Steve Grubbs: So, our guest today is Barry Waitte. And Barry started out at the at the ground level at Apple shortly after he graduated from college. I don’t know if we’ll have time to get into how he was hired, but it’s a very interesting story. And then moved up over time, was one of the people that was in charge of the program to sell Apple computers, Macintoshes and such through colleges and eventually, rose to the ranks of Senior Vice President of Apple before he left.
Today, he is the proprietor and owner of Tamber Bay Vineyards. Really just one of the finest vineyards creating great reds and whites out in Napa. If you get a chance to get to Napa, go to Calistoga and drop by Tamber Bay Vineyards and you will not regret that stop. So, Barry, thank you for joining us and tell us a little bit about your initial work at Apple.
Barry Waitte: Thank you, Steve, pleasure to be with you. And once again, you and I seem to find each other on these securitous paths of life and figuring out businesses. A couple of things: first, we could drop the senior and the vice president role. Some people might get kind of rattled on that one, so I only got to the VP level for a period of time. Let’s talk about the Macintosh. So, the question was how I got there into the Mac group?
Steve Grubbs: Yeah.
Barry Waitte: So forth? I started in Apple in 1980 and was a pretty low=level grunt at the time because, as you said, it was pretty close right after college that I got into that. But I got invited to join the Mac team in the marketing department and helped define channels and work with entities before the Macintosh was introduced.
And as many people know, if you follow the history of it, the Mac was truly introduced at the Super Bowl in 1984 by one of the most extraordinary commercials, I think even to today’s standards, that went out there. And I was very fortunate that I got to pursue selling and marketing the Macintoshes to universities across the country for a number of years. So that’s just kind of my little background into it.
Now, I did spend 14 years at Apple, had many, many jobs, moved a couple of times with the company, but started and finished in Cupertino, which was one of the great professional runs of life. How fortunate to be part of something like that? Because back in 1980, who knew what Apple was going to be? Matter of fact, I didn’t even know the name of the company until I was kind of into the interview process. But I got caught up into it and believed the preachings of Steve, we were going to change the world. And that was a good step in that direction.
Steve Grubbs: And it happened. I believe today, it’s the single most valuable company in the world by market cap.
Barry Waitte: It is.
Steve Grubbs: Two trillion.
Barry Waitte: But if I could just say something about that. Apple had a couple of lives, and I call V1, V2 of Steve’s two different lives there. In V1, he started the company, if I’m not mistaken, 1978/77, somewhere in that time frame, went public two or three years later. But then he was—which, if you read the book, he was ceremonially escorted out of the company, in a sense, in 1985.
And a lot of people will say, that was a good move. I’m on the fence of that one. I mean, the man was so inspiring, but he had some…As other people know, he’s a difficult guy to work for, and I think that was becoming a blight in some of the activities that he was doing.
But look, he came back in 1997 as part of the next acquisition. Next was the technology that Steve had started and so forth. Apple bought that in there. So look, at between that time of 85 and specifically when he came back in 97, Apple was not a healthy company. And I think it’s such a great story that, I know it’s a little off target, I think, where you want to go, but it’s a great story about a guy who started a company who literally let’s just say got fired, but came back and saved the company and saved it so much that it is his architecture and his leadership and inspiration that has now created the most valued company on the planet.
And I give Cook a lot of credit for taking that imagery and creating a business model over the last ten years, that really maturated that, but what a story? What a story? Well, I never knew Steve after 1985. Never ran into him, never talked to him. So I am only a V1 guy. I only know him for that. But I did follow him. I buy Apple products. I got more Apple crap around my house than most people just because I love the logo. And as many of us said back in those days, I bled the colors of Apple and still do today.
Steve Grubbs: What a gift to be at the beginning of something and to work with one of the just really small handful of leaders that has built something so life changing for so many people. I just think getting that. But I want to make sure I get to this concept of selling the Macintosh. I mean, it just seems crazy to me that you took a $2,500 device and tried to sell it to college students and ended up doing it successfully. Can you talk a little bit about that, and also weave in the story of when you and Steve Jobs hit the road to sell this?
