Key Moments
How Failure Created the Steve Jobs We All Know | Geoffrey Cain
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Key Moments
Steve Jobs nearly went bankrupt and was called a 'snake oil salesman' after being ousted from Apple, but his decade of failure at NeXT ultimately forged the leader who would save Apple.
Key Insights
Steve Jobs was pushed out of Apple in 1985 due to the commercial failure of the Macintosh and his inability to be managed, leading him to attempt a coup against CEO John Scully.
Jobs invested $7 million of his own money into NeXT, spending astronomically on a $100,000 logo by Paul Rand and a $500,000 manufacturing line for a 'perfect cube' computer, pricing himself out of the market.
Despite hiring people with 'edge' who would push back, Jobs often ignored critical feedback from his NeXT executives regarding sales projections and financial viability, leading the company to the brink of bankruptcy in 1993.
The revolutionary object-oriented programming of NeXTSTEP's software, developed in the late 1980s, laid the foundation for the iPhone's operating system, demonstrating Jobs's visionary foresight despite NeXT's hardware failures.
Jobs's personal funding of both NeXT and Pixar, combined with Pixar's successful IPO due to 'Toy Story' in 1995, provided the financial freedom and leverage for his eventual return to Apple.
Upon returning to Apple in 1997 as interim CEO, Jobs immediately cut 70% of the company's projects and integrated NeXT's operating system, which became the bedrock for Apple's subsequent product innovations like the iPod and iPhone.
Ousted from Apple and facing financial ruin
Steve Jobs, a co-founder of Apple, was pushed out of the company in 1985. This followed the commercial underperformance of the Macintosh, which, despite being a cultural success and a technological leap forward in personal computing, failed to meet sales expectations. Jobs's management style, characterized by intense conviction and confrontational behavior, made him difficult to manage. He clashed with CEO John Sculley, even attempting a coup to oust Sculley and take control of Apple. This period marked a significant low point, leading to his departure and a decade outside the company he helped create.
The ambitious and costly beginnings of NeXT
After leaving Apple, Steve Jobs founded NeXT Computer with the ambitious goal of creating a cutting-edge computer for leading science laboratories and universities. He personally invested $7 million and poached five talented Apple employees. Jobs's pursuit of perfection led to exorbitant expenses, including a $100,000 logo designed by Paul Rand and a complex manufacturing process for a 'perfect cube' computer that required a $500,000 sanding line. This focus on aesthetics and engineering over market practicality meant the computer was incredibly expensive, estimated at $10,000 in 1986, effectively pricing it out of reach for most consumers and leading to dismal sales.
Ignoring feedback and nearing bankruptcy
Despite the market's clear rejection of NeXT's high-priced, impractical hardware, Steve Jobs often dismissed critical feedback from his executives. He was convinced of his own vision, sometimes exhibiting a 'reality distortion field' where he convinced himself as much as others. Emails from his executives clearly showed the dire financial situation, warning of impending failure if certain sales targets or fundraising goals were not met. However, Jobs would counter with optimistic, unfounded projections. This disconnect persisted for years, with the company burning through cash and piling up debt, leading NeXT to the verge of bankruptcy by 1993, being 'one weekend away from shutting the doors completely.' Investors like Canon and Ross Perot provided crucial funding, but the company's core product was not selling.
The revolutionary software that foreshadowed the iPhone
While NeXT's hardware was a commercial failure, its software, NeXTSTEP, was revolutionary. Developed using object-oriented programming, a paradigm Jobs had seen at Xerox PARC, it offered a more efficient and intuitive way to build applications, foreshadowing modern drag-and-drop interfaces. This technology, which allowed for complex tasks like rapid financial trading, satellite imagery analysis, and intelligence work, was far ahead of its time. The CIA and NSA were particularly interested in its capabilities, especially its removable optical disks for secure data. Although NeXT's hardware was too expensive and impractical, the underlying software proved to be the true innovation, laying the groundwork for what would later become the operating system powering the iPhone in 2007.
A decade of personal and financial struggle
For ten years, from 1985 to 1995, Steve Jobs personally funded both NeXT Computer and Pixar. NeXT faced continuous financial losses, and by 1993, it was on the brink of collapse, requiring a last-minute $20 million investment from Canon. At one point, Fortune magazine referred to Jobs as a 'snake oil salesman.' His personal fortune was nearly depleted, and he had driven away many of his co-founders and investors. This period of intense struggle and near-failure was a crucible that tested his resilience and forced a reckoning with his management style and vision. The successful IPO of Pixar in 1995, driven by the blockbuster hit 'Toy Story,' finally provided him with significant financial stability and the capital needed for his eventual return to Apple.
The reluctant return and the rescue of Apple
Apple, by the mid-1990s, was in a dire state, suffering from 'featuritis' and bureaucracy, with nearly 70 product lines and a consistently crashing operating system. In 1996, Apple's CTO Ellen Hancock, seeking a new operating system, received a chance voicemail from a NeXT manager, leading Apple to acquire NeXT. Steve Jobs initially resisted returning to Apple, preferring to focus on Pixar. However, after encouragement from mentor Andy Grove and a realization that he did care deeply about Apple, he agreed to become interim CEO in October 1997. He famously declared, 'I do give a about Apple.' This marked the beginning of Apple's dramatic turnaround.
