From Podfather to Palm's Pilot

Jon Rubinstein orchestrated a little music player for Steve Jobs that turned Apple around. Can he repeat that magic at Palm?

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Flash back ten years. Apple is a company bleeding money, thought by many to be in a death spiral. Its head of hardware development, a 41-year-old electrical engineer named Jon Rubinstein, is busy cutting projects and people and launching the G3 and iMac computers. He's living in Palo Alto, Calif., with a cat for companionship, working seven days a week, and subsisting on take-out food at the office.

Then came the iPod.

In 2001, on a business trip to Japan, Rubinstein visited Toshiba, where his hosts trotted out a 1.8-inch hard drive they were working on. They thought it was interesting but weren't really sure what they could do with it. Perhaps Jon had some ideas?

You know those hokey cartoons where the lightbulb goes off over somebody's head, indicating a brilliant idea? That was Jon, sitting there in that Toshiba office. ”I'm, like, ’Yeah, I know exactly what to do with that ,' ” he recalls.

Some four months before, Steve Jobs, his boss, told him to check out the possibility of designing an Apple music player. ”He told me to see what it would take to do it and see if I think we can do it,” Rubinstein recalls. ”My first reaction was ’Hey, we're really busy right now. I don't need more on my plate.' ” But, of course, that's not the sort of thing you say to Steve Jobs. So what Rubinstein ­actually said was, ”Okay, I'll go take a look at it.” He did the research and decided that a music player just didn't make sense for Apple at the time, because the device would have to be too big and clunky to be appealing or it simply wouldn't hold enough songs to be useful. He shelved the idea indefinitely.

Then he saw the Toshiba hard drive. The lightbulb went on. And the rest is consumer electronics history.

Suddenly, he was running a crash project to develop a little music player that became the iPod, which revolutionized the music industry, pushed Apple into the Fortune 200, launched a thousand business-school case histories, and will be described in books (or whatever succeeds them) a century from now.

These days, Rubinstein lives in a San Francisco high-rise with his wife of six years and two dogs. (The cat died.) He takes the train to Sunnyvale, where, as executive chairman of the struggling smart-phone maker Palm, he's tackling another turnaround. If all goes well, he'll soon be competing more or less head-to-head with his former mentor—Jobs.

But not everything has changed. Rubinstein still pads around the house barefoot, buys his jeans at budget retailer Mervyns, and gripes about the cost of running shoes. His income, place of residence, and age suggest he should be driving a Porsche Carrera or maybe a Mercedes SL 550. But he doesn't even own a car. ”I do drink better wine these days,” he says.

At Palm, Rubinstein is essentially expected to do what Steve Jobs did for Apple. That is, take a once-high-flying company heading for oblivion and, through product innovations, make it a player again. Palm helped create the smart-phone market with the Treo, then lost ground to the BlackBerry and, more recently, the iPhone. Rubinstein's job is to get Palm back into the race. ”Palm can be saved,” says Ken Dulaney, an analyst at Gartner's San Jose, Calif., office. ”They had a great product, though they stuck with it too long. Their name is known.”

But, says Dulaney, the next product is critical: ”If they don't come up with a good piece of hardware next, they'll be crippled.” The rumor mill says that product will be a Web-surfing phone that will blow the iPhone out of the water and that it'll be coming in the first half of 2009.

Rubinstein says he's always been ”a product guy.” It's just that the hardware keeps getting smaller. First, in the early 1980s, after he graduated with a master's in engineering from Cornell, he worked on test methods for computer production at Hewlett-Packard. Then he helped design subsystems for the HP 9836 workstation. In 1986, start-up Ardent Computer, headed by industry legend Gordon Bell, hired Rubinstein to help design a new kind of compact, graphics-oriented supercomputer.

Then, in 1990, Steve Jobs came calling. He wanted Rubinstein to help develop reduced-instruction-set computing workstations at NeXT Computer, the quirky but influential start-up Jobs launched during his years of exile from Apple. Alas, NeXT ran out of money before it could ship anything Rubinstein worked on.

With Jobs's blessing, Rubinstein took some of the technology he had been developing and started a company called Firepower Systems to build PowerPC-based personal computers. However, when IBM killed its own PowerPC line and stopped investing in the market, Firepower's business was pretty much destroyed. Still, he made a tidy profit six months later when he sold Firepower to Motorola. Weary of the high-tech merry-go-round, at age 40 he began what he intended to be an extended vacation.

