Steve Jobs on NeXT Vision: Building for Education

Stephen Jobs figures heroically in the history of American entrepreneurship. At the age of 22, he founded a company called Apple Computer and proceeded to grow it into a $2 billion business. In the spring of 1985, he lost a power struggle inside Apple and left the company he had created. He spent the summer considering his next move and resolved to begin again. In September, he started a new computer company with his own money. With characteristic flair, he called it Next, Incorporated. This morning at its offices in Silicon Valley, California, the company is about to get a first look at its new trademark, the signature it hopes to make familiar around the world.

The designer, Paul Rand, created the logos for IBM, Westinghouse, UPS, and many others. Rand doesn't normally work for infant companies, even if they could afford him, but Next isn't an ordinary startup. The idea is to, please don't open, don't look at the back first. This is the front. And don't get scared, this is not the design. I did this with a sort of floristy when he saw it, you know, and said, Jesus, $100,000 down the drain. I'm sure that's what he thought. Jobs has had a sneak preview of the logo and loves it. As he waits for a verdict from his staff, he can hardly contain his excitement.

Assertive as he is, he values consensus. Most of these young computer and software designers were on the team that developed the Macintosh. They left secure jobs at Apple to follow their boss in pursuit of his new vision. Steve's goal is to transform the learning process at the college and graduate school level with a powerful computer and a new kind of software. And we decided we wanted to start a company that had a lot to do with education, and in particular, higher education, colleges and universities. So what our vision is, is that there's a revolution in software going on now on college and university campuses, and it has to do with providing two types of breakthrough software. One is called simulated learning environments.

It's where you can't give a student in physics a linear accelerator. You can't give a student in biology a $5 million recombinant DNA laboratory, but you can simulate those things. You can simulate them on a very powerful computer, and it is not possible for students to afford these things. It is not possible for most faculty members to afford these things. So if we can take what we do best, which is to find really great technology and pull it down to a price point that's affordable to people. If we can do the same thing for this type of computer, which is maybe 10 times as powerful as a personal computer that we did for personal computers, then I think we can make a real difference in the way the learning experience happens in the next five years.

And that's what we're trying to do. Companies come and go at the crest of the wave. I mean, you know, IBM had their day way back when, when they, you know, they were at the crest. In December 1985, in business for just 90 days, Jobs and his 11 employees hold their first retreat. Company retreats like this are the continuation of a tradition Steve established at Apple early on. Watching him in action at these brainstorming sessions is an opportunity to observe him at his lucid best as a company builder and motivator. His opening remarks reveal his faith in high technology and his idealism, an unusual combination that is part of his uniqueness. In effect, he is planting the seeds of a new corporate culture. More important than building a product, we are in the process of architecting a company that will hopefully be much, much more incredible.

The total will be much more incredible than the sum of its parts. And the cumulative effort of approximately, you know, 20,000 decisions that we're all going to make over the next two years are going to define what our company is. And one of the things that made Apple great was that in the early days, it was built from the heart, not by somebody who came in and said, I know how to build a company. Here's what you do. Dot, dot, dot, dot, dot, dot, dot, dot. It wasn't built that way. It was built from the heart. Now, unfortunately, we didn't always use our heads and we can do better in many respects because we are wiser and smarter and know more and those kinds of things. But one of the most important things, one of my largest wishes is that we build next from the heart and that people that are thinking about coming to work for us or buying our products or who want to sell us things feel that, that we're doing this because we have a passion about it.

We're doing this because we really care about the higher educational process. Not because we want to make a buck. Not because, you know, we just want to do it to do it. Jobs can be overbearing and impatient, but this team knows what to expect and is not easily intimidated. They are smart and they are focused and their preferred language is computer ease. They actually provided analogous to rehearsal worlds when you drop in a small talk. Torch provided you a way to drop actually into the seashell and program the actions that happen when you double click on an icon or when you drop something on an icon. We have to create a product that's an order of magnitude more powerful than the current generation of PCs. For two solid days, the group listens to progress reports from each department.

The goal is to arrive at design decisions, production deadlines, and a marketing strategy aimed at selling on college campuses. The point is that June, July, and August are time frames when people do work. When the school's out and when the people, the researchers, and the staff that deal with making computing happen for September, that's when they do work. That is, that's like a bomb run. You don't change your target when you're in the bomb run. From the sidelines, Jobs probes and challenges. He has a remarkable ability to identify the conclusions implicit in what the others have to say. So, really, the next 90 days are real important. We are going to make it or break it based on whether we can provide products to higher education and services and relationships to higher education that no one else provides.

And I think we ought to spend 100% of our time thinking about that. And if we can't do that, then we ought to go broke. There needs to be someone who is sort of the keeper and reiterator of the vision. Because there's just a ton of work to do, and a lot of times, you know, when you have to walk 1,000 miles and you take the first step, it looks like a long ways. And it really helps if there's someone there saying, well, we're one step closer. The goal definitely exists. It's not just a mirage out there. So in 1,001 little and sometimes larger ways, the vision needs to be reiterated. I do that a lot. There was the price one, the schedule one, and technology.

