Tim Cook: The Genius Who Took Apple to the Next Level

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Copyright © 2019 by Leander Kahney

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For Traci, Nadine, Milo, Olin, and Lyle

Contents

Title Page

Copyright

Dedication

Introduction: Killing It

Chapter 1: The Death of Steve Jobs

Chapter 2: A Worldview Shaped by the Deep South

Chapter 3: Learning the Trade at Big Blue

Chapter 4: A Once-in-a-Lifetime Opportunity to Join a Near-Bankrupt Company

Chapter 5: Saving Apple Through Outsourcing

Chapter 6: Stepping into Steve Jobs’s Shoes

Chapter 7: Finding His Feet with Hot New Products

Chapter 8: A Greener Apple

Chapter 9: Cook Fights the Law, and Wins

Chapter 10: Doubling Down on Diversity

Chapter 11: Robot Cars and the Future of Apple

Chapter 12: Apple’s Best CEO?

Acknowledgments

Notes

Index

About the Author

Introduction

Killing It

Each time a man stands up for an ideal, or acts to improve the lot of others, or strikes out against injustice, he sends forth a tiny ripple of hope, and crossing each other from a million different centers of energy and daring, those ripples build a current that can sweep down the mightiest walls of oppression and resistance.

Robert F. Kennedy

When Tim Cook took over as CEO of Apple in 2011, he had big shoes to fill. One of the largest, most innovative companies in the world had just lost its visionary founder. Steve Jobs and the company he cofounded were beyond iconic, and with him gone, pundits predicted disaster. With rising competition from Android, and uncertainty about future products, Cook had everything to lose by stepping into the driver’s seat.

But the critics were wrong. Fast forward eight years, and under Cook’s leadership, Apple has been absolutely killing it. Since Jobs died, Apple reached the ultimate milestone, becoming the world’s first trillion-dollar company, making it the most valuable corporation in the world. Its stock has nearly tripled. Its cash reserves have more than quadrupled since 2010, to a record $267.2 billion—despite its spending nearly $220 billion in stock buybacks and dividends. For perspective, the U.S. government only has $271 billion cash on hand.

To get an idea of just how enormous Apple is during Tim Cook’s CEO tenure, consider that the company made $88.3 billion in revenue and $20 billion in profits in Q1 of 2018, as I’m writing this book. By comparison, Facebook, with more than 2.2 billion active users, made just $40.6 billion over all of 2017. Not to mention that in just those three months, Apple made almost as much as its rival Microsoft—once the biggest company in tech—during the entire year of 2017, at $90 billion.

Cook’s Apple is crushing the competition in almost every way:

The iPhone is the single most successful product of all time. It’s a juggernaut. Apple has sold more than 1.2 billion iPhones in the ten years since it was introduced—four of those years thanks to Jobs’s leadership, then the rest under Cook. Cumulative sales are approaching $1 trillion in revenue alone. While Android may ship more handsets, Apple is by far the revenue leader and taking 80 percent of all the profit in the mobile industry. While Apple sells premium handsets with 30–40 percent profit margins, the rest of the mobile industry fights for the low end of the market, where margins are razor thin. And with the iPhone X and its offspring, Apple’s market share continues to grow. The rest of the industry is left to fight over smaller and smaller scraps of profit.

Apple is also succeeding in computers. Although computers play second fiddle to the iPhone, Apple has recently been growing its PC market share for the first time in decades—and is the only company doing so. PC sales are down 26 percent overall from their peak in 2011. Thanks to tablets and smartphones, the PC market seemed unlikely ever to recover. But since Cook took over, Apple has been steadily growing its slice of the market, from 5 percent in 2011 to about 7 percent today. That may seem like modest gains, but like with the iPhone, Apple is only competing at the high end of the market.

Apple blew open a whole new industry with wearables. Launched in April 2015, the Apple Watch is the first major product of the Tim Cook era that had no input from Steve Jobs. It is a sleeper hit, with more than forty million Apple Watch wearers and sales up 50 percent quarter over quarter. Apple’s watch business is already bigger than Rolex. Apple’s AirPods are another hit; the company is expected to sell fifty million–plus AirPods and Beats headphones in 2018. With the new HomePod speaker, Apple’s smart audio business could exceed $10 billion annually.

Apple’s service business is also growing astronomically. Responsible for $9.1 billion in Q2 2018, it is Apple’s second biggest segment by revenue and is almost as big as the satellite TV company Dish Networks. If it were to stand alone, services would be a Fortune 500 company. Some pundits see its services business, built on sales of music, apps, and digital subscriptions, growing to $50 billion by 2020, which could make it bigger than Mac and iPad combined—and bigger than even Disney or Microsoft.

And perhaps the best is yet to come. Behind the scenes, Apple is rumored to be building a robot car, which, if successful, threatens to disrupt the $2 trillion global automotive industry the same way Apple crushed the mobile phone industry. GM and Ford may end up like Nokia and Motorola.

Defying expectations, Apple is enjoying unprecedented levels of success under Tim Cook’s leadership, and looks to have a bright future. Despite fears that there would be a mass exodus of talent after Jobs’s death and that the company would be gutted as key players left for rivals, Cook has largely held together the management team he inherited from Jobs, supplementing it with clever, high-profile hires of his own. Not only has he steered Apple through a time of uncertainty following Jobs’s death, and grown it beyond belief, but he’s also led a cultural revolution within the company. Under Cook, Apple isn’t as cutthroat and abrasive as it was before—without undoing the company’s core products or increasing profits. While Jobs often set teams against each other—and even individual executives—Cook has favored a more harmonious approach, letting go of a few executives who created conflict and drama while increasing cross-collaboration between previously heavily siloed teams.

Cook believes strongly that companies should have a good strategy coupled with good values. In late 2017, his six core values for running Apple were quietly published in an obscure financial statement, and subsequently were given their own subsections on Apple’s website. Though they haven’t been publicly identified by Cook or the company in any formal capacity, looking at Cook’s leadership style over the last eight years, these six values shed light on him as a leader and provide the foundation for everything he has done at Apple:

Accessibility: Apple believes accessibility is a fundamental human right and technology should be accessible to everyone.

Education: Apple believes education is a fundamental human right and a quality education should be available to all.

Environment: Apple drives environmental responsibility in product design and manufacturing.

Inclusion and diversity: Apple believes diverse teams make innovation possible.

Privacy and security: Apple believes privacy is a fundamental human right. Every Apple product is designed from the ground up to protect your privacy and security.

Supplier responsibility: Apple educates and empowers the people in its supply chain, and helps preserve the environment’s most precious resources.

As I wrote this book, it became clear how these core values are the bedrock of Cook’s leadership at Apple. You’ll read how he first unearthed and then embedded them in the company, from the first day he joined Apple to the present day. We’ll explore how he developed these values throughout his life and how they came to underpin the heart and soul of the culture at Apple, by investigating the circumstances with which Cook inherited the top job and just how high the stakes were, and then journeying back to his childhood, early career, and his time at Apple.

As the company settles into its recently completed headquarters, a futuristic spaceship that’s among the biggest HQs in Silicon Valley, Apple is poised for its third great act, when it brings computing to previously unconquered industries—medicine, health, fitness, automotive, and the smart home, among others. Cook’s tenure at Apple is already the stuff of business legend, and it’s high time his contributions to Apple, and the world, are aptly celebrated. After all, he has led Apple to become the world’s first trillion-dollar company. What follows is the story of Tim Cook, the quiet genius leading Apple to heady heights.

Chapter 1

The Death of Steve Jobs

On Sunday, August 11, 2011, Tim Cook got a call that would change his life. When he picked up the phone, Steve Jobs was on the other end, asking him to come to his home in Palo Alto. At the time, Jobs was convalescing from treatment for pancreatic cancer and a recent liver transplant. He had been diagnosed with cancer in 2003, and after initially resisting treatment, he had undergone several increasingly invasive procedures to fight the disease ravaging his body. Cook, surprised by the call, asked when he should come over, and when Jobs replied, Now, Cook knew it was important. He set off immediately to Jobs’s home.