But in January 1997 Jobs called again. He was selling NeXT to Apple and wanted Rubinstein as senior vice president of hardware engineering. How could he say no to the great persuader? Apple was at a low point, with annual sales of US $9.8 billion, down from more than $11 billion the ­previous year. Its Power Macintosh computers were running tired six-year-old System 7, and it had only 3 percent of the personal computer market, down from over 9 percent in 1993.

Rubinstein and the rest of Jobs's execu­tive team revamped the company's culture, product line, and engineering teams. By mid-1999 the company's computer business was becoming healthy again, although its market share, still hovering around 3 percent, was hardly more than a footnote in the PC marketplace.

And then came iTunes. In late 2000, Apple was caught short when Hewlett-Packard introduced computers with built-in CD burners. Apple needed to add burners to its line quickly and also develop software to support them. It bought the rights to an MP3 player called SoundJam and brought one of its developers, Jeff Robbin, who had worked for Apple in the 1990s, back to the company to work on the project that would be iTunes. The main thing he needed to add was the ability to seamlessly burn CDs from within the program.

That first generation of iTunes mostly stored music in a library and burned CDs from that library. But it also had to support at least some of the digi­tal music players then on the market. So as part of the iTunes project, Apple ­engineers bought various digital music players, including Creative's Nomad, Diamond Multimedia's Rio, and Philips's Nike.

”They were horrible,” Rubinstein recalls. ”The small solid-state ones could hold, like, six songs. The hard-drive ones were really big and ugly and took all day long to download music. It was just an awful experience.

”We started kicking around the idea of doing our own music player. Steve told me, ’Look into it.' We all wanted one that was better than what was out there, but we were really busy.”

Rubinstein formed a small team to investigate. They looked at technologies and tossed around ideas, but they just couldn't identify a ”home run product,” as Rubinstein puts it.

”I kept telling Steve that it wasn't time yet,” he recalls. Jobs trusted Rubinstein's instincts and, uncharacteristically, didn't push too hard.

In February of 2001 Rubinstein went to Japan on an annual trip to visit hardware suppliers and look at technologies under development. It was a whirlwind—about four days and seven companies. It was at the end of his otherwise routine meeting with Toshiba executives that they showed him the tiny disk drive. Rubinstein's mind was churning, even as he tried not to let his expression change. He immediately recognized the minuscule marvel as the missing piece of the music-player puzzle. Almost all of the other disk drives available then were a comparatively clunky 2.5 inches in diameter. The 1.8-inch drive offered up to 5 gigabytes, compared with 25 for the larger units, but 5 GB was enough to hold about 1000 songs in the MP3 format. And the diminutive drive sucked down roughly half the power of the 2.5-inch drives then standard in notebook computers: when active, the drive drew 1.3 watts compared with the 2.3 of its 2.5-inch brethren; while asleep, it needed only 0.05 W compared with the 0.10 of a typical 2.5-inch drive. With some smart engineering, that lower consumption meant approximately 10 hours of playing time.

”It clicked right away,” Rubinstein recalls. ”I had visited lithium-ion battery manufacturers. I instantly knew exactly what battery we'd need to use. I'd been to display vendors, and the capability, size, and costs of displays that were coming would make this extremely feasible.” The prices of small LCDs had plunged, thanks to the demands of the cellphone industry.

But ”the key element was the drive,” he insists. ”Before that, we had two choices—do a big clunky device or do a device that held a dozen songs. Neither made sense. But once I saw the 1.8-inch drive I said, ’Okay, now I know how to do it.' ”

Talk about good timing. Had Rubinstein made that routine trip to Japanese suppliers a month earlier, the drive might not have been ready to show; a little later, and a competitor might have seen it first.

Jobs, coincidentally, was in Tokyo for the Macworld conference, so Rubinstein didn't have to wait for morning in California to call him with the news. He met Jobs at the hotel and uttered eight words that would set in motion one of the great revolutions in consumer-­product history. ”I said, ’Hey, I know how to do this now.' He goes, ’Great, I'll write you a check.' That's what he always would say when we kicked off a project.” It meant that Rubinstein now had authorization to pull together a development team and start them working full-out on the project.

The full-time development team was small, between six and eight people during much of the project. Rubinstein brought on Tony Fadell as a consultant to help figure out the details; he later hired Fadell to run the group. Jonathan Ive, Apple's senior vice president of industrial design, made prototype after prototype. Phil Schiller, then Apple's head of product marketing, jumped onto the idea of the scroll wheel; he had the insight that it should scroll more quickly the longer it's turned, an innovation that has been endlