really calm and Zen-like” and said he understood. But Jobs later said
that he never really forgave Katzenberg:
Our film toasted his at the box office. Did that feel good? No, it still felt awful, because
people started saying how everyone in Hollywood was doing insect movies. He took the
brilliant originality away from John, and that can never be replaced. That’s unconscionable,
so I’ve never trusted him, even after he tried to make amends. He came up to me after he
was successful with Shrek and said, “I’m a changed man, I’m finally at peace with myself,”
and all this crap. And it was like, give me a break, Jeffrey.
For his part, Katzenberg was much more gracious. He considered Jobs one of the “true
geniuses in the world,” and he learned to respect him despite their volatile dealings.
More important than beating Antz was showing that Pixar was not a one-hit wonder. A
Bug’s Life grossed as much as Toy Story had, proving that the first success was not a fluke.
“There’s a classic thing in business, which is the second-product syndrome,” Jobs later
said. It comes from not understanding what made your first product so successful. “I lived
through that at Apple. My feeling was, if we got through our second film, we’d make it.”
Steve’s Own Movie
Toy Story 2, which came out in November 1999, was even bigger, with a $485 million
gross worldwide. Given that Pixar’s success was now assured, it was time to start building
a showcase headquarters. Jobs and the Pixar facilities team found an abandoned Del Monte
fruit cannery in Emeryville, an industrial neighborhood between Berkeley and Oakland,
just across the Bay Bridge from San Francisco. They tore it down, and Jobs commissioned
Peter Bohlin, the architect of the Apple stores, to design a new building for the sixteen-acre
plot.
Jobs obsessed over every aspect of the new building, from the overall concept to the
tiniest detail regarding materials and construction. “Steve had this firm belief that the right
kind of building can do great things for a culture,” said Pixar’s president Ed Catmull. Jobs
controlled the creation of the building as if he were a director sweating each scene of a
film. “The Pixar building was Steve’s own movie,” Lasseter said.
Lasseter had originally wanted a traditional Hollywood studio, with separate buildings
for various projects and bungalows for development teams. But the Disney folks said they
didn’t like their new campus because the teams felt isolated, and Jobs agreed. In fact he
decided they should go to the other extreme: one huge building around a central atrium
designed to encourage random encounters.
Despite being a denizen of the digital world, or maybe because he knew all too well its
isolating potential, Jobs was a strong believer in face-to-face meetings. “There’s a
temptation in our networked age to think that ideas can be developed by email and iChat,”
he said. “That’s crazy. Creativity comes from spontaneous meetings, from random
discussions. You run into someone, you ask what they’re doing, you say ‘Wow,’ and soon
you’re cooking up all sorts of ideas.”
So he had the Pixar building designed to promote encounters and unplanned
collaborations. “If a building doesn’t encourage that, you’ll lose a lot of innovation and the
magic that’s sparked by serendipity,” he said. “So we designed the building to make people
get out of their offices and mingle in the central atrium with people they might not
otherwise see.” The front doors and main stairs and corridors all led to the atrium, the café
and the mailboxes were there, the conference rooms had windows that looked out onto it,
and the six-hundred-seat theater and two smaller screening rooms all spilled into it.
“Steve’s theory worked from day one,” Lasseter recalled. “I kept running into people I
hadn’t seen for months. I’ve never seen a building that promoted collaboration and
creativity as well as this one.”
Jobs even went so far as to decree that there be only two huge bathrooms in the building,
one for each gender, connected to the atrium. “He felt that very, very strongly,” recalled
Pam Kerwin, Pixar’s general manager. “Some of us felt that was going too far. One
pregnant woman said she shouldn’t be forced to walk for ten minutes just to go to the
bathroom, and that led to a big fight.” It was one of the few times that Lasseter disagreed
with Jobs. They reached a compromise: there would be two sets of bathrooms on either
side of the atrium on both of the two floors.
Because the building’s steel beams were going to be visible, Jobs pored over samples
from manufacturers across the country to see which had the best color and texture. He
chose a mill in Arkansas, told it to blast the steel to a pure color, and made sure the truckers
used caution not to nick any of it. He also insisted that all the beams be bolted together, not
welded. “We sandblasted the steel and clear-coated it, so you can actually see what it’s
like,” he recalled. “When the steelworkers were putting up the beams, they would bring
their families on the weekend to show them.”