When he arrived, Jobs told Cook that he wanted him to take over as CEO of Apple. The plan was for Jobs to step down as CEO, go into semiretirement, and become the chairman of Apple’s board. Even though Jobs was very sick, both men believed—or at least pretended—that he would be around for a while yet. Though he had been diagnosed several years before, he had lived for many years with the disease, refusing to slow down or step back from Apple. In fact, only a few months earlier, in the spring of 2011, he had told his biographer Walter Isaacson, There’ll be more; I’ll get to the next lily pad; I’ll outrun the cancer. Always determined, Jobs refused to back down or admit that his illness was serious. And at that time, he truly believed he would survive it.

For both men, Jobs’s new appointment as chairman wasn’t an honorary title or something to keep the shareholders happy; it was a real, honest-to-goodness job that would allow him to oversee and steer Apple’s future direction. As David Pogue, technology writer for the New York Times and Yahoo, wrote, You can bet that as chairman, Mr. Jobs will still be the godfather. He’ll still be pulling plenty of strings, feeding his vision to his carefully built team, and weighing in on the company’s compass headings. Jobs had already left Apple once—and now that he’d made it into one of the most innovative companies in the world, he wasn’t about to do so again.

As Jobs and Cook discussed CEO succession on that momentous day in August, Cook brought up Steve’s godfather role. The pair chatted about how they’d work together in their new positions, not realizing quite how close to death Steve actually was. I thought . . . he was going to live a lot longer, said Cook, reflecting back on the conversation. We got into a whole level of discussion about what would it mean for me to be CEO with him as chairman, he recalled. When Jobs said, You make all the decisions, Cook suspected something was wrong. Jobs would never have handed over the reins willingly. So Cook tried to pick something that would incite him, asking questions like, You mean that if I review an ad, and I like it, it should just run without your okay? Jobs laughed and said, Well, I hope you’d at least ask me! Cook asked him two or three times, ‘Are you sure you want me to do this?’ He was prepared for Jobs to step back in if need be, because he saw him getting better at that point in time.

Jobs’s reply to the question about the ad was revealing. He was famously meddlesome in nature, one of the main reasons why Cook assumed he would continue to oversee Apple, even if Cook was now officially in charge of running the day-to-day—though he had largely been doing this for several years already in his role as COO, while Jobs was still CEO. And despite stepping away from all formal responsibility, Jobs did remain very much a part of the company. Cook kept him involved, going over [to his house] often during the week, and sometimes on the weekends. Every time I saw him he seemed to be getting better. He felt that way as well. Both Jobs and Apple’s PR team continued to deny that he was in ill health—no one would admit that he was close to death. But, unfortunately, it didn’t work out that way, Cook said, and Jobs’s death stunned the world only a few months later.

Cook the Cipher

When it came to picking a successor to Jobs, there were rumors that the Apple board was likely to choose someone from outside the company, but this was never actually the case. The board was Jobs’s board, sometimes controversially so, and they were always going to accept whomever Jobs picked for the role. Jobs wanted an insider who got Apple’s culture, and he believed there was no one who fit the bill more perfectly than Cook, the man he had trusted to run Apple in his absence on two previous occasions.

Cook, who had been running Apple behind the scenes for so many years, was Jobs’s natural successor, but to many onlookers his ascendance to the CEO position was surprising. No one outside Apple or even inside the company would have considered him a visionary, the type of leader whom Jobs had epitomized and everyone assumed Apple needed. It was widely accepted that after Jobs, the next most visionary person at Apple was not Cook but instead chief designer Jony Ive.

After all, no one else had Ive’s operational power or experience—he had worked hand in glove with Jobs since the days of the first-generation iMac. Together, the pair had spent a decade and more refashioning Apple into a design-led organization. Ive had a cult status of his own, having been the face of many Apple products in promotional videos. For his design on the iMac, iPod, iPhone, and iPad, Ive had won many high-profile awards, and as a consequence he was well known to the public. In contrast, Cook was a much more shadowy figure. He’d never appeared in any product videos and had presented at Apple’s product launches on only a few occasions when Jobs was ill. He had given almost no interviews over his career and had been the subject of only a smattering of magazine articles (none of which he participated in). He was largely unknown.

But although some people thought Ive was in a strong position to succeed Jobs, having been so pivotal to Apple’s vision and products, he had no interest in running a business. He wanted to continue designing—at Apple he had every designer’s dream job: limitless resources and creative freedom. He wasn’t going to sacrifice such a rare and liberating position for the management headaches that inevitably come with running an entire company.

