Inside Steve's Brain (4 page)

The Clones.
Jobs killed the clone business. The move was highly controversial, even inside the company, but it instantly allowed Apple to capture the whole Mac market again by eliminating the competition. Customers could no longer get a cheaper Mac from Power Computing or Motorola or Umax. The only competition was Windows, and Apple was a different proposition. Killing the clones was unpopular with Mac users who were becoming accustomed to buying cheap Macs from the clone makers, but the decision was the right strategic move for Apple.

The Suppliers.
Jobs also negotiated new deals with Apple’s suppliers. At the time, both IBM and Motorola were supplying Apple with chips. Jobs decided to pit them against each other. He told them that Apple was only going to go with one of them, and that he expected major concessions from the one he chose. He didn’t drop either supplier, but because Apple was the only major customer of PowerPC chips from both companies, he got the concessions he wanted, and more important, guarantees of the chips’ continued development. “It’s like turning a big tanker,” Jobs told
Time
magazine. “There were a lot of lousy deals that we’re undoing.”
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The Pipeline.
The most important thing Jobs did was radically simplify Apple’s product pipeline. In his modest office near the company’s boardroom (he reportedly hated Amelio’s refurbished offices and refused to occupy them), Jobs drew a very simple two-by-two grid on the whiteboard. Across the top he wrote “Consumer” and “Professional,” and down the side, “Portable” and “Desktop.” Here was Apple’s new product strategy. Just four machines: two notebooks and two desktops, aimed at either consumers or professional users.

Slashing the product pipeline was an extremely gutsy move. It took a lot of nerve to cut a multibillion-dollar company back to the bone. To kill everything to focus on just four machines was radical. Some thought it was crazy, even suicidal. “Our jaws dropped when we heard that one,” former Apple chairman Edgar Woolard Jr. told
Business Week
. “But it was brilliant.”
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Jobs knew that Apple was only a few short months from bankruptcy, and the only way to save the company was to focus keenly on what it did best: build easy-to-use computers for consumers and creative professionals.

Jobs canceled hundreds of software projects and almost all the hardware. Amelio had already killed nearly three hundred projects at Apple—from prototype computers to new software—and laid off thousands of workers, but he had to stop there. “There’s only so much cutting one CEO can do,” Oliver said. “There was tremendous pressure on him when he did that. It made it much easier for Steve to take the fifty projects that remained and cut them back to ten.”

Gone were the monitors, the printers, and—most controversially—the Newton handheld, a move that prompted Newton lovers to protest with placards and loudspeakers in Apple’s parking lot. I GIVE A FIG FOR THE NEWTON, one placard read. NEWTON IS MY PILOT, said another.

The killing of the Newton was widely considered an act of vengeance on a previous Apple CEO, John Sculley, who had ousted Jobs from Apple in the late 1980s. The Newton was Sculley’s baby, and here was Jobs knifing it to get revenge. After all, the Newton Division had just turned its first profit and was about to be spun off into a separate company. A whole new industry for handhelds was springing up, which would soon come to be dominated by the Palm Pilot.

But to Jobs, the Newton was a distraction. Apple was in the computer business, and that meant it had to focus on computers. It was the same with laser printers. Apple was one of the first companies in the laser printer business and had carved out a big chunk of the market. Many thought Jobs was leaving millions of dollars on the table by getting out of it.

But Jobs argued that Apple should be selling premium computers: well-designed, well-made machines for the top end of the market, like luxury cars. Jobs would argue that all cars did the same thing—they went from A to B—but lots of people paid top dollar for a BMW over a Chevy. Jobs acknowledged that the analogy wasn’t perfect (cars run on anyone’s gas, but Macs couldn’t run Windows software) but argued Apple’s customer base was big enough to earn Apple good margins.

To Jobs, this was a key point. There was—and always has been—pressure on Apple to sell dirt-cheap computers. But Jobs insisted that Apple would never compete in the commodity computer market, which is a race to the bottom. Between Dell, Compaq, and Gateway, there were half a dozen computer makers, all making essentially the same product, distinguished only by price. Instead of taking on Dell with the cheapest possible computer, Apple would make first-class products to make enough profit to keep developing more first-class products. Volume would drive down the prices.

Cutting back the number of products was a good move operationally. Fewer products meant less inventory, which had an immediate impact on the company’s bottom line. Jobs was able to cut Apple’s inventory from more than $400 million to less than $100 million in one year.
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Previously, the company had been forced to take write-downs of millions of dollars in unsold machines. By cutting the products back to a minimum, Jobs minimized the risk of getting hit with expensive write-offs, the kind of hit that might have sunk the company.

The cutbacks and reorganization weren’t easy on Jobs, who put in long, grueling hours. “I’d never been so tired in my life,” Jobs told
Fortune
in 1998. “I’d come home at about ten o’clock at night and flop straight into bed, then haul myself out at six the next morning and take a shower and go to work. My wife deserves all the credit for keeping me at it. She supported me and kept the family together with a husband in absentia.”
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He sometimes wondered if he was doing the right thing. He was already CEO of Pixar, which was enjoying the success of
Toy Story
. He knew that returning to Apple would put pressure on Pixar, his family, and his reputation. “I wouldn’t be honest if some days I didn’t question whether I made the right decision in getting involved,” he told
Time
.
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“But I believe life is an intelligent thing—that things aren’t random.”

Jobs was mostly worried about failing. Apple was in dire trouble, and he might not be able to save it. He’d already earned a place in the history books; now he didn’t want to wreck it. In the 1998 interview with
Fortune
, Jobs said that he looked to his hero Bob Dylan for inspiration. One of the things that Jobs admired about Dylan was his refusal to stand still. Many successful artists at some point in their careers atrophy: they keep doing what made them successful in the first place, but they don’t evolve. “If they keep on risking failure, they’re still artists,” Jobs said. “Dylan and Picasso were always risking failure.”

Even though there are no published reports of mass layoffs involving thousands of staff after Jobs took the helm, there were, in fact, mass layoffs. Most, if not all, were performed by the product managers, who laid off staff after projects were killed. But it was very quietly kept out of the papers.

There are stories—likely apocryphal—of Jobs cornering luckless employees in elevators and quizzing them on their role at the company. If the answers weren’t satisfactory, they’d be fired on the spot. The practice became known as getting “steved.” The term is now part of tech jargon for any project that gets unceremoniously terminated: “My online knitting pattern generator got steved.”

Jim Oliver is doubtful that any employees were personally “steved” in elevators. Jobs may have fired someone on the spot, but it wasn’t in Oliver’s presence—and he accompanied Jobs almost everywhere for three months as his personal assistant. If Jobs did fire anyone, Oliver doubts he did it more than once. “But the stories certainly got around and put people on their toes,” Oliver said. “These stories get repeated, but I never found the person he did it to.”
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Based on what he’d heard, Oliver expected Jobs to be an unpredictable, bad-tempered basket case, and was pleasantly surprised to find him quite calm. Jobs’s outbursts are overplayed, Oliver said. He did witness a few temper flare-ups but they were “very rare” and often premeditated. “The public dressing-downs were clearly calculated,” Oliver said. (Jobs does have a tendency to polarize things, though. He has a certain favorite Pilot pen and all the others are “crap.” People are either geniuses or bozos.)

Jobs may have killed the Newton, but he kept most of the Newton team, whom he had judged to be good engineers. He needed them to build one of the machines in his simplified product matrix: the consumer portable, later named the iBook. While doing his product survey, Jobs had also been conducting a people survey. The company’s assets weren’t just products, they were the employees as well. And there were some gems. “I found ten months ago the best industrial design team I’ve ever seen in my life,” Jobs would later say, referring to Jonathan Ive and his team of designers. Ive was already working for Apple— he’d been at Apple for several years and had risen to head the design group. (Ive is detailed later, in Chapter 3.)

Jobs paid careful attention to find the talent on the product teams, even if they weren’t the ones running the show. Peter Hoddie said that after the QuickTime presentation, in which he’d talked a lot about the software, Jobs asked him his name. “I didn’t know if that was good or bad,” Hoddie recalled. “But he remembered my name.” Later, Hoddie became QuickTime’s senior architect.

