A few minutes before 9 a.m., there was a flurry of excitement as some of them saw that the online Apple store had posted a yellow “We’ll be back soon” sign. That meant they were queuing up pages with information about the new products they would unveil in the next few hours.
A short while later, Apple opened the doors to the auditorium, where Bo Diddley and Chuck Berry blared through the speakers. Reporters craned their necks to see if they could spot any executives in the front of the room. As they eagerly reported sightings of Chief Operating Officer Tim Cook, marketing chief Phil Schiller, and board member Al Gore on their live blogs, the lights began to dim and the last song, Jerry Lee Lewis’s “Great Balls of Fire,” ended.
When Jobs appeared from the left side of the stage, the audience broke into thunderous applause as cameras flashed around the room. Some whistled in appreciation as a grinning Jobs soaked it all in before talking up the brilliance of Apple’s products and services. He was so persuasive that he seemed to be casting a spell. The fans called it his reality distortion field. The developers, who had been chosen to demo their apps, performed their roles perfectly.
“Isn’t that fantastic!” he enthused. “This is going to be great.”
With a half hour left in the presentation, Jobs began talking about the new iPhone, with long-awaited features like 3G high-speed wireless connectivity and third-party apps. The starting price: $199 compared to the $399 price for the first phone.
Jobs ended his performance with a showing of Apple’s latest ad, which poked fun at Apple’s secrecy. In the television spot, two guards dressed in dark clothing carry a metal box through an austere corridor as they slide their security cards to enter a protected area under the watch of a security camera. There, they take their key to unlock the box, which reveals the iPhone 3G.
“Isn’t that nice?” Jobs asked when it was over. “You wanna see that again? Let’s roll that again. I love this ad!”
It was another masterful performance, but the media soon turned their attention to Jobs’s dramatic weight loss. Reporters who interviewed Jobs afterward noticed that his collarbone was visible through his shirt. Jobs’s strange dietary habits were well known, and his weight had fluctuated before, but this time he was looking emaciated. Gossip site Gawker was one of the first to speculate publicly about whether the cancer had come back.
“People watching the imperiously slim presenter at the WWDC today are finding it hard to look at Jobs’s frailer than ever frame and not wonder if he’s still suffering,” the site wrote.
When the Wall Street Journal contacted the company for comment about Jobs’s extreme weight loss, Katie Cotton, Apple’s spokeswoman, tried to neutralize the story, saying that Jobs had picked up a “common bug” in the weeks before the event and had been taking antibiotics. The Internet exploded when the Drudge Report saw the ensuing Journal piece and linked to it. Many bloggers and journalists rose to the company’s defense, saying that Apple would have issued a release if Jobs were really ill, but others demanded more information.
“For almost any other human being, this topic would be a personal matter,” wrote Henry Blodget, a well-known equities analyst from the dot-com era, in a blog entry. “In this case, however, tens of billions of dollars of market value rests on Steve’s remaining healthy and at the helm of Apple for many years, so his health is a material business concern.”
The world was waking up to the fact that the emperor was wasting away.
2
Reality Distortion
One Thursday afternoon in late July a few weeks after WWDC, the New York Times columnist Joe Nocera was working at his desk when his phone rang. He didn’t recognize the number, but the 408 area code told him that it was from someone in Silicon Valley. Curious, he picked up and heard the voice of someone he hadn’t spoken with in decades.
The first words out of the caller’s mouth made Nocera sit up.
“This is Steve Jobs. You think I’m an arrogant asshole who thinks he’s above the law, and I think you’re a slime bucket who gets most of his facts wrong.”
Nocera had been working on a column about Apple’s lack of disclosure on Jobs’s health, and he had asked the company spokesman for a comment. He hadn’t expected to hear back from Jobs himself.
In the weeks since the WWDC keynote address, the speculation over Jobs’s weight loss had continued, but Apple had said little. In its quarterly earnings call, Chief Financial Officer Peter Oppenheimer deflected the questions about Jobs’s health with a vague nondenial.
