Fred Anderson, Apple’s longtime chief financial officer, helped found the private-equity firm Elevation Partners, which blundered with ill-timed investments, including Palm. Elevation counted another friend of Apple, and Steve Jobs, among its partners: U2 front man Bono. Awkwardly for Elevation and Palm, and Apple for that matter, U2 became spokesmodels for Research in Motion’s BlackBerry smartphone.
Going forward, the business world will get to watch a top Apple executive try to apply his considerable success at Apple to another company. In late 2011, retail chief Ron Johnson became the CEO of JCPenney, vowing to turn around the retailer by reinventing the department store. Johnson’s reputation reached heroic proportions at Apple. A former VP of merchandising at Target who led the team responsible for launching Michael Graves’s exclusive line of products, Johnson was the founding head of Apple’s retail stores. Having taken the Apple retail concept global—by the end of Apple’s fiscal year in 2011 the company had 357 stores in eleven countries—Johnson was ready for a change.
For years it was an article of faith in Silicon Valley that Apple should not be emulated. Its closed approach to business as well as to hardware and software development was widely deemed to have been a grievous strategic error, allowing a technologically inferior Microsoft to dominate the industry. Even after the success of the last ten-plus years, remarkably few big companies openly mimic Apple. HP, for example, is experimenting with retail stores in Latin America and Canada, but not in the United States. The Apple approach seems to hold more sway among the younger generation of entrepreneurs, especially in Silicon Valley. These Tech 2.0 titans admire Apple’s obsession with detail and the company’s ability to build a closed world that seduces and ensnares consumers.
Elon Musk, for example, a founder of PayPal as well as the space-exploration start-up SpaceX, paid homage to Apple by hiring one of its top retail executives, George Blankenship, to oversee the nascent sales efforts of Tesla Motors, Musk’s fledgling electric-car venture. Blankenship, who worked at the Gap for the first twenty years of his career, is vice president for “worldwide sales and ownership experience” for Tesla. What “sales and ownership experience” means to a new company like Tesla is the location and design of its retail showrooms, as distinctly different from a traditional auto dealership as Apple’s retail boutiques were from a big-box Circuit City store.
Blankenship, a trim, goateed fifty-eight-year-old, is ideally suited for the Tesla assignment. He ran real estate operations for Gap, the multibrand retailing behemoth, and then signed on with Apple in 2000 to be its site-selection guru for the nascent Apple stores. “I sit here today and look at Tesla, and I see Apple ten or eleven years ago, when I joined,” he said. As we chatted, we were sitting in a lounge area of the Tesla “showroom” in San Jose. Tesla showrooms aren’t dealerships—a legal distinction in certain states. But they’re also not meant to evoke the dealership vibe. Salesmen with short-sleeved dress shirts and ugly ties are nowhere to be found on the premises. Tesla’s site selection itself is unusual: The San Jose showroom sits in the middle of the high-end Santana Row shopping center, located between BCBG Max Azria and Franco Uomo clothing stores. It is nowhere near a freeway off-ramp. The walls are painted in an arresting dark red, with giant Apple monitors displaying Tesla promotional videos. An interactive touch screen on one wall allows prospective car buyers to design the interior of their dream electric car.
His mission at Tesla, said Blankenship, is the same as Apple’s goal was back when its stores opened: get uninformed customers familiar with a new product they otherwise wouldn’t have been inclined to even consider. “I sort of look at the iPod as a big step forward for Apple because up until then it was trying to build confidence and get people comfortable coming into the store,” he said. “And then comes the iPod. It cost $400. Most of the music players at that time were $149. What’s the difference? Well, the difference is this one is ‘a thousand songs in your pocket.’ ” Whether or not other players held a thousand songs was beside the point. Apple came up with the easily repeatable marketing line that perfectly captured the iPod’s capability. Blankenship described Tesla’s version, an obvious homage to Apple marketing, regarding how to sell its $150,000-plus Roadster. “Zero to sixty in 3.7 seconds,” he said. “Well, that’s impossible. Nope. Get in the car and ride it and you’ll see, it’s zero to sixty in 3.7 seconds. Two hundred forty-five miles on a charge. That’s impossible. Nope, not in our cars. So what happens is you begin developing a customer who wants your car. It’s not about price, it’s about wanting the car.”
