To think they can change 9 page

you’re so passionate about it, I’ll give you six days to prove me wrong.” He did, and Jobs

respected him ever after.

By the fall of 1979 Apple was breeding three ponies to be potential successors to the Apple II

workhorse. There was the ill-fated Apple III. There was the Lisa project, which was beginning to

disappoint Jobs. And somewhere off Jobs’s radar screen, at least for the moment, there was a

small skunkworks project for a low-cost machine that was being developed by a colorful

employee named Jef Raskin, a former professor who had taught Bill Atkinson. Raskin’s goal was

to make an inexpensive “computer for the masses” that would be like an appliance—a selfcontained

unit with computer, keyboard, monitor, and software all together—and have a graphical

interface. He tried to turn his colleagues at Apple on to a cutting-edge research center, right in

Palo Alto, that was pioneering such ideas.

Xerox PARC

The Xerox Corporation’s Palo Alto Research Center, known as Xerox PARC, had been

established in 1970 to create a spawning ground for digital ideas. It was safely located, for better

and for worse, three thousand miles from the commercial pressures of Xerox corporate

headquarters in Connecticut. Among its visionaries was the scientist Alan Kay, who had two great

maxims that Jobs embraced: “The best way to predict the future is to invent it” and “People who

are serious about software should make their own hardware.” Kay pushed the vision of a small

personal computer, dubbed the “Dynabook,” that would be easy enough for children to use. So

Xerox PARC’s engineers began to develop user-friendly graphics that could replace all of the

command lines and DOS prompts that made computer screens intimidating. The metaphor they

came up with was that of a desktop. The screen could have many documents and folders on it, and

you could use a mouse to point and click on the one you wanted to use.

This graphical user interface—or GUI, pronounced “gooey”—was facilitated by another

concept pioneered at Xerox PARC: bitmapping. Until then, most computers were character-based.

You would type a character on a keyboard, and the computer would generate that character on the

screen, usually in glowing greenish phosphor against a dark background. Since there were a

limited number of letters, numerals, and symbols, it didn’t take a whole lot of computer code or

processing power to accomplish this. In a bitmap system, on the other hand, each and every pixel

on the screen is controlled by bits in the computer’s memory. To render something on the screen,

such as a letter, the computer has to tell each pixel to be light or dark or, in the case of color

displays, what color to be. This uses a lot of computing power, but it permits gorgeous graphics,

fonts, and gee-whiz screen displays.

Bitmapping and graphical interfaces became features of Xerox PARC’s prototype computers,

such as the Alto, and its object-oriented programming language, Smalltalk. Jef Raskin decided that

these features were the future of computing. So he began urging Jobs and other Apple colleagues

to go check out Xerox PARC.

Raskin had one problem: Jobs regarded him as an insufferable theorist or, to use Jobs’s own

more precise terminology, “a shithead who sucks.” So Raskin enlisted his friend Atkinson, who

fell on the other side of Jobs’s shithead/genius division of the world, to convince Jobs to take an

interest in what was happening at Xerox PARC.

What Raskin didn’t know was that Jobs was working on a more complex deal. Xerox’s venture

capital division wanted to be part of the second round of Apple financing during the summer of

1979. Jobs made an offer: “I will let you invest a million dollars in Apple if you will open the

kimono at PARC.” Xerox accepted. It agreed to show Apple its new technology and in return got

to buy 100,000 shares at about $10 each.

By the time Apple went public a year later, Xerox’s $1 million worth of shares were worth

$17.6 million. But Apple got the better end of the bargain. Jobs and his colleagues went to see

Xerox PARC’s technology in December 1979 and, when Jobs realized he hadn’t been shown

enough, got an even fuller demonstration a few days later. Larry Tesler was one of the Xerox

scientists called upon to do the briefings, and he was thrilled to show off the work that his bosses

back east had never seemed to appreciate. But the other briefer, Adele Goldberg, was appalled that

her company seemed willing to give away its crown jewels. “It was incredibly stupid, completely

nuts, and I fought to prevent giving Jobs much of anything,” she recalled.

Goldberg got her way at the first briefing. Jobs, Raskin, and the Lisa team leader John Couch

were ushered into the main lobby, where a Xerox Alto had been set up. “It was a very controlled

show of a few applications, primarily a word-processing one,” Goldberg said. Jobs wasn’t

satisfied, and he called Xerox headquarters demanding more.

So he was invited back a few days later, and this time he brought a larger team that included

Bill Atkinson and Bruce Horn, an Apple programmer who had worked at Xerox PARC. They both

knew what to look for. “When I arrived at work, there was a lot of commotion, and I was told that

Jobs and a bunch of his programmers were in the conference room,” said Goldberg. One of her

engineers was trying to keep them entertained with more displays of the word-processing

program. But Jobs was growing impatient. “Let’s stop this bullshit!” he kept shouting. So the

Xerox folks huddled privately and decided to open the kimono a bit more, but only slowly. They

agreed that Tesler could show off Smalltalk, the programming language, but he would

demonstrate only what was known as the “unclassified” version. “It will dazzle [Jobs] and he’ll

never know he didn’t get the confidential disclosure,” the head of the team told Goldberg.

They were wrong. Atkinson and others had read some of the papers published by Xerox PARC,

so they knew they were not getting a full description. Jobs phoned the head of the Xerox venture

capital division to complain; a call immediately came back from corporate headquarters in

Connecticut decreeing that Jobs and his group should be shown everything. Goldberg stormed out

in a rage.

When Tesler finally showed them what was truly under the hood, the Apple folks were

astonished. Atkinson stared at the screen, examining each pixel so closely that Tesler could feel

the breath on his neck. Jobs bounced around and waved his arms excitedly. “He was hopping

around so much I don’t know how he actually saw most of the demo, but he did, because he kept

asking questions,” Tesler recalled. “He was the exclamation point for every step I showed.” Jobs

kept saying that he couldn’t believe that Xerox had not commercialized the technology. “You’re

sitting on a gold mine,” he shouted. “I can’t believe Xerox is not taking advantage of this.”

The Smalltalk demonstration showed three amazing features. One was how computers could be

networked; the second was how object-oriented programming worked. But Jobs and his team paid

little attention to these attributes because they were so amazed by the third feature, the graphical

interface that was made possible by a bitmapped screen. “It was like a veil being lifted from my

eyes,” Jobs recalled. “I could see what the future of computing was destined to be.”

When the Xerox PARC meeting ended after more than two hours, Jobs drove Bill Atkinson

back to the Apple office in Cupertino. He was speeding, and so were his mind and mouth. “This is

it!” he shouted, emphasizing each word. “We’ve got to do it!” It was the breakthrough he had

been looking for: bringing computers to the people, with the cheerful but affordable design of an

Eichler home and the ease of use of a sleek kitchen appliance.

“How long would this take to implement?” he asked.

“I’m not sure,” Atkinson replied. “Maybe six months.” It was a wildly optimistic assessment,

but also a motivating one.

“Great Artists Steal”

The Apple raid on Xerox PARC is sometimes described as one of the biggest heists in the

chronicles of industry. Jobs occasionally endorsed this view, with pride. As he once said, “Picasso

had a saying—‘good artists copy, great artists steal’—and we have always been shameless about

stealing great ideas.”

Another assessment, also sometimes endorsed by Jobs, is that what transpired was less a heist

by Apple than a fumble by Xerox. “They were copier-heads who had no clue about what a

computer could do,” he said of Xerox’s management. “They just grabbed defeat from the greatest

victory in the computer industry. Xerox could have owned the entire computer industry.”

Both assessments contain a lot of truth, but there is more to it than that. There falls a shadow, as

T. S. Eliot noted, between the conception and the creation. In the annals of innovation, new ideas

are only part of the equation. Execution is just as important.

