Inside Steve''''s Brain Business Lessons from Steve Jobs, the Man Who Saved Apple by Leander Kahney_1 pot

• Peguin Books Ltd, 80 Strand, London WC2R 0RL, England • Penguin Ireland, 25 St Stephen’s Green, Dublin 2, Ireland a division of Penguin Books Ltd • Penguin Books Australia Ltd, 250 Cam

Chapter 1 - Focus: How Saying “No” Saved Apple

Chapter 2 - Despotism: Apple’s One-Man Focus Group

Chapter 3 - Perfectionism: Product Design and the Pursuit

of Excellence

Chapter 4 - Elitism: Hire Only A Players, Fire the Bozos

Chapter 5 - Passion: Putting a Ding in the Universe

Chapter 6 - Inventive Spirit: Where Does the InnovationCome From?

Chapter 7 - Case Study: How It All Came Together with theiPod

Chapter 8 - Total Control: The Whole Widget

Acknowledgements

Notes

Index

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First published in 2008 by Portfolio,

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Copyright © Leander Kahney, 2008

All rights reserved Library of Congress Cataloging-in-Publication Data

1 Jobs, Steven, 1955- 2 Apple Computer, Inc.—Management

3 Computer industry—United States I Title

HD9696.2.U62J636 2008 338.761004’092—dc22 2007049270

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For my children, Nadine, Milo, Olin, and Lyle; my wife, Traci; my mother, Pauline; and my brothers, Alex and Chris And Hank, my dear old dad, who was a big Steve Jobs fan.

"Apple has some tremendous assets, but I believe without some attention, the company could, could, could—I’m searching for the right word—could, could die.”

—Steve Jobs on his return to Apple as interim

CEO, in Time, August 18, 1997

Steve Jobs gives almost as much thought to the cardboardboxes his gadgets come in as the products themselves.This is not for reasons of taste or elegance—though that’spart of it To Jobs, the act of pulling a product from its box is

an important part of the user experience, and likeeverything else he does, it’s very carefully thought out

Jobs sees product packaging as a helpful way tointroduce new, unfamiliar technology to consumers Takethe original Mac, which shipped in 1984 Nobody at thetime had seen anything like it It was controlled by this weirdpointing thing—a mouse—not a keyboard like other earlyPCs To familiarize new users with the mouse, Jobs madesure it was packaged separately in its own compartment.Forcing the user to unpack the mouse—to pick it up andplug it in—would make it a little less alien when they had touse it for the first time In the years since, Jobs has carefullydesigned this “unpacking routine” for each and every Appleproduct The iMac packaging was designed to make itobvious how to get the machine on the Internet, and

included a polystyrene insert specially designed to double

as a prop for the slim instruction manual

As well as the packaging, Jobs controls every otheraspect of the customer experience—from the TV ads thatstimulate desire for Apple’s products, to the museum-likeretail stores where customers buy them; from the easy-to-use software that runs the iPhone, to the online iTunesmusic store that fills it with songs and videos

Jobs is a control freak extraordinaire He’s also aperfectionist, an elitist, and a taskmaster to employees Bymost accounts, Jobs is a borderline loony He is portrayed

as a basket case who fires people in elevators,manipulates partners, and takes credit for others’achievements.1 Recent biographies paint an unflatteringportrait of a sociopath motivated by the basest desires— tocontrol, to abuse, to dominate Most books about Jobs aredepressing reads They’re dismissive, little more thancatalogs of tantrums and abuse No wonder he’s calledthem “hatchet jobs.” Where’s the genius?

Clearly he’s doing something right Jobs pulled Applefrom the brink of bankruptcy, and in ten years he’s madethe company bigger and healthier than it’s ever been He’stripled Apple’s annual sales, doubled the Mac’s marketshare, and increased Apple’s stock 1,300 percent Apple

is making more money and shipping more computers thanever before, thanks to a string of hit products—and onegiant blockbuster

Introduced in October 2001, the iPod transformed Apple.And just as Apple has been transformed from a strugglingalso-ran into a global powerhouse, so has the iPod beentransformed from an expensive geek luxury into a diverseand important product category Jobs quickly turned theiPod from an expensive, Mac-only music player that manypeople dismissed into a global, multibillion-dollar industrythat supports hundreds of accessory companies andsupporting players.

