Once audience members stepped into the concert hall they could see a giant video screen serving as a backdrop for the darkened stage. A tall table on the left held a large vase bursting with white French tulips and an array of remote controls. On the right side of the stage, shrouded in black velvet, was what appeared to be a phalanx of computer monitors on an elliptical table. Behind the desk chair facing them stood a pillar about four feet tall with another black velvet mantle draped over it. Befitting the venue, chamber music wafted through the sound system as the crowd settled in. It was a Tuesday morning, yet most of those in attendance were dressed as if they had arrived for a night at the symphony. (I even wore a suit.) That’s just the way Steve wanted it.
The show was so extravagant a success that it really could have been considered NeXT’s first major product. The crowd went silent as soon as Steve, clean-shaven and with his hair neatly trimmed, stepped into the spotlight. He was wearing a dapper, dark Italian suit, a blindingly white shirt, and a burgundy-and-black crosshatched tie. Pausing to soak it all in, he smiled with pursed lips, trying hard not to break into a toothy grin; the applause went on and on.
“It’s great to be back,” he said, after the clapping stopped completely. And then, pressing his hands together in a prayerful gesture, he launched into his comeback pitch. It would last two and a half hours. He had spent months polishing his remarks, which were given as more of a business school lecture than a sales spiel. Steve laid out the new taxonomy of the computer industry—a version of that taxonomy that made his new machine seem like the natural next grand step, of course. He did so using presentation slides that had been meticulously put together by hand, because no computer application yet existed to automate the process. Work on the slides had gone on and on; after days of trying to find the exact shade of green for one slide, Steve finally found a tone he liked and kept muttering, “Great green! Great green!” The phrase became a mantra for the beleaguered marketing team.
He explained how what he was now calling a “personal workstation” fit the needs of sophisticated computer users much better than the workstations that Sun and Apollo were selling for tens of thousands of dollars. While at Apple, he admitted, he had overlooked the significance of linking personal computers such as the Macintosh into networks. The NeXT computer was designed from the ground up to be connected to a network.
Computer scientists already knew this history, of course, but the broader public that was so fascinated with Jobs didn’t. Steve had always been able to describe the potential of obscure yet real technologies with such aplomb that he created something akin to lust in his audience. He had absolute self-confidence that he could sell people a sense of discovery in the form of technological products they previously didn’t even know they wanted, a confidence that was usually justified. When he held up the NeXT computer’s innards and described it as “the most beautiful printed circuit board I’ve ever seen in my life,” the audience gasped and then broke out into applause, despite the fact that at any distance over a few feet every circuit board looks pretty much the same. The audience even clapped when he described the Cube’s ten-foot power cord. On this day, the crowd would follow wherever Steve would lead. When he called big universities “Fortune 500 companies disguised by another name,” they even seemed to believe that this was true.
The tricky part of the show came when he had to explain that this radically new computer would have to make do with black-and-white and grayscale graphics, a cost-cutting decision (it saved NeXT $750 per machine) that had become unavoidable as Steve’s persnickety meddling had delayed the machine and driven up its cost. No matter. Steve simply presented the screen as a magnificent design element. He bragged about the subtle shades of gray in a way that almost demeaned a color screen as an unnecessary extravagance. As the demo went on, Steve’s claims became more grandiose, as if these NeXT machines might revolutionize the academics of not just science but the arts as well. Given all this potential, he suggested, it was remarkable that the NeXT computer would cost only $6,500; that its printer was priced at a mere $2,000; and that customers who wanted a conventional hard drive to augment the machine’s storage capacity would pay just $2,000 more. Still, he couldn’t completely conceal the reality that a fully functioning NeXT computer system would cost well over ten grand—some seven thousand dollars more than it was supposed to have.
