Competition

When IBM introduced its personal computer in August 1981, Jobs had his team buy one and dissect it. Their consensus was that it sucked. Chris Espinosa called it “a half-assed, hackneyed attempt,” and there was some truth to that. It used old-fashioned command-line prompts and didn’t support bitmapped graphical displays. Apple became cocky, not realizing that corporate technology managers might feel more comfortable buying from an established company like IBM rather than one named after a piece of fruit. Bill Gates happened to be visiting Apple headquarters for a meeting on the day the IBM PC was announced. “They didn’t seem to care,” he said. “It took them a year to realize what had happened.”

Reflecting its cheeky confidence, Apple took out a full-page ad in the Wall Street Journal with the headline “Welcome, IBM. Seriously.” It cleverly positioned the upcoming computer battle as a two-way contest between the spunky and rebellious Apple and the establishment Goliath IBM, conveniently relegating to irrelevance companies such as Commodore, Tandy, and Osborne that were doing just as well as Apple.

Throughout his career, Jobs liked to see himself as an enlightened rebel pitted against evil empires, a Jedi warrior or Buddhist samurai fighting the forces of darkness. IBM was his perfect foil. He cleverly cast the upcoming battle not as a mere business competition, but as a spiritual struggle. “If, for some reason, we make some giant mistakes and IBM wins, my personal feeling is that we are going to enter sort of a computer Dark Ages for about twenty years,” he told an interviewer. “Once IBM gains control of a market sector, they almost always stop innovation.” Even thirty years later, reflecting back on the competition, Jobs cast it as a holy crusade: “IBM was essentially Microsoft at its worst. They were not a force for innovation; they were a force for evil. They were like ATT or Microsoft or Google is.”

Unfortunately for Apple, Jobs also took aim at another perceived competitor to his Macintosh: the company’s own Lisa. Partly it was psychological. He had been ousted from that group, and now he wanted to beat it. He also saw healthy rivalry as a way to motivate his troops. That’s why he bet John Couch $5,000 that the Mac would ship before the Lisa. The problem was that the rivalry became unhealthy. Jobs repeatedly portrayed his band of engineers as the cool kids on the block, in contrast to the plodding HP engineer types working on the Lisa.

More substantively, when he moved away from Jef Raskin’s plan for an inexpensive and underpowered portable appliance and reconceived the Mac as a desktop machine with a graphical user interface, it became a scaled-down version of the Lisa that would likely undercut it in the marketplace.

Larry Tesler, who managed application software for the Lisa, realized that it would be important to design both machines to use many of the same software programs. So to broker peace, he arranged for Smith and Hertzfeld to come to the Lisa work space and demonstrate the Mac prototype. Twenty-five engineers showed up and were listening politely when, halfway into the presentation, the door burst open. It was Rich Page, a volatile engineer who was responsible for much of the Lisa’s design. “The Macintosh is going to destroy the Lisa!” he shouted. “The Macintosh is going to ruin Apple!” Neither Smith nor Hertzfeld responded, so Page continued his rant. “Jobs wants to destroy Lisa because we wouldn’t let him control it,” he said, looking as if he were about to cry. “Nobody’s going to buy a Lisa because they know the Mac is coming! But you don’t care!” He stormed out of the room and slammed the door, but a moment later he barged back in briefly. “I know it’s not your fault,” he said to Smith and Hertzfeld. “Steve Jobs is the problem. Tell Steve that he’s destroying Apple!”

Jobs did indeed make the Macintosh into a low-cost competitor to the Lisa, one with incompatible software. Making matters worse was that neither machine was compatible with the Apple II. With no one in overall charge at Apple, there was no chance of keeping Jobs in harness.

End-to-end Control

Jobs’s reluctance to make the Mac compatible with the architecture of the Lisa was motivated by more than rivalry or revenge. There was a philosophical component, one that was related to his penchant for control. He believed that for a computer to be truly great, its hardware and its software had to be tightly linked. When a computer was open to running software that also worked on other computers, it would end up sacrificing some functionality. The best products, he believed, were “whole widgets” that were designed end-to-end, with the software closely tailored to the hardware and vice versa. This is what would distinguish the Macintosh, which had an operating system that worked only on its own hardware, from the environment that Microsoft was creating, in which its operating system could be used on hardware made by many different companies.