Implementing lessons learned to revive Apple
As interim CEO, Jobs acted decisively, immediately cutting 70% of Apple's projects and integrating NeXT's superior operating system, NeXTSTEP, into Apple's future development. This move was foundational to Apple's renaissance and the creation of iconic products like the iPod and iPhone. Jobs also learned to trust his people more, understanding that true leadership involved supporting and retaining top talent, rather than solely relying on his own vision. He learned the importance of pragmatism, even making a controversial $150 million deal with Microsoft, their archrival, to secure much-needed funding and software support, a move the younger Steve would have deemed unthinkable. This period demonstrated a maturation in his leadership, marked by a greater willingness to compromise and a deeper understanding of business realities.
Personal transformation and enduring influence
Beyond his business acumen, Jobs underwent significant personal growth during his NeXT years, especially after marrying Laurene Powell Jobs. She provided a stabilizing presence, helping him mature and develop a more balanced identity that included family alongside his professional pursuits. This personal grounding contributed to his ability to lead with more empathy, a trait he had to learn and cultivate. While he remained challenging and demanding, he learned to inspire and bring out the best in talented individuals, pushing them to achieve beyond their perceived limits. His journey through failure taught him resilience, discipline, and the critical lesson that success is not just about brilliant ideas but about building scale, making pragmatic alliances, and fostering a supportive environment for talent.
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Steve Jobs was pushed out of Apple in 1985 due to clashes with CEO John Scully and his inability to manage the Macintosh division effectively. His difficult personality, confrontational meetings, and attempts to undermine leadership contributed to the decision.
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Mentioned in this video
Co-founder of Apple, whose difficult journey through failure and learning is the central focus of the video. He is depicted as brilliant but flawed, learning crucial lessons about leadership, vision, and collaboration.
Co-founder of Apple with Steve Jobs. Mentioned as a key figure in the early days of Apple.
The graphic designer Steve Jobs hired to create the logo for NeXT Computer, which cost $100,000.
A rival of Steve Jobs at Apple, who was head of Apple France and later played a role in the events leading to Jobs' departure and the NeXTSTEP acquisition.
An investor in NeXT Computer who promised to help sell its products to the federal government. Their partnership dissolved due to Jobs' refusal to pursue government contracts.
The original owner of Pixar, whom Steve Jobs bought the company from.
A key figure at Pixar who, along with John Lasseter, led the creative development of its films.
A key figure at Pixar who, along with Ed Catmull, led the creative development of its films.
The CFO of NeXT Computer who came in during a financial crisis and helped the company post a small profit.
A middle manager at NeXT who initiated the crucial contact with Apple that led to the acquisition of NeXTSTEP.
The CTO of Apple who, upon receiving a call from Garrett Rice, showed interest in NeXTSTEP, leading to its acquisition.
Steve and Lorraine Jobs' son, whose birth contributed to Jobs' personal growth and realization of family importance.
Steve Jobs' hardware chief at NeXT and later a key figure at Apple, instrumental in the turnaround of both companies.
Steve Jobs' wife, credited with softening him, providing structure, and helping him mature, influencing his personal and professional life significantly.
Steve Jobs' first daughter, with whom he initially had a difficult relationship but later repaired.
A key software engineer at NeXT who was brought into Apple to lead its software development during the company's turnaround.
A friend of Steve Jobs and founder of Oracle, who proposed a hostile takeover of Apple, a strategy the older Jobs rejected.
Early mentor to Steve Jobs and CEO of Intel, whose blunt advice prompted Jobs to realize his own care for Apple and step up as interim CEO.
Co-founder of Microsoft, Steve Jobs' primary rival, with whom he had a complex 'frenemy' relationship characterized by public criticism and strategic interactions.
The technology company co-founded by Steve Jobs, which he was ousted from and later returned to save. The video details its struggles, product strategies, and eventual turnaround influenced by Jobs' second tenure.
The computer company Steve Jobs founded after leaving Apple. Known for its advanced software but impractical hardware, it faced significant financial struggles and was eventually acquired by Apple.
Mentioned as a potential partner for NeXT, and later in the context of its historical rivalry with Apple and the importance of its operating system strategy.
An investor in NeXT Computer that provided crucial funding, preventing the company from bankruptcy.
The animation studio Steve Jobs personally funded and where he learned to step back from creative control, contributing to its success with films like Toy Story.
The company that eventually acquired Pixar, a strategic move by Steve Jobs.
The company led by Jean-Louis Gassée that Apple initially considered acquiring for its operating system before ultimately choosing NeXTSTEP.
The primary competitor to Apple, led by Bill Gates. Their rivalry with Jobs and Apple is highlighted, including a significant deal made during Apple's crisis.
An early personal computer released by Apple that was a cultural success but a commercial failure, contributing to Apple's crisis and Jobs' departure.
An early Apple product whose development was influenced by the technological advancements made during the NeXT era.
A revolutionary product from Apple whose foundation is traced back to the object-oriented programming developed by NeXT.
A product from Apple whose software foundation is rooted in the NeXTSTEP operating system.
The operating system developed by NeXT Computer, which was technologically advanced and became the foundation for Apple's future operating systems, including those powering the iPhone and iPad.
Microsoft's operating system released in 1995, representing a major success and the pinnacle of Bill Gates' open ecosystem strategy.
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