The comparisons between Apple and Tesla don’t stop with the stores or the marketing message for its first, expensive product. Just as Apple followed the original iPod with a far less pricey iPod Mini, Tesla plans to unveil a $57,000 sedan called the Model S. “We have people waiting in line to be able to buy a Model S, because they want the car,” he said, not needing to add that many of these people admired but couldn’t necessarily afford the Roadster. (Celebrity owners such as actors George Clooney and Dustin Hoffman and superagent Ari Emanuel clearly could afford one.)
Blankenship is hard-pressed to find any differences between how Apple approached retail and how Tesla hopes to sell cars: “They were trying to get into the buying decision, we’re in the buying decision. They were trying to overcome a preconceived idea. We’re trying to overcome a new technology that we’re trying to introduce. They didn’t want to focus on price. We’re not focused on price. They wanted to have a great experience. We want to have a great experience.”
There’s one thing at Apple Tesla doesn’t plan to emulate just yet. “Elon actually asked me … ‘Do you think we should do a Top 100?’ I said, ‘Not yet. There’s really no need for that yet.’ ” Apple, Blankenship explained, was broadening its portfolio from computers to music to phones. Such things called for senior-level coordination. Tesla, for the time being, sells one model.
Tesla executives admire Apple’s messaging and approach to retail, while other entrepreneurs at Web 2.0 companies including Facebook, Twitter, and Inkling have studied Apple in the hope of appropriating other elements of its success. Whereas Apple was barely part of the conversation a decade ago, especially among Internet companies, today it is Topic A. “We look at Apple as an extraordinary model,” said Sheryl Sandberg, the chief operating officer of Facebook and a veteran of Google. “We study its approach to everything from the consistency of its messaging to how it structures its business.”
Facebook has created a “closed” (that is, non-Web-based) platform while encouraging others to build applications within Facebook, on Facebook’s terms. (Sound familiar?) Facebook’s young founder and CEO, Mark Zuckberberg, frequently walked in Palo Alto with Steve Jobs, seeking the older man’s advice. Sandberg, who served on the Disney board with Jobs, said the Apple example also is valuable for managing her relationship with Zuckerberg. “I work for a founder-driven company,” she said. “Seeing how Jobs channeled his passion and intensity helped me appreciate how I can help Mark realize his vision for Facebook.”
One acclaimed Silicon Valley entrepreneur is said to have been so enamored with Jobs that he is modeling himself after him. Jack Dorsey, the inventor of Twitter, emulated Jobs by taking on an operating role at Twitter while also serving as CEO of Square, a mobile-payments processing start-up he founded. (Jobs gave less of his time to Pixar but was heavily involved, for instance, in Pixar’s sale to Disney while he was CEO of Apple.) Square’s elegant white credit card reader easily could be mistaken for having come out of Apple’s industrial design lab.
Meanwhile, a handful of former Apple employees are starting their own companies, taking with them the lessons they learned at Apple. “Culture is the sum of things that we encourage and discourage,” said Matt MacInnis, a former Apple education marketing executive who founded a digital publishing company called Inkling that initially produced textbooks solely for the iPad. MacInnis listed some of Inkling’s founding values, all borrowed from his experien
ces at Apple: “Don’t talk about product until it’s done. Have high expectations. Don’t talk about the road map with the entire company.”
Even entrepreneurs who had success before Apple’s resurgence are studying its ways. Mike McCue was a young executive at Netscape and later founded Tellme Networks, which he sold to Microsoft for nearly $1 billion. His latest start-up is Flipboard, a publishing platform that aims to upend the magazine industry by aggregating content on the iPad. McCue said he’s been studying Apple since its earliest days. As an entrepreneur, he embraces Apple’s notion of “building technology not for technology’s sake, but to change the world, to make a ‘dent in the universe,’ as they used to say.” He overtly thinks about the simplicity of Apple’s design and attention to detail. “We are primarily about building a really pure user experience that is heavily thought through,” said McCue. “We will spend hours and hours and hours talking about a ‘close’ button in the corner of the screen and mocking it up, and going through hundreds of different design iterations on that before we settle on one that we like. That kind of attention to detail means that as a result you really can’t do a lot of things. You have to just do a few things really, really well.”
