Steve would lunch three or four times a week with his most important collaborator, Jony Ive. The design chief was on the CEO’s wavelength, and Steve knew from the moment he met Jony that he was “a keeper.” © Art Streiber/AUGUST
At the Academy Awards in 2005, the Incredibles gang from Pixar paused for a photo on the red carpet. John Lasseter is front and center, flanked by his wife, Nancy, and Steve’s wife, Laurene. Director Brad Bird is at the far right, with his wife, Elizabeth Canney. Steve is in the back, with the goofy grin.
Watching Pixar president Ed Catmull, Steve absorbed a series of lessons about managing a creative corporation that became the foundation of his moderated behavior upon his return to Apple. © Michael Macor/San Francisco Chronicle/Corbis
In 2004, Steve swore he would never sell Pixar to Disney. But then Disney replaced Michael Eisner with a new CEO, Bob Iger. Iger, at right in 2005 when he and Steve announced that ABC programming would be available on the iTunes store for Apple’s video iPods, worked slowly and carefully to wipe away years of mistrust between Disney and Pixar. He and Jobs eventually became close friends. Disney acquired Pixar in 2006. Courtesy of the Walt Disney Company
Tim Cook joined Apple in 1998, and eventually succeeded Steve as CEO. A quiet and intense Southerner, Cook became Steve’s go-to guy for any particularly gnarly situation, and the two developed a keen friendship. Once, Steve called Cook’s mother to encourage her to convince her son to start a family. © Kimberly White/Corbis
Steve’s presentations were always carefully choreographed, none more so than the 2010 event where he introduced the iPad. The homey set conveyed the sense of how simple and intimate the device was supposed to be, but the leather loveseat was also a concession to Steve’s frail health. © Kimberly White/Corbis
Chapter 6
Bill Gates Pays a Visit
In the early afternoon of July 21, 1991, five people converged on Steve Jobs’s house in Palo Alto. It was an unusually warm summer Sunday; the temperature had soared well into the nineties, and judging from the stuffy atmosphere inside, it didn’t seem that Steve had gotten around to turning on the air-conditioning. He had dashed back from a weekend Yosemite getaway with Laurene at the Ahwahnee lodge, the same rustic inn where the two had been married a few months prior.
Steve had only recently purchased the house. Neither he nor Laurene was interested in raising a family in a rambling, crumbling mansion isolated in the hills of Woodside. They wanted their children to grow up in a more central location, and Old Palo Alto, as the neighborhood was known, was quiet, shady, and within walking distance of schools and downtown. Also, Steve’s first child, Lisa—now a teenager—lived nearby with her mother. The house featured enormous wooden beams that had been used as forms for concrete work on the Golden Gate Bridge, yet it was anything but ostentatious, at least by Bay Area standards. (John Lasseter puckishly calls it the “Hansel and Gretel” house.) Steve would call this home for the rest of his life.
Steve and Laurene made a few additions and modifications over the years but nothing really radical, and eventually they acquired an adjoining lot in order to expand the vegetable and flower garden that they both tended. The garden was just getting started that July, but already it was teeming with tomatoes, sunflowers, string beans, cauliflower, basil, and an assortment of lettuces. They had planted wild grasses native to Northern California around the perimeter of the property, which faced intersecting streets on two sides. Some neighbors grumbled at first, but most came to appreciate the way the color and character of the vegetation would change with the seasons. In spring the plantings would explode with wildflowers, and in summer the untrimmed clumps of grass would shimmer in the wind. There was no security wall, just a short split-rail fence bordering the sidewalk. There wasn’t even a garage. Steve and Laurene rarely used the big wooden front door of the house. Most visitors would park on the street behind Steve’s Porsche or Mercedes, enter the gate by the garden, and knock on the kitchen door, if it wasn’t already standing wide open to catch the breeze.