Another possible candidate rumored by outside media pundits was Scott Forstall, an ambitious executive who was then in the role of senior vice president of iOS software. Forstall had climbed the leadership ladder at Apple with high-profile projects like Mac OS X, the software that ran the Macintosh. But his star had really risen with the smashing success of the iPhone, since he’d overseen the development of its software. Forstall had a reputation as a hard-charging and demanding executive and styled himself after Jobs, even driving the same silver Mercedes-Benz SL55 AMG. Bloomberg once referred to Forstall as a mini-Steve, so for some it was a logical assumption that he was a shoo-in for the next CEO. Apple, ever secretive, made no comment on possible successors.

For most, it was baffling that Apple would replace a visionary leader with someone who was so different in character from Jobs, almost his polar opposite. It’s easy now to look at Cook’s ascent to the head of the world’s biggest tech company as the markings of a new era for Apple, but in 2011 it felt more like an ending than a new chapter.

Nobody would make Tim Cook CEO, a Silicon Valley investor had told Fortune’s Adam Lashinsky a few years earlier in 2008. That’s laughable. They don’t need a guy who merely [gets stuff done]. They need a brilliant product guy, and Tim is not that guy. He is an ops guy—at a company where ops is outsourced. This was a harsh analysis, but there was a certain truth to it; to most people, Cook was a blank slate, notable more for what he wasn’t than what he was.

But ultimately, this unexpected choice was the best for the company. Cook already had the crucial experience of running Apple and had done so effectively. He had stepped in when Jobs took two leaves of absence, in 2009 and 2011, after his initial pancreatic cancer diagnosis in 2003. While Jobs was away, Cook ran Apple as chief executive, overseeing the company’s day-to-day operations. He was so unlike Steve Jobs, but he had run the company successfully twice, so the board clearly felt that he would maintain Apple’s long-lasting stability.

They had indicated their faith in Cook before. In 2010, as COO, he had received a hefty $58 million in salary, bonus, and other stock awards. Now, as he transitioned into the CEO role, the Apple board voted to award him with one million restricted stock options. To ensure he’d stay on as CEO for a while, half of them were scheduled to vest in August 2016, five years later. The other half were scheduled to vest after ten years, in August 2021. Apple’s board was confident that Tim Cook was the CEO Apple needed.

Jobs Resigns; Cook Is CEO

Less than two weeks after he asked Cook to take over as CEO, Jobs resigned and publicly announced him as his successor. A lot of Apple watchers assumed that Jobs wasn’t really leaving and that this change wouldn’t have a significant impact on Apple, since Jobs would still be a huge part of the company. He had taken leaves of absence before and had always returned. And after stepping down, he was immediately named chairman of the company, which implied his continued oversight of Apple’s future.

But Apple’s board was concerned about public opinion—they wanted the world to see what they saw in Cook. He might not have been as beloved a figure as Steve Jobs, but it was important that the public learned to love him for his unique strengths—and to have faith that though it would be different, he would run the company just as well as Jobs had done. An Apple press release announced Jobs’s resignation and Cook’s ascension to CEO. The Board has complete confidence that Tim is the right person to be our next CEO, said Art Levinson, chairman of Genentech, on behalf of Apple’s board. Tim’s 13 years of service to Apple have been marked by outstanding performance, and he has demonstrated remarkable talent and sound judgment in everything he does.

The same day that Jobs’s resignation was announced, August 24, 2011, both the Wall Street Journal and AllThingsD’s Walt Mossberg cited sources familiar with the situation as saying that Jobs would continue to be as active as ever in dictating Apple’s product strategy. He wasn’t going anywhere; Cook would run Apple operationally, but Jobs would be involved in developing major future products and strategy. People looked for clues wherever they could find them to prove that Jobs was okay; Jobs wasn’t quitting the board of directors at Disney or stepping away from Apple completely—most refused to believe that his health had taken a sudden worsening. Apple’s share price only dipped a little—less than 6 percent. Even the market didn’t truly believe he was out of the picture.