The wackiest piece of serendipity was “The Love Lounge.” One of the animators found a
small door on the back wall when he moved into his office. It opened to a low corridor that
you could crawl through to a room clad in sheet metal that provided access to the airconditioning
valves. He and his colleagues commandeered the secret room, festooned it
with Christmas lights and lava lamps, and furnished it with benches upholstered in animal
prints, tasseled pillows, a fold-up cocktail table, liquor bottles, bar equipment, and napkins
that read “The Love Lounge.” A video camera installed in the corridor allowed occupants
to monitor who might be approaching.
Lasseter and Jobs brought important visitors there and had them sign the wall. The
signatures include Michael Eisner, Roy Disney, Tim Allen, and Randy Newman. Jobs loved
it, but since he wasn’t a drinker he sometimes referred to it as the Meditation Room. It
reminded him, he said, of the one that he and Daniel Kottke had at Reed, but without the
acid.
The Divorce
In testimony before a Senate committee in February 2002, Michael Eisner blasted the ads
that Jobs had created for Apple’s iTunes. “There are computer companies that have fullpage
ads and billboards that say: Rip, mix, burn,” he declared. “In other words, they can
create a theft and distribute it to all their friends if they buy this particular computer.”
This was not a smart comment. It misunderstood the meaning of “rip” and assumed it
involved ripping someone off, rather than importing files from a CD to a computer. More
significantly, it truly pissed off Jobs, as Eisner should have known. That too was not smart.
Pixar had recently released the fourth movie in its Disney deal, Monsters, Inc., which
turned out to be the most successful of them all, with $525 million in worldwide gross.
Disney’s Pixar deal was again coming up for renewal, and Eisner had not made it easier by
publicly poking a stick at his partner’s eye. Jobs was so incredulous he called a Disney
executive to vent: “Do you know what Michael just did to me?”
Eisner and Jobs came from different backgrounds and opposite coasts, but they were
similar in being strong-willed and without much inclination to find compromises. They
both had a passion for making good products, which often meant micromanaging details
and not sugarcoating their criticisms. Watching Eisner take repeated rides on the Wildlife
Express train through Disney World’s Animal Kingdom and coming up with smart ways to
improve the customer experience was like watching Jobs play with the interface of an iPod
and find ways it could be simplified. Watching them manage people was a less edifying
experience.
Both were better at pushing people than being pushed, which led to an unpleasant
atmosphere when they started trying to do it to each other. In a disagreement, they tended
to assert that the other party was lying. In addition, neither Eisner nor Jobs seemed to
believe that he could learn anything from the other; nor would it have occurred to either
even to fake a bit of deference by pretending to have anything to learn. Jobs put the onus on
Eisner:
The worst thing, to my mind, was that Pixar had successfully reinvented Disney’s
business, turning out great films one after the other while Disney turned out flop after flop.
You would think the CEO of Disney would be curious how Pixar was doing that. But
during the twenty-year relationship, he visited Pixar for a total of about two and a half
hours, only to give little congratulatory speeches. He was never curious. I was amazed.
Curiosity is very important.
That was overly harsh. Eisner had been up to Pixar a bit more than that, including visits
when Jobs wasn’t with him. But it was true that he showed little curiosity about the artistry
or technology at the studio. Jobs likewise didn’t spend much time trying to learn from
Disney’s management.
The open sniping between Jobs and Eisner began in the summer of 2002. Jobs had
always admired the creative spirit of the great Walt Disney, especially because he had
nurtured a company to last for generations. He viewed Walt’s nephew Roy as an
embodiment of this historic legacy and spirit. Roy was still on the Disney board, despite his
own growing estrangement from Eisner, and Jobs let him know that he would not renew the
Pixar-Disney deal as long as Eisner was still the CEO.
Roy Disney and Stanley Gold, his close associate on the Disney board, began warning
other directors about the Pixar problem. That prompted Eisner to send the board an
intemperate email in late August 2002. He was confident that Pixar would eventually renew
its deal, he said, partly because Disney had rights to the Pixar movies and characters that
had been made thus far. Plus, he said, Disney would be in a better negotiating position in a
year, after Pixar finished Finding Nemo. “Yesterday we saw for the second time the new
Pixar movie, Finding Nemo, that comes out next May,” he wrote. “This will be a reality
check for those guys. It’s okay, but nowhere near as good as their previous films. Of course
they think it is great.” There were two major problems with this email: It leaked to the Los
Angeles Times, provoking Jobs to go ballistic, and Eisner’s assessment of the movie was
wrong, very wrong.