Jobs and his engineers significantly improved the graphical interface ideas they saw at Xerox

PARC, and then were able to implement them in ways that Xerox never could accomplish. For

example, the Xerox mouse had three buttons, was complicated, cost $300 apiece, and didn’t roll

around smoothly; a few days after his second Xerox PARC visit, Jobs went to a local industrial

design firm, IDEO, and told one of its founders, Dean Hovey, that he wanted a simple singlebutton

model that cost $15, “and I want to be able to use it on Formica and my blue jeans.” Hovey

complied.

The improvements were in not just the details but the entire concept. The mouse at Xerox

PARC could not be used to drag a window around the screen. Apple’s engineers devised an

interface so you could not only drag windows and files around, you could even drop them into

folders. The Xerox system required you to select a command in order to do anything, ranging from

resizing a window to changing the extension that located a file. The Apple system transformed the

desktop metaphor into virtual reality by allowing you to directly touch, manipulate, drag, and

relocate things. And Apple’s engineers worked in tandem with its designers—with Jobs spurring

them on daily—to improve the desktop concept by adding delightful icons and menus that pulled

down from a bar atop each window and the capability to open files and folders with a double

click.

It’s not as if Xerox executives ignored what their scientists had created at PARC. In fact they

did try to capitalize on it, and in the process they showed why good execution is as important as

good ideas. In 1981, well before the Apple Lisa or Macintosh, they introduced the Xerox Star, a

machine that featured their graphical user interface, mouse, bitmapped display, windows, and

desktop metaphor. But it was clunky (it could take minutes to save a large file), costly ($16,595 at

retail stores), and aimed mainly at the networked office market. It flopped; only thirty thousand

were ever sold.

Jobs and his team went to a Xerox dealer to look at the Star as soon as it was released. But he

deemed it so worthless that he told his colleagues they couldn’t spend the money to buy one. “We

were very relieved,” he recalled. “We knew they hadn’t done it right, and that we could—at a

fraction of the price.” A few weeks later he called Bob Belleville, one of the hardware designers

on the Xerox Star team. “Everything you’ve ever done in your life is shit,” Jobs said, “so why

don’t you come work for me?” Belleville did, and so did Larry Tesler.

In his excitement, Jobs began to take over the daily management of the Lisa project, which was

being run by John Couch, the former HP engineer. Ignoring Couch, he dealt directly with

Atkinson and Tesler to insert his own ideas, especially on Lisa’s graphical interface design. “He

would call me at all hours, 2 a.m. or 5 a.m.,” said Tesler. “I loved it. But it upset my bosses at the

Lisa division.” Jobs was told to stop making out-of-channel calls. He held himself back for a

while, but not for long.

One important showdown occurred when Atkinson decided that the screen should have a white

background rather than a dark one. This would allow an attribute that both Atkinson and Jobs

wanted: WYSIWYG, pronounced “wiz-ee-wig,” an acronym for “What you see is what you get.”

What you saw on the screen was what you’d

get when you printed it out. “The hardware team screamed bloody murder,” Atkinson recalled.

“They said it would force us to use a phosphor that was a lot less persistent and would flicker

more.” So Atkinson enlisted Jobs, who came down on his side. The hardware folks grumbled, but

then went off and figured it out. “Steve wasn’t much of an engineer himself, but he was very good

at assessing people’s answers. He could tell whether the engineers were defensive or unsure of

themselves.”

One of Atkinson’s amazing feats (which we are so accustomed to nowadays that we rarely

marvel at it) was to allow the windows on a screen to overlap so that the “top” one clipped into the

ones “below” it. Atkinson made it possible to move these windows around, just like shuffling

papers on a desk, with those below becoming visible or hidden as you moved the top ones. Of

course, on a computer screen there are no layers of pixels underneath the pixels that you see, so

there are no windows actually lurking underneath the ones that appear to be on top. To create the

illusion of overlapping windows requires complex coding that involves what are called “regions.”

