It was Markkula who guided the formation of alliances that Apple used to great purpose. The company allied with larger companies to give a durable sheen to its image. It joined with ITT, for example, to distribute computers in Europe (though the relationship eventually foundered) and with Chicago’s Bell & Howell, which had a strong reputation among teachers, to help place Apples in schools. “Markkula was the driving force who made these things happen,” Trip Hawkins, an Apple marketing manager, recalled.
Markkula was receptive to approaches made in 1977 by Andre Sousan, the Commodore official who had once wanted to buy Apple. Sousan recalled: “I said to the two Steves and Markkula, ‘Listen! You’re not going to make it on the scale you want to make it if you don’t go immediately to Europe. I’ll set up the operations as if they are a part of Apple and I’ll write up a formula which will allow you to buy it out.’” Apple, stretched to the limits, agreed and Sousan became a member of the Executive Staff.
In March 1978 Markkula called Dow Jones’s Princeton, New Jersey, offices, spoke to Technical Director Carl Valenti, and asked for an appointment. Valenti recalled: “I told him I had a space on my calendar for nine the next morning. He said, ‘Fine.’ I didn’t realize he was calling from Cupertino. So next morning in walks Mike Markkula with bloodshot eyes, having come on the red-eye.” Markkula showed Valenti how he had programmed an Apple II to fish stocks off the Dow Jones News Retrieval Service and the pair agreed, on a handshake, that the two companies would jointly develop software programs. “The other companies,” Valenti observed, “came in and tried to tie us up ten ways to Sunday. Apple didn’t do that.”
Closer to home Apple was one of the first microcomputer companies to recognize the importance of users groups. When the company drew up plans to organize its first international users group, a memo stated: “A major element in our strategy would be to draw heavily upon outside resources in planning and executing this meeting.” It continued: “There is no one who sells as well as a committed, involved user who cares about his vendor and his product.” In San Francisco a group was formed to help solve a practical problem. As one of its founders, Bruce Tognazzini, explained, “We couldn’t figure out how to work the damn computer.” These groups, which gradually started in dozens of cities along with local and regional chapters and their own publications, not only helped spread the word and promote software development but also served as a way of keeping track of owners, maintaining a pool of guinea pigs for testing new products and providing bodies to recruit.
Markkula recognized better than any of his colleagues the way in which appearances could affect business. When, in 1979, Apple rented a large booth at the National Computer Conference in New York, it was calculated to impress the financial analysts who, sooner or later, would make judgments about what Apple was worth as a public company. Occasionally Markkula’s taste for splash got the better of him and a foray into the sponsorship of automobile races where Apple spent more than one hundred thousand dollars backing a Southern California team was a flop. “It was the worst thing we ever did,” said Jobs. Scott’s far simpler and cheaper idea of a balloon decorated with the Apple logo, inspired by some beer commercials, was far more successful. The moral seemed obvious: Relatively small expenditures could bring a disproportionate amount of publicity.
As happened with minicomputers, outsiders developed dozens of uses for the Apple II which had not even been contemplated in Cupertino. Little companies started to make attachments that plugged into the machine. The printed circuit boards that slid into the expansion slots of the computer would turn it into a clock or a calendar or allow letters to run across eighty columns rather than forty. Rows of extra memory chips were designed to boost the Apple’s memory; other cards allowed the computer to connect with a telephone. One of the most popular cards, Microsoft’s Softcard, allowed the Apple to run programs originally written for computers built around Intel microprocessors that used the CP/M operating system. There were light-pens and graphic tablets, calculator keypads, fans to cool the machine and small devices that protected it from surges in energy.
