Inside Apple: How America's Most Admired--and Secretive--Company Really Works

by Adam Lashinsky

  Another reason why Apple wants new products to remain in stealth mode until their release dates is so they don’t steal the thunder from existing products. If consumers know exactly what’s coming, they may hold off on a purchase for fear it will be superseded by the next generation. This dulling of demand renders products already on retail shelves or in warehouses awaiting purchase worthless. (Indeed, even imperfect information can damage sales: Apple said expectations of a new iPhone in the summer of 2011 hurt sales of the existing iPhone 4.)

  Most important, announcing products before they are ready gives the competition time to respond, raises customer expectations, and opens a company up to the carping of critics who are bashing an idea rather than an actual product. Companies who fail to grasp the power of secrecy do so at their peril. Hewlett-Packard committed this product marketing sin in early 2011 by announcing it would have an ill-defined “cloud” offering later in the year. Unfathomably, HP later “pre-announced” the sale of its PC business, inflicting immeasurable damage on a unit that accounted for nearly a third of its sales. (HP’s board fired its CEO, Léo Apotheker, shortly after the announcement about the PC unit.)

  Apple secrecy over its product launches is extraordinary largely because so few other companies keep secrets nearly as well. Matt Drance worked at Apple for eight years, first as an engineer, and then as an “evangelist” helping outside developers design products for the Apple platform. He looked on in amazement at the non-Apple approach. “Here’s a shocker,” he wrote on his blog, Apple Outsider, after Korean phone maker LG embarrassingly blew an announced product deadline for a new smartphone.

  The product you send out the door will probably come later, and with fewer features, than you intended. Time runs out. Unexpected complications arise. Bugs overwhelm the team. Your partner invalidates your plans. Something’s got to givy ds got te. You need to either take something out, or wait longer. But if you’ve spent months blowing smoke, now everyone is waiting longer. The problem with talking smack is you immediately put yourself on the clock. You almost guarantee public disappointment when the product does not ship as (or when) promised. If you just shut your mouth and let the product speak for itself—once you actually have a product—then there’s a much better chance for people to be pleasantly surprised. Some companies understand this. Others clearly do not.

  Secrecy at Apple is strictly enforced from within. Valley engineers love to swap stories about their work, but Apple engineers have a reputation for keeping to themselves. “I’ve had friends who’ve been reprimanded for talking too much,” reported a former engineer. “It’s best in general not to talk about work.” The mentality makes Apple stand out in the tech world. “Fear is palpable there, including among partners,” said Gina Bianchini, a seasoned Valley entrepreneur and longtime Apple watcher who is CEO of Mightybell.com;, an Internet start-up. (The home page of Mightybell.com wryly states “Handmade in California,” an homage to the bigger company’s tagline “Designed by Apple in California.”) “No company has that level of fear.” In 2011, she explained Apple’s outsider status with an epiphany from TED, an annual tech-industry thinkfest in Long Beach, California, attended by a who’s who of top executives and investors. “One thing I observed this year at TED: The Apple employee population does not circulate within the Silicon Valley ecosystem. Nobody knows anybody at Apple. The Internet people all know each other, but Apple lives in its own world. Inside, everyone is so afraid to talk that it’s easier to mix exclusively with each other.”

  Another Valley engineer plays in a regular poker game with a team of Apple employees. The understanding is that if Apple comes up at the card table, the subject will be changed. Being fired for blabbing is a well-founded concern. For example, people working on launch events will be given watermarked paper copies of a booklet called Rules of the Road that details every milestone leading up to launch day. In the booklet is a legal statement whose message is clear: If this copy ends up in the wrong hands, the responsible party will be fired.

  Apple goes to great lengths to maintain discipline. “There were just these things that were kept very, very secret,” said a former senior executive. “There was a project we were working on, where we put in special locks on one of the floors and put up a couple of extra doors to hide away a team that was working on stuff. You had to sign extra-special agreements acknowledging that you were working on a super-secret project and you wouldn’t talk about it to anyone—not your wife, not your kids.”

