What Steve Jobs learned in exile from Apple

Apple fired Steve Jobs on September 16, 1985. Apple appointed him interim CEO exactly 11 years later, on September 16, 1996. Of course, Jobs later became permanent CEO, a position he held until 2011 when he resigned for health reasons.

Both times, Apple was in shambles, with its market share declining. And the company in danger of going out of business. Its financial condition was worse in 1985 than in 1996. But in 1996, Michael Dell was saying, unironically, that Apple should just give it up and return all the money to its shareholders and close up shop.

In 1985, firing Steve Jobs was part of the solution. 11 years later, hiring him back was part of the solution.

And it’s safe to say he didn’t let the company down. During his second tour with Apple, he arguably became the most effective CEO of the century. Which century? He served in two centuries, and the second one is still far from over, but he seems likely to be in the running for the 21st century as well.

A disclaimer

I am neither a Steve Jobs fan nor an Apple fan. If you want a gushing tribute to Steve Jobs, I recommend you stop reading now.

If you want an analysis from a complete outside perspective of what was different about Steve Jobs the first time around versus the second, and how he went from getting his butt kicked by Commodore to surpassing Microsoft in valuation, even though he couldn’t pass them in sales, then you might want to keep reading.

I have never been a fan of Steve Jobs, but I have always been curious what he learned in 11 years. Because it’s clear from an outside perspective why Apple fired him in 1985. It’s also clear from an outside perspective that something was very different in 1997, or soon enough after, that he was able to rescue Apple and set it on its way to becoming the world’s most valuable company.

Not only that, maybe what he learned is useful. I am not a CEO, and I don’t expect to ever be a CEO. But maybe the thing he learned is useful for people who aren’t CEOs as well.

What went wrong for Steve Jobs at Apple in 1985?

Apple had a good thing going in the 1970s. In 1977, they introduced the Apple II. It was an excellent machine. It had color when its two main competitors didn’t. It also offered much better expansion capabilities than the other two machines. The expansion capability was a stroke of brilliance. Even though the TRS-80 outsold the Apple II, the Apple II lasted much longer on the market because it was so easy to literally plug new capability into the machine to stave off obsolescence.

The problem was following it up. Steve Jobs was in charge of three potential follow-ups to the widely successful Apple II.

The Apple III

The first, the Apple III, was an interesting machine, but it was a classic case of form over function. It was incrementally better than the Apple II. But it was expensive and unreliable. The case design was more ambitious than the Apple II. But the system ran hot, and Steve Jobs wouldn’t let the engineers put a fan or even vents in it. He said fans were inelegant and air vents were ugly. The result was an unreliable machine, and the easiest way to fix it was to pick it up off the table and drop it (as elegantly as you could of course) a few inches onto the table. The hope was the impact would reseat any loose chips back in their sockets.

I don’t like fan noise either, but I dislike the idea of dropping $4,400 computer on the table to try to fix it even more. I don’t think I am alone in that.

The Apple Lisa

His next project was a computer called Lisa. Lisa was extremely innovative, with a graphical user interface and a mouse way back in 1983. Problem was it was underpowered and overpriced. It only ran at 5 MHz and it cost $10,000.

The Macintosh

His third attempt went better. That computer was called the Macintosh. Conceptually, it had a lot of similarities with the Lisa. But with some give and take, they were able to make it a little bit faster while reducing the price down to $2,495. It was still expensive, but the price was a bit more sane. To put things in modern perspective, that Mac cost $7,780 in 2025 dollars versus $32,528 for a Lisa in 2025 dollars.

The price was better, but still not low enough to provide the immediate help Apple needed. It was clear this computer was the future, but after selling 70,000 units in its first 100 days, it was something people talked about a lot more than they bought. I still argue it was a long-term success, but a short-term failure.

The short-term help that Apple needed at the time came in the form of the Apple IIe and Apple IIc.

What Steve Jobs was doing wasn’t working. Steve Jobs’s boss was John Sculley. Sculley had been an executive at Pepsi, and Jobs lured him to Apple by asking him if he wanted to keep selling sugar water to people or if he would rather come over to Apple and change the world. That’s a classic Steve Jobs line if there ever was one. John Sculley came over to Apple, and a few months later, he fired Steve Jobs.

What was NeXT for Steve Jobs

After leaving Apple, Steve Jobs started his own computer company, a company he called NeXT. It was a commercially unsuccessful computer along the same lines as the Apple III and the Lisa. It was technologically innovative. But it cost $6,500 when it launched in 1988. It saw some use in universities, but not much use outside of academic environments. The World Wide Web was created on NeXT computers, but the reason it caught on was because people got it running on less expensive machines.

Jobs also ended up funding Pixar, becoming its majority shareholder. By the mid 90s, Pixar was going much better than NeXT was. Pixar had a smash hit movie in Toy Story while NeXT floundered.

Steve Jobs’ return to Apple in 1996

Steve Jobs returned to Apple because Apple bought NeXT in December 1996.

