John Sculley, January 2014
|Born||John Sculley III
April 6, 1939
New York City
|Residence||Palm Beach, Florida, U.S.|
John Sculley III (born April 6, 1939) is an American businessman, entrepreneur and investor in high-tech startups. Sculley was vice-president (1970–1977) and president of Pepsi-Cola (1977–1983), until he became Chief executive officer of Apple on April 8, 1983, a position he held until leaving in 1993. In May 1987, Sculley was named Silicon Valley's top-paid executive, with an annual salary of US$2.2M.
Sales at Apple increased from $800 million to $8 billion under Sculley's management, although many attribute his success to the fact that Sculley joined the company just when Steve Jobs' visions and creations had become highly lucrative. However, his stint at Apple remains controversial due to his departure from founder Steve Jobs's sales structure, particularly regarding Sculley's decision to compete with IBM in selling computers to the same types of customers. Others say that the "two clashed over management styles and priorities, Jobs focusing on future innovation and Sculley more on current product lines and profitability." But Sculley ultimately was forced to step down as Apple CEO because he was opposed to licensing Macintosh software and was talking to Goldman-Sachs about splitting Apple into two companies. When Sculley left in May 1993, Apple had $2 billion in cash and $200 million in debt.
John Sculley is recognized worldwide as an expert in marketing, in part because of his early successes at PepsiCo, notably his introduction of the Pepsi Challenge, which allowed the company to gain market share from primary rival Coca Cola. He used similar marketing strategies throughout the 1980s and 1990s at Apple to mass-market Macintosh personal computers, and today he continues to speak and write about disruptive marketing strategies. Sculley is currently invested in and involved with a number of high-tech start-up companies, including 3CInteractive, XL Marketing (now rebranded as Zeta Interactive), Inflexion Point, Mobeam, OpenPeak, x10 Credit, Pivot Acquisition Corp., nextSource, and WorldMate. Through their family investment office, Sculley Brothers, John Sculley and his brothers Arthur and David are investing in US health care because they see innovation in healthcare delivery services as an opportunity for their marketing skills and experience. Among their healthcare investments are Watermark Medical, MDLIVE, Audax Health Solutions, Misfit Wearables, and Modernizing Medicine.
John Sculley was born in New York City, the son of Margaret Blackburn (Smith), a horticulturist, and John Sculley, Jr., a Wall Street lawyer. Five days later, he was one of the first infants to fly the Atlantic Ocean to his mother's home country, Bermuda, where his family first settled in 1934. John and his brothers spent much of their childhood in Bermuda before moving back to New York. He attended high school at St. Mark's School in Southborough, Massachusetts.
1967–82 : 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, at the age of 30, Sculley became the company's youngest marketing vice-president.
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 eventually became 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 was best known at Pepsi for the Pepsi Challenge, an advertising campaign he started in 1975 to compete against Coca-Cola to gain market share, using heavily advertised taste tests. It claimed based on 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, where Pepsi had a significantly lower market share 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. Sculley himself took the taste test and picked Coke instead of Pepsi.
In 1977, Sculley was named Pepsi's youngest-ever CEO and president.
1983–93: Apple Inc.
Apple lured Sculley away from Pepsi in order to apply his marketing skills to the personal computer market. Steve Jobs successfully sealed the deal after he made his legendary pitch to John: "Do you want to sell sugared water for the rest of your life? Or do you want to come with me and change the world?" Also, Apple's president, Mike Markkula, wanted to retire and believed that Steve Jobs, who wished to be the company's president, lacked the discipline and temperament needed to run Apple on a daily basis. Sculley, with his solid business background and considerable recent success, would give Apple an image of greater reliability and stability. From the time they first met in 1982 until 1985, Jobs and Sculley had what both acknowledged as an amazing partnership. Sculley used his marketing experience to help keep the aging Apple II generating much-needed cash and helped Jobs launch the Mac with the most admired consumer marketing campaign of its time. Jobs was the product czar and made all the product decisions.