Barry Waitte: Let’s put it in context. Steve led a drive on a number of products that had this new interface that we all take advantage of today. We all just see it as it is. But before Apple came around, there wasn’t an interface where we’re using a mouse or icons on a screen and so forth. But there was a precursor to the Macintosh called the Lisa Computer, L-I-S-A.
And we were told at the time that the Lisa stand for the Local Integrated System Architecture. We have now subsequently found that it was very much the name of his daughter. So, Steve had some pretty good power, but that probably didn’t have a good marketing sense to it. So Local Integrated System Architecture sounded pretty official.
Now, the Lisa came out over a year earlier. It was Steve’s pet project for a while, and as I know it. So I wasn’t part of the Lisa group or anything like that, but Steve, I believe, was removed from the leadership of that project, and he had to go do some other things, obviously. And so he picked up on this less expensive kind of model and started progressing on that one.
Now, the Lisa, when it came out, was $10,000. Put that in today’s terms, right? So just go 4X. What did you say it was like $7,000? Okay.
Steve Grubbs: 7600, so it’d be 3X.
Barry Waitte: Yeah. So that’s just a lot of money for the computer. Now, the Lisa did break ground. I was fortunate at that time to be in the sales organization when it came out and showed it to a lot of folks and it was a lot of oohing and ahing, but not a lot of people buying. It was targeted toward the business market.
Let’s back up even further. Apple tried to bring a computer called the Apple 3 to the business world and it failed fairly significantly. A lot of which, quite frankly had to do with they didn’t put a big enough fan in the damn computer and so it kept breaking down. So of course, businesses, as soon as I got on the market that didn’t go well.
So the Lisa comes out, I think it was 1982, maybe 83. And then that didn’t do so well. But Steve jumped over and basically manhandled the control of this new project that subsequently came out as a Macintosh. It was a skunks group. We were the people there that worked in it. We called ourselves the Pirates. My job was mostly to help just the thinking of what markets should we be in, where should we go? And I had a lot of good sales field experience and so I was working with the likes of Dan’l Lewin and others that are big namesakes in the project as well.
It was a project that seemed always behind and over budget and then it came out with a $2,500 price tag. Now again, I wasn’t involved in those decisions; that was other marketeers that were doing that inside the company, including Steve. And I do believe that was a very controversial number, eight. It’s very expensive, but it’s only a quarter of the cost of the Lisa. So, I think there is some Yang and Yang on all the sides of that.
And if you go about a year out after the introduction, the Macintosh had a couple of bumps along the way. It did not do well all in the general market. Certainly, the business community was not ready to adapt it because it, quite frankly didn’t have the software. It was expensive. It’s certainly very expensive as a consumer computer. And look at, we were told not to sell it to K12 education because the Apple 2, which was the cash cow of Apple, was so well entrenched in that market, which actually also created a divide.
So, look at, Apple had its kingdoms inside. We had the Mac Group, obviously, we had the Lisa Group trying to survive and we had the Apple 2 organization. And so there was good tension between all this, which is not necessarily bad; tension, I think, creates urgency just in general and I think that’s good.
But nonetheless, one of the brainchilds—not mine, believe me, I did not come up with this idea—was to sell the computers to universities, but in a very different way. And that was to actually sell the computers in a resale consideration to the university and give them full license to sell it to faculty, staff, and students.
And in that resell environment, the powers that be—and I guess I’m going to say Dan’l Lewin, really had I gave him credit for that—of convincing Apple to do so at half the price. So that $2,500 computer we’re selling to the universities for $1250. Now all of a sudden that becomes, you know, that’s a feasible computer. And I’ll also suggest that, and this beared out in a little bit of the research I did, but it beared out that universities are liberal thinkers—we know that anyway, but also in how they just do things. And so they were very acceptive of this new technology.