Cook accepted the role of CEO, acknowledging that he was going to work within the system that Jobs had established. It couldn’t have been less like Jobs’s return in 1997. Unlike Jobs, Cook wasn’t going to tear down what wasn’t working and rebuild; he had been a steady captain in his role as COO and planned to keep the ship on its existing trajectory. Unsurprisingly, he did not immediately announce any major changes that would cause investors or fans concern. He wanted to earn their trust first. Plus, according to one widely reported rumor at the time, Jobs had left a detailed plan for a pipeline of products (rumored to be new iPhones, iPads, and Apple TV) that would extend for the next four years at least. Jobs’s influence wasn’t going away anytime soon. Any changes Cook implemented would be quiet and behind the scenes, just as his previous contributions to Apple had been. Transitioning from COO to CEO, he became more involved in day-to-day administrative matters, something that Jobs rarely had the patience for. He took a more hands-on approach to promotions and corporate reporting structures. He also increased Apple’s focus on education and launched a new charitable matching program. (Jobs, by contrast, had canceled many of Apple’s charitable initiatives after taking over as CEO.)

Cook wanted to create a sense of company camaraderie, which was lacking when Jobs was at the helm, so he took to sending more company-wide emails, in which he addressed the Apple employees as Team. One of his earliest such messages as CEO, in August 2011, struck a reassuring tone:

I am looking forward to the amazing opportunity of serving as CEO of the most innovative company in the world. . . . Steve has been an incredible leader and mentor . . . [and] we are really looking forward to Steve’s ongoing guidance and inspiration as our Chairman. I want you to be confident that Apple is not going to change. . . . Steve built a company and culture that is unlike any other in the world and we are going to stay true to that. . . . I am confident our best years lie ahead of us and that together we will continue to make Apple the magical place that it is.

Taking a more hands-on approach to interactions with staff was different from Jobs’s style. Cook’s first email sparked a trend within the company that helped a new culture to develop under his leadership. His emails and other internal communications, such as town hall meetings, helped the new CEO spread his values throughout the company. He also made a conscious effort to adopt some of the things that Jobs had done to establish a sense of continuity between the two leaders. One neat touch Jobs had employed to make himself more approachable was to have a publicly available email address: [email protected] or [email protected]. Cook continued this tradition, responding personally to some of the hundreds of emails that flocked in following his CEO appointment.

One correspondent, a man named Justin R, wrote to Cook, Tim, just wanted to wish you the best of luck, and to let you know that there are a lot of us that are excited to see where Apple is going. Oh, one more thing—WAR DAMN EAGLE! (a reference to the War Eagle battle cry of Cook’s alma mater, Auburn University). And of course, Cook responded: Thanks Justin. War Eagle forever! He wasn’t just a boring operations guy—these emails gave the public a taste of his personality and showed them that he was a leader dedicated not only to his company but to his customers as well.

Cook was beginning this smooth transition to permanent CEO as the visionary leader who had come to define Apple moved into his new position as chairman. But unfortunately, Jobs would not remain Apple’s chairman for long.

The Death of Steve Jobs

Steve Jobs’s death on October 5, 2011, shook the world. Just over a month after Cook took over as CEO, Jobs passed away at the age of fifty-six, eight years after his initial diagnosis of pancreatic cancer. He had defied all odds and lived for almost a decade with a disease that has a one-year survival rate of 20 percent and a five-year survival rate of just 7 percent. For so long, people had believed that Jobs and Apple were indestructible. Apple was the company that always performed the impossible, whether that was a dramatic turnaround from near bankruptcy to astonishing corporate success in the late 1990s, unparalleled engineering feats with the iPod and iPhone, or the reinvention of the music industry with iTunes. This was all due to Jobs’s influence. Apple was considered untouchable and its leader had become a mythological figure. Few people, it seemed, had entertained the thought that he would actually die.

Jobs passed away the day after Apple unveiled the iPhone 4S at the Yerba Buena Center for the Arts in San Francisco. The 4S’s big new feature was the AI voice assistant Siri, one of the final projects Jobs had been actively involved with at Apple. In the crowd at the conference was an empty seat marked Reserved for Jobs. He may have been missing in body, but his presence was felt, and the fact that there was a seat set aside for him was even more poignant, foreshadowing his passing away the very next day.

The news of Jobs’s death sent ripples of shock and mourning around the world. Never before had the death of a chief executive affected people so intensely. The reaction to his death was unprecedented—despite his often tyrannical leadership of one of the world’s most