Quickly and ruthlessly, Jobs updated the iPod with evernewer and better models, adding an online store, Windowscompatibility, and then video The result: more than 100million sold by April 2007, which accounts for just under half

of Apple’s ballooning revenues The iPhone, an iPod thatmakes phone calls and surfs the Net, looks set to becomeanother monster hit Launched in June 2006, the iPhone isalready radically transforming the massive cell phonebusiness, which pundits are saying has already divided intotwo eras: pre-iPhone and post-iPhone

Consider a few numbers At the time of this writing(November 2007) Apple had sold a whopping 100 millioniPods, and is on track to ship more than 200 million iPods

by the end of 2008 and 300 million by the close of 2009.Some analysts think the iPod could sell 500 million unitsbefore the market is saturated All of which would make theiPod a contender for the biggest consumer electronics hit

of all time The current record holder, Sony’s Walkman, sold

350 million units during its fifteen-year reign in the 1980s

and early 1990s.

Apple has a Microsoft-like monopoly on the MP3 playermarket In the United States, the iPod has nearly 90 percentmarket share: nine out of ten of all music players sold is aniPod.2 Three quarters of all 2007 model year cars haveiPod connectivity Not MP3 connectivity, iPod connectivity.Apple has distributed 600 million copies of its iTunesjukebox software, and the iTunes online store has soldthree billion songs “We’re pretty amazed at this,” said Jobs

at a press event in August 2007, where he cited thesenumbers The iTunes music store sells five million songs aday—80 percent of all digital music sold online It’s the thirdlargest music retailer in the United States, just behind Wal-Mart and Best Buy By the time you read this, thesenumbers will probably have doubled The iPod has become

an unstoppable juggernaut that not even Microsoft cancompete with

And then there’s Pixar In 1995, Jobs’s private littlemovie studio made the first fully computer-animated movie,

Toy Story It was the first in a string of blockbusters thatwere released once a year, every year, regular anddependable as clockwork Disney bought Pixar in 2006 for

a whopping $7.4 billion Most important, it made JobsDisney’s largest individual shareholder and the mostimportant nerd in Hollywood “He is the Henry J Kaiser orWalt Disney of this era,”3 said Kevin Starr, a culturehistorian and the California state librarian

What a remarkable career Jobs has had He’s making

an immense impact on computers, on culture, and,naturally, on Apple Oh, and he’s a self-made billionaire,one of the richest men in the world “Within this class ofcomputers we call personals he may have been, andcontinues to be, the most influential innovator,” says GordonBell, the legendary computer scientist and a preeminentcomputer historian.4

But Jobs should have disappeared years ago—in 1985,

to be precise—when he was forced out of Apple after afailed power struggle to run the company

Born in San Francisco in February 1955 to a pair ofunmarried graduate students, Steve was put up foradoption within a week of his birth He was adopted byPaul and Clara Jobs, a blue-collar couple who soon aftermoved to Mountain View, California, a rural town full of fruitorchards that didn’t stay rural very long—Silicon Valleygrew up around it

At school, Steven Paul Jobs, named after his adoptivefather, a machinist, was a borderline delinquent He sayshis fourth-grade teacher saved him as a student by bribinghim with money and candy “I would absolutely have ended

up in jail,” he said A neighbor down the street introducedhim to the wonders of electronics, giving him Heathkits(hobbyist electronics kits), which taught him about the innerworkings of products Even complex things like TVs were

no longer enigmatic “These things were not mysteriesanymore,” he said “[It] became much more clear that they

were the results of human creation, not these magicalthings.”5

Jobs’s birth parents had made attending college acondition of his adoption, but he dropped out of ReedCollege in Oregon after the first semester, although hecontinued to unofficially attend classes in subjects thatinterested him, like calligraphy Penniless, he recycledCoke bottles, slept on friends’ floors, and ate for free at thelocal Hare Krishna temple He experimented with an all-apple diet, which he thought might allow him to stopbathing It didn’t

Jobs returned to California and briefly took a job at Atari,one of the first games companies, to save money for a trip

to India He soon quit and headed out with a childhoodfriend in search of enlightenment

On his return he started hanging around with anotherfriend, Steve Wozniak, an electronics genius who’d built hisown personal computer for fun but had little interest inselling it Jobs had different ideas Together theycofounded Apple Computer Inc in Jobs’s bedroom andsoon they were assembling computers by hand in hisparents’ garage with some teenage friends To fund theirbusiness, Jobs sold his Volkswagen microbus Wozniaksold his calculator Jobs was twenty-one; Wozniak, twenty-six

