Return to the Little Kingdom (2 page)

 

—Michael Moritz,
San Francisco, 2009

W
riting about companies can be a perilous occupation. For like people, companies are never what they seem to be. Both share a natural impulse to put their best foot forward but companies, particularly large ones, spend a lot more time and money on appearances than do most individuals. Advertisements are designed to portray the corporation and its products in the most appealing light. Public-relations agencies are retained to issue press releases, deal with reporters, and cope with uncomfortable issues. Security analysts, bankers, and brokers are sedulously courted to make sure that stock exchanges give proper attention to the company’s shares.

There is then some charm about businesses that have not stepped into the public light. They don’t have to worry about the strictures of federal agencies or shareholders who appreciate only a cultivated notoriety. Their founders and managers tend to speak with fewer inhibitions than executives at larger organizations, and they guard their secrets with less anxiety. During their first few years most companies are content with whatever publicity they can get. But the stories that appear in large newspapers and magazines tend, by virtue of the subject, to be short and usually gloss over many aspects of a young company’s progress while the appeal of novelty tends to soften criticism. Yet by the time corporate histories are commissioned the details of those early stages are often lost. Myths spring up about life in the good old days and even the best-intentioned efforts turn from fact to fiction. Nostalgia, as the wise man said, isn’t what it was. So there’s much to be said for writing about a company before its founders and early employees die or lose details in a gin-mottled fog.

While they remain small, companies are easy enough to describe but once they outgrow a garage or an office suite they become increasingly opaque. As employees are scattered in factories and warehouses across the country or overseas, one is left to deal with impressions that have to be recorded with the dots and dabs of pointillism. If sheer size is one obstacle there are also more mechanical obstructions. For trying to figure out the tone and nature of a large American corporation is a bit like charting the affairs of Gorki. Some stories can be gleaned from bitter refugees but a closer inspection is more hazardous. It’s difficult to obtain a tourist visa, simple to discover the official line, impossible to move around without being followed, and all too easy to get expelled.

Sad to say, small businesses in a particular corner of California have an irritating habit of turning into large corporations. During the past thirty years the orchards between San Jose and San Francisco have been mowed down to make way for dozens of companies which now form Silicon Valley. Most of these make their money from some connection with electronics and have grown so fast that it’s easy to believe that the prunes and apricots shed some fertile residue. During the last decade, as developments in microelectronics have moved from the missile cone to the tabletop, these companies have attracted the usual parasitic herd of politicians, management consultants, and journalists eager to uncover a cure for the ills that have bothered other industries.

To some extent the popular conception of these companies has been formed by contrived illusion. They are supposed to conduct their business in novel ways. They are considered to be informal and relaxed places to work, where unusual minds can be kept entertained. Their founders are supposed to share the wealth, while hierarchy and bureaucracy, the curses of conventional corporations, have somehow been abolished. The heads of companies, we are told, let employees wander into their offices and are reluctant to fire anyone but thieves and bigots. To listen to the publicity merchants these companies are started by people with daring imaginations and a yen for risk. They seem to introduce new products with the predictable certainty with which Henry Kaiser once launched Liberty ships and the development of a new chip or a faster computer is invariably portrayed as the result of the march of destiny. They are rarely discussed without some invocation of God, country, or the pioneering spirit.

 

There is no better example of all this than Apple Computer, Inc., which is Silicon Valley’s most precocious child. Within eight years it has gone from a living room to a yearly sales rate of more than $1 billion while the stock market has placed a value of more than $2.5 billion on its shares. It took less time to reach the
Fortune
500 than any other start-up in the history of the index and it stands a good chance of falling among the one hundred largest U.S. industrial corporations before its tenth birthday. Two of its stockholders are said to be among the four hundred wealthiest people in the United States and well over one hundred of its employees have become millionaires. By most conventional standards Apple has dwarfed the accomplishments of any company born in Silicon Valley. It is larger than enterprises founded decades earlier, it has designed and introduced new products, and it hasn’t had to seek help from a corporate sugar daddy.

