Inside Apple

by Adam Lashinsky

  www.johnmurray.co.uk

  First published in Great Britain in 2012 by John Murray (Publishers)

  An Hachette UK company

  Copyright © Adam Lashinsky 2012

  The right of Adam Lashinsky to be identified as the Author of the Work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988.

  All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means without the prior written permission of the publisher.

  A CIP catalogue record for this title is available from the British Library

  ISBN 978-1-84854-723-0

  John Murray (Publishers)

  338 Euston Road

  London NW1 3BH

  www.johnmurray.co.uk

  CONTENTS

  Cover

  Title Page

  Copyright

  Dedication

  Chart: Apple’s Core

  1. Rethink Leadership

  2. Embrace Secrecy

  3. Focus Obsessively

  4. Stay Start-Up Hungry

  5. Hire Disciples

  6. Own Your Message

  7. Overwhelm Friends/Dominate Foes

  8. Plan for After Your Successor

  9. Inspire Imitators

  10. One More Thing

  Acknowledgments

  Author’s Note

  About the Author

  For Marcia, Ruth, and Leah

  APPLE’S CORE

  An unconventional org chart for an unconventional organization. CEO Tim Cook is at the center, and the reporting structure is just one of many ways that Apple differs from other corporations. This chart, conceptualized by graphic designer David Foster, is based on the author’s reporting in addition to some limited information Apple releases publicly.

  1

  Rethink Leadership

  On August 24, 2011, the day Steve Jobs resigned as chief executive officer of Apple, he attended a meeting of the company’s board of directors. He was gravely ill and had reached the conclusion that it was time to relinquish his post. He became chairman of the board that day, giving some hope to Apple’s employees, customers, and investors alike that he’d continue to exert influence on the company and be around for a while longer.

  What Jobs loved most was products. Though he came that day to tell his directors in person that he was stepping down, he also knew he’d be able to see Apple’s latest offerings. Indeed, Apple was weeks away from introducing its newest iPhone, which would for the first time include the artificial intelligence–powered personal assistant software called Siri. Like the HAL computer in Stanley Kubrick’s 2001: A Space Odyssey, Siri answered questions. It talked back to its owner. It began to fulfill one of the promises of the computer revolution that Steve Jobs had helped start twenty-five years earlier, to harness the power of computers to improve human life.

  Scott Forstall, Apple’s top executive for mobile software, was demonstrating Siri to the board when Jobs interrupted him. “Let me have the phone,” Jobs said, indicating that he wanted to try the personal assistant technology for himself. Forstall, who had worked for Jobs his entire career, first at NeXT and then at Apple, hesitated. He was an engineer with the theatrical flair, ambition, charisma, and raw intelligence of Jobs. Yet Forstall’s hesitation was warranted: The whole allure of Siri was that it learned its master’s voice over time by adapting to quirks and absorbing personal details. The machine was like a baseball glove molded to its owner’s hand, and this particular unit knew Forstall. For all sorts of reasons—Jobs’s notorious short temper, this being an emotional day to begin with, the stress of handing over an unfinished product so close to its launch date—Forstall was reluctant to give the phone to Jobs. “Be careful now,” he said to a man who had never been careful in his life. “I have it pretty much attuned to my voice.”

  Jobs, typically, wasn’t taking no for an answer. “Give me the phone,” he barked, prompting Forstall to walk around the table and hand over the device. The ailing Jobs, who had overseen the purchase of the start-up company that invented Siri’s technology, tossed the computer a couple of softballs. Then he turned existential, asking, “Are you a man or are you a woman?” Responded Siri: “I have not been assigned a gender, sir.” Laughter ensued, and with it some relief.

  Siri’s gender-identification issues might have been a lighthearted moment during a difficult meeting for the board, but when Jobs grabbed the iPhone prototype a jolt of anxiety undoubtedly coursed through Forstall. The scene illustrates many of the principles that make Apple great—but also different from most companies that are held up as models of good management. A giant company had concentrated its best manpower on a single product. The product had been developed in extreme secrecy, and the phone’s mechanics and design reflected an obsessive focus on detail. Also on display, for the last time, was a different breed of CEO, one who exhibited personality traits—narcissism, whimsy, disregard for the feelings of others—that society normally dismisses as negatives. But are they? For the way Apple does business and the way its executives manage the company fly in the face of years of business school teaching, begging the question: Is Apple’s success unique, or is Apple on to something the rest of the business world ought to be emulating?

  It is fitting that Jobs’s last official act was reviewing an iPhone, given that Apple’s reinvention and domination of the smartphone category four years earlier had demonstrated the company’s and Jobs’s singular strengths. When it launched the iPhone in 2007, Jobs had turned Apple upside down to make it happen. He envisioned the iPhone as a revolutionary device combining the convenience of a smartphone with the music storage and listening capability of an iPod. If marrying these two inventions wasn’t enough of a challenge, there was the additional pressure that the resulting device needed to have a design-snob-worthy look, a user-friendly software interface, and a wow factor (touch-sensitive glass screen, anyone?).

  The iPhone team at the time already was stretched thin. Its very existence was putting strains on the rest of the company. Raids on other Apple groups, Macintosh software development in particular, had ground other projects to a halt; the latest version of the Mac’s operating system was delayed because the engineers writing the code had been switched to iPhone work. Resentment simmered among employees who were not chosen for the project because suddenly their electronic ID badges stopped working in areas that had been cordoned off and reserved for iPhone development. All Apple products are created equally; some are more equal than others.

  An elite within an elite had been created, and the push to finish the iPhone was like an all-out mobilization for war. Engineers used macabre military terminology at Apple to describe the phase of product development when a launch approaches: the death march.

  It is not every CEO who could ask and expect his most talented employees to work through the holidays, as Jobs did for years when the annual Macworld trade show was held shortly after New Year’s Day. But Jobs loomed larger than life for Apple employees. He had founded the company in 1976 with his chum Stephen Wozniak. He spearheaded the development of the Mac in the early 1980s, quit in disgust in 1985 when the CEO he’d selected to run the company reduced his authority, and returned triumphantly in 1997 to rescue a beleaguered company. Nearly a decade later, Apple reigned as the brightest light in the constellation of personal-technology companies, and its lodestar unquestionably was Steve Jobs.

  Even when he wasn’t walking through the hallways of Apple, Jobs was a visible CEO. Sure, his office in the 1 Infinite Loop building was off limits to most of the company. Yet Jobs was supremely present in the life of Apple. Employees of all stripes saw him in the company cafeteria, usually chatting with his design chief and alter
ego, Jonathan Ive. They would spot him walking around campus, and they would see his car parked in front of IL-1. They watched his keynote presentations as eagerly as the public did so they could understand where their company was headed. Jobs may well have been unapproachable, and odds were that typical employees would never attend a meeting with him. But they believed that whatever they were working on would be seen, eventually, by “Steve.” For all flowed up to him, and his fingerprints were on everything important that Apple did.

  On the eve of the original iPhone launch, Jobs was at the peak of his faculties and the top of his game. He had seemingly beaten cancer, having survived the removal of a malignant tumor from his pancreas two years earlier. He had disclosed little about his illness, other than that it wasn’t the predominant kind of pancreatic cancer, which kills quickly. In his unvarying outfit of black mock turtleneck, Levi’s blue jeans, dark socks, New Balance sneakers, and 1960s-style round spectacles, Jobs was fit and robust, his salt-and-pepper beard full and just a tiny bit bushy. Having turned 50 two years earlier, Jobs was on a tear. Apple had remade the music industry with the iPod and the iTunes music store. That year Jobs had sold his side project, Pixar, to Disney for $7.5 billion, making him the famed entertainment company’s largest shareholder, a member of Disney’s board of directors, and a billionaire several times over.

