Apple Computer Entrepreneur's Rise and Fall

By Andrew Pollack
Special to the New York Times

San Francisco --  September 18, 1985 -- In his years of guiding Apple Computer Inc., Steven P. Jobs had become the epitome of the American entrepreneur, a symbol of the wealth and power that can arise almost overnight in California's Silicon Valley.

Even President Reagan, in a recent address, urged the nation's youth to ''follow in the footsteps of those two college students who launched one of America's great computer firms from the garage behind their house.''

The tale of Mr. Jobs's visionary leadership at Apple came to a bitter end on Tuesday when he resigned as the company's chairman after disclosure of his plans to start a new company.

A Prominent Salesman

Mr. Jobs has been the most prominent salesman of the personal computer revolution, preaching that the new technology would change everyone's lives. And just as Mr. Jobs is falling, the revolution he foretold is stalling: Consumers and businesses are slowing their purchases of computers and questioning how much they really need the machines.

Mr. Jobs's resignation, which followed a long corporate power struggle, also exemplifies a situation common to the entrepreneur: an inability to adjust as the company grows larger and the nature of the business changes.

Mr. Jobs would not comment in detail today on the developments that led to his fall from grace at Apple.

But according to associates, the same vision, drive and ego that helped Mr. Jobs make Apple into a leading personal computer company also prevented him from heeding the advice of others to the point that Apple, which at one time seemed unstoppable, is in worse financial shape than it has ever been.

''He only trusted himself to be the high leader,'' said Stephen Wozniak, who founded Apple with Mr. Jobs in 1976 and has since seen his relations sour with his former partner.

Mr. Wozniak, who himself left Apple in February to form his own company, said today that Mr. Jobs ''could never see himself in second place at Apple,'' and that his devotion to pet projects made it difficult for him to make ''common sense business decisions.''

Mr. Jobs, at 30 years old a millionaire many times over, lost operating authority of the company in the spring, but remained its largest shareholder and chairman of the board. His impatience with this reduced role led him, in the best Silicon Valley spirit, to do what entrepreneurs do best: start a new company. It was this that caused the final rift with Apple's current management.

''This whole thing was so inevitable,'' said Judith K. Larsen, senior research scientist at Cognos Associates, a technology research firm, and author of ''Silicon Valley Fever,'' a history of Silicon Valley. ''It's happened over and over again.''

Indeed, Silicon Valley has had its share of instant successes and sudden failures. Nolan Bushnell had to leave Atari Inc. as it grew larger and more complex, and Adam Osborne left his Osborne Computer Company in a dispute with the management brought in to run the growing company. Both companies subsequently collapsed.

Power Struggle

Apple is not considered to be in danger of failing, although some computer analysts say the company, in a weakened condition, may be a takeover target. But the job of guiding Apple now belongs more than ever to John Sculley, the president and chief executive officer recruited from Pepsico two years ago by Mr. Jobs personally.

Mr. Sculley has declined to comment on Mr. Jobs's resignation.

But in an interview today, William V. Campbell, an executive vice president, said the company did not need Mr. Jobs. ''We've been without Steve Jobs for the better part of four months,'' he said, referring to the period since Mr. Jobs lost his operating responsibilities. ''Since that time we've been doing just fine.''

Mr. Jobs's resignation culminates a tumultuous power struggle with Mr. Sculley that began earlier this year as Apple's fortunes started to decline, a power struggle that Mr. Sculley has compared to a real-life version of ''Dynasty,'' the television program.

Sought Seasoned Manager

Mr. Jobs courted Mr. Sculley in hopes of providing Apple with a more experienced manager. For the first year, they appeared to be in great harmony.

But as Apple's financial position worsened, Mr. Sculley came under increasing pressure to exert that seasoned authority and he seized control. Mr. Jobs fought to regain his company, trying to enlist the board's help. But in May, Mr. Sculley won, and the board relieved Mr. Jobs of his operating responsibilities, leaving him with just the title of chairman of the board.

Mr. Jobs's resignation from that position was precipitated by a dispute over plans to start his own company to make unspecified computer products for the higher education market. Apple officials say they feel betrayed that Mr. Jobs might compete with Apple, since the higher education market is one of Apple's strongholds. In addition, Mr. Jobs plans to hire five Apple employees.

What exacerbated matters, Apple executives say, is that Mr. Jobs disclosed his plans to hire the employees a day after he implied to the board that he would not hire key Apple employees and would not compete with Apple. Under those assumptions, the board had even discussed making an investment in Mr. Jobs's new company.

