By the time Apple went public a year later, Xerox’s $1 million worth of shares were worth $17.6 million. But Apple got the better end of the bargain. Jobs and his colleagues went to see Xerox PARC’s technology in December 1979 and, when Jobs realized he hadn’t been shown enough, got an even fuller demonstration a few days later. Larry Tesler was one of the Xerox scientists called upon to do the briefings, and he was thrilled to show off the work that his bosses back east had never seemed to appreciate. But the other briefer, Adele Goldberg, was appalled that her company seemed willing to give away its crown jewels. “It was incredibly stupid, completely nuts, and I fought to prevent giving Jobs much of anything,” she recalled.
Goldberg got her way at the first briefing. Jobs, Raskin, and the Lisa team leader John Couch were ushered into the main lobby, where a Xerox Alto had been set up. “It was a very controlled show of a few applications, primarily a word-processing one,” Goldberg said. Jobs wasn’t satisfied, and he called Xerox headquarters demanding more.
So he was invited back a few days later, and this time he brought a larger team that included Bill Atkinson and Bruce Horn, an Apple programmer who had worked at Xerox PARC. They both knew what to look for. “When I arrived at work, there was a lot of commotion, and I was told that Jobs and a bunch of his programmers were in the conference room,” said Goldberg. One of her engineers was trying to keep them entertained with more displays of the word-processing program. But Jobs was growing impatient. “Let’s stop this bullshit!” he kept shouting. So the Xerox folks huddled privately and decided to open the kimono a bit more, but only slowly. They agreed that Tesler could show off Smalltalk, the programming language, but he would demonstrate only what was known as the “unclassified” version. “It will dazzle [Jobs] and he’ll never know he didn’t get the confidential disclosure,” the head of the team told Goldberg.
They were wrong. Atkinson and others had read some of the papers published by Xerox PARC, so they knew they were not getting a full description. Jobs phoned the head of the Xerox venture capital division to complain; a call immediately came back from corporate headquarters in Connecticut decreeing that Jobs and his group should be shown everything. Goldberg stormed out in a rage.
When Tesler finally showed them what was truly under the hood, the Apple folks were astonished. Atkinson stared at the screen, examining each pixel so closely that Tesler could feel the breath on his neck. Jobs bounced around and waved his arms excitedly. “He was hopping around so much I don’t know how he actually saw most of the demo, but he did, because he kept asking questions,” Tesler recalled. “He was the exclamation point for every step I showed.” Jobs kept saying that he couldn’t believe that Xerox had not commercialized the technology. “You’re sitting on a gold mine,” he shouted. “I can’t believe Xerox is not taking advantage of this.”
The Smalltalk demonstration showed three amazing features. One was how computers could be networked; the second was how object-oriented programming worked. But Jobs and his team paid little attention to these attributes because they were so amazed by the third feature, the graphical interface that was made possible by a bitmapped screen. “It was like a veil being lifted from my eyes,” Jobs recalled. “I could see what the future of computing was destined to be.”
When the Xerox PARC meeting ended after more than two hours, Jobs drove Bill Atkinson back to the Apple office in Cupertino. He was speeding, and so were his mind and mouth. “This is it!” he shouted, emphasizing each word. “We’ve got to do it!” It was the breakthrough he had been looking for: bringing computers to the people, with the cheerful but affordable design of an Eichler home and the ease of use of a sleek kitchen appliance.
“How long would this take to implement?” he asked.
“I’m not sure,” Atkinson replied. “Maybe six months.” It was a wildly optimistic assessment, but also a motivating one.
“Great Artists Steal”
The Apple raid on Xerox PARC is sometimes described as one of the biggest heists in the chronicles of industry. Jobs occasionally endorsed this view, with pride. As he once said, “Picasso had a saying—‘good artists copy, great artists steal’—and we have always been shameless about stealing great ideas.”
