John Sculley

John Sculley
File:Sculley j.jpg
Born	April 6, 1939
Occupation(s)	President of PepsiCo (1977-1983) CEO of Apple Computer (1984-1993) Partner at Sculley Brothers, LLC (1995-Present)

John Sculley (born April 6, 1939) was president of PepsiCo during the 1970s and early 1980s until he became CEO of Apple Computer on April 8, 1983. Sculley is currently a partner in Sculley Brothers, a private investment firm formed in 1995. He is best known for his marketing skills, particularly in his introduction of 'the Pepsi Challenge' at PepsiCo, which allowed the company to gain market share over its rival, Coca Cola. Sculley followed this strategy at Apple throughout the 1980s and 1990s to mass market Apple Macintosh personal computers. In May 1987, Sculley was named Silicon Valley's top-paid executive, with an annual salary of US$2.2M.

Background and personal life

Sculley was born in the United States, but within a week of his birth, he and his family were relocated to Bermuda, and subsequently to Brazil and Europe. At the age of 14, he invented a color cathode ray tube, but was unable to patent it because Dr Lawrence of Lawrence-Livermore Laboratories had filed a similar patent to his, only weeks earlier. Lawrence's patent was later acquired by Sony and eventually became technology that led to the Trinitron color television tube. Sculley received a bachelor's degree in architectural design from Brown University and an MBA from the Wharton School of Business. Sculley married Ruth Kendall in 1960, and they had a daughter, Meg, and son, Jack. They divorced in 1965, and in 1978, Sculley married Carol Lee ("Leezy") Adams.

1967–82: Sculley at Pepsi-Cola

Sculley joined the Pepsi-Cola division of PepsiCo in 1967 as a trainee, where he participated in a six-month training program at a bottling plant in Pittsburgh . In 1970 he became the company's youngest marketing vice-president at the age of 30; in 1977, he was named Pepsi's youngest-ever president. At Pepsi, Sculley used his marketing skills and started the Pepsi Challenge in 1980 to compete against Coca Cola to gain market share, using heavily-advertised taste tests.

As vice-president of marketing at Pepsi, Sculley initiated one of the company's first consumer-research studies, an extended in-home product test in which 350 families participated. As a result of the research, Pepsi decided to launch new, larger and more varied packages of their soft drinks. In 1970, Pepsi set out to dethrone Coca Cola as the market leader of the industry, in what would eventually become known as the Cola Wars.

Pepsi began spending more on marketing and advertising, typically paying between US$200,000 and $300,000 for each television spot, while most companies spent between $15,000 and $75,000. With the Pepsi Generation campaign, Pepsi aimed to overturn Coca Cola's classic marketing. At Pepsi, Sculley also took the position of managing PepsiCo's International Food Operations division, shortly after he visited a failing potato-chip factory in Paris. PepsiCo's Food division was their only money-losing division, with revenues of US$83 million and losses of $16 million. To make the food division profitable, Sculley hired new managers from Frito-Lay and improved product quality, as well as improving accounts and establishing financial controls. Within three years, the food division was making US$300 million in revenues and $40 million in profit.

Sculley is best known at Pepsi for the Pepsi Challenge, an advertising campaign initiated from Sculley's own research that Pepsi-Cola tasted better than Coca-Cola. The Pepsi Challenge included a series of television advertisements that first aired in the early 1970s, featuring lifelong Coca-Cola drinkers participating in blind taste tests. Pepsi's soft drink was always chosen as the preferred product by the participant; however, these tests have been criticized as being biased. The Pepsi Challenge was mostly targeted at the Texas market, because Pepsi had a significantly low market share there at the time. The campaign was successful, significantly increasing Pepsi's market share in that state. At the time the Pepsi Challenge was started, Sculley was senior vice-president of United States sales and marketing operations at Pepsi.

1983–93: the Sculley era at Apple

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BusinessWeek's November 1984 magazine cover featuring Steve Jobs (left) and John Sculley (right).

While chairman of Apple Computer, Steve Jobs recruited Sculley from Pepsi by asking him, "Do you want to sell sugar water for the rest of your life, or do you want to change the world?". Apple chose Sculley because they wanted him to apply his marketing skills to the personal computer market, particularly to the Apple Macintosh. The Board of Directors stripped Jobs of all operational responsibilities in 1985 after a power struggle and personality conflicts with Sculley, three months after Jobs' 30th birthday. Sculley has commented on the situation by saying: "The board had to make a choice and I said look, it's Steve's company, I was brought in here to help. If you want him to run it, that's fine by me. But we gotta at least decide what we're gonna do and everybody's got to get behind it ... and ultimately after the board talked with Steve and talked with me, the decision was that we would go forward with my plans and Steve left."

Microsoft threatened to discontinue Microsoft Office for the Macintosh if Apple did not license parts of the Macintosh graphical user interface to them for use in the Windows operating system. Sculley agreed under the pressure, a decision which later affected the Apple v. Microsoft lawsuit. Also while at Apple, Sculley coined the term personal digital assistant (PDA) referring to the Apple Newton, one of the world's first PDAs. Sculley raised the initial price of the Macintosh to $2,495 from the originally planned $1,995, using the additional money for higher profit margins and expensive advertising campaigns.