Apple has said it is considering legal action against Mr. Jobs for conflict of interest or stealing trade secrets, although Mr. Jobs's letter of resignation said his new venture would not use proprietary Apple technology. But Apple officials say privately that the company has been negotiating with Mr. Jobs, through his lawyer, trying to reach a settlement.

Mr. Jobs defended his decision to start a new company, saying that he no longer had any authority at Apple. ''The company's recent reorganization left me with no work to do and no access even to regular management reports,'' he said in his letter of resignation. ''I am but 30 and want still to contribute and achieve.''

He said in an interview that he has no intention of raiding Apple and is surprised that Apple is reacting so vehemently to his hiring five employees, none of them top executives.

Tension Between 'Doctrines'

Such disputes are common in Silicon Valley, where companies often sue employees who leave to start their own company. ''There's a tension between two doctrines,'' said Robert Spanner, a Palo Alto lawyer who handles such cases.

On one hand, he said, employees have a right to organize and start their own companies, a practice that contributes to the development of new products and technology.

But it is illegal for someone in Mr. Jobs's position as chairman to use privileged information to help start that company or decide which employees to recruit, or to use Apple technology, he said. Mr. Spanner said he did not know enough to comment specifically on the case of Mr. Jobs.

Like many legends, the story of Apple is somewhat exaggerated, even by President Reagan. Mr. Jobs and Mr. Wozniak were not college students, but were college dropouts who hung around together in the garage at the home of Mr. Jobs's parents, tinkering with electronics. Some of their first devices were boxes that allowed them to make long-distance calls without paying.

It was Mr. Wozniak who actually did the engineering work to design the Apple II computer, which became a best-seller. But Mr. Jobs was the one who wanted to start a company and blustered his way into getting Apple a supply of parts and a topnotch public relations firm before the company was hardly out of the garage.

He became the company's visionary, conceptualizing products like the Macintosh. ''He seemed to be able to see slightly beyond the horizon when other people couldn't see beyond the end of their nose,'' said Michael Moritz, senior editor of the Technologic Computer Letter, an industry newsletter, and author of ''The Little Kingdom,'' a history of Apple.

Mr. Jobs could inspire and charm, getting people to follow him down any path. ''He was always so persuasive the way he would say things,'' said Mr. Wozniak, who, despite his falling out with Mr. Jobs, called him ''the finest technical leader Apple has ever had.''

But Mr. Jobs could also be arrogant and alienate people who worked with him and take revenge on people who crossed him. Former Apple employees say they were afraid to disagree with Mr. Jobs.

He would sometimes walk into a meeting abruptly and make unilateral decisions.

He viewed the Macintosh computer, his major love at Apple, as a perfect machine, and made it hard for other devices to be attached to it, despite the fact that the Apple II had been successful because users could so easily upgrade it with other devices.

Later Failures

Apple has been unable to duplicate the phenomenal success of its first product, the Apple II, a problem that is common among startup companies. Apple failed with the Apple III, a successor to the Apple II, and then with the Lisa. The Macintosh, the newest product, seems to be an initial success, but its long-term outlook remains clouded. Because of Mr. Jobs's devotion to the Macintosh, the Macintosh group acquired a special status at Apple, even to the point of receiving massages at their desks, courtesy of the company.

Meanwhile, necessary improvements on the Apple II were not made and morale in that department declined, prompting Mr. Wozniak, and others, to leave the company.

Mr. Jobs said Tuesday night that his new company would work on products for the education market. These products are likely to be high-powered computers that will not use the same software as Apple computers. But he said plans for the new company are still vague. ''We were going to listen to these people and find out what they want,'' he said, referring to users of computers in schools.

While Mr. Jobs will have plenty of money and talented people from which to draw, the odds of his starting another company of the size and success of Apple are exceedingly thin. The computer business has become much more competitive than when Apple started and is not growing as fast. Moreover, few entrepreneurs have managed to strike gold twice.

Apple, while having a solid management, still might miss Mr. Jobs. The company is weak in top engineering talent to guide product development. Moreover, more traditional managers like Mr. Sculley have often proved no more adept at running technology companies than the original entrepreneurs. Some analysts and former employees are worried that Apple is losing its spark and becoming stodgy, a process some refer to as ''Scullification.''

''The great sadness and the great tragedy'' of the departure of Mr. Jobs from Apple, Mr. Moritz said, ''is that both the company and he personally would be better off if they were still together.''

GRAPHIC: photo of Steven P. Jobs (NYT)

Copyright 1985 The New York Times Company