The man who fired Steve Jobs
Twenty years ago, in the spring of 1985, I went to Serramonte Plaza in Daly City to shop for the new Macintosh Plus. As advertised in the San Francisco Chronicle, the Macintosh Plus cost $2,600 and was a big improvement from the Mac 512kb. It had one megabyte of RAM expandable to four megabytes. I thought I’d wait for the Mac SE with 20 MB internal hard drive but there was no telling when it would be launched.
As the PR industry in the Philippines was becoming more and more competitive, I wanted frantically to retool Agatep Associates, my public relations consultancy, into the image and likeness of Apple Computer.
Walking out of the store with my prized MacPlus, I heard the news that Steve Jobs, co-founder of Apple, had been fired by John Sculley, ex-marketing VP of Pepsi Cola who was hired by Jobs himself to become CEO of Apple. Jobs reportedly made a legendary pitch to Sculley, asking him whether he preferred to sell sugared water for the rest of his life or come join him and change the world. Crestfallen with disbelief, I kept mumbling as I drove my 1982 Toyota Corolla to our house in Pacifica City: You soda jerk John Sculley, you will pay for this. May your conscience drive you nuts for the rest of your days.
How could they fire Steve Jobs, what did he do? Didn’t they recognize his genius for creating the Macintosh? How did they fire him, unceremoniously after a shouting match? And how did Steve Jobs take it, pained and bitterly disappointed, like the way Juan Manuel Marquez felt after losing to Manny Pacquiao by a split decision in their second fight? I thought for a moment about Job’s millions of adoring fans across the globe who must have been feeling the same let-down and who were at that instant cursing Sculley.
Firing people reminds me of the comedy-drama “Up in the Air,” a film adaptation of the novel of the same name by Walter Kirn. The story is about a corporate downsizer Ryan Bingham, played by George Clooney, who led a suitcase life traveling around the country firing people for a living. In the real world you don’t fire people like that. And as it turned out, Jobs was not really fired. The Apple board of directors merely took away his managerial powers over the Macintosh unit but he retained his position as Chairman of the Board.
After Jobs died of pancreatic cancer, John Sculley offered an olive branch to the world and gave a candid interview with Dow Jones Newswire. Jobs was a creative genius, he said, but some of his employees described him as an erratic, temperamental manager. Apple’s president, Mike Markkula, wanted to retire but he believed Jobs lacked the discipline needed to run Apple on a daily basis. By the end of 1984, Macintosh sales slowed down. Jobs kept meetings running past midnight, sent out lengthy faxes, then called new meetings at 7:00 a.m.
Sculley reminisced: “The directors instructed me to ‘contain’ Jobs and limit his ability to launch expensive forays into untested products. Steve believed I was the wrong person to lead the company. On May 24, 1985 he called a board meeting to resolve the matter. The board of directors sided with me. They asked Jobs to step down as head of the Macintosh division. He remained as chairman of the board but he was extremely hurt. He resigned from Apple after five months. Today, twenty six years later, I still disagree with how the executives handled the situation. I was not responsible for Jobs’ departure.
“When Steve was gone and I took over I was highly criticized. They said, How could they put a guy who knows nothing about computers in charge of a computer company? Looking back, it was a big mistake that I was ever hired as CEO. Steve was the first choice but the board wasn’t prepared to make him CEO when he was 25, 26 years old. They looked for high-tech candidates to be CEO. Ultimately they recruited me. The idea was that Steve and I were going to work as partners. He would be the technical person and I would be the marketing person. Steve always wanted to be CEO. It would have been much more honest if the board had said, Let’s figure out a way for him to be CEO. You could focus on the stuff that you bring and he focuses on the stuff he brings.
“It would have been better if Steve would have been the CEO and I would have been the president. I wish Steve and I did not have a falling out and I had gone back to him and said, this is your company, let’s figure out how you can come back and be CEO. I wish I had thought of that. But you can’t change history. In the past I tried, but he never had any interest in re-engaging. He clearly blamed me,” Sculley said.