Apple recognized that software would help expand the market for its computer and gave large discounts to programmers who promised to write programs. Time and again programmers discovered ways to stretch the limits of the computer. Apple was receptive to programmers, particularly since most of the programs that were demonstrated did not always work properly. And Apple was also seen by some programmers operating off a shoestring as a large company that could bankroll their diversions. When programs were completed and Apple chose to buy them, Jobs frequently did seat-of-the-pants calculations and arrived at a price by counting the lines of code. Exchanging software or copying some interesting new program became the most important part of many Apple user-group meetings. In 1979 when Fred Gibbons, who had started Software Publishing Corporation, needed an Apple, he picked it up at Jobs’s home. Others relied on their own steam. Phone phreak John Draper developed a word-processing program, Easywriter, for the Apple and then hawked it to San Francisco Bay Area computer stores.
Others were attracted by the computer. Bill Budge, then twenty-two, had declined job offers from Intel and was studying for a doctorate in computer science at the University of California at Berkeley when he saw an Apple II. He promptly spent $2,000 of his $5,000 teaching-assistant salary. “It was the best toy I ever had.” Necessity became the mother of programs and Budge said, “There was no way to get enough software to keep you occupied.” When Budge, at the end of 1979, took his first game, Penny Arcade (an adaptation of Pong), to Apple he traded it for a $1,000 printer. Within six weeks Budge had written another three programs. In 1979 Apple also published a word-processing program dubbed Apple Writer. The program was written by Paul Lutus, a graduate of San Francisco’s hippie movement and a one-time panhandler who had helped design lighting systems for the space shuttle Columbia before turning to programming. Lutus wrote the first version of his word-processing program, Applewriter, in a twelve-by-sixteen-foot log cabin on Eight Dollar Mountain in a remote part of Oregon.
But the one program that did more for Apple than all the others combined was Visicalc. At a time when nobody at Commodore would take his telephone call, Daniel Fylstra, the head of Personal Software, a pint-sized company based in Boston, managed to gain a hearing at Apple. Jobs offered Fylstra an Apple II at dealer price to ensure that Personal Software, which was selling a chess game, would develop programs for Apple. At the time, two acquaintances of Fylstra’s were working on a program to simplify budget forecasting. Daniel Bricklin, a Harvard MBA student, wanted a program that would eliminate the tedious recalculating required after revising financial budgets and enlisted his friend, Robert Frankston, a fellow computer programmer, to help make it work. A finance professor scoffed at the commercial prospects for Bricklin’s idea but did suggest he contact Fylstra. Bricklin wanted to borrow a computer from Fylstra and because the Commodore and Radio Shack machines were being used, wound up with Personal Software’s Apple. Bricklin wrote a prototype program in BASIC for an Apple with 24K bytes of memory and then, said Fylstra, “We all decided he might as well continue on the machine he had started on.” Visicalc—the name derives from visible calculator—was demonstrated to Markkula and to officials at Atari in January 1979, Fylstra recalled: “He interpreted it as a checkbook program. I don’t think Markkula or the others had an inkling of what it could be but they did encourage me.” But the electronics analyst Ben Rosen, impressed by the power and speed of Visicalc and the way in which it gave the user more control over the computer, was more impressed and reported to readers of his newsletter: “So who knows? Visicalc could someday become the software tail that wags (and sells) the personal computer dog.”
Visicalc did wag. And because it was available, at first for $100, solely on the Apple for twelve months after its formal introduction in October 1979, it wagged harder for Apple than for any other manufacturer. Visicalc was what helped Apple creep into small and large b
usinesses. It was an electronic spreadsheet which could calculate the effect of changing one number in a tabletop of numbers. It offered the precision of a good accountant, the sprightly touch of a bright financial planner, and the plodding steadiness of a reliable bookkeeper. It also provided another compelling reason for Apple to shift even farther away from the home market. Fylstra tagged along to dealer training sessions to demonstrate Visicalc on a wide-screen television. Business users were convinced. Fritz Maytag, president of San Francisco’s Anchor Brewing Company, was ecstatic: “I trust Visicalc more than my own financial statements. It’s just a miracle.” Of the 130,000 computers sold by Apple before September 1980, Michael Scott estimated that 25,000 were sold on the strength of Visicalc.
“You’ve got to play guts ball,” Morris said.