Not every company and not every executive will be able to copy Apple. Some companies are too complicated for one P&L. (It’s conceivable Apple may one day also be too complicated for one P&L.) Some industries demand market research. An oil giant, for example, is not going to drill for oil without first forming an opinion about demand.
But it’s hard to imagine that the basic tenets of the Apple way can’t be imitated. Who would argue for not focusing, or for not holding employees accountable? What maker of products or deliverer of services wouldn’t benefit from asking the question: Are we basing that decision on what’s best for the product, and therefore for the customer? Is there a company that couldn’t benefit from a critical examination of its messaging, to at least ask the questions: Are we simplifying the message enough? Is our point clear? How many companies allow their PR departments to serve multiple masters and purposes, including CEO ego gratification, as opposed to pushing product? Is there something to consider in discouraging employees from being distracted by pursuits that may help them but not the company? Is career development always best for the shareholders?
As an unabashed admirer of start-ups, Jobs fought like crazy to have Apple retain some of a start-up’s characteristics. In fact, though medium-sized and large companies will want to study Apple’s ways, its best lessons may be for start-ups. Because Apple was so sick when Jobs returned, he was able to treat it as a reboot, what the rest of the world would call a turnaround project. Yet the Apple of the late 1990s was very much an upstart. It had little to lose and everything to gain from casting aside the industry’s ways of doing things. The management and operational characteristics of the reborn Apple are a treasure trove of guideposts for all business; they are a veritable handbook for entrepreneurs.
The biggest pitfall in trying to be like Apple, however, is that Apple’s culture is thirty-five years in the making and bears the stamp of one extraordinary entrepreneur who turned into a shrewd chief executive of a sixty-thousand-person corporation. It won’t be a snap for any company to create its own version of the Apple culture. As well, Apple itself will find out how strong its culture really is—and how much of its success was directly attributable to Steve Jobs.
10
One More Thing
The “Let’s Talk iPhone” event began, as Apple events typically do, at the stroke of 10 a.m., on Tuesday, October 4, 2011. A nervous energy ran through the crowd of about 250 guests who had squeezed into the Town Hall auditorium on Apple’s Cupertino campus. There were two reasons for this: The event was the first company product debut since Tim Cook had been named CEO. Far more important, though, Apple’s rabid followers fully expected a brand-new smartphone, the iPhone 5. The rumor mill had pegged the device as originally scheduled to be unveiled back in June, but in June there had been no iPhone 5, so today must be the day.
One reason for the anticipation was that the iPhone 5 allegedly possessed a new “form factor,” a cause for celebration. (Form factor is geekspeak for the physical appearance of a device, as opposed to the composition of its innards.) A newly designed phone would represent a visible, touchable, lovable object for the cognoscenti to savor. These product unveilings are for techies what the Paris collections are for fashion editors and department store buyers—though Apple consumers needn’t wait long between festive unveiling and in-store availability. What’s more, Apple followers felt a sense of history: They might be bearing witness to the debut of the last product that an ailing Steve Jobs had shepherded from genesis to fruition.
Top Apple executives harbored some secrets, as they are wont to do, one of which would not be unveiled at this event: Just a few miles away, Steve Jobs lay dying at his home in Palo Alto. The company had informed the Palo Alto police a few days earlier that the Apple co-founder’s death was imminent. The local authorities, Apple felt, could use the time to prepare for the inevitable outpouring of emotion from Apple fans who would transform the grounds outside his home into a shrine.
Jobs would in fact succumb the next afternoon, at about 3 p.m., to the illnesses that began eight years earlier. But on this day, with a typically brilliant blue sky over Cupertino and a giddy din inside the auditorium, the show went on. The script was written, the guests were in place, and the product demonstrations were ready. Outside the building, satellite trucks belonging to local and national news outlets parked, makeshift sound stages with klieg lights ready to beam the news to the world. Inside, journalists and other Apple guests munched on pastries and sipped coffee and juice. The journalists knew they, too, were part of a ritual; most had been to dozens of Apple product unveilings before.
