Which of the following statements is INCORRECT about Mike Scott?

W: When Steve Jobs and Steve Wozniak founded Apple in 1976, they couldn’t be trusted to run the company. (1) So, Mike Markkula, Apple’s first backer, and the man that guided the company early on, brought in a CEO to do the adult things needed to keep a company running. His choice for CEO was Michael Scott, who had previously worked with him at Fairchild. Today we have the pleasure of talking with Mr. Scott. So tell us, Scott, you were employee number seven when you came into Apple, right?
M: No, because I assigned the employee numbers. I was employee number seven, because I wanted number seven. (1) I was actually employee number five at that time. So I was 007, of course, as a joke.
W: What was it like when you came into the company? You were recruited by Mike Markkula, Apple’s first investor, right?
M: Markkula and I went way back. We both started in 1967-68,I think. We started the same day at Fairchild. (1) He wanted the nickname "Mike", so I got the nickname "Scotty". Coincidentally, we also have the same birthday, except he’s a year and a day older. We worked together at Fairchild for five years, he went on to Intel and I went on to National Semiconductor. We always stayed in touch because we had lunch on our birthday. So he called me, I guess in 1976, and said that he’d met these two guys that wanted to do a home computer. He could handle the marketing, but he wanted me to handle the details. So I met with him and the two Steves and read the business plan, which was quite wrong because it said TI was going to be our major competitor. And for some reason, they never got into the PC business.
F: When you were running around with everyone in those early days, was Steve Jobs then as assertive as he is today? It’s funny hearing about you guys doing these manufacturing things and now there are these legends of him tearing down an iPod the night before it releases because it doesn’t make the proper clicking sound. Was he as particular then as he is said to be now, or in the early days, was he learning and acting differently?
M: No, (2) he was maybe more particular. In the original Apple II case, Jobs wanted a rounded edge on it so it didn’t have a hard feel. They spent weeks and weeks arguing exactly how rounded it would be. (2) So that attention to detail is what Steve is known for, but it also is his weakness because he pays attention to the detail of the product, but not to the people. To me, the biggest thing in growing a company is you need to grow the people, so it’s like being a farmer, you need to grow your staff and everybody else too as much as you can to enable the company to grow, just as much as you need to sell the product.
F: Can you explain that? So was that your job to make sure you brought in all the right people and he wasn’t very attuned to that?
M: I don’t know how much he’s changed being a manager, but he would not, for instance... he was never allowed to have much of a staff while he was there because he would not supervise them. He wouldn’t make sure they got their reviews on time or that they got their raises, or that they got the health they need. You have to take care of the people as well as the product. As they said he yelled at people, at times you have to yell, but at times you have to be supportive too, and I would say that that’s still what makes Steve, Steve. The thing that everyone still misses is that there always was and still is a lot more to Apple than just two Steves. (3) But thank God I think our early decision to let the two Steves do the publicity, I’m happy for that.
F: What did Jim Martindale do? What was his role?
M: I may’ve gotten him mixed up with somebody else, but I’m pretty sure he was our first foreman, or production guy. The production room, which was originally only 700 square feet, and mostly was just doing final tests and debugs, and I think Kottke worked for him for a while, and if I remember right that was the beginning of our production operation. They’ve always been kind of funny at Apple, because we’ve always tried to chop shop out a lot of it. On the Apple II, 95% of the cost was just materials, not the labor, so that was quite a bit different from the historical way of doing things.
F: That’s because you guys were customizing?
M: No, the cost of the microprocessor and the cost of the memory was such a high percentage of the value of the product. The other thing we ended up doing was, historically, when we went into the business for retail. (4) The retailers at the time all wanted a 50% markup and we couldn’t afford that much margin and meet the price points we wanted. So the original Apple II price point was $ 1195, and it still is. Over thirty years, but you’re getting a lot more for your money. One of the big original arguments on the Apple was that we really wanted it to be under a thousand dollars. We wanted it to be $995, but we just could not do it cheap enough to get to that price point, so that was one of the other big internal arguments at the time, how to price the machine.
F: It’s funny to think about because Apple is known for being profitable and going after margins, it’s funny to think that even back then, the company still wanted to try and protect that good margin.
M: The catch is that it’s not only for Apple. The whole rest of the chain has to make money too. So you have to have distributors and retail stores and everybody has to make a markup. You have to ask if they’re truly adding value for what the markup is. Then there’s the tradeoff there too. You could say Apple could’ve grown faster at some point in time if it didn’t keep the price up as high. (5) But if you set the prices too high, you establish a price umbrella that lets competition get into the business. 1 noticed that with the iPad, Apple is no longer making that mistake.
F: Thank you, Scott. We are running out of time. Nice talking to you.
M: Thank you!