Inside Steve's Brain

by Leander Kahney

  The first magazine ad for the Apple II shows a preppy young man playing with the machine on a kitchen table, while his wife, washing the dishes, looks on adoringly. The ad’s sexual politics may have been old-fashioned, but it conveyed a message that Apple’s PCs were useful, utilitarian machines. The kitchen setting made them seem like just another labor-saving appliance.

  The importance of advertising to Jobs is clearly illustrated by his choice of CEO to run Apple in its early days: John Sculley, a marketing executive from PepsiCo who had used advertising to build Pepsi into a Fortune 500 company. Sculley was Apple’s CEO for ten years, and though he made some strategic mistakes, he was stunningly successful at using marketing to grow Apple. When he took over in April 1983, Apple had $1 billion in revenues. It was a $10 billion company when he left a decade later.

  In 1983, Apple was one of America’s fastest growing companies, but it needed an experienced executive to manage growth. Just twenty-six, Jobs was judged by Apple’s board to be too young and inexperienced to handle the job himself, so Jobs spent many months finding an older executive he could work with.

  He chose Sculley, the thirty-eight-year-old president of PepsiCo, who’d masterminded the “Pepsi Generation” advertising campaign, which helped unseat Coke as the number-one brand for the first time in its history. Jobs spent several months courting Sculley, an experienced executive and a marketer extraordinaire, to run the company.

  During the “Cola Wars” of the ’70s, Sculley massively boosted Pepsi’s market share by spending huge sums of cash on savvy TV advertising. Expensive, slick campaigns like the “Pepsi Challenge” transformed Pepsi from an underdog into a soda giant on equal footing with Coca-Cola. Jobs wanted Sculley to apply the same advertising chops to the fledgling market for personal computers. Jobs was especially worried about the Macintosh, which would debut in a few months. Jobs felt that advertising would be one of the major factors in its success. He wanted the Mac to appeal to the general public—not just electronics freaks—and advertising a weird and unfamiliar new product would be key to that. Sculley had no technology experience whatsoever, but it didn’t matter. Jobs wanted his marketing expertise. Jobs wanted to create an “Apple Generation.”

  Sculley ran Apple in partnership with Jobs. He became Jobs’s mentor and teacher, applying his marketing expertise to the nascent but rapidly growing PC market. Sculley and Jobs’s strategy at Apple was to build sales rapidly and then out-advertise the competition. “Apple hadn’t yet realized that as a billion-dollar corporation it had immense advantages we hadn’t exploited,” Sculley wrote in his autobiography, Odyssey. “It’s almost impossible for a company with sales of $50 million or even $200 million to invest in the kinds of effective television advertising campaigns you need if you’re going to leave any impression at all.”20

  Jobs and Sculley immediately boosted Apple’s advertising budget from $15 million to $100 million. Sculley said their goal was to make Apple “first and foremost a product marketing company.” Many critics have dismissed Apple’s advertising flair, rejecting it as trivial and unimportant. Pure flash; no substance. But at Apple, marketing has always been one of its key strategies. Apple has used advertising as an extremely important and effective way to distinguish itself for the competition. “Steve and I were convinced we had the secret formula—a combination of revolutionary technology and marketing,” wrote Sculley.21

  Sculley’s ideas have been very influential on Jobs, laying the groundwork for many of Jobs’s marketing techniques at Apple today.

  At PepsiCo, Sculley was responsible for some of the earliest and most successful examples of lifestyle advertising— emotionally charged spots that tried to reach people’s minds through their hearts. Rather than try to market specific attributes of Pepsi over other sodas, which were negligible, Sculley created advertising that articulated an “enviable lifestyle.”

  Sculley’s “Pepsi Generation” ads featured wholesome American kids engaged in idealized leisure pursuits: playing with puppies in a field or eating watermelon at a picnic. They portrayed uncomplicated vignettes of life’s magic moments, set in a mythical middle America. They were designed to appeal to baby boomers—the fastest-growing, wealthiest consumers in the post-World War II economy—by portraying a lifestyle they’d aspire to. They were the first “lifestyle” ads.