“Jobs is a strong-willed, elitist artist who doesn’t want his creations mutated inauspiciously by unworthy programmers,” explained ZDNet’s editor Dan Farber. “It would be as if someone off the street added some brush strokes to a Picasso painting or changed the lyrics to a Dylan song.” In later years Jobs’s whole-widget approach would distinguish the iPhone, iPod, and iPad from their competitors. It resulted in awesome products. But it was not always the best strategy for dominating a market. “From the first Mac to the latest iPhone, Jobs’s systems have always been sealed shut to prevent consumers from meddling and modifying them,” noted Leander Kahney, author of Cult of the Mac.

Jobs’s desire to control the user experience had been at the heart of his debate with Wozniak over whether the Apple II would have slots that allow a user to plug expansion cards into a computer’s motherboard and thus add some new functionality. Wozniak won that argument: The Apple II had eight slots. But this time around it would be Jobs’s machine, not Wozniak’s, and the Macintosh would have limited slots. You wouldn’t even be able to open the case and get to the motherboard. For a hobbyist or hacker, that was uncool. But for Jobs, the Macintosh was for the masses. He wanted to give them a controlled experience.

“It reflects his personality, which is to want control,” said Berry Cash, who was hired by Jobs in 1982 to be a market strategist at Texaco Towers. “Steve would talk about the Apple II and complain, ‘We don’t have control, and look at all these crazy things people are trying to do to it. That’s a mistake I’ll never make again.’” He went so far as to design special tools so that the Macintosh case could not be opened with a regular screwdriver. “We’re going to design this thing so nobody but Apple employees can get inside this box,” he told Cash.

Jobs also decided to eliminate the cursor arrow keys on the Macintosh keyboard. The only way to move the cursor was to use the mouse. It was a way of forcing old-fashioned users to adapt to point-and-click navigation, even if they didn’t want to. Unlike other product developers, Jobs did not believe the customer was always right; if they wanted to resist using a mouse, they were wrong.

There was one other advantage, he believed, to eliminating the cursor keys: It forced outside software developers to write programs specially for the Mac operating system, rather than merely writing generic software that could be ported to a variety of computers. That made for the type of tight vertical integration between application software, operating systems, and hardware devices that Jobs liked.

Jobs’s desire for end-to-end control also made him allergic to proposals that Apple license the Macintosh operating system to other office equipment manufacturers and allow them to make Macintosh clones. The new and energetic Macintosh marketing director Mike Murray proposed a licensing program in a confidential memo to Jobs in May 1982. “We would like the Macintosh user environment to become an industry standard,” he wrote. “The hitch, of course, is that now one must buy Mac hardware in order to get this user environment. Rarely (if ever) has one company been able to create and maintain an industry-wide standard that cannot be shared with other manufacturers.” His proposal was to license the Macintosh operating system to Tandy. Because Tandy’s Radio Shack stores went after a different type of customer, Murray argued, it would not severely cannibalize Apple sales. But Jobs was congenitally averse to such a plan. His approach meant that the Macintosh remained a controlled environment that met his standards, but it also meant that, as Murray feared, it would have trouble securing its place as an industry standard in a world of IBM clones.

Machines of the Year

As 1982 drew to a close, Jobs came to believe that he was going to be Time’s Man of the Year. He arrived at Texaco Towers one day with the magazine’s San Francisco bureau chief, Michael Moritz, and encouraged colleagues to give Moritz interviews. But Jobs did not end up on the cover. Instead the magazine chose “the Computer” as the topic for the year-end issue and called it “the Machine of the Year.”