Atkinson pushed himself to make this trick work because he thought he had seen this capability

during his visit to Xerox PARC. In fact the folks at PARC had never accomplished it, and they

later told him they were amazed that he had done so. “I got a feeling for the empowering aspect of

naïveté,” Atkinson said. “Because I didn’t know it couldn’t be done, I was enabled to do it.” He

was working so hard that one morning, in a daze, he drove his Corvette into a parked truck and

nearly killed himself. Jobs immediately drove to the hospital to see him. “We were pretty worried

about you,” he said when Atkinson regained consciousness. Atkinson gave him a pained smile and

replied, “Don’t worry, I still remember regions.”

Jobs also had a passion for smooth scrolling. Documents should not lurch line by line as you

scroll through them, but instead should flow. “He was adamant that everything on the interface

had a good feeling to the user,” Atkinson said. They also wanted a mouse that could easily move

the cursor in any direction, not just up-down/left-right. This required using a ball rather than the

usual two wheels. One of the engineers told Atkinson that there was no way to build such a mouse

commercially. After Atkinson complained to Jobs over dinner,

he arrived at the office the next day to discover that Jobs had fired the engineer. When his

replacement met Atkinson, his first words were, “I can build the mouse.”

Atkinson and Jobs became best friends for a while, eating together at the Good Earth most

nights. But John Couch and the other professional engineers on his Lisa team, many of them

buttoned-down HP types, resented Jobs’s meddling and were infuriated by his frequent insults.

There was also a clash of visions. Jobs wanted to build a VolksLisa, a simple and inexpensive

product for the masses. “There was a tug-of-war between people like me, who wanted a lean

machine, and those from HP, like Couch, who were aiming for the corporate market,” Jobs

recalled.

Both Mike Scott and Mike Markkula were intent on bringing some order to Apple and became

increasingly concerned about Jobs’s disruptive behavior. So in September 1980, they secretly

plotted a reorganization. Couch was made the undisputed manager of the Lisa division. Jobs lost

control of the computer he had named after his daughter. He was also stripped of his role as vice

president for research and development. He was made non-executive chairman of the board. This

position allowed him to remain Apple’s public face, but it meant that he had no operating control.

That hurt. “I was upset and felt abandoned by Markkula,” he said. “He and Scotty felt I wasn’t up

to running the Lisa division. I brooded about it a lot.”

CHAPTER NINE

GOING PUBLIC

A Man of Wealth and Fame

With Wozniak, 1981

Options

When Mike Markkula joined Jobs and Wozniak to turn their fledgling partnership into the Apple

Computer Co. in January 1977, they valued it at $5,309. Less than four years later they decided it

was time to take it public. It would become the most oversubscribed initial public offering since

that of Ford Motors in 1956. By the end of December 1980, Apple would be valued at $1.79

billion. Yes, billion. In the process it would make three hundred people millionaires.

Daniel Kottke was not one of them. He had been Jobs’s soul mate in college, in India, at the All

One Farm, and in the rental house they shared during the Chrisann Brennan crisis. He joined

Apple when it was headquartered in Jobs’s garage, and he still worked there as an hourly

employee. But he was not at a high enough level to be cut in on the stock options that were

awarded before the IPO. “I totally trusted Steve, and I assumed he would take care of me like I’d

taken care of him, so I didn’t push,” said Kottke. The official reason he wasn’t given stock options

was that he was an hourly technician, not a salaried engineer, which was the cutoff level for

options. Even so, he could have justifiably been given “founder’s stock,” but Jobs decided not to.

“Steve is the opposite of loyal,” according to Andy Hertz-feld, an early Apple engineer who has

nevertheless remained friends with him. “He’s anti-loyal. He has to abandon the people he is close

to.”

Kottke decided to press his case with Jobs by hovering outside his office and catching him to

make a plea. But at each encounter, Jobs brushed him off. “What was really so difficult for me is

that Steve never told me I wasn’t eligible,” recalled Kottke. “He owed me that as a friend. When I

would ask him about stock, he would tell me I had to talk to my manager.” Finally, almost six

months after the IPO, Kottke worked up the courage to march into Jobs’s office and try to hash

out the issue. But when he got in to see him, Jobs was so cold that Kottke froze. “I just got choked

up and began to cry and just couldn’t talk to him,” Kottke recalled. “Our friendship was all gone.