  The Pepsi commercials were treated like miniature movies, shot with the highest production values by Hollywood filmmakers. When other companies were spending $15,000 to shoot a commercial, Pepsi spent between $200,000 and $300,000 for a single spot.22

  Jobs does exactly the same thing at Apple today. Apple is famous for its lifestyle advertising. It never loads its ads with speeds and feeds, functions and features, like everyone else. Instead, Apple engages in lifestyle marketing. It portrays hip young people with “enviable lifestyles,” given to them courtesy of Apple’s products. Apple’s highly successful iPod ad campaign shows young people grooving to the music in their heads. There is never any mention of the iPod’s hard capacity.

  Sculley also perfected big splashy marketing events, like Macworld, as news. Sculley dreamed up the “Pepsi Challenge”— a blind taste test that pitted Pepsi against Coke, staged at grocery stores, malls, and big sports events. These challenges often caused such a splash that they would often attract local TV crews. A spot on the local TV news that evening was worth far more than any thirty-second commercial. Sculley upped the stakes: organizing celebrity challenges at big sports games that would often garner massive publicity. “Marketing, after all, is really theater,” Sculley wrote. “It’s like staging a performance. The way to motivate people is to get them interested in your product, to entertain them, and to turn your product into an incredibly important event. The Pepsi Generation campaign did all this in scaling Pepsi to epic proportions and making a brand bigger than life.”23

  Jobs uses the same technique to introduce new products at the annual Macworld Expo. Jobs has turned his trademark “one more thing” keynote speeches at Macworld into massive media events. They are marketing theater, staged for the world’s press.

  One More Thing: Coordinated Marketing Campaigns

  The Macworld speech is just one part of much bigger, coordinated campaigns that are executed with a precision that would impress a general. The campaigns combine rumor and surprise with traditional marketing, and rely wholeheartedly on secrecy for their effectiveness. On the outside it can look somewhat chaotic and uncontrolled, but they are tightly planned and coordinated. Here’s how it works.

  Weeks ahead of a secret product announcement, Apple’s PR department sends out invitations to the press and VIPs. The invitation gives the time and location of a “special event” but contains scant information about its nature or any upcoming products that might be revealed. It’s a tease. Jobs is effectively saying, “I’ve got a secret, guess what it is.”

  Immediately, tongues start wagging. There’ll be an explosion of blog posts and press articles speculating on what Jobs will announce. In years past, the speculation was limited to specialist Apple websites and fan forums, but more recently the mainstream press also reports the rumors. The Wall Street Journal, the New York Times, CNN, and the International Herald Tribune have all written breathless articles looking forward to Jobs’s product presentations. The rumor-mongering surrounding Macworld 2007—where Jobs introduced the iPhone—even made the nightly news on all the cable and TV networks, which is unheard of for any company in any industry. Not even Hollywood can garner as much attention for its movie premieres.

  This kind of worldwide publicity is worth many hundreds of millions of dollars in free exposure. The launch of the iPhone in January 2007 was the biggest to date. Standing onstage in San Francisco, Jobs single-handedly eclipsed the much larger Consumer Electronics Show in Las Vegas, which was happening at the same time. The CES is more important economically than Macworld, yet Jobs and the iPhone handily stole its thunder. Jobs’s iPhone launch also overshadowed announcements from muc
h bigger companies, including the introduction of the consumer version of Microsoft’s Vista, and became the biggest technology story of the year. Harvard Business School professor David Yoffie estimated that the iPhone rumor reports and follow-up stories were worth $400 million in free advertising. “No other company has ever received that kind of attention for a product launch,” Yoffie says. “It’s unprecedented.”24

  It was so successful that Apple didn’t spend a penny to advertise the iPhone before its launch. “Our secret marketing program for the iPhone was none,” Jobs told Apple employees in a companywide address. “We didn’t do anything.”

