Becoming Steve Jobs

by Brent Schlender

  This was a new kind of quality, something consumers had never expected from technology or electronics, which had always reflected their origin in the gnarly world of engineering. Buyers of products from Olympus, Panasonic, IBM, Motorola, Canon, or even Sony waded through instruction manuals that were confounding at best, and often nothing more than a step up from the technical Heathkit directions Steve had encountered as a kid. More often than not, buyers of Apple products had little more to do than open a sleek and solid package, connect their stylish device to an outlet or a Mac, and turn it on.

  Buyers of PCs had heard about the quality of Apple computers for years. But now that millions of consumers had played with their iPods and used iTunes software on their PCs, Apple’s reputation for building products that made even Sony’s look stodgy was more universal. It had taken just a couple of years, in fact, for Apple to develop a phenomenal reputation among that younger generation that had ignored its products when the first retail stores opened. By 2006, the Apple emporiums from Tokyo to Johannesburg to the new gleaming cube that opened on Fifth Avenue in the heart of Manhattan were flooded primarily by young buyers. For these new customers, and of course for the Apple faithful of old, the company had an open invitation to enter any new field it liked. They were primed for any new addition to the Apple experience.

  Just as significantly, Steve’s skill at figuring out an industry’s soft spot, and maneuvering Apple into a position to solve that problem, finally matched his confidence that he could do so. Steve had always been able to suss out the weak spots in other adjacent industries (just as he had always been able to quickly pinpoint the personal foibles of other people). But now that Apple had pulled off its iTunes coup, Steve knew that the company could successfully enter another industry and alter its business model in a way that would benefit both Apple and the industry’s consumers. Releasing a new phone, he knew, might take that strategy to a whole new level of complexity, affecting the lives of not merely tens or hundreds of millions of individual human beings, but billions of potential buyers. All he had to do was figure out how to work with the telephone carriers.

  THE FIRST TIME Steve ever railed on to me about “the stupid carriers” was back in 1997. That’s how long he had been thinking about a phone, even though he swore again and again that he’d never do business with “those bozos.” I once said to him, “Steve, methinks you doth protest too much! You sure seem to be thinking about this a lot.” He didn’t laugh. He just got angrier. “Yeah, I do think a lot about what a crock of shit it is,” he ranted, “that our only choice if we want to get into the phone handset business is to work with one of the goddamn telecom carriers.” When Steve agreed to launch the ROKR, Motorola was the one that dealt primarily with the carriers. The disappointing experience reinforced Steve’s belief that the carriers always stiffed handset makers. Nevertheless, the carriers held the keys to a market he couldn’t ignore. By 2004, worldwide unit sales of cellphone handsets already had topped 500 million units a year, dwarfing unit sales of PCs and iPods and PDAs combined. And they were growing.

  There was one way that Apple could have avoided the carriers: by operating a network itself. A new strain of carrier had emerged in the United States called a “mobile virtual network operator” (MVNO). The MVNO model made it possible for an independent company with its own strong brand to have its own eponymous network by leasing wireless capacity wholesale from one of the telecom giants. Sprint once approached Steve about starting an Apple-branded MVNO. But as much as he wanted to avoid the carriers, Steve knew that operating a network was a complex, transaction-intensive business and way outside Apple’s area of expertise. So he swallowed hard, and asked Eddy Cue to start knocking on doors.

  Cue and Jobs knew there was one big obstacle to negotiating a successful deal: Steve wanted Apple to have complete control over the handset. Since the phone was also going to be a top-notch iPod, and an Internet client, and a serious computing device, the user experience would be critical to its success. The multi-touch interface on the iPhone would be utterly different from anything consumers had experienced before. Furthermore, if websites were going to display at a big enough size for consumers young and old, the screen would have to take up virtually the entire front surface of the phone. All of this was doable, Steve thought—but only if the carriers kept their hands off his design. Finally, Steve knew the team would go through a few designs before getting it perfect; Apple needed the freedom to experiment without anyone second-guessing its engineers. So any carrier that committed to a deal would have to do so without knowing all of the specifics of what kind of phone Apple would finally deliver.

  “We actually knew Verizon better than we knew AT&T,” recalls Cue. (At the time, Cue was dealing with Cingular, a joint venture of Bell South and SBC that bought AT&T Wireless in 2004. In 2006, after SBC acquired AT&T Corp. and Bell South, it changed its name to AT&T.) “We knew Verizon because we had consulted them when we did the deal with Motorola for the ROKR, even though they didn’t end up selling the phone. When we went back to them to talk about our own phone, they were pretty tough. They thought cellular was their playground. Sort of like, ‘You’re gonna play our game by our rules.’ And they were pretty powerful. So when you looked at what we wanted to do, it didn’t match well, because they said, ‘Whaddya mean, you’re gonna control the phone’s UI?’ ”

  AT&T’s wireless executives weren’t nearly as tough. They had more customers than Verizon, but their network was derided for its spotty coverage. So when Cue and Jobs came for a visit, the results were different. “When we went to see [AT&T],” says Cue, “we spent four hours with Ralph de la Vega and Glenn Lurie in a room in the Four Seasons. And right off we really liked them. You could tell they were hungrier and wanted to show what they were capable of. So we started a relationship that same day.”

