Steve Jobs

by Walter Isaacson

  As the Macintosh continued to disappoint—sales in March 1985 were only 10% of the budget forecast—Jobs holed up in his office fuming or wandered the halls berating everyone else for the problems. His mood swings became worse, and so did his abuse of those around him. Middle-level managers began to rise up against him. The marketing chief Mike Murray sought a private meeting with Sculley at an industry conference. As they were going up to Sculley’s hotel room, Jobs spotted them and asked to come along. Murray asked him not to. He told Sculley that Jobs was wreaking havoc and had to be removed from managing the Macintosh division. Sculley replied that he was not yet resigned to having a showdown with Jobs. Murray later sent a memo directly to Jobs criticizing the way he treated colleagues and denouncing “management by character assassination.”

  For a few weeks it seemed as if there might be a solution to the turmoil. Jobs became fascinated by a flat-screen technology developed by a firm near Palo Alto called Woodside Design, run by an eccentric engineer named Steve Kitchen. He also was impressed by another startup that made a touchscreen display that could be controlled by your finger, so you didn’t need a mouse. Together these might help fulfill Jobs’s vision of creating a “Mac in a book.” On a walk with Kitchen, Jobs spotted a building in nearby Menlo Park and declared that they should open a skunkworks facility to work on these ideas. It could be called AppleLabs and Jobs could run it, going back to the joy of having a small team and developing a great new product.

  Sculley was thrilled by the possibility. It would solve most of his management issues, moving Jobs back to what he did best and getting rid of his disruptive presence in Cupertino. Sculley also had a candidate to replace Jobs as manager of the Macintosh division: Jean-Louis Gassée, Apple’s chief in France, who had suffered through Jobs’s visit there. Gassée flew to Cupertino and said he would take the job if he got a guarantee that he would run the division rather than work under Jobs. One of the board members, Phil Schlein of Macy’s, tried to convince Jobs that he would be better off thinking up new products and inspiring a passionate little team.

  But after some reflection, Jobs decided that was not the path he wanted. He declined to cede control to Gassée, who wisely went back to Paris to avoid the power clash that was becoming inevitable. For the rest of the spring, Jobs vacillated. There were times when he wanted to assert himself as a corporate manager, even writing a memo urging cost savings by eliminating free beverages and first-class air travel, and other times when he agreed with those who were encouraging him to go off and run a new AppleLabs R&D group.

  In March Murray let loose with another memo that he marked “Do not circulate” but gave to multiple colleagues. “In my three years at Apple, I’ve never observed so much confusion, fear, and dysfunction as in the past 90 days,” he began. “We are perceived by the rank and file as a boat without a rudder, drifting away into foggy oblivion.” Murray had been on both sides of the fence; at times he conspired with Jobs to undermine Sculley, but in this memo he laid the blame on Jobs. “Whether the cause of or because of the dysfunction, Steve Jobs now controls a seemingly impenetrable power base.”

  At the end of that month, Sculley finally worked up the nerve to tell Jobs that he should give up running the Macintosh division. He walked over to Jobs’s office one evening and brought the human resources manager, Jay Elliot, to make the confrontation more formal. “There is no one who admires your brilliance and vision more than I do,” Sculley began. He had uttered such flatteries before, but this time it was clear that there would be a brutal “but” punctuating the thought. And there was. “But this is really not going to work,” he declared. The flatteries punctured by “buts” continued. “We have developed a great friendship with each other,” he said, “but I have lost confidence in your ability to run the Macintosh division.” He also berated Jobs for badmouthing him as a bozo behind his back.

  Jobs looked stunned and countered with an odd challenge, that Sculley should help and coach him more: “You’ve got to spend more time with me.” Then he lashed back. He told Sculley he knew nothing about computers, was doing a terrible job running the company, and had disappointed Jobs ever since coming to Apple. Then he began to cry. Sculley sat there biting his fingernails.

  “I’m going to bring this up with the board,” Sculley declared. “I’m going to recommend that you step down from your operating position of running the Macintosh division. I want you to know that.” He urged Jobs not to resist and to agree instead to work on developing new technologies and products.

  Jobs jumped from his seat and turned his intense stare on Sculley. “I don’t believe you’re going to do that,” he said. “If you do that, you’re going to destroy the company.”

  Over the next few weeks Jobs’s behavior fluctuated wildly. At one moment he would be talking about going off to run AppleLabs, but in the next moment he would be enlisting support to have Sculley ousted. He would reach out to Sculley, then lash out at him behind his back, sometimes on the same night. One night at 9 he called Apple’s general counsel Al Eisenstat to say he was losing confidence in Sculley and needed his help convincing the board to fire him; at 11 the same night, he phoned Sculley to say, “You’re terrific, and I just want you to know I love working with you.”

  At the board meeting on April 11, Sculley officially reported that he wanted to ask Jobs to step down as the head of the Macintosh division and focus instead on new product development. Arthur Rock, the most crusty and independent of the board members, then spoke. He was fed up with both of them: with Sculley for not having the guts to take command over the past year, and with Jobs for “acting like a petulant brat.” The board needed to get this dispute behind them, and to do so it should meet privately with each of them.

  Sculley left the room so that Jobs could present first. Jobs insisted that Sculley was the problem because he had no understanding of computers. Rock responded by berating Jobs. In his growling voice, he said that Jobs had been behaving foolishly for a year and had no right to be managing a division. Even Jobs’s strongest supporter, Phil Schlein, tried to talk him into stepping aside gracefully to run a research lab for the company.

  When it was Sculley’s turn to meet privately with the board, he gave an ultimatum: “You can back me, and then I take responsibility for running the company, or we can do nothing, and you’re going to have to find yourselves a new CEO.” If given the authority, he said, he would not move abruptly, but would ease Jobs into the new role over the next few months. The board unanimously sided with Sculley. He was given the authority to remove Jobs whenever he felt the timing was right. As Jobs waited outside the boardroom, knowing full well that he was losing, he saw Del Yocam, a longtime colleague, and hugged him.

  After the board made its decision, Sculley tried to be conciliatory. Jobs asked that the transition occur slowly, over the next few months, and Sculley agreed. Later that evening Sculley’s executive assistant, Nanette Buckhout, called Jobs to see how he was doing. He was still in his office, shell-shocked. Sculley had already left, and Jobs came over to talk to her. Once again he began oscillating wildly in his attitude toward Sculley. “Why did John do this to me?” he said. “He betrayed me.” Then he swung the other way. Perhaps he should take some time away to work on restoring his relationship with Sculley, he said. “John’s friendship is more important than anything else, and I think maybe that’s what I should do, concentrate on our friendship.”

  Plotting a Coup

  Jobs was not good at taking no for an answer. He went to Sculley’s office in early May 1985 and asked for more time to show that he could manage the Macintosh division. He would prove himself as an operations guy, he promised. Sculley didn’t back down. Jobs next tried a direct challenge: He asked Sculley to resign. “I think you really lost your stride,” Jobs told him. “You were really great the first year, and everything went wonderful. But something happened.” Sculley, who generally was even-tempered, lashed back, pointing out that Jobs had been unable to get Macintosh softw
are developed, come up with new models, or win customers. The meeting degenerated into a shouting match about who was the worse manager. After Jobs stalked out, Sculley turned away from the glass wall of his office, where others had been looking in on the meeting, and wept.

  Matters began to come to a head on Tuesday, May 14, when the Macintosh team made its quarterly review presentation to Sculley and other Apple corporate leaders. Jobs still had not relinquished control of the division, and he was defiant when he arrived in the corporate boardroom with his team. He and Sculley began by clashing over what the division’s mission was. Jobs said it was to sell more Macintosh machines. Sculley said it was to serve the interests of the Apple company as a whole. As usual there was little cooperation among the divisions; for one thing, the Macintosh team was planning new disk drives that were different from those being developed by the Apple II division. The debate, according to the minutes, took a full hour.

