Becoming Steve Jobs

by Brent Schlender

  Given his uncertain position at the time, it wasn’t surprising that Steve was the more volatile participant. He was willing to admit a few mistakes, even allowing that Bill was correct in saying that Apple should have taken the IBM PC more seriously. Then he took that thought further. “The singular event that defined Apple’s place in the industry in the 1980s was actually not the Macintosh,” he announced. “That was a positive event. The negative event that defined Apple’s place was the Apple III. It was the first example I’d seen in my career of a product taking on a life of its own and developing way beyond what was necessary to satisfy customer demand. The project took eighteen months more than we’d planned and was overdesigned and cost a little too much. It’s interesting to speculate what would’ve happened if the Apple III had come out right, as a lean, mean upgrade to the Apple II that offered incremental features that made it more suitable for business. [Instead,] Apple left a real hole.” Later, he made clear that much of the blame could be laid at his feet: “One of the reasons that the Apple III had problems was that I grabbed some of the best people from that project to do research on how to turn what I saw at Xerox [PARC] into reality.”

  It was a fascinating admission. Steve was never much for looking back at his own mistakes, and yet during this very public conversation with a friend whom everyone but Jobs now acknowledged as the leader of the computer industry, he was downright contrite. Later in the conversation, he even pulled out a story he’d ripped from the pages of Newsweek to make sure that Bill wasn’t offended by the author’s claim that Steve was no longer his friend. “I tore this out and I was going to call you before I knew we were getting together,” he said, brandishing the page like a trial attorney. “This is not true at all, and I have no idea where they got that.”

  Steve became most engaged when we started discussing whether the PC industry would ever again produce a breakthrough machine like the Mac. That was the kind of product that most interested Steve, of course. At every stage of his life, he always wanted to create devices that would completely reset the industry. “Fundamentally,” he explained, “the PC industry is taking the existing and repackaging it or making it run faster. I think that’s much more valuable than I used to. But I also think that what’s the real trick, and the real necessity to keep our industry healthy, is to balance that incremental improvement with some big steps. I worry about the big steps, and where they’re going to come from.” Later he added, “The standard bearer needs a kick in the ass every once in a while. [Besides,] it’s great for the creator of the deviant innovation. If they’re right, there’s a big pot of gold there, and the ability to make a contribution to the world.”

  Bill wasn’t obsessed with the revolutionary. He knew that there was a place for breakthrough technologies, and that the nature of the tech business—indeed, human nature itself—guaranteed that such milestones would arise. But over the course of the interview he made clear that what was closer to his heart was the pain that such disruptions caused the corporate customers of his software. “All I want is a car that will run on the current streets,” he explained. “I’m on this evolutionary path.” The huge investments corporate America had started to make in personal computers and in the critical applications it used to run operations “make for some very unusual dynamics,” he said. “In an Egghead Software store five years from now you’re not going to find business software for six different types of desktop computers. Personally, I would be stunned if you would find software for more than one overwhelmingly successful type of computer, and maybe a couple of others. More than three would be shocking.”

  When Steve had left Apple in 1985, the primary competition in the computer hardware business had been framed as a battle to design the best machine; whoever did that, it was assumed, would win the most customers. But six years later that wasn’t the game at all, a fact that Steve was only slowly coming to understand, in light of his difficulties with the NeXT computer. The game was now all about serving corporate customers with their millions of machines. Those companies were increasingly reliant on their PCs, which ran custom-built applications that helped them execute complicated, data-intensive operations. They needed these applications to work with every new unit. The cost of re-creating their data to fit, say, a NeXT computer that didn’t work with the Windows operating system would have been exorbitant, not just in the financial cost of reprogramming but in the opportunity cost lost to all the time required by a retrofit. It wasn’t the bells and whistles that excited these customers; in fact, they found bells and whistles kind of scary. Nope, what they needed was more power, more speed, and above all else, reliability.

  Very few people writing about this new industry in the mainstream press truly understood how personal computers had already begun to revert to institutional machines. This was mainly because it was easier for most journalists of the early 1990s to envision and get personally excited about the potential of educational software, or of managing their personal finances, or organizing their recipes in the “digital” kitchen, or imagining how amateur architects could design funky homes right on their home computers. Who wouldn’t be excited about more power in the hands of people, the computer as an extension of the brain, a “bicycle for the mind,” as Steve put it? This was the story of computing that got all the ink, and it was a story no one unfurled as well as Steve.

  Bill Gates wasn’t swayed by that romance. He saw it as a naïve fantasy that missed the point of the much more sophisticated things PCs could do for people in the enterprise. A consumer market can be an enormously profitable one—put simply, there are so many more people than businesses that if you sell them the right product you can mint money. But the personal computers of that time still didn’t have enough power at a low enough price to excite the vast majority of consumers, or to change their lives in any meaningful way. The business market, however, was a different beast. The potential volume of sales represented by all those corporate desktops, in all those thousands of companies big and small, became the target of Bill Gates’s strategic brilliance and focus. Those companies paid good prices for the reliability and consistency that Windows PCs could deliver. They welcomed incremental improvement, and Bill knew how to give it to them. Steve paid lip service to it, but his heart wasn’t in it. He thrilled only to the concept of how a dramatically better computer could unlock even more potential for its user.