  Of course, there wouldn’t be this kind of attention if the product plans were known ahead of time. The whole stunt relies on secrecy, which is tightly enforced. At San Francisco’s Moscone Center, the Apple booth is shrouded in a twenty-foot-high black curtain. The curtain’s only entrance, at the back, is manned by a guard who carefully checks the credentials of all who try to enter. Two more guards are stationed at opposing corners of the rectangular booth, monitoring the sides. Everything inside the curtain is also wrapped, including the tops of the display stands. Even the main presentation stage, which sits in the center of the booth, is completely wrapped with fabric on all sides. All the advertising banners hanging from the ceiling are wrapped on all sides. The banner wrappings have elaborate pulley mechanisms to remove the curtains after Jobs makes his announcement. There are big banner ads upstairs at the entrance, which are also wrapped in black canvas. The banners are protected 24/7 by guards. One year, the guards caught some bloggers taking pictures and forced them to erase their memory cards. “The urge to clamp down on information sometimes borders on paranoia,” wrote Tom McNichol in Wired magazine.

  Several weeks before launch, Apple’s PR department sends the new gadget under strict nondisclosure agreements to three of the most influential technology product reviewers: Walt Mossberg at the Wall Street Journal, David Pogue at the New York Times, and Edward Baig at USA Today. It’s always the same three reviewers, because these three have proven track records of making and breaking products. A bad review can doom a device, but a good one can make it a blockbuster. Mossberg, Pogue, and Baig prepare their reviews for publication on the product’s launch date.

  Meanwhile, Apple’s PR department contacts the national news and business magazines offering a behind-the-scenes “making of” peek at the product. This “making of” is usually anything but—most details are withheld—however, it’s better than nothing and the magazines always take Jobs up on it. Putting Jobs’s face on the cover moves magazines on the news-stands. Jobs plays off old rivalries. He pits Time against Newsweek and Fortune against Forbes. The magazine that promises the most extensive coverage gets the exclusive. Jobs uses this same trick time after time, and it always gets results. Jobs started this practice with the original Mac and called them “sneaks,” as in sneak peeks. Familiarizing a reporter with a new product ahead of time usually guaranteed a more favorable review. When Jobs launched a new iMac in 2002, Time magazine got the exclusive behind-the-scenes story, and in return Jobs got the front cover and a glossy seven-page spread inside. It was timed perfectly for the machine’s introduction at Macworld.

  During the speech, he always saves the biggest announcement for last. At the end, he’ll say there’s “one more thing,” almost as though it were an afterthought.

  The minute Jobs unveils the product, Apple’s marketing machine begins its advertising blitz. The secret banners at Macworld are unveiled, and immediately the front door of Apple’s website showcases the new product. Then begins a coordinated campaign in magazines, newspapers, radio, and TV. Within hours, new posters go up on billboards and bus stops all over the country. All the ads reflect a consistent message and styling. The message is simple and direct: “One thousand songs in your pocket” is all you need to know about the iPod. “You can’t be too thin. Or too powerful” sends a clear message about Apple’s MacBook laptops.

  The Secret of Secrecy

  Jobs’s Apple is obsessively secretive. It’s almost as secretive as a covert government agency. Like CIA operatives, Apple employees won’t talk about what they do, even with their closest confidants: wives, boyfriends, parents. Employees certainly will not discuss their work with outsiders. Many won’t even refer to the company by name. Like superstitious theater folk who call Macbeth the “Scottish play,” some Apple employees call it “the fruit company.”

  Talking out of school is a firing offense. But many employees don’t know anything anyway. Apple staffers are given information on a strictly need-to-know basis. Programmers write software for products they’ve never seen. One group of engineers designs a power supply for a new product, while another group works on the screen. Neither group gets to see the final design. The company has a cell structure, each group isolated from the other, like a spy agency or a terrorist organization.

  In the old days, the information flowed so fast out of Apple that the legendary trade publication MacWeek was known as MacLeek. Everyone, from engineers to managers, was feeding information to the press. Since Jobs’s return, Apple’s 21,000 employees as well as dozens of suppliers are extremely tight-lipped. Despite dozens of reporters and bloggers sniffing around, very little good information leaks out about the company’s plans or upcoming products.

  In January 2007, a judge ordered Apple to pay the $700,000 in legal fees of two websites that reported details of an unreleased product code-named “Asteroid.” Apple had sued the sites in an attempt to learn the identity of the person in its ranks who leaked the information, but lost the case.