When I started to think about writing this book, Apple was already a large company. It was perched between the great success brought by the Apple II personal computer and the twin challenges of building and introducing a new round of machines and competing with the Juggernaut from Armonk, IBM. Apple’s early days were fast slipping into the stuff of folksong and legend and the personal-computer industry was maturing fast. Small companies that had managed to survive the early days were beginning to fall by the wayside. A few had emerged as leaders and Apple was one.

I thought that I could learn more about Silicon Valley, the start of a new industry, and life at a young company by focusing on one firm rather than by trying to come to grips with many. I was interested in whether image matched reality and whether public statements corresponded with private actions. I wanted to concentrate on the years before Apple became a publicly held company, examine the atmosphere that nourished the founders, and find out how their personalities came to affect the company. To a lesser extent I also wanted to come to terms with the conventional questions: Why? when? and how? “In the right place at the right time” clearly explains part of Apple’s success but dozens, if not hundreds, of other people who started microcomputer companies have failed.

For some months I enjoyed a carefully circumscribed freedom at Apple. I was allowed to attend meetings and watch progress on a new computer. But the company I saw in 1982 was very different from the little business that filled a garage in 1977. Consequently, I have scattered these corporate snapshots throughout the book. This isn’t an authorized portrait of Apple Computer nor was it ever supposed to be a definitive history. Apart from documents that were leaked, I had no access to corporate papers. The name of one character who appears briefly in the narrative, Nancy Rogers, has been changed, and some of the people mentioned in the text have either left the company or assumed different titles. I discovered quickly enough that writing a book about a growing company in an industry that changes with dizzying rapidity has at least one similarity to the production of a computer. Both could always be better if every new and enticing development were included. But like an engineer I had to bolt down and ship. So this is about Apple’s road to its first one billion dollars.

A large set of French windows rinsed the California sun. The filtered light, which had the long wash of fall, played along a rumpled line of suitcases, garment bags, backpacks, and guitar cases. The owners of the luggage were seated around a stone fire-place in generous crescents of straight-backed chairs. Most of the sixty or so faces fell into that blind gap that camouflages those between their late teens and early thirties. About a third were women. Most wore androgynous uniforms of jeans, T-shirts, tank tops, and running shoes. There were a few paunches, some occasional patches of gray hair, and more than the average run of spectacles. Some cheeks were unshaven and a few were still swollen with sleep. Several blue-brimmed polyester baseball caps carried the silhouette of an apple with a bite gouged out of the side and, in black lettering, the words MACINTOSH DIVISION.

At the front of the group, sitting on the edge of a steel table, was a tall, slight figure in his late twenties. He was dressed in a checked shirt, bleached jeans, and scuffed running shoes. A slim digital watch ran around his left wrist. His long, delicate fingers had nails that were chewed to the quick, while glossy black hair was carefully shaped and sideburns crisply trimmed. He blinked a pair of deep, brown eyes as though his contact lenses were stinging. He had a pale complexion and a face divided by a thin, angular nose. The left side was soft and mischievous while the right had a cruel, sullen tint. He was Steven Jobs, chairman and co-founder of Apple Computer and general manager of the Macintosh Division.

The group waiting for Jobs to speak worked for Apple’s youngest division. They had been bused from the company’s headquarters in Cupertino, California, across a range of pine-covered hills for a two-day retreat at a resort built for weekenders on the edge of the Pacific. Sleeping quarters were wooden condominiums with stiff-necked chimneys. The wood had been bleached gray by the wind and the spray and the buildings were set among sand dunes and spiky grass. Collected together in the clear morning light, the group formed the footloose confection typical of a young computer company. Some were secretaries and laboratory technicians. A few were hardware and software engineers. Others worked in marketing, manufacturing, finance, and personnel. A couple wrote instruction manuals. Some had recently joined Apple and were meeting their colleagues for the first time. Others had transferred from a division called Personal Computer Systems, which made the Apple II and Apple III computers. A few had once worked for the Personal Office Systems Division, which was preparing to introduce a machine called Lisa that Apple intended to sell to businesses. The Macintosh Division was sometimes called Mac but the lack of an official-sounding name reflected its uncertain birth. For the computer code-named Mac was, in some ways, a corporate orphan.