Accompanying the main story was a profile of Jobs, which was based on the reporting done by Moritz and written by Jay Cocks, an editor who usually handled rock music for the magazine. “With his smooth sales pitch and a blind faith that would have been the envy of the early Christian martyrs, it is Steven Jobs, more than anyone, who kicked open the door and let the personal computer move in,” the story proclaimed. It was a richly reported piece, but also harsh at times—so harsh that Moritz (after he wrote a book about Apple and went on to be a partner in the venture firm Sequoia Capital with Don Valentine) repudiated it by complaining that his reporting had been “siphoned, filtered, and poisoned with gossipy benzene by an editor in New York whose regular task was to chronicle the wayward world of rock-and-roll music.” The article quoted Bud Tribble on Jobs’s “reality distortion field” and noted that he “would occasionally burst into tears at meetings.” Perhaps the best quote came from Jef Raskin. Jobs, he declared, “would have made an excellent King of France.”

To Jobs’s dismay, the magazine made public the existence of the daughter he had forsaken, Lisa Brennan. He knew that Kottke had been the one to tell the magazine about Lisa, and he berated him in the Mac group work space in front of a half dozen people. “When the Time reporter asked me if Steve had a daughter named Lisa, I said ‘Of course,’” Kottke recalled. “Friends don’t let friends deny that they’re the father of a child. I’m not going to let my friend be a jerk and deny paternity. He was really angry and felt violated and told me in front of everyone that I had betrayed him.”

But what truly devastated Jobs was that he was not, after all, chosen as the Man of the Year. As he later told me:

Time decided they were going to make me Man of the Year, and I was twenty-seven, so I actually cared about stuff like that. I thought it was pretty cool. They sent out Mike Moritz to write a story. We’re the same age, and I had been very successful, and I could tell he was jealous and there was an edge to him. He wrote this terrible hatchet job. So the editors in New York get this story and say, “We can’t make this guy Man of the Year.” That really hurt. But it was a good lesson. It taught me to never get too excited about things like that, since the media is a circus anyway. They FedExed me the magazine, and I remember opening the package, thoroughly expecting to see my mug on the cover, and it was this computer sculpture thing. I thought, “Huh?” And then I read the article, and it was so awful that I actually cried.

In fact there’s no reason to believe that Moritz was jealous or that he intended his reporting to be unfair. Nor was Jobs ever slated to be Man of the Year, despite what he thought. That year the top editors (I was then a junior editor there) decided early on to go with the computer rather than a person, and they commissioned, months in advance, a piece of art from the famous sculptor George Segal to be a gatefold cover image. Ray Cave was then the magazine’s editor. “We never considered Jobs,” he said. “You couldn’t personify the computer, so that was the first time we decided to go with an inanimate object. We never searched around for a face to be put on the cover.”

Apple launched the Lisa in January 1983—a full year before the Mac was ready—and Jobs paid his $5,000 wager to Couch. Even though he was not part of the Lisa team, Jobs went to New York to do publicity for it in his role as Apple’s chairman and poster boy.

He had learned from his public relations consultant Regis McKenna how to dole out exclusive interviews in a dramatic manner. Reporters from anointed publications were ushered in sequentially for their hour with him in his Carlyle Hotel suite, where a Lisa computer was set on a table and surrounded by cut flowers. The publicity plan called for Jobs to focus on the Lisa and not mention the Macintosh, because speculation about it could undermine the Lisa. But Jobs couldn’t help himself. In most of the stories based on his interviews that day—in Time, Business Week, the Wall Street Journal, and Fortune—the Macintosh was mentioned. “Later this year Apple will introduce a less powerful, less expensive version of Lisa, the Macintosh,” Fortune reported. “Jobs himself has directed that project.” Business Week quoted him as saying, “When it comes out, Mac is going to be the most incredible computer in the world.” He also admitted that the Mac and the Lisa would not be compatible. It was like launching the Lisa with the kiss of death.

The Lisa did indeed die a slow death. Within two years it would be discontinued. “It was too expensive, and we were trying to sell it to big companies when our expertise was selling to consumers,” Jobs later said. But there was a silver lining for Jobs: Within months of Lisa’s launch, it became clear that Apple had to pin its hopes on the Macintosh instead.