Finding Nemo became Pixar’s (and Disney’s) biggest hit thus far. It easily beat out The
Lion King to become, for the time being, the most successful animated movie in history. It
grossed $340 million domestically and $868 million worldwide. Until 2010 it was also the
most popular DVD of all time, with forty million copies sold, and spawned some of the
most popular rides at Disney theme parks. In addition, it was a richly textured, subtle, and
deeply beautiful artistic achievement that won the Oscar for best animated feature. “I liked
the film because it was about taking risks and learning to let those you love take risks,”
Jobs said. Its success added $183 million to Pixar’s cash reserves, giving it a hefty war
chest of $521 million for the final showdown with Disney.
Shortly after Finding Nemo was finished, Jobs made Eisner an offer that was so onesided
it was clearly meant to be rejected. Instead of a fifty-fifty split on revenues, as in the
existing deal, Jobs proposed a new arrangement in which Pixar would own outright the
films it made and the characters in them, and it would merely pay Disney a 7.5% fee to
distribute the movies. Plus, the last two films under the existing deal—The Incredibles and
Cars were the ones in the works—would shift to the new distribution deal.
Eisner, however, held one powerful trump card. Even if Pixar didn’t renew, Disney had
the right to make sequels of Toy Story and the other movies that Pixar had made, and it
owned all the characters, from Woody to Nemo, just as it owned Mickey Mouse and
Donald Duck. Eisner was already planning—or threatening—to have Disney’s own
animation studio do a Toy Story 3, which Pixar had declined to do. “When you see what
that company did putting out Cinderella II, you shudder at what would have happened,”
Jobs said.
Eisner was able to force Roy Disney off the board in November 2003, but that didn’t end
the turmoil. Disney released a scathing open letter. “The company has lost its focus, its
creative energy, and its heritage,” he wrote. His litany of Eisner’s alleged failings included
not building a constructive relationship with Pixar. By this point Jobs had decided that he
no longer wanted to work with Eisner. So in January 2004 he publicly announced that he
was cutting off negotiations with Disney.
Jobs was usually disciplined in not making public the strong opinions that he shared with
friends around his Palo Alto kitchen table. But this time he did not hold back. In a
conference call with reporters, he said that while Pixar was producing hits, Disney
animation was making “embarrassing duds.” He scoffed at Eisner’s notion that Disney
made any creative contribution to the Pixar films: “The truth is there has been little creative
collaboration with Disney for years. You can compare the creative quality of our films with
the creative quality of Disney’s last three films and judge each company’s creative ability
yourselves.” In addition to building a better creative team, Jobs had pulled off the
remarkable feat of building a brand that was now as big a draw for moviegoers as Disney’s.
“We think the Pixar brand is now the most powerful and trusted brand in animation.” When
Jobs called to give him a heads-up, Roy Disney replied, “When the wicked witch is dead,
we’ll be together again.”
John Lasseter was aghast at the prospect of breaking up with Disney. “I was worried
about my children, what they would do with the characters we’d created,” he recalled. “It
was like a dagger to my heart.” When he told his top staff in the Pixar conference room, he
started crying, and he did so again when he addressed the eight hundred or so Pixar
employees gathered in the studio’s atrium. “It’s like you have these dear children and you
have to give them up to be adopted by convicted child molesters.” Jobs came to the atrium
stage next and tried to calm things down. He explained why it might be necessary to break
with Disney, and he assured them that Pixar as an institution had to keep looking forward to
be successful. “He has the absolute ability to make you believe,” said Oren Jacob, a
longtime technologist at the studio. “Suddenly, we all had the confidence that, whatever
happened, Pixar would flourish.”
Bob Iger, Disney’s chief operating officer, had to step in and do damage control. He was
as sensible and solid as those around him were volatile. His background was in television;
he had been president of the ABC Network, which was acquired in 1996 by Disney. His
reputation was as a corporate suit, and he excelled at deft management, but he also had a
sharp eye for talent, a good-humored ability to understand people, and a quiet flair that he
was secure enough to keep muted. Unlike Eisner and Jobs, he had a disciplined calm,
which helped him deal with large egos. “Steve did some grandstanding by announcing that
he was ending talks with us,” Iger later recalled. “We went into crisis mode, and I
developed some talking points to settle things down.”
