The Apple II took the company from Jobs's garage to the pinnacle of a new industry. Its sales rose dramatically, from 2,500 units in 1977 to 210,000 in 1981. But Jobs was restless. The Apple II could not remain successful forever, and he knew that, no matter how much he had done to package it, from power cord to case, it would always be seen as Wozniak's masterpiece. He needed his own machine. More than that, he wanted a product that would, in his words, make a dent in the universe.

(1) A New Baby

At first he hoped that the Apple III would play that role. It would have more memory, the screen would display eighty characters across rather than forty, and it would handle uppercase and lowercase letters. Indulging his passion for industrial design, Jobs decreed the size and shape of the external case, and he refused to let anyone alter it, even as committees of engineers added more components to the circuit boards. The result was piggybacked boards with poor connectors that frequently failed. When the Apple III began shipping in May 1980, it flopped. Randy Wigginton, one of the engineers, summed it up: "The Apple III was kind of like a baby conceived during a group orgy, and later everybody had this bad headache, and there's this bastard child, and everyone says, 'It's not mine.'"

Then he and Apple hired two engineers from Hewlett-Packard to conceive a totally new computer. The name Jobs chose for it would have caused even the most jaded psychiatrist to do a double take: the Lisa. Other computers had been named after daughters of their designers, but Lisa was a daughter Jobs had abandoned and had not yet fully admitted was his. "Maybe he was doing it out of guilt," said Andrea Cunningham, who worked at Regis McKenna on public relations for the project. "We had to come up with an acronym so that we could claim it was not named after Lisa the child." The one they reverse-engineered was "local integrated systems architecture," and despite being meaningless it became the official explanation for the name. Among the engineers it was referred to as "Lisa: invented stupid acronym." Years later, when I asked about the name, Jobs admitted simply, "Obviously it was named for my daughter."

By then Jobs had distanced himself from the Apple III and was thrashing about for ways to produce something more radically different. At first he flirted with the idea of touchscreens, but he found himself frustrated. At one demonstration of the technology, he arrived late, fidgeted awhile, then abruptly cut off the engineers in the middle of their presentation with a brusque "Thank you." They were confused. "Would you like us to leave?" one asked. Jobs said yes, then berated his colleagues for wasting his time.

There was, however, one programmer who was infusing the project with some life: Bill Atkinson. He was a doctoral student in neuroscience who had experimented with his fair share of acid. When he was asked to come work for Apple, he declined. But then Apple sent him a nonrefundable plane ticket, and he decided to use it and let Jobs try to persuade him. "We are inventing the future," Jobs told him at the end of a three-hour pitch. "Think about surfing on the front edge of a wave. It's really exhilarating. Now think about dog-paddling at the tail end of that wave. It wouldn't be anywhere near as much fun. Come down here and make a dent in the universe." Atkinson did.

The Lisa was conceived as a $2,000 machine based on a sixteen-bit microprocessor, rather than the eight-bit one used in the Apple II. Without the wizardry of Wozniak, who was still working quietly on the Apple II, the engineers began producing a straightforward computer with a conventional text display, unable to push the powerful microprocessor to do much exciting stuff. Jobs began to grow impatient with how boring it was turning out to be.

By the fall of 1979 Apple was breeding three ponies to be potential successors to the Apple II workhorse. There was the ill-fated Apple III. There was the Lisa project, which was beginning to disappoint Jobs. And somewhere off Jobs's radar screen, at least for the moment, there was a small skunkworks project for a low-cost machine that was being developed by a colorful employee named Jef Raskin, a former professor who had taught Bill Atkinson. Raskin's goal was to make an inexpensive "computer for the masses" that would be like an appliance-a self-contained unit with computer, keyboard, monitor, and software all together-and have a graphical interface. He tried to turn his colleagues at Apple on to a cutting-edge research center, right in Palo Alto, that was pioneering such ideas.

With his shaggy hair and droopy moustache that did not hide the animation in his face, Atkinson had some of Woz's ingenuity along with Jobs's passion for awesome products. His first job was to develop a program to track a stock portfolio by auto-dialing the Dow Jones service, getting quotes, then hanging up. "I had to create it fast because there was a magazine ad for the Apple II showing a hubby at the kitchen table looking at an Apple screen filled with graphs of stock prices, and his wife is beaming at him-but there wasn't such a program, so I had to create one." Next he created for the Apple II a version of Pascal, a high-level programming language. Jobs had resisted, thinking that BASIC was all the Apple II needed, but he told Atkinson, "Since you're so passionate about it, I'll give you six days to prove me wrong." He did, and Jobs respected him ever after.

