Jobs #4

We continue some with the early life of the Apple computer and Steve Jobs,
from the book "Steve Jobs" by Walter Isaacson.
DAWN OF A NEW AGE

THE APPLE 2

An Integrated Package

     As jobs walked the floor of the Personal Computer Festival,
he came to the realization that Paul Terrell of the Byte Shop had
been right: Personal computers should come in a complete package.
The next Apple, he decided, needed to have a great case and a
built-in keyboard, and be integrated end to end, from the power
supply to the software. "My vision was to create the first fully
packaged computer," he recalled. "We were no longer aiming for
the handful of hobbyists who liked to assemble their own
computers, who knew how to buy transformers and keyboards. For
every one of them there were a thousand people who would want the
machine to be ready to run."
     In their hotel room on that Labor Day weekend of 1976,
Wozniak tinkered with the prototype of the new machine, to be
named the Apple II, that Jobs hoped would take them to this next
level. They brought the prototype out only once, late at night,
to test it on the color projection television in one of the
conference rooms. Wozniak had come up with an ingenious way to
goose the machine's chips into creating color, and he wanted to
see if it would work on the type of television that uses a
projector to display on a movie-like screen. "I figured a
projector might have a different color circuitry that would choke
on my color method," he recalled. "So I hooked up the Apple II to
this projector and it worked perfectly." As he typed on his
keyboard, colorful lines and swirls burst on the screen across
the room. The only outsider who saw this first Apple 11 was the
hotel's technician. He said he had looked at all the machines,
and this was the one he would be buying....
     The Commodore flirtation brought to the surface a potential
conflict between Jobs and Wozniak: Were they truly equal in what
they contributed to Apple and what they should get out of it?
Jerry Wozniak, who exalted the value of engineers over mere
entrepreneurs and marketers, thought most of the money should be
going to his son. He confronted Jobs personally when he came by
the Wozniak house. "You don't deserve shit," he told Jobs. "You
haven't produced anything." Jobs began to cry, which was not
unusual. He had never been, and would never be, adept at
containing his emotions. He told Steve Wozniak that he was
willing to call off the partnership. "If we're not fifty-fifty,"
he said to his friend, "you can have the whole thing." Wozniak,
however, understood better than his father the symbiosis they
had. If it had not been for Jobs, he might still be handing out
schematics of his boards for free at the back of Homebrew
meetings. It was Jobs who had turned his ingenious designs into a
budding business, just as he had with the Blue Box. He agreed
they should remain partners.
     It was a smart call. To make the Apple II successful
required more than just Wozniak's awesome circuit design. It
would need to be packaged into a fully integrated consumer
product, and that was Jobs's role.
     He began by asking their erstwhile partner Ron Wayne to
design a case. "I assumed they had no money, so I did one that
didn't require any tooling and could be fabricated in a standard
metal shop," he said. His design called for a Plexiglas cover
attached by metal straps and a rolltop door that slid down over
the keyboard.
     Jobs didn't like it. He wanted a simple and elegant design,
which he hoped would set Apple apart from the other machines,
with their clunky gray metal cases. While haunting the appliance
aisles at Macy's, he was struck by the Cuisinart food processors
and decided that he wanted a sleek case made of light molded
plastic. At a Homebrew meeting, he offered a local consultant,
Jerry Manock, $1,500 to produce such a design. Manock, dubious
about Jobs's appearance, asked for the money up front. Jobs
refused, but Manock took the job anyway.
     Within weeks he had produced a simple foam-molded plastic
case that was uncluttered and exuded friendliness. Jobs was
thrilled. Next came the power supply. Digital geeks like Wozniak paid
little attention to something so analog and mundane, but Jobs
decided it was a key component. In particular he wanted-as he
would his entire career-to provide power in a way that avoided
the need for a fan. Fans inside computers were not Zen-like; they
distracted. He dropped by Atari to consult with Alcorn, who knew
old-fashioned electrical engineering. "Al turned me on to this
brilliant guy named Rod Holt, who was a chain-smoking Marxist who
had been through many marriages and was an expert on everything,"
Jobs recalled. Like Manock and others meeting Jobs for the first
time, Holt took a look at him and was skeptical. "I'm expensive,"
Holt said. Jobs sensed he was worth it and said that cost was no
problem. "He just conned me into working," said Holt, who ended
up joining Apple full-time.
     Instead of a conventional linear power supply, Holt built
one like those used in oscilloscopes. It switched the power on
and off not sixty times per second, but thousands of times; this
allowed it to store the power for far less time, and thus throw
off less heat. "That switching power supply was as revolutionary
as the Apple II logic board was," Jobs later said. "Rod doesn't
get a lot of credit for this in the history books, but he should.
Every computer now uses switching power supplies, and they all
rip off Rod's design." For all of Wozmak's brilliance, this was
not something he could have done. "I only knew vaguely what a
switching power supply was," Woz admitted.....

