Part 17 (1/2)

That spring Larry Ellison saw Amelio at a party and introduced him to the technology journalist Gina Smith, who asked how Apple was doing. ”You know, Gina, Apple is like a s.h.i.+p,” Amelio answered. ”That s.h.i.+p is loaded with treasure, but there's a hole in the s.h.i.+p. And my job is to get everyone to row in the same direction.” Smith looked perplexed and asked, ”Yeah, but what about the hole?” From then on, Ellison and Jobs joked about the parable of the s.h.i.+p. ”When Larry relayed this story to me, we were in this sus.h.i.+ place, and I literally fell off my chair laughing,” Jobs recalled. ”He was just such a buffoon, and he took himself so seriously. He insisted that everyone call him Dr. Amelio. That's always a warning sign.”

Brent Schlender, Fortune's well-sourced technology reporter, knew Jobs and was familiar with his thinking, and in March he came out with a story detailing the mess. ”Apple Computer, Silicon Valley's paragon of dysfunctional management and fumbled techno-dreams, is back in crisis mode, scrambling lugubriously in slow motion to deal with imploding sales, a floundering technology strategy, and a hemorrhaging brand name,” he wrote.

”T o the Machiavellian eye, it looks as if Jobs, despite the lure of Hollywood-lately he has been overseeing Pixar, maker of Toy Story and other computer-animated films-might be scheming to take over Apple.”

Once again Ellison publicly floated the idea of doing a hostile takeover and installing his ”best friend” Jobs as CEO. ”Steve's the only one who can save Apple,” he told reporters. ”I 'm ready to help him the minute he says the word.” Like the third time the boy cried wolf, Ellison's latest takeover musings didn't get much notice, so later in the month he told Dan Gillmore of the San Jose Mercury New s that he was forming an investorgroup to raise $1 billion to buy a majority stake in Apple. (The company's market value was about $2.3 billion.) The day the story came out, Apple stock shot up 11% in heavy trading. T o add to the frivolity, Ellison set up an email address, [email protected], asking the general public to vote on whether he should go ahead with it.

Jobs was somewhat amused by Ellison's self-appointed role. ”Larry brings this up now and then,” he told a reporter. ”I try to explain my role at Apple is to be an advisor.” Amelio, however, was livid. He called Ellison to dress him down, but Ellison wouldn't take the call. So Amelio called Jobs, whose response was equivocal but also partly genuine. ”I really don't understand what is going on,” he told Amelio. ”I think all this is crazy.”

Then he added a rea.s.surance that was not at all genuine: ”You and I have a good relations.h.i.+p.” Jobs could have ended the speculation by releasing a statement rejecting Ellison's idea, but much to Amelio's annoyance, he didn't. He remained aloof, which served both his interests and his nature.

By then the press had turned against Amelio. Business Week ran a cover asking ”Is Apple Mincemeat?”; Red Herring ran an editorial headlined ”Gil Amelio, Please Resign”; and Wired ran a cover that showed the Apple logo crucified as a sacred heart with a crown of thorns and the headline ”Pray.” Mike Barnicle of the Boston Globe, railing against years of Apple mismanagement, wrote, ”How can these nitwits still draw a paycheck when they took the only computer that didn't frighten people and turned it into the technological equivalent of the 1997 Red Sox bullpen?”

When Jobs and Amelio had signed the contract in February, Jobs began hopping around exuberantly and declared, ”You and I need to go out and have a great bottle of wine to celebrate!” Amelio offered to bring wine from his cellar and suggested that they invite their wives. I t took until June before they settled on a date, and despite the rising tensions they were able to have a good time. The food and wine were as mismatched as the diners; Amelio brought a bottle of 1964 Cheval Blanc and a Montrachet that each cost about $300; Jobs chose a vegetarian restaurant in Redwood City where the food bill totaled $72. Amelio's wife remarked afterward, ”He's such a charmer, and his wife is too.”