John Sculley, who was the architect of the Cola Wars, joined Pepsi-Cola in 1967 as a trainee. Then In 1970, at the age of 30, he became Pepsi’s youngest marketing vice president. He is remembered for the Pepsi Challenge advertising campaign that he started in 1975 to compete against Coca-Cola. The Pepsi Challenge included a series of television advertisements that first aired in the early 1970s, featuring lifelong Coca-Cola drinkers participating in blind taste tests. Pepsi’s soft drink was always chosen as the preferred product by the participant.
During Sculley’s governance, sales at Apple increased from $800 million to $8 billion. However, he remained controversial at Apple because he veered away from Steve Jobs’s sales procedure, particularly regarding the decision to compete with IBM in selling computers to the same types of customers. Sculley was ultimately forced to resign in 1993 as the company’s margins eroded, sales diminished and stocks declined.
Jobs and Sculley spent months getting to know each other before Sculley joined Apple. Jobs had no exposure to marketing other than what he picked up on his own. This was typical of Steve. When he knew something was going to be important he would try to absorb as much as he possibly could.
“One of the things that fascinated Steve was when I described to him that there’s not much difference between a Pepsi and a Coke, but we were outsold 9 to 1. Our job was to convince people that Pepsi was a big enough decision that they ought to pay attention to it, and eventually switch. We decided that we had to treat Pepsi like a necktie. In that era people cared what necktie they wore. The necktie said: Here’s how I want you to see me. So we have to make Pepsi like a nice necktie. When you are holding a Pepsi in your hand, its says, Here’s how I want you to see me.
“We talked a lot about how perception leads reality and how if you are going to create a reality you have to be able to create the perception. We did it with something called the Pepsi Generation. Steve loved those ideas. A lot of the stuff we were doing was focused on how we would bring the Mac to the market. It had to be done at such a high level of perception that it would sort of tease people to want to find out what the product is capable of. The product couldn’t do very much in the beginning. Almost all of the technology was used for the user experience. In fact we got a backlash where people said it’s a toy. But eventually our product became more powerful.
“At the end of 10 years, I didn’t want to stay any longer in Apple. I told the board I wanted to leave, even as IBM tried to recruit me at the time. They asked me to stay. I stayed and then they later fired me. The board gave me the assignment to try and sell Apple in 1993. I tried to sell it to AT&T, IBM and other people. We couldn’t get anyone who wanted to buy it. But if I had any sense, I would have said: Why don’t we go back to the guy who created the whole thing and understands it. Why don’t we go back and hire Steve to come back and run the company?
“It’s obvious looking back now that that would have been the right thing to do. We didn’t do it, so I blame myself for that one. It would have saved Apple the near-death experience that they had. I’m convinced that if Steve hadn’t come back when he did – if they had waited another six months – Apple would have been history. It would have been gone. During my watch, everything we did was to follow Steve Jobs’ design philosophy and methodology. Unfortunately, I wasn’t as good at it as he was. It wasn’t the time to could build consumer products and he wasn’t having any more luck at NeXT than we were having at Apple. The one thing he did better: he built the better next-generation operating system which eventually was merged into Apple’s operating system.
Steve Jobs later claimed that being fired from Apple was the best thing that could have happened to him. He said: “The heaviness of being successful was replaced by the lightness of being a beginner again. It freed me to enter one of the most creative periods of my life.”
If Steve wasn’t booted out of Apple when he was a 30-year-old brat, he would not have had the driving force to redeem himself and create NeXT, Pixar, the Toy Story, the iPod, the iPhone and the iPad. He would not have changed the world.
(The author is the president of Agatep Associates, a public relations consultancy, and group chair of Euro RSCG Agatep, an advertising and marketing services agency. He was two-time president of the Public Relations Society of the Philippines and professor of PR, Journalism and Advertising at the University of Sto. Tomas, Assumption College and St. Paul University.)