Despite all this, the Apple II was still paying everyone's salaries and making a huge profit for the company. And it wasn't even being advertised. About the only salary Apple spent on the Apple II during that period—1980 to 1983—was on the guy who printed the price lists.
• o •
It was terrible. I mean, we had everybody at Apple—all the employees and all the money—going into the Apple III and nothing was coming out. And accounting didn't account for it that way. The company lost so much money on the Apple III in those days—in today's money, it would be at least a billion. I calculated at the time that we lost about $300 million. That's just my own estimate.
And not only was the Apple II carrying the whole company and carrying a debacle like the Apple III, it was hiding the Apple Ill's real deficiencies from the world. Nobody in the real world, but nobody, treated the Apple III as if it was significant.
All of our users had no idea, I'm telling you. Because if you opened up a computer magazine, all you saw were fifty ads for the Apple II—not by Apple, but by resellers and small mom-and- pop shops who were building all those games and add-ons for the Apple II.
As for the computer magazines, in their reviews of the Apple III, almost every one of them acknowledged it was a failure in the marketplace. Never did they acknowledge that it was a prominent part of Apple's business. They gave consumers the impres
sion that we were largely an Apple II company—with this hugely successful product—and that there was this big group still working on the flawed Apple III for some reason.
• o •
Now, I accept that Apple had to work the way a company has to. There are a lot of people who operate the company, and there are a lot of people on the board who run things. So the reasoning is very difficult to see. I mean, this was a time when the company had one reputation but it was totally different on the inside. It very much bothered me that you can get away with all kinds of things when you are successful. For example, a bad person can get away with a lot of things if they have a lot of money. And a bad person can hide it—hide behind the money—and keep on being a bad person.
In this case, we had a bad computer, the Apple III, even though the Apple II was selling like hotcakes. It had taken over the world. The IBM PC didn't overtake it until 1983. So it was a leader.
I still don't understand it.
• o •
To be fair, the Apple III had some serious competition. In about 1981, IBM finally came out with its answer to the Apple II. It was selling great almost right away. It was truly becoming a huge success really rapidly. So we had some serious competition all of a sudden, and we'd never had that before.
All those big companies with big IBM mainframe and other large computers were already IBM customers, and it didn't take much for the IBM rep to sell them an IBM PC to go with it all. As a matter of fact, there used to be a saying that "you can't get fired for buying IBM."
When the IBM PC first came out, we were kind of cocky aboul it. We took out a full-page ad in the
Wall Street Journal
thai said, "Welcome IBM. Seriously."
And like I said, the PC passed by the Apple II, the largest- selling computer in the world, in 1983.
•
o •
By this time, I should point out, Mike Scott—our president who took us public and the guy who took us through the phenomenally successful IPO—was gone. During the time the Apple III was being developed, he thought we'd grown a bit too large. There were good engineers, sure, but there were also a lot of lousy engineers floating around. That happens in any big company.
It's not necessarily the lousy engineer's fault, by the way. There's always going to be some mismatch between an engineer's interests and the job he's doing.
Anyway, Scotty had told Tom Whitney, our engineering manager, to take a vacation for a week. And meanwhile he did some research. He went around and talked to every engineer in the company and found out who was doing what and who was working and who wasn't doing much of anything.
Then he fired a whole bunch of people. That was called Bloody Monday. Or, at least, that's what it ended up being called in the Apple history books. I thought that, pretty much, he fired all the right ones. The laggards, I mean.
And then Mike Scott himself was fired. The board was just very pissed that he'd done this without a lot of backing and enough due process, the kind of procedure you're supposed to follow at a big company.
Also, Mike Markkula told me Mike Scott had been making a lot of rash decisions and decisions that just weren't right. Mike thought Scotty wasn't really capable of handling the company given the point and size it had gotten to.
I did not like this one bit. I liked Scotty very, very much as a person. I liked his way of thinking. I liked his way of being able to joke and be serious. With Scotty, I didn't see many things fall
through the cracks. And I felt that he respected the good work that I did—the engineering work. He came from engineering.
And as I said, Scotty had been our president, our leader from day one of incorporation until we'd gone public in one of the biggest IPOs in U.S. history. And now, all of a sudden, he was just pushed aside and forgotten.
I think it's sad that none of the books today even seem to recall him. Nobody knows his name. Yet Mike Scott was the president that took us through the earliest days.
• o •
I learned a lot of things at Apple those first few years. I learned right away that in a company, you can have different ideas about what ads look like or what the logo looks like, even different ideas about the name of the company or a product it has. People have different and often conflicting ideas about all these things.
One thing I've learned directly from this new experience of creating and working at a company with so many different people is: Hey, never pretend you can do someone's job better than someone who's been doing it for years.
I was much better keeping quiet and just focusing on my particular talent of engineering. That guaranteed that I would be productive at what I do and could let other people be productive at what they did best.
So few companies were like this. But companies don't always evolve the way you want them to. After all, when we first started Apple, Steve and I really had this engineering-centric model in mind. We wanted Apple to have the amazing employee morale we think HP got as a result of treating its engineers like upper- class citizens, you know?
But we knew what were getting into because Mike Markulla told us. He said, "This is going to be a marketing company." The product is going to be driven, in other words, by demands that the marketing department finds in customers. This is just the
opposite of a place where engineers just build whatever they love, and marketing comes up with ways to market them. I knew this was going to be a challenge for me.