  Steve regaled the AT&T folks with the myriad ways the iPhone would send consumption of wireless data bandwidth soaring, painting a vision that made them salivate. For the first time, he explained, consumers would have a device in their hand that could do much of what they could do on their desktop computer. The iPhone’s big touch screen would make unmodified, full-featured Internet websites usable just about anywhere. Consumers would download and share photographs, which are rich with data. They would spend lots of time doing email. They could edit documents or manage information about their sales contacts remotely, right on the phone, by interacting with either built-in applications or over the Internet, with specialized websites that worked regardless of whether the user’s main computer was a PC or a Mac. They would purchase and download music from the iTunes store. They could text easily. And that was all without even mentioning video! Once people started looking at videos and movies online, data usage would skyrocket. Maybe someday they’d make video phone calls. He told them about a site that had just started up in February, something called YouTube, where people uploaded and shared video clips with anyone else online around the world. Maybe that too would turn into something big! This is what AT&T had to look forward to, he explained—being the carrier for all these kinds of new activities. And Steve had learned something else along the way, he told them. He knew that once you made this kind of powerful technology available to the world, it would take off in ways you couldn’t predict, in ways that even he couldn’t predict. Surely those developments, too, would drive usage of the AT&T wireless network.

  This was why Steve had one other demand above and beyond having total control of the design and manufacture and sales price of the phone. If Apple’s phone was going to be an instrument that drove consumption of wireless data, Steve felt that his company also should be compensated for bringing the carrier the extra business. So if AT&T wanted the right to be the initial, exclusive carrier for the iPhone, it would have to pay Apple a sales commission for the added data traffic the iPhone would inevitably foster. In other words, Steve wanted a piece of the carrier’s action. After all, Apple kept 30 percent of the take on anything sold in the iTu
nes Music Store. So why not do the same thing with phone data carriage fees?

  All in all, his demands were every bit as bold as the vision he painted. But AT&T could see that the iPhone might give its network a highly needed boost, and something else none of its competitors could claim—a phone from what had become the hottest gadget manufacturer in the world. So it was willing to strike what, in hindsight, seems like an extraordinary deal for Apple. Steve got all that he wanted, and perhaps a little bit more than he should have. AT&T gave Apple unprecedented freedom to produce, almost sight unseen, whatever phone Steve and his wizards wanted to make. It allowed Apple to set the price for the new phones, which AT&T could not change or discount. And, last but not least, the Cupertino company would receive up to about 10 percent of the data carriage revenues a user generated each month, for the duration of that customer’s iPhone service contract. These were terms no handset maker had ever received. Never had a carrier shared its fees with a telephone manufacturer.

  As it would turn out, sharing fees was something neither side liked. One year later, they changed the deal so that AT&T paid Apple the full price for each phone, instead of getting the distributor’s price, which was about $200 below retail. Since accounting rules allowed Apple to spread the price AT&T paid per phone across two years, Apple was able to smooth out revenue stream and buffer the ups and downs of usage. And AT&T was happy to get Apple’s fingers out of its own revenue stream. It was a cleaner arrangement for both sides—and many telecommunications analysts believe it has been an even better deal for Apple than the old model.

  After the development of iTunes, Steve had come to fully appreciate the power Apple now commanded. He used it aggressively but intelligently. He didn’t overreach with AT&T. He knew they needed something like the iPhone, he knew nobody else could provide it, and so he made a deal that gave them what they wanted, but on terms that would make Apple very, very rich. He had Cue to handle the day-to-day business of the relationship, and Cue was on the phone with AT&T’s Glenn Lurie constantly—no one wanted a repeat of Apple’s Motorola partnership. It all worked out brilliantly for Apple. By some analysts’ estimates, the Cupertino company now pockets as much as 80 percent of the profits of the entire cellphone handset business.

  STEVE WAS DEEPLY focused during these years. He had pared his life down so that he could be as expansive as possible in very specific aspects of his work. The dividing lines were clear. Family mattered. A small group of friends mattered. Work mattered, and the people who mattered most at work were the ones who could abet, rather than stifle, his single-minded pursuit of what he defined as the company’s mission. Nothing else mattered.

  This is why, during the last decade of his life, Steve built so much of his work life around his collaboration and deep friendship with Jony Ive. Their relationship was unlike any creative partnership either had experienced previously. Not only were they both extremely productive, but they seemed to get along even when they disagreed. “People have talked about that roller coaster of falling in and out of favor with Steve,” Jony mused during one of two lengthy interviews we had in 2014. “I was fortunate in that we didn’t have that experience. We had a very consistent relationship that weathered his illnesses and the huge transitions the company went through.”