Jobs’s plan was simple: cut back so that the core A team— his cadre of ex-NeXT execs, and the company’s best programmers, engineers, designers, and marketers—could again develop innovative products, and keep improving and updating them. “If we could make four great product platforms that’s all we need,” Jobs explained in a 1998 interview. “We can put our A team on every single one of them instead of having a B or a C team on any. We can turn them much faster.”
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As we’ll see in a later chapter, one of Jobs’s key business strategies throughout his career has been to recruit the most talented people he can find.

Jobs made sure that Apple’s organizational chart was streamlined and straightforward. His new managerial flowchart was pretty simple: Jon Rubinstein ran engineering, Avie Tevanian ran software, Jonathan Ive headed up the design group, Tim Cook ran operations, and Mitch Mandich ran worldwide sales. Jobs insisted on a clear chain of command all the way down the line: everyone in the company knew whom they reported to and what was expected of them. “The organization is clean and simple to understand, and very accountable,” Jobs told
Business Week
.
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“Everything just got simpler. That’s been one of my mantras—focus and simplicity.”

Jobs’s dramatic focusing worked. Over the next two years, Apple introduced four machines that proved to be a string of hits.

First there was the Power Macintosh G3, a speedy professional machine introduced in November 1997. It’s largely forgotten now, but the G3 was a big hit with Apple’s core audience—professional users—and sold a very respectable one million units in its first year. The G3 was followed by the multicolored iBook and the sleek titanium PowerBook, which were both chart toppers. But it was the iMac, a fruity-colored teardrop-shaped machine, that was a blockbuster. The iMac sold six million units, becoming the best-selling computer of all time. The iMac became a cultural phenomenon, launching a dizzying array of see-through plastic products, from toothbrushes to hair dryers. Bill Gates was mystified by the iMac’s success. “The one thing Apple’s providing now is leadership in colors,” he said. “It won’t take long for us to catch up with that, I don’t think.”
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Gates couldn’t see that beyond the iMac’s unusual colors, the computer had other merits that would make it a hit with consumers: easy setup, friendly software, and a distinct personality.

Jobs focused Apple on a small selection of products it could execute well. But that focus has also been applied to the individual products themselves. To avoid “feature creep”—the growing list of features that is often added to new products during their design stage and after their initial release—Jobs insists on a tight focus. Many cell phones are shining examples of feature creep. They do everything under the sun, but basic functions like adjusting the volume or checking voicemail are sometimes obscured by the devices’ overwhelming complexity. To avoid confusing the consumer with an endless array of complex choices, one of Jobs’s favorite mantras at Apple is: “Focus means saying no.”

Focus is also having the confidence to say no when everyone else is saying yes. When Jobs launched the iMac, for example, it didn’t have a floppy drive, then standard equipment on computers. It seems silly now, but there were howls of protest from customers and the press. Many pundits said the lack of a floppy drive was a fatal mistake that would doom the iMac. “The iMac is clean, elegant, floppy-free—and doomed,” wrote Hiawatha Bray in the
Boston Globe
in May 1998.
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Jobs wasn’t 100 percent sure of the decision himself, said Hoddie, but he trusted his gut that the floppy was becoming obsolete. The iMac was designed as an Internet computer, and owners would use the Net to transfer files or download software, Jobs reasoned. The iMac was also one of the first computers on the market to use USB, a new standard for connecting peripherals that no one except Intel was using (and Intel invented it). But the decision to ditch floppies and use USB put a forward-looking shine on the iMac. It seemed like a futuristic product, whether or not that was the intention.

Jobs also keeps Apple’s product lineup very simple and focused. Throughout the late 1990s and early 2000s, Apple fielded at most half a dozen major product lines: two major desktop and laptop computers, some monitors, the iPod, and iTunes. Later, it added the Mac mini, the iPhone, the AppleTV, and some iPod accessories, like woolly socks and armbands. Contrast Jobs’s insistence on maintaining a tight focus with other companies in the tech industry, especially the giants, like Samsung or Sony, which carpet bomb the market with hundreds of different products. Over the years, Sony has sold six hundred different models of the Walkman. Sony’s CEO, Sir Howard Stringer, has expressed envy of companies with a narrow product lineup. “Sometimes I wish there were just three products,” he has lamented.
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