Mike Markkula

     All of this required money. "The tooling of this plastic
case was going to cost, like, $100,000," Jobs said. "Just to get
this whole thing into production was going to be, like,
$200,000." He went back to Nolan Bushnell, this time to get him
to put in some money and take a minority equity stake. "He asked
me if I would put $50,000 in and he would give me a third of the
company," said Bushnell. "I was so smart, I said no. It's kind of
fun to think about that, when I'm not crying."
     Bushnell suggested that jobs try Don Valentine, a
straight-shooting former marketing manager at National
Semiconductor who had founded Sequoia Capital, a pioneering
venture capital firm. Valentine arrived at the Jobses' garage in
a Mercedes wearing a blue suit, buttondown shirt, and rep tie.
His first impression was that Jobs looked and smelled odd. "Steve
was trying to be the embodiment of the counterculture. He had a
wispy beard, was very thin, and looked like Ho Chi Minh."
Valentine, however, did not become a preeminent Silicon Valley
investor by relying on surface appearances. What bothered him
more was that Jobs knew nothing about marketing and seemed
content to peddle his product to individual stores one by one.
"If you want me to finance you," Valentine told him, "you need to
have one person as a partner who understands marketing and
distribution and can write a business plan." jobs tended to be
either bristly or solicitous when older people offered him
advice. With Valentine he was the latter. "Send me three
suggestions," he replied. Valentine did, Jobs met them, and he
clicked with one of them, a man named Mike Markkula, who would
end up playing a critical role at Apple for the next two decades.
     Markkula was only thirty-three, but he had already retired
after working at Fairchild and then Intel, where he made millions
on his stock options when the chip maker went public. He was a
cautious and shrewd man, with the precise moves of someone who
had been a gymnast in high school, and he excelled at figuring
out pricing strategies, distribution networks, marketing, and
finance. Despite being slightly reserved, he had a flashy side
when it came to enjoying his newly minted wealth. He built
himself a house in Lake Tahoe and later an outsize mansion in the
hills of Woodside. When he showed up for his first meeting at
Jobs's garage, he was driving not a dark Mercedes like Valentine,
but a highly polished gold Corvette convertible. "When I arrived
at the garage, Woz was at the workbench and immediately began
showing off the Apple II," Markkula recalled. "I looked past the
fact that both guys needed a haircut and was amazed by what I saw
on that workbench. You can always get a haircut." Jobs immediately
liked Markkula. "He was short and he had been passed over for the
top marketing job at Intel, which I suspect made him want to prove
himself." He also struck Jobs as decent and fair. "You could tell that if
he could screw you, he wouldn't. He had a real moral sense to him."
Wozniak was equally impressed. "I thought he was the nicest person ever,"
he recalled. "Better still, he actually liked what we had!"
Markkula proposed to Jobs that they write a business plan
together. "If it comes out well, I'll invest," Markkula said,
"and if not, you've got a few weeks of my time for free." Jobs
began going to Markkula's house in the evenings, kicking around
projections and talking through the night. "We made a lot of
assumptions, such as about how many houses would have a personal
computer, and there were nights we were up until 4 a.m.," Jobs
recalled. Markkula ended up writing most of the plan. "Steve
would say, 'I will bring you this section next time,' but he
usually didn't deliver on time, so I ended up doing it."
Markkula's plan envisioned ways of getting beyond the hobbyist
market. "He talked about introducing the computer to regular
people in regular homes, doing things like keeping track of your
favorite recipes or balancing your checkbook," Wozniak recalled.
Markkula made a wild prediction: "We're going to be a Fortune 500
company in two years," he said. "This is the start of an industry.
It happens once in a decade." It would take Apple seven
years to break into the Fortune 500, but the spirit of Markkula's
prediction turned out to be true.
     Markkula offered to guarantee a line of credit of up to
