Steve had made an effort to keep Ruby and Avie on board. But the fact that the new jobs he promoted them into turned out to be hollow is an indication of the ambivalence he felt about keeping them. In one critical way, Steve hadn’t changed much. He put the needs of the company ahead of any work relationship. He became even more pragmatic about this kind of thing during his later years. In important ways, his assessment of the team—measured by the same high standards he applied to himself—was clear-headed and brilliant. Losing employees, colleagues, and personal friends was hard on a personal level, for Steve and for everyone else involved in the transitions. But Steve had always believed that when the time came for a change in personnel, a company should move on as quickly as possible. It will soon find that circumstances change, and that it can do just fine without the old heroes.
Where Steve failed in these transitions is in the aftermath. The departure of Ruby, with whom he’d worked for sixteen years, was characteristic, even though the hardware chief delayed his official resignation in order to better prepare Tony Fadell to succeed him as head of the newly formed iPod group Ruby had put together. When others could no longer match his level of effort and intensity, when they became less important to his plans for Apple, or when they left the company, Steve would lose interest. Steve cared more about the potential buying power of his customers than he cared about propping up departing veterans whose contributions he deemed waning. Avie or Ruby should never have expected anything different. Steve had treated his Apple cofounder, Woz, this way, and others along the way had been dismissed in similar fashion. He prioritized ruthlessly, and when Avie and Ruby tumbled down in the ranks of people who could deliver what he believed Apple needed, he moved on.
TWO MONTHS AFTER Avie and Ruby retired, Apple made a seemingly innocuous announcement, in which it tersely acknowledged that Nancy Heinen, the company’s general counsel—and one of just two women on Steve’s executive team—had quietly resigned. She was only forty-eight years old at the time of her “retirement,” yet the news made barely a ripple. One month later, however, the plot thickened when another Apple press release noted that the company had embarked on an “internal investigation,” at the behest of the Securities and Exchange Commission, into apparent “irregularities” in stock option grants made to senior management between 1997 and 2001. Nearly a year later, on April 24, 2007, Heinen would be formally charged by the SEC of being complicit in improperly managing the “backdating” of two 2001 stock grants: one of 7.5 million options to Jobs, and another—the one Jobs himself had initiated after Fred Anderson was recruited by Dell—of 4.8 million options to other members of the executive team. By backdating the options, Heinen had given Steve and his team better strike prices. That in and of itself wasn’t illegal—what crossed the line, however, was how the records accounting for the options were doctored, allegedly at Heinen’s direction, in a way that made Apple’s earnings report look slightly better than it was at the time. Eventually, Heinen settled with the SEC without admitting any wrongdoing, after paying a $200,000 fine and returning $1.575 million of proceeds from options she received from the grants in question.
Anderson had been chief financial officer at the time of the alleged backdating, and the SEC produced an email in which he cursorily approved Heinen’s suggestion of a specific strike date for backdating the options. He too was implicated by the SEC, for supposedly not paying proper attention to the grants, and settled the charges after paying $3.65 million of proceeds derived in the same way as Heinen’s.
All kinds of mitigating factors complicate the backdating story. Apple’s outside counsel, Palo Alto–based Wilson Sonsini Goodrich, had advised Heinen that backdating was probably legal; much the same advice it gave to several other tech companies who were eventually pursued by the SEC, including Pixar. Steve had authorized the backdating, albeit with the assumption that it was legal. And he did himself no favors with his testimony to the SEC. Explaining his own 7.5 million options grant, Steve sounded self-pitying. “It wasn’t so much about the money,” he said. “Everybody likes to be recognized by his peers.” He had hoped, he explained, that the board would come forward on its own with an offer of new options, given his success and the fact that a previous grant was underwater. “It would have made me feel better,” he told investigators.
Talk about tone-deaf. Even allowing for the fact that Steve was not feeling well on the day of his testimony, and that he never imagined his testimony would become public, his words accurately, if unintentionally, reflected a certain callousness that he applied to Anderson and Heinen’s plight. Anderson had resigned from Apple’s board about six months before the SEC came to its decision, when it became clear that the company’s internal investigation would lay the blame for the trouble at his feet, and at Heinen’s. Meanwhile, Steve himself was left untouched by the SEC. “I was hurt,” says Anderson, “because I have tried to live my life as a Boy Scout. The most important things to me are my set of values and how I conduct myself, you know? And everybody that knows me, whether at Apple or anywhere else, will tell you that I have incredibly high ethical standards and that I would never, ever knowingly do anything wrong. I mean, even with people. I always treated people with respect and protected a lot of people from Steve’s idiosyncrasies.”
Anderson deserved better treatment than he got from Steve and from Apple. (Heinen has not spoken publicly about her departure.) But by the time the backdating scandal became a public matter, he was no longer CFO, making him less important to Steve than he had been. Steve could be tremendously helpful to friends and colleagues in times of need, especially when they or their families needed medical treatment. He could also be cold and insensitive to coworkers when their personal issues obstructed what he saw as the company’s mission, or distracted them from giving Apple their full attention. With a little more empathy, and a little more caring for those who weren’t critical to his cause, Steve could have saved himself, and Apple, from a handful of unnecessary headaches.
