Inside Steve's Brain (16 page)

“I want to put a ding in the universe.”

At every turn of his career, Steve Jobs has inspired employees, lured software developers, and snagged customers by invoking a higher calling. For Jobs, programmers don’t work to make easy-to-use software; they’re striving to change the world. Apple’s customers don’t buy Macs to work on spreadsheets; they’re making a moral choice against the evil monopoly of Microsoft.

Take the iPod. It’s a cool MP3 player. It’s a great blend of hardware, software, and online services. It’s driving Apple’s comeback. But for Jobs, it’s primarily about enriching people’s lives with music. As he told
Rolling Stone
in 2003: “We were very lucky—we grew up in a generation where music was an incredibly intimate part of that generation. More intimate than it had been, and maybe more intimate than it is today, because today there’s a lot of other alternatives. We didn’t have video games to play. We didn’t have personal computers. There’s so many other things competing for kids’ time now. But, nonetheless, music is really being reinvented in this digital age, and that is bringing it back into people’s lives. It’s a wonderful thing. And in our own small way, that’s how we’re working to make the world a better place.”
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Get that last part: “that’s how we’re working to make the world a better place.” In everything Jobs does, there’s a sense of mission. And like any true believer, he’s passionate about his work. Yes, his commitment produces a lot of screaming and shouting. Jobs is no pussycat when dealing with underlings. He knows what he wants, and he’ll throw a fit to get it. Oddly, many of his collaborators like getting yelled at. Or at least, they like the effect it has on their work. They appreciate his passion. He pushes them to greatness, and, though they might burn out, they learn a lot along the way. Jobs’s secret: it’s OK to be an asshole, as long as you’re passionate about it.

Making the world a better place has been Jobs’s mantra from the get-go. In 1983, Apple was six years old and growing explosively. It was transforming from a classic Silicon Valley startup run by young hippies into a big corporation with blue-chip customers. It needed a seasoned businessman in charge.

Jobs had spent months trying to seduce John Sculley, the president of PepsiCo, to run the company. But Sculley wasn’t convinced it was wise to step down as head of a big established firm for a risky, hippie startup like Apple. Still, Sculley was tempted. Personal computers were the future. The pair met numerous times in Silicon Valley and New York. Finally, one evening, looking out over Central Park from the balcony of Jobs’s luxury apartment at the San Remo building, Jobs turned to the older man and brazenly challenged him: “Do you want to sell sugar water for the rest of your life, or do you want to change the world?”

It’s perhaps the most famous challenge in modern business history: it’s an insult, a compliment, and a soul-searching, philosophical challenge rolled into one question. Of course, the question cut Sculley to the core. It unsettled him profoundly, and he fretted about it for days. In the end, he couldn’t resist the gauntlet Jobs had thrown down. “If I didn’t accept, I’d have spent the rest of my life wondering if I made the wrong decision,” Sculley told me.

The team that developed the first Mac was a ragtag bunch of ex-academics and technicians working on an under-the-radar skunkworks affair that had little chance of seeing the light of day—until Jobs took it over. Right from the get-go, Jobs convinced the team that they were creating something revolutionary. This wasn’t just a cool computer or a challenging engineering problem. The Mac’s easy-to-use graphical interface was going to revolutionize computing. For the first time, computers would be accessible to the nontechnical public.

The Mac team members worked like slaves for three years, and though Jobs screamed at them, he kept up morale by instilling in them the conviction that they had a higher calling. The work they were doing was nothing less than God’s work. “The goal was never to beat the competition, or to make a lot of money; it was to do the greatest thing possible, or even a little greater,” wrote Andy Hertzfeld, one of the lead programmers.

Jobs told the Mac team they were artists, fusing technology with culture. He convinced them that they were in a unique position to change the face of computing, and privileged to be designing such a groundbreaking product. “For a very special moment, all of us have come together to make this new product,” Jobs wrote in an essay for the premier issue of
Macworld
magazine in 1984. “We feel this may be the best thing we’ll ever do with our lives.”