It was so sad.”

Rod Holt, the engineer who had built the power supply, was getting a lot of options, and he

tried to turn Jobs around. “We have to do something for your buddy Daniel,” he said, and he

suggested they each give him some of their own options. “Whatever you give him, I will match

it,” said Holt. Replied Jobs, “Okay. I will give him zero.”

Wozniak, not surprisingly, had the opposite attitude. Before the shares went public, he decided

to sell, at a very low price, two thousand of his options to forty different midlevel employees.

Most of his beneficiaries made enough to buy a home. Wozniak bought a dream home

for himself and his new wife, but she soon divorced him and kept the house. He also later gave

shares outright to employees he felt had been shortchanged, including Kottke, Fernandez,

Wigginton, and Espinosa. Everyone loved Wozniak, all the more so after his generosity, but many

also agreed with Jobs that he was “awfully naïve and childlike.” A few months later a United Way

poster showing a destitute man went up on a company bulletin board. Someone scrawled on it

“Woz in 1990.”

Jobs was not naïve. He had made sure his deal with Chrisann Brennan was signed before the

IPO occurred.

Jobs was the public face of the IPO, and he helped choose the two investment banks handling

it: the traditional Wall Street firm Morgan Stanley and the untraditional boutique firm Hambrecht

& Quist in San Francisco. “Steve was very irreverent toward the guys from Morgan Stanley,

which was a pretty uptight firm in those days,” recalled Bill Hambrecht. Morgan Stanley planned

to price the offering at $18, even though it was obvious the shares would quickly shoot up. “Tell

me what happens to this stock that we priced at eighteen?” Jobs asked the bankers. “Don’t you sell

it to your good customers? If so, how can you charge me a 7% commission?” Hambrecht

recognized that there was a basic unfairness in the system, and he later went on to formulate the

idea of a reverse auction to price shares before an IPO.

Apple went public the morning of December 12, 1980. By then the bankers had priced the stock

at $22 a share. It went to $29 the first day. Jobs had come into the Hambrecht & Quist office just

in time to watch the opening trades. At age twenty-five, he was now worth $256 million.

Baby You’re a Rich Man

Before and after he was rich, and indeed throughout a life that included being both broke and a

billionaire, Steve Jobs’s attitude toward wealth was complex. He was an antimaterialistic hippie

who capitalized on the inventions of a friend who wanted to give them away for free, and he was a

Zen devotee who made a pilgrimage to India and then decided that his calling was to create a

business. And yet somehow these attitudes seemed to weave together rather than conflict.

He had a great love for some material objects, especially those that were finely designed and

crafted, such as Porsche and Mercedes cars, Henckels knives and Braun appliances, BMW

motorcycles and Ansel Adams prints, Bösendorfer pianos and Bang & Olufsen audio equipment.

Yet the houses he lived in, no matter how rich he became, tended not to be ostentatious and were

furnished so simply they would have put a Shaker to shame. Neither then nor later would he travel

with an entourage, keep a personal staff, or even have security protection. He bought a nice car,

but always drove himself. When Markkula asked Jobs to join him in buying a Lear jet, he declined

(though he eventually would demand of Apple a Gulfstream to use). Like his father, he could be

flinty when bargaining with suppliers, but he didn’t allow a craving for profits to take precedence

over his passion for building great products.

Thirty years after Apple went public, he reflected on what it was like to come into money

suddenly:

I never worried about money. I grew up in a middle-class family, so I never thought I would starve. And

I learned at Atari that I could be an okay engineer, so I always knew I could get by. I was voluntarily

poor when I was in college and India, and I lived a pretty simple life even when I was working. So I

went from fairly poor, which was wonderful, because I didn’t have to worry about money, to being

incredibly rich, when I also didn’t have to worry about money.