Steve knew he had to end the show with something that would obscure this unfortunate detail, something that would bring the concert hall crowd to its feet. And that something was music. For the previous six weeks, he had pushed Tevanian, who had been with the company just a few months, to build a music synthesizer software application that could show off the Cube as a more multitalented computer than anything else around. Developing that music synthesizer capability was a tricky bit of programming, and one night, after weeks of effort, Tevanian finally figured out how to make it work. “Suddenly, this circuit board was producing sound! I thought, This is amazing!” Tevanian remembers. “It’s eleven o’clock at night, though, and there is nobody there to show it to. So I run to the building next door, and lo and behold, Steve is still working. I said, ‘Steve, I’ve got to show you something.’ So we run back over to the engineering lab and I show him. And he just starts swearing at me. ‘Why did you show this to me? I can’t believe you did this!’ he yells. And I say, ‘Steve, you don’t understand, it works!’ And he says, ‘I don’t care, because it sounds horrible. I don’t ever want to see anything like this again.’
“I learned a lot from that interaction,” Tevanian adds. “Most people who work in a Steve Jobs organization end up quitting or being fired when that happens, but I just put my head down and thought, Okay, so there is a bar that you have to exceed before you can show it to him. I can show it to other people, but not to him.”
At the very moment when the audience might have been expected to grow restless, Steve unveiled Tevanian’s trick. He had the computer play gamelan music from Indonesia in a percussive demonstration of polyphonic sound generation. The audience sat rapt as amplified, synthesized music swelled to fill the hall. Steve, like a parent trying not to seem overly proud, broke into a taut smile. Nobody had heard anything quite like this come out of a computer. But that was just the warm-up act. Steve next invited Dan Kobialka, the concertmaster for the San Francisco Symphony, to perform a duet alongside the Cube on his violin. The selection was an excerpt from Bach’s Violin Concerto in A Minor. Steve backed away and spotlights illuminated the two performers; for more than five minutes, Davies Symphony Hall seemed as intimate as a living room. When Kobialka lifted his bow at the end, the standing ovation was spontaneous. A third spotlight trained on Steve, who was holding a single rose as he bowed to the adoring throng.
Reactions to the premiere were as over-the-top as the event itself. Industry mavens like Stewart Alsop, Dick Shaffer, and Michael Murphy forecast that the machine would make NeXT a $200- to $300-million-a-year company by 1990. Shaffer called himself a “convert.” Even leaving the pundits aside—after all, they were in the business of grandiose predictions—the more sober press accepted Steve’s claims for his new machine. I called it “dazzling” myself in my front-page article for the Wall Street Journal, and even described it as “relatively inexpensive.” As Steve had intended, I was comparing the machine to existing workstations, and not to the original price point he’d promised the universities that were supposed to be his key customers.
The truth that all of us missed was that this was a machine that had virtually no chance to succeed in the marketplace. Steve’s mismanagement meant that the NeXT computer was only somewhat less expensive than most workstations, with just a few marginal improvements that didn’t offset its many shortcomings. The principles on which NeXT had been based were in tatters, the goals of those long-gone offsite meetings trashed. Jobs had been told emphatically from the start that the machine should cost no more than $3,000; more recently, his collegiate advisers had told him that it should probably be pr
iced at half that. Colleges were not about to spend $10,000 on a fully tricked-out NeXT computer system, versus $2,500 for a Mac or $5,000 for a low-end Sun workstation. The game was already over, but few of us knew it.
STEVE’S MOST IMPORTANT and direct competitors were not fooled by the glitzy debut. The folks at Sun Microsystems laughed off the introduction. CEO Scott McNealy, a brash Detroiter who played hockey in his spare time, thought that Steve’s fancy fonts and magnesium case were wasted on the hard-core buyers of workstations. “We give them what they want,” he told me, “and they don’t really care how pretty the icons are.”