$250,000 in return for being made a one-third equity participant.
Apple would incorporate, and he along with Jobs and Wozniak would
each own 26% of the stock. The rest would be reserved to attract
future investors. The three met in the cabana by Markkula's
swimming pool and sealed the deal. "I thought it was unlikely
that Mike would ever see that $250,000 again, and I was impressed
that he was willing to risk it," Jobs recalled.
     Now it was necessary to convince Wozniak to come on board
fulltime. "Why can't I keep doing this on the side and just have
HP as my secure job for life?" he asked. Markkula said that
wouldn't work, and he gave Wozniak a deadline of a few days to
decide. "I felt very insecure in starting a company where I would
be expected to push people around and control what they did,"
Wozniak recalled. "I'd decided long ago that I would never become
someone authoritative." So he went to Markkula's cabana and
announced that he was not leaving HP Markkula shrugged and said
okay. But Jobs got very upset. He cajoled Wozniak; he got friends
to try to convince him; he cried, yelled, and threw a couple of
fits. He even went to Wozmak's parents' house, burst into tears,
and asked Jerry for help. By this point Wozniak's father had
realized there was real money to be made by capitalizing on the
Apple II, and he joined forces on Jobs's behalf. "I started
getting phone calls at work and home from my dad, my mom, my
brother, and various friends," Wozniak recalled. "Every one of
them told me I'd made the wrong decision." None of that worked.
Then Allen Baum, their Buck Fry Club mate at Homestead High,
called. "You really ought to go ahead and do it," he said. He
argued that if he joined Apple fulltime, he would not have to go
into management or give up being an engineer. "That was exactly
what I needed to hear," Wozniak later said. "I could stay at the
bottom of the organization chart, as an engineer." He called jobs
and declared that he was now ready to come on board.
     On January 3, 1977, the new corporation, the Apple Computer
Co., was officially created, and it bought out the old partnership that
had been formed by Jobs and Wozniak nine months earlier.
Few people noticed. That month the Homebrew surveyed its
members and found that, of the 181 who owned personal computers,
only six owned an Apple. Jobs was convinced, however, that the
Apple II would change that.
     Markkula would become a father figure to Jobs. Like Jobs's
adoptive father, he would indulge Jobs's strong will, and like
his biological father, he would end up abandoning him. "Markkula
was as much a father-son relationship as Steve ever had," said
the venture capitalist Arthur Rock. He began to teach Jobs about
marketing and sales. "Mike really took me under his wing," Jobs
recalled. "His values were much aligned with mine. He emphasized
that you should never start a company with the goal of getting
rich. Your goal should be making something you believe in and
making a company that will last."
     Markkula wrote his principles in a one-page paper titled
"The Apple Marketing Philosophy" that stressed three points. The
first was empathy, an intimate connection with the feelings of
the customer: "We will truly understand their needs better than
any other company." The second was focus: "In order to do a good
job of those things that we decide to do, we must eliminate all
of the unimportant opportunities." The third and equally
important principle, awkwardly named, was impute. It emphasized
that people form an opinion about a company or product based on
the signals that it conveys. "People DO judge a book by its
cover," he wrote. "We may have the best product, the highest
quality, the most useful software etc.; if we present them in a
slipshod manner, they will be perceived as slipshod; if we
present them in a creative, professional manner, we will impute
the desired qualities."
     For the rest of his career, Jobs would understand the needs
and desires of customers better than any other business leader,
he would focus on a handful of core products, and he would care,
sometimes obsessively, about marketing and image and even the
details of packaging. "When you open the box of an iPhone or
iPad, we want that tactile experience to set the tone for how you
perceive the product," he said. "Mike taught me that.".....