When the doors opened at precisely 9:45 a.m., the photographers and camera operators were allowed in first. Then the rest of the audience was allowed to scramble for seats: Print and broadcast journalists mixed with Apple partner-guests that included Dick Costolo, the CEO of Twitter, and Ralph de la Vega, AT&T’s top wireless executive. The Wall Street Journal’s Walt Mossberg took a seat in the middle of the auditorium, a handful of rows from the stage, on this day just another scribe invited to sing Apple’s praises.
Until the music fell silent, there was nothing to distinguish this affair from the countless others Apple had produced over the years. Four songs from the 1960s and 1970s blared over loudspeakers as the crowd found their seats, took out their notebooks or laptop computers, and waved their hellos to one another. The tunes easily could have come off Steve Jobs’s playlist: “Under My Thumb,” by the Rolling Stones; Led Zeppelin’s “Whole Lotta Love”; “Can’t Explain,” by the Who (which, come to think of it, could be the anthem for Apple’s PR department); and “Jumpin’ Jack Flash,” again by the Stones. Katie Cotton, the head of public relations and also the doyenne of Apple events, sat down in her second-row seat on the aisle at 9:55 a.m. Nine of the ten seats in the front-center portion of the hall were occupied by senior Apple executives. They included software chief Scott Forstall, online services head Eddy Cue, and product marketing boss Phil Schiller. A lone absentee from the Steve Jobs brain trust was Jonathan Ive.
The first sign that this would be a different kind of Apple product unveiling was when Tim Cook strode onto the stage from behind a curtain in the wings at stage left. (His was the empty front-row seat.) Cook had anchored Jobs-less events before—the relentless cadence of product launches continued throughout Jobs’s medical leaves—but this time was different. And painful though it must have been for him, Cook acknowledged the transition. “This is my first product launch since being named CEO,” he said. “I’m sure you didn’t know that,” he continued, to gentle laughter in the room. “I consider it a privilege of a lifetime.” Cook reminded the audience that Town Hall was the site of numerous historic events in Apple’s past: the launch of the iPod in 2001, a new MacBook Air in 2010. The roo
m, he said, “is like a second home to many of us,” eliciting more chuckles. “Today will remind you of the uniqueness of this company,” Cook went on. “It is an extraordinary time to be at Apple.”
No one in the auditorium mistook Tim Cook for Steve Jobs. But for the time being, Cook’s material—alternately self-deprecatory and messianic—stood on its own. Gushing that “there is amazing momentum here” and “only Apple could do this,” Cook ticked through Apple’s recent accomplishments. It had opened a new store in Shanghai, which drew a hundred thousand visitors on its opening weekend. Cook showed a video of the grand opening that displayed plenty of shiny, happy Apple faces—Chinese Apple faces. “I think I’ve watched that a hundred times, and I think I could watch it a hundred more easily,” Cook said, deploying a Jobsian conceit of subtly instructing the audience that what they had just watched was amazing—and also peeling back the curtain on Apple’s methods: Cook, a literal man, likely had watched the clip a hundred times during endless rehearsals for the event.
Cook breezed through a review of Apple’s performance, following the script and hitting Apple’s key points. “Our products are at the core of everything we do,” he began. The MacBook Air, Cook continued, is “thin, light, beautiful, and wicked fast,” using nearly identical language to his “off-the-cuff” observations when the laptop was unveiled a year before. Other executives, including Eddy Cue, Scott Forstall, and Phil Schiller, reviewed various product areas, including a handful of upgrades to existing products. Then Schiller addressed the news of the day. When he uttered the words “iPhone 4S,” there was an awkward silence in the room as the energy seeped out of it. The phone had a faster processor, a better camera (eight megapixels … better than most $200 point-and-shoot cameras), and other new features. But it was not a new phone physically, and it wasn’t an iPhone 5. Never mind that Apple typically redesigns the iPhone every two years and that the iPhone 4 was only a year old. The audience felt deflated, as if Apple had failed to meet the high expectations everyone had for the event. (Apple’s share price dipped on the news—only to hit fresh highs nine trading days later.)
Inside Apple Page 16