  The stress from such secret keeping becomes too much for some. Jobs made a habit of personally conveying to employees the confidentiality of all-company broadcasts. Recalled one ex-employee: “He’d say, ‘Anything disclosed from this meeting will result not just in termination but in the prosecution to the fullest extent that our lawyers can.’ This made me very uncomfortable. You have to watch everything you do. I’d have nightmares.”

  Visitors are allowed at Apple offices, but they are kept under tight wraps. Some report being shocked at the unwillingness of employees to leave their guests unattended for even a few moments ifonew momen the cafeteria. A tech-industry executive visiting a friend in mid-2011 was asked not to post anything to Twitter about the visit or to “check in” at the popular website Foursquare, which publishes a user’s location. In Apple’s view of the world, simply revealing that someone visited Apple on undisclosed business could lead to divulging something about Apple’s agenda. (One wonders if Apple will discourage the use of its “Find My Friends” feature, added to the iPhone’s software in late 2011, a feature the company described as a “temporary location-sharing” service.)

  For the most part, Apple counts on its employees to censor themselves. But in some cases, it pays attention to what employees say when they are out of the office—even when they’ve only walked across the street for a beer. BJ’s Restaurant and Brewhouse is tucked so close to Apple’s Cupertino campus that insiders jokingly refer to it as IL-7, for “Infinite Loop 7,” a building that doesn’t exist. Company lore holds that plainclothes Apple security agents lurk near the bar at BJ’s and that employees have been fired for loose talk there. It doesn’t quite matter if the yarn is true or apocryphal. The fact that employees repeat it serves the purpose.

  Steve Jobs once said that not talking about the inner workings of the company is something he borrowed from Walt Disney. The creator of the original Magic Kingdom felt the magic the public attributed to Disney would be diminished by excessive focus on what went on behind the scenes. What’s more, Disney enforced strict internal secrecy. When it was planning Walt Disney World in Florida in the 1960s, for example, Disney formed a committee to work on a “Project X.” Internal memos about the plans for the new theme park were numbered so they could be tracked, according to Neal Gabler’s exhaustive biography, Walt Disney: The Triumph of the American Imagination.

  It’s one thing to pressure employees to keep information from falling into the wrong hands. Apple’s twist is that those wrong hands happen to include one’s own colleagues. It is, in the words of one former employee, “the ultimate need-to-know culture.” Teams are purposely kept apart, sometimes because they are unknowingly competing against one another, but more often because the Apple way is to mind one’s own business. This has a side benefit that is striking in its simplicity: Employees kept from butting into one another’s affairs will have more time to focus on their own work. Below a certain level, it is difficult to play politics at Apple, because the average employee doesn’t have enough information to get into the game. Like a horse fitted with blinders, the Apple employee charges forward to the exclusion of all else.

  Apple created an elaborate and unnerving system to enforce internal secrecy. It revolves around the concept of disclosure. To discuss a topic at a meeting, one must be sure everyone in the room is “disclosed” on the topic, meaning they have been made privy to certain secrets. “You can’t talk about any secret until you’re sure everyone is disclosed on it,” said an ex-employee. As a result, App
le employees and their projects are pieces of a puzzle. The snapshot of the completed puzzle is known only at the highest reaches of the organization. It calls to mind the cells a resistance organization plants behind enemy lines, whose members aren’t given information that could incriminate a comrade. Jon Rubinstein, formerly Apple’s senior hardware executive, once deployed the comparison in a less flattering but equally effective manner. “We have cells, like a terrorist organization,” he told Businessweek simssweek

  As with any secret society, trustworthiness is not assumed. New additions to a group are kept out of the loop for a period of time, at least until they have earned their manager’s trust. Employees tell stories of working on “core technology” rather than actual products or of not being allowed to sit near the rest of the group for a months-long probation period. Organization charts, typical fare at most big companies, don’t exist at Apple. That is information employees don’t need and outsiders shouldn’t have. (When Fortune magazine printed an Apple org chart of its own design in May 2011, visitors to Apple told tales of employees becoming nervous merely being seen with a printed copy of it on their desks.) Employees do have one important source of information, however: the internal Apple Directory. This electronic guide lists each employee’s name, group, manager, location, email, and phone number, and might include a photograph.

  Apple employees don’t need an organization chart to know who is powerful, of course. The executive team, a small council of advisers to the CEO, runs the company, assisted by a cadre of fewer than one hundred vice presidents. But rank doesn’t always confer status at Apple. Everyone is aware of an unwritten caste system. The industrial designers are untouchable, as were, until his death, a tiny group of engineers who had worked with Steve Jobs for years, some dating to his first stint at Apple. A small group of engineers carries the title of DEST, distinguished engineer/scientist, technologist. These are individual contributors with clout in the organization but no management responsibilities. Otherwise, status fluctuates with the prominence of the products on which one works. As the success of the iPhone and iPad grew, the coolest faction of the company was the software engineers working on Apple’s mobile operating system software, known as iOS. Hardware engineers and, grudgingly, product marketers connected with the devices ranked high in the pecking order, followed by people in the iTunes, iCloud, and other online services organizations. Employees associated primarily with the Macintosh, once the cocks of the roost, were considered second-rate in the Apple hierarchy by this time. In terms of corporate coolness, functions such as sales, human resources, and customer service wouldn’t even rate.

  With silos being the norm at Apple, the surprise is the silos within silos. “There are no open doors at Apple,” said one former employee. Security badges allow an employee into only certain areas, and it isn’t uncommon for employees to be able to go places their boss cannot. Some areas are even more secretive than others, and this has nothing to do with special projects. An example is the famous industrial design lab where Apple’s designers work. So restrictive is the access to the lab that few Apple employees have ever seen inside its doors.

  In his best-selling book Incognito, neuroscientist David Eagleman writes about the deleterious impact of a culture of secrecy. “The main thing to know about secrets,” he says, “is that keeping them is unhealthy for the brain.” People want to tell secrets, he explained, and have a strong natural tendency to do so. Apple solves this problem by keeping its employees in the dark as much as possible. But it also begs the question of the happiness of Apple employees.

  By and large, Apple is a collaborative and cooperative environment, devoid of overt politicking. The reason for the cooperation, according to former insiders, is the comhe , is thmand-and-control structure. “Everyone knows that seamless integration between the various parts is key to making the magic happen,” according to Rob Schoeben, a former vice president who oversaw product marketing for software applications. “At Apple, teams work together constantly. Steve will rip your nuts off if you didn’t,” he said while Jobs was still alive. Under Bill Gates, Microsoft had a reputation for being a political infighting nightmare, the implication being that Gates liked the results of the survival-of-the-fittest mentality.

  Apple’s culture may be cooperative, but it isn’t usually nice, and it’s almost never relaxed. “When you’re on the campus, you never get the feeling that people are slacking off,” said an observer with access to Apple’s upper ranks. “The fighting can get personal and ugly. There’s a mentality that it’s okay to shred somebody in the spirit of making the best products.” Apple’s high standards come into play. “The pressure to be perfect is the overriding concern,” said one ex-executive. “And it’s hard to be perfect.” Another former insider described the all-too-common stories executives told of having personal time off ruined because of an urgent “Steve request.” “They went like this: ‘On vacation my product was going to be in a keynote, and I had to jump on a plane and rehearse all weekend.’ ”

  The competitive nature of the Apple culture comes into play. “Apple is a prizefight every day you go to work,” said Steve Doil, a onetime executive in Apple’s supply-chain organization. “If you’re distracted even a little bit then you slow down the team.” A former executive described the Apple culture in similar terms. “It’s a culture of excellence,” this executive noted. “There’s a sense that you have to play your very best game. You don’t want to be the weak link. There is an intense desire to not let the company down. Everybody has worked so hard and is so dedicated.”