But here’s where the argument went from us, Apple, and I did a lot of this was going to the university and saying, “Look at, we’ll sell you this computer at this really low price. You sell it to your faculty, staff, and students. You mark it up as you see fit.” We did not dictate that—couldn’t buy legal law anyway. “But then use that money that you did, your profitability, you don’t have shareholders, but put it back into the universities for IT infrastructure, for laboratories, for networks, things like that.”
And in some cases, and I did help orchestrate some of the biggest distributions of the Macintosh in history up to that point, at least one of which was the University of Michigan. We did it within a year. We distributed, if I’m not mistaken, 2700 computers in a weekend, in two days, to faculty, staff and students. We literally changed the computing landscape of one of the most premier universities in the United States, University of Michigan.
And by the way, what universities do is they look at each other’s universities and there’s a lot of “I want to be like them.” So all of a sudden, we are doing we called this “the big deal.” We did another one months later at the University of Minnesota, which has the second largest population of university students in the United States. And then it just pervasively went all over the country.
And so by some measures, and not sure this is an official declaration, but I believe by year three-ish, two or three, we had sold as many Macintoshes into the university channel as all other channels combined. And it really was, in essence, a saving grace for the Macintosh to have one of the channels take off.
By the way, that’s all really just a good portfolio strategy, right? You have different markets, you get in all of them in some degree, which ones work, which ones don’t, de-invest, invest. You do all those kind of things with everything. This was just a great strategy that purveyed out in a market that I had a bit to do with, and that was fantastic. I enjoyed that.
So anyway, that’s how the Mac came about. That’s what I did and what happened in universities. And it was the first resale program in universities ever for computing up to that point. And now I think universities have their full resale centers of selling Dells and everything else that goes on there. So it all worked. It certainly worked in Apple’s favor to be first mover in that market strategy.
Steve Grubbs: First of all, I want to get to the Vision Pro question before that, just for color. You and Steve headed out on the road to sell these at one point. What was that like, being on the road with Steve Jobs?
Barry Waitte: You can cry a number of times during the day for all different reasons. That’s exactly what happened. The roadshow, both before the Mac was introduced to select audiences and then certainly after. And look at, as we all know, and if we can all see speeches of Steve, he’s one of the most inspiring speakers ever. So, I got to see that at times, multiple times a day. Now, we also know that Steve has a demanding…My screen just went completely white, so I don’t know if I’m still there.
Steve Grubbs: We can see you. You sound great, and you look great.
Barry Waitte: Okay, great. I’ll just keep going then. Steve had a challenging personality, some of which is his standards were just incredibly high. But that not only was in his demands of his product and what it needed to look like, and we go read Isaac’s book. You’ll get way into that thread. But he was also just a difficult man at times to be with, and a lot of it had to do with his business personality and his high level of standards and what people did.
So, to suggest that you walked on eggs almost all the times that you’re with him, you did. There are a few times we went out to dinner, and I’ll say they were not pleasant, and it had nothing to do with what we did. But it was just that someone can dictate a mood—Steve could. But you know, Steve, I give him credit for so many things, but when it came to showtime, he put his pants on and, like an athlete, went out and just wowed it every single time.
Steve Grubbs: So, I want to contrast that. And I know that you are not privy to what’s happening at Apple today, but I just want to use some of your learnings to think about how Apple may move forward with this new Vision Pro headset that they rolled out.
Tim Cook, obviously, not Steve Jobs. He probably is not as visionary. We know that he is not going to stand up and give the motivational speech, but he certainly has rolled out a product that has the potential to be very significant and he put it out at a fairly high price, a price that—Microsoft has been selling their hollow lens at about $3,500 and really has not moved that many of them. And people are stepping back and saying, “Well, Microsoft is not Apple.”
So, they roll it out at $3,500, half the price, really, of what the Macintosh rolled out at, but seven times more expensive than the Meta Quest 3 that’s coming out. So talk to me a little bit about, if you were Tim Cook, what are your thoughts on where they go from here with this device? Just from the knowledge you have in this sort of an arena?