  Jobs then described the projects under way: a more powerful Mac, which would take the place of the discontinued Lisa; and software called FileServer, which would allow Macintosh users to share files on a network. Sculley learned for the first time that these projects were going to be late. He gave a cold critique of Murray’s marketing record, Belleville’s missed engineering deadlines, and Jobs’s overall management. Despite all this, Jobs ended the meeting with a plea to Sculley, in front of all the others there, to be given one more chance to prove he could run a division. Sculley refused.

  That night Jobs took his Macintosh team out to dinner at Nina’s Café in Woodside. Jean-Louis Gassée was in town because Sculley wanted him to prepare to take over the Macintosh division, and Jobs invited him to join them. Belleville proposed a toast “to those of us who really understand what the world according to Steve Jobs is all about.” That phrase—“the world according to Steve”—had been used dismissively by others at Apple who belittled the reality warp he created. After the others left, Belleville sat with Jobs in his Mercedes and urged him to organize a battle to the death with Sculley.

  Months earlier, Apple had gotten the right to export computers to China, and Jobs had been invited to sign a deal in the Great Hall of the People over the 1985 Memorial Day weekend. He had told Sculley, who decided he wanted to go himself, which was just fine with Jobs. Jobs decided to use Sculley’s absence to execute his coup. Throughout the week leading up to Memorial Day, he took a lot of people on walks to share his plans. “I’m going to launch a coup while John is in China,” he told Mike Murray.

  Seven Days in May

  Thursday, May 23: At his regular Thursday meeting with his top lieutenants in the Macintosh division, Jobs told his inner circle about his plan to oust Sculley. He also confided in the corporate human resources director, Jay Elliot, who told him bluntly that the proposed rebellion wouldn’t work. Elliot had talked to some board members and urged them to stand up for Jobs, but he discovered that most of the board was with Sculley, as were most members of Apple’s senior staff. Yet Jobs barreled ahead. He even revealed his plans to Gassée on a walk around the parking lot, despite the fact that Gassée had come from Paris to take his job. “I made the mistake of telling Gassée,” Jobs wryly conceded years later.

  That evening Apple’s general counsel Al Eisenstat had a small barbecue at his home for Sculley, Gassée, and their wives. When Gassée told Eisenstat what Jobs was plotting, he recommended that Gassée inform Sculley. “Steve was trying to raise a cabal and have a coup to get rid of John,” Gassée recalled. “In the den of Al Eisenstat’s house, I put my index finger lightly on John’s breastbone and said, ‘If you leave tomorrow for China, you could be ousted. Steve’s plotting to get rid of you.’”

  Friday, May 24: Sculley canceled his trip and decided to confront Jobs at the executive staff meeting on Friday morning. Jobs arrived late, and he saw that his usual seat next to Sculley, who sat at the head of the table, was taken. He sat instead at the far end. He was dressed in a well-tailored suit and looked energized. Sculley looked pale. He announced that he was dispensing with the agenda to confront the issue on everyone’s mind. “It’s come to my attention that you’d like to throw me out of the company,” he said, looking directly at Jobs. “I’d like to ask you if that’s true.”

  Jobs was not expecting this. But he was never shy about indulging in brutal honesty. His eyes narrowed, and he fixed Sculley with his unblinking stare. “I think you’re bad for Apple, and I think you’re the wrong person to run the company,” he replied, coldly and slowly. “You really should leave this company. You don’t know how to operate and never have.” He accused Sculley of not understanding the product development process, and then he added a self-centered swipe: “I wanted you here to help me grow, and you’ve been ineffective in helping me.”

  As the rest of the room sat frozen, Sculley finally lost his temper. A childhood stutter that had not afflicted him for twenty years started to return. “I don’t trust you, and I won’t tolerate a lack of trust,” he stammered. When Jobs claimed that he would be better than Sculley at running the company, Sculley took a gamble. He decided to poll the room on that question. “He pulled off this clever maneuver,” Jobs recalled, still smarting thirty-five years later. “It was at the executive committee meeting, and he said, ‘It’s me or Steve, who do you vote for?’ He set the whole thing up so that you’d kind of have to be an idiot to vote for me.”

