Despite his gruff initial reaction, Steve asked the others in the room about Cue’s proposal, and about the basic idea of selling direct to customers online. The executives around the table started to talk about all the problems they could foresee with an online store—tying customized purchases into a manufacturing system that had been built to create computers with standardized configurations; not having any research indicating that customers actually wanted to buy computers this way; and, most worrisome, the potential for alienating Apple’s existing retail partners, like Best Buy and CompUSA. Mandich, who was senior enough to know that an interesting discussion was developing, kept silent. Finally, one of the senior guys opposing the idea spoke up. “Steve,” he asked, “isn’t this all pointless? You’re not going to do this—the channel will hate it.” Cue, who didn’t know any better, turned to him immediately. “The channel?” he exclaimed. “We lost two billion dollars last year! Who gives a fuck about the channel?” Steve perked up. “You,” he said, pointing at the senior exec, “are wrong. And you,” he continued, looking at Cue, “are right.” By the end of the meeting, he had asked Cue and O’Connor to create an online store where buyers could customize their purchases—and to have it completed in two months.
The online store went up on April 28, 1998. As Cue prepared to drive home that evening, he walked past Steve’s office to tell him they’d sold more than a million dollars’ worth of computers in just six hours. “That’s great,” said Steve. “Imagine what we could do if we had real stores.” Nothing would ever be enough, Cue realized. He liked the challenge.
STEVE LOVED GREAT stores. When on vacation in Italy or France, he would insist that Laurene join him in visiting Valentino, Gucci, Yves Saint Laurent, Hermès, Prada, and the like. Wearing the ragged cutoff jeans and Birkenstocks of a bohemian American tourist out for a long day of informal sightseeing, Steve would squire Laurene around exclusive shopping districts. After strolling into one of these bastions of fashion, he and his striking blond wife would head in completely different directions. While Laurene browsed distractedly, Steve would buttonhole the salesclerks and bombard them with questions: Why had they chosen to devote so little space to their merchandise? How did people flow through the store? He’d look at the stores’ interior architecture, wondering how the interplay of wood, arches, stairways, and natural and unnatural light helped set a mood that was conducive to spending outrageous sums of money. To Steve, these stores were pulling off something he had never been able to manage: they sold a lifestyle product at an absurdly high margin by presenting it in a beautiful and yet informative way. The presentation itself helped justify the higher prices a customer was asked to pay. The dreary aisles and dull salesmen of Circuit City and CompUSA were making no such argument for Apple.
In 1998, Steve convinced Gap CEO Mickey Drexler to join Apple’s board of directors. Then, in 2000, he hired Target’s vice president of merchandising, Ron Johnson, and made him part of the executive team, with a bold and simple mandate: Create the ideal store. “The Mac is unique,” Steve told me many years later. “The trick was to get it in front of people somewhere where they could see what makes it different and better, and to have salespeople who had something to say about it. We thought if we didn’t do that, we’d go broke.”
Johnson came from old-school retailing, but he was the right man for the job Steve had in mind. After earning his MBA at Stanford, Johnson chose to start his career unloading trucks for the Mervyn’s department store. He then moved up the ranks at Target before making his mark by commissioning the architect Michael Graves to design a teapot exclusively for the department store. Graves had designed a teapot for the Italian appliance icon Alessi in 1984 that was still a global bestseller a decade later, and Johnson wondered, “Why are beautiful objects not available to everyday people, but only to the well-to-do?” It was a question that could have popped full-form out of the brain of Steve Jobs.
When it came time to introduce Graves’s teapot, Johnson engineered an event that also could have been dreamed up by Steve: he rented out the Whitney Museum in New York City to “let the press see what design could be for everyday people.” The teapot, and a line of other merchandise designed by Graves exclusively for Target, set the department store on the path that eventually led to its becoming the high-end, urbane alternative to Walmart. When Jobs came calling, he wooed Johnson, who was not headed toward a CEO role at Target, with the same kind of promise of unlimited opportunity that had worked with Sculley: “You get to do it all,” Steve told him.
“I looked at it as a chance to work with one of the greatest creators ever,” Johnson told a group of Stanford MBA candidates during a 2014 interview, “but my friends in the Valley all thought that I was nuts. ‘You’re leaving Tar-jzeh [the Francofied pronunciation that both mocked and trumpeted the chain’s high-end position] and going to that loser company?” It was the year 2000, when Apple was still seen as a marginal player in the market for personal computers.
Throughout the interview process, and in Johnson’s early days at Apple, Jobs spent more time talking to him about personal matters than retail affairs. “The first time we met,” Johnson said, “we talked for two or three hours about all kinds of things. Steve was a very, very private guy. He had grown up fast, and he was only best friends with a handful of people. He told me, ‘I want to be good friends, because once you know how I think we only have to talk once or twice a week. Then when you want to do something you can do it and not feel that you have to ask permission.’ ”
For some time, Johnson was the only retailer employed by Apple. For weeks after his arrival, he sat in on the executive team meetings and mulled over what would make for the ideal store. The key was the customer experience, and as Johnson pondered this, every idea he came up with was counterintuitive. Stores that sell to a customer once every few years generally opt for cheap real estate in remote locations; but the ideal store, for customers and for a brand looking to make its mark, would be right at the center of things. Telephone support should be fine for such occasional customers, but face-to-face interaction is what people really want, especially with computers, which are a lot harder to understand than, say, a raincoat. Salespeople are motivated by commissions, but customers don’t want to feel pressured into buying something they don’t want. Johnson came up with almost a dozen of these ideas, each of which went against the heart of traditional retailing practice. According to Johnson, Steve supported all of his most far-reaching thoughts. “ ‘If you think something through hard enough,’ Steve would say, ‘you’ll get to the inevitable answer,’ ” remembers Johnson.
At Mickey Drexler’s suggestion, Jobs asked Johnson to develop a prototype for what an Apple retail store might look like. Commandeering a warehouse a couple of miles away from the Apple campus, Johnson built his prototype under the greatest secrecy. Much like an Apple computer under development, the prototype went through several iterations. It was a design project as much as anything, and Steve pushed for a minimalist, clean feel, with easy navigation around tables featuring Apple’s laptops and desktop computers.
By late 2000, Jobs and Johnson had a prototype they liked. But on a Tuesday morning in October, Johnson woke up with an epiphany: the layout of the stores, which revolved around areas selling particular product lines, was all wrong. Steve and the executive team had been discussing one subject endlessly in their Monday-morning meetings: the digital hub. Johnson realized that the stores should be laid out to match that concept, with an area built around music, and another built around movies, and so on. It was, once again, a counterintuitive thought—and yet it was also, once again, a thought that would serve customers better than the more common approach that Apple had been on the verge of embracing. That morning, Johnson joined Steve for a previously scheduled review of the prototype. On the car ride over to the prototype hangar, Johnson told Steve that he thought they’d gotten it all wrong. “Do you know how big a change this is,” Steve roared. “I don’t have time for this. I don’t want you to say a word to anyone about this. I don’t know what I think of this.” They sat for the rest of the short ride in silence.