  Jobs could see into the future better than anyone else in the technology industry. But four years later, after all Apple accomplished between the first iPhone and the new model Jobs held in his hand, he refrained from asking Siri the existential question he knew was beyond its artificial intelligence yet of paramount importance: “What kind of company will Apple be after I’m gone?”

  The death march that led to the iPhone was textbook Apple—favorites were played, key resources were diverted to a product that had captured the CEO’s interest, the hours were brutal, yet the work felt important. Could another company with annual sales of $108 billion have achieved a similar feat in the same time frame? Probably not unless it had a CEO who believed that he could change the world and his company could put a “dent in the universe.”

  After his death at age fifty-six on October 5, 2011, Steve Jobs was rightly celebrated for his extraordinary contributions to the reordering of multiple industries. He revolutionized no fewer than four: computers, music (through the iTunes Store and the iPod), film (through Pixar, which pioneered computer animation), and communications (with the iPhone). Having helped define the computer industry as a young man, he was well on his way to ushering in its successor. Months before his death, at the triumphant debut of Apple’s second iPad, Jobs declared the beginning of the “post-PC era”—meaning computing would no longer be confined to a desktop or laptop. In Apple, he oversaw a company whose products were world famous but whose methods were top secret.

  Were Apple better understood, its fans and foes alike would see it as a giant jumble of contradictions, a company whose methods go against decades of well-established management maxims. It’s as if Apple weren’t paying attention to what they’re teaching in business schools. In fact, it is not.

  Apple is secretive at a time when the prevailing trend in business is toward transparency. Far from being empowered, its people operate within a narrow band of responsibility. Jobs famously encouraged the 2005 graduation class of Stanford not to “let the noise of others’ opinions drown out your own inner voice, heart, and intuition.” Yet Apple’s own employees are expected to follow orders, not offer opinions. Good managers, we have been taught, delegate. Yet Apple’s CEO was a micromanager in every sense of the word, from approving every ad his company created to deciding who would and wouldn’t attend top-secret off-site meetings.

  Apple flouts yet another piece of modern management’s love of efficiency: It consistently leaves money on the table at a moment when profits are king and quarterly earnings exert a tyrannical sway over its fellow publicly traded companies. Apple, in fact, shows relatively little interest in Wall Street, seemingly viewing investors as an irritant at worst, a necessary evil at best. It aims to retain the vibrancy of a start-up at a time when many once-nimble tech companies (Microsoft, Yahoo!, AOL, and even Cisco come to mind) find ossification an inevitable side effect of growth.

  Apple isn’t even a particularly nice place to work in an era when legions of companies compete to be listed on Fortune magazine’s annual ranking of most desirable workplaces. (Apple opts out of the competition altogether, choosing not to apply.) Then again, Apple clearly is doing something right. In fact, it has done little wrong since Steve Jobs returned to Cupertino in 1997. In the latter half of 2011, Apple and ExxonMobil jockeyed for position as the world’s largest company by market capitalization.

  If Apple is so good at what it does, just how does it do it anyway? Google’s work environment has found its way into the popular culture. Hey, I can go to work in my pajamas, eat Cap’n Crunch, and joust with the other engineers while atop my Razor scooter—wheeee! Precious few have a clue what goes on at Apple when the camera isn’t pointed at whichever executive is conducting a carefully rehearsed demo at an Apple product launch.

  This is just how Apple wants it. As far as Apple is concerned, the subject of how it really works is taboo. Privately, executives refer to its playbook as the recipe for Apple’s “secret sauce.” Tim Cook, the longtime operations chief who became CEO in August 2011, six weeks before Steve Jobs died, once addressed the matter publicly. “That’s a part of the magic of Apple,” he said, when asked by a Wall Street analyst to comment on Apple’s planning process. “And I don’t want to let anybody know our magic because I don’t want anybody copying it.”