  Apple’s culture is the polar opposite of Google’s, where flyers announcing extracurricular activities—from ski outings to a high-profile author series—hang everywhere. At Apple, the iTunes team sponsors the occasional band, and there is a company gym (which isn’t free), but by and large Apple people come to work to work. “At meetings, there is no discussion about the lake house where you just spent the weekend,” recalled a senior engineer. “You get right down to business.” The contrast with the non-Apple world is stark. “When you interact with people at other companies, there’s just a relative lack of intensity,” said this engineer. “At Apple, people are so committed that they go home at night and don’t leave Apple behind them. What they do at Apple is their true religion.”

  The attitude toward work at Apple hasn’t changed over the decades. Here’s how Joe Nocera, writing in Esquire magazine in 1986, described Jobs’s perspective on the Apple work environment:

  He used to talk, for instance, about making Apple an “insanely great” place to work, but he wasn’t talking about irresistible perks or liberal benefits. Instead, he was talking about creating an environment where you would work harder and longer than you’d ever worked in your life, under the most grinding of deadline pressure, with more responsibility than you ever thought you could handle, never taking vacations, rarely getting even a weekend off… and you wouldn’t care! You’d love it! You’d get to the point where you couldn’t live without the work and the responsibility and the grinding der. grindiadline pressure. All of the people in this room had known such feelings about work—feelings that were exhilarating and personal and even intimate—and they’d known them while working for Steve Jobs. They all shared a private history of their work together at Apple. It was their bond, and no one who was not there could ever fully understand it.

  Almost nobody describes working at Apple as being fun. In fact, when asked if Apple is a “fun” place, the responses are remarkably consistent. “People are incredibly passionate about the great stuff they are working on,” said one former employee. “There is not a culture of recognizing and celebrating success. It’s very much about work.” Said another: “If you’re a die-hard Apple geek, it’s magical. It’s also a really tough place to work. You have products that go from inception to launch, which means really late hours.” A third similarly dodged the question: “Because people are so passionate about Apple, they are aligned with the mission of the
company.”

  If they don’t join for a good time, they also don’t join Apple for the money. Sure Apple has spawned its share of stock-options millionaires—particularly those who had the good timing to join in the first five or so years after Jobs returned. “You can get paid a lot of money at most places here in the Valley,” said Frederick Van Johnson, the former Apple marketing employee. “Money is not the metric.”

  By reputation, Apple pays salaries that are competitive with the marketplace—but no better. A senior director might make an annual salary of $200,000 with bonuses in good years amounting to 50 percent of the base. Talking about money is frowned upon at Apple. “I think working at a company like that, and actually being passionate about making cool things, is cool,” said Johnson, summarizing the ethos. “Sitting in a bar and seeing that 90 percent of the people there are using devices that your company made… there is something cool about that, and you can’t put a dollar value on it.”

  Steve Jobs—who was famously uninterested in discussing money—took a nuanced view of the subject of happiness and enjoyment at Apple. “I don’t know anyone who wouldn’t say it’s t

  he most fulfilling experience in their lives,” he said. “People love it, which is different than saying they have fun. Fun comes and goes.”

  Focus Obsessively

  Tucked away in a walled-off section of the creative studio of Apple’s main marketing building is a room devoted to packaging. Compared with weighty and complex tasks such as software design or hardware manufacturing, packaging would be a pedestrian concern at many companies, almost an afterthought. Not at Apple, which devotes tremendous energy and resources to how it wraps its products. The packaging room is so secure that those with access to it need to badge in and out. To fully grasp how seriously Apple executives sweat the small stuff, consider this: For months, a packaging designer was holed up in this room performing the most mundane of tasks—opening boxes.