The First Launch Event

     The introduction of the Apple II was scheduled to coincide
with the first West Coast Computer Faire, to be held in April
1977 in San Francisco, organized by a Homebrew stalwart, Jim
Warren. Jobs signed Apple up for a booth as soon as he got the
information packet. He wanted to secure a location right at the
front of the hall as a dramatic way to launch the Apple 11, and
so he shocked Wozniak by paying $5,000 in advance. "Steve decided
that this was our big launch," said Wozniak. "We would show the
world we had a great machine and a great company.".....
     It was worth the effort. The Apple II looked solid yet
friendly in its sleek beige case, unlike the intimidating
metal-clad machines and naked boards on the other tables. Apple
got three hundred orders at the show, and Jobs met a Japanese
textile maker, Mizushima Satoshi, who became Apple's first dealer
in Japan.....

Mike Scott

     Apple was now a real company, with a dozen employees, a line
of credit, and the daily pressures that can come from customers
and suppliers. It had even moved out of the Jobses' garage,
finally, into a rented office on Stevens Creek Boulevard in
Cupertino, about a mile from where Jobs and Wozniak went to high
school.
     Jobs did not wear his growing responsibilities gracefully.
He had always been temperamental and bratty. At Atari his
behavior had caused him to be banished to the night shift, but at
Apple that was not possible. "He became increasingly tyrannical
and sharp in his criticism," according to Markkula. "He would
tell people, `That design looks like shit."' He was particularly
rough on Wozniak's young programmers, Randy Wigginton and Chris
Espinosa. "Steve would come in, take a quick look at what I had
done, and tell me it was shit without having any idea what it was
or why I had done it," said Wigginton, who was just out of high
school.
     There was also the issue of his hygiene. He was still
convinced, against all evidence, that his vegan diets meant that
he didn't need to use a deodorant or take regular showers. "We
would have to literally put him out the door and tell him to go
take a shower," said Markkula. "At meetings we had to look at his
dirty feet." Sometimes, to relieve stress, he would soak his feet
in the toilet, a practice that was not as soothing for his
colleagues.....
     Jobs's desire for control and disdain for authority was
destined to be a problem with the man who was brought in to be
his regent, especially when Jobs discovered that Scott was one of
the only people he had yet encountered who would not bend to his
will. "The question between Steve and me was who could be most
stubborn, and I was pretty good at that," Scott said. "He needed
to be sat on, and he sure didn't like that." Jobs later said, "I
never yelled at anyone more than I yelled at Scotty.".....
     Wozniak began to rankle at Jobs's style. "Steve was too
tough on people. I wanted our company to feel like a family where
we all had fun and shared whatever we made." Jobs, for his part,
felt that Wozniak simply would not grow up. "He was very
childlike. He did a great version of BASIC, but then never could
buckle down and write the floating-point BASIC we needed, so we
ended up later having to make a deal with Microsoft. He was just
too unfocused." .....
     The Apple 2 would be marketed, in various models, for the
next sixteen years, with close to six million sold. More than any
other machine, it launched the personal computer industry.
Wozniak deserves the historic credit for the design of its
awe-inspiring circuit board and related operating software, which
was one of the era's great feats of solo invention. But Jobs was
the one who integrated Wozniak's boards into a friendly package,
from the power supply to the sleek case. He also created the
company that sprang up around Wozniak's machines.
     As Regis McKenna later said, "Woz designed a great machine,
but it would be sitting in hobby shops today were it not for
Steve Jobs." Nevertheless most people considered the Apple 2 to
be Wozniak's creation. That would spur Jobs to pursue the next
great advance, one that he could call his own.
..........