FOR THE REST of his time at Apple, Steve would manage the company with a mix of old-timers and newcomers. Cook and Ive had been with him for years by now, as had communications chief Katie Cotton, and Phil Schiller, the good-natured head of marketing. Sina Tamaddon and Eddy Cue had gradually become part of the core, and Steve promoted Fadell to head up the hardware side of the iPhone project, and Forstall, another former NeXT whiz, to handle the software. Forstall and Fadell could have become the next “Avie and Ruby,” had they not viewed each other as rivals from the very start. They would clash and undercut each other even more than Fadell had banged heads with Ive and Ruby. Steve found himself refereeing disputes that were beginning to threaten the vaunted synergy that had always been Apple’s “secret sauce”—the blending of clever hardware and ingenious software into a single, magical digital widget. In fact, Fadell was such an explosive force that he would leave the company in 2009, and head off to form a new company, called Nest Labs, which makes a thermostat and a smoke detector that work with your home Wi-Fi network. Fadell is not remembered fondly in the Apple executive boardroom. When certain Apple higher-ups speak of him now, they sneer at the designer of “that little thermostat.” The definition of little is relative, of course. In 2014, Google paid $3.2 billion to acquire Fadell’s Nest Labs.
In the last years of his life, two avoidable controversies distracted Jobs from what he really wanted to be doing: working with this group on great new products. The two events played out, even after his death, in ways that made Apple, and Steve, seem arrogant, willful, and above the law. Starting in the mid-2000s, Steve was the informal leader of a group of Silicon Valley CEOs who agreed not to poach senior employees from one another. In 2010, the Justice Department filed a complaint in 2010 against Apple, along with Adobe, Google, Intel, Intuit, and Pixar, alleging that the companies had entered a series of agreements, recorded formally and informally, to not hire from one another. A class-action lawsuit followed in 2011, filed by an engineer at Lucasfilm on behalf of
64,000 employees of these companies, and others in Silicon Valley. (This lawsuit added Lucasfilm, which like Pixar is now owned by Disney, to the list of companies.) The plaintiffs alleged that the anticompetitive scheme cost workers billions of dollars in unrealized wage gains they might have enjoyed with unrestricted job mobility.
Emails subpoenaed during the investigation show that Steve was clearly involved. They also show him taking mordant pleasure at the fact that a Google recruiter was fired for poaching an Apple employee, after Steve had complained to Eric Schmidt, who was then CEO of the giant search engine company. When Jobs heard the news, his email reply was a smiley-face icon. Steve was hardly the only CEO to be caught with incriminating emails, but he was the only one shown making light of the personal impact of the collusion. Other chief executives seemed motivated primarily by a desire to not piss off Steve, who had become the most powerful employer in the technology business.
Tim Cook doesn’t see anything egregious in Steve’s thinking—even though he has since tried to settle the lawsuit by offering to pay hundreds of million of dollars to participants in the class-action suit. “I know where Steve’s head was,” he says. “He wasn’t doing anything to hold down salaries. It never came up. He had a simple objective. If we were working together on something—like with Intel, where we threw everything in the middle of the table and said let’s convert the Mac to the Intel processor—well, when we did that we didn’t want them poaching our employees that they were meeting, and they didn’t want us poaching theirs. Doesn’t it make sense that you wouldn’t, that it’s an okay thing? I don’t think for a minute he thought he was doing anything bad, and I don’t think he was thinking about saving any money. He was just very protective of his employees.” It’s a rational argument, insofar as it goes. All CEOs want to keep their best employees at their company. But it ignores the simple fact that making such an agreement with other companies, explicitly or otherwise, is illegal, according to the U.S. government and most antitrust lawyers. Steve, apparently, couldn’t be bothered even with acknowledging those rules.
That same attitude hurt Apple in another case it had to settle, in which the government alleged that Apple conspired with book publishers to raise the price of ebooks. As Steve prepared to launch the iPad, he was sure that reading books on the device would be seen as an attractive feature, one that he hoped would create profits for Apple while stealing customers from Amazon. He and Eddy Cue strongly encouraged book publishers to adopt the agency model Apple used on its app and iTunes stores—publishers could set the price of their ebooks, as long as Apple got 30 percent of the sale. Furthermore, they wouldn’t allow their titles to be sold at lower prices elsewhere. In this scenario, prices of ebooks would have risen uniformly from the low, $9.99 price Amazon often charged for new releases. The publishers would have enjoyed smaller profits but would have been able to set higher prices and avoid permitting Amazon to drive book prices down. Here, too, Steve’s emails did nothing to help Apple. His aggressive negotiating notes show that he was fully aware of the impact of getting all the publishers on the same page. Writing to James Murdoch, the son of News Corp CEO Rupert Murdoch, Jobs said that News Corp’s best option, he believed, was to “Throw in with Apple, and see if we can all make a go of this to create a real mainstream ebooks market at $12.99 and $14.99.”
