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By Root 459 0

following was important and started to feed off itself. When Rosen and another Morgan Stanley analyst, Barton Biggs, lunched with Arthur Rock in San Francisco, their conversation was summarized in a two-page memo circulated around the New York banking house. Written by Biggs, it had a breathless tone: “Arthur Rock is a Legend with a capital ‘L’ like Ted Williams or Fran Tarkenton, Leonard Bernstein and Nureyev. . . . In his line of business he is a player who is several orders of magnitude better than anyone else who has ever been in the game.” Biggs dutifully reported Rock’s comments about Apple to his colleagues at Morgan Stanley. “The people running this company . . . are very bright, very creative and very driven.” Words like those were guaranteed to make readers (and investors) froth at the mouth.

The early descriptions of Apple’s marketing campaign were hardly guaranteed to have the same effect as tips from one of the country’s most experienced venture capitalists. In set speeches and formal presentations, Markkula was given to describing Apple’s grand plan in three words: “Empathy. Focus. Impute.” The muddle of nouns and verbs provoked giggles among the advertising account executives but Markkula was expressing, in a peculiarly modern way, an old idea. In the 1940s, for example, IBM had used a similar strategy when it opened a lavish showroom on New York’s Fifth Avenue, and the company founder, Tom Watson, had later explained. “We were carrying the corporate image far out in front of the size and reputation of the corporation.”

At the start, Apple’s marketing strategy was not the result of any clearheaded vision. Notions of product life cycles resembled the sort of patterns that were common in the semiconductor industry where chips were liable to be superseded within twelve months of introduction. The early gaffes were concealed by the forgiving nature of an expanding market. At first there was great uncertainty at the Regis McKenna Agency about Apple’s prospects. The account executive, Frank Burge, explained, “People who knew Markkula and Apple wondered whether they would make it. We kept saying ‘These guys are flakes. They’re never going to make it.’ Jobs and Wozniak looked as if they were on something. It was counter to everything we believed in.” The agency people looked at Markkula, whom they didn’t consider to have much of a reputation for marketing, and Scott with his manufacturing instincts, and worried that nobody at Apple had any experience selling to consumers.

To hedge his bets McKenna took on another computer company, Video Brain, which at the start of 1978 announced a non-programmable computer named The Family Computer, with the hope that people would plug cartridges in and use the machine at home. The product was greeted enthusiastically by the press and by buyers for major department stores who felt that consumers wouldn’t want to learn how to program. Eventually consumers balked at the price, which kept creeping up, aided by the company’s ambitious decision to make the semiconductors for the machine. Video Brain failed.

However, for some months McKenna had a tough time trying to decide whether to dump Apple in favor of Video Brain. Though the agency chose to stand by Apple, its caution was reflected in the size of the advertising budget it proposed for the company’s second year. McKenna proposed that Apple spend $300,000. Markkula insisted that the budget be doubled. Markkula was convinced that it was futile for Apple to try to eke out a living on a small share of the microcomputer market and steadfastly insisted that Apple had to look imposing and pretend to be large if it was ever to become a force in the industry. McKenna explained, “I’m always conservative with very young companies. I don’t want to be stuck with unpaid bills of one hundred thousand dollars. Markkula kept saying ‘We must develop a position early.’ He really pushed for that. It was a very important decision.”

The advertisement that introduced the Apple II showed a kitchen with a woman merrily at work beside a chopping board