>> Anne Rudden: Good afternoon. My name is Anne Rudden, and I am here to
introduce Adam Lashinsky, who is joining us as part of the Microsoft Research
Visiting Speaker Series.
Adam is here today to discuss his book, Inside Apple, How America's Most
Admired and Secretive Company Really Works. Apple has created some deeply
loved products, but even sophisticated business people don't understand how
Apple does what it does.
Adam will tell us more about some of their unique approaches to business.
Adam Lashinsky is a senior editor at large for Fortune Magazine, where he
covers technology and finance. He is also a frequent speaker and Fox News
contributor.
Prior to joining Fortune Lashinsky was columnist for the street.com and the San
Jose Mercury News.
Please join me in welcoming Adam Lashinsky.
[applause].
>> Adam Lashinsky: Thank you very much. It's really wonderful to be here. I
want to tell you straight off the bat that I'm doing this presentation on Power Point
and running off of PC. A dirty little secret that I've been waiting to reveal until I
got here is that I wrote the book on a PC in Word. So thank you. Thank you very
much.
I have to get some things off my screen. There we go. And one other sort of
opening comment is that I know that a lot of people when they begin a talk ask
people to turn off their telephones or to close their laptops.
I would like you to do just the opposite. I'm assuming that if you are looking at
your phone or your laptop that you're either tweeting or on Facebook. I'm Adam
Lashinsky on Twitter and Adam Lashinsky also on Facebook. And you're more
than welcome to comment on what I'm saying.
So -- and one last very important caveat. I have spent more than the last year
researching Apple. And there are, in fact, in my book some comments
comparing Apple and Microsoft from people who are in the position to make
comparisons. But I, however, have not been studying Microsoft for the last year.
So I'm more than willing to have a conversation in the Q and A with you about
comparisons between the two companies and I'll be delighted if you draw your
own conclusions in terms of compare and contrast from the things that I said.
But it's not my goal here to necessarily do that, compare and contrast for you, but
they'll be -- there will be elements, including in some of the images that I show
that will reflect on these comparisons. So I'll leave some time so that we can get
into it together when I'm done.
My overarching these of the book is that Apple behaves differently in almost
every way from other businesses and, in fact, disregards much of what is taught
in business school. And Steve Jobs had a low opinion of MBA programs and of
the curriculum in business schools. Which is one of the reasons why toward the
end of his life he created Apple University which he thought of as being an Apple
MBA.
And I'll get into some of the specifics. The highest level difference between the
Apple way and what I characterize as the other way and the one that still strikes
me as the biggest realization is Apple's aversion to the notion of general
management. Apple doesn't like the concept of a general manager.
Jobs saw no reason why he should have jacks of all trades working in the
company. He valued people for their expertise, and he saw -- he also thought
that it would be a mistake to take somebody who's doing a really good job for the
company, for the shareholders, an expert on their domain and move them around
to broaden them.
We all understand why it's good for that person to broaden them, but it's a little
bit less clear why it might be so good for the shareholders or for the product to
move these people around. And it's a theme that I want you to think about
because I'll come back to it in other ways.
A moment on -- before Steve Jobs came back to Apple in 1997. This company
was a fallen idol. And one of the things that occurred to me as I was thinking
back to 1997, because that was the year that I moved to Silicon Valley and joined
the San Jose Mercury News is just how relatively irrelevant Apple was at the
time.
And to set the scene for you, I was -- having joined the San Jose Mercury News,
right around the time of Gil Amelio's firing and the Microsoft 150 million dollar
investment in Apple I was sort of taken aback by the home-town boosterism for
Apple in the news room at the Mercury News. The Mercury News, in my opinion,
had bought into this notion that Apple's our team and Microsoft was the opposing
team and was the bad guy.
And I said, you know, look, that's all very interesting, but we're business
journalists and it seems preposterous to me that we would ignore the most
important -- not ignore, but that we would have a sort of an emotional opinion
about the most important company in the industry at the expense of the
home-town company which really isn't that important anymore. That was not a
popular opinion for me to take.
But when Jobs came back, it's now been repeated many times, the company was
90 days from insolvency. Its supply chain was a shambles. It owned far too
much inventory and had factories all over the place, including in the United
States. And it behaved -- there were multiple chiefdoms and multiple products
within Apple in 1997, when Jobs returned.
And the example that I used to illustrate this is that there were -- Jobs confronted
16 advertising budgets when he returned to the company. And one of the first
things that he did, along with slashing the factories and slashing the product
lineup, killing printers, killing the Newton famously, was also eliminating those 16
advertising budgets.
He said no longer are there going to be 16 budgets. There's going to be one.
And if you think your product deserves advertising support, then you come to me
and make your case, and I'll decide if you're going to get advertising support.
And the result was an increase in advertising spending over time. This was not
about cost cutting, it was about controlling the message centrally, which is
another theme that's consistent.
I want to talk about leadership. And this is Narcissist, the god who was in love
with -- in love with himself. And the -- in the book I discuss the business coach
and psychotherapist Michael Maccoby, who wrote a fantastic Harvard Business
Review article called -- and a book, a subsequent book called Narcissistic
Leaders.