If Steve had started NeXT with a clear mind and even an ounce of humility, Sun is the company he would have acknowledged as his most dangerous competitor—and potentially his best role model. McNealy, one of four cofounders who started the company in 1982, had become CEO in 1984. He was only three months older than Steve but seemed far more seasoned. His father had once been the CEO of American Motors, the now-defunct automaker that is remembered primarily for offbeat car models like the Nash Rambler and the AMC Pacer. At night, as a child, Scott would pore through his father’s briefcase when he wasn’t looking. As an adolescent, and later as a college student, he became what he called a “factory rat,” spending time on the plant floor learning firsthand about the complexities of auto manufacturing, and about the dynamics of corporations that manage large numbers of people. A child of privilege, he went to Detroit’s most prestigious private schools, and then on to Harvard for a business degree, finishing up with a Stanford MBA.
McNealy couldn’t have been more different from Steve Jobs. Aside from his formal education, he was a rabid jock. He liked country music and heavy metal, not Dylan and the Beatles. McNealy was an irrepressible practical joker who was prone to shoot from the lip, but he managed his company with a maturity that Jobs only pretended to have. Sun had hit $1 billion in sales within four years. McNealy did it by smartly targeting a customer base that had money to spend—corporate R&D departments, the U.S. military, and the National Laboratories, a less glamorous but much more affluent set of customers than the universities Steve went after. Sun next went after Wall Street, which was just beginning to discover the power of using computers to identify quick trading opportunities. These customers didn’t much care what the computers looked like, as long as they had big screens and could handle multiple computing threads simultaneously.
Sun succeeded by identifying the market’s real need, by delivering just that product, and by keeping its machines reasonably affordable. NeXT failed at all of that. In fact, NeXT didn’t actually sell its first computer until almost a year after that splashy debut in Davies Hall—four full years after Steve had started the company. McNealy was focused, budget conscious, and opportunistic. Steve’s goals were muddled, and he was a spendthrift who was slow off the mark. McNealy had thrown in with his cofounders at Sun to sell a lot of machines, serve his customers, and make a lot of money. Steve had founded NeXT because he was furious at John Sculley and Apple, because he desperately needed a second act, and because he thought it was his responsibility—and birthright—to keep astounding the world. There had been a market to be attacked when Steve founded NeXT; McNealy’s success proved it. But Steve was still young and immature, and didn’t think there was anyone else in the computer business who really mattered. He was looking in the mirror while McNealy had been looking out the window to learn what the world really needed.
Another industry leader was equally unimpressed by NeXT. Bill Gates refused to develop software for the NeXT computer, despite Steve’s repeated, if confused, efforts to lure him in with promises that Microsoft would profit as much with NeXT as it had with the Mac (for years, Microsoft had been the Mac’s leading applications developer). When Bill first visited Steve in Palo Alto to see what Jobs was putting together at NeXT, Steve left him stewing in the lobby for half an hour before coming to get him. It was a spiteful beginning to what would turn out to be a nonexistent relationship between Microsoft and NeXT. Gates rebuffed Steve again and again and again, with venom. “Develop for it?” he told InfoWorld. “I’ll piss on it.” Microsoft software was already on its way to defining the industry standard in nearly all aspects of computing, so Gates’s reluctance to support NeXT with custom versions of its application software effectively marginalized the company.
Gates didn’t let up after the Davies Hall showcase. “In the grand scope of things,” he said, “most of these features are truly trivial.” A year later, he said of the NeXT computer, “If you want black, I’ll get you a can of paint.” To this day Gates remembers the moment he definitively told Jobs that Microsoft absolutely would not develop software for NeXT. “He wasn’t livid,” Gates told me recently. “He was deflated. He was at a loss for words, which wasn’t typical. He knew what I was saying might be right. And it wasn’t a particularly pretty picture in terms of what it meant for big black cubes changing the world.”
TOWARD THE END of the show at Davies Hall, Steve Jobs revealed what should have been the biggest news to come out of the event: computer industry colossus IBM had decided to license the NeXTSTEP operating system for use on a line of its own engineering workstations. The vision of the world’s biggest computer company running Steve’s revolutionary operating system seemed a great endorsement.