Another assessment, also sometimes endorsed by Jobs, is that what transpired was less a heist by Apple than a fumble by Xerox. “They were copier-heads who had no clue about what a computer could do,” he said of Xerox’s management. “They just grabbed defeat from the greatest victory in the computer industry. Xerox could have owned the entire computer industry.”
Both assessments contain a lot of truth, but there is more to it than that. There falls a shadow, as T. S. Eliot noted, between the conception and the creation. In the annals of innovation, new ideas are only part of the equation. Execution is just as important.
Jobs and his engineers significantly improved the graphical interface ideas they saw at Xerox PARC, and then were able to implement them in ways that Xerox never could accomplish. For example, the Xerox mouse had three buttons, was complicated, cost $300 apiece, and didn’t roll around smoothly; a few days after his second Xerox PARC visit, Jobs went to a local industrial design firm, IDEO, and told one of its founders, Dean Hovey, that he wanted a simple single-button model that cost $15, “and I want to be able to use it on Formica and my blue jeans.” Hovey complied.
The improvements were in not just the details but the entire concept. The mouse at Xerox PARC could not be used to drag a window around the screen. Apple’s engineers devised an interface so you could not only drag windows and files around, you could even drop them into folders. The Xerox system required you to select a command in order to do anything, ranging from resizing a window to changing the extension that located a file. The Apple system transformed the desktop metaphor into virtual reality by allowing you to directly touch, manipulate, drag, and relocate things. And Apple’s engineers worked in tandem with its designers—with Jobs spurring them on daily—to improve the desktop concept by adding delightful icons and menus that pulled down from a bar atop each window and the capability to open files and folders with a double click.
It’s not as if Xerox executives ignored what their scientists had created at PARC. In fact they did try to capitalize on it, and in the process they showed why good execution is as important as good ideas. In 1981, well before the Apple Lisa or Macintosh, they introduced the Xerox Star, a machine that featured their graphical user interface, mouse, bitmapped display, windows, and desktop metaphor. But it was clunky (it could take minutes to save a large file), costly ($16,595 at retail stores), and aimed mainly at the networked office market. It flopped; only thirty thousand were ever sold.
Jobs and his team went to a Xerox dealer to look at the Star as soon as it was released. But he deemed it so worthless that he told his colleagues they couldn’t spend the money to buy one. “We were very relieved,” he recalled. “We knew they hadn’t done it right, and that we could—at a fraction of the price.” A few weeks later he called Bob Belleville, one of the hardware designers on the Xerox Star team. “Everything you’ve ever done in your life is shit,” Jobs said, “so why don’t you come work for me?” Belleville did, and so did Larry Tesler.
In his excitement, Jobs began to take over the daily management of the Lisa project, which was being run by John Couch, the former HP engineer. Ignoring Couch, he dealt directly with Atkinson and Tesler to insert his own ideas, especially on Lisa’s graphical interface design. “He would call me at all hours, 2 a.m. or 5 a.m.,” said Tesler. “I loved it. But it upset my bosses at the Lisa division.” Jobs was told to stop making out-of-channel calls. He held himself back for a while, but not for long.
One important showdown occurred when Atkinson decided that the screen should have a white background rather than a dark one. This would allow an attribute that both Atkinson and Jobs wanted: WYSIWYG, pronounced “wiz-ee-wig,” an acronym for “What you see is what you get.” What you saw on the screen was what you’d get when you
printed it out. “The hardware team screamed bloody murder,” Atkinson recalled. “They said it would force us to use a phosphor that was a lot less persistent and would flicker more.” So Atkinson enlisted Jobs, who came down on his side. The hardware folks grumbled, but then went off and figured it out. “Steve wasn’t much of an engineer himself, but he was very good at assessing people’s answers. He could tell whether the engineers were defensive or unsure of themselves.”
One of Atkinson’s amazing feats (which we are so accustomed to nowadays that we rarely marvel at it) was to allow the windows on a screen to overlap so that the “top” one clipped into the ones “below” it. Atkinson made it possible to move these windows around, just like shuffling papers on a desk, with those below becoming visible or hidden as you moved the top ones. Of course, on a computer screen there are no layers of pixels underneath the pixels that you see, so there are no windows actually lurking underneath the ones that appear to be on top. To create the illusion of overlapping windows requires complex coding that involves what are called “regions.” Atkinson pushed himself to make this trick work because he thought he had seen this capability during his visit to Xerox PARC. In fact the folks at PARC had never accomplished it, and they later told him they were amazed that he had done so. “I got a feeling for the empowering aspect of naïveté,” Atkinson said. “Because I didn’t know it couldn’t be done, I was enabled to do it.” He was working so hard that one morning, in a daze, he drove his Corvette into a parked truck and nearly killed himself. Jobs immediately drove to the hospital to see him. “We were pretty worried about you,” he said when Atkinson regained consciousness. Atkinson gave him a pained smile and replied, “Don’t worry, I still remember regions.”
Jobs also had a passion for smooth scrolling. Documents should not lurch line by line as you scroll through them, but instead should flow. “He was adamant that everything on the interface had a good feeling to the user,” Atkinson said. They also wanted a mouse that could easily move the cursor in any direction, not just up-down/left-right. This required using a ball rather than the usual two wheels. One of the engineers told Atkinson that there was no way to build such a mouse commercially. After Atkinson complained to Jobs over dinner, he arrived at the office the next day to discover that Jobs had fired the engineer. When his replacement met Atkinson, his first words were, “I can build the mouse.”
Atkinson and Jobs became best friends for a while, eating together at the Good Earth most nights. But John Couch and the other professional engineers on his Lisa team, many of them buttoned-down HP types, resented Jobs’s meddling and were infuriated by his frequent insults. There was also a clash of visions. Jobs wanted to build a VolksLisa, a simple and inexpensive product for the masses. “There was a tug-of-war between people like me, who wanted a lean machine, and those from HP, like Couch, who were aiming for the corporate market,” Jobs recalled.
Both Mike Scott and Mike Markkula were intent on bringing some order to Apple and became increasingly concerned about Jobs’s disruptive behavior. So in September 1980, they secretly plotted a reorganization. Couch was made the undisputed manager of the Lisa division. Jobs lost control of the computer he had named after his daughter. He was also stripped of his role as vice president for research and development. He was made non-executive chairman of the board. This position allowed him to remain Apple’s public face, but it meant that he had no operating control. That hurt. “I was upset and felt abandoned by Markkula,” he said. “He and Scotty felt I wasn’t up to running the Lisa division. I brooded about it a lot.”
CHAPTER NINE
GOING PUBLIC
A Man of Wealth and Fame
With Wozniak, 1981
Options
When Mike Markkula joined Jobs and Wozniak to turn their fledgling partnership into the Apple Computer Co. in January 1977, they valued it at $5,309. Less than four years later they decided it was time to take it public. It would become the most oversubscribed initial public offering since that of Ford Motors in 1956. By the end of December 1980, Apple would be valued at $1.79 billion. Yes, billion. In the process it would make three hundred people millionaires.
Daniel Kottke was not one of them. He had been Jobs’s soul mate in college, in India, at the All One Farm, and in the rental house they shared during the Chrisann Brennan crisis. He joined Apple when it was headquartered in Jobs’s garage, and he still worked there as an hourly employee. But he was not at a high enough level to be cut in on the stock options that were awarded before the IPO. “I totally trusted Steve, and I assumed he would take care of me like I’d taken care of him, so I didn’t push,” said Kottke. The official reason he wasn’t given stock options was that he was an hourly technician, not a salaried engineer, which was the cutoff level for options. Even so, he could have justifiably been given “founder’s stock,” but Jobs decided not to. “Steve is the opposite of loyal,” according to Andy Hertz-feld, an early Apple engineer who has nevertheless remained friends with him. “He’s anti-loyal. He has to abandon the people he is close to.”