And I was -- the narcissist is someone, obviously, who is visionary, who doesn't
care what anybody else thinks, who is willing to take great risks, who does not
care if they're loved but expects to be followed and is charismatic.
And Maccoby adds on to this the productive narcissist. He in his practice would
coach business executives whom he diagnosed clinically as being narcissistic, to
channel their narcissim in a productive way so they could screen out some of the
bad tendencies of a narcissist and focus them to productive gain for the
company.
And as I was reading this article for the first few pages I thought he's writing
about Steve Jobs and he hasn't mentioned Steve Jobs' name yet. And then he
does mention Steve Jobs. And he uses them as an example.
This is not a derogation by the way to refer to him as a productive narcissist.
Maccoby sees it as an accurate psychological Jungian description.
By the way, the two other categories that Maccoby talks about -- and these will
be people that you will recognize in the room and we all have elements of all of
these characteristics, although Jobs probably didn't have the third one. The
second is a productive obsessive. The narcissist needs an obsessive as a side
kick to get things done. Because the narcissist is not interested in details. At
least not boring details. Maybe important details but not the mundane stuff of
business.
The third category is what Maccoby called erotics. Erotics are people who do
need to be loved, who are very good team members. They want to work to help
the team succeed. They are very hurt if somebody criticizes them or if they are
not being valued or respected. These are not people who typically will be
leaders. But that doesn't mean that they can't be very good team members.
And my point is the sort of unusual observation or to put a -- I don't know, an
academic patent on this observation of how Apple had been run for the past 15
years by this prototypical productive narcissist.
One of the central tenets of business I think in our modern day is that good
managers push decision making down into the organization. They empower their
people to make decisions and to get things done. That is not the Apple way.
Jobs was a famous micromanager, and the people beneath him micromanaged
as much as he did. In my book I described the interchange that he had with the
person whose job it was to write a product news release e-mail that would go out
simultaneously with the big keynote at the Moscone Center. And this person
went back and forth with Jobs over and over regarding the punctuation in the
e-mail, the comma or the semicolon.
You know, I tell this story, and some business audiences are not surprised by
this at all. I say, yeah, my CEO would do that. I find it surprising that he would
chew up the kind of time it would take to go over grammar in an e-mail.
A hallmark of Apple's business culture is its secrecy. This is a chapter in my
book and it was an excerpt in Fortune Magazine. And I think it's come to define
what my book is about. It's not the only thing my book is about, their culture, but
their culture is one of secrecy. And secrecy is multifaceted at Apple. And my
line is that all companies keep secrets. At Apple everything, but everything is a
secret.
They have a sense of humor about this. This is a T-shirt that you can actually
buy at the company store in Cupertino that's open to the public. I visited the
Apple campus, but that's all I'm allowed to say. I just love this T-shirt. I bought it
for my editor at the height of our stress getting the book done and sent it to him.
This is -- Apple's very aware of it. Its culture of secrecy is unique and a little bit
extreme.
The -- but here's how the secrecy works. It works with threats. And the hallmark
of the new employee orientation on your first day at Apple, and it happens every
Monday, is the security briefing. The security briefing, a security official explains
to the new recruits why secrecy is so important, that secrecy, keeping our
products secret for example is worth untold hundreds of millions or billions of
dollars to the company. And if you divulge our secrets you'll be punished, you'll
be fired and may be sued on the way. And this is on your first day of work at
Apple.
So why keep secrets? The obvious reason is to -- is so that the public will be
delighted when they receive the beautiful products that you're going to sell them.
And I think this is an important topic in the technology industry because Apple
has -- Apple really goes against the grain of how the tech industry works. Most
of the industry signals what its products are going to be for quite some time. And
we all know there's good reasons for signalling what your products are going to
be.
You want to -- in particular because you want to give developers the time and the
opportunity and the nurturing that they need to have their products ready for your
products. Apple does this, of course, but they do it in extreme secrecy so that
word won't get out to the public.
There's like a business 101 reason for doing this as well. We all know it. You
have a product on the shelves and, even more importantly, in warehouses. And
you let the public know that a new version is coming very soon. Guess what, you
just killed the value of the product on the shelves and the value even more so of
the warehouses. Those are never going to get out of the warehouse, at least not
at a profitable price point.
Multiple Silicon Valley companies have screwed this up over the years. And this
is something that Apple rarely -- not never, about it rarely screws up.
The -- they take secrecy to an extreme. I really enjoy the anecdote in my book of
someone I know who plays in a regular poker game with Apple employees. This
person does not work at Apple. And, you know, my opinion, from my time in the
Valley, and I would think it's consistent with the engineering culture in Redmond,
is that engineers like to talk about their work. Journalists certainly like to talk with
other journalists about their work.
No one goes out of their way -- you don't reveal what you're working on in any
great detail, but you do like to talk about the technical aspects, what languages
are interesting to you. I don't know. I shouldn't veer into assuming what
engineers talk about. But I think you get my point.
Apple people don't. And the anecdote from the poker table is when the subject of
Apple comes up at the poker table, the subject is changed.