• o •
Back in high school, I read a book called
The Loneliness of the Long-Distance Runner
by Alan Sillitoe. It just grabbed me. It was about a criminal going through this big mental discussion. It really showed how he was thinking very independently—it showed the way people in general who are inwardly driven think—and he's trying to decide whether he should win this big footrace while he's in jail. The bad governor will become famous if the criminal wins.
And he's trying to decide, Should he win the race, or shouldn't he? Should he let the governor have all the fame? Or should he try to run away, and keep running, and just escape?
The whole thing had a huge impact on my own thinking. In life, there is an "us" and a "them." A "we" and a "they." And the "they" is the administration, the authorities. And sometimes they're on the wrong side and we're on the right side.
Chapter 16
Crash Landing
Before Alice and I were divorced, Alice told me about a friend of hers, Sherry, who was interested in buying a movie theater. A real running theater. It was the Mayfair Theater in San Jose. Alice thought I should buy it, and I could never turn Alice down when it came to anything she wanted to do.
So I bought it.
Sherry and Alice had gotten involved with a group called Eastern Star, a group of women who had relatives in the Freemasons. Because she was in Eastern Star, she was spending a lot of time there, a lot of nights away there. In order to have more time with her, I decided that I would become a Freemason. Freemasons, after all, regularly have joint events with Eastern Star. So I went down to the Masonic lodge and did a lot of training, and after some period of time and three big events, I became a third- degree Mason. Then I got more time with Alice. I eventually became an officer and everything.
I should tell you that although I am a lifetime Freemason, I'm not like the other people who are Freemasons. My personality is very, very unlike theirs. To get in, you have to say all this stuff about God, the Bible, words that sound a little bit like they come from the Constitution, and none of this ritual stuff is the way I
think, you know? But I did it, and I did it well. If I'm going to do something, I always try to do it well. And I did this for one reason, as I said: to see Alice more. I wanted to save the marriage. I would go so far as to join the Freemasons if that's what it took. That's how I was.
So anyway, pretty much near the end of the marriage, I was a Freemason and I bought that theater. Alice's friend Sherry and Sherry's boyfriend, Howard, would run it. It had been their idea from the start, to run a theater. They'd gotten to Alice, as a friend, so she got to me. And now I owned it.
The Mayfair Theater was in kind of a low-income area of town. I remember we had to paint the bathroom black because of all the graffiti, and even afterward, people would still put graffiti in it, only in white paint. At least we could wash the walls.
I felt like making it into something special. I never had the idea that it was going to make a lot of money, but I wanted it to be kind of special and I put in nice seats and a good sound system. I had a couple of guys running it, and they scraped off a wall one day and found there was this beautiful natural wood artwork underneath this blah wall someone had tacked up on top of it. So we actually brought in some experts who sanded everything down, and they were able to recover the original artwork. I loved that theater.
But then Alice and I got divorced, and I was stuck with the theater. I went there every day after work at Apple. I drove down there, set up my computer so I could get some work done, saw what movies were playing, and said hi to everybody. The theater was this fun group of people, a really small operation. It was neat to see how it operated. I mean, it was a small, low-budget theater. We didn't get that many customers. And we only got pretty low- rate movies. For instance, we had
Friday the 13th.
That was probably the biggest movie we ever showed, and we only got it long after it opened.
Actually, the only movies we ever sold out on were gang movies, like
The Warriors.
That made sense, considering what part of town we were in!
I'd only been single a few weeks when I asked out the woman who would be my second wife, Candi Clark. I knew her because once, when I bought a bunch of advance tickets to a
Star Trek
movie and offered them half price to Apple employees, she'd asked for a bunch because she had a lot of brothers. I thought she was pretty cute, so I asked her to come to one of those low-budget science fiction movies we were showing at my theater, and she did. The next day, we raced bumper cars at the Malibu Grand Prix track near the San Francisco airport and I beat her really well.
I thought she was just super pretty. She was blonde, medium build, and it turned out she had been an Olympic kayaker. (I found that out when I saw a picture of her and Ronald Reagan on the wall of her apartment after our second date.) She worked at Apple creating database reports for managers, that sort of stuff.
So now I had a girlfriend and that was it. It was all really quick.
• o •
It wasn't very long after I'd divorced Alice and met Candi that we decided to get married. She had an uncle down in San Diego who made jewelry, and I had this idea. Let's get a ring for me, I said, that has the diamond on the inside so nobody can see it. I thought that would be more special than a normal ring. We would know there was a diamond, but the world wouldn't.
So we decided to fly down on a plane, on my V-tail Beechcraft, which I'd bought right after getting my pilot's license six months before. I think today that it was the most beautiful and unorthodox single-engine plane there is. It was so distinctive, the shape of its tail was so unique, and I was so proud to fly it. I had it painted—by a painter named Bill Kelly, he'd done PR for Apple— in the nicest earth tones.
The first time in my life that I was able to take a passenger
alone, it was with Candi. I took her down to San Jose one night, and it was raining. Of course, I had never flown in the rain at night, but I did and we got back safely. I think that might have been my best landing ever.
But no, I wasn't at all cocky about my flying. I knew how to do a flight plan and how to do flights. I knew the rules to follow. But still, I was a beginner pilot. I was still a pretty rough new trainee. But anyway, Candi and I took a few trips in the new plane, and then one day we decided to fly down to San Diego where Candi's uncle could design that wedding ring with the diamond on the inside.