Let’s Be Pirates!

As the Macintosh team grew, it moved from Texaco Towers to the main Apple buildings on Bandley Drive, finally settling in mid-1983 into Bandley 3. It had a modern atrium lobby with video games, which Burrell Smith and Andy Hertzfeld chose, and a Toshiba compact disc stereo system with MartinLogan speakers and a hundred CDs. The software team was visible from the lobby in a fishbowl-like glass enclosure, and the kitchen was stocked daily with Odwalla juices. Over time the atrium attracted even more toys, most notably a B?sendorfer piano and a BMW motorcycle that Jobs felt would inspire an obsession with lapidary craftsmanship.

Jobs kept a tight rein on the hiring process. The goal was to get people who were creative, wickedly smart, and slightly rebellious. The software team would make applicants play Defender, Smith’s favorite video game. Jobs would ask his usual offbeat questions to see how well the applicant could think in unexpected situations. One day he, Hertzfeld, and Smith interviewed a candidate for software manager who, it became clear as soon as he walked in the room, was too uptight and conventional to manage the wizards in the fishbowl. Jobs began to toy with him mercilessly. “How old were you when you lost your virginity?” he asked.

The candidate looked baffled. “What did you say?”

“Are you a virgin?” Jobs asked. The candidate sat there flustered, so Jobs changed the subject. “How many times have you taken LSD?” Hertzfeld recalled, “The poor guy was turning varying shades of red, so I tried to change the subject and asked a straightforward technical question.” But when the candidate droned on in his response, Jobs broke in. “Gobble, gobble, gobble, gobble,” he said, cracking up Smith and Hertzfeld.

“I guess I’m not the right guy,” the poor man said as he got up to leave.

For all of his obnoxious behavior, Jobs also had the ability to instill in his team an esprit de corps. After tearing people down, he would find ways to lift them up and make them feel that being part of the Macintosh project was an amazing mission. Every six months he would take most of his team on a two-day retreat at a nearby resort.

The retreat in September 1982 was at the Pajaro Dunes near Monterey. Fifty or so members of the Mac division sat in the lodge facing a fireplace. Jobs sat on top of a table in front of them. He spoke quietly for a while, then walked to an easel and began posting his thoughts.

The first was “Don’t compromise.” It was an injunction that would, over time, be both helpful and harmful. Most technology teams made trade-offs. The Mac, on the other hand, would end up being as “insanely great” as Jobs and his acolytes could possibly make it—but it would not ship for another sixteen months, way behind schedule. After mentioning a scheduled completion date, he told them, “It would be better to miss than to turn out the wrong thing.” A different type of project manager, willing to make some trade-offs, might try to lock in dates after which no changes could be made. Not Jobs. He displayed another maxim: “It’s not done until it ships.”

Another chart contained a koōan-like phrase that he later told me was his favorite maxim: “The journey is the reward.” The Mac team, he liked to emphasize, was a special corps with an exalted mission. Someday they would all look back on their journey together and, forgetting or laughing off the painful moments, would regard it as a magical high point in their lives.

At the end of the presentation someone asked whether he thought they should do some market research to see what customers wanted. “No,” he replied, “because customers don’t know what they want until we’ve shown them.” Then he pulled out a device that was about the size of a desk diary. “Do you want to see something neat?” When he flipped it open, it turned out to be a mock-up of a computer that could fit on your lap, with a keyboard and screen hinged together like a notebook. “This is my dream of what we will be making in the mid-to late eighties,” he said. They were building a company that would invent the future.

For the next two days there were presentations by various team leaders and the influential computer industry analyst Ben Rosen, with a lot of time in the evenings for pool parties and dancing. At the end, Jobs stood in front of the assemblage and gave a soliloquy. “As every day passes, the work fifty people are doing here is going to send a giant ripple through the universe,” he said. “I know I might be a little hard to get along with, but this is the most fun thing I’ve done in my life.” Years later most of those in the audience would be able to laugh about the “little hard to get along with” episodes and agree with him that creating that giant ripple was the most fun they had in their lives.