Jobs could seduce and charm people at will, and he liked to do so. People such as Amelio and Sculley allowed themselves to believe that because Jobs was charming them, it meant that he liked and respected them. I t was an impression that he sometimes fostered by dis.h.i.+ng out insincere flattery to those hungry for it. But Jobs could be charming to people he hated just as easily as he could be insulting to people he liked.

Amelio didn't see this because, like Sculley, he was so eager for Jobs's affection. Indeed the words he used to describe his yearning for a good relations.h.i.+p with Jobs are almost the same as those used by Sculley. ”When I was wrestling with a problem, I would walk through the issue with him,” Amelio recalled. ”Nine times out of ten we would agree.” Somehow he willed himself to believe that Jobs really respected him: ”I was in awe over the way Steve's mind approached problems, and had the feeling we were building a mutually trusting relations.h.i.+p.”

Amelio's disillusionment came a few days after their dinner. During their negotiations, he had insisted that Jobs hold the Apple stock he got for at least six months, and preferably longer. That six months ended in June. When a block of 1.5 million shares was sold, Amelio called Jobs. ”I 'm telling people that the shares sold were not yours,” he said. ”Remember, you and I had an understanding that you wouldn't sell any without advising us first.”

”That's right,” Jobs replied. Amelio took that response to mean that Jobs had not sold his shares, and he issued a statement saying so. But when the next SEC filing came out, it revealed that Jobs had indeed sold the shares. ”Dammit, Steve, I asked you point-blank about these shares and you denied it was you.” Jobs told Amelio that he had sold in a ”fit of depression” about where Apple was going and he didn't want to admit it because he was ”a little embarra.s.sed.” When I asked him about it years later, he simply said, ”I didn't feel I needed to tell Gil.”

Why did Jobs mislead Amelio about selling the shares? One reason is simple: Jobs sometimes avoided the truth. Helmut Sonnenfeldt once said of Henry Kissinger, ”He lies not because it's in his interest, he lies because it's in his nature.” I t was in Jobs's nature to mislead or be secretive when he felt it was warranted. But he also indulged in being brutally honest at times, telling the truths that most of us sugarcoat or suppress. Both the dissembling and the truth-telling were simply different aspects of his Nietzschean att.i.tude that ordinary rules didn't apply to him.

Exit, Pursued by a Bear.

Jobs had refused to quash Larry Ellison's takeover talk, and he had secretly sold his shares and been misleading about it. So Amelio finally became convinced that Jobs was gunning for him. ”I finally absorbed the fact that I had been too willing and too eager to believe he was on my team,” Amelio recalled. ”Steve's plans to manipulate my termination were charging forward.”

Jobs was indeed bad-mouthing Amelio at every opportunity. He couldn't help himself. But there was a more important factor in turning the board against Amelio. Fred Anderson, the chief financial officer, saw it as his fiduciary duty to keep Ed Woolard and the board informed of Apple's dire situation. ”Fred was the guy telling me that cash was draining, people were leaving, and more key players were thinking of it,” said Woolard. ”He made it clear the s.h.i.+p was going to hit the sand soon, and even he was thinking of leaving.” That added to the worries Woolard already had from watching Amelio b.u.mble the shareholders meeting.

At an executive session of the board in June, with Amelio out of the room, Woolard described to current directors how he calculated their odds. ”I f we stay with Gil as CEO, I think there's only a 10% chance we will avoid bankruptcy,” he said. ”I f we fire him and convince Steve to come take over, we have a 60% chance of surviving. I f we fire Gil, don't get Steve back, and have to search for a new CEO, then we have a 40% chance of surviving.” The board gave him authority to ask Jobs to return.

Woolard and his wife flew to London, where they were planning to watch the Wimbledon tennis matches. He saw some of the tennis during the day, but spent his evenings in his suite at the Inn on the Park calling people back in America, where it was daytime. By the end of his stay, his telephone bill was $2,000.

First, he called Jobs. The board was going to fire Amelio, he said, and it wanted Jobs to come back as CEO. Jobs had been aggressive in deriding Amelio and pus.h.i.+ng his own ideas about where to take Apple. But suddenly, when offered the cup, he became coy. ”I will help,” he replied.

”As CEO?” Woolard asked.