This was the first of many visits I would make over the next ten years, and Steve made a point of having me, the photographer George Lange, and his assistant come to this kitchen door, which was indeed standing wide open on this warm day. The guest of honor apparently didn’t get the word to use this entrance, or else he simply forgot. He arrived about fifteen minutes after the appointed time, and used the big knocker on the front door to let us know he had arrived. Steve and I went to greet him, and Bill Gates waved to the driver of his black limo to leave. We all shook hands and went inside.
The house was a fraction of the size of the Jackling Mansion in Woodside, and just as sparsely furnished, at least at that point. The living room had a half dozen or so framed prints by Ansel Adams leaning against the walls, yet to be hung. An audiophile-quality stereo system in a vertical rack had been set up with a couple of speaker towers carefully placed along one wall, and about a hundred LPs sat on the floor, some in a box and others loosely propped near the stereo.
The only seats were two classic Eames lounge chairs with footstools. Bill and Steve sat in the chairs, and I sat on an ottoman. Bill occasionally would move to the other ottoman or get up and pace a little, while Steve, who was barefoot, remained seated with his legs curled up underneath him for most of the session. George roamed the room freely, snapping pictures as the two men talked.
The occasion: the first of only two formal joint interviews that the pair would ever grant. (The latter would take place sixteen years later, onstage at a high-tech business conference.) I had arranged the meeting as the key element of a package of cover stories in Fortune to commemorate the tenth anniversary of IBM’s shipment of its first PC, and to contemplate the future of the young industry. It had been relatively easy to get Bill to buy in to the idea of the interview. Indeed, he was willing to interrupt a beach vacation with his friend Ann Winblad, a fellow coder from Minnesota, who was now a venture capitalist. Like Bill, she too enjoyed taking a stack of thick books along so they could read and discuss them. Bill had begun dating Melinda French, his future wife, several years before, but even after their romance blossomed, he let her know that he planned to continue to take his “think week” vacations with Winblad.
Steve, on the other hand, had played hard to get. Unlike Gates, he insisted on setting certain parameters for the get-together, primarily that it occur on his turf. Bill would have to come to his house in Palo Alto, and only on this particular Sunday. The interview violated what had become Steve’s basic criteria for publicity—he would only put himself out for stories that promoted his company’s products. If I was going to get this kind of exclusive, unfettered access on an occasion where he had nothing to sell, it was damn well going to be on his terms.
THE CAREERS OF Bill Gates and Steve Jobs intertwine in ways that illuminate the entire history of the personal computer industry—and that help explain why Steve was so unsuccessful at NeXT, and, more important, why he was able to succeed so brilliantly upon his return to Apple. While Fortune would cast the interview as a retrospective, it turned mostly into a discussion that forecast the directions in which the two men would eventually take the world of computing. Bill and Steve were two very different people with two very different approaches to computing, approaches that perfectly suited and reflected their personalities. Fortune was right to recognize them as cofounders of the PC revolution, but in 1991 it would have been a stretch to predict that these same two men would shape the industry for yet another two decades. But that’s how it turned out: for thirty-five years, from the creation of the Apple II until Steve’s death in 2011, their differing philosophies helped determine the design and purpose and marketing of everything from smartphones and iPods, to the cheapest laptops and desktop machines, to the massive mainframe computers that drove the productivity of Fortune 500 companies.
By 1991, their differences had placed the two thirty-somethings (Steve, then thirty-six, was eight months older than Bill) on opposite
trajectories. Quite simply, Steve’s career had been spiraling downward, while Bill’s was soaring to unseen levels. One simple proof of Bill’s rising power: For this interview reviewing the decade since the shipment of the first IBM PC, Fortune hadn’t even considered inviting someone from IBM. That’s because Gates had neutered Big Blue even before the company manufactured its first personal computer, when he convinced them to license his operating system, MS-DOS, without an exclusivity clause. That brilliant gambit meant that by 1991 it was Gates, not IBM, who held the keys to the industry’s future.