Kottke decided to press his case with Jobs by hovering outside his office and catching him to make a plea. But at each encounter, Jobs brushed him off. “What was really so difficult for me is that Steve never told me I wasn’t eligible,” recalled Kottke. “He owed me that as a friend. When I would ask him about stock, he would tell me I had to talk to my manager.” Finally, almost six months after the IPO, Kottke worked up the courage to march into Jobs’s office and try to hash out the issue. But when he got in to see him, Jobs was so cold that Kottke froze. “I just got choked up and began to cry and just couldn’t talk to him,” Kottke recalled. “Our friendship was all gone. It was so sad.”
Rod Holt, the engineer who had built the power supply, was getting a lot of options, and he tried to turn Jobs around. “We have to do something for your buddy Daniel,” he said, and he suggested they each give him some of their own options. “Whatever you give him, I will match it,” said Holt. Replied Jobs, “Okay. I will give him zero.”
Wozniak, not surprisingly, had the opposite attitude. Before the shares went public, he decided to sell, at a very low price, two thousand of his options to forty different midlevel employees. Most of his beneficiaries made enough to buy a home. Wozniak bought a dream home for himself and his new wife, but she soon divorced him and kept the house. He also later gave shares outright to employees he felt had been shortchanged, including Kottke, Fernandez, Wigginton, and Espinosa. Everyone loved Wozniak, all the more so after his generosity, but many also agreed with Jobs that he was “awfully naïve and childlike.” A few months later a United Way poster showing a destitute man went up on a company bulletin board. Someone scrawled on it “Woz in 1990.”
Jobs was not naïve. He had made sure his deal with Chrisann Brennan was signed before the IPO occurred.
Jobs was the public face of the IPO, and he helped choose the two investment banks handling it: the traditional Wall Street firm Morgan Stanley and the untraditional boutique firm Hambrecht & Quist in San Francisco. “Steve was very irreverent toward the guys from Morgan Stanley, which was a pretty uptight firm in those days,” recalled Bill Hambrecht. Morgan Stanley planned to price the offering at $18, even though it was obvious the shares would quickly shoot up. “Tell me what happens to this stock that we priced at eighteen?” Jobs asked the bankers. “Don’t you sell it to your good customers? If so, how can you charge me a 7% commission?” Hambrecht recognized that there was a basic unfairness in the system, and he later went on to formulate the idea of a reverse auction to price shares before an IPO.
Apple went public the morning of December 12, 1980. By then the bankers had priced the stock at $22 a share. It went to $29 the first day. Jobs had come into the Hambrecht & Quist office just in time to watch the opening trades. At age twenty-five, he was now worth $256 million.
Baby You’re a Rich Man
Before and after he was rich, and indeed throughout a life that included being both broke and a
billionaire, Steve Jobs’s attitude toward wealth was complex. He was an antimaterialistic hippie who capitalized on the inventions of a friend who wanted to give them away for free, and he was a Zen devotee who made a pilgrimage to India and then decided that his calling was to create a business. And yet somehow these attitudes seemed to weave together rather than conflict.
He had a great love for some material objects, especially those that were finely designed and crafted, such as Porsche and Mercedes cars, Henckels knives and Braun appliances, BMW motorcycles and Ansel Adams prints, Bösendorfer pianos and Bang & Olufsen audio equipment. Yet the houses he lived in, no matter how rich he became, tended not to be ostentatious and were furnished so simply they would have put a Shaker to shame. Neither then nor later would he travel with an entourage, keep a personal staff, or even have security protection. He bought a nice car, but always drove himself. When Markkula asked Jobs to join him in buying a Lear jet, he declined (though he eventually would demand of Apple a Gulfstream to use). Like his father, he could be flinty when bargaining with suppliers, but he didn’t allow a craving for profits to take precedence over his passion for building great products.
Thirty years after Apple went public, he reflected on what it was like to come into money suddenly:
Steve Jobs Page 13