I watched people at Apple who made a lot of money and felt they had to live differently. Some of

them bought a Rolls-Royce and various houses, each with a house manager and then someone to

manage the house managers. Their wives got plastic surgery and turned into these bizarre people. This

was not how I wanted to live. It’s crazy. I made a promise to myself that I’m not going to let this money

ruin my life.

He was not particularly philanthropic. He briefly set up a foundation, but he discovered that it

was annoying to have to deal with the

person he had hired to run it, who kept talking about “venture” philanthropy and how to

“leverage” giving. Jobs became contemptuous of people who made a display of philanthropy or

thinking they could reinvent it. Earlier he had quietly sent in a $5,000 check to help launch Larry

Brilliant’s Seva Foundation to fight diseases of poverty, and he even agreed to join the board. But

when Brilliant brought some board members, including Wavy Gravy and Jerry Garcia, to Apple

right after its IPO to solicit a donation, Jobs was not forthcoming. He instead worked on finding

ways that a donated Apple II and a VisiCalc program could make it easier for the foundation to do

a survey it was planning on blindness in Nepal.

His biggest personal gift was to his parents, Paul and Clara Jobs, to whom he gave about

$750,000 worth of stock. They sold some to pay off the mortgage on their Los Altos home, and

their son came over for the little celebration. “It was the first time in their lives they didn’t have a

mortgage,” Jobs recalled. “They had a handful of their friends over for the party, and it was really

nice.” Still, they didn’t consider buying a nicer house. “They weren’t interested in that,” Jobs said.

“They had a life they were happy with.” Their only splurge was to take a Princess cruise each

year. The one through the Panama Canal “was the big one for my dad,” according to Jobs, because

it reminded him of when his Coast Guard ship went through on its way to San Francisco to be

decommissioned.

With Apple’s success came fame for its poster boy. Inc. became the first magazine to put him

on its cover, in October 1981. “This man has changed business forever,” it proclaimed. It showed

Jobs with a neatly trimmed beard and well-styled long hair, wearing blue jeans and a dress shirt

with a blazer that was a little too satiny. He was leaning on an Apple II and looking directly into

the camera with the mesmerizing stare he had picked up from Robert Friedland. “When Steve Jobs

speaks, it is with the gee-whiz enthusiasm of someone who sees the future and is making sure it

works,” the magazine reported.

Time followed in February 1982 with a package on young entrepreneurs. The cover was a

painting of Jobs, again with his hypnotic stare. Jobs, said the main story, “practically singlehanded

created the personal computer industry.” The accompanying profile, written by Michael

Moritz, noted, “At 26, Jobs heads a company that six years ago was located in a bedroom and

garage of his parents’ house, but this year it is expected to have sales of $600 million. . . . As an

executive, Jobs has sometimes been petulant and harsh on subordinates. Admits he: ‘I’ve got to

learn to keep my feelings private.’”

Despite his new fame and fortune, he still fancied himself a child of the counterculture. On a

visit to a Stanford class, he took off his Wilkes Bashford blazer and his shoes, perched on top of a

table, and crossed his legs into a lotus position. The students asked questions, such as when

Apple’s stock price would rise, which Jobs brushed off. Instead he spoke of his passion for future

products, such as someday making a computer as small as a book. When the business questions

tapered off, Jobs turned the tables on the well-groomed students. “How many of you are virgins?”

he asked. There were nervous giggles. “How many of you have taken LSD?” More nervous

laughter, and only one or two hands went up. Later Jobs would complain about the new generation

of kids, who seemed to him more materialistic and careerist than his own. “When I went to school,

it was right after the sixties and before this general wave of practical purposefulness had set in,”

he said. “Now students aren’t even thinking in idealistic terms, or at least nowhere near as much.”

His generation, he said, was different. “The idealistic wind of the sixties is still at our backs,

though, and most of the people I know who are my age have that ingrained in them forever.”

CHAPTER TEN

THE MAC IS BORN

You Say You Want a Revolution

Jobs in 1982

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