Eisner had presided over ten great years at Disney, when Frank Wells served as his
president. Wells freed Eisner from many management duties so he could make his
suggestions, usually valuable and often brilliant, on ways to improve each movie project,
theme park ride, television pilot, and countless other products. But after Wells was killed in
a helicopter crash in 1994, Eisner never found the right manager. Katzenberg had
demanded Wells’s job, which is why Eisner ousted him. Michael Ovitz became president in
1995; it was not a pretty sight, and he was gone in less than two years. Jobs later offered his
assessment:
For his first ten years as CEO, Eisner did a really good job. For the last ten years, he
really did a bad job. And the change came when Frank Wells died. Eisner is a really good
creative guy. He gives really good notes. So when Frank was running operations, Eisner
could be like a bumblebee going from project to project trying to make them better. But
when Eisner had to run things, he was a terrible manager. Nobody liked working for him.
They felt they had no authority. He had this strategic planning group that was like the
Gestapo, in that you couldn’t spend any money, not even a dime, without them approving
it. Even though I broke with him, I had to respect his achievements in the first ten years.
And there was a part of him I actually liked. He’s a fun guy to be around at times—smart,
witty. But he had a dark side to him. His ego got the better of him. Eisner was reasonable
and fair to me at first, but eventually, over the course of dealing with him for a decade, I
came to see a dark side to him.
Eisner’s biggest problem in 2004 was that he did not fully fathom how messed up his
animation division was. Its two most recent movies, Treasure Planet and Brother Bear, did
no honor to the Disney legacy, or to its balance sheets. Hit animation movies were the
lifeblood of the company; they spawned theme park rides, toys, and television shows. Toy
Story had led to a movie sequel, a Disney on Ice show, a Toy Story Musical performed on
Disney cruise ships, a direct-to-video film featuring Buzz Lightyear, a computer storybook,
two video games, a dozen action toys that sold twenty-five million units, a clothing line,
and nine different attractions at Disney theme parks. This was not the case for Treasure
Planet.
“Michael didn’t understand that Disney’s problems in animation were as acute as they
were,” Iger later explained. “That manifested itself in the way he dealt with Pixar. He never
felt he needed Pixar as much as he really did.” In addition, Eisner loved to negotiate and
hated to compromise, which was not always the best combination when dealing with Jobs,
who was the same way. “Every negotiation needs to be resolved by compromises,” Iger
said. “Neither one of them is a master of compromise.”
The impasse was ended on a Saturday night in March 2005, when Iger got a phone call
from former senator George Mitchell and other Disney board members. They told him that,
starting in a few months, he would replace Eisner as Disney’s CEO. When Iger got up the
next morning, he called his daughters and then Steve Jobs and John Lasseter. He said, very
simply and clearly, that he valued Pixar and wanted to make a deal. Jobs was thrilled. He
liked Iger and even marveled at a small connection they had: his former girlfriend Jennifer
Egan and Iger’s wife, Willow Bay, had been roommates at Penn.
That summer, before Iger officially took over, he and Jobs got to have a trial run at
making a deal. Apple was coming out with an iPod that would play video as well as music.
It needed television shows to sell, and Jobs did not want to be too public in negotiating for
them because, as usual, he wanted the product to be secret until he unveiled it onstage. Iger,
who had multiple iPods and used them throughout the day, from his 5 a.m. workouts to late
at night, had already been envisioning what it could do for television shows. So he
immediately offered ABC’s most popular shows, Desperate Housewives and Lost. “We
negotiated that deal in a week, and it was complicated,” Iger said. “It was important
because Steve got to see how I worked, and because it showed everyone that Disney could
in fact work with Steve.”
For the announcement of the video iPod, Jobs rented a theater in San Jose, and he invited
Iger to be his surprise guest onstage. “I had never been to one of his announcements, so I
had no idea what a big deal it was,” Iger recalled. “It was a real breakthrough for our
relationship. He saw I was pro-technology and willing to take risks.” Jobs did his usual
virtuoso performance, running through all the features of the new iPod, how it was “one of
the best things we’ve ever done,” and how the iTunes Store would now be selling music
videos and short films. Then, as was his habit, he ended with “And yes, there is one more
thing:” The iPod would be selling TV shows. There was huge applause. He mentioned that
the two most popular shows were on ABC. “And who owns ABC? Disney! I know these
guys,” he exulted.