Catching the tail of the early PC revolution, Apple took offlike a rocket It went public in 1980 with the biggest public

offering since Ford Motor Company in 1956, makinginstant multimillionaires of those employees with stockoptions In 1983, Apple entered the Fortune 500 at number

411, the fastest ascent of any company in business history

“I was worth about over a million dollars when I was three and over ten million dollars when I was twenty-fourand over a hundred million dollars when I was twenty-five,and it wasn’t that important because I never did it for themoney,” Jobs said

twenty-Wozniak was the hardware genius, the chip-headengineer, but Jobs understood the whole package Thanks

to Jobs’s ideas about design and advertising, the Apple IIbecame the first successful mass-market computer forordinary consumers—and turned Apple into the Microsoft

of the early eighties Bored, Jobs moved on to the Mac, thefirst commercial implementation of the revolutionarygraphical user interface developed in computer researchlabs Jobs didn’t invent the graphical user interface that isused on almost every computer today, including millions ofBill Gates’s Windows machines, but he brought it to themasses This has been Jobs’s stated goal from the verybeginning: to create easy-to-use technology for the widestpossible audience

In 1985, Jobs was effectively kicked out of Apple forbeing unproductive and uncontrollable After a failed powerstruggle with then-CEO John Sculley, Jobs quit before hecould be fired With dreams of revenge, he founded NeXTwith the purpose of selling advanced computers to schools

and putting Apple out of business He also picked up astruggling computer graphics company for $10 million from

Star Wars director George Lucas, who needed cash for adivorce Renamed Pixar, Jobs propped up the strugglingcompany for a decade with $60 million of his own money,only to see it eventually produce a string of blockbustersand turn into Hollywood’s premiere animation studio

NeXT, on the other hand, never took off In eight years itsold only 50,000 computers and had to exit the hardwarebusiness, concentrating on selling software to nichecustomers like the CIA This is where Jobs could havedisappeared from public life With NeXT failing, Jobs mighthave written his memoirs or become a venture capitalistlike many before him But in hindsight, NeXT was astunning success NeXT’s software was the impetus forJobs’s return to Apple, and it became the foundation ofseveral key Apple technologies, especially Apple’s highlyregarded and influential Mac OS X

Jobs’s return to the company in 1996—the first time heset foot on the Cupertino campus in eleven years—hasturned out to be the greatest comeback in business history

“Apple is engaged in probably the most remarkablesecond act ever seen in technology,” Eric Schmidt,Google’s chief executive, told Time magazine “Itsresurgence is simply phenomenal and extremelyimpressive.”6

Jobs has made one savvy move after another The iPod

is a smash and the iPhone looks like one, too Even the

is a smash and the iPhone looks like one, too Even theMac, once written off as an expensive toy for a nicheaudience, is staging a roaring comeback The Mac, likeApple itself, is now thoroughly mainstream In ten yearsJobs has hardly made a single misstep, except one bigone: he overlooked Napster and the digital music revolution

in 2000 When customers wanted CD burners, Apple wasmaking iMacs with DVD drives and promoting them asvideo editing machines “I felt like a dope,” he told Fortune

magazine.7

Of course, it’s not all been savvy planning Jobs has beenlucky Early one morning in 2004, a scan revealed acancerous tumor on his pancreas: a death sentence.Pancreatic cancer is a sure and quick killer “My doctoradvised me to go home and get my affairs in order, which

is doctor’s code for prepare to die,” Jobs said “It means totry to tell your kids everything you thought you’d have thenext ten years to tell them in just a few months It means tomake sure everything is buttoned up so that it will be aseasy as possible for your family It means to say yourgoodbyes.” But later that evening, a biopsy revealed thatthe tumor was an extremely rare form of cancer that istreatable with surgery Jobs had the operation.8

Now in his early fifties, Jobs lives quietly, privately, withhis wife and four kids in a large, unostentatious house insuburban Palo Alto A Buddhist and a pescadarian (avegetarian who eats fish), he often walks barefoot to thelocal Whole Foods for fruit or a smoothie He works a lot,taking the occasional vacation in Hawaii He draws $1 in