Jobs continually interrupts to focus the lens of his vision on priorities. By the end of the first day, the team has established the critical importance of keeping the price of the computer within the reach of students and professors and bringing the product to market by spring 1987. A survey of college campuses has indicated that the new computer should sell for no more than $3,000 to be considered affordable. Since college buying takes place in the summer, Jobs is concerned that a failure to have their product ready by spring 1987 will delay the company an entire year. If we don't deliver this by spring 87, we're out of business. So my first priority is to make sure this damn thing is out by spring 87. I think spring can basically push out the summer, but I also hear that that is number one. I guess I disagree with price being the second thing, because unless we have this technology that wows people, we're not going to have a firm foundation that people are going to buy from.

And I think people are going to be a lot more flexible saying, well, geez, this runs three times faster, seven times faster than, you know, a computer. Well, what's the highest we could go here? Well, what Bruce is arguing is that technology jumps ahead of price. Well, we couldn't make this $5,000. They didn't say if you made it go three times faster, we'd pay $4,000. They didn't say that. That's right. If it's $3,000, it's a hot product. They said, you're $3,000, forget it. That's their magic number. They've also told us that nobody else says they can do that. And they think that's a really big number. Now, whether it is or not, in reality, who knows? Whether it is or not in terms of their commitments to push us, we've established that. If we really do believe that we have to ship this by summer of 87, then how are we going to move that up?

I don't think price is going to change the schedule that much. I think the real risk is in the technology. It's not in the cost. There's another option. You can go to the spring of 88. Yeah, we could. But the problem is, if we do that, then that's... Well, wait. No, that's not the worst thing. The worst thing is the world isn't standing still. So by the spring of 88, well, we want color. The technology window sort of passes us by. And all the work we've done, we throw it on the toilet. We start over. And since we've proved we can't do something great in 18 months, why should we believe we could do it a year later? I don't care what you say. Reality distortion is reality distortion. And it has its motivational value. And that's fine. And I think it has a very strong point and a very important value. However, when it comes to the...

When it comes to that date affecting the design of the product, that's when we get into a rut, a real deep shit. Because if we are unrealistic about this date, we make design decisions that we then have to go over, reiterate, throw out, start all over again. And you told us yesterday, we have a past, and unfortunately some of us can't get rid of that past. And I remember a past where we put out a list this long about the software that was going to ship with our product. As you recall, the list was formidable, and we all thought we could do it in 12 months, 15 packages. So maybe what we ought to do, though, is say, see, I think we have to drive a stake in the ground somewhere.

And I think if we miss this window, then a whole series of events come into play. We can't sell enough units in 87 to pay for our operating costs. Word gets out that we're not doing that well. A lot of the credibility starts to erode. I don't know. You can make up all these fantasies. We've got to have a stake in the ground. The problem I've got, though, is one, will everybody believe that the stake is in fact in the ground? And secondly, when software comes back and says what they can do by summer or spring of 87, will they be telling us the truth? That's what I'm worried about. That's exactly my point. We've got a person here that said he could do a word processor in six months. It's taken three years. Well, George, I can't change the world. You know, what do you want me to do? What's the solution?

I mean, I don't want to hear just because we blew it last time, we're going to blow it this time. What we can learn is what I want is probably irrelevant. I mean, there are certain realities here, both psychological and market, that are going to come into play in my own personal judgment. And I think this is a window that we've got. We've been given it, and thank God we've been given it. Nobody else has done this. It's a wonderful window. We have 18 months. So I don't think we have a company if we don't do this. No matter what I say or anybody else says, that is my deepest belief. If we don't do this, we will not be able to attract great people. We will not be able to retain the ones, some of the ones we have. And, you know, it just won't be us.

And I find myself making lists of things we don't know. And then I remember that our company is 90 days old. And I look back to all the things we do know. And it's really phenomenal how far we've come in 90 days. Boy, I've forgotten how much work it actually is to start a company. It's a lot of work. And you've got to do everything. You've got to come up with a name. You've got to come up with a logo. I mean, in addition to designing the product, you've got to figure out what to design. You've got to figure out how you're going to get it to the marketplace. You've got to do a part number system. You've got to go get bank accounts. You've got to set up charts, general ledgers. Get a management information system. Get a little kitchen set up. Get a coffee maker. All this stuff. Where are we going to? Three months later, the company returns to Pebble Beach to hold its second retreat.

Progress has been made. The first mock-up of the new computer is in the trunk Steve is carrying. But the flush of excitement that animated the first days of startup has given way to the pressure of solving actual problems in time to meet critical deadlines. The minute Steve begins to deliver his traditional sayings of chairman jobs, it becomes clear that the mood of this retreat will be different from the first. My first saying is that the honeymoon is over. All of those wonderful things that we got for just being are now sort of just old news. We are like every other startup. We've been a company now for six months. And yes, you could say that, well, we had a lawsuit for four of those months, and we had this and that.