Barry Waitte: I have no right to be put in a camp of Steve or of Cook’s shoes in his thinking. My observation, and I’ve tried to be an observer, is, Cook is a masterful business planner. He comes from that operational side, the supply chain, that’s where he came from, and obviously got the confidence of Steve as he got into senior leadership and Steve gave him the reins before Steve passed.
Where does Mr. Cook go with this and so forth? Apple has always premised itself—and I’d say always—on the basis of the brand, the brand of Apple. And I got to see that back in the days of selling computers to schools and that was part of the strategy: get them young, get them branded with the logo. And we know today that that was incredibly successful. And we know that’s successful in other products; people will buy something just for the brand, even though it may be even deficient in this case of technology or some quality control.
Also pricing strategy, since that seems to be the threat of your inquiry, you know, it’s easier to lower a price than raise a price. And by setting a standard out there, you’re saying what, you’re saying this product is superior. And for all the Apple advocates, they are going to believe that to a certain degree. The question I think becomes, and if I want to relate it back to my days, is this an Apple Lisa, or is this a Macintosh or is this some other product out there? Is it going to carry itself long enough to get decent market acceptance?
Without a doubt, and I’m not Steve, you’re much more proficient in this world than I am, certainly. But I think it’s the coolest looking of the headsets I’ve ever seen. But I haven’t had one on my head yet and I don’t know its functionality. But when we have a suggested retail price, then Apple has the latitude, as we did way back when in all these different markets, to have different pricing strategies for quantity discounts, for channel-specific discounts, for all these kinds of good things that most people—and I’m going to say most—are going to be able to buy it less than that SRP price onto that.
And of course, Apple will watch that carefully. And I think they’re far more sophisticated today in understanding their direction of success or failure than we were way back when. We have better tools today by far to do that.
Steve Grubbs: What I find interesting is that if you look at, like, Microsoft and their Xbox or you look at Meta and their Quest 2 headset, they’re willing to sell their hardware at break even or a loss and make their money on the software sales that accompany that device.
Apple has always had the, from what I understand and I want you to talk to me about this, it seems like Apple has always made the decision, “We are not going to sell our hardware at a loss. It’s going to be a profit center,” and they pull it off and they also make money on their software, obviously. So talk to us a little bit about that decision and Apple’s view of it.
Barry Waitte: Well, historically, Apple was a hardware company and that’s where we made our money, and gross margins on hardware was our game. We internally talked about that day after day. What Cook has done is he’s made, and if you look at the profitability of Apple, there’s some nutty number, 80.90% of the profitability comes from services. So, he has flipped the model, at least for a company success. So, it’s interesting that they came out with an ultra-premium price for this. And I don’t know if there are services side too underneath it.
And Steve, again, I’m just going to confess, I don’t know much about the product or its differentiation to others, but I don’t know if there is truly a technological advantage to it. As we know, these technology advantages are now very short lived. We used to think we can declare success and failure in my old days in seconds. Now it’s milliseconds. And your imagery and your voice is communicated so quickly throughout the world. How fast can people of predominance get canceled right, in a day? And products can do the same thing.
Apple, I think, has their secret advantage and that’s their brand through the years and even more so in the last ten, has been so entrenched and so well developed that there’s a level of success that will come just from that.
Steve Grubbs: Am I right that you worked with Guy Kawasaki in the marketing department?
Barry Waitte: A little bit. Guy was an evangelist for software, but he was also one of Steve’s confidence. Confidence? Yes, whatever, you know what I mean. And he was always coming up with fantastic ideas. He is one of the most positive men I’ve ever met and I loved watching him through his days after Apple, his Garage Incubator Program early on and just everything about it. So Guy is one of those, he’s a true intellectual thinker and what could be done, but he always had a practicality, at least in my mind, behind all those things. And, yeah, he was a good guy.
Again, I don’t correspond with him or have any relationship up to this point. As you pointed out at the beginning, I’m in the wine business now, and I had to make a decision to get out of the computing business to get into this. And it would be hard to do both. But yes, Guy was a great contributor to the success of Apple and those early days of the Macintosh.
Steve Grubbs: I assume some of his big ideas played a role in the success of the Macintosh.