Now, the -- my realization working on this -- working on this book was every
company tries to keep its secrets from the outside world, they keep secrets from
journalists where appropriate. The difference at Apple is how Apple keeps
secrets from its own people. In a age when transparency is the norm where at
Google, for example, one of the justifications -- I don't know if they still use this,
but in the early days the justification for all the free food was the hope that people
would meet in the cafeteria and they would talk about what was going on and
what they were working on, and they would meet people from other parts of the
company and share ideas.
Apple people don't do this. They're discouraged from doing it. And I liken Apple
employees to horses fitted with blinders. You do not look left, you do not look
right, you focus on what you're doing. And what you're working on is none of my
business, and what I'm working on is none of your business.
Now, this sounds harsh, and perhaps it is. But one of the over and over I would
hear people say with a straight face that below a certain level Apple is not a
particularly political organization. And I came to understand why. If you don't
have any information, you can't play politics. And so this is one more way that
the company focuses. Because again I'm making a generalization, but people
focus on their job. They come in. They don't multitask, by the way, because
they're not asked to do 17 things, they're asked typically to do one thing.
And that, by the way, extends to how they learn about things when, to this day,
even in the age of streaming video when Apple -- when Apple senior
management does a public key note for the likes of me and the Apple employees
will gather in the cafeterias in Cupertino, and they'll watch on closed circuit
television to see what's being announced. This is the first time they're going to
see the product also. And that includes the people who worked on the product
because they'll only be familiar with the feature that they worked on.
And there will be this, you know, sense of pride, sense of accomplishment, and
then they get back to work. It's not a culture of back patting or celebrating
achievements.
Apple has a culture and a language around the notion of disclosure. And that's
the word that they use. The question will be are you disclosed on the topic? If
you're not disclosed on this topic you don't believe in a meeting, I can't talk to you
about it. And people have described to me this Kabuki, this awkward dance of
trying to figure out how do I broach the subject of whether or not you're disclosed
if I can't really mention the subject that is -- that we're talking about? [laughter].
They will go so far as to have, you know, badges -- badges are not one size fits
all at Apple. Badges only get you into where you have authorization to get. I've
been told more than once by people that they could go certain places that their
superiors couldn't go because they were allowed to go to this room and others
weren't.
And Apple is famous for building special rooms where once there were clear
glasses, now there's frosted glass. Once there were no walls, now there's walls.
The carpenters have come in and built walls, put in new security, badge system,
and then only the people who are working on this project are allowed into that
lockdown room.
And as I describe it, if you don't know what's going on in that room, that's
because you're not working on that project. And you know enough, if you've
been there for a while, not to ask. You would have been told if you were
supposed to have been told.
Don't try to read the writing. It actually is highly accurate but it's hard to read
from a distance. This is Apple's org chart. And I created this org chart in Fortune
-- a variation of this org chart in Fortune Magazine in May of last year. Steve
Jobs was the sun king in the center of this when we published the magazine
article. And I have come to think it's a little less dramatic with Tim Cook in the
center.
But the point is to show -- by the way, what I love as a journalist is that org charts
are a very controversial topic at Apple. Apple doesn't do org charts. They don't
print org charts. People were, I was told, were nervous to have my org chart on
their desk at Apple.
And this goes back to the secrecy and almost this paranoia of people
understanding on the outside what goes in on the -- what goes on on the inside.
And I think what's startling about the org chart is that the CEO really is no more
than two levels removed from all the important vice presidents in the company.
And they only have about 70 vice presidents out of like for 26,000, 27,000
non-retail employees.
Jobs of course was famous for reaching down wherever he felt like it and far
below the vice president level as well for getting information from Apple
employees. I don't know, and I don't think we really know yet how Tim Cook will
compare in that regard.
I think it's well known by now that Apple sweats the details. It's a detail oriented
company. They have enough managers who are productive obsessives running
product. The details are important across the company. And what I've found is
it's an amazingly consistent company.
So any time I'm talking about design, I might as well be talking about marketing
or human resources or any of the other functions. And the detail that I write
about in the book has to do with a packaging room, the packaging design room
where I describe a packaging designer whose job it was to figure out exactly
where to put that little piece of cellophane tape on the iPod box that we peel off
when we open the box.
And there were someone 50 prototype boxes in the room. And this person spent
a matter of weeks practicing taking the tape off. The sticker I guess would be a
better -- sticker would be a better way of putting it.
Seems odd, but I tend to get a lot of head nodding when I ask has anybody ever
-- this is a contentious thing to say here, but does anybody remember the time
they first opened an iPod box or an iPhone box and it came off perfectly and the
phone came up and you took it out and everything was very neatly put together.
And you get a sense for their attention to detail.
Jobs was quoted many times saying that -- explaining why Apple doesn't do
traditional market research or customer research or focus groups. His attitude
was why would we ask people about products that they don't know that they
want? That's our job is to design those products and give them what they want.
I just like this imagine of the faithful standing in line in the rain outside the 24 by 7
Fifth Avenue Apple store in New York City.