“Steve loves Apple. He serves as the CEO at the pleasure of Apple’s board and has no plans to leave Apple. Steve’s health is a private matter.”
The company didn’t comment at all when the New York Times published a story about Jobs’s health. The article revealed that Jobs was dealing with nutritional problems after his 2004 cancer surgery and had had another surgical procedure earlier in the year related to his weight loss, but that he had been reassuring people around him that he was cancer-free. It was mystifying that Apple wouldn’t want to endorse this story in some way if it were true. It would have calmed the fears that had caused Apple’s stock to fall from $186 before WWDC to as low as $149 within about six weeks.
That’s when Jobs came calling. Nocera hadn’t talked to him in twenty years. The last time was in 1986, when he worked on an article for Esquire and shadowed Jobs for a week shortly after he had started NeXT. Nocera had gotten unimaginable access to him back then, sitting in on meetings, dining together at one of Jobs’s favorite vegetarian restaurants, and even driving with him to Pixar. But he had never heard from Jobs afterward and hadn’t maintained the relationship.
“Do you want to have a conversation about this off the record or not?” Jobs asked.
Nocera wanted it on the record, but Jobs refused. He wasn’t really asking. This was another ploy that he used often. Off-record conversations allowed him to influence articles without putting himself on the line. If Nocera wanted to hear what Jobs had to say, he had no choice but to acquiesce.
In the remarkable conversation that followed, Jobs wove a dubious story. Echoing the company line, Jobs first told Nocera that he had had a major infection and a high fever before WWDC and that he had been taking antibiotics.
“It wasn’t cancer related in the slightest,” he promised. He acknowledged that he had undergone a small, outpatient procedure several weeks before, but insisted that calling it “surgery” was inaccurate. “It’s like having a wart removed,” he said, his tone measured and calm. He repeated that it had nothing to do with cancer.
Nocera pressed his central question—why wasn’t Apple saying more about his health?
Jobs grew defensive. He reminded Nocera that he had immediately disclosed his surgery back in 2004. In comparison, former Intel CEO Andrew Grove had waited a year after his operation to tell the public about his prostate cancer.
“You’re saying I should have disclosed it the day before, but there’s no clear policy,” Jobs said, adding speciously that more people died from prostate cancer than from what he had. He then asserted that his obligation to provide details about his health was somewhere between that of a janitor and the president of the United States.
Jobs had been feeling as if he were under attack from the media. He was particularly incensed over a Fortune magazine article that claimed his surgery a few years before was called the “Whipple procedure,” in which parts of the pancreas, stomach, small intestine, and bile duct were removed. It wasn’t Nocera’s story, but Jobs wanted to set the record straight.
“It was a semi-Whipple procedure. I had roughly half of my pancreas removed. I did not have my spleen removed,” he said, splitting hairs. What he described was just a modified version used to preserve the stomach and minimize potential nutritional problems. Then he circled back to his previous point. His health was his business.
“Someday I won’t be CEO of Apple, and it’ll be time to have some new blood in there, so why don’t we pretend th
at today? Anybody who doesn’t want to be at Apple without me should just sell their stock.”
Nocera just sat back and listened. He was mildly tongue-tied and somewhat abashed by the outpouring of emotion. Jobs wasn’t looking for a dialogue. He just wanted to vent.
“Don’t get on your soapbox,” Jobs snapped. He clearly knew Nocera’s position on the issue. Nocera felt that Jobs had an obligation to be transparent on matters as crucial as this. He was arguably the most indispensable chief executive on the planet. And he had had cancer.
“Don’t use me as a whipping boy on this. My private life does not belong to the shareholders. If they want me to step down, the directors should remove me from the job,” he said, adding that otherwise they should “shut up.”
“Where is everybody demanding that Rupert Murdoch publish his cholesterol level?”