The Lisa computer, an innovative model designed by a team initially led by Jobs, became available in January 1983, and had disastrous sales. When Jobs' Macintosh, the first of a new series of models with a pioneering black-and-white graphical user interface, was shipped to stores in January 1984, Sculley raised the initial price to $2,495 from the originally planned $1,995, using the additional money for higher profit margins and expensive advertising campaigns. Macintosh sold well, and received excellent reviews; however, it did not put the IBM PC out of business. Some of the privileges of Jobs' elite development groups were trimmed, and projects were subject to stricter review for usefulness, marketability, feasibility, and reasonable cost.
At the peak of the Macintosh success, Apple made an attempt to move unsold inventory of Lisa computers by renaming it to "Macintosh XL" and positioning it as a top-of-the-line pro Macintosh model. Since it lacked the user-friendliness of the Macintosh, this idea had little success.
At this point, a power struggle between Jobs and Sculley was becoming obvious. Jobs became "non-linear": he kept meetings running past midnight, sent out lengthy faxes, then called new meetings at 7:00 am. Sculley had little control over the Macintosh division, which Jobs was the general manager of. The Apple board of directors instructed Sculley to "contain" Jobs and limit his ability to launch expensive forays into untested products. Rather than submit to Sculley's direction, Jobs attempted to oust him from his leadership role at Apple. Sculley found out about Jobs's plans and called a board meeting at which Apple's board of directors sided with Sculley and removed Jobs from his managerial duties. Jobs resigned from Apple and founded NeXT Inc. the same year. After Jobs left, the company experienced a turnaround in 1986; one journalist wrote "since Sculley joined the company ... many things have changed", and that his "strategy has worked". Apple introduced a faster microprocessor and renaming "The Macintosh Office" "Desktop Publishing."
Under the direction of Sculley, who had learned several painful lessons after introducing the bulky Macintosh Portable in 1989, Apple introduced the PowerBook in 1991. The same year, Apple introduced System 7, a major upgrade to the operating system, which added color to the interface and introduced new networking capabilities. It remained the architectural basis for Mac OS until 2001. The success of the PowerBook and other products brought increasing revenue. For some time, it appeared that Apple could do no wrong, introducing fresh new products and generating increasing profits in the process. The magazine MacAddict named the period between 1989 and 1991 as the "first golden age" of the Macintosh.
Microsoft threatened to discontinue Microsoft Office for the Macintosh if Apple did not license parts of the Macintosh graphical user interface to use in the Windows operating system. Under pressure, Sculley agreed, a decision which later affected the Apple v. Microsoft lawsuit. About that time, Sculley coined the term personal digital assistant (PDA) referring to the Apple Newton, one of the world's first PDAs which, as it turned out, was several years ahead of its time.
In the early 1990s, Sculley led Apple, at enormous expense, to port its operating system to run on a new microprocessor, the PowerPC. Sculley later acknowledged such an act was his greatest mistake, indicating that he should instead have targeted the dominant Intel architecture. After a bad first quarter in 1993, Apple's board forced Sculley out. He was replaced by German-born Michael Spindler, who had been Chief Operating Officer, who was also ousted a year later.
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 were eventually fulfilled by the Internet and the World Wide Web during the 1990s and others by Apple itself with the introduction of Siri.
On December 5, 1992, John Sculley, as Chairman, CEO and CTO of Apple Computer, Inc., gave a seminal speech regarding the future of the internet, entitled "The Dawn of a $3.5 Trillion Communications Mega-Industry: Information Access, Processing and Distribution in a Digital World." This was the keynote address to a packed house at the Harvard Business School's Burden Auditorium, as part of the inaugural student-run Harvard/MIT Communications 2000 Symposium (now known as the Harvard Business School Tech Club's annual Cyberposium).