Apple desperately needed modern operating system that could compete with Windows NT. Their efforts to build something internally had failed, so they went looking for an acquisition target. The two finalists were Steve Jobs’ NeXT and Be, a startup led by Jean-Louis Gassée, another former Apple employee.

Turning BeOS into a next generation Mac operating system was arguably the faster route, and the asking price was lower, but Apple would only bid $200 million while Gassée demanded $275 million. Apple chose the other option, buying NeXT for $429 million. One of the things Apple said to Steve Jobs was that they were struggling in the business market. Steve Jobs replied, “That’s our specialty at NeXT!”

That was not, in fact, their specialty. But Apple bought the line and bought the company.

What changed?

When you listen to the way Steve Jobs talked at NeXT, it sounds like classic Steve Jobs. His pitch went something like this:

Hi, I’m Steve Jobs. I make computers. When we made this computer, we approached all of the leading universities. But we didn’t ask for their specifications. We asked for their dreams.

If you already like Steve Jobs, it’s brilliant. But if you don’t already like Steve Jobs, he sounds like a used car salesman. The pitch just plays right into what you already think of Steve Jobs.

The motivational author Simon Sinek identified a subtle change in the way Steve Jobs delivered his message sometime after he returned to Apple. Sinek summarizes his later sales pitch like this.

We believe in challenging the status quo. We believe things should be well designed, elegant, intuitive, and easy to learn and use. We make computers.

It’s basically the same message. But the order is completely different. And also saying why he did what he did. He was no longer making computers for the sake of making computers, but rather, to challenge the status quo.

Turning the message on its head

The old Steve Jobs started with what he did, how he did it, and maybe why he did it. Saying he didn’t ask for specifications, but asked for dreams has an implied why in it. But it wasn’t as good as asking John Sculley if he wanted to get away from selling sugar water and change the world.

Sometime after 1996, he flipped the order around. He started out by saying why he does what he does. Then he said what he did. And finally at the very end, he gets around mentioning that he makes computers.

The message works because he hooks you in with vision. You don’t care what he builds, you’re interested. So when he says he makes computers, you’re thinking to yourself, I need one of those or I’ll be needing one soon, so why wouldn’t I buy one from him?

That’s why things went differently 11 years later.

What happens when you don’t say why you built it

I alluded to this earlier. My favorite computer company did as much as anyone to send Steve Jobs into exile. Commodore controlled nearly 2/3 of the computer market in the mid-1980s. Their approach was to look at the competition, build something better if they could, and sell it as cheaply as they could. Their best selling computer, the Commodore 64, outsold the Apple II nearly 2 to 1 in spite of being on the market for five fewer years. Then they followed it up with a computer that was 10 years ahead of its time. It had color, it had great sound, it had fully preemptive multitasking, and cost hundreds of dollars less than a Mac cost. Steve Jobs dismissed it. It came out in 1985, the same year Apple fired Steve Jobs. Apple was scared even if Jobs wasn’t.

Commodore was out of business by the spring of 1994. Their products were innovative and a great value, but they couldn’t tell you why they built them. You can probably guess what happened between 1985 and 1994.

By the time PC clones got color and sound and could beat Commodore in price, Commodore was done. Microsoft couldn’t tell you why they build anything either, but they cornered the market on race-to-the-bottom commodity computing. Or at least the operating system component of it. They left the messy business of building hardware to others.

How Steve Jobs sold against the odds

Steve Jobs was successful because he figured out that by flipping his message around, he could sell his vision. That worked well enough to bring his company out of survival mode. Then he was able to move into MP3 players, followed by phones, followed by tablets. Apple was more successful in those product categories than it was in computers. That in turn helped increase computer sales since Apple phones and tablets and MP3 players work better with their computers than with Windows computers. But it also opened other revenue streams, like selling music and digitally distributing applications. They get a cut of all of that revenue.

That same line works whether you are selling computers, phones, tablets, apps, or music.

How to talk like Steve Jobs. The successful version.

If you want to sell a product or idea like Steve Jobs, find a way to succinctly say three things. Start with why you, or your company, built this thing. Then say how your ideas are different or better, ideally tying it into that first point. At the end, say what the product is. When you work in sales, one of the things they tell you to have is an elevator pitch. Why your company built the product, what makes it good and makes it different, and what it is can be a very compelling outline for an elevator pitch.

You don’t go into a ton of technical detail, but there isn’t enough time for that in the elevator pitch anyway. But you leave the person with the impression that your company has a vision, you know what you’re talking about, and if what you sell is something they need, they’d do well to buy it from you.

Dave Farquhar

David Farquhar is a computer security professional, entrepreneur, and author. He has written professionally about computers since 1991, so he was writing about retro computers when they were still new. He has been working in IT professionally since 1994 and has specialized in vulnerability management since 2013. He holds Security+ and CISSP certifications. Today he blogs five times a week, mostly about retro computers and retro gaming covering the time period from 1975 to 2000.