Early breakfast meetings were an inescapable fact of life for almost everyone at Apple. So one morning at 7:30 sharp the waitress at the Good Earth Restaurant was filling large brown mugs with coffee. The trimmings of the restaurant belied its name. There were plastic menus, vinyl bench seats, veneer tables, and the baroque wicker chairs that importers like to say are made in Thailand. The only trace of the good earth was a smell of cinnamon that seemed to come from the wallpaper.
Anthony Morris, an Apple dealer from Manhattan, was having breakfast with the Mac marketing manager, Michael Murray. Morris, in a blue pinstripe suit, starched white button-down shirt, and silk tie, let out an early morning sigh as the waitress disappeared. “Cleavage this early in the morning. Cupertino is getting decadent.” A Stanford MBA, Morris was considered one of Apple’s better dealers and was among two hundred invited to Cupertino for a preview of Lisa. There was some industry chatter as Morris passed on scuttlebutt that another computer company was going to avoid complying with FCC regulations governing new products by introducing an entirely new disk drive but giving it a name belonging to an existing series. “The sales rep was all over town boasting about this. But last year she took a year off to finish her master’s in arts and dance so that tells you a lot.”
Morris, who sold only Apples, mentioned that he was about to start carrying computers made by IBM and DEC. “We could not survive selling only Apples,” he explained, “so there’s been a loss of faith or what some would call the emergence of sound business practices.” He paused. “Apple has to start thinking about the business customer. Those buggers are demanding.”
Murray raised his eyes from his breakfast plate and asked, “What would it take to make you cancel IBM?”
“I probably won’t,” Morris replied. “First, the Apple III was going pssss. We’ve got twenty-eight people. I cannot feed them when sales are going down. It’s scary how quickly your business goes down. Second, my clients want IBM and nobody has ever got fired for buying IBM. IBM’s goddamn thorough. They have done a lot of thinking. They understand the business user. The message from IBM is if you take ’em on you can double your sales in ninety days.” Morris mentioned a fellow dealer in New York City. “He did a million dollars in a month. He didn’t do that with Apple.”
Murray countered, “We’re going to hang Mac out in front of the dealers and make them salivate and see if we can get some momentum away from IBM. We’ve got so many different kinds of dealers. How do we understand our best one hundred dealers? How do we get you really excited?”
Morris argued that many of Apple’s promotional pieces weren’t suitable for dealers whose customers were businesses. “The people in Cupertino don’t leave Cupertino enough. They don’t know what the world is about. We’ve got to systematically reduce the number of decisions a customer has to make in order to get them to make the decision we want. We shouldn’t be saying, ‘Here’s a candyland. Make your choice.’”
Murray nodded and reverted to the nagging prospect of IBM. “It’s scary to think how small we are and how slick IBM is.”
Morris replied with assurance, “You’ve got to play guts ball. You will fail if you’re only as good as IBM. It’s just like women in business. You’ve got to work twice as hard to get half the recognition.”
Some mornings later a group of marketing managers from all the Apple divisions gathered for their monthly meeting. Joe Roebuck, a marketing manager, placed his Styrofoam coffee cup on the table near an overhead projector and surveyed his companions. “This place is beginning to look like IBM. Everybody’s got ties. No blue shirts yet. But we’re getting there.” The chief topic of discussion was the avalanche of magazines, brochures, newsletters, buyers’ guides, flyers, catalogs, and data sheets—the “pieces”—that Apple published to help persuade customers to buy its products. Phil Roybal, who headed Apple’s marketing publications, showed a series of slides about the importance of these publications and said, “Literature is not an event. It’s part of a process. We have to sell prospects what they want”—he paused for effect and added—“which is a solution.” He associated each of Apple’s publications with customers in varying states of anticipation and noted, “The average prospect walks into a store and takes five hours to make the connection between what he wants and what he should buy. Most don’t care whether it’s an Apple II or III or an IBM PC or a sack of walnuts. The dealer will grab anything that says apple, shove it into the prospect’s hand, and hope he’ll buy. They’re not selling solutions. The literature has to start pulling the products together into solutions for people.”
