The decade that Steve Jobs spent away from Apple is often seen as his “wilderness” years, a time when he came close to fading forever from public life. He was forced out of the company he founded. His new company, NeXT, was struggling to say afloat. His other company, Pixar, lurched from business plan to business plan. Yet that decade would become one of the most productive periods of Jobs’s amazing life, laying the foundation for the personal, technological, and financial success that would follow. “The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything,” he said at a famous Stanford commencement speech in 2005. “It freed me to enter one of the most creative periods of my life.”
In 1985, Steve Jobs wasn’t so much fired from Apple as he was chased out. He lost a power struggle with then-CEO John Sculley, whom Jobs had recruited from Pepsi. Sculley was brought into Apple as the grown-up, the “adult supervision.” Jobs, just 29, wanted Sculley to run the fast-growing and often chaotic company while Jobs obsessed about new products. He hoped that Sculley would teach him how to eventually take the reins.
Things went swimmingly at first, but Jobs’s penchant for meddling put him at odds with Sculley and many others. The crunch came when Jobs’s Macintosh division failed to upgrade the original Mac, leading to a deep slide in sales. Consumers viewed it as an expensive toy. There was no killer app to drive sales (desktop publishing wouldn’t take off until after Jobs left).
Sculley removed Jobs as head of the Mac division, leading Jobs to retaliate by trying to have him kicked out. Jobs lost.
He quickly set up a rival company in hopes of driving Apple out of business.
Called NeXT (of course), the company began work on a high-end workstation aimed at colleges and universities. Jobs took some of the key Macintosh personnel with him, and was immediately sued by Apple for “nefarious schemes.” He persuaded Texas millionaire Ross Perot to invest (Perot was impressed by Jobs after seeing him on a CBS news show) and, later, Japan’s Canon.
Jobs spent lavishly at his new company. He splurged $100,000 on a cubist logo designed by the famous graphic designer Paul Rand and built a headquarters office with hardwood floors and a floating glass staircase designed by architect I. M. Pei. He experimented with new management ideas, like letting his staff see all the company’s financials, including payroll. Predictably, that turned out to be a mistake. Yet Jobs nevertheless was able to recruit stellar talent to work at the company, including Jon Rubinstein and Avie Tevanian, who would later take on key roles at Apple.
In 1989, after three years in development, Jobs introduced the NeXTcube at a press event in San Francisco. Plagued by delays, the machine was months behind schedule. Asked about being late, Jobs responded, “Late? This computer is five years ahead of its time!”
The NeXTcube sported a distinctive case made of pricey black magnesium. It ran proprietary software that was developed at great expense, and Jobs built a robot factory to churn out 150,000 machines a year. But the $6,500 workstation was too expensive for schools, its initial target market. Only government agencies like the CIA could afford it. In the end, only 50,000 were ever sold.
Meanwhile, Jobs had picked up his other company, Pixar, from George Lucas for $10 million shortly after leaving Apple. Lucas unloaded what was then a fledgling computer-graphics division after being cleaned out in an expensive divorce.
At the time, Pixar was little more than a group of academics who had created an advanced computer-graphics package called RenderMan. Jobs tried to market it as the Pixar Image Computer, a high-end graphics workstation, but only Disney bit.
Then the company tried to sell RenderMan as a stand-alone animation package. That too failed. Having spent more than $50 million of his own money to keep it afloat, Jobs tried several times to sell Pixar. He came very close to passing it off to Apple’s archenemy, Microsoft. “If I knew in 1986 how much it was going to cost to keep Pixar going, I doubt if I would’ve bought the company,” Jobs later said.
He was forced to lay off most of Pixar’s staff in 1991. But he kept a handful of key players, including Ed Catmull, the firm’s technical genius, and John Lasseter, who was garnering rave reviews for short films he made as demos for RenderMan. One of Lasseter’s shorts won an Academy Award.
Throughout this period, Jobs was excoriated in the press. Pixar and NeXT were high-profile failures. Jobs was portrayed not as a technologist but as a slick marketer, a fast talker whose early success came from riding Steve Wozniak’s coattails. Maybe Sculley was right.
In 1993, Jobs reached his nadir. To keep NeXT afloat, he folded the company’s hardware operation and laid off most of the rest of the staff. He was in “ankle-deep shit,” as he would later put it. He stopped going to work, spending his days at home with his young son.
Pixar was also limping on, making animated shorts and special effects for TV commercials. Then the company—and Jobs—got a key break. Disney tried to hire Lasseter away. He rebuffed it, but not before Disney agreed to finance three of Pixar’s feature-length movies. The deal was lopsided (Disney got most of the money), but what emerged was a deal to back a buddy movie featuring a pair of mismatched toys. Lasseter flew to Hollywood to take a crash course in screenwriting.
After several restarts, including one that almost killed the film entirely, Toy Story was released in 1995 to huge critical acclaim. The first fully computer-made movie, Toy Story won an Oscar and went on to become the highest-grossing movie of the year.
It was the first win in an unprecedented Pixar run: 12 blockbuster hits that have earned on average $602 million apiece—by far the best run of any studio in Hollywood. Plus six Oscars.
In 1996, a year after Toy Story, Apple’s then-CEO, Gil Amelio, approached Jobs about buying NeXT’s operating system. For years, Apple had been trying to develop a successor to its aging Macintosh operating system, which was creaking under the weight of all the extra features that had been added since 1984. That effort was failing, and now Apple was hoping to buy the NeXTStep OS to replace the Mac OS.
In December 1996, Apple announced that Apple had indeed bought NeXT for $430 million. Jobs was brought back to the company as a special adviser to Amelio, paving the way for his later return as CEO.
It wasn’t exactly a prime perch. Apple at the time was struggling financially. For the first time, Windows computers were as good as the Mac, if not better, and certainly a lot cheaper. By comparison, Apple’s computers were slow, expensive, and lackluster. The only successful companies in the Mac ecosystem were the clone makers, which were further eroding Apple’s market share.
In the first quarter of 1997, Apple announced a quarterly loss of $700 million, one of the largest in Silicon Valley history. Apple’s board fired Amelio and, in desperation, asked Jobs to take over. At first he balked. He was already running Pixar, which was finally a success, and Apple was nearly bankrupt. He didn’t want to oversee its demise. Yet Apple was under his skin. He’d cofounded it, and couldn’t stand by and watch it die. He took the title of iCEO—interim CEO—and got to work while the board looked for a permanent CEO.
So ended Jobs’s lost decade. His time in the wilderness taught him how to be a better manager and delegator. He discovered creative processes at Pixar that later worked well at Apple. He recruited staff and developed technologies that would underpin Apple’s success. And he helped create an entire genre of computer-animated movies, which would make him a multibillionaire when Disney bought Pixar. He also got married and raised a family.
It turned out the decade wasn’t lost, after all.