It's well known by now I think that one of the hallmarks of Apple's success is its
tight integration. Jobs spoke at length in his later years about the importance of
integrating hardware and software. But it's not just hardware and software. It's
all the other functions of the company.
And this part's important, with design being preeminent. And obviously design is
important for every manufacturer of everything. It's my sense, and I may have
drunk the cool aid on this too much, but it's my sense that it's unusual the way
that the -- the seat at the table that design has at Apple, that they're willing to
sacrifice other things for design, that it's unfathomable for a financial person to
tell Jonathan Ive, head of design at Apple how something should go. We can't
afford that. Or a material science person to say that can't be built. And his
attitude, with Jobs' support, obviously, has been no, this is what it's going to look
like. Now, you go figure out how to build it, and you go figure out how we're
going to pay for it.
It's truly unique.
One of the -- please brace yourself. One of the hallmarks of Apple's approach -oh, I just realized it says Apples says no more than yes. So I need to fix that. Is
the power of saying no. Jobs would say that it's as important or far more
important to say no than it is to say yes. And the saying no at Apple again is
multifaceted. Apple says no to new products. It says no to features on its
products. It says no to industries that it will go into. It has famously said no for
years now to targeting the enterprise. And we know how that's going for them
right now, showing no love but getting a lot of traction because people who work
at companies in the enterprise happen to be consumers who buy Apple products.
And this comes under the rubric, I think, of discipline. It's been an incredibly
disciplined company. And I think it is hard to say no. It's hard for all of us to say
no. We want to do the next thing.
And I think it's well illustrated by -- and again, with apologies, this graphical
representation of, you know, what you get in the box when you buy a PC from a
retailer take your iMac out of the box.
Apple says no in ways that are interesting to me as a journalist as well. We'll
never know, I don't think, why exactly they pulled out of Macworld but I think their
explanation was at least one version of the truth. If you remember -- I can't
remember the year. I want to say 2009 Apple announced that that Macworld
would be its last. And it was right around the time of Steve Jobs' medical leave.
And so there was speculation we're not going to do Macworld any more because
Steve can't do Macworld. I buy at a certain level their public explanation, which
was no, we just don't see the value of putting all this energy into somebody else's
event anymore, when we can -- when we do our events and we have our own
dialog with our customers if the retail stores every single day around the world.
And so they basically, you know, flipped the bird to Macworld and stopped going,
this event that had been their primary promotional vehicle for so long. And
having just been in Davos a couple weeks ago, I'm just personally amused that
the notion of a Microsoft executive, I'm sorry, excuse me, an Apple executive,
any Apple executive sitting in a chair on stage at the World Economic Forum in
Davos. They're just not there. It's just completely outside of their cultural
makeup to be in Davos.
And I'll eat my words on this when an Apple executive shows up in Davos. But
I'm not too concerned about that happening any time soon.
Some aspects of the Apple work culture. I wrote in my May article about the DRI.
It's been around at Apple for a long time. It actually precedes Jobs' return to the
company. The DRI stands for the directly responsible individual. You go to a
meeting, there's a list of tasks. Next to each task is a name. That name is the
DRI. It's so simple. And yet all of us know companies that don't do it well. And I
personally began last year to make myself a little obnoxious around my
magazine when I would ask people so who is the DRI on that. And they would
say, yeah, right, shut up. [laughter].
But hoakie or not, it speaks to a culture of accountability and responsibility. This
is the person who's going to be on the hook if it doesn't go right. That person's
the DRI. I mentioned Apple's aversion to general management. And the flip side
that is that it's a massively functional place. And I spoke about that already.
People are -- they go very deep, and they have responsibility across the
corporation for what they do. The example I gave in the book is that the Apple's
graphic arts department chooses photographic images for everything, for the
website, for the marketing collateral, for the Apple stores. Any other company
would have individual people in their -- in theme units responsible for graphical
images. And that's not their way.
There's many more examples like that, mostly including the fact that -- and this is
truly radical, I think, that the lack of individual P&Ls for parts of the Apple
business. It's one company with one P&L. The CFO owns it. It takes a lot of the
burden about thinking about money away from managers in other parts of the
company. Their job is to make product or market product or procure product, not
to -- not to worry about profits.
Not to say they don't worry, but anyway, you get the point.
In selected ways, Apple's been very good at behaving like a startup. It is not a
startup. Make no mistake. And I'm not trying to suggest that it is. But it's been
very good at taking small groups and having them work on important projects
and trying to emulate the best the best of a startup. And so I liken them to -these are rich kids doing a startup because they're in a small group, they're hived
off separately. But they've got some very good resources from daddy. That I got
Apple's balance sheet to do this startup.
Small numbers are an important part of the company. And I wrote in May about
the top 100, which is this highly secretive, highly selective group that Jobs would
put together approximately once a year, when he was healthy, take these top
people, not by rank, by the way, necessarily by rank, but by who he thought were
the hundred or so most important people at the company, and he would do an
offsite, someplace in Santa Cruz or Carmel, the Monterey Bay area and just very
Apple-like, he insisted people attending a top 100 go there on a bus that would
leave the Cupertino campus and drive down. He didn't want anybody driving
them self.