  This fundamental difference between the two coparents of the PC was made utterly clear by the interview. What wasn’t made clear, and what Bill didn’t even come close to revealing, was how his deep understanding of the computing needs of businesses would transform the computer business itself over the next several years, further sidelining anyone who, like Steve, chose to focus on the aesthetics and thrills of personal computers. Even though nobody recognized it at the time, Bill was about to take the personal right out of personal computing. Ironically, in so doing, he would leave an opening for Steve to fill—eventually.

  THE DECADE OF the 1990s was about to become the Age of Microsoft, a period of time when a single company dictated the direction of the entire computing industry. Microsoft did have a key partner in Intel, whose chips powered almost every machine running the Windows operating system. But the combination of Windows and a growing suite of office productivity applications gave Microsoft an entree to corporations that Intel could never match. While the steadily increasing power and speed of Intel’s chips set a rhythm of inexorable advancements for technology, Windows and Microsoft’s other software shaped the look and feel of corporate computing. By attending to every need of both the Fortune 500 and small businesses, Bill Gates was becoming technology’s king. Intel CEO Andy Grove was, somewhat to his dismay, relegated to the avuncular role of the “elder statesman.”

  Together, Gates and Grove had exploited something that Steve had ignored. Looking over the horizon, they could see that the architecture of PCs would improve so much in performance as to subsume almost every aspect of computing. In the past, hi
gh-end business machines were based on proprietary designs that didn’t benefit from the economies of scale of standardized parts. Gates and Grove knew that eventually—and it wasn’t going to take very long at all—the expensive, customized guts of engineering workstations would become juiced-up PC circuit boards, and that the same evolution would ultimately subsume business minicomputers, mainframes, and even supercomputers, those rare and superexpensive machines used for everything from modeling weather patterns to controlling nuclear devices. (For example, IBM’s Watson, the machine that in 2011 beat Jeopardy! phenomenon Ken Jennings, is one such computer based on a PC-like architecture.) As a result, pretty much every computer that companies relied on to manage their most critical operations would adopt the internal electronic architecture of a PC writ large. All were much, much cheaper and easier to program and operate than unwieldy mainframes, because they were built out of the very same semiconductor components as PCs, and usually used a variation of the Windows operating system software. Thus they benefited from the ever-improving economics of scale afforded by the combination of Moore’s law and by the breathtaking growth of the PC market itself.

  Throughout the 1990s, Microsoft would become the unchallenged steward of corporate computing. And corporations would welcome its standardization. In a headlong rush to improve productivity through technology, they spent trillions of dollars. In 1991, the $124 billion of corporate spending on information technology accounted for just 2 percent of the gross domestic product. By 2000, that percentage had more than doubled to 4.6 percent. The leading beneficiary of all that was Microsoft; over that same period, its revenues rose from $1.8 billion to $23 billion, its profits rose from $463 million to $9.4 billion, and its stock price appreciated 3,000 percent.

  Mired at NeXT, Steve enjoyed hardly any of the spoils of this frenzy. He did sell a few computers to businesses, and once the Internet emerged as the world’s great network, the company’s WebObjects software turned into a useful tool for corporations developing custom websites. But these were table scraps. For the most part, Steve Jobs could only watch from the sidelines as his old friend and nemesis, a man far more suited to the demands of the corporate market, became arguably the most important businessperson on the globe.

  AFTER ABOUT TWO and a half hours, we wrapped up the interview. I had covered the two men for years, but bringing these dynamic and headstrong competitors together for a conversation had been like seeing them for the first time in three dimensions. A kind of a parallax effect in their interaction helped me better discern and appreciate each. Perhaps it was because they weren’t there to sell anything that I could see them with more nuance. Their proximity and innate competitiveness had brought out spontaneous displays of wit, sharp-edged opinions, and even a sense of friendship that they might not have allowed to show in a different setting.

  George Lange, who had been circling the two, camera in hand, during much of the encounter, now wanted to set up the shoot for the cover photograph. We didn’t have much time—Bill was adamant about getting to the San Francisco airport in time for his scheduled flight back to Seattle. George had considered shooting them outside, but he decided that the main staircase, which curved dramatically up from the living room, would work better for the cover. He explained his reasons to both. Bill was never that particular about press photo shoots—his primary concern was that they happen quickly. But Steve fancied himself a self-taught expert on the art form. The most intense negotiations I ever had with him when proposing a story for Fortune were about the photography. Steve had all kinds of advice about the pictures that would accompany an article, especially about the stylistic approach to his cover portrait. He could be more than a little vain about how he was portrayed, and always sought the upper hand in deciding not only who would do the shooting, but how the portraits would be set up. This time, however, he didn’t put up a fuss. He climbed right up the red clay steps and sat down. As soon as George looked at him he exclaimed, “Steve, you’re not wearing shoes! Don’t you want to wear some shoes for the cover of Fortune?” Steve shrugged and said, “Sure, fine.” He ran upstairs, grabbed a pair of sneakers, and came back wearing them—with the laces left untied.

