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1
Siberia
I'm asking Steve to step down," Apple CEO John Sculley told the company's board of directors, "and you can back me on it . . . or you're going to have to find yourselves a new CEO."
It was April 11, 1985, and long-simmering tensions between John Sculley and Steve Jobs had finally erupted. It marked a stunning reversal. Just two years earlier, Steve had handpicked and personally recruited John from PepsiCo. Apple had grown into a billion-dollar company, and Steve, along with the board, felt that John would be the right person to provide the company with "adult supervision" as its CEO. After John joined, Steve remained chairman of the board and head of the Macintosh unit, where he led the development of the company's flagship personal computer.
John's working relationship with Steve began as trusting and close. The two shared private talks and meals. They seemed preternaturally aligned on most parts of Apple's corporate strategy.
But the relationship soured as the company's fortunes declined. Apple computers weren't selling. John struggled to put forward a clear vision to boost sales. And Steve-convinced of his own brilliance-was impossible to manage. He had recently told an executive, "I am the board."
But the duly elected members of Apple's board begged to differ-they dressed down both John and Steve over the situation. Now John wanted Steve out entirely. He asked that Steve be removed from his operational role and stripped of all decision-making authority.
Steve was livid. He reminded the board members that Apple was his baby-the company he had built from nothing out of his parents' garage. He remained indispensable, he told them, as nothing less than Apple's beating heart and its intellectual force. But only one person could lead Apple, and John wanted it to be him. "I had given Steve greater power than he ever had and I had created a monster," John recounted later.
Just over a year before, on January 24, 1984, Steve had launched his brainchild into the world: the Macintosh. Steve called it the “computer for the rest of us” and claimed that its simplicity and ease of use would revolutionize the personal computer industry. For the first one hundred days, it posted strong shipments and looked poised to succeed.
But regular customers were put off by the Mac's serious limitations. Though simple to use, the Mac had no hard drive, extremely limited functionality, and was priced at a jaw-dropping $2,495 (almost $8,000 in 2026 dollars). By 1985, Apple had run through early adopters, and the remaining shoppers turned to the lower-priced alternative, the Apple II. Mac inventory piled up, budgets spun out of control, and the company struggled to come up with a dazzling new product. An industry-wide slump made the problem worse.
For the first time in its short history, Apple was in real trouble. By early 1985, IBM-the computing giant that dominated corporate America-and its imitators had captured nearly half the personal computer market, up from about a third just months earlier. These "clone" computers ran the same software as IBM's machines but cost far less. Apple's market share remained stuck in place, exposing the failure of the company's Macintosh gamble.
Things got so bad that Steve and John entered secret talks to sell the company to General Electric. According to journalist Frank Rose, the conglomerate hired Texas-based businessman H. Ross Perot to meet with Apple's leadership and investigate the company as an acquisition target. In the end, GE decided against buying. But Ross was impressed with Steve, a connection that would later prove important when Steve needed investors.
Ross's fascination with Steve followed a pattern. Many in Apple's orbit lavished attention on Steve while overlooking John's contributions to the company, fueling an emerging rivalry between the two that was exacerbated by Apple's shaky market position.
To fix the problem, Steve told employees that he believed Apple should play in the big leagues. So far, the company had focused on the consumer market. If Apple made a more powerful computer for corporate customers, Steve believed it could take on IBM. So he began to develop the Macintosh Office, an upgraded version of the Mac specially designed for office settings.
John was not on board. He thought Steve's plans were unrealistic. The Mac was designed to be a simple device for drawing and typing at home. Its architecture was not built for pressure-cooker corporate environments with complex demands. Even engineers in Steve's own department argued that the project lay beyond their capabilities. Steve forged ahead anyway.
Steve also liked that releasing the Macintosh Office would give Apple a chance to recreate its 1984 commercial from the year before, which had introduced the original Mac and become an instant classic. Apple tasked Chiat/Day, the same firm behind the 1984 spot, to develop a follow-on.
Chiat/Day's concept: convince business leaders that they were on a slow march off a cliff if they didn't buy the Macintosh Office. On Super Bowl Sunday, January 20, 1985, Steve and John went to Stanford Stadium to watch the premiere of their new commercial together.