Unless there was a change in policy, Jobs said, the public needed to accept that he wasn’t going to talk about his health.
“I don’t begrudge you your belief, but I have a different belief. I don’t hold myself above other CEOs as you hold me.”
He wrapped up the call by pointing out that he wasn’t the only executive at Apple. “I think we have great leaders at Apple. The last few public events, I’ve tried to feature those other leaders. I’ve been trying to expose the other people.”
The conversation was classic Steve. Slices of what he said may have been technically true. Taken together, it was wildly misleading. Jobs’s deflection tactics were famous, but not being privy to the details about the CEO’s health, Nocera had no basis to doubt him. In any case, other than the “slime bucket” line, everything about the phone call was off the record, so he couldn’t quote Jobs on any of it.
In his actual column, Nocera stuck to his criticism of the company, writing, “Apple simply can’t be trusted to tell the truth about its chief executive.” But he also provided the reassurance that investors had been looking for.
“While his health problems amounted to a good deal more than ‘a common bug,’ ” he wrote, “they weren’t life-threatening and he doesn’t have a recurrence of cancer.” In the end, Jobs got what he wanted. The speculation that plagued the company died down. Apple’s stock eventually recovered to around $180.
Once the idea that Jobs was ailing had been planted in the public’s mind, however, it was impossible to expunge it. Reporters kept digging and pre-wrote obituaries. In late August, Bloomberg inadvertently released its draft. “Steve Jobs, who helped make personal computers as easy to use as telephones, changed the way animated films are made, persuaded consumers to tune into digital music and refashioned the mobile phone, has XXXX. He was TK,” the draft said. “XXXX” was a placeholder for the details of his death, and “TK” was a copyediting code indicating that there was more information to come. At the top was a list of Jobs’s friends and colleagues whom the news service planned to contact for a comment. Jobs seemed to take it in stride, at least publicly. When Apple held a press event shortly after, Jobs put up a slide with Mark Twain’s quote “The reports of my death are greatly exaggerated.”
Beneath the bravado, paranoia lingered. When an Apple contractor posted on the Internet a video of Jobs walking into the office, he was summarily fired. Any speculation concerning Jobs’s health was still verboten. Apple’s shares sank as low as $85 amid the uncertainty.
At a media event to unveil a new lineup of laptop computers in mid-October, reporters took note right away that Jobs remained thin. Jobs continued to pretend that nothing was wrong. Before a question-and-answer session, he showed another slide that said “110/70 Steve’s blood pressure.”
“This is all we’re going to talk about Steve’s health today,” he said.
Just as he had told Nocera, Jobs shared the stage that day with more of his executives than in the past. Tim Cook, Jobs’s second-in-command, kicked the morning off with a briefing on the state of the Macintosh computer business. Though he was unaccustomed to the limelight and nowhere nearly as exciting as Jobs, the audience was charmed by his relaxed southern accent. Apple’s design superstar Jonathan Ive also made a rare personal appearance. The Brit, who typically participated through videos and remote demonstrations, spoke haltingly but earnestly about the revolutionary design of the latest MacBook Pros. In the question-and-answer session, Jobs and Cook were joined by Schiller, a well-known gadget lover who knew the ins and outs of practically every product feature.
It wasn’t lost on the audience that Jobs had played a smaller role than usual. Reporters would look back on the event later and wonder why. Was it a deliberate strategy to show the depth of Apple’s executive bench or had Jobs been too sick to manage the presentation?
Several weeks later, it became even clearer that something was wrong. Apple announced that Jobs would not be speaking in January at the Macworld trade show, where he had presented the keynote every year since 1997 and where major products like the MacBook Air laptop and the iPhone were first shown. Apple’s explanation was that it was moving away from industry events in favor of its own press events, but few believed this official story. The decision seemed too last-minute.
Renewed fears about Jobs’s health swept through the market, and once again Wall Street was flooded with phone calls from investors. Apple’s shares lost 6.6 percent of their value by the end of the following day.