  Some speculated that Jobs sued the websites to keep the press in line. The lawsuit was seen as press intimidation, a scare tactic designed to intimidate the press from reporting rumors. Much of the public discussion concerned press freedom and whether bloggers have the same rights as professional reporters, who enjoy some protection under laws that shield journalists. This is why the Electronic Frontier Foundation took on the case and turned it into a cause célèbre—to protect press freedom. But from Jobs’s point of view, the case had nothing to do with press freedom. He sued the bloggers to scare the shit out of his own employees. He was less concerned with gagging the press than gagging staff who leaked to the press— and anyone who might think of doing it in the future. Apple’s buzz marketing is worth hundreds of millions of dollars, and Jobs wanted to check the leaks.

  Some of Jobs’s secrecy measures get a little extreme. When Jobs hired Ron Johnson from Target to head up Apple’s retail effort, he asked him to use an alias for several months lest anyone get wind that Apple was planning to open retail stores. Johnson was listed on Apple’s phone directory under a false name, which he used to check into hotels.

  Apple’s head of marketing, Phil Schiller, said he’s not allowed to tell his wife or kids what he’s working on. His teenage son, an avid iPod fan, was desperate to know what his dad was cooking up at work, but Daddy had to keep his trap shut lest he get canned. Even Jobs himself is subject to his own strictures: he took an iPod hi-fi boombox home for testing, but kept it covered with a black cloth. And he listened to it only when no one else was around.

  Apple’s obsessive secrecy is not a quirk of Jobs’s control-freak tendencies; it’s a key element of Apple’s extremely effective marketing machine. Apple makes millions of dollars in free advertising every time Jobs steps onto a stage to reveal a new product. Many have wondered why there are no bloggers at Apple. It’s because loose lips at Apple sink ships. But there are dozens of bloggers at Pixar, even before Jobs sold Pixar to Disney. Pixar bloggers happily gossip about all aspects of Pixar’s projects and their work lives. The difference is that Pixar’s movies don’t rely on a surprise unveiling to get press. New movies are routinely reported in the Hollywood trade press. Jobs isn’t a control freak for the sake of it; there’s a method to his madness.

  Personality Plus

  Jobs has been very successful at creating a persona for Apple. Through ad
vertising, he has shown the public the things he, and Apple, stands for. In the late 1970s, it was revolution through technology. Later it was about being creative, thinking different. Jobs’s personality allows Apple to market itself as human, and cool. His personality is the raw material of Apple’s advertising. Even an agency like Chiat/Day could never ever make Bill Gates look cool.

  Apple’s advertising has done a good job at conveying the company as an icon of change, of revolution, and of bold thinking. But it does so in a subtle, indirect way. Apple rarely brags. It never says, “We’re revolutionary. Really.” It uses the storytelling of its advertising to convey this message, often as a sub-text.

  Take the iPod silhouette ads. The imagery of the campaign was fresh and new; it didn’t look like anything that came before. “They always have this freshness in graphic design. The look is very simple and very iconic. It’s so distinctive that it has a look to itself,” advertisng journalist Warren Berger, author of Advertising Today and Hoopla, told me in a telephone interview.25

  Berger said the best way to get creative advertising is to hire the most creative agency. Chiat/Day is one of a handful of the most creative agencies in the world, but the real trick is to communicate what the brand is about. “Lee Clow and Jobs understood each other so well, they became buddies,” said Berger. “Clow really got the culture of Apple, the mind-set. He really understood what they were trying to do. And Jobs gave Clow total creative freedom. He allowed Clow to show him anything no matter how crazy it might seem. It really allows people to push the boundaries. IBM could never do that. They would never give Chiat/Day the freedom that Jobs gave them.”

  In 2006, Hewlett-Packard started to do very good advertising, with campaigns that featured people, not computers, in spots that looked like they may have come from Apple. In one of HP’s “The Computer Is Personal Again” TV spots, the hip-hop star Jay Z shows viewers the contents of his computer, which is conjured up as a 3D special effect between his gesticulating hands. His face is never shown.