It’s possible that Steve really didn’t see anything wrong with trying to build solidarity among publishers, because he had done the same thing with record company executives when setting up the iTunes Music Store. Nobody accused him of collusion then, even though he had insisted on setting a price of 99 cents a track. It’s also possible that a variety of assorted corporate safeguards—better legal counsel, better compliance efforts, and so on—could have kept Apple on the right side of the law in both the ebooks case and the labor collusion. But Steve had molded Apple into a tool for turning what unfolded in his imagination into real products, not an organization that conservatively guarded against the downside of his impulses. So the safeguards that did exist weren’t powerful enough to prevent the troubles that arose.
“Steve created a management approach that worked for the type of product that he had been thinking about,” Bill Gates told me after Steve’s death. “You know, if you were going to do hardware and software together, and you’re going to do a few super, super nice designs, and you’re going to do it end-to-end where partnerships aren’t the key thing, where you control that experience totally. He managed a great organization that was purpose-fit to that.” We had been chatting about why so many books had been written promising to reveal how to do business “the Apple way,” or “the Steve Jobs way.” Bill was describing why Steve is a unique managerial case, someone whose model has limited applications. “Maybe you should call your book Don’t Try This at Home,” he said, only half joking. “So many of the people who want to be like Steve have the asshole side down. What they’re missing is the genius part.” One downside to the Steve Jobs way of running a company, he opined, is that “This is not an organization with checks and controls.”
ALL HIS LIFE, Steve had tried to control the narrative about Apple by being the sole employee to tell its story to the public. There was a cost to this choice that didn’t really become apparent until the last years of Steve’s life, when his notoriety and Apple’s success drew attention to Cupertino as never before. Apple became the lightning rod for everything from criticism of the tech industry’s sustainability problems to corporate governance controversies that affected many other companies as well. And its spokesman was a mortally unhealthy man with a desperate impatience to deal with things that really mattered to him, not this broad array of nagging distractions.
Ever since getting sick in 2004, Steve had kept goals in his head of things he wanted to be alive for. Some were personal, like the school graduations of his kids. Some were corporate, like his desire to live long enough to introduce the iPad tablet computer. Dealing with the media circus that erupted in 2010 when a technology blog came into possession of an iPhone 4 prototype that a young Apple engineer left in a bar was nowhere on Steve’s list. Nor was flying back from a Hawaii vacation to manage an uproar that became known as “Antennagate,” the result of the discovery that the iPhone 4, if held at certain angles, would drop calls more frequently than past iPhones. And he had only passing sensitivity to corporate governance issues. Yet all these incidents, and more, added to the already immense task he faced of managing a sprawling international company with nearly fifty thousand employees during these years when he was quite truly dying.
It is part of the CEO’s job description to manage such distractions, and Steve was not particularly good at this even when he was healthy. He had always been impatient. But the cancer was exhausting him and bringing the kind of wearing pain he had never before experienced. Not surprisingly, Steve bollixed up things that he might have handled with ease under different, healthier circumstances.
For instance, reasonable people can disagree on the subject of whether Steve had a fiduciary responsibility to disclose his cancer earlier than he did, and to then keep the public informed of its progress. Steve felt, and perhaps naively wished, that this was a private matter, and so he skirted the truth about his disease again and again. But calling Nocera a “slime bucket” when the Times columnist called to address the issue did little for the reputation of Apple or its CEO. Similarly, Steve’s public comments about Apple’s response to the controversy that was set off when a spate of suicides occurred at the Chinese campuses of Foxconn, its leading assembler of iPhones, did more to hurt Apple than help it, in a situation where its record was actually fairly good for a big global corporation.
As Apple built up a supply chain that delivered more and more iPhones, iPods, iTouches, Nanos, and the like, it annually audited working conditions at the factories of its suppliers, and even of its suppliers’ subcontractors. But problems slipped past these audits. That’s not unusual; not surprisingly, the conditions of Asian manufacturing plants
have been worrisome for decades. That’s unlikely to change. In a system set up purely to secure the lowest costs for U.S. and European manufacturers, workers are unlikely to be paid or treated particularly well. When Apple learned of the suicides, it actually responded quickly, pulling together a noteworthy task force to investigate Fox-conn’s factories, and taking other actions that some observers have deemed forward-looking. Again, reasonable people can disagree about the quality of Apple’s response. But what everyone can agree on is that Steve didn’t help matters with some of his public responses to the crisis, including the moment at a tech conference when he said, “Oh, we’re all over this one.” He sounded glib, in the way of any corporate CEO trying to smooth over an inconvenient truth.
Steve had come a long way in moderating some of the behaviors that had made the young man at the Garden of Allah such a volatile, difficult presence. Some of his old foibles hung on with persistence. Others had been tamed. And at the moment when the pressures of his job would have benefited most from his evolution, his illness added to the complexity of his task.
Heroic narratives aren’t supposed to have chapters like this. In the typical Pixar movie, or in the Disney animations that started getting better and better toward the end of Steve’s life, true emotions are unfrozen, reconciliations are wholly achieved. But Steve’s life wasn’t a movie. It was inspiring, confounding, and unabashedly human, to the very end.
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