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Q&A with former Apple CEO John Sculley on the Newton, the iPhone 7, and starting a business today

The legendary John Sculley ran Apple for 10 years and Pepsi-Cola for six years before that. Back in 1983, Steve Jobs pitched John Sculley to join Apple with the following now-legendary line: “Do you want to sell sugared water for the rest of your life? Or do you want to come with me and change the world?”

The result was some of Apple’s most groundbreaking and tumultuous years. They included the development of the hugely consequential (if ultimately ill-fated) Newton MessagePad; it was Sculley who coined the phrase “personal digital assistant.” And a popular myth about Sculley and Steve Jobs — that Sculley had a direct hand in firing Jobs in 1985 — isn’t true.

Since then, Sculley has launched many successful business ventures, and he shows no signs of slowing down. We had a chance to talk to Sculley by phone and ask him about his time at Apple, his thoughts on the iPhone 7, and his latest book Moonshot. The following interview is edited for length and clarity.

ExtremeTech: Thank you for taking the time to talk with us. Can you tell us a little bit about your time with Steve Jobs?

JS: Steve Jobs — he’s an American treasure. He’s a genius. He always was. Steve and I, there’s probably no one on the planet who closer to Steve Jobs for the few years that we worked together than me. The experiences we had together were incredibly valuable for me to learn. At the same time, I was there when Steve was creating a lot of the things which weren’t technically possible back in the early ’80s. [With] Moore’s Law, you just couldn’t do it. It wasn’t until that Steve came back a much more mature Steve Jobs 2.0 that he was actually able to implement it. We were talking about phones and talking about a lot of the very cool stuff that Steve ended up doing later in life.

ET: I remember going into Manhattan to see the [color] Mac II for the first time in 1987, I think it was.

JS: Really? Wow. Yeah. That was [also] the Mac SE. That was a great product. I loved that.

ET: Yeah, the Mac SE was fantastic. We also think people don’t realize how much of a connection ARM has from the Newton to today, to the iPhones today.

JS: A lot of people think that Newton was a failure and it’s absolutely true. When we launched it, the handwriting was terrible. Recognition just didn’t work and people made fun of it. The thing that a lot of people don’t know is that when Walt Mossberg left The Wall Street Journal, he listed the most important innovations he’d ever seen in the 20 years he was there, and Newton was right up there on the list. The reason was it was the first personal digital assistant, way before Siri, Cortana…

Apple Newton MessagePad

JS: …the [same] things we have today, but the technology was just pretty early in those days, obviously. The other interesting thing was was that there was no low-powered microprocessor, and we needed one that could render graphics. We had an object-based operating system that we created for Newton, and the small processors for handheld products could only do integer arithmetic. They couldn’t do graphics. They didn’t last very long. It took too much battery power.

We created a company together with Hermann Hauser out of Cambridge University. He was the founder of Acorn [Computers] and it was all Hermann’s invention, but it was all architected to the requirements of Newton. We had a Newton team up at 1 Kendall Square next to IBM in Boston. They developed the operating system, which was a derivative of Schema and a little bit of Smalltalk operating systems that had been created back in the ’70s. Again, they couldn’t run fast in those days. Out of that came ARM, and Apple owned 43% of ARM.

I was pushed out of Apple in 1993 because I refused to license the Mac software. I thought it would bankrupt the company. Apple did license the Mac software, almost did bankrupt the company.

JS: It wasn’t until Gil Amelio, who was the second CEO to follow me, sold the 43% of the ARM technology that Apple owned for $800 million. That [move] kept the doors open at Apple [and prevented it] from going bankrupt. But it also gave them the ability to go and buy Steve Jobs’s NeXT, and you know the rest of the story.

In hindsight, Newton actually not only helped co-develop the microprocessor that’s in 7 or 8 billion mobile devices today, and that just got acquired for $32 billion by SoftBank. It also helped define the whole idea of what personal digital assistants were, and screens that you could do gestures on — all that stuff which we later saw commercialized 15 years later.

ET: Everyone I’ve spoken to over the years who’s had a Newton thought it was fantastic, aside from the handwriting part – [those] who understood what it was for thought it was great.

JS: Yeah. The funny thing is it was our mistake. We actually went through a very talented guy Stepan Pachikov, who was a Russian scientist. He was out on the leading edge of stuff and he thought that the handwriting would work better than it did, and it didn’t. He went on to be successful at other things, and actually moved to Silicon Valley.

We never needed the handwriting recognition. It’s a shame we ever put it in the release of the product because it was so ancillary. It had a digital assistant. You could’ve done it without any handwriting recognition. You may remember, about a year after Newton, there was a product called PalmPilot and they did something much smarter than we did. They came out with this Graffiti language, which was a better way to do it. They said, instead of trying to have the computer recognize your handwriting, we’ll just create an alphabet of symbols and it worked perfectly.

ET: I was pretty good at [Graffiti], but not great.

JS: Yeah. Anyway, now you can do all that with speech recognition. You don’t need handwriting recognition anymore.

iPhone 7 3ET: Apple’s in the news a lot right now. I mean, it’s always in the news for one reason or another, but especially now for the iPhone 7.

JS: I’m a big Apple fan. I own an iPhone. I love it. My favorite product is the iPad Pro.

On the iPhone 7, I think they’re really laying the groundwork for 2017, which will be the 10th anniversary of when Steve Jobs introduced the first iPhone. The most significant set of components, I think, that they’ve sort of teased about, is the AirPods. I have no inside information, just to be clear, but the speculation is is that the AirPods will play a bigger role in the future.