  As for Apple’s gadgets, as much as the world loves and admires them, few understand how Apple makes and markets them. It’s a topic best grasped through an understanding of the nitty-gritty processes of working at Apple: how its leaders function, the way the company pits competing technology teams against one another, and its unique approach—or lack of an approach—to career development. While many members of Apple’s middle ranks toil for years in the same exact role—yet another difference from the rest of the upward-and-onward corporate world—a handful of trusted lieutenants have bubbled up to become next-generation company leaders.

  This book is an attempt to hack into Apple’s closed world and to decode its secret systems so that aspiring entrepreneurs, curious middle managers, envious rival CEOs, and creatives who dream of turning insights into inventions can understand the company’s processes and customs. If—and it’s not a given—it were possible to imitate Apple, who wouldn’t want to try? To confront that complicated task, the most logical place to start would be with Jobs. Jobs died at his Palo Alto home in 2011, but his spirit will inhabit Apple Inc. for years to come. To understand how Apple works is to know how his style was a refutation of the conventional wisdom of what a CEO should be.

  Steven Paul Jobs changed the world, but he was the epitome of the hometown boy. In a paradox not unlike the many paradoxes of his company, Jobs was an urbane aesthete who nevertheless lived the life of a dyed-in-the-wool suburbanite. He professed a disdain for shopping malls, yet he put his company’s first retail store in one. He drove to work every day of his adult life, the prototypical commuter more at home on the freeway than in a city center.

  He was born in San Francisco in 1955. His adoptive parents moved the family first to Mountain View, and then Los Altos, both small towns in what was known at the time as the Santa Clara Valley. He attended high school in nearby Cupertino, and in some ways he never left. For brief periods he strayed from the sunny, arid strip between San Francisco and San Jose, an area where a collection of nascent defense-technology companies were replacing the apricot and prune orchards that dotted the landscape when Jobs was a boy. He briefly attended Reed College in Oregon, a liberal campus where the 1960s lingered well into the 1970s. Jobs camped out for a time on a friend’s farm in Oregon, but when he needed money he came home to work for Atari. In these early years, he embrac
ed strict vegetarianism, sampled a course on calligraphy—early evidence of a lifelong obsession with design—and sought to find himself in India. Again, he returned home. Years later, Jobs bought an apartment in the exclusive San Remo apartment building overlooking New York’s Central Park. But the pull of lean-to buildings and the entrepreneurs who were creating companies in them proved strong: He never took up residence on the Upper West Side.

  A cheerleader for what became known as Silicon Valley, Jobs would question the judgment of entrepreneurially minded people who advocated starting companies or furthering their careers anywhere else. Toward the beginning of his rejuvenation of Apple, in 1999, he belittled the former Disney executive Jeff Jordan for having graduated from Stanford University, “in the epicenter of entrepreneurship,” and then leaving town for various positions. A decade later, Andy Miller, CEO and co-founder of Quattro Wireless, a mobile advertising company that Apple bought and whose technology became Apple’s iAd, discussed geography with Jobs when the two met to hash out their deal. “Your company is in Waltham,” Jobs said, mispronouncing the name of the Massachusetts town where Quattro was located. Miller tried correcting Jobs on the pronunciation, but Jobs cut him off. “I don’t care,” Jobs said. “You know what’s in Waltham?” he asked, still mispronouncing the name. “Absolutely nothing.”

  The other titans of the tech industry immigrated to a place where Jobs was a native. Andy Grove of Intel was born in Hungary, Oracle co-founder Larry Ellison, in Chicago. Google’s Larry Page and Sergey Brin hailed from Michigan and Russia, respectively. Mark Zuckerberg, the newest superstar of Silicon Valley when Jobs died, was born in suburban New York and founded Facebook in a Harvard dorm room. They all sought out the Silicon Valley that Jobs wove into his personal fabric at a young age. He loved to tell the story of phoning his neighbor, William Hewlett, to ask for spare parts for a device Jobs was building called a “frequency counter.” He was thirteen years old. Hewlett, the co-founder of Hewlett-Packard, the original Silicon Valley company to start in a garage, gave Jobs the parts—and a summer job.