Joe Roebuck interrupted. “We’re churning out requirements for literature like crazy.”
“When I look at the business plan for the coming year,” Roybal responded, “I find I’m running a shortfall of five writers a week. I can kill some projects or I can kill some writers.”
THE BOZO EXPLOSION
Apple Computer started life as a business, not a company. The gradual change from a bloated garage operation into something resembling a corporation was arduous and protracted. Once Apple announced its disk drive in the summer of 1978, orders increased, the backlog of unsold computers disappeared, and the pressure to grow mounted. The headquarters was moved to a building fifteen times larger than the office Apple had occupied behind the Good Earth Restaurant. It was set among orchards a block or so from Stevens Creek Boulevard, and Apple’s new neighbors were a plant nursery and a couple of wooden frame houses. When the ninety or so employees wandered around their empty new building, most were convinced that it would last, if not for a lifetime, certainly for several years.
Within three months the packing cartons arrived and again Apple commandeered a couple more buildings. The second shuffle was made in such a hurry that interior alterations were performed without any building permits and equipment was brought in over a weekend from trucks discreetly parked by some rear doors. Packing cartons, new offices, fresh surroundings, and unfamiliar companions became a disconcerting way of life.
Over the course of about two years a sheaf of professionals arrived. For newcomers accustomed to the struts and underpinnings of a large company, the turmoil of a start-up was entirely foreign. There were few of the services most companies devise to make life easier. When a sink or lavatory got clogged, there was no maintenance department to call. When the telephones broke, no communications consultant came tripping down the hallway with a handpiece clipped to his belt. When somebody had to make a long business trip there was no travel department to look after the arrangements. Legal matters were handled by an outside law firm. Personnel problems were dealt with on the fly and raises were given at will. There was little time to relax and any sign of a casual air was a complete illusion. Above all, there was a relentless pressure.
Jean Richardson, who started as a secretary and eventually became Apple’s advertising director, recalled, “For a couple of years the pace was awful. It was twelve hours a day and weekends. I knew if I took a drink at a water fountain I would miss a beat and slip a schedule. It was almost inhuman. I was at the burnout stage.” As the professionals arrived, Apple was confronted with the problems of reconciling old and new, coping with the consternation a
nd resentment provoked by the arrivals and accommodating the habits and influences they brought with them.
For a company growing as fast as Apple, hiring new employees was its most important task. In the long run this overshadowed everything else. People recruited one day frequently wound up hiring others within days or weeks of their arrival, so one early misjudgment could be amplified and have grave implications. For relative innocents running a small business, it was easy to be awed by the reputation of other companies, the length of a résumé, a string of advanced degrees, and the sound of a reputation. There was a conscious effort to hire people who were overqualified for the immediate job at hand but who would be able to cope with larger demands as orders increased.
Apple, like other companies before it, took to raiding established firms. Every major steal brought squeals of delight. Markkula couldn’t conceal his glee when he lured somebody from Intel, Scott was just as happy when he snared a body from National Semiconductor, and Jobs interpreted a resignation from Hewlett-Packard as something approaching divine approval. When another company president called to complain about the way Apple was pinching his people, they chuckled some more.
Candidates for senior positions were usually interviewed by Markkula, Scott, and Jobs. The visible differences among the trio were enough to ring alarm bells in the heads of some who contemplated joining Apple. When, during interviews, Jobs insisted on putting his dirty feet on the table or when, at luncheon interviews, he returned a plate to a waitress informing her that the food was “garbage,” he wasn’t necessarily impressive. Though he tended to be swayed by reputations, Jobs distrusted résumés and preferred to rely on his instincts. He conducted many screenings at the Good Earth Restaurant or other nearby eateries, usually plumped for somebody he felt was right, and trusted his choices to be able to do what they said they could do.
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