The Xerox Corporation's Palo Alto Research Center, known as Xerox PARC, had been established in 1970 to create a spawning ground for digital ideas. It was safely located, for better and for worse, three thousand miles from the commercial pressures of Xerox corporate headquarters in Connecticut. Among its visionaries was the scientist Alan Kay, who had two great maxims that Jobs embraced: "The best way to predict the future is to invent it" and "People who are serious about software should make their own hardware." Kay pushed the vision of a small personal computer, dubbed the "Dynabook," that would be easy enough for children to use. So Xerox PARC's engineers began to develop user-friendly graphics that could replace all of the command lines and DOS prompts that made computer screens intimidating. The metaphor they came up with was that of a desktop. The screen could have many documents and folders on it, and you could use a mouse to point and click on the one you wanted to use.

(2) Xerox PARC

This graphical user interface-or GUI, pronounced "gooey" -- was facilitated by another concept pioneered at Xerox PARC: bitmapping. Until then, most computers were character-based. You would type a character on a keyboard, and the computer would generate that character on the screen, usually in glowing greenish phosphor against a dark background. Since there were a limited number of letters, numerals, and symbols, it didn't take a whole lot of computer code or processing power to accomplish this. In a bitmap system, on the other hand, each and every pixel on the screen is controlled by bits in the computer's memory. To render something on the screen, such as a letter, the computer has to tell each pixel to be light or dark or, in the case of color displays, what color to be. This uses a lot of computing power, but it permits gorgeous graphics, fonts, and gee-whiz screen displays.

Raskin had one problem: Jobs regarded him as an insufferable theorist or, to use Jobs's own more precise terminology, "a shithead who sucks." So Raskin enlisted his friend Atkinson, who fell on the other side of Jobs's shithead/genius division of the world, to convince Jobs to take an interest in what was happening at Xerox PARC. What Raskin didn't know was that Jobs was working on a more complex deal. Xerox's venture capital division wanted to be part of the second round of Apple financing during the summer of 1979. Jobs made an offer: "I will let you invest a million dollars in Apple if you will open the kimono at PARC." Xerox accepted. It agreed to show Apple its new technology and in return got to buy 100,000 shares at about $10 each.

Bitmapping and graphical interfaces became features of Xerox PARC's prototype computers, such as the Alto, and its object-oriented programming language, Smalltalk. Jef Raskin decided that these features were the future of computing. So he began urging Jobs and other Apple colleagues to go check out Xerox PARC.

Goldberg got her way at the first briefing. Jobs, Raskin, and the Lisa team leader John Couch were ushered into the main lobby, where a Xerox Alto had been set up. "It was a very controlled show of a few applications, primarily a word-processing one," Goldberg said. Jobs wasn't satisfied, and he called Xerox headquarters demanding more.

By the time Apple went public a year later, Xerox's $1 million worth of shares were worth $17.6 million. But Apple got the better end of the bargain. Jobs and his colleagues went to see Xerox PARC's technology in December 1979 and, when Jobs realized he hadn't been shown enough, got an even fuller demonstration a few days later. Larry Tesler was one of the Xerox scientists called upon to do the briefings, and he was thrilled to show off the work that his bosses back east had never seemed to appreciate. But the other briefer, Adele Goldberg, was appalled that her company seemed willing to give away its crown jewels. "It was incredibly stupid, completely nuts, and I fought to prevent giving Jobs much of anything," she recalled.

So he was invited back a few days later, and this time he brought a larger team that included Bill Atkinson and Bruce Horn, an Apple programmer who had worked at Xerox PARC. They both knew what to look for. "When I arrived at work, there was a lot of commotion, and I was told that Jobs and a bunch of his programmers were in the conference room," said Goldberg. One of her engineers was trying to keep them entertained with more displays of the word-processing program. But Jobs was growing impatient. "Let's stop this bullshit!" he kept shouting. So the Xerox folks huddled privately and decided to open the kimono a bit more, but only slowly. They agreed that Tesler could show off Smalltalk, the programming language, but he would demonstrate only what was known as the "unclassified" version. "It will dazzle [Jobs] and he'll never know he didn't get the confidential disclosure," the head of the team told Goldberg.