I have this image of these executives who over the years are worth tens or
maybe even hundreds of millions of dollars getting on the coach bus to go down
to Santa Cruz for a meeting. He didn't want people putting it on their calendar.
He didn't want people doing work while they were there.
He would have the room swept of bugs to make sure that you all weren't
monitoring what was going on at a top 100. But the point is that secrets were so
tightly held among a much smaller group that he wanted these people who were
leaders in the company on a fairly regular basis to understand the roadmap of
where things were going but not to be confused with doing this at an all-hands
meeting. That's not where these types of things were going to be discussed.
Apple's a very good marketer, obviously. And one of the hallmarks of their
marketing is staying on script. And I have a lot about this in the book. I think a
hundred -- a thousand songs in your pocket is an example of sheer genius. They
were describing a product that already existed on the market. There were
probably MP3 players could give you a thousand songs at the time. But they
came up with the idea of a thousand songs in your pocket. And repeated it over
and over and over until we started repeating it.
One of my favorite anecdotes in the book is about the launch of the iPhone. And
I quote one of the executives who was one of the very few people who was
authorized to speak about the iPhone publicly. And his point to me was here's
how you control the message. You work on the script of what the marketing
message is going to be. Then you're going to go do media interviews. And you
do many, many media interviews. And promoting a book I understand now what
he's talking about, doing many, many interviews.
He said intellectually you're going to be want to deviate from the script because
you're just going to want to amuse yourself or entertain yourself. But your
listener's hearing it for the first time, so you need to deliver it is the way you were
taught. And the reason you want -- you do that is that you want the listener to
repeat the script to whoever they're going to talk to, to their friend so that now the
message starts coming back into the public realm of exactly what the script was
of what we've already agreed on to sell the product.
A hallmark of Apple marketing for years, even before the company was blessed
with 100 billion dollars in cash, the way that it is today, is that Apple will spend -will spend anything to market and to obviously to make but to market its
products. And the story I just love is of the launch of iMovie HD in 2005 at
Macworld. If you remember seven years ago, HD was new. There weren't a lot
of cameras. There weren't a lot of televisions that played it. But Apple was going
to go ahead and release an HD version.
It wanted demonstrate the beauty and the value of hi def. So jobs said he
wanted a wedding. They knew by the way that weddings were a popular use for
iMovie, which is, you know, interesting. It's not that they don't pay attention to
how customers use the product. That's different from not doing customer
research.
So they -- an apple employee allowed her wedding to be shot. And they shot this
beautiful elegant wedding at the Officers' Club in the Presidio at San Francisco.
They showed the clips to Jobs. And he said in so many words I don't like it. And
it was too elegant. It was beautiful but it was somber. That's not the image we
want.
He said I want a beach, maybe Hawaii. I want feet -- bare feet in the sand. This
was three weeks before Macworld. And so the team found an actress or a
model, I can't remember which, but a beautiful bride, obviously, very important in
Apple marketing. You all know this. Unless they're portraying someone not
associated with Apple [laughter] and they're not beautiful. You know this. Who
was having a wedding right before New Years Eve. And in Maui. They sent a
crew at tremendous expense. They offered to pay for the flowers and to send a
video as compensation for, you know, interrupting this person's wedding.
And they shot the video. They got it back to California. They showed it to Steve.
He approved it and they put a 30 second clip in Macworld. There was some
collateral also I think in retail stores and maybe in the hallway afterwards. And
that's a still image of what they did. They spent a lot of money on it. And they
didn't care about the money.
I mention to you that any -- that it's a consistent company. And on this point of
the marketing, the marketing is all about being -- is all about simplicity. And this
is a wall, this is a re-creation of an actual wall in a marketing building on the
Apple campus. As the people who work in marketing walk in the building they
have to go around this wall every day to get to their desks. And except that's not
what the wall actually says. That's what it says. [laughter].
And so, you know, imagine having this point hammered home to you every day
you come to work. You begin to get the point of why we look at commas and
periods and semicolons.
Apple as you know has a unique way of dealing with people like me. They keep
the press at arm's length with interesting exceptions. They lavish attention on
product reviewers. And I know you all do. But they will go to amusing length in -for product reviewers. These two fellows in particular. And I encourage you to
read in my book what -- how Apple reacted when David Pogue, who is a very
friendly fellow wrote in and said there's something buggy about my Apple TV.
They got on it really, really quickly, which is different from the reaction I get if I
have a question about something that I'm doing. [laughter].
They understand, by the way, that celebrity is very important, public image is
very important. And I really love the anecdote in my book about when this guy,
Harry Connick, Jr., sent Steve Jobs an e-mail having to do with a problem with
his monitor. And Apple has a culture of escalation. Jobs sent the e-mail to
Cook, Cook sent the e-mail to somebody in the supply chain organization who
sent the e-mail to one of their employees who got Mr. Connick, Jr., a new monitor
in 30-some minutes.
One last point before I go to you, and that's on the future of Apple. And I know
I've spent however many minutes now talking about how wonderful it is. A very
important topic going forward is how they're going to face their challenges, not
only without Steve Jobs, but being at the other end of what was one of the most
amazing 15-year runs in the history of the corporation. I maintain they could
never have expected to have another 15 years like the last 15 years even if jobs
were alive and well.