Jobs said no. Woolard pushed hard for him to become at least the acting CEO. Again Jobs demurred. ”I will be an advisor,” he said. ”Unpaid.”

He also agreed to become a board member-that was something he had yearned for-but declined to be the board chairman. ”That's all I can give now,” he said. After rumors began circulating, he emailed a memo to Pixar employees a.s.suring them that he was not abandoning them. ”I got a call from Apple's board of directors three weeks ago asking me to return to Apple as their CEO,” he wrote. ”I declined. They then asked me to become chairman, and I again declined. So don't worry-the crazy rumors are just that. I have no plans to leave Pixar. You're stuck with me.”

Why did Jobs not seize the reins? Why was he reluctant to grab the job that for two decades he had seemed to desire? When I asked him, he said: We'd just taken Pixar public, and I was happy being CEO there. I never knew of anyone who served as CEO of two public companies, even temporarily, and I wasn't even sure it was legal. I didn't know what I wanted to do. I was enjoying spending more time with my family. I was torn. I knew Apple was a mess, so I wondered: Do I want to give up this nice lifestyle that I have? What are all the Pixar shareholders going to think? I talked to people I respected. I finally called Andy Grove at about eight one Sat.u.r.day morning-too early. I gave him the pros and the cons, andin the middle he stopped me and said, ”Steve, I don't give a s.h.i.+t about Apple.” I was stunned. I t was then I realized that I do give a s.h.i.+t about Apple-I started it and it is a good thing to have in the world. That was when I decided to go back on a temporary basis to help them hire a CEO.

The claim that he was enjoying spending more time with his family was not convincing. He was never destined to win a Father of the Year trophy, even when he had spare time on his hands. He was getting better at paying heed to his children, especially Reed, but his primary focus was on his work. He was frequently aloof from his two younger daughters, estranged again from Lisa, and often p.r.i.c.kly as a husband.

So what was the real reason for his hesitancy in taking over at Apple? For all of his willfulness and insatiable desire to control things, Jobs was indecisive and reticent when he felt unsure about something. He craved perfection, and he was not always good at figuring out how to settle for something less. He did not like to wrestle with complexity or make accommodations. This was true in products, design, and furnis.h.i.+ngs for the house. I t was also true when it came to personal commitments. I f he knew for sure a course of action was right, he was unstoppable. But if he had doubts, he sometimes withdrew, preferring not to think about things that did not perfectly suit him. As happened when Amelio had asked him what role he wanted to play, Jobs would go silent and ignore situations that made him uncomfortable.

This att.i.tude arose partly out of his tendency to see the world in binary terms. A person was either a hero or a bozo, a product was either amazing or s.h.i.+t. But he could be stymied by things that were more complex, shaded, or nuanced: getting married, buying the right sofa, committing to run a company. In addition, he didn't want to be set up for failure. ”I think Steve wanted to a.s.sess whether Apple could be saved,” Fred Anderson said.

Woolard and the board decided to go ahead and fire Amelio, even though Jobs was not yet forthcoming about how active a role he would play as an advisor. Amelio was about to go on a picnic with his wife, children, and grandchildren when the call came from Woolard in London. ”We need you to step down,” Woolard said simply. Amelio replied that it was not a good time to discuss this, but Woolard felt he had to persist. ”We are going to announce that we're replacing you.”

Amelio resisted. ”Remember, Ed, I told the board it was going to take three years to get this company back on its feet again,” he said. ”I 'm not even halfway through.”

”The board is at the place where we don't want to discuss it further,” Woolard replied. Amelio asked who knew about the decision, and Woolard told him the truth: the rest of the board plus Jobs. ”Steve was one of the people we talked to about this,” Woolard said. ”His view is that you're a really nice guy, but you don't know much about the computer industry.”

”Why in the world would you involve Steve in a decision like this?” Amelio replied, getting angry. ”Steve is not even a member of the board of directors, so what the h.e.l.l is he doing in any of this conversation?” But Woolard didn't back down, and Amelio hung up to carry on with the family picnic before telling his wife.