In retrospect, this turned out to be true. The Mac was a revolutionary breakthrough in computing. But this was perhaps an article of faith. The Mac was just one of dozens of competing computers being developed at the time. There was no guarantee it would be better, or even that it would get released to market. The team took Jobs’s conviction on faith. They joked that their belief in Jobs’s vision was the same kind of faith instilled by leaders of charismatic cults.

But Jobs instilled in his team a passion for their work, which is critical when trying to invent new technologies. Without it, workers might lose faith in a project that takes several years to come to fruition. Without a passionate commitment to their work, they might lose interest and abandon it. “Unless you have a lot of passion about this, you’re not going to survive,” Jobs has said. “You’re going to give it up. So you’ve got to have an idea or a problem or a wrong that you want to right that you’re passionate about; otherwise you’re not going to have the perseverance to stick it through. I think that’s half the battle right there.”

Jobs’s passion is a survival strategy. Many times when Jobs and Apple have tried something new, there have been a few true believers, but the wider world’s reaction has often been disdainful. In 1984, the first Mac’s graphical user interface was widely derided as “a toy.” Bill Gates was mystified that people wanted colored computers. Critics initially called on Apple to open up the iPod. Without a strong belief in his vision, a passion for what he was doing, it would be much harder for Jobs to resist the critics. “I’ve always been attracted to the more revolutionary changes,” Jobs told
Rolling Stone
. “I don’t know why. Because they’re harder. They’re much more stressful emotionally. And you usually go through a period where everybody tells you that you’ve completely failed.”

Instilling employees with a passion for what the company is doing has a very practical application: staffers are generally happy to work extremely long hours, even by Silicon Valley’s workaholic standards. The Mac team worked long, hard hours because Jobs made them believe the Mac was their product. It was their creativity and work that was bringing the product to life, and he made them believe they would have a profound impact. What better motivator is there? At Apple, technology is a team sport. The Mac development team worked so hard that it became a badge of honor. They all got sweatshirts emblazoned with “90 HOURS A WEEK AND LOVING IT.”

Many of Apple’s staff genuinely believe that Apple is making a dent in the universe. They strongly feel that Apple is leading technology, setting trends, and breaking new ground. To be part of that is very enticing. “People do believe that Apple is changing the world,” said one former staff member. “Not everyone believes it 100 percent, but they all believe it at least a little. As an engineer, what Apple is doing is very exciting. There was always something exciting about to happen. The company has incredible momentum.”

At Apple, the corporate culture trickles down from Jobs. Just as Jobs is exceedingly demanding of the people who report to him, Apple’s middle managers demand the same level of high performance from their staff. The result is a reign of terror. Everyone is in constant fear of losing their jobs. It’s known as the “hero/asshole rollercoaster.” One day you’re a hero, the next you’re an asshole. At NeXT, Jobs’s employees called it the “hero/shithead rollercoaster.” “You live for days when you’re a hero and try to get through the days when you’re an asshole,” said a former staffer. “There’s incredible highs and there’s incredible lows.”

According to several staffers I talked to, there’s a constant tension at Apple between the fear of getting fired and a messianic zeal for making a dent in the universe. “More than anywhere else I’ve worked before or since, there’s a lot of concern about being fired,” explained Edward Eigerman, a former Apple engineer. “You’d ask your coworkers, ‘Can I send this e-mail, or file this report?’ People would say, ‘you can do whatever you want on your last day at Apple.’”
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Eigerman spent four years at Apple working as an engineer in a New York sales office. Everyone he worked with eventually got fired for one reason or another, he said, mostly for performance-related issues, like not meeting their numbers. But on the other hand, no one quit either. Even though working at Apple was demanding and stressful, everyone loved their job and was extremely loyal to the company and to Steve Jobs.

“People love to work there,” said Eigerman. “They are very excited to be there. There’s a lot of passion. People love the products. They really believe in the products. They are very excited about what they are doing.”