They were wrong. Atkinson and others had read some of the papers published by Xerox PARC, so they knew they were not getting a full description. Jobs phoned the head of the Xerox venture capital division to complain; a call immediately came back from corporate headquarters in Connecticut decreeing that Jobs and his group should be shown everything. Goldberg stormed out in a rage.

The Smalltalk demonstration showed three amazing features. One was how computers could be networked; the second was how object-oriented programming worked. But Jobs and his team paid little attention to these attributes because they were so amazed by the third feature, the graphical interface that was made possible by a bitmapped screen. "It was like a veil being lifted from my eyes," Jobs recalled. "I could see what the future of computing was destined to be."

When Tesler finally showed them what was truly under the hood, the Apple folks were astonished. Atkinson stared at the screen, examining each pixel so closely that Tesler could feel the breath on his neck. Jobs bounced around and waved his arms excitedly. "He was hopping around so much I don't know how he actually saw most of the demo, but he did, because he kept asking questions," Tesler recalled. "He was the exclamation point for every step I showed." Jobs kept saying that he couldn't believe that Xerox had not commercialized the technology. "You're sitting on a gold mine," he shouted. "I can't believe Xerox is not taking advantage of this."

(3)"Great Artists Steal"

When the Xerox PARC meeting ended after more than two hours, Jobs drove Bill Atkinson back to the Apple office in Cupertino. He was speeding, and so were his mind and mouth. "This is it!" he shouted, emphasizing each word. "We've got to do it!" It was the breakthrough he had been looking for: bringing computers to the people, with the cheerful but affordable design of an Eichler home and the ease of use of a sleek kitchen appliance.

"How long would this take to implement?" he asked.

"I'm not sure," Atkinson replied. "Maybe six months." It was a wildly optimistic assessment, but also a motivating one.

The Apple raid on Xerox PARC is sometimes described as one of the biggest heists in the chronicles of industry. Jobs occasionally endorsed this view, with pride. As he once said, "Picasso had a saying --'good artists copy, great artists steal' -- and we have always been shameless about stealing great ideas."

Another assessment, also sometimes endorsed by Jobs, is that what transpired was less a heist by Apple than a fumble by Xerox. "They were copier-heads who had no clue about what a computer could do," he said of Xerox's management. "They just grabbed defeat from the greatest victory in the computer industry. Xerox could have owned the entire computer industry."

Both assessments contain a lot of truth, but there is more to it than that. There falls a shadow, as T. S. Eliot noted, between the conception and the creation. In the annals of innovation, new ideas are only part of the equation. Execution is just as important.

Jobs and his engineers significantly improved the graphical interface ideas they saw at Xerox PARC, and then were able to implement them in ways that Xerox never could accomplish. For example, the Xerox mouse had three buttons, was complicated, cost $300 apiece, and didn't roll around smoothly; a few days after his second Xerox PARC visit, Jobs went to a local industrial design firm, IDEO, and told one of its founders, Dean Hovey, that he wanted a simple single-button model that cost $15, "and I want to be able to use it on Formica and my blue jeans." Hovey complied.

The improvements were in not just the details but the entire concept. The mouse at Xerox PARC could not be used to drag a window around the screen. Apple's engineers devised an interface so you could not only drag windows and files around, you could even drop them into folders. The Xerox system required you to select a command in order to do anything, ranging from resizing a window to changing the extension that located a file. The Apple system transformed the desktop metaphor into virtual reality by allowing you to directly touch, manipulate, drag, and relocate things. And Apple's engineers worked in tandem with its designers-with Jobs spurring them on daily-to improve the desktop concept by adding delightful icons and menus that pulled down from a bar atop each window and the capability to open files and folders with a double click.

It's not as if Xerox executives ignored what their scientists had created at PARC. In fact they did try to capitalize on it, and in the process they showed why good execution is as important as good ideas. In 1981, well before the Apple Lisa or Macintosh, they introduced the Xerox Star, a machine that featured their graphical user interface, mouse, bitmapped display, windows, and desktop metaphor. But it was clunky (it could take minutes to save a large file), costly ($16,595 at retail stores), and aimed mainly at the networked office market. It flopped; only thirty thousand were ever sold.