And one observation I make, one of these paradoxes of Apple is it's an extremely
entrepreneurial company, it behaviors like an entrepreneurial company. At least
that's how it looks from the outside. But guess what, there aren't a lot of
entrepreneurs in the company. And there are currently no entrepreneurs on the
executive team. Steve Jobs was the entrepreneur at Apple. Tim Cook's an
IBMer, for gosh sakes. He bled blue before he went to Apple.
Scott Forstall has never worked for a company that Steve Jobs wasn't the CEO
of. He graduated from school and went to NeXT and then went to Apple. And
Jonathan Ive in the rare interviews that he gives has been quoted saying when
he had his own design consultancy in London he didn't particularly care for the
business angle of it. And that's the impression that Apple people have about him
as well. He's this brilliant designer but not somebody with a passion for
business. And it's jobs, like Bill Gates, was an incredibly shrewd businessman in
addition to all of his other qualities.
I think I'm right around where I like to ask you for your questions. So that's my
brand new website and my Twitter handle. And I thank you for your attention. I'd
love to talk about what you want to talk about.
[applause].
>> Adam Lashinsky: Thank you. Thank you. Right up front.
>>: Adam, you give a big objective about understanding to us what Apple is and
how they [inaudible]. What is your subjective opinion of Apple?
>> Adam Lashinsky: You know, I admire your effort to bait me into that.
[laughter]. This only occurred to me after the article in May when maybe
someone made this observation to me, or if I came to it on my own, I can't
remember, that my tone in the article, and I think my tone in the book is relatively
non-judgmental.
So I find that what I write about the workplace, for example, is a real Warshak
test for readers. Because people come to me and say what a horrible place to
work. And I haven't felt that. I've felt that it's demanding and really tough, maybe
not particularly pleasant, but excellent.
And so, you know, I've tried not to -- I think I've been served well by observing,
reporting, describing, and analyzing and that I don't have to say whether or not I
like it, because I don't think it's -- I don't think it's relevant whether or not I like it.
Yes. Please.
>>: Jobs was the ultimate control guy, and I they probably kept the company
Marching in exactly his direction.
>> Adam Lashinsky: Yeah.
>>: To what extent, now that he's gone, do you think the executive team will go
in the same direction or pursue some other interests?
>> Adam Lashinsky: Well, as individuals, I mean, or take the company in new
directions?
>>: You reported about Forstall and, you know, he's got some ambition. Do you
think they'll stay together as cohesive as when he was there or not?
>> Adam Lashinsky: No. I mean, they can't stay as cohesive as they were. And
I think this plays into what I said about it would be unrealistic to expect them to
do as well over the next 15 years as they have. You know, there's some weird,
weird history if you think about it. So the top team stayed with him for a very long
time. And when they left, they tended to be exhausted and rich, and they retired.
And the few who went out and did something didn't do particularly well at it. So
we have shockingly few examples of senior Apple people running things of
importance.
And you contrast this with ex-Microsoft people and ex-Oracle people, for
example, who are, you know, ruling the roost all over the place in the technology
industry and beyond. And so I think that would have started to break down a little
bit anyway. These are human beings, all of them, as far as I know.
And so I think -- these are -- that's one example of the many challenges that
they're going to have.
Having said that, two things. One, I think he really did imprint the culture of
excellence. And he stamped the culture with his DNA. And they'll continue to do
certain things his way because that's their way.
And so, for example, I think design will be continue to be preeminent. Now, the
burden's going to be on having good design. And if they have bad design they'll
fail because of that, but I think they'll fail that way rather than fail by being timid or
by all of a sudden letting the accountants call the shots. And, you know, I -- I
have a quote in the book from Avie Tevanian a long-time senior software
executive speaking to me before Jobs died. He said, you know, when -- after
Steve is gone, the competition still won't have Steve Jobs.
All the way in the back. Yeah.
>>: There's some news about Microsoft employees gave I think over a hundred
million dollars to charity this past year.
>> Adam Lashinsky: Yeah.
>>: But we don't hear anything about Apple ->> Adam Lashinsky: No.
>>: I was wondering about that sort of perception of the importance of charity
within that company or whether it's just secondary to everything else that we do.
>> Adam Lashinsky: There isn't. So Jobs personally felt that it wasn't the
company's job to be philanthropic. He was not philanthropic by all accounts. We
may finds out that that's not true, you know, that he gave some secret money.
But there's no evidence of it.
And he told senior executives that he, for example, is politically very liberal and
he didn't think it was his place to give the company's money to causes that were
of interest to him. He'd rather make money, let the shareholders give away their
money.
One of the -- the first public move that Tim Cook made as CEO was to institute a
philanthropic matching grant for US employees up to $10,000. And he noted that
this was something that employees wanted.
But you put your finger on it, Jobs was unapologetic about the fact that this was
of no interest to him and he didn't think this was a proper corporate function.