The next retreat was at the end of January 1983, the same month the Lisa launched, and there was a shift in tone. Four months earlier Jobs had written on his flip chart: “Don’t compromise.” This time one of the maxims was “Real artists ship.” Nerves were frayed. Atkinson had been left out of the publicity interviews for the Lisa launch, and he marched into Jobs’s hotel room and threatened to quit. Jobs tried to minimize the slight, but Atkinson refused to be mollified. Jobs got annoyed. “I don’t have time to deal with this now,” he said. “I have sixty other people out there who are pouring their hearts into the Macintosh, and they’re waiting for me to start the meeting.” With that he brushed past Atkinson to go address the faithful.

Jobs proceeded to give a rousing speech in which he claimed that he had resolved the dispute with McIntosh audio labs to use the Macintosh name. (In fact the issue was still being negotiated, but the moment called for a bit of the old reality distortion field.) He pulled out a bottle of mineral water and symbolically christened the prototype onstage. Down the hall, Atkinson heard the loud cheer, and with a sigh joined the group. The ensuing party featured skinny-dipping in the pool, a bonfire on the beach, and loud music that lasted all night, which caused the hotel, La Playa in Carmel, to ask them never to come back.

Another of Jobs’s maxims at the retreat was “It’s better to be a pirate than to join the navy.” He wanted to instill a rebel spirit in his team, to have them behave like swashbucklers who were proud of their work but willing to commandeer from others. As Susan Kare put it, “He meant, ‘Let’s have a renegade feeling to our group. We can move fast. We can get things done.’” To celebrate Jobs’s birthday a few weeks later, the team paid for a billboard on the road to Apple headquarters. It read: “Happy 28th Steve. The Journey is the Reward.—The Pirates.”

One of the Mac team’s programmers, Steve Capps, decided this new spirit warranted hoisting a Jolly Roger. He cut a patch of black cloth and had Kare paint a skull and crossbones on it. The eye patch she put on the skull was an Apple logo. Late one Sunday night Capps climbed to the roof of their newly built Bandley 3 building and hoisted the flag on a scaffolding pole that the construction workers had left behind. It waved proudly for a few weeks, until members of the Lisa team, in a late-night foray, stole the flag and sent their Mac rivals a ransom note. Capps led a raid to recover it and was able to wrestle it from a secretary who was guarding it for the Lisa team. Some of the grown-ups overseeing Apple worried that Jobs’s buccaneer spirit was getting out of hand. “Flying that flag was really stupid,” said Arthur Rock. “It was telling the rest of the company they were no good.” But Jobs loved it, and he made sure it waved proudly all the way through to the completion of the Mac project. “We were the renegades, and we wanted people to know it,” he recalled.

Veterans of the Mac team had learned that they could stand up to Jobs. If they knew what they were talking about, he would tolerate the pushback, even admire it. By 1983 those most familiar with his reality distortion field had discovered something further: They could, if necessary, just quietly disregard what he decreed. If they turned out to be right, he would appreciate their renegade attitude and willingness to ignore authority. After all, that’s what he did.

By far the most important example of this involved the choice of a disk drive for the Macintosh. Apple had a corporate division that built mass-storage devices, and it had developed a disk-drive system, code-named Twiggy, that could read and write onto those thin, delicate 5?-inch floppy disks that older readers (who also remember Twiggy the model) will recall. But by the time the Lisa was ready to ship in the spring of 1983, it was clear that the Twiggy was buggy. Because the Lisa also came with a hard-disk drive, this was not a complete disaster. But the Mac had no hard disk, so it faced a crisis. “The Mac team was beginning to panic,” said Hertzfeld. “We were using a single Twiggy drive, and we didn’t have a hard disk to fall back on.”

