After losing a boardroom power struggle with Apple CEO John Sculley, Steve Jobs was exiled to a small building across the street from Apple’s headquarters. It was May 1985. He and his colleagues called his new office “Siberia.”
Corporate reports stopped flowing to his desk, and executives stopped calling, leaving him bored and lonely. “It was amazing to see how ostracized he was in the Valley,” recalled Susan Barnes, a Macintosh financial controller who had previously reported to him. “It was really cruel.”
Jobs is remembered as the visionary who returned to Apple, the company he cofounded, in 1997, and saved it from near-bankruptcy. But before the comeback, he made a series of leadership decisions that destabilized the company and left it drifting toward death.
An overlooked truth: the instincts that made Jobs extraordinary, his perfectionism, his force of will, his refusal to compromise, also nearly destroyed Apple in its early years. After he left, Jobs spent twelve years failing at a company called NeXT, and those failures laid the foundation for Apple’s resurgence with the iPod, iPhone, and iPad.
Here are five times Steve was wrong and learned from his mistakes:
1. He made himself the center of every decision
By early 1985, Apple had splintered into warring factions. Jobs undermined Sculley to colleagues and challenged his every decision. “I am the board,” Jobs, Apple’s chairman, told one executive. Sculley’s supporters stormed the human resources department to complain. As one executive observed, no one knew who was really running the company.
The civil war paralyzed Apple at the worst moment. Macintosh sales were declining, IBM and its clones were eating market share, and for the first time in its history Apple laid off employees, more than 1,200 of them, and announced its first-ever quarterly loss. The company secretly entered talks to sell itself to General Electric.
By the time the board sided with Sculley and stripped Jobs of his authority, the internal war had already cost Apple months of progress.
That autumn, Jobs left Apple and started a new computer company, NeXT. The pattern followed him. Ignoring the warnings of his cofounders, Jobs rushed out the first NeXT computer, called the Cube, in October 1988 with an unfinished operating system. The price was more than double what its target customers said they could pay. Selling only a few dozen computers a month, the company eventually laid off half its workforce and abandoned hardware entirely.
When the founder becomes the only voice in the room, the company has nothing to fall back on when the voice is wrong.
2. He built for his own taste instead of the market
Between the Super Bowl commercial, the famous keynote, and the promise of a “computer for the rest of us,” the Macintosh launch in January 1984 became one of the most mythologized product launches in American business. For the first hundred days, shipments were strong and the Mac looked poised to succeed.
But the machine had no hard drive, extremely limited functionality, and a price tag of $2,495, almost $8,000 in today’s dollars. The first wave of buyers loved it. At that price, there was no second wave. The Mac was a beautiful machine that regular customers simply couldn’t justify buying.
The commercial disappointment helped trigger the power struggle with Sculley, Jobs’s ouster, and twelve years of strategic drift that nearly killed Apple.
3. He shipped before products were ready and blamed his team when they fell apart
In early 1985, Jobs pushed Apple to release the Macintosh Office, a version of the Mac aimed at corporate buyers. Its technical heart, a device for sharing files across office computers, was severely delayed and not ready to ship. The product landed to weak sales, accelerating the internal crisis that would end with Jobs’s removal months later.
At NeXT, he repeated the pattern. After the Cube was released, NeXT cofounder Dan’l Lewin presented Jobs with a list of problems piling up. Rather than fix them, Jobs blamed the sales team. “We’re so far away from selling anybody anything right now,” Lewin pushed back. “You don’t want to hear it, but this is not a problem in sales.” So Jobs demoted Lewin and announced it in an email to the entire company.
4. He couldn’t kill what wasn’t working
When Gil Amelio became Apple’s CEO in 1996, he kept hearing the same phrase from engineers: “Steve Jobs can get away with whatever he wants, so I’m going to do whatever I want.”
By then, Apple had lost all focus. The company had released more than seventy products in a single year, including a $6,500 laptop that caught fire and had to be recalled. Apple had poured $500 million into a new operating system called Copland that never shipped. Nobody could decide when to cut their losses.
Jobs spent a decade at NeXT making the same mistake, refusing to abandon his hardware business long after his advisors told him it was finished. But when he returned to Apple in 1997, he killed 70 percent of the product portfolio. The visionary who once couldn’t let go of the beautiful black Cube had learned, at enormous cost, that survival sometimes means letting go of the product you love.
5. He treated the people he needed as obstacles
On Super Bowl Sunday in January 1985, Apple aired a follow-up to its iconic “1984” commercial. Called “Lemmings,” the ad depicted blindfolded businesspeople marching off a cliff. The message to corporate customers: you’re idiots if you don’t buy our product.
At NeXT, Jobs called his distribution partner’s stores “ugly.” He blew off lucrative meetings arranged by his biggest investor, Ross Perot, the Texas billionaire and soon-to-be presidential candidate.
So Perot delivered the lesson himself. At a dinner with NeXT executives and corporate customers in San Francisco, Perot asked all the customers to stand. Then he turned to everyone still sitting, Jobs included: “Now, everybody who’s sitting down, applaud these people who are standing up, because that’s why we’re here.”
It took twelve years of humbling for Jobs to absorb these lessons. By 1997, he had learned to step back, delegate, and let go. He chose his battles instead of fighting every one. The tantrums that had defined his management style ebbed, and instead he listened to his lieutenants in Monday morning staff meetings, implemented their advice, and built an executive team at Apple that held together for eight years.
“Sometimes I go for ‘best’ when I should go for ‘better,’” he later admitted, “and end up going nowhere or backwards.” It was the kind of admission the younger Steve could never have made.