The basic agreement between the companies was that IBM would license the right to use the NeXTSTEP operating system as a graphical interface in return for $60 million—a pittance for IBM, but critical operating capital for NeXT, which was burning through its investors’ cash as the years dragged on. Many people believed that the arrangement might have broader implications, an impression that Steve did nothing to dispel. IBM had an existing deal with Microsoft to jointly develop a new operating system for future PCs called OS/2. By announcing the deal with NeXT, IBM seemed to be indicating that it was not comfortable with Microsoft as its sole key partner. (Indeed, within a few months of the NeXT announcement, it became clear that IBM and Microsoft were having serious issues working together.) The tantalizing possibility was that Steve’s operating system might eventually power not only workstations but also the personal computers of Apple’s most feared competitor. If that ever happened, Steve’s comeback would be complete.
But Steve never seemed to quite know how to play his cards with IBM. He displayed an unsettled and juvenile mix of hubris and uncertainty. Jobs could be bold and strong, as when he secured IBM’s promised investment before any Big Blue exec had even laid eyes on the NeXTSTEP operating system. But he could also be just plain rude: Walking in late to one meeting with a suite of IBMers who had flown out to NeXT, Steve interrupted the proceedings with the dismissive pronouncement: “Your UI [user interface] sucks.” Dan’l Lewin, who would meet with Steve to carefully plot their strategy before every IBM meeting, never knew what to expect from his boss. Sometimes Steve would completely undermine the groundwork the two had carefully laid. “I’d sit there and literally kick him under the table,” Lewin recalls. “There was one meeting, for example, where he went in and actually told them, ‘I really don’t understand why you guys would want to help us.’ ”
Psychologically and emotionally, signing on with IBM was every bit as complicated for Steve as begging Bill Gates to support his computer. Steve had always envisioned NeXTSTEP as the backbone of his own spectacular computer. He wanted to be the hero, not a secondary partner to a more powerful computer company. If IBM had exploited his operating system, and sold a lot of computers running their version of NeXTSTEP, the glory would have been theirs, not his.
It shouldn’t have been surprising, then, that Steve failed to make this important relationship work. He killed the IBM deal by failing to follow through as a good business partner. IBM’s Bill Lowe, a veteran who had been instrumental in launching the PC back in 1981, had initiated the deal. But Lowe retired in 1990, and James Cannavino replaced him. Cannavino logically assumed IBM could use NeXT’s 2.0 version of NeXTSTEP on its machines. But Steve, who hadn
’t even met Cannavino, held up IBM for more money, leading to another round of protracted negotiations. He overplayed his hand. Cannavino stopped taking Steve’s calls and just abandoned the project, although there was never any real announcement that it was over. It was a minor disappointment for IBM, ending its “Plan B” fantasy of creating a real alternative to Microsoft’s new Windows graphical operating system for PCs. But it was a fatal blow to NeXT, ending its last real chance to achieve the kind of scale that would have turned it into, as Steve had said in 1985, “the world’s next great computer company.”
Lewin quit NeXT in frustration months before the IBM deal dissolved. He was the first of the five original employees to leave NeXT. “We owned the world when we were at NeXT. And it failed because of Steve,” Lewin remembers. Steve invited Lewin to lunch two weeks after his resignation. “Well, now that you’re leaving, what do you really think?” Steve asked him.
“You’re going to go through every penny, the way you’re headed,” said the now former head of sales. At the time NeXT still had some $120 million in cash. “This company is just not going to happen. You may own 51 percent of it, or 58, whatever it is, but more than half the company worked for me. And I’ve been fighting with you because I believe in what I know we need to do to run this business. If you want to succeed, you need to listen to your people. Otherwise you’re doomed.”
A few months later, George Crow, another cofounder, left, tired of bearing the brunt of Steve’s furor for the delays in hardware development. Susan Barnes left around the same time in 1991. Managing Steve’s finances when he had little fiscal discipline and no checks on his spendthrift ways had grown wearying. “It was classic: his visionary optimism versus my reality,” says Barnes. “He always felt that we were going to turn the next corner. And I would always tell him that there was nothing in the business model to indicate that that was so.”
Becoming Steve Jobs Page 14