  After the shoot, I told Bill I’d run him over to the airport in my Volvo station wagon, but we had to wait a minute so George could take a photo of the three of us in Steve’s backyard, for the editor’s page of the magazine. Then Bill and I rushed off to the airport. We didn’t say much—I could tell that he had moved on and was already thinking about what was next for him. “You guys get along pretty well,” I remarked. “Why shouldn’t we?” he answered. He was preoccupied, but polite as always. “Thanks. I’m really glad we did that,” he said as he jumped out of the car.

  George’s photo turned out to be my favorite from the many cover stories I worked on with either Bill or Steve. Wrought-iron railings swoop around the two young cybertycoons, who are perched shoulder to shoulder on the staircase, Steve one step higher than Bill. The expressions on their faces seem without pretense to me, and very revealing of their personalities. Bill looks like the cat who ate the canary. And Steve, who seemingly could sell anyone (except Bill, that is) the Golden Gate Bridge, has the sly smile of a clever young man who would never outgrow his penchant for making mischief.

  Despite his business woes, Steve did have reasons to smile. If he was adrift professionally, he was starting to settle personally, in a way that gave him great satisfaction. His daughter Lisa had just come to live with him and Laurene. This was a complicated kind of atonement on his part, given the way he had immaturely and irresponsibly tried to deny his paternity. And the impending arrival of his son, Reed, excited this very untypical man in a deeply normal way. Reed, of course, was the first child he had planned for, and when he arrived in October, Steve reacted as so many fathers do—he became a know-it-all, in that deadly serious way that’s deeply amusing to parents who have been through the exercise. “They were classic new parents,” remembers Mike Slade. “They did everything wrong. They were both hippies, right? So the kid was in their bed the whole time, the kid was only breastfed. So what did the kid do? Let’s see, he screamed all the time and he was hungry all the time ’cause, duh, right? So within a week they looked like prison camp survivors.

  “Steve is kind of a baby himself, right?” Slade continued. “And the guy was getting no sleep. So he instantly became a madman. It was right out of the CIA torture training manual. I’m not kidding. Within a week of Reed being born he was like, ‘I’ve gotta hire a president and COO. I’ve gotta do it. Ooh, it’s too much.’ ” But even this was a reflection of the very standard delight he took in his son, and the seriousness he was going to apply to the endeavor of raising Reed.

  There was one other reason for Steve to be happy then, although nobody—including Steve—understood it at the time.

  Bill’s strategy—to have Microsoft steer the industry toward a standardization that fit the needs of business—would shape everything about computing in the 1990s. Workstations did become subsumed by PCs. Mainframes did turn into nothing more than vast arrays of circuit boards built upon the PC architecture. The personal computer giants of that decade, companies like Dell and Compaq and HP and Gateway, churned out one artless machine after another, competing on brute measures like speed, power, and delivery times. The billions of people around the world who came to depend on the PC interacted daily with interchangeable boxes powered by the same chips, and they executed their tasks through applications governed by the same operating system. Apple, which had been the one company producing unique computers for individuals, foundered as Sculley and the hapless CEOs who succeeded him chased the same market as everyone else. By the late 1990s, it was almost as if the Orwellian scenario of the Mac’s “1984” commercial had come true. Big Business, with a pair of capital B’s, ruled computing. The drones used what they were told. The personal had been stripped out of personal computing. Year after year after year, Microsoft’s domination increased with one inevitab
le and inexorable and dull step after another. It seemed that Windows might rule forever. The rise of Bill Gates was as dull as the computing he enabled. At least that’s how Steve felt about the work of his far more successful rival.

  All this standardization left an opening, of course. An opening for someone who preferred creating machines that delighted real people, rather than primarily serve the needs of business. An opening for someone just like Steve Jobs. At the time of our interview, Steve was still a confused fellow. His lingering resentment of the way he had been treated by Sculley and the Apple board, his frustration about the misfortunes and secondary importance of NeXT, and his egotistical need to matter in an industry whose direction was being dictated by someone else made it impossible for him then to see a way out of his dilemma. For the next few years, he would press ahead with his goal of making winners of NeXT and Pixar. But eventually he would sense his way to the opening that Gates had left behind—the opening for a company that could once again make insanely great computing machines for you and me. And when he found that opening, and made the most of it, he was rewarded with a kind of adulation that Gates would never come close to receiving.

  Chapter 7

  Luck

  WOODY

  Oh, Buzz, you’ve had a big fall. You must not be thinking clearly.

  BUZZ

  No, Woody, for the first time I am thinking clearly.

  (looking at himself)

  You were right all along. I’m not a Space Ranger.