Jobs and his team went to a Xerox dealer to look at the Star as soon as it was released. But he deemed it so worthless that he told his colleagues they couldn't spend the money to buy one. "We were very relieved," he recalled. "We knew they hadn't done it right, and that we could-at a fraction of the price." A few weeks later he called Bob Belleville, one of the hardware designers on the Xerox Star team. "Everything you've ever done in your life is shit," Jobs said, "so why don't you come work for me?" Belleville did, and so did Larry Tesler.

In his excitement, Jobs began to take over the daily management of the Lisa project, which was being run by John Couch, the former HP engineer. Ignoring Couch, he dealt directly with Atkinson and Tesler to insert his own ideas, especially on Lisa's graphical interface design. "He would call me at all hours, 2 a. m. or 5 a. m.," said Tesler. "I loved it. But it upset my bosses at the Lisa division." Jobs was told to stop making out-of-channel calls. He held himself back for a while, but not for long.

One important showdown occurred when Atkinson decided that the screen should have a white background rather than a dark one. This would allow an attribute that both Atkinson and Jobs wanted: WYSIWYG, pronounced "wiz-ee-wig," an acronym for "What you see is what you get." What you saw on the screen was what you'd get when you printed it out. "The hardware team screamed bloody murder," Atkinson recalled. "They said it would force us to use a phosphor that was a lot less persistent and would flicker more." So Atkinson enlisted Jobs, who came down on his side. The hardware folks grumbled, but then went off and figured it out. "Steve wasn't much of an engineer himself, but he was very good at assessing people's answers. He could tell whether the engineers were defensive or unsure of themselves."

One of Atkinson's amazing feats (which we are so accustomed to nowadays that we rarely marvel at it) was to allow the windows on a screen to overlap so that the "top" one clipped into the ones "below" it. Atkinson made it possible to move these windows around, just like shuffling papers on a desk, with those below becoming visible or hidden as you moved the top ones. Of course, on a computer screen there are no layers of pixels underneath the pixels that you see, so there are no windows actually lurking underneath the ones that appear to be on top. To create the illusion of overlapping windows requires complex coding that involves what are called "regions." Atkinson pushed himself to make this trick work because he thought he had seen this capability during his visit to Xerox PARC. In fact the folks at PARC had never accomplished it, and they later told him they were amazed that he had done so. "I got a feeling for the empowering aspect of na? vete," Atkinson said. "Because I didn't know it couldn't be done, I was enabled to do it." He was working so hard that one morning, in a daze, he drove his Corvette into a parked truck and nearly killed himself. Jobs immediately drove to the hospital to see him. "We were pretty worried about you," he said when Atkinson regained consciousness. Atkinson gave him a pained smile and replied, "Don't worry, I still remember regions."

Atkinson and Jobs became best friends for a while, eating together at the Good Earth most nights. But John Couch and the other professional engineers on his Lisa team, many of them buttoned-down HP types, resented Jobs's meddling and were infuriated by his frequent insults. There was also a clash of visions. Jobs wanted to build a VolksLisa, a simple and inexpensive product for the masses. "There was a tug-of-war between people like me, who wanted a lean machine, and those from HP, like Couch, who were aiming for the corporate market," Jobs recalled.

Jobs also had a passion for smooth scrolling. Documents should not lurch line by line as you scroll through them, but instead should flow. "He was adamant that everything on the interface had a good feeling to the user," Atkinson said. They also wanted a mouse that could easily move the cursor in any direction, not just up-down/left-right. This required using a ball rather than the usual two wheels. One of the engineers told Atkinson that there was no way to build such a mouse commercially. After Atkinson complained to Jobs over dinner, he arrived at the office the next day to discover that Jobs had fired the engineer. When his replacement met Atkinson, his first words were, "I can build the mouse."

Both Mike Scott and Mike Markkula were intent on bringing some order to Apple and became increasingly concerned about Jobs's disruptive behavior. So in September 1980, they secretly plotted a reorganization. Couch was made the undisputed manager of the Lisa division. Jobs lost control of the computer he had named after his daughter. He was also stripped of his role as vice president for research and development. He was made non-executive chairman of the board. This position allowed him to remain Apple's public face, but it meant that he had no operating control. That hurt. "I was upset and felt abandoned by Markkula," he said. "He and Scotty felt I wasn't up to running the Lisa division. I brooded about it a lot."