But the bottom line is the world doesn't really care. What the world cares about is what we produce. We've been a startup for six months. We've been spending money like we've been a startup for six months. And in some areas, we've really produced a lot. We've got a lot to show for six months in some areas. In other areas, we don't have a lot to show for six months. So I hope that throughout this retreat, we tend to make sure that our feet are on the ground and we realize that we're going to be judged like every other startup from here on out, and that is by what our product is and how timely we bring it to market, not on the fact that we're next, not on the fact that we were sued, not on the fact that we're really good people who had a lot to do with Macintosh. That stuff's irrelevant at this point. What we'd like to do is step back a minute from the point of view of what's feasible. In December, the group concluded they must ship product in 18 months and agreed they could be ready.

Three months down the line, this seems questionable, and there is frustration in the room. It's totally useless, as far as I can see, to talk about how you're going to implement something unless you know what it is you want to implement. So that's what I'm not getting. I'm not getting it from marketing. I'm not getting a clear idea from anybody, really, what the features are and what is this thing that we're talking about doing. It ain't my job, and if I was him, it wouldn't be my job. It'd be your job. You know, it isn't like this should be something new. But, I mean, I agree. Let me back up a bit. So somebody's got to say, here's what we can do, and we can make it happen, and here's the level of thing we can ship in 16 months.

And what I hear him saying is, well, anything more than a quarterback offer, forget it. And boy, that just makes me smoke. It just seems like we're in this really difficult time where, I don't know. I mean, I sort of think another month's going to go by, and there's still not going to be anything running in the sun. It's very interesting. And another month will go by, and there still won't be anything running. It just seems like it's just, and I guess maybe that's just the way it has to be. You think we're going to have to? No, forget about slipping in time. Fuck everything after shipment. Just look to shipment, you know? Marketing's out of line. There's too many people in marketing. Figure about $250 a month for health and life. Before we cut the facilities budget, it's $1,000. But that's not where it's going.

Money is also emerging as a problem. In return for 70% of the stock, Jobs has committed $7 million of his own money to carry the company to product launch. But at the present burn rate, it appears that that amount will be insufficient. The unpleasant task of cutting expenses must be faced. All this other stuff, in the final analysis, we really don't care about that much, is what's costing us the money. There are not million-dollar buckets out there to identify that we need spending cuts. There's lots and lots of $100,000 buckets, and it's going to take everybody in this room doing a mindset change. We just go out and we buy brand-new Macintoshes and brand-new hard disks for everybody, and it's not at all clear. I don't think we're getting great deals on that stuff. We're not scrounging. Well, no Mac owners bring their Mac for a call.

Well, we're not. I mean, we used to be. We used to find people to get us really good employee discounts on things and everything else, and we stopped nickel and diming for that stuff, and it all adds up. And I think the other thing is we signal deep pockets out there. Every vendor that comes to us, every person that comes to us for recruiting, everything, they expect these $20, $30 million behind us, and it isn't there, and it's not going to be there. So you can kick yourself in the butt, but I guess now's the time to change. And one of the things I don't see, I don't see it in myself, I don't see it in enough of the rest of us, is I don't see that startup hustle. In other words, if we zoom out at the big picture, it would be a shame to have lost the war because we won a few battles. And I sort of feel like I and some of the rest of us are concentrating too much on the smaller battles, and we're not keeping the war in perspective.

And the war is called survival. The war is called not running out of money until we get our product on the market. Steve Jobs had built a major company by the time he was 28. According to some, he had even created the personal computer industry. In any event, he was a wealthy man and was acknowledged as a master entrepreneur. What is it that drives him, at age 31, to begin all over again? Part of the answer seems to be his need to feel that he is contributing to history. I felt it the first time when I visited a school. It was like I had third and fourth graders in a classroom one time, and they had a whole classroom full of Apple IIs. And I spent a few hours there, and I saw these third and fourth graders growing up completely different than I grew up because of this machine.

And what hit me about it was that here was this machine that very few people designed, about four in the case of the Apple II. And then they gave it to some people who didn't know how to design it, but they knew how to make it, to manufacture it. They can make a whole bunch of them. They gave it to some people that didn't know how to design it or manufacture it, but they knew how to distribute it. And they gave it to some people who didn't know how to design it or manufacture it or distribute it, but they knew how to write software for it. And gradually this sort of inverse pyramid grew. And when it finally got into the hands of a lot of people, it blossomed out of this tiny little seed. And it seemed like an incredible amount of leverage. And it all started with just an idea. And here was this idea taken through all of these stages, resulting in a classroom full of kids growing up with some insights and some fundamentally different experiences, which I thought might be very beneficial to their lives because of this germ of an idea a few years ago.

And that's an incredible feeling, to know that you had something to do with it, A, and, B, to know it can be done, to know that you can plant something in the world and it'll grow and change the world ever so slightly. Whether Next can be a viable business is something only time will tell. But Steve Jobs' passionate commitment... to his vision is clear, and his certainty that it can be achieved and is worth achieving is a conviction to be observed in all successful entrepreneurs.