The ad, titled "Lemmings," aired during a break in the fourth quarter. The dystopian spot opens on a line of blindfolded, suit-clad office workers marching toward the edge of a cliff as they whistle an eerie, minor-key version of "Heigh-Ho" from Snow White and the Seven Dwarfs. One by one, the lemmings step off the edge and fall to their deaths. The last lemming in the line stops just before the edge, removes his blindfold and gazes over the abyss.
"You can look into it," announces a somber voice, "or you can go on with business as usual." Text flashes: The Macintosh Office.
As the lemmings fell, the eighty-four thousand fans in Stanford Stadium went uncomfortably silent. Apple's top duo began to experience a sinking feeling themselves. John felt certain the reaction portended hard times for the product.
Sure enough, Apple released the Macintosh Office three days later to muted press coverage and weak sales. Worse, John's fears about Apple's capacity to deliver the product were realized. The technical heart of the product-Apple's much-hyped file server-was severely delayed and not yet ready to ship.
The bad sales numbers drove further division behind the scenes as Apple employees began splintering into factions. At one point, a contingent supporting John stormed the Human Resources Department to complain about Steve overstepping his area of control. Meanwhile Steve undermined John at every turn, badmouthing him to colleagues and challenging his every decision. Steve's acolytes accused John of lacking vision and misunderstanding technology products. They felt that he was turning Apple into yet another boring, bureaucratic corporation.
With so much open dissension, no one knew who was really running the company.
In response, John-the Wharton-trained, former PepsiCo president-made a plan to reshape Apple's corporate hierarchy. From its earliest days as a start-up, the company had relied on flat management. This had facilitated scrappiness and the creative exchange of ideas when Apple was young. But as it grew, John watched the lack of structure fuel chaos and infighting. He believed that a mature Apple needed centralized leadership to succeed. So he moved to combine the product divisions under one C-suite that would report up to him.
The plan sounded simple enough. But John faced one big obstacle: bringing Steve to heel. Under his proposed reshuffle, Steve would become one of three coequal product executives. On the back side of his office door, John hung a graphic outlining his mission: a simple pyramid with himself perched at the top.
Steve wasn't having it, particularly as his respect for John dwindled. John's attempt to impose order was failing and tensions kept ratcheting. On February 7, when an anonymous caller made a bomb threat targeting John's and Steve's personal homes, a rumor circulated inside Apple that it had been orchestrated by Steve to seek revenge. "Guards with rifles were sleeping on our sofa," John admitted to a pair of journalists. The threat turned out to be a hoax, but the suspicions among staff illustrated how deep the rift had become.
Two weeks later, Steve threw himself a thirtieth birthday bash at the St. Francis Hotel in San Francisco’s Union Square. For someone who was known to say, “Never trust anyone over thirty,” the milestone prompted reflection. As Steve wrote on the table cards: “You’ve helped me acquire my habits (good and bad). Thank you for joining me tonight to celebrate thirty more years of living with them.”
Steve arrived an hour into the event, clad in a black tuxedo, in accordance with the party's black-tie dress code. John set aside his differences and rose to give Steve a toast, calling him "technology's foremost visionary."
Then a jazz singer took the stage, sporting a red tuxedo.
"I'm Ella Fitzgerald," she said, "and for some reason a young man here wants me to sing happy birthday to him for his thirtieth birthday."
Few at the party would forget hearing Ella sing to Steve. But for the legendary chanteuse, it was just another gig. After singing a jazzy rendition of "Happy Birthday," she left the building. To Ella, "he was just a rich guy named Steve," wrote David Bunnell, the founder of Macworld, the magazine devoted to Apple and the Macintosh, who covered the party. Then members of the San Francisco Symphony orchestra took over the music. Steve departed soon after.
To attendees, the event felt distant and sad. "Steve doesn't have any real friends," Mike Murray, who marketed the Mac, had told David before the party.
The next month, March 1985, John and Steve barely spoke to each other. Steve told anyone who would listen that John was clueless. Apple managers complained that Steve's perfectionist tantrums were making it impossible to meet product deadlines. They urged John to enforce discipline over the chaos, to step up as CEO.
Something had to be done. So Jay Elliot, Apple's human resources chief, brought John to Steve's office to hash things out. Outside the windows, rain poured. Inside, things quickly went south.
