I’ve not been shy about my love of Apple products. I love the minimalist design of my computer, iPod, iPhone. I love how they just work. I love how they seem to be created with the express purpose of allowing others to be creative. When the iPod came out, I lost my mind; I was just blown away. How did they get such great sound in that tiny itty bitty gleaming white case? It was a piece of art I carried in my purse, a beautiful totem. I was seduced anew when in 2010 my crummy old Dell exploded and I needed a new computer. Big bought me a MacBook Pro. I was shrieking with joy at the purchase of this computer. It was amazing. I love everything about it – the fact that it integrates seamlessly with my iPod and my iPhone, the fact that it is beautiful, fun to use, and it feels like a device that supports creative passions, such as writing books.
What’s more, since I like CEOs in principle, I found Steve Jobs fascinating. When he passed away, I felt bereft. I worried that the creative spark that was born in every Apple product would fizzle, but I’ve come to believe the DNA is woven into the culture at Apple and will be there for generations. One can hope. Anyway, I began reading the Steve Jobs biography a few days ago, and I came across two passages that set off my Enron alarms.
Partly because of the poor sales of the Cube, Apple produced disappointing revenue numbers in September 2000. That was just when the tech bubble was deflating and Apple’s education market was declining. The company’s stock price, which had been above $60, fell 50% in one day, and by early December it was below $15.
This dramatic decline in Apple’s stock brought me up short. Though I remember the tech bubble bursting, I wasn’t aware that all companies were having these massive spikes and dips in their stock price. 50% in one day is alarming. Shocking, even. It was this fact that made me do a little research and realize that indeed, I had foolishly imagined that the market burst in a calm, orderly way with stocks s-l-o-w-l-y declining. Why I had overlooked that intraday turbulence as normal at the time, I don’t know – just a weird little blindspot. But it did serve to strengthen my belief that Enron was outperforming many companies in September 2000, notably Apple.
Enron’s stock closed at $85.33 on September 1, and was at $87.46 on the last trading day of that month. On December 1 it was $65.50 but by the last day of trading for the month (and the year) it was back to $83.13. Go Enron.
The second passage, which was actually the very next paragraph, was this:
Making matters worse was a June 2001 cover story in Fortune about overcompensated CEOs, “The Great CEO Pay Heist”. A mug of Jobs, smiling smugly, filled the cover. Even though his options were underwater at the time, the technical method for valuing them when granted (known as a Black-Scholes valuation) set their worth at $872 million. Fortune proclaimed it “by far” the largest compensation package ever granted a CEO. It was the worst of all worlds: Jobs had almost no money that he could put in his pocket after four years of hard and successful turnaround work at Apple, yet he had become the poster child of greedy CEOs, making him look hypocritical and undermining his self-image. He wrote a scathing letter to the editor, declaring that his options actually “are worth zero” and offering to sell them to Fortune for half the supposed $872million the magazine had reported.
Oh really? Color me interested. One thing I hadn’t done, which I probably should, was to go back and take a look at the Fortune archives to see what else they were reporting back then. We already know that in March, Bethany McLean had published “Is Enron Overpriced?” Then two months later, this hit piece on Steve Jobs came out (it was not written by Bethany McLean.) Fortune was definitely taking a jaundiced eye at CEOs, and lurid, lying portrayals seemed to be the mode of lashing out.Fortune seemed to be trying to stir up trouble by exaggerating and misrepresenting what was happening both at Apple and Enron. I am curious to know if Fortune published any positive articles at all during 2001 or if the publication was only interested in stoking class warfare.
While reading the book, I couldn’t help but compare Steve Jobs to Jeff Skilling. Steve Jobs was a tyrant, an ego-maniac who sucked the life out of people around him. He had an absolutely nauseating personality, prickly and short-tempered. Jeff Skilling was a prince. He could be demanding, but he didn’t humiliate people just for fun the way Jobs did. He was brilliant, but didn’t have weird affectations, such as practicing a “hard stare” that was designed to intimidate people. He was a doofy, brilliant guy who believed passionately and who was not without a great sense of humor.
Neither Steve nor Jeff saw their children as much as they’d like. Steve could be cold and mercurial to his own kids though, and by all accounts Jeff is a wonderful father. When he left Enron, it was for the purpose of spending more time with his children.
Another point zooms to mind, and this one really bugs me. After Dr. Lay passed away, there was some discussion about whether his heart problems had been revealed in the financial documents. I remember this public conversation very well and it angered me even then. But as I read the Jobs bio, that anger bubbled up anew. Steve Jobs was a narcissistic jackwagon who refused to have cancer surgery when his tumor was discovered, then refused to follow medical advice (the pancreas provides enzymes that make allow the stomach to digest food and absorb nutrients; after he finally had part of his removed some nine months after diagnosis, he had difficulty getting enough protein. The doctors advised eating meat and fish proteins as well as full-fat milk products. Steve, a vegan, stubbornly refused.) Even while he was going through these procedures, he refused to discuss the fact that he had cancer. Certainly nobody demanded he disclose this in his financial filings.
I am of the belief that CEOs are entitled to as much privacy as anyone else. I hate the fact that their compensation is discussed so openly. To give those busybodies a taste of their own medicine, I’m always tempted to say, “So how much money do you make? I think that’s way too much. You should give more to charity.” Some things, like money and health are nobody’s business at all. But CEOs, I suppose, are our cultural whipping boys right now so nobody is willing to shut up about these things.
The final point is that Steve Jobs was ensnared in what looks now like a quaint backdating scandal in 2006. He just had a run of bad luck and every time he would change the date of his options, they’d become worthless. But the SEC declined to pursue this for no real reason other than Apple acted “swiftly” to correct it – and probably the fact that Al Gore was on the board.
This made me think of the NatWest Three. They suspected something might be amiss with a deal they did with Andy Fastow and went to the British version of the SEC, and were promptly strung up like common criminals.
It seems to me in many ways that in the late 1990s and early 2001, the two companies were mirror images of each other. But Apple got the good fate and Enron was doomed to collapse.