The team discussed the problem at the January 1983 retreat, and Debi Coleman gave Jobs data about the Twiggy failure rate. A few days later he drove to Apple’s factory in San Jose to see the Twiggy being made. More than half were rejected. Jobs erupted. With his face flushed, he began shouting and sputtering about firing everyone who worked there. Bob Belleville, the head of the Mac engineering team, gently guided him to the parking lot, where they could take a walk and talk about alternatives.

One possibility that Belleville had been exploring was to use a new 3?-inch disk drive that Sony had developed. The disk was cased in sturdier plastic and could fit into a shirt pocket. Another option was to have a clone of Sony’s 3?-inch disk drive manufactured by a smaller Japanese supplier, the Alps Electronics Co., which had been supplying disk drives for the Apple II. Alps had already licensed the technology from Sony, and if they could build their own version in time it would be much cheaper.

Jobs and Belleville, along with Apple veteran Rod Holt (the guy Jobs enlisted to design the first power supply for the Apple II), flew to Japan to figure out what to do. They took the bullet train from Tokyo to visit the Alps facility. The engineers there didn’t even have a working prototype, just a crude model. Jobs thought it was great, but Belleville was appalled. There was no way, he thought, that Alps could have it ready for the Mac within a year.

As they proceeded to visit other Japanese companies, Jobs was on his worst behavior. He wore jeans and sneakers to meetings with Japanese managers in dark suits. When they formally handed him little gifts, as was the custom, he often left them behind, and he never reciprocated with gifts of his own. He would sneer when rows of engineers lined up to greet him, bow, and politely offer their products for inspection. Jobs hated both the devices and the obsequiousness. “What are you showing me this for?” he snapped at one stop. “This is a piece of crap! Anybody could build a better drive than this.” Although most of his hosts were appalled, some seemed amused. They had heard tales of his obnoxious style and brash behavior, and now they were getting to see it in full display.

The final stop was the Sony factory, located in a drab suburb of Tokyo. To Jobs, it looked messy and inelegant. A lot of the work was done by hand. He hated it. Back at the hotel, Belleville argued for going with the Sony disk drive. It was ready to use. Jobs disagreed. He decided that they would work with Alps to produce their own drive, and he ordered Belleville to cease all work with Sony.

Belleville decided it was best to partially ignore Jobs, and he asked a Sony executive to get its disk drive ready for use in the Macintosh. If and when it became clear that Alps could not deliver on time, Apple would switch to Sony. So Sony sent over the engineer who had developed the drive, Hidetoshi Komoto, a Purdue graduate who fortunately possessed a good sense of humor about his clandestine task.

Whenever Jobs would come from his corporate office to visit the Mac team’s engineers—which was almost every afternoon—they would hurriedly find somewhere for Komoto to hide. At one point Jobs ran into him at a newsstand in Cupertino and recognized him from the meeting in Japan, but he didn’t suspect anything. The closest call was when Jobs came bustling onto the Mac work space unexpectedly one day while Komoto was sitting in one of the cubicles. A Mac engineer grabbed him and pointed him to a janitorial closet. “Quick, hide in this closet. Please! Now!” Komoto looked confused, Hertzfeld recalled, but he jumped up and did as told. He had to stay in the closet for five minutes, until Jobs left. The Mac engineers apologized. “No problem,” he replied. “But American business practices, they are very strange. Very strange.”

Belleville’s prediction came true. In May 1983 the folks at Alps admitted it would take them at least eighteen more months to get their clone of the Sony drive into production. At a retreat in Pajaro Dunes, Markkula grilled Jobs on what he was going to do. Finally, Belleville interrupted and said that he might have an alternative to the Alps drive ready soon. Jobs looked baffled for just a moment, and then it became clear to him why he’d glimpsed Sony’s top disk designer in Cupertino. “You son of a bitch!” Jobs said. But it was not in anger. There was a big grin on his face. As soon as he realized what Belleville and the other engineers had done behind his back, said Hertzfeld, “Steve swallowed his pride and thanked them for disobeying him and doing the right thing.” It was, after all, what he would have done in their situation.