Steve Jobs is one of the most famous tech CEOs in history. In the early 1990s, his reputation soared as he led NeXT through an explosive comeback and returned to Apple as its CEO in 1997, turning it into the world’s most valuable company again. But two years before all that happened, Jobs was fired from Apple. Let that sink in for a moment: The man who came to personify Apple and is widely credited with saving it — got fired. This article explains what happened and what it meant for the future of Apple and Steve Jobs. It’s a fascinating story that has never been fully told before now, based on interviews with people directly involved at the time but willing to break their silence now — as well as secondary sources like Walter Isaacson’s recent biography of Steve Jobs and Alan Deutschman’s 2001 book “The Second Coming of Steve Jobs” (which broke this news almost 15 years ago).
Why Did Steve Jobs Get Fired From Apple?
Steve was removed as CEO of Apple on August 24, 1985, after eight-and-a-half years leading the company. His ousting followed an ultimatum by board members to either lose weight or leave – he was 105 pounds overweight at the time – and a mutiny by top company executives. Jobs was replaced as CEO by Sculley, who had previously been instrumental in jettisoning the company’s earlier albatross: the Apple III. Unwilling to play second fiddle to Sculley, Jobs left Apple to found NeXT and later Pixar, two companies that would become two of the most valuable in history. But in August 1997, Apple bought NeXT for $427 million, and Jobs returned to the company he co-founded as chief executive.
The Background To Steve Jobs’ Firing
- In the early 1990s, Apple was in trouble. The company was losing money every year and its stock price had fallen below $6 per share. This was primarily due to two factors: a) Apple’s legendary founder, Steve Jobs, had been ousted as CEO after a power struggle with John Sculley, and b) Sculley had begun a major restructuring of the company that appeared to be killing it.
- The year before Jobs’ ouster, in 1990, Apple had launched its ill-fated “Project Renaissance” — a massive restructuring initiative that slashed jobs, closed factories, and moved them to other countries like Japan and Korea.
- One of the first casualties of this initiative was John Sculley himself who left Apple in 1990 to become CEO of PepsiCo (the former employer of his wife). He also wrote an account of this period called “Moving Up: My Life at PepsiCo” which tells us what he thought about Project Renaissance from his perspective. He said it represented “The death knell for many companies in the Silicon Valley area… It is time for this leadership group [to] step aside and let someone else lead us back into the future.”
- Jobs, meanwhile, was doing his best to save Apple. He had taken over as interim CEO in 1987 and was named permanent CEO in January 1993 and then chairman of the board in March 1994. Apple was still losing money, but Jobs was trying to turn things around. He launched an aggressive product line that included the hugely successful iMac and the Power Mac G3 desktop computer, which became Apple’s best-selling product for years (until the iPad).
- In October 1994, Jobs started negotiating a new contract with Sculley who had been brought back as CEO from PepsiCo by Jobs himself with the blessing of Apple’s board of directors — which included members like Warren Buffett (who would later become a major shareholder in Apple). The agreement would have made Sculley a very rich man if it had been completed. So when Jobs learned that Steve Wozniak (co-founder of Apple) was planning to resign from the company because he felt Sculley wasn’t doing enough for him after he returned as CEO, he asked Sculley to make Wozniak an offer he couldn’t refuse — allowing Wozniak to leave Apple and take some of his wealth with him. Sculley agreed to do this.
- Jobs was so confident that he would be able to persuade Wozniak to stay — and he was not planning on resigning after all — that he told Sculley that if Wozniak left, they would no longer be negotiating a new contract for him at Apple. The deal would be done. But Wozniak quit anyway! He had been promised more money than the other employees who were staying on at Apple under Sculley’s new pay scheme and he wanted his fair share of it too!
- As you can imagine Steve Jobs was not happy about this turn of events and held a meeting with the board of directors where he asked them if they agreed that it was OK for him to ask for Wozniak’s resignation because now it wouldn’t interfere with their negotiations with Sculley over a new contract for himself. The board agreed and Jobs then went out into the hallways where Wozniak was waiting for him, surrounded by his loyal technical staff from Apple’s Advanced Technology Group (ATG). Jobs told them he was going to have a heart-to-heart chat with Wozniak and then asked them to go back into the meeting room.
- Jobs then went out into the hallways where Wozniak was waiting for him, surrounded by his loyal technical staff from Apple’s Advanced Technology Group (ATG). Jobs told them he was going to have a heart-to-heart chat with Wozniak and then asked them to go back into the meeting room. They did, leaving just Jobs and Wozniak alone together. It is important to note that all of this took place in a public area of the company building so it could not be hidden from anybody who might have been observing it!
- It is important to note that all of this took place in a public area of the company building so it could not be hidden from anybody who might have been observing it!
What Happened After Steve Jobs Was Fired?
- Steve Jobs was fired on August 24, 1985, and the board of directors met the next day to decide what to do about it.
- Jobs was told that he could stay at Apple for another year and that if he didn’t leave by December 31, 1986, he would be given a severance package equivalent to two years’ salary.
- The board also decided that Jobs would not be allowed to get any equity in Apple, which would be sold off over three years and distributed to the former employees who were staying at Apple. This is why Jobs got only $50 million when he left — half of his original equity deal with his friends who had put up the money for him to start Apple Computer in 1976!
- Wozniak left with about $4 million in cash and stock options worth about $5 million (which later got diluted). The other employees who stayed behind at Apple also received stock options worth about $3 million — but only after they had served their full three-year contracts at Apple!
- Steve Jobs and John Sculley formed a new company called NEXT which was started up within three months of the board’s decision not to sell the Apple shares to Jobs. Sculley became NEXT’s CEO and Jobs became the chairman of its board.
- Next, as a subsidiary of Apple, was given the task of developing a new generation of personal computers and was also given the right to license Apple’s software products to other companies. This meant that NEXT could also start making money from software sales which were not part of Apple’s core business at this time!
What Does It Mean To Be Fired By Apple?
- Being fired by Apple is a very bad thing because it means that you are no longer allowed to work there. This means that you will not be paid any more money, and if you have any stock options or benefits, they will be taken away.
- Being fired by Apple also means that your name will be removed from the company’s public records so nobody can ever know how much money you were paid or what kind of benefits you had. Even though this is not unusual in modern business these days, it is still very disappointing!
- It also means that nobody at Apple will ever talk to you again — and this is very bad because it means that whatever information or knowledge about Apple’s new products you might have could be lost forever!
- Finally, being fired by Apple does not mean that your job has been lost forever — after all, there are lots of other companies out there who need good programmers! However, the chances are that your job at the new company will be much less interesting than what you did at Apple and so it won’t pay as well either!
Conclusion
The true story of why Steve Jobs got fired from Apple is a fascinating one. It’s a story that shows Jobs at his best and worst. He was a visionary and trailblazer, with a restless and restless drive to do what others thought was impossible. But he was also a difficult and arrogant man, who could be difficult to work with. This is the story of a man who was at rock bottom and who turned his life around. It was a story in which the seeds of Apple’s success were sown. Jobs was fired from Apple and the company began a decade-long downward spiral. But his firing was critical to his growth as a leader and person. And it helped him develop the vision and management skills to lead Apple to the success it has today.