Furthermore he would get very steamed about employees who wanted to have
prominent roles in philanthropic organizations outside of work. He wouldn't
necessarily stop them, but he definitely didn't want the Apple name to be
associated with it. That extended to for-profit things as well. He didn't want
people being on boards. Unique individual, right? It's not a popular position.
Yeah?
>>: I know it's hard to make a general statement, but are Apple employees
happy?
>> Adam Lashinsky: I reported on this a lot, and so I would -- there was a period
where I would ask people, is it fun to go to work at Apple. And people would
dodge the question. They would say people at Apple have a really strong sense
of mission. And I have would say yes, but is it fun? [laughter]. And they would
say there's a tremendous amount of pride of the accomplishment of the
company.
And I'd say okay, even I get it. I don't want to portray it as a joyless place. I think
that would be unfair. For example I hear stories about, you know, engineers who
have always dreamt of working on a Mac since they bought their first Apple 2 E
as -- in junior high school are in hog's heaven working -- you know, working on
Mac software.
And I have every reason to believe those people are, in fact, happy. But I am
comfortable saying that as a generalization it's not a joy full work environment.
>>: How about their turnover?
>> Adam Lashinsky: Yeah. So -- well -- her question was what about their
turnover? Success is a real good tonic for this sort of thing. And so is a stock
price that goes from, you know, 11 or something to 400 something. And it's also
-- there's also something about being on the winning team. You'll tolerate a lot to
be able to say that you're on the winning team.
So I've been told that turnover is relatively low, that it's difficult to take engineers
out. But this sort of thing is -- I don't have data on it. They do, but they don't give
that out. And this stuff becomes very anecdotal. You certainly hear stories in the
Valley about them getting raided. And I think it's happening more and more, as
you would expect. But I don't think it's been viewed as a big problem.
I am fast -- I know they're following all the coverage of my chapter about the
workplace. And I'm very interested to see how that plays out for them.
>>: Can you speak a little bit from a journalists perspective? What was some of
the challenges you faced writing a story about -- a book about Apple, how long it
took? And how did you overcome some of those challenges with their secrecy
and some of the kind of cryptic answers you were getting.
>> Adam Lashinsky: Sure. So here's the beauty of it. As an investigative
journalist, and I come from a place that prides itself on good access to
corporations. And I've done plenty of those stories over the years. I found it
incredibly liberating to do it the other way and to have -- we have a very cordial
relationship. I call and I say here's what I'm doing. Would you like to cooperate?
No. [laughter]. Okay. Well, I'll keep you informed. I'll let you know about my
timing, I'll let you know what I'm going to say. I'll give you an opportunity to
comment. I'll run facts by you.
And I say liberating in the sense that I then go do my thing with no interference
whatsoever, no meddling. And so my reporting is just very traditional shoe
leather reporting of I call somebody and I ask them to talk. And then I say who
else should I talk to, and I go talk to those people.
And you asked me about timing. I've spent most of last year working on this in
one form or another. And I'll say the article really helped the book. So I talked to
a lot of people for the article. I quoted a lot of them anonymously. I went back to
all those people and interviewed them again for the book. And I called way more
people who by this point had read the article. And they said I know you. You
wrote a fair portrait of the company.
And one last thing is I found -- so Apple's position, by the way, is that there's only
one subject they want to comment on, and that's their products. And they'll
comment on that on their timeframe, not yours. But they want the coverage by
journalists to be about their products. Any other subject is not of professional
interest to them. I respect that. I totally get it.
But when I cautious I'm sorry. I lost my train of thought on ->>: [inaudible] products, their schedule [inaudible].
>> Adam Lashinsky: Thank you. Apple people disagree -- the Apple people
would like this story to be told. They're very proud of the company's
accomplishments. It may be a tough place to work but they think they've done
great stuff and it annoys them or it pains them maybe would be a better way of
putting it, that no one's written the kinds of story that I wrote. They liked it. And I
think many people -- I know many people internally did as well.
So my point is there was a willingness among the alumni to cooperate despite
the fear of pissing off Steve Jobs.
I'm going to go over here and then [inaudible].
>>: So obviously on [inaudible] working very well ->> Adam Lashinsky: Yeah.
>>: So to what extent, in your opinion, is can be emulated by other companies,
including Microsoft, in a successful way, if we wanted to.
>> Adam Lashinsky: If you wanted to. How could other companies emulate
Apple, including Microsoft. I'm not going to tough the Microsoft thing with a
10-foot pole here.
You should go to your cafe and coffee shops and discuss that and tell me what
you come up with.
But I've described this as a -- something of a don't try this at home type of thing,
or try it with caution. But I do think -- and you have to be through the book sort of
chapter and verse and say could we do this, could we do that, no, yes, no. I
think every company could be better at focusing its message. I think every
company could be better asking the honest question, is this something we really
want to be doing? Should we have said no to this instead?
I think every company should say is this a product we're proud of, that we wanted
to build because we want to use it? And so on.