Apple tried to quell the speculation. “If Steve or the board decides that Steve is no longer capable of doing his job as CEO of Apple,” a spokesman told reporters, “I am sure they will let you know.”
The truth, no matter how skillfully Apple tried to mask it, was that Jobs was getting sicker. His digestive problems, not uncommon in patients who had the Whipple procedure, were the least of his concerns. The tumors in his liver were messing with his hormones, and drug therapies were giving him uncomfortable side effects. One therapy made his skin dry out and crack, while an experimental treatment involving a radioactive substance caused nausea, vomiting, and abdominal pain. Jobs’s best hope for recovery was a liver transplant, but he refused to admit that he needed one.
All of Apple’s efforts to protect the CEO’s privacy came crumbling down on January 5, 2009, when he sent out an open letter.
Dear Apple Community,
For the first time in a decade, I’m getting to spend the holiday season with my family, rather than intensely preparing for a Macworld keynote.
Unfortunately, my decision to have Phil deliver the Macworld keynote set off another flurry of rumors about my health, with some even publishing stories of me on my deathbed.
I’ve decided to share something very personal with the Apple community so that we can all relax and enjoy the show tomorrow.
As many of you know, I have been losing weight throughout 2008. The reason has been a mystery to me and my doctors. A few weeks ago, I decided that getting to the root cause of this and reversing it needed to become my #1 priority.
Fortunately, after further testing, my doctors think they have found the cause—a hormone imbalance that has been “robbing” me of the proteins my body needs to be healthy. Sophisticated blood tests have confirmed this diagnosis.
The remedy for this nutritional problem is relatively simple and straightforward, and I’ve already begun treatment. But, just like I didn’t lose this much weight and body mass in a week or a month, my doctors expect it will take me until late this Spring to regain it. I will continue as Apple’s CEO during my recovery.
I have given more than my all to Apple for the past 11 years now. I will be the first one to step up and tell our Board of Directors if I can no longer continue to fulfill my duties as Apple’s CEO. I hope the Apple community will support me in my recovery and know that I will always put what is best for Apple first.
So now I’ve said more than I wanted to say, and all that I am going to say, about this.
Steve
Jobs had been furious about all the speculation over his health following the Macworld announcement. He wrote the letter be
cause he thought Apple’s board and staff weren’t doing enough to kill the rumors. He was in complete denial that he was gravely ill.
“You guys don’t know what you’re talking about,” he said, lashing out at people. “I’m not that sick. Why aren’t you supporting me?”
The company, in fact, had been doing everything they could to protect his privacy. Securities laws didn’t define a company’s obligation to disclose details about its chief executive’s health, but the one clear rule was that a company could not mislead shareholders, and that once it made a statement, it had to update the information as it changed. Apple so far had been extremely careful about crafting its comments so they were technically true. It also had deliberately avoided answering any questions about Jobs’s cancer, so they didn’t have to update his status. No one would ever hold up their handling of the situation as a model for corporate governance, but it was a compromise they had made to honor Jobs’s wish for privacy. It was a delicate balance.
Jobs’s letter potentially put Apple into legal hot water. It was true that Jobs had a hormone imbalance. His body was producing an excessive quantity of a hormone called glucagon, which increased blood sugar levels, interfered with his body’s ability to use the blood sugar for fuel, and led to a condition in which his body was breaking down fat to use for energy instead. But then Jobs crossed the very line that Apple’s lawyers had been trying so hard to avoid. He deceived shareholders by claiming the treatment was “simple and straightforward.” Given that the root of the cause was a recurrence of cancer, it was patently untrue.
The letter also undid Apple’s efforts to avoid any obligation to keep the public informed of Jobs’s health. Jobs had ensnared himself and the company in a trap. The only way out for him to stay compliant with the law was to go on medical leave, which was something he probably should have already done.
Haunted Empire: Apple After Steve Jobs Page 3