Bill’s end run around IBM hinged on the fact that he had understood something IBM had not: that the software IBM was looking for—that is, an operating system—held the potential to be a cornerstone of the entire computer industry. An operating system manages the flow of data within a computer, and gives programmers access to its hardwired information-processing capabilities. It is the crucial intermediary between the programmer who has a task he wants to accomplish and the semiconductor chips and circuitry that can make that happen. What Bill realized, and no one else saw, was that a standardized operating system could ultimately have enormous benefit for the industry, and therefore enormous strategic potential for its steward.
That was back in 1981. In the decade since, while Steve had been on a quest to make a series of breakthrough computers, Gates had been executing a far grander plan. IBM had given instant credibility to the concept of the personal computer, in a way that Apple had never managed to do, especially in the business world. Sales of its computers had quickly outpaced those of other manufacturers, including Apple. The proliferation of those IBM PCs had spread Microsoft’s MS-DOS widely, rivaled only by the proprietary operating system that Apple used on its machines. But Apple didn’t license its operating system to other computer makers. Gates, on the other hand, readily licensed his operating system to other manufacturers, who promptly started beating IBM at its own game. The new entrants, like Compaq and Dell and Gateway, were lean and aggressive companies that could take the two standard pieces of the IBM PC—Microsoft’s MS-DOS and Intel’s microprocessor chips—and produce clones that were faster, more innovative machines than those coming out of hidebound Big Blue. It was Compaq, for example, not IBM, that introduced the whole concept of a portable PC, opening up an important new slice of the market. Gates encouraged the clone manufacturers, licensing MS-DOS to them under the same terms he gave IBM. And his developers worked steadily to improve the operating system. MS-DOS eventually became the foundation of Windows, the operating system that supported the kind of graphical interface that Steve had pioneered with the Lisa and the Mac, and Windows became the standard of just about every personal computer other than those made by Apple. By 1991, Bill Gates’s operating systems were on 90 percent of all the PCs in the world. And the company that owned the other 10 percent? Well, that was Apple, which was becoming less relevant, less innovative, and less important year after year.
The hegemony of its operating systems paid off in multiple ways for Microsoft. Early incarnations of its applications, like Word and Excel, had been designed from the bottom up to work with MS-DOS and then Windows, giving Microsoft an edge over other software companies like WordPerfect and Lotus, which also made productivity-oriented applications. In 1990, Gates had bundled all his productivity applications into a package called Microsoft Office. Sales of Office were so robust that other software developers were pushed even further to the side. By 1991, Microsoft was far and away the world’s dominant software company. And Bill was nowhere near done. He was about to steer Microsoft into a position so powerful that only the government could restrain the company.
All the success had transformed the public’s perception of Gates himself, of course. He had started the 1980s as something of a supplicant to IBM and Apple. Back then, Jobs was the rich face of the computer industry, his stake in the company he founded worth $256 million immediately after its IPO. When Microsoft went public in March 1986, Gates’s 45 percent in equity was worth $350 million. By the time of our interview, he had become the world’s youngest billionaire. Steve’s bank account, meanwhile, had plummeted while he scoured around unsuccessfully for another great new product. Now Bill ruled the roost, while it was becoming increasingly difficult to forecast a future in which Steve Jobs would have any important role to play in the computer industry.
IN THEORY, the interview had the potential to be a fistfight. Both men had developed—and, in many ways, earned—serious reputations as prickly, cut-throat competitors.
Many people have forgotten what a difficult guy Bill Gates could be. In the years since his 2000 resignation as Microsoft’s CEO, as Gates has transformed himself into a global philanthropist, the public has seen a thoughtful, caring, and sharply focused elder statesman try to tackle enormously difficult public health and education problems. All those qualities (minus the “elder” part) were in place in 1991, but back then Bill was competing in the computer industry, not investing in a cure for malaria and prodding countries to attack AIDS, provide cleaner drinking water, and find ways to help farmers weather global warming. Gates was trying to execute a plan to make Windows ubiquitous, running on anything that could compute, and he lived in constant paranoia of leaving weak spots that would allow a competitor to pierce the shell he’d built around the industry. “That is the stupidest thing I’ve ever heard,” he would snap at coworkers whose business analysis failed to live up to his standards, and then drive his point home by shaking his head in exasperation and muttering, “That is so totally random.” Bill, with some justification, always thought he was the smartest guy in the room. He was willing to explain his rationale for a decision once, but pity those who needed a second recitation; that too could provoke a sarcastic outburst or, worse yet, a simmering passive-aggressive anger that would later reveal itself unexpectedly, in withering fashion.