Despite the zeal, employees are distinctly un-cultish. They consciously avoid the cultish types. At a job interview, the worst thing a prospective employee can say is: “I’ve always wanted to work at Apple,” or “I’ve always been a big fan.” That’s the last thing Apple employees want to hear. Staffers like to describe each other as “level-headed.”

The stress of riding the hero/asshole rollercoaster would be intolerable if a lot of staffers weren’t giddy to work at Apple. As well as wanting to put a ding in the universe, several employees described other perks of working at Apple, including the high caliber of fellow employees, an outstanding corporate cafeteria, and the challenge of working on the cutting edge of technology.

One of the best perks is Apple’s employee stock options, which have become very valuable as Apple’s stock has surged a split-adjusted 1,250 percent since Jobs returned as CEO in 1997, according to
Business Week
. At Apple, there are few corporate indulgences. Jobs has his own personal Gulfstream V jet, but most officers and executives fly coach. There are no generous expense accounts. The lavish retreats of Apple’s early days— where hundreds of salespeople would be entertained at a Hawaiian resort for a week—are long gone.

But most of Apple’s full-time employees have grants of stock options, which are awarded to them when they join the company. After a vesting period, usually a year, staffers are allowed to buy chunks of stock at a discounted price, typically the price of the stock when they were first hired. When they sell the stock, the difference between the purchase price and the selling price is kept as profit. The higher the stock rises, the more money they make. Stock options are a popular form of employee compensation in the technology industry. It’s non-cash compensation, which makes it cheap to issue, and it more or less guarantees that employees have to work like slaves to raise the stock price.

Engineers, programmers, managers, and other mid-level staffers who make up the majority of Apple’s payroll are typically awarded several thousand stock options. At 2007 prices, several thousand stock options could be worth anywhere between $25,000 to $100,000—or considerably more, depending on the stock price and the employee’s vesting schedule.

Higher-level managers and executives have much larger grants. In October 2007, Apple’s senior vice president of retail, Ron Johnson, cashed in 700,000 shares worth about $130 million before taxes. According to regulatory filings with the Securities and Exchange Commission, Johnson exercised the options at about $24, and immediately sold them for about $185 apiece. In 2005, Johnson made about $22.6 million on stock options, and in 2004, $10 million according to reports.

Apple also has a popular stock purchase plan. Employees can buy discounted stock in chunks based on their salary. The stock is priced at the lowest price in the last six months, plus a percentage discount, which is guaranteed to make a little money, and quite often a lot of money. I received reports of Apple staff buying fancy cars, making down payments on houses, and salting large sums of cash in the bank.

“At Apple we gave all our employees stock options very early on,” Jobs told
Fortune
in 1998. “We were among the first in Silicon Valley to do that. And when I returned, I took away most of the cash bonuses and replaced them with options. No cars, no planes, no bonuses. Basically, everybody gets a salary and stock.... It’s a very egalitarian way to run a company that Hewlett-Packard pioneered and that Apple, I would like to think, helped establish.”

Indeed, Apple did help establish stock options as standard Silicon Valley compensation procedure. During the boom, options became the norm at companies all across the tech sector. So important were options that, on returning to Apple in 1997, Jobs immediately fought hard to reprice plunging options to prevent an exodus of staff to other companies. As
Time
magazine reported that August: “To restore morale, Jobs says, he went to the mat with the board to lower the price of incentive stock options. When the board members resisted, he pushed for their resignations.”

Later, Jobs got into trouble with his own stock options, a situation that hadn’t been resolved at the time of this writing. In 2006, the Securities and Exchange Commission launched a widespread investigation into more than 160 companies, including Apple and Pixar, that had allegedly backdated stock options. According to the SEC, companies were routinely re-pricing options to a date prior to the actual date the options were granted—usually when the stock price was lower, which boosted the worth of the stock. Backdating options is not technically illegal, but improperly reporting backdated options is, and, according to the SEC, it was widespread.