Barry Waitte: Yeah, I actually think he is the one that came up with the idea with Dan’l Lewin for creating this university market strategy, which I got to implement, full disclosure, but I think that’s where that came from and how to do that. And then, of course, look at, you go to the senior management, you go to the board and you say, “Yeah, let’s offer it to this channel at half price.” That was not an easy quest, and it created turmoil all over the place.
And the biggest one was with our dealer network. And at that time, there was no Apple stores. It was all dealer based. And they were buying the product for resale far more than what we were selling to universities. And the university could just buy them and use them and then sell at whatever price. That created channel conflict to no end.
But Steve and the Apple management stayed forth on it. And it became a very successful strategy, obviously, for the Mac.
Steve Grubbs: Who was the genius behind the famous 1984 Orwellian TV commercial that aired in the Super Bowl?
Barry Waitte: I remember when I first saw it, it’s just the chill that I got. Knew it was happening. There was a gal that was kind of in charge of the production side, and I knew her. But the real brainchild, I believe, behind this was Chait Day, and I think Chait himself. Apple hired a movie director, Ridley Scott. This is the first thing he did other than full motion pictures to do. But he treated this like a full motion picture. And I guaranteed you Apple paid him as if he was doing a full motion picture.
But if you get inside it and you see the graphics that were used and some of the equipment, I think they tore apart an airplane. I forget if it was a 747 or something. But a lot of the things you see on walls and so forth, I mean, it was extraordinary. Has imagery of a movie called Alien that was made right about that same time.
But it was Chiat Day that really came up with the brainchild of that. But look at, Chait and Steve had a special relationship, without a doubt. And they challenged each other and inspired each other. And it was a success of many things, a lot of the campaigns.
I also believed, and just to extend that, if I’m not mistaken, there was a campaign that came in the later days called “Think Differently.” And I also believe that was Chiat’s campaign that came out. That was one of the best one.
Steve Grubbs: Two wrap up questions. One of our listeners, John, says, “I believe they claim that this iteration, the Vision Pro headset, will quickly be replaced by another at twice the price. Do you think that the current price is to prep consumers for the next price?”
Barry Waitte: Wow. Again, I don’t know the products of the space, so I can’t say that. That’s not surprising, though. Look at it, Apple’s got a lot of cahoonas. They have the market muscle to do this. And if they think that there’s another product set a value set, they may do that, but to their advantage. If they come out with multiple products, then they can really…I could just go to town on my whiteboard back here drawing up market strategies with that.
We tend to think of products like this as just a one off “Let’s just see how this goes.” I can guarantee you, Apple’s got four or five iterations of this. They’ve got a two-to-three-year strategy, pricing everything and there’s a ton of “what ifs” what happened to that?
But all of a sudden, look, if they come out be simple about this. If they come out with a headset that has more features and it’s higher price, all of a sudden, this one, let’s price it 15, 20% less, now it even looks more like the box I want to buy. So one may be getting ready to be positioned as the volume leader. Well, they’ll have a higher end one. I don’t know. I’m not there.
Steve Grubbs: It makes sense in the way they price iPhones, right? Because I buy the $1,200 iPhone, and I don’t blame because it’s just like a monthly payment. But I know that I started with the $300 iPhone back in the day, so they have various prices that you can hit depending on who you are and what you’re willing to part with.
So that kind of a model seems like if it’s successful in the marketplace, that it’s probably likely that they’ll create premium versions of it. Okay, final question. Nothing to do with Apple, nothing to with technology. Barry, you and I both love wine.
Barry Waitte: Yes, Steve, we’ve been on each other’s porch a couple of times..
Steve Grubbs: Yes, we have. So, last question, we’re a little bit overtime. You were in the foundational era of Apple, and now you’ve built your own grape, you switched fruits. What is the difference between building a vineyard and building a tech company?
