After the IPO, Steve was worth $256 million. That widely publicized number, along with the fancy cars that started appearing in the Apple parking lot and the talk of country homes and expensive vacations, contributed to a sense within the company that the offering had created a set of winners and losers. Apple, which had grown from a handful of people in 1977 to 2,900 employees by the summer of 1981, was riven in more ways than one. In the fall of 1980, its head count had doubled in just three months. Apple “old-timers” took to calling that short stretch of time “the bozo period,” and scorned the newbies.

Steve was rarely showy about his newfound wealth, but he widened the rifts in the company in other solipsistic ways. Broadly speaking, Apple employees were focused either on supporting and milking the revenue from the Apple II or on exploring new products. The Apple II was the breadwinner driving the company’s growth. The work going on around it was the classic, incremental work of improving and deepening the usefulness of a product so that it would be successful for years. Apple II staffers built an extensive retail sales channel of hundreds of resellers; worked with the emerging world of software developers to ensure that they had the necessary tools to write more interesting software that would attract even more buyers; and labored on follow-up machines, like the Apple IIe and the Apple II GS. Their work paid off: the Apple II, in its various models, was a remarkably resilient product, selling nearly six million units before it was finally discontinued in 1993. For a decade, the company would depend on Woz’s reliable old Apple II to fuel its soaring growth. Indeed, it wasn’t until 1988 that Macintosh revenues at long last exceeded those from Apple II sales.

It didn’t take long for Steve, whose official job was to head up product development, to simply stop caring about the Apple II. He felt, in his bones, as he liked to say, that Apple would need a great new product, that the industry was moving at such a rapid pace that the company would be fatally wounded if all it had to offer were slightly improved versions of the Apple II. He made his feelings very clear, and suggested that any engineer or marketer worth his salt would be drawn to working on the creation of the next breakthrough product with him. While Steve’s narrow attitude slighted scores of the company’s hardware and software designers, it was especially insulting to Woz, who eventually chose to nurse along the Apple II rather than join the Mac team. “Some Apple II engineers were being treated like they didn’t exist,” Woz would later say. As the company grew, he and Steve couldn’t help but grow apart.

In a broad way, Steve was correct in thinking that Apple needed a significant new offering, and soon. The best recipe for maintaining steadily rising revenues in the computer hardware business is to have a breakthrough product ready just when your last breakthrough is reaching the peak of its own success. Markkula, Scotty, and the board all agreed that the company urgently needed a new model, ideally one better tailored to the needs of office workers. IBM, which had been the sleeping elephant of the industry, had reportedly started studying the possibility of building its own personal computer. (The device would eventually make it to market in the summer of 1981.) So in 1978 the Apple board gave Steve the budget and the engineering talent to go ahead and start developing a successor to the Apple II.

The personal computer industry was in its infancy, and everyone was flying blind, including Steve. One important thing he didn’t yet understand was that most breakthrough products result from a long cycle of hit-and-miss prototypes, the steady accumulation of features, and a timely synthesis of existing technologies. He and Woz, on the contrary, had stuck their heads down, worked hard, and on their very first try created something brilliant that the industry had never before seen. That was Steve’s idea of product development. But he was about to discover that that wasn’t the way it worked inside a corporation.

The company had concrete and meaningful goals for its new machine, to be called the Apple III. It would be aimed at the office as well as the home, and would support a color monitor that displayed 80 characters of text on each line, twice as many as the original Apple II. Since a typical typewritten document can accommodate 80 characters per line, the Apple III would compete head-on with specialized word-processing computers from Wang Laboratories that over the past two years had cascaded into offices across the United States and Europe in even greater numbers than the Apple II had landed in people’s homes. Done right, the new model would have been Apple’s entree into the corporate market for personal computers.

The success of the Apple 1 and the Apple II had given Steve a little too much confidence in his own technical judgment. He made a series of bad decisions that would be hard to undo later, the most important being his edict that the Apple III, whose footprint had to be small enough to leave lots of open room on an office desk, would be absolutely silent, which meant no internal cooling fan. This slowed the development process to a crawl, because engineers had to figure out how to create convection currents to draw heat away from the motherboard, which held all the semiconductor chips, as well as from the power supply. Without a fan, those components could make the innards of a small computer hot as a pizza oven. The solution the engineers finally came up with was to make the cabinet itself act as a heat sink to help draw out and dissipate the heat; however, that meant making it out of cast aluminum, a good heat conductor but a material that added considerably to the cost and complexity of manufacture.

It wasn’t just Steve’s demands that slowed the Apple III. Since Apple would be wooing customers who might have purchased an Apple II, the company had to make sure that that software created for the II would also run on the III. This “backwards-compatibility” was an annoying requirement that was far more complicated than Steve imagined, and the time his engineers spent learning to accomplish it slowed the project almost as much as his fussy hardware demands. Steve pushed the Apple III engineers relentlessly to solve these problems quickly. It didn’t matter to him that these were gnarly problems to solve. Accustomed to Woz’s magical ability to defy old boundaries and technical obstacles, he expected these new hardware and software engineers to do the same. They couldn’t.

STEVE’S IMPATIENCE WITH the nuts and bolts of corporate life was understandable. Steve was a visionary. It’s a word that is loosely tossed around these days, especially in Silicon Valley, but it legitimately applied to Steve even from very early in his life. He had the ability to see around corners, to envision how the seeds of existing ideas could be combined to create something unimaginable to others. The challenge he faced was to become an effective visionary—that’s what turns a dreamer into someone who changes the world.

A few weeks before he made that drive up to the Garden of Allah in late 1979, Steve had decided, at the urging of Bill Atkinson, Jef Raskin, and several other Apple technical employees, to check out some work being done by a well-known computer scientist named Alan Kay and some other engineers at Xerox Corporation’s Palo Alto Research Center, just a ten-minute drive up the peninsula from Cupertino. PARC, as it was known, would become famous for developing the concepts behind any number of important technologies, including Ethernet local area networking, high-resolution video monitors, laser printing, and object-oriented programming. That summer, Xerox had joined a number of venture capital firms in a $7 million secondary investment round in Apple (as part of the deal, Steve sold $1 million worth of his own stock to the investors), and in return had agreed to give Apple a peek at its most advanced technologies, or, as people in Silicon Valley like to say, to “open the kimono.” These visits were nothing short of an epiphany for Steve, because the technology at PARC was the visual expression of everything he believed computers could and should be.