Steve Jobs

For a few weeks it seemed as if there might be a solution to the turmoil. Jobs became fascinated by a flat-screen technology developed by a firm near Palo Alto called Woodside Design, run by an eccentric engineer named Steve Kitchen. He also was impressed by another startup that made a touchscreen display that could be controlled by your finger, so you didn’t need a mouse. Together these might help fulfill Jobs’s vision of creating a “Mac in a book.” On a walk with Kitchen, Jobs spotted a building in nearby Menlo Park and declared that they should open a skunkworks facility to work on these ideas. It could be called AppleLabs and Jobs could run it, going back to the joy of having a small team and developing a great new product.

Sculley was thrilled by the possibility. It would solve most of his management issues, moving Jobs back to what he did best and getting rid of his disruptive presence in Cupertino. Sculley also had a candidate to replace Jobs as manager of the Macintosh division: Jean-Louis Gassée, Apple’s chief in France, who had suffered through Jobs’s visit there. Gassée flew to Cupertino and said he would take the job if he got a guarantee that he would run the division rather than work under Jobs. One of the board members, Phil Schlein of Macy’s, tried to convince Jobs that he would be better off thinking up new products and inspiring a passionate little team.

But after some reflection, Jobs decided that was not the path he wanted. He declined to cede control to Gassée, who wisely went back to Paris to avoid the power clash that was becoming inevitable. For the rest of the spring, Jobs vacillated. There were times when he wanted to assert himself as a corporate manager, even writing a memo urging cost savings by eliminating free beverages and first-class air travel, and other times when he agreed with those who were encouraging him to go off and run a new AppleLabs R&D group.

In March Murray let loose with another memo that he marked “Do not circulate” but gave to multiple colleagues. “In my three years at Apple, I’ve never observed so much confusion, fear, and dysfunction as in the past 90 days,” he began. “We are perceived by the rank and file as a boat without a rudder, drifting away into foggy oblivion.” Murray had been on both sides of the fence; at times he conspired with Jobs to undermine Sculley, but in this memo he laid the blame on Jobs. “Whether the cause of or because of the dysfunction, Steve Jobs now controls a seemingly impenetrable power base.”

At the end of that month, Sculley finally worked up the nerve to tell Jobs that he should give up running the Macintosh division. He walked over to Jobs’s office one evening and brought the human resources manager, Jay Elliot, to make the confrontation more formal. “There is no one who admires your brilliance and vision more than I do,” Sculley began. He had uttered such flatteries before, but this time it was clear that there would be a brutal “but” punctuating the thought. And there was. “But this is really not going to work,” he declared. The flatteries punctured by “buts” continued. “We have developed a great friendship with each other,” he said, “but I have lost confidence in your ability to run the Macintosh division.” He also berated Jobs for badmouthing him as a bozo behind his back.

Jobs looked stunned and countered with an odd challenge, that Sculley should help and coach him more: “You’ve got to spend more time with me.” Then he lashed back. He told Sculley he knew nothing about computers, was doing a terrible job running the company, and had disappointed Jobs ever since coming to Apple. Then he began to cry. Sculley sat there biting his fingernails.

“I’m going to bring this up with the board,” Sculley declared. “I’m going to recommend that you step down from your operating position of running the Macintosh division. I want you to know that.” He urged Jobs not to resist and to agree instead to work on developing new technologies and products.

Jobs jumped from his seat and turned his intense stare on Sculley. “I don’t believe you’re going to do that,” he said. “If you do that, you’re going to destroy the company.”

Over the next few weeks Jobs’s behavior fluctuated wildly. At one moment he would be talking about going off to run AppleLabs, but in the next moment he would be enlisting support to have Sculley ousted. He would reach out to Sculley, then lash out at him behind his back, sometimes on the same night. One night at 9 he called Apple’s general counsel Al Eisenstat to say he was losing confidence in Sculley and needed his help convincing the board to fire him; at 11 the same night, he phoned Sculley to say, “You’re terrific, and I just want you to know I love working with you.”

At the board meeting on April 11, Sculley officially reported that he wanted to ask Jobs to step down as the head of the Macintosh division and focus instead on new product development. Arthur Rock, the most crusty and independent of the board members, then spoke. He was fed up with both of them: with Sculley for not having the guts to take command over the past year, and with Jobs for “acting like a petulant brat.” The board needed to get this dispute behind them, and to do so it should meet privately with each of them.

Sculley left the room so that Jobs could present first. Jobs insisted that Sculley was the problem because he had no understanding of computers. Rock responded by berating Jobs. In his growling voice, he said that Jobs had been behaving foolishly for a year and had no right to be managing a division. Even Jobs’s strongest supporter, Phil Schlein, tried to talk him into stepping aside gracefully to run a research lab for the company.

When it was Sculley’s turn to meet privately with the board, he gave an ultimatum: “You can back me, and then I take responsibility for running the company, or we can do nothing, and you’re going to have to find yourselves a new CEO.” If given the authority, he said, he would not move abruptly, but would ease Jobs into the new role over the next few months. The board unanimously sided with Sculley. He was given the authority to remove Jobs whenever he felt the timing was right. As Jobs waited outside the boardroom, knowing full well that he was losing, he saw Del Yocam, a longtime colleague, and hugged him.

After the board made its decision, Sculley tried to be conciliatory. Jobs asked that the transition occur slowly, over the next few months, and Sculley agreed. Later that evening Sculley’s executive assistant, Nanette Buckhout, called Jobs to see how he was doing. He was still in his office, shell-shocked. Sculley had already left, and Jobs came over to talk to her. Once again he began oscillating wildly in his attitude toward Sculley. “Why did John do this to me?” he said. “He betrayed me.” Then he swung the other way. Perhaps he should take some time away to work on restoring his relationship with Sculley, he said. “John’s friendship is more important than anything else, and I think maybe that’s what I should do, concentrate on our friendship.”