Steve Jobs in Exile with Geoffrey Cain

Business Books & Co.

This episode features author Geoffrey Cain discussing his book 'Steve Jobs in Exile,' which chronicles the twelve years Steve Jobs spent building NeXT after being ousted from Apple in

Key takeaways

• Steve Jobs founded NeXT in 1985 with a three-year deadline that proved impossible, leading to hardware costs exceeding $6,000 while targeting academic buyers with strict budgets.
• Apple sued Jobs personally and dragged his five co-founders through litigation, creating legal limbo that nearly bankrupted NeXT before its launch.

Main topics

• NeXT Computer founding and early struggles
• Steve Jobs' leadership transformation from self-obsession to customer focus

Notable quotes

Steve was chained to next computer and also to Pixar, his other company.

Conclusion

The episode reframes Jobs' exile not as a failure but as an essential crucible

Transcript preview

Speaker 1 (0:00) In 1976, Steve Jobs and Steve Wozniak founded Apple. In 1985, Jobs was forced out of Apple after a dramatic corporate power struggle. He immediately founded Next, another computer company that built revolutionary technology but struggled to find a market and was consistently barely surviving. Twelve years later, in true Shakespearean fashion, Apple, on the brink of bankruptcy itself, would purchase Next and the prodigal son would return, leading Apple to eventually become the most valuable company in the world. The renaissance of Apple would be built on the incredible technologies developed at Next and the hard-won leadership lessons that had transformed Jobs along the way. Renowned journalist and author Jeffrey Cain has written the definitive book on Next and the transformation of Steve Jobs as a businessman during those difficult 12 years. We are privileged to be joined by Jeffrey to discuss Steve Jobs in Exile, the untold story of Next, and the remaking of An American Visionary. Jeffrey, thank you so much for joining us on the show. Great to be here, David. So Jeffrey, let's start at the beginning of this project for you. So tell us about the genesis. What got you interested in writing about Next? What got you interested in writing about this period in Steve Jobs' life? Speaker 2 (1:14) I was originally a tech journalist and I was covering Apple. So I was specifically covering the Samsung versus Apple court case. And for listeners who might not remember that, that... It was about 15 years ago. It was around the time that Steve Jobs had died. And Apple brought a lawsuit against Samsung for patent infringement for copying the iPhone. This was back when the iPhone was just first getting big. And so I was on that story. I was covering both companies, Samsung and Apple. And, you know, because Steve Jobs had passed, it was 2011. There was an outpouring of memories about him. And when I was... interviewing or hanging around, you know, the older generation of Apple executives. So people who had been there through the 80s, the 90s, the early 2000s. One of the things that they would frequently say is, we know Steve Jobs today as, you know, he was the CEO of Apple. He returned, he turned the company around and built the iPhone and made it the company that we all know. That's like the Steve Jobs who is now the imprint in our minds. But they would always tell me, you know, like people have been glossing over the story that led up to that. We tend to assume that Steve Jobs was always brilliant and always a genius, that he was always somebody who just had the greatest ideas would come out and he would change the world. And that was that. And anybody who didn't understand him just wasn't brilliant enough to understand him. That was sort of the narrative that was forming. But what these executives would tell me is that that's a storyline being written after the fact. It's a narrative problem, as they would say in my field. There are stories that we write when the story is finished, when somebody dies and has made their legacy. And then there are stories that unfold as they are happening. And to truly understand what's happening, you have to go back in time and put yourself in the position of living before the success, living before the legacy was built, and to try to look at history unfolding from somebody who doesn't know what's going to happen. And in this particular case, We remember Steve Jobs as famous and successful, but if you were winding the clock back, he died in 2011, but let's go back 20 years before he died. If you were sitting there in a room with Steve Jobs and taking his orders and building his machines, you would not know that Steve Jobs was going to be a success. And in fact, there's a good chance you would think that he is going to end up a failure because at this time in the... late 80s and 90s, he was failing. Almost everything he touched in this period was a failure at his company called Next Computer because he had a vision. He was pushed out of Apple originally in 1985, and he had a vision that he was going to get revenge on Apple, and he was going to build an even better computer, a more cutting-edge computer, and he was going to use it to revolutionize science, research. you know, the World Wide Web was created on this thing, but it was created so early that nobody knew what it was all about. And so if you were looking at this at the time in the year, say, 1990, you would have said Steve Jobs is out of his mind because this is going to be an absolute failure. There's no chance this guy is going to succeed. And even the media said it. I found old reports in the news and even, you know, Fortune magazine at one point asked the question. Is Steve Jobs a snake oil salesman? Is this all fake and he's just going to be forgotten? So I wanted to go back in time to the story before the story. I wanted to find that story of, you know, what does it mean to be the most historically remembered entrepreneur in recent history? But what is it like to be that person before you become that person? And it's never easy. It's always a long winding road of struggle and failure. And it's ultimately the failures that teach you. what it takes to succeed. Speaker 4 (5:02) One of my friends asked me to summarize your book as we were reading it. I'd mentioned we were reading it. I said, it's Steve Jobs without the plot armor. And it's basically how Steve Jobs got the plot armor in some ways. It's the hero's journey and super enjoyed it. Speaker 2 (5:16) Thanks. Yeah, I appreciate that. Well, but that's exactly how it unfolded as I was writing it. So when I wrote the book, I didn't go in thinking like, I'm going to write the hero's journey. That would be an act of manipulation. I mean, that would be me sort of, you know, imposing a story where it might not exist. But as I got deeper and as I talked to the people closest to him, including Ed Catmull, who was the co-founder of Pixar, you know, worked very closely with Steve Jobs at Pixar during these years. They said exactly that. They would say, you know, Steve was going through the hero's journey. And these guys, you know, I mean, they were deep in the art of storytelling. They created Toy Story. And they could see it. They said, you know, we've read Joseph Campbell, who created the hero's journey structure. You know, we've seen the great cinema of the past. We've read the great mythology and studied the lives of great leaders. So, you know, people like Winston Churchill kind of went through a similar story of being ousted into the wilderness, the middle chapter, and then returning to lead his nation. You see a lot of this in history and literature and mythology. And a lot of the people who were closest to Steve Jobs told me exactly that, that It was a hero's journey. And, you know, that's not something that you, the writer, have to impose on it. It's not you making up a structure around his life. He was going through this stage in the wilderness and he was being tested and having to overcome these struggles that would eventually form him into the great businessman who he became. So just Speaker 3 (6:42) to... To dive a little deeper there, you decide to start the book at the beginning of Next, and you don't really go much into the history of Steve at Apple before that and the successes that they've had there. So was that a narrative choice that you made? Was that something that, you know, there's a bunch of other books that have been written about this? You wanted to, you know, I think like this is something that's relatively undercovered in the literature. I guess like. Who were you trying to like sort of write this for and how much knowledge should our readers, you know, have about Steve Jobs coming into this book? Speaker 2 (7:14) You know, there's been a lot written about Steve Jobs. And, you know, the one definitive biography is the one by Walter Isaacson called Steve Jobs. I mean, that's that's the go to, you know, the access biography. Steve gave a lot of interviews to Walter Isaacson for that one. And he told the story of what happened at Apple when Steve founded it. with Steve Wozniak in the 70s and 80s. So, you know, that's a story. We all have that image in our head. We all know that Steve Jobs created the Macintosh that he co-founded Apple. You know, we all know that he had these early successes, you know, and that he was shaping the future of computing at the time. Like there's really no question about that. And, you know, any... reader or viewer can turn on Netflix and they can watch, you know, that there are two Steve Jobs films that cover that period in great depth. So it's a story that's been well covered. We know who he was at that time. We know his flaws. You know, we know that he was inspired, for example, by Zen Buddhism and that influenced his design decisions. We know that he abandoned his daughter, Lisa, who was born. with his girlfriend at the time and, you know, didn't treat his ex-girlfriend well, the mother of Lisa. And yet he named the computer the Lisa, you know, same name as his daughter. Like, these are stories that have joined the lore of, you know, the history of business and technology. Like, everybody knows it. And I wanted to do something different. I had to make careful decisions because, you know, a book has to have a clear start and end. And if I had simply told the story of how Steve Jobs founded Apple, people are going to look at that and say, well, wait, can't I just buy any of the other zillion books? So I decided instead to begin the story at the high point as Steve is releasing the Macintosh and to recast the story and to remind readers that the first Macintosh computer certainly was a leap forward in terms of innovation and the simplicity of technology. You have to remember that technology at the time, a computer would fill the room and a Macintosh, you know, brought that processing power and, you know, put it on a desk and anybody could use it. But despite that innovative success, the Macintosh was not a market success by any means. It was, it did not sell much. It sold somewhat in the first hundred days of sales. But ultimately what people were buying were not Steve's computer. They were buying the Apple II computer, which was the... high volume, lower price version. The Macintosh was like $8,000 at the time, you know, in current money. It was just too expensive. And so I wanted to start this story by showing the release of the Macintosh and how that led to a lot of problems for Steve and Apple. It was not the victory that we remember it as. It was, in fact, the ignition of the eventual downfall of Apple as... Budget spun out of control as computers could not be sold, inventories piled up. By the year 1985, one year after the Macintosh was released, Apple was in its first ever crisis and had its first ever layoffs. And the company's future was so unclear that Steve Jobs, something we don't remember now, but Steve Jobs himself with his CEO, John Sculley, they put up Apple for sale. General Electric was actually looking at buying Apple. So that shows you how bad things are getting. And it was because of the succession of problems that the company decided that Steve Jobs was actually the problem. He was not well-liked at the time. He was not the celebrity who we know at the time. We know the celebrity nowadays, but at the time, he was not a well-liked leader. He was divisive. He would have outbursts. He was immature. And ultimately, Apple decided to send him off. And they said, we're going to strip you of your duties. We're going to put you in an office across the street and you can just essentially do nothing and just please leave us alone. And that's why he decided to leave and to start Next Computer, which was his attempt to show Apple what he was really made of. It was