At times Jobs displayed a strange mixture of p.r.i.c.kliness and neediness. He usually didn't care one iota what people thought of him; he could cut people off and never care to speak to them again. Yet sometimes he also felt a compulsion to explain himself. So that evening Amelio received, to his surprise, a phone call from Jobs. ”Gee, Gil, I just wanted you to know, I talked to Ed today about this thing and I really feel bad about it,” he said.

”I want you to know that I had absolutely nothing to do with this turn of events, it was a decision the board made, but they had asked me for advice and counsel.” He told Amelio he respected him for having ”the highest integrity of anyone I 've ever met,” and went on to give some unsolicited advice. ”Take six months off,” Jobs told him. ”When I got thrown out of Apple, I immediately went back to work, and I regretted it.” He offered to be a sounding board if Amelio ever wanted more advice.

Amelio was stunned but managed to mumble a few words of thanks. He turned to his wife and recounted what Jobs said. ”In ways, I still like the man, but I don't believe him,” he told her.

”I was totally taken in by Steve,” she said, ”and I really feel like an idiot.”

”Join the crowd,” her husband replied.

Steve Wozniak, who was himself now an informal advisor to the company, was thrilled that Jobs was coming back. (He forgave easily.) ”I t was just what we needed,” he said, ”because whatever you think of Steve, he knows how to get the magic back.” Nor did Jobs's triumph over Amelio surprise him. As he told Wired shortly after it happened, ”Gil Amelio meets Steve Jobs, game over.”

That Monday Apple's top employees were summoned to the auditorium. Amelio came in looking calm and relaxed. ”Well, I 'm sad to report that it's time for me to move on,” he said. Fred Anderson, who had agreed to be interim CEO, spoke next, and he made it clear that he would be taking his cues from Jobs. Then, exactly twelve years since he had lost power in a July 4 weekend struggle, Jobs walked back onstage at Apple.

I t immediately became clear that, whether or not he wanted to admit it publicly (or even to himself), Jobs was going to take control and not be a mere advisor. As soon as he came onstage that day-wearing shorts, sneakers, and a black turtleneck-he got to work reinvigorating his beloved inst.i.tution. ”Okay, tell me what's wrong with this place,” he said. There were some murmurings, but Jobs cut them off. ”I t's the products!” he answered. ”So what's wrong with the products?” Again there were a few attempts at an answer, until Jobs broke in to hand down the correct answer. ”The products suck!” he shouted. ”There's no s.e.x in them anymore!”

Woolard was able to coax Jobs to agree that his role as an advisor would be a very active one. Jobs approved a statement saying that he had ”agreed to step up my involvement with Apple for up to 90 days, helping them until they hire a new CEO.” The clever formulation that Woolard used in his statement was that Jobs was coming back ”as an advisor leading the team.”

Jobs took a small office next to the boardroom on the executive floor, conspicuously eschewing Amelio's big corner office. He got involved in all aspects of the business: product design, where to cut, supplier negotiations, and advertising agency review. He believed that he had to stop the hemorrhaging of top Apple employees, and to do so he wanted to reprice their stock options. Apple stock had dropped so low that the options had become worthless. Jobs wanted to lower the exercise price, so they would be valuable again. At the time, that was legally permissible, but it was not considered good corporate practice. On his first Thursday back at Apple, Jobs called for a telephonic board meeting and outlined the problem.

The directors balked. They asked for time to do a legal and financial study of what the change would mean. ”I t has to be done fast,” Jobs told them.

”We're losing good people.”

Even his supporter Ed Woolard, who headed the compensation committee, objected. ”At DuPont we never did such a thing,” he said.

”You brought me here to fix this thing, and people are the key,” Jobs argued. When the board proposed a study that could take two months, Jobs exploded: ”Are you nuts?!?” He paused for a long moment of silence, then continued. ”Guys, if you don't want to do this, I 'm not coming back on Monday. Because I 've got thousands of key decisions to make that are far more difficult than this, and if you can't throw your support behind this kind of decision, I will fail. So if you can't do this, I 'm out of here, and you can blame it on me, you can say, 'Steve wasn't up for the job.'”