"Sculley just started hollering at [Steve]," Jay recalled. John blamed Steve for the Mac Division's poor sales and lambasted him for undermining his authority.
Steve started shouting back, saying that John was the real source of Apple's problems. The Mac Division was one thing, Steve said, but John simply couldn't lead the company. Then came Steve's stinger: He said he regretted ever hiring him as CEO.
And then, Steve burst into tears.
"I knew at that moment that Sculley had him," Jay said, "because Sculley would go to the board and say, 'This guy is out of control.'"
A few weeks later, the night before the fateful April 11 board meeting, John did exactly that. He proposed to the board that Steve be transferred from his post as leader of the Mac team to a newly invented, completely powerless unit tasked with dreaming up far-off ideas.
For three hours, from 6:00 p.m. to 9:00 p.m., Steve and John went back and forth, arguing for their professional lives. After taking a break for the night, the pair picked up at 9:00 a.m. the next day and fought before the board for another grueling six and a half hours. John declared that if the board didn't side with him, he would resign as CEO.
Exhausted, the board backed John. Though they criticized him for hesitating to assert his leadership, they needed him more than they needed Steve, whom they saw as an immature agent of chaos.
The board's clear message to Steve: Let John run the company. The board allowed Steve to keep his title as chairman of the board, but they removed him from his post leading the Mac team-a crushing blow.
Steve left the room and broke down in tears once again.
"I can't believe this is happening," he told Nanette Buckhout after the meeting. Nancy worked as the assistant to-of all people-John. Steve's famed "reality distortion field"-his ability to convince anyone (including himself) that almost anything was possible-made him unafraid to express his emotions to anyone, even the assistant of his nemesis. Apple employees half-jokingly called this ability "the world according to Steve."
"Why did John do this to me?" Steve sobbed. "I can't believe he would do this. He betrayed me."
On May 7, 1985, John and Jay landed in Paris. They needed a spiritual replacement for Steve to lead the Mac team and hoped to convince the head of Apple France, a debonair executive named Jean-Louis Gassée, to do it.
Like Steve, Jean-Louis had a je ne sais quoi. He was charismatic and handsome. He wore leather jackets, seductive colognes, and a diamond earring. He had appeared in French Vogue, where he was lauded as one of France's best-dressed men. Even his descriptions of tech strategy had an edge. "At Apple," he wrote, "one sometimes tends to forget that life is not made of a series of orgasms but also of love."
And like Steve, Jean-Louis came from an unusual background. He had studied math in school, helped manage a strip club in Paris, and spent his early twenties as a door-to-door salesman of elixirs meant to reinvigorate the sex lives of French women. At twenty-four years old, he pivoted from potions to PCs and joined Hewlett-Packard's French division as a senior salesman. After hearing about a start-up called Apple, he made the leap and, in 1981, launched Apple's French subsidiary.
Under Jean-Louis's leadership, Apple France became the company's most successful global arm. Impressed by his track record, John tagged Jean-Louis for a promotion-he wanted him to join the Mac Division. But Jean-Louis was hesitant to enter Apple's toxic leadership fray and was put off by the idea of working for Steve. In his book of essays, Jean-Louis had described Steve as "that handsome and tragic character out of some novel, that visionary monster, aesthete, lonely, detestable and fascinating creature."
When John first proposed that Jean-Louis join the Mac Division, Jean-Louis demanded a letter from Steve guaranteeing that he would hand over leadership of the division within a year. At the time, Steve was outraged at the affront. But now, with Steve on his way out, John could promise Jean-Louis that the division would eventually be his. Until then, he would run Macintosh marketing.
When Steve found out about the arrangement, he was livid. He angrily told Jay that he didn't want Jean-Louis around. Steve wasn't going to stand by as a charming French interloper commandeered his team.
Steve was thoroughly fed up with John. He wanted control of his company once again, so he decided to put a coup in motion. After Apple secured the rights to sell personal computers in China, Steve accepted an invitation to travel to Beijing to speak at the Great Hall of the People. He anticipated that John would want to come too and invited John on the trip. Then, once John signed on, Steve bailed, leaving John to travel to Beijing by himself.
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