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Stupid Business Decisions: Apple Fires Steve Jobs


With the co-founder gone, the company's culture -- and its business -- started to rot.

In early 1983, Apple (AAPL) co-founder Steve Jobs had his sights set on hiring John Sculley, president of PepsiCo (PEP), to serve as the company's CEO and help manage its rapid expansion.

Jobs finally lured Sculley to Apple by asking, "Do you want to spend the rest of your life selling sugared water to children, or do you want a chance to change the world?"

Friction between Sculley and Jobs began almost immediately after his hiring in April of that year. Sculley removed Jobs from the development of the Lisa computer, and Jobs started concentrating on a project that would ultimately produce a little computer called the Macintosh.

When the Mac launched in 1984, it wasn't met with unmitigated success.

A larger number of Macs went unsold during the holiday season, and at the beginning of 1985, Apple posted its first quarterly loss in the company's history in addition to laying off 20% of its staff.

In April 1985, Sculley announced to Apple's board of directors that he was "asking Steve to step down and you can back me on it and then I take responsibility for running the company, or we can do nothing and you're going to find yourselves a new CEO."

Jobs got wind of Sculley's ultimatum and turned the tables, lobbying hard for the ouster of the man he brought into the company he started.

He lost.

On April 11, 1985, Jobs was relieved of all responsibility within the Macintosh division and was named chairman of Apple, with no role in the operations of the firm.

Andy Hertzfeld, one of the original Macintosh developers, was quoted as saying that "after a brief period of depressed cooperation, [Jobs] started attacking John" behind the scenes and was involuntarily removed.

In Hertzfeld's words, "Apple never recovered from losing Steve. They lost their soul."

Others were less sentimental about the departure of a man who was seen by some as dictatorial and diva-esque. Larry Tessler, who had joined Apple after a stint at Xerox (XRX), said, "People in the company had very mixed feelings about it. Everyone had been terrorized by Steve Jobs at some point or another and so there was a certain relief that the terrorist had gone but on the other hand I think there was an incredible respect for Steve Jobs by the very same people and we were all very worried -- what would happen to this company without the visionary, without the founder[,] without the charisma…"

During his time away from Apple, Jobs acquired Pixar and founded NeXT, a computer company that created the framework for what would ultimately become the Apple OSX operating system. Meanwhile, Apple, under the tutelage of Sculley, rolled out a string of high-profile flops, including the QuickTake camera, the Newton, the Apple Pippin game system, and an unsuccessful lawsuit against Microsoft (MSFT) for the theft of intellectual property.

Apple's financial performance also suffered:

Click to enlarge

On February 7, 1997, Apple purchased NeXT, which finally brought Jobs back to the company he started. Gil Amelio, who, in 1996, replaced Michael Spindler as CEO, who had replaced John Sculley when he was forced out in 1993, was canned later that year, and Jobs was on top once again.

He began by jettisoning the Newton and introducing exciting new products, one after the other:

  • The iMac
  • The iBook
  • Final Cut Pro
  • Mac OS X
  • Apple stores
  • The iPod
  • iTunes
  • The Mac mini
  • AppleTV
  • The iPhone

And, most important of all, this:

Click to enlarge

As for Sculley, he's currently a partner at private equity firm Rho Ventures, which he joined in 2004 after a stint at Sculley Brothers LLC, a private investment firm he founded in 1994, with, as the name suggests, his brothers David and Arthur. He also co-founded InPhonic (a bankrupt online retailer of cell phones), sits on the board of online identity authentication company IdenTrust, and was, at one time, involved with a company called Radiospire, which sold "chipset and system solutions to OEMs for eventual integration into cable replacement dongles, HDTVs, DVD players, game consoles, and other consumer electronics products."

Things don't seem to be all doom and gloom for Sculley, however. He made an investment in a product called The Wine Clip, a magnetic device that clips on to the neck of a wine bottle and makes it taste as if it has been aged longer than it actually has.

"I was asked to take a wine tasting to determine if there was a difference when using The Wine Clip," Sculley says in a testimonial on "I could sense a considerable difference. So much so that I invested in the company."

Bottoms up, John.

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