As you add more and more Siri capability into an iPhone, that there are a lot of things that the AirPods should enable you to do as both a microphone and a speaker. Think of [Amazon’s] Alexa and how cool that is. Siri is obviously getting better and better over time, too. I think, from my vantage point, I’m really excited and looking forward to 2017 when the 10th anniversary iPhone, I would expect, is going to be amazing.

ET: That brings to mind tapping the one AirPod and thinking of Star Trek and saying, “Computer.” Like you do that same kind of motion that you see in science fiction with that device.

JS: Yeah. I suspect it will be really cool. I can’t wait to have one. I mean, that’s a product, the one in 2017, I’d probably stand in line to get one like [Steve Wozniak] does. Woz usually stands in line. He’ll go there and wait for seven hours to be one of the first.

ET: Tell us about your latest book Moonshot.

John Sculley: Sure. Moonshot is not an autobiography. It’s really about lessons learned by successful entrepreneurs, including myself — all about what do you have to do to take advantage of the exceptional time we’re at now, with this exponential growing technology to be able to build multi-billion dollar businesses… The entrepreneurs [in the book] were comfortable talking to me because they knew I wasn’t trying to write a sensational story. I was trying to get their ‘lessons learned’ as well. They talked candidly about what went well and what doesn’t go well. Obviously, when you’re taking high risks, you make mistakes, and the mistakes you really learn more from than the successes. That was the motivation for Moonshot. Moonshot

The real insight is something that is already happened: There’s been a market power shift. Remember, my background is marketing. The power shift in the marketplace has been that in every industry, no matter what the vertical sector may be, that the power has shifted to the customers. The customers now have more transparency, and they have more access to opinions and other customers unfiltered. They’re paying more attention to the opinions of other customers than they are to the reputations of the large incumbents.

A simple example would be in June: No one had ever heard of Pokémon Go. By the middle of July on one day, more people were in Pokémon Go than Twitter. You get word of mouth. That was the motivation, this power shift of customers in control.

What it led to is, what do you do with this information? A good example I talk about [is to] forget about the business plan. The business plan is just a budgeting exercise and sure, you got to have it, and you have to have a budget, too. But what you really want, if you’re going to build a disruptive business, is you start with a big customer problem that needs a solution that probably has a big pain point for customers, so they’re aware of it. Then you build a customer plan.

ET: We know at least two of your latest companies, PeopleTicker and Zeta Interactive; can you tell us a little bit about what you’re working on now?

JS: With Zeta Interactive, we are very profitable and growing very fast; we have about 1,300 people in the company. We manage the whole life cycle of the customer, from engagement through retention and monetization. We sell to about 500 of the Fortune 1,000. We have one of the largest databases on people, I think, since we’re in markets besides the US. We have about 370 billion profiled names in our database. We use machine learning technology. We are able to provide some services to big verticals like insurance, wireless operators, and financial services.

PeopleTicker is a company — I co-founded Zeta, I didn’t co-found PeopleTicker, but I’m an investor in it and a chairman of it. What PeopleTicker does is it says, we’re in the era of urgency. It’s all shifting to project-based work, where people are being recruited on project teams that may come from your organization, but may also come from independent contractors, partners, and customer people. These project teams have all kinds of new technology tools. A good example would be Slack. People use Slack channels to be able to communicate with different people and different project needs. The result is that all of the job growth in the US — not some of it, but all of it — is coming from independent contractors. They work for themselves, but they hire out on a part-time basis, a project basis, whatever they need. They’re the on-demand workforce.

John Sculley 2Now with data analytics, PeopleTicker can tell you for every city, let’s say in the United States, for 16 different job verticals, what the pay rate is for those job verticals, either for independent contractors or for permanents. It’s really used as a planning tool. If someone says, ‘Gee, I’ve got an urgent need to put together a project team. I need 160 people. I’m looking at 4 different cities; where should I do it? What’s the comparable costs from a pay rate to bill rate for those kinds of people?’ I can look at a mix of perms versus independent contractors. You can go right now to India and say, ‘What would it cost in India versus Mexico versus Canada versus the US in the individual cities for that.’ It’s a fast-growing platform, all based on sophisticated structured data analytics.

I’ll give you another one, which is an amazing healthcare company called RxAdvance. This’ll probably be the biggest one that I will have done since Apple when it gets completed. The biggest cost in healthcare are chronic care patients, and the single biggest part of that spend is in pharmaceuticals and medication therapy management, especially drugs. Supply chains are traditionally procurement networks, which are managing the cost of procuring drugs. Our team has had over 60 years experience in the health care. We started this company three years ago. What we do is we go in and we unlock all of the inefficiencies, complexities of avoidable drugs for chronic care patients and related medication therapy management, which is incredibly complex and way too costly. We believe that by 2020, that we’ll get this business up to about $10 billion of revenue and about $800 million in profit.

I’ll give you one final example. We were at the Goldman Sachs FinTech Conference this week in New York and we just took out a stealth FinTech company called Lantern Credit. I’ll be doing the keynote at Money 2020 in Las Vegas where we’ll unveil demonstrations of it. This is, again, a sophisticated data analytics company that enables you to improve your credit score in less than 24 hours, versus the 6 to 8 months it takes today through a complex dispute resolution process that often doesn’t work. The first generation of consumer credit score companies were basically about ways to sell credit cards. What we do is we can go in and enable all kinds of ways of unlocking, particularly middle income people, giving them far more credit worthiness because of the types of things that we can do working with large banks and our sophisticated data analytics platform.

You can order Sculley’s latest book Moonshot!: Game-Changing Strategies to Build Billion Dollar Businesses from Amazon.

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