In public, the two men had attacked each other regularly, even gleefully, and they would continue to do so for years. Steve cast Bill as a philistine with zero aesthetic sense and little originality. It was a view he’d hold throughout his life. Bill, he told me repeatedly, knew no other solution than throwing money and people at a problem, which was why Microsoft’s software was so convoluted and mediocre. (Steve conveniently ignored his own spendthrift ways at NeXT.) Bill bluntly painted Steve as a loser who had fallen from importance because of his own stupid decisions. He was relentless about NeXT’s insignificance. Later in the 1990s, when Jobs supported the Department of Justice’s effort to rein in the Microsoft monopoly, Gates repeatedly threw Steve in with the vast set of “losers” who “whined” about what he saw as his company’s deserved success.
But that Sunday in July they behaved themselves, with little friction and no open acknowledgment of the obvious disparity in their wealth and power. Steve was too proud to concede Bill’s preeminence. Bill was too well-behaved to gloat over Steve’s current woes. They accorded one another a certain level of respect. They understood each other’s strengths. With nothing at stake and the country’s leading business magazine there to pat them on the back, none of the negative sentiments flared.
Face-to-face on this Sunday afternoon, the slights—and there were a few—were couched. After Bill attacked John Sculley for wanting to license Apple’s operating system so other manufacturers could create Apple clones, Steve got a shot in at both Sculley and Gates. “I’m not interested in building a PC,” Steve said, criticizing the standardization that Bill had promulgated. “Tens of millions of people needlessly use a computer that is far less good than it should be.” That eventually led to the only outright insult, which they both found funny. Making the case that Microsoft’s dominance hindered innovation in the industry, Steve said, “In the MS-DOS world, there are hundreds of people making PCs.”
“Right,” said Bill.
“And there are hundreds of people making applications for those PCs.”
“Right.”
“But they all have to pass through this very small
orifice called Microsoft to get to one another.”
“It’s a very large orifice,” Bill replied, leaning way back in his chair as he laughed. “I keep telling you it’s being extended.… It’s not even an orifice. We shouldn’t have used that term.”
“It’s been used before,” said Steve, grinning like a little kid.
“Which orifice?” Bill asked, grinning right back at Steve, before catching himself and leaning forward again. “Anyway …”
Bill was the steadier and more consistent of the two. His vision of the history of the industry was as assured as his sense of where it would go. “I wrote down in 1975, when I started the company,” he explained, casting his extraordinary foresight as nothing more than a simple vocalization of what should have been obvious to everyone, “that there were two focuses of technology in terms of building computers. One was chips, the other was software.” He went on to add, “My approach to the PC market has been the same from the beginning. The goals of Microsoft to create the standards for that machine have been the same from day one.” He didn’t apologize for any aspect of Microsoft’s success. He wouldn’t outright acknowledge its near monopoly, but he argued forcefully that standardization around his operating system and Intel’s chips benefited everyone. “Now the latest chip technology passes through to the consumer so fast and so efficiently,” he said. “When Intel comes up with a new microprocessor chip, a few weeks later two hundred PC companies have come up with a machine, and you can drive out to the computer warehouse and buy a machine. It’s the same if you take software. Because the volumes are so immense, incredible software that’s ten times as good as anything that was out even five years ago is available for essentially the same price. Even in strange categories you can choose from so much software.”
Becoming Steve Jobs Page 17