Jobs began speaking quietly and slowly. “This,” he said, “is the cream of Apple. We have the best people here and we must do something that most of us have never done: We have never shipped a product.” He walked with a springy step to an easel and pointed to some plain mottos written in a childish hand on large, creamy sheets of paper. These he converted into homilies. “It’s Not Done Until It Ships,” he read. “We have zillions and zillions of details to work out. Six months ago nobody believed we could do it. Now they believe we can. We know they’re going to sell a bunch of Lisas but the future of Apple is Mac.” He folded back one of the sheets of paper, pointed to the next slogan, and read: “Don’t Compromise.” He mentioned the introduction date planned for the computer and said, “It would be better to miss than to turn out the wrong thing.” He paused and added, “But we’re not going to miss.” He flipped another page, announced, “The Journey Is the Reward,” and predicted, “Five years from now you’ll look back on these times and say, ‘Those were the good old days.’ You know,” he mulled in a voice that rose half an octave, “this is the nicest place in Apple to work. It’s just like Apple was three years ago. If we keep this kind of pure and hire the right people, it’ll still be a great place to work.”

Jobs pulled a torn white plastic bag along the table, dangled it by his knee, and asked in the tone of someone who knows what the answer will be: “Do you want to see something neat?” An object that looked like a desk diary slipped from the plastic bag. The case was covered in brown felt and fell open to reveal a mock-up of a computer. A screen occupied one half and a typewriter keyboard the other. “This is my dream,” said Jobs, “of what we’ll be making in the mid- to late eighties. We won’t reach this on Mac One or Mac Two but it will be Mac Three. This will be the culmination of all this Mac stuff.”

Debi Coleman, the division’s financial controller, was more interested in the past than the future and, much like a child hoping for a familiar bedtime tale, asked Jobs to tell the newcomers how he had silenced the founder of Osborne Computers whose portable computer had been putting a dent in Apple’s sales. “Tell us what you told Adam Osborne,” she implored. With a reluctant shrug Jobs waited for the anticipation to build before embarking on the story. “Adam Osborne is always dumping on Apple. He was going on and on about Lisa and when we would ship Lisa and then he started joking about Mac. I was trying to keep my cool and be polite but he kept asking, ‘What’s this Mac we’re hearing about? Is it real?’ He started getting under my collar so much that I told him, ‘Adam, it’s so good that even after it puts your company out of business, you’ll still want to go out and buy it for your kids.’”

The group alternated between the indoor sessions and alfresco sessions on a bank of sun-parched grass. Some foraged in a cardboard box and donned T-shirts that had the computer’s name racing across the chest in a punky script. The retreat seemed a cross between a confessional and a group-encounter session. There was a nervous, slightly strained, jocularity but the old-timers who had attended previous retreats said the atmosphere was relaxed and low-key. A couple of the programmers muttered that they would have preferred to stay and work in Cupertino, but they lounged on the grass and listened to briefings from other members of the group.

Some picked at bowls of fruit, cracked walnuts, and crumpled soft-drink cans while Michael Murray, a dark-haired marketing man with dimples and mirrored sunglasses, rattled through industry charts and projected sales rates and market share. He showed how Mac would be introduced between the more expensive office computers made by competitors like IBM, Xerox, and Hewlett-Packard and the cheaper home computers sold by companies like Atari, Texas Instruments, and Commodore. “We’ve got a product that should be selling for five thousand dollars but we have the magic to sell for under two thousand. We’re going to redefine the expectations of a whole group of people.” He was asked how sales of Mac would affect Apple’s office computer, Lisa, which was a more elaborate computer but built around the same principles.