Since leaving Apple, Sculley has invested in and assisted a number of successful businesses: He was a founding investor in MetroPCS, formerly General Wireless, and helped guide the company's brand marketing; MetroPCS is now a multi-billion dollar public company on the New York Stock Exchange. He built NFO Research from $25 million to $550 million in revenue, and sold it to IPG for $850 million. He helped launch and advised Hotwire.com, Intralinks (which was co-founded by his brother Arthur), and InPhonic, Buy.com, and PeoplePC - each of which became billion dollar market cap public companies in the 1990s. In 1995, Sculley and his two brothers, Arthur and David, formed a family office they call "Sculley Brothers," which was a privately owned portfolio of family investments, not an outside investor fund. Arthur Sculley is a former CEO of JP Morgan Private Bank; David Sculley is a former CEO of HJ Heinz USA. Other successful companies that Sculley Brothers helped create include Profession Sportscare, Intralinks, CreditTrade, Country Gourmet Soups, Buy.com, NextSource, XL Marketing, 3Cinteractive, and OpenPeak.
Sculley went political in the early 1990s on behalf of Republican Tom Campbell, who in 1992 was running in the California Republican primary to be the party candidate for a United States Senate seat. Sculley hosted a fundraiser 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.
In 1994, Sculley signed on as CEO with Spectrum Information Technologies, a US$100 million wireless communications company. Unbeknownst to Sculley, at the time he joined the company, it was under investigation for fraud by the Securities and Exchange Commission (SEC). Four months later, Sculley learned of the fraud investigation and resigned, filing a lawsuit against Spectrum president Peter Caserta for damaging his reputation. In 1997, Sculley became the chairman of Live Picture, a California-based company, to oversee its push into high-quality, low-bandwidth imaging over the Internet. US$22M in venture capital was provided for the company. Sculley later left the company, but remained an investor. In 1999, Live Picture filed for federal bankruptcy protection as part of a plan to be acquired by MGI Software.
In 1997, Sculley co-founded PopTech with Bob Metcalfe and several other dignitaries from the technology industry. In 1998 he joined the board of directors of BuyComp LLC (now Buy.com), an Internet-only computer store. Two years later, he partnered with Dennis M. Lynch to launch Signature21. In its first year, the two-man firm provided marketing services to an array of small to medium-sized businesses. In 2001, Sculley and Lynch transitioned the company into a learning program for rising entrepreneurs. Months later, Lynch left the company, while Sculley continued to consult and work with small businesses, including InPhonic, whose board of directors he later joined. InPhonic is an online retailer of cell phones and wireless plans. Sculley's early leadership and enthusiasm helped steer InPhonic towards its successful IPO in 2004. Sculley currently serves as the vice chairman of the InPhonic board of directors. InPhonic filed for Chapter 11 in 2007.
In 2002, Sculley endorsed and invested in the Wine Clip, a wine accessory product, which claims to accelerate the aeration of wine by exposure to magnets. A year later he helped in the founding of Verified Person Inc., an online pre-employment screening company. He currently serves on the board of directors. 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. In the same year, John Sculley became a Venture Partner at Rho Ventures.
Before speaking at the Silicon Valley 4.0 conference, Sculley was interviewed by CNET 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 2010, he was interviewed for Cult of Mac on the topics of Steve Jobs and design.
In 2007 Sculley co-founded the data company Zeta Interactive with business partner David A. Steinberg, and in January 2014 the data analytics firm XL Marketing, rebranded and incorporated its resources into Zeta, re-launching it as a Big Data-Driven Marketing firm. On January 30, 2014, Sculley was a panelist at a forum organized by Zeta, which featured ad executives, marketers and NFL executive to discuss the changes in the way companies market and reach consumers since Sculley's time at Apple in 1984 when the computer company featured what became one of the first iconic Super Bowl ads - the 1984 commercial.
In 2014, Sculley co-founded Obi Mobiles, a smartphone brand aimed at the emerging markets.
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