When Iger then came onstage, he looked as relaxed and as comfortable as Jobs. “One of
the things that Steve and I are incredibly excited about is the intersection between great
content and great technology,” he said. “It’s great to be here to announce an extension of
our relation with Apple,” he added. Then, after the proper pause, he said, “Not with Pixar,
but with Apple.”
But it was clear from their warm embrace that a new Pixar-Disney deal was once again
possible. “It signaled my way of operating, which was ‘Make love not war,’” Iger recalled.
“We had been at war with Roy Disney, Comcast, Apple, and Pixar. I wanted to fix all that,
Pixar most of all.”
Iger had just come back from opening the new Disneyland in Hong Kong, with Eisner at
his side in his last big act as CEO. The ceremonies included the usual Disney parade down
Main Street. Iger realized that the only characters in the parade that had been created in the
past decade were Pixar’s. “A lightbulb went off,” he recalled. “I’m standing next to
Michael, but I kept it completely to myself, because it was such an indictment of his
stewardship of animation during that period. After ten years of The Lion King, Beauty and
the Beast, and Aladdin, there were then ten years of nothing.”
Iger went back to Burbank and had some financial analysis done. He discovered that
they had actually lost money on animation in the past decade and had produced little that
helped ancillary products. At his first meeting as the new CEO, he presented the analysis to
the board, whose members expressed some anger that they had never been told this. “As
animation goes, so goes our company,” he told the board. “A hit animated film is a big
wave, and the ripples go down to every part of our business—from characters in a parade,
to music, to parks, to video games, TV, Internet, consumer products. If I don’t have wave
makers, the company is not going to succeed.” He presented them with some choices. They
could stick with the current animation management, which he didn’t think would work.
They could get rid of management and find someone else, but he said he didn’t know who
that would be. Or they could buy Pixar. “The problem is, I don’t know if it’s for sale, and if
it is, it’s going to be a huge amount of money,” he said. The board authorized him to
explore a deal.
Iger went about it in an unusual way. When he first talked to Jobs, he admitted the
revelation that had occurred to him in Hong Kong and how it convinced him that Disney
badly needed Pixar. “That’s why I just loved Bob Iger,” recalled Jobs. “He just blurted it
out. Now that’s the dumbest thing you can do as you enter a negotiation, at least according
to the traditional rule book. He just put his cards out on the table and said, ‘We’re screwed.’
I immediately liked the guy, because that’s how I worked too. Let’s just immediately put all
the cards on the table and see where they fall.” (In fact that was not usually Jobs’s mode of
operation. He often began negotiations by proclaiming that the other company’s products or
services sucked.)
Jobs and Iger took a lot of walks—around the Apple campus, in Palo Alto, at the Allen
and Co. retreat in Sun Valley. At first they came up with a plan for a new distribution deal:
Pixar would get back all the rights to the movies and characters it had already produced in
return for Disney’s getting an equity stake in Pixar, and it would pay Disney a simple fee to
distribute its future movies. But Iger worried that such a deal would simply set Pixar up as
a competitor to Disney, which would be bad even if Disney had an equity stake in it. So he
began to hint that maybe they should actually do something bigger. “I want you to know
that I am really thinking out of the box on this,” he said. Jobs seemed to encourage the
advances. “It wasn’t too long before it was clear to both of us that this discussion might
lead to an acquisition discussion,” Jobs recalled.
But first Jobs needed the blessing of John Lasseter and Ed Catmull, so he asked them to
come over to his house. He got right to the point. “We need to get to know Bob Iger,” he
told them. “We may want to throw in with him and to help him remake Disney. He’s a great
guy.” They were skeptical at first. “He could tell we were pretty shocked,” Lasseter
recalled.
“If you guys don’t want to do it, that’s fine, but I want you to get to know Iger before
you decide,” Jobs continued. “I was feeling the same as you, but I’ve really grown to like
the guy.” He explained how easy it had been to make the deal to put ABC shows on the
iPod, and added, “It’s night and day different from Eisner’s Disney. He’s straightforward,
and there’s no drama with him.” Lasseter remembers that he and Catmull just sat there with
their mouths slightly open.
Iger went to work. He flew from Los Angeles to Lasseter’s house for dinner, and stayed
up well past midnight talking. He also took Catmull out to dinner, and then he visited Pixar
Studios, alone, with no entourage and without Jobs. “I went out and met all the directors
one on one, and they each pitched me their movie,” he said. Lasseter was proud of how
much his team impressed Iger, which of course made him warm up to Iger. “I never had
more pride in Pixar than that day,” he said. “All the teams and pitches were amazing, and
Bob was blown away.”