And so I'm not advocating that any company be so closed off to journalists as
they are. And by the way. I'll tell you straight up. I said it many times. I've
always admired the way Microsoft is willing to engage its critics in the press in a
very fair way. Microsoft's company is you want to come in and take the time to
tell us what you're going to write, generally we want to take the time to comment
on that. Love that. I respect it and admire it. But that's just -- that's not the
Apple way. Yes?
>>: Do employees talk to you about the manufacturing problems going on in
China at all?
>> Adam Lashinsky: No. I didn't focus on the manufacturing problems -- the
issues at Fox Com that the New York Times has written about recently. And I
don't have any good reason for why I didn't. I may have felt that it wasn't central
to the story that I was telling.
And so this is, in fact, Tim Cook's first big PR test. And he handed deviated from
the script yet in that they didn't cooperate, they didn't comment. He really hasn't
said anything other than that one employee memo that was leaked, that was
defensive and emotional but didn't say anything.
And so I -- but I will say that I believe that they're really flummoxed by this. I
believe that they do care, that they believe they have tried to do the right thing in
China. I think they feel picked on. In fact, I would state it more neutrally. They
are being picked on.
The New York Times I think was fair in saying we could have written this about
any consumer electronics company. I haven't seen if anyone's queried Microsoft
yet, but Microsoft will need to have its answer ready on this, because I assume
that, you know, phones with the Windows license in it are made and other
devices are made in factories in China. And Apple is very -- Apple has an
underdog culture. Apple is not used to being the top dog. So this is an
uncomfortable position for them. Yes?
>>: I don't hear a lot of Apple bashing at Microsoft. I'm just curious at Apple if
there's Microsoft bashing. [laughter].
>> Adam Lashinsky: I think people would follow Jobs -- would have followed
Jobs' lead on that, and I think Jobs slowed down his or diminished his Microsoft
bashing over time and he switched targets with Google being his favorite target
toward the end of his life.
But I don't -- you know, I know people who have worked at both companies and
that's a subject that they like to talk about. But I wouldn't characterize it as
bashing. And it hasn't come up in that way. Yeah, right in front.
>>: Before Jobs stepped down, there was a lot of accounts that he was
rearranging the company to put Jonathan Ive pretty much in complete
operational power. Now, that Tim Cook's the CEO, do you see that changing?
Because it seems like because design is a big Apple thing it would make sense
that Jonathan Ive would have complete operational power pretty much.
>> Adam Lashinsky: No, I don't agree. I never -- I never saw that in any credible
source. And the Apple people I talked to say that that would be a preposterous
thing to do. He's not a operational person. And he's very powerful. But he
doesn't need operational control of the company to have that power.
>>: But in terms of, you know, how Jobs tended to make a lot of the choices in
the product and had final say, from what I understand Jonathan Ive is kind of
assuming that role. Is that true or ->> Adam Lashinsky: I think it's speculation. I think it may well be true, but -- that
they would deputize him, as it were, to make key design or key product
decisions. But I don't have anything on that. And I haven't -- you know, I try to
read everything credible. And I certainly haven't seen anything credible about
that.
>>: So we're coming up to [inaudible].
>> Adam Lashinsky: One last?
>>: One last.
>> Adam Lashinsky: Okay. I should -- oh, I feel like I -- yeah, thanks.
>>: So you said that Apple effectively works by predicting what people will like,
right? Between let's say the Apple II and the iMac they weren't terrifically good at
doing that. They had a lot of products that would come out and people would go
okay that's need but they wouldn't buy the products.
>> Adam Lashinsky: Right.
>>: Starting with the iMac, everything started to work.
>> Adam Lashinsky: Right.
>>: What changed?
>> Adam Lashinsky: Well, to give you a pat answer, Steve Jobs changed.
>>: What really [inaudible].
>> Adam Lashinsky: Well, my sense is that he learned a lot and made an awful
lot of mistakes at NeXT. And he was a better CEO when he came back. He had
ideas about structure that he didn't have before. So he restructured how the
company worked and got it pulling in one direction the way I described.
I described to you that they -- that they -- that they -- that he gutted the product
lineup and got the company to focus. I mean, maybe a short substantive answer
to your question is during that period they weren't focused. So it's not one thing.
But that would be one very important thing. He got the company focused on
doing just a few things.
>>: So if they had done the right subset of all of those products that weren't very
successful, do you think they would have succeeded?
>> Adam Lashinsky: I think that doing all of the products prevented them from
getting to the right subset. And but make no mistake, you're raising an
interesting issue which it is a hit driven company and it is a bet the company
company. Now it's ameliorated a little bit by the success of the Mac to be over
these past 10 years. It's a cash cow now, which can cover up some sins.
But if the iPad had been terrible, that would have been really bad, I think.
>>: They probably would have been smart enough just not to bring it out.
>> Adam Lashinsky: We'll find out over the -- you know, they've been very grace
full like having these littler things like the Apple TV of calling it a hobby so that we
don't focus on it. And fact they don't go into mass production on it, so totally fair,
it is a small thing.
But if they go big on something and it's a flop, then we'll know that the strategy -I don't think the strategy is perfect. It is, in fact, a risky strategy. Thank you.
[applause].
>> Anne Rudden: Thanks for coming.
>> Adam Lashinsky: Thank you.