The "Sculley Era" at Apple was characterized by market division and further subdivision, with a large number of models covering what critics called a too-finely subdivided range. Each production model was marketed under different names in each of several primary markets — home, education, and business. This technique backfired, as it resulted in high manufacturing costs, high marketing costs, and market confusion. Too many products with similar specifications resulted in a failed business model that decreased profits, despite high gross margins, and ultimately led Apple's board to force Sculley out. He was replaced by Michael Spindler.

Another side effect of his tenure was the destruction of Apple's engineering department. As the company grew, mid- and low-level managers within the company found it fairly easy to gain funding for practically any project. Apple became filled with these projects, many of which had little commercial potential. When money tightened in the early 1990s, this resulted in a sweeping round of empire building, in which mid-level managers attempted to take over as many projects as possible in order to make their projects more difficult to discontinue. Over the period from 1990 to 1995, very few successful releases were made with the exception of the Mac OS updates, while massive projects such as QuickDraw GX and PowerTalk were released in essentially unusable forms and saw almost no use by the market.

In the early 1990s, at enormous expense, Sculley led Apple to translate its operating system to run on a new microprocessor, the PowerPC. Sculley later acknowledged this was his greatest mistake, averring he should instead have translated to the dominant Intel architecture.

Though Sculley asserted Apple's most important goal was to crack the business PC market, under his ten-year leadership Apple failed to address the key product quality complaint of business buyers about the Macintosh operating system: poor system stability caused by a lack of memory protection and pre-emptive multitasking.

While at Apple in 1987, Sculley made several famous predictions in a Playboy interview . He predicted that the Soviet Union would land a man on Mars within the next 20 years and claimed that optical storage media such as the CD-ROM would revolutionize the use of personal computers. Some of his ideas for the Knowledge Navigator would eventually be fulfilled not by Apple itself, but by the Internet and the World Wide Web during the 1990s.

1994–present: after Apple

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Sculley in a 2003 BBC television documentary interview.

Sculley turned his attention to politics in the early 1990s on behalf of Republican Tom Campbell, who in 1992 was running in California for a US Senate seat. Sculley hosted a fund-raising fete for Campbell at his ranch in Woodside. Sculley had become acquainted with Hillary Clinton, serving with her on a national education council. When Bill Clinton ran for president, Sculley supported him. Sculley sat next to Hillary Clinton during the President's first State of the Union address in January 1993.

Only one business day after leaving Apple in 1994, Sculley signed on with Spectrum Information Technologies, a US$100 million wireless communications company. At the time Sculley joined the company, it was under investigation for fraud by the Securities and Exchange Commission (SEC). Four months later, Sculley knew of the fraud investigation and resigned, filing a lawsuit against Spectrum president Peter Caserta for damaging his reputation.

Sculley endorsed and invested in the Wine Clip, a pseudo-scientific product, which is purported to improve the flavor of wine by exposure to magnets. In 1995, Sculley became an investment partner of Sculley Brothers LLC, a private investment firm in New York. Sculley has spoken at Pop!Tech since its opening in 1997 every year except for 2005.

Sculley became the chairman of Live Picture, a California-based company, in 1997 to oversee its push into high-quality, low-bandwidth imaging over the Internet. Live Picture was best known for its work in network imaging and as the inventor of zoomable images for the Internet. US$22M in venture capital was provided for the company. Sculley later left the company but stayed as an investor. In 1999, Live Picture filed for federal bankruptcy protection as part of a plan to be acquired by MGI Software.

Before speaking at the Silicon Valley 4.0 conference, Sculley was interviewed by CNet News.com in October, 2003 where he explained the mistakes he made at Apple concerning the Apple Newton and HyperCard. Also in 2003, Sculley was interviewed by the BBC for the television documentary The World's Most Powerful episode Steve Jobs vs. Bill Gates, discussing his time at Apple during the 1980s as CEO.

In 2004, Sculley joined the board of directors at OpenPeak, a maker of software for wireless consumer electronics, digital media, computers and home systems. In March 2006, Sculley was named Chairman of IdenTrust (formerly Digital Signature Trust Company) a San Francisco based firm focusing on verifying identity and boosting financial security.

References

• John Sculley and John A. Byrne, Odyssey: Pepsi to Apple, ISBN 0060157801 (October 1, 1987)
• Owen W. Linzmayer, Apple Confidential 2.0, pages 153–68, ISBN 1593270100 (January 1, 2004)
• Michael S. Malone, Infinite Loop, ISBN 0385486847 (February 16, 1999)

External links

• PBS.org - John Sculley Biography
• Harry Walker Agency - John Sculley Biography
• NNDB - John Sculley
• Rho Ventures - John Sculley Venture Partner Biography
• 1987 Audio Interview with John Sculley by Don Swaim of CBS Radio - RealAudio