Indeed after seeing what was coming up over the next few years—Cars, Ratatouille,
WALL-E—Iger told his chief financial officer at Disney, “Oh my God, they’ve got great
stuff. We’ve got to get this deal done. It’s the future of the company.” He admitted that he
had no faith in the movies that Disney animation had in the works.
The deal they proposed was that Disney would purchase Pixar for $7.4 billion in stock.
Jobs would thus become Disney’s largest shareholder, with approximately 7% of the
company’s stock compared to 1.7% owned by Eisner and 1% by Roy Disney. Disney
Animation would be put under Pixar, with Lasseter and Catmull running the combined unit.
Pixar would retain its independent identity, its studio and headquarters would remain in
Emeryville, and it would even keep its own email addresses.
Iger asked Jobs to bring Lasseter and Catmull to a secret meeting of the Disney board in
Century City, Los Angeles, on a Sunday morning. The goal was to make them feel
comfortable with what would be a radical and expensive deal. As they prepared to take the
elevator from the parking garage, Lasseter said to Jobs, “If I start getting too excited or go
on too long, just touch my leg.” Jobs ended up having to do it once, but otherwise Lasseter
made the perfect sales pitch. “I talked about how we make films, what our philosophies are,
the honesty we have with each other, and how we nurture the creative talent,” he recalled.
The board asked a lot of questions, and Jobs let Lasseter answer most. But Jobs did talk
about how exciting it was to connect art with technology. “That’s what our culture is all
about, just like at Apple,” he said.
Before the Disney board got a chance to approve the merger, however, Michael Eisner
arose from the departed to try to derail it. He called Iger and said it was far too expensive.
“You can fix animation yourself,” Eisner told him. “How?” asked Iger. “I know you can,”
said Eisner. Iger got a bit annoyed. “Michael, how come you say I can fix it, when you
couldn’t fix it yourself?” he asked.
Eisner said he wanted to come to a board meeting, even though he was no longer a
member or an officer, and speak against the acquisition. Iger resisted, but Eisner called
Warren Buffett, a big shareholder, and George Mitchell, who was the lead director. The
former senator convinced Iger to let Eisner have his say. “I told the board that they didn’t
need to buy Pixar because they already owned 85% of the movies Pixar had already made,”
Eisner recounted. He was referring to the fact that for the movies already made, Disney was
getting that percentage of the gross, plus it had the rights to make all the sequels and
exploit the characters. “I made a presentation that said, here’s the 15% of Pixar that Disney
does not already own. So that’s what you’re getting. The rest is a bet on future Pixar films.”
Eisner admitted that Pixar had been enjoying a good run, but he said it could not continue.
“I showed the history of producers and directors who had X number of hits in a row and
then failed. It happened to Spielberg, Walt Disney, all of them.” To make the deal worth it,
he calculated, each new Pixar movie would have to gross $1.3 billion. “It drove Steve crazy
that I knew that,” Eisner later said.
After he left the room, Iger refuted his argument point by point. “Let me tell you what
was wrong with that presentation,” he began. When the board had finished hearing them
both, it approved the deal Iger proposed.
Iger flew up to Emeryville to meet Jobs and jointly announce the deal to the Pixar
workers. But before they did, Jobs sat down alone with Lasseter and Catmull. “If either of
you have doubts,” he said, “I will just tell them no thanks and blow off this deal.” He
wasn’t totally sincere. It would have been almost impossible to do so at that point. But it
was a welcome gesture. “I’m good,” said Lasseter. “Let’s do it.” Catmull agreed. They all
hugged, and Jobs wept.
Everyone then gathered in the atrium. “Disney is buying Pixar,” Jobs announced. There
were a few tears, but as he explained the deal, the staffers began to realize that in some
ways it was a reverse acquisition. Catmull would be the head of Disney animation, Lasseter
its chief creative officer. By the end they were cheering. Iger had been standing on the side,
and Jobs invited him to center stage. As he talked about the special culture of Pixar and
how badly Disney needed to nurture it and learn from it, the crowd broke into applause.
“My goal has always been not only to make great products, but to build great companies,”
Jobs later said. “Walt Disney did that. And the way we did the merger, we kept Pixar as a
great company and helped Disney remain one as well.”