a revenge project, ultimately. Speaker 4 (11:27) So a lot of our listeners know that I like cinematic and movie comparisons and comparisons from literature. And it was very almost like Homeric, the way that your book was structured, because they have the The Macintosh release, they have Jobs, you know, sort of has a Pyrrhic victory with the Macintosh release. And now, you know, he's getting ready to sail out on his own. But before they can even launch the ships to next, litigation is pending, right? Apple is, you know, making sure that next starts in legal limbo. So the team, which was composed largely of those ex-Apple employees, particularly Daniel Lewin, who they put through a lot of legal hell there, they're immediately sued by Apple. You kind of phrase it or put it as it's almost a company being over before it started. Why was Apple so threatened by Next? You know, they're the ones that actually pushed Steve Jobs out and said, oh, maybe we can work together again when he talked about making his own company. But why were they so threatened by Next? And how did the experience of starting off, you know, under that cloud of legal jeopardy affect Next in the long term? Speaker 2 (12:31) Apple's response. is kind of irrational when you look back on it because they were the ones who originally told Steve, sayonara, get out of here, we don't like you anymore. The Macintosh was not a major success. And yet when Steve told them he's going to go off and found Next Computer, they panicked because Steve Jobs, despite being controversial at the time, he was still the heart and soul of Apple. You have to remember. And Steve knew that. I mean, he had no life outside of Apple. Without Steve Jobs, there's essentially no Apple. You just can't separate the two. And so when Steve Jobs left, he had his followers at Apple and he was taking Dan O'Loughlin, who you mentioned. So Dan O'Loughlin would become his head of marketing at Next Computer. He took a number of top software and hardware engineers who went on to build stellar careers in the Valley. I mean, they're some of the most revered people. They went. With Steve, the next computer, Rich Page is one of them, hardware. Bud Tribble is a famous software engineer, did a lot of work later on at Apple too with the iTunes and the iPhone and so forth. These people are, you know, they went on to become luminaries and Apple knew that they were extremely talented. So once Steve said, okay, you don't like me here anymore. I'm going to go and start my own company with my own people. Suddenly the reaction changed. It's almost a kind of... In the business world, there's the term, a kind of not invented here syndrome. You know, Steve Jobs is a part of Apple and inventing things for Apple. So that should be Apple's. But once Steve leaves, there's a kind of psychological dissonance that happens, a kind of irrational response. And it's like, well, wait a second. Yeah, so we did push out Steve, but he's still a part of Apple, heart and soul, right? And anything he creates outside of Apple. That's a threat to us because that's like our beating heart making something for somebody else that's not ours. So the company had a truly over-the-top and irrational reaction and decided to sue Steve personally. So they didn't sue the company next. They sued Steve Jobs and they sued Rich Page, his hardware engineer, on a personal level. And then they dragged everybody else, his five co-founders at next. They got dragged through the legal process with the... depositions and all that. So an extremely stressful time. These are very young people. They were all in their 20s and 30s. They recounted to me that they had mortgages to pay off. They had young kids at home. They were leaving, abandoning one of the most successful companies in Silicon Valley to that point, even though Apple had had hard times. It was a billion-dollar company at the time, which was a lot in the 80s. Speaker 2 (15:15) you know, once they left and once they were under that pressure, they weren't sure if they made the right choice. So one of the most interesting things I found when writing this book is that there were so many events, so many turning points like this, where if anything else had gone slightly differently, all of the history of technology afterwards would have turned out differently. Like Apple, if this lawsuit had succeeded, Next would have closed, Steve Jobs would have never returned to Apple, and then... Apple later, which was close to bankruptcy, probably would have gone out of business. That's just one example, and I can give a lot of them. But it's really incredible how Apple, this lawsuit failed. Apple decided it was too expensive and they couldn't make progress. So they told Steve, OK, fine, we'll give you a settlement and you can make your computer, but just don't compete with us. Speaker 1 (16:04) Jeffrey, Steve Jobs is somebody who's kind of famous for setting very aggressive deadlines, and they start next. And he immediately is setting a very aggressive deadline for how long it's going to take them to develop the first version of the next computer. And it seemed to me reading the book that he was setting them up for failure, setting such an aggressive deadline, because it seemed they're effectively starting from scratch. They're developing a completely new operating system. They're developing. workstation level hardware. There's this whole concept of the 1M, if I remember right, 1 MIPS, 1 million pixels. Yeah. Speaker 3 (16:40) And so Speaker 1 (16:41) do you think that that timeline was ridiculously aggressive at the beginning? And what was the thinking in Steve's mind, knowing the amount of work that was ahead of that team to set such an aggressive deadline? Speaker 2 (16:55) Well, he was thinking, I did it at Apple, so I can do it at Next. Whatever. He was trying to relive those moments, the moments of glory at Apple when he was on the stage and he was the star of the show. And he thought, so, you know, I've been pushed out. I'm going to start over now with this new startup. You know, and originally he said, I have three years to get this computer out. And if I miss that deadline, then we're going to be in trouble. Because the problem with when you're making hardware and making technology, if you miss one deadline. The entire technological curve moves forward a generation and then you're stuck