  Suddenly the frozen onlookers began to squirm. Del Yocam had to go first. He said he loved Jobs, wanted him to continue to play some role in the company, but he worked up the nerve to conclude, with Jobs staring at him, that he “respected” Sculley and would support him to run the company. Eisenstat faced Jobs directly and said much the same thing: He liked Jobs but was supporting Sculley. Regis McKenna, who sat in on senior staff meetings as an outside consultant, was more direct. He looked at Jobs and told him he was not yet ready to run the company, something he had told him before. Others sided with Sculley as well. For Bill Campbell, it was particularly tough. He was fond of Jobs and didn’t particularly like Sculley. His voice quavered a bit as he told Jobs he had decided to support Sculley, and he urged the two of them to work it out and find some role for Jobs to play in the company. “You can’t let Steve leave this company,” he told Sculley.

  Jobs looked shattered. “I guess I know where things stand,” he said, and bolted out of the room. No one followed.

  He went back to his office, gathered his longtime loyalists on the Macintosh staff, and started to cry. He would have to leave Apple, he said. As he started to walk out the door, Debi Coleman restrained him. She and the others urged him to settle down and not do anything hasty. He should take the weekend to regroup. Perhaps there was a way to prevent the company from being torn apart.

  Sculley was devastated by his victory. Like a wounded warrior, he retreated to Eisenstat’s office and asked the corporate counsel to go for a ride. When they got into Eisenstat’s Porsche, Sculley lamented, “I don’t know whether I can go through with this.” When Eisenstat asked what he meant, Sculley responded, “I think I’m going to resign.”

  “You can’t,” Eisenstat protested. “Apple will fall apart.”

  “I’m going to resign,” Sculley declared. “I don’t think I’m right for the company.”

  “I think you’re copping out,” Eisenstat replied. “You’ve got to stand up to him.” Then he drove Sculley home.

  Sculley’s wife was surprised to see him back in the middle of the day. “I’ve failed,” he said to her forlornly. She was a volatile woman who had never liked Jobs or appreciated her husband’s infatuation with him. So when she heard what had happened, she jumped into her car and sped over to Jobs’s office. Informed that he had gone to the Good Earth restaurant, she marched over there and confronted him in the parking lot as he was coming out with loyalists on his Macintosh team.

  “Steve, can I talk to you?” she said. His jaw dropped. “Do you have any idea what a privilege it has been even to know someone as fine as John Scu
lley?” she demanded. He averted his gaze. “Can’t you look me in the eyes when I’m talking to you?” she asked. But when Jobs did so—giving her his practiced, unblinking stare—she recoiled. “Never mind, don’t look at me,” she said. “When I look into most people’s eyes, I see a soul. When I look into your eyes, I see a bottomless pit, an empty hole, a dead zone.” Then she walked away.

  Saturday, May 25: Mike Murray drove to Jobs’s house in Woodside to offer some advice: He should consider accepting the role of being a new product visionary, starting AppleLabs, and getting away from headquarters. Jobs seemed willing to consider it. But first he would have to restore peace with Sculley. So he picked up the telephone and surprised Sculley with an olive branch. Could they meet the following afternoon, Jobs asked, and take a walk together in the hills above Stanford University. They had walked there in the past, in happier times, and maybe on such a walk they could work things out.

  Jobs did not know that Sculley had told Eisenstat he wanted to quit, but by then it didn’t matter. Overnight, he had changed his mind and decided to stay. Despite the blowup the day before, he was still eager for Jobs to like him. So he agreed to meet the next afternoon.

  If Jobs was prepping for conciliation, it didn’t show in the choice of movie he wanted to see with Murray that night. He picked Patton, the epic of the never-surrender general. But he had lent his copy of the tape to his father, who had once ferried troops for the general, so he drove to his childhood home with Murray to retrieve it. His parents weren’t there, and he didn’t have a key. They walked around the back, checked for unlocked doors or windows, and finally gave up. The video store didn’t have a copy of Patton in stock, so in the end he had to settle for watching the 1983 film adaptation of Harold Pinter’s Betrayal.