So they hammered out a new arrangement. Eisner agreed to let Pixar put up half the money for future films and in return take half of the profits. “He didn’t think we could have many hits, so he thought he was saving himself some money,” said Jobs. “Ultimately that was great for us, because Pixar would have ten blockbusters in a row.” They also agreed on co-branding, though that took a lot of haggling to define. “I took the position that it’s a Disney movie, but eventually I relented,” Eisner recalled. “We start negotiating how big the letters in ‘Disney’ are going to be, how big is ‘Pixar’ going to be, just like four-year-olds.” But by the beginning of 1997 they had a deal, for five films over the course of ten years, and even parted as friends, at least for the time being. “Eisner was reasonable and fair to me then,” Jobs later said. “But eventually, over the course of a decade, I came to the conclusion that he was a dark man.”
In a letter to Pixar shareholders, Jobs explained that winning the right to have equal branding with Disney on all the movies, as well as advertising and toys, was the most important aspect of the deal. “We want Pixar to grow into a brand that embodies the same level of trust as the Disney brand,” he wrote. “But in order for Pixar to earn this trust, consumers must know that Pixar is creating the films.” Jobs was known during his career for creating great products. But just as significant was his ability to create great companies with valuable brands. And he created two of the best of his era: Apple and Pixar.
CHAPTER TWENTY-THREE
THE SECOND COMING
What Rough Beast, Its Hour Come Round at Last . . .
Steve Jobs, 1996
Things Fall Apart
When Jobs unveiled the NeXT computer in 1988, there was a burst of excitement. That fizzled when the computer finally went on sale the following year. Jobs’s ability to dazzle, intimidate, and spin the press began to fail him, and there was a series of stories on the company’s woes. “NeXT is incompatible with other computers at a time when the industry is moving toward interchangeable systems,” Bart Ziegler of Associated Press reported. “Because relatively little software exists to run on NeXT, it has a hard time attracting customers.”
NeXT tried to reposition itself as the leader in a new category, personal workstations, for people who wanted the power of a workstation and the friendliness of a personal computer. But those customers were by now buying them from fast-growing Sun Microsystems. Revenues for NeXT in 1990 were $28 million; Sun made $2.5 billion that year. IBM abandoned its deal to license the NeXT software, so Jobs was forced to do something against his nature: Despite his ingrained belief that hardware and software should be integrally linked, he agreed in January 1992 to license the NeXTSTEP operating system to run on other computers.
One surprising defender of Jobs was Jean-Louis Gassée, who had bumped elbows with Jobs when he replaced him at Apple and subsequently been ousted himself. He wrote an article extolling the creativity of NeXT products. “NeXT might not be Apple,” Gassée argued, “but Steve is still Steve.” A few days later his wife answered a knock on the door and went running upstairs to tell him that Jobs was standing there. He thanked Gassée for the article and invited him to an event where Intel’s Andy Grove would join Jobs in announcing that NeXTSTEP would be ported to the IBM/Intel platform. “I sat next to Steve’s father, Paul Jobs, a movingly dignified individual,” Gassée recalled. “He raised a difficult son, but he was proud and happy to see him onstage with Andy Grove.”
A year later Jobs took the inevitable subsequent step: He gave up making the hardware altogether. This was a painful decision, just as it had been when he gave up making hardware at Pixar. He cared about all aspects of his products, but the hardware was a particular passion. He was energized by great design, obsessed over manufacturing details, and would spend hours watching his robots make his perfect machines. But now he had to lay off more than half his workforce, sell his beloved factory to Canon (which auctioned off the fancy furniture), and satisfy himself with a company that tried to license an operating system to manufacturers of uninspired machines.
By the mid-1990s Jobs was finding some pleasure in his new family life and his astonishing triumph in the movie business, but he despaired about the personal computer industry. “Innovation has virtually ceased,” he told Gary Wolf of Wired at the end of 1995. “Microsoft dominates with very little innovation. Apple lost. The desktop market has entered the dark ages.”
He was also gloomy in an interview with Tony Perkins and the editors of Red Herring. First, he displayed the “Bad Steve” side of his personality. Soon after Perkins and his colleagues arrived, Jobs slipped out the back door “for a walk,” and he didn’t return for forty-five minutes. When the magazine’s photographer began taking pictures, he snapped at her sarcastically and made her stop. Perkins later noted, “Manipulation, selfishness, or downright rudeness, we couldn’t figure out the motivation behind his madness.” When he finally settled down for the interview, he said that even the advent of the web would do little to stop Microsoft’s domination. “Windows has won,” he said. “It beat the Mac, unfortunately, it beat UNIX, it beat OS/2. An inferior product won.”
Apple Falling
For a few years after Jobs was ousted, Apple was able to coast comfortably with a high profit margin based on its temporary dominance in desktop publishing. Feeling like a genius back in 1987, John Sculley had made a series of proclamations that nowadays sound embarrassing. Jobs wanted Apple “to become a wonderful consumer products company,” Sculley wrote. “This was a lunatic plan. . . . Apple would never be a consumer products company. . . . We couldn’t bend reality to all our dreams of changing the world. . . . High tech could not be designed and sold as a consumer product.”
Jobs was appalled, and he became angry and contemptuous as Sculley presided over a steady decline in market share for Apple in the early 1990s. “Sculley destroyed Apple by bringing in corrupt people and corrupt values,” Jobs later lamented. “They cared about making money—for themselves mainly, and also for Apple—rather than making great products.” He felt that Sculley’s drive for profits came at the expense of gaining market share. “Macintosh lost to Microsoft because Sculley insisted on milking all the profits he could get rather than improving the product and making it affordable.” As a result, the profits eventually disappeared.