  They had come a long way since that day in 1997 when Steve first walked over to the Design Lab, where Jony was anxiously assuming that his new boss intended to fire him on the spot. But Steve told me that he immediately recognized Jony as a “real keeper.” He could tell instantly that he liked his taste, judgment, and ambition. Nevertheless, Jony had remained intimidated during that first year, fearful that if he did a single thing wrong, he’d have to pack his bags. Such was Steve’s reputation. While Jony thoroughly enjoyed the process of working with the boss on that very first iMac, he always felt self-conscious when trying to describe some of his design decisions to Steve. But a visit to Pixar helped him realize that he and his boss were on the same wavelength. “When we visited Pixar with the first model of the iMac, it was a revelation, because I didn’t know Steve very well, even then,” says Jony. “But to hear his introduction of me to the whole of Pixar, I realized that he really understood what I was trying to achieve at an emotional level. At some level, he knew what I was trying to articulate.”

  As Steve spoke, it became clear to Jony that he had an even more sophisticated and intuitive sense than Jony did of why the unusual new design made sense. This was before the product had been announced or shown to anyone else outside Apple. “He could do that,” Ive continues. “He could refine and describe ideas so much better than anyone else could. I think very quickly he understood that I had a specific proficiency in terms of having good taste and understanding of aesthetics and form. But one of my problems is that I’m not always as articulate as I would like to be. I can feel things intuitively, and Steve could sense the full meaning of what I was getting at. So I didn’t have to justify it explicitly. And then what would happen was I would then see him articulate those ideas but in a way that I was completely incapable of doing. And that’s what was so amazing. I learned, I got better at it, but obviously I was never ever in his league.”

  Their relationship deepened as Apple’s metabolism accelerated. Personal computers have always been works in progress, thanks in large part to the escalator effect of Moore’s law, which forces you to redesign constantly in an effort to do more with components that keep becoming more capable. The iPod only accelerated that cycle. Jony and Steve could never pause for long to bask in the afterglow of shipping a new device. But integrating these faster cycles into the company’s routine was a deeply satisfying challenge, Jony contends. “I’ve always thought there are a number of things that you have achieved at the end of a project,” he says. “There’s the object, the actual product itself, and then there’s all that you learned. What you learned is as tangible as the product itself, but much more valuable because that’s your future. You can see where that goes and demand more of yourself, being so unreasonable in what you expect of yourself and what we expect of each other, that it yields these even more amazing results, not just in the product but in what you’ve learned.”

  Ive believes that the lessons gained from each successive product development cycle fueled Steve’s unquenchable restlessness. Each product somehow fell short, which meant that the next version not only could be better but had to be better. Looking at their work this way, Steve turned the incremental development of products into an ongoing and impossible quest for perfection. What got left out of each product merely served as the basis for the next, improved edition. Steve always wanted to look forward, and the completion of a device was just one more call to the future.

  Ive, like Cook and Laurene, believes Steve came back from his 2004 cancer operation more focused than ever. “I remember walking and us both being in tears very, very early on, wondering whether he would see Reed graduate,” he says. “At one level there was a daily ‘What did they say? What did the tests show?’ conversation.” But Ive doesn’t think cancer is what motivated Steve during the incredibly productive end of his life. “I think it’s hard to maintain a singular focus in reaction to an illness that lasts many, many years,” he continues. “There were other things beside his illness that motivated him to focus more intensely on his work. Things like selling product in very high volume for the first time in the company’s history. I’m talking about selling tens or hundreds of millions of units of a single product. That was a huge change for Apple.

  “I remember a conversation in which we talked about how do we define our metrics for feeling like we have really succeeded? We both agreed clearly it’s not about share price. Is it about number of computers we sell? No, because that would still suggest that Windows was more successful. Once again, it all came back to whether we felt really proud of what we collectively had designed and built. Were we proud of that?

  “There was definitely pride, in that the numbers reflected that we were doing good wor
k. But also I think Steve felt a vindication. This is important. It wasn’t a vindication of ‘I’m right’ or ‘I told you so.’ It was a vindication that restored his sense of faith in humanity. Given the choice, people do discern and value quality more than we give them credit for. That was a really big deal for all of us because it actually made you feel very connected to the whole world and all of humanity, and not like you’re marginalized and just making a niche product.

  “There were many things that overlapped or aligned to make Steve much more sharply focused than before,” he concludes. “One was his illness, but one was an unprecedented momentum as a business that none of us had ever felt before. Feeling that momentum was as important as his illness to his creativity and success, because the excitement was still fresh.”

  By the time the two got around to focusing on the iPhone, Steve had become closer to Jony than anyone he had ever worked with. “The bond became so strong between us,” says Ive. “We could just be honest and straightforward and not have to articulate precisely why this is a good idea or why this is a valuable idea. And we also were honest enough to be able to say ‘Nah, that’s a terrible idea,’ without worrying about each other’s feelings so much.”

  Not surprisingly, some on the executive team thought Ive held unwarranted sway over Steve. In the years after Steve’s death, more and more unaccredited stories came forth alleging that Jony was the one who really decided who got fired and who got promoted, as if he were Steve’s Svengali. The truth was simpler than that. Steve prioritized ruthlessly, in just about every aspect of his life. To maintain his focus, Steve made clear decisions about what mattered and what didn’t. His time and friendship and discussions with Jony mattered, even at the expense of other relationships. It proved to be a relationship that was as expansive as Steve’s ambition.