Barry Waitte: Well, I’ll tell you the similarity, quite frankly, and it’s what I learned at Apple. When I decided to leave tech and leave operational stuff, I wanted to do something that still offered a clear path of creativity. I’m not a graphic artist. I’m not the deepest thinker, but I just so enjoyed the freedom that I had at Apple to be creative in thought and how to do things and encouraged to do. That the point of failure. I got a closet full of failures at Apple, as does Apple has a closet full of products. And that’s what I love about the wine business, is the notion of creativity. And what I also enjoy as a former product marketing, is I get to create stuff every year.
When I think about the Macintosh, in some respects, look at, the Macintosh came out in 84, and it’s been modified now over time. But in the wine business, I think of it as every year we create a new product. Mother Nature gives us something completely different than it did last year. And in my market segment of wine, my job is not to make wine like I did last year. It is not to be homogenous. There’s plenty of wineries that do that, and that’s good for them, and there’s people that demand that.
But Steve, why you like Tamber Bay, I think, and why so many people do is this curiosity of what does this vintage bring or what does this new wine bring? So I’ve gone overboard on this. I make 20 different wines for Tamber Bay. We’ve got 21 actually coming up this year. We’re going to pick a new vineyard. Yeah, and it’s going to be great.
In that process of determining what that for example, this new vineyard process of what we’re doing, where we’re getting it, how is it going to be differentiated, what we have, how does it fit into the product set? And quite frankly, in two and a half years, three years, when I come out with this, you and I are going to have the same discussion about price point because it’s going to be our most expensive wine, right?
Steve Grubbs: Yeah.
Barry Waitte: Where did I learn that? So that’s its similarity. Here’s the difference, if I could just have 40 more seconds, the difference is in high tech, and this is probably in most businesses, but there’s something of an intellectual property that is so imperative to the value of that company. And in tech, it’s huge. Everything’s a secret and you protect it with legal crap all over the place.
There’s no such thing as IP in winemaking. None. It does have science and there’s ways of doing things. But when you get, again, to the level that I have built our company, our winery, it’s about creativity and about being an artist. And the thousand decisions we make along the way of making a single wine in a single year, all are artistic. Let me back up on that one. Most are artistic, taking what science we know, what tastes we have, things of that nature. And then in having this ability to modify it to a profile that we think is really interesting and unique.
Steve Grubbs: I think you once told me that Napa Vinyards will get together for coffee on a Saturday morning and just share IP.
Barry Waitte: Oh my gosh, yes. And two weeks ago, as an example, I have three brand new Pinot Noirs that are now on the market, three brand new. Two from Sonoma, one from Santa Rita Hills in Santa Barbara. We invited five winemakers over and to give us a critique on each one of these. And not only were they tasting the one we just released, but we also let them taste the same three Pinos from the next year that is still in barrel, and it’s a completely collaborative process.
There’s a saying that Robert Mugabe said back in the 60’s and 70’s, “All boats rise with the tide.” And his notion was if we talk about Napa and we protect each other as Napa, everybody in Napa will be successful. And I so loved that and champion that with all my Vinyard friends here. And we do it together all the time.
Steve Grubbs: It gets back to what you were saying about brand. I think Napa is an equal brand to Apple, just in a different space.
Barry Waitte: The best decision I ever made about being in the wine business is coming to Napa, without a doubt, it’s the best and the history is just fantastic.
Steve Grubbs: Here’s my last comment, Barry. I’m hosting some entrepreneurs at my place here in Austin tonight. We’re starting with Tamber Bay Shard, and then my most expensive bottle of wine that I have of yours, which is the Oakville Cab. We will drink well tonight.
Barry Waitte: You will, yeah. Those are two of our best Chardonnay that I know you have. And, of course, our Oakville, it’s in the same camp of some of the best wines in Napa, and I’m just so proud to be part of that. Thank you, Steve. Great plug. Fantastic.
Steve Grubbs: I love it. So, anyway, thank you, Barry, for joining us today. It’s just such a gift to be able to talk to somebody who was in the formative days of Apple and actually got to work with Steve Jobs. So, thanks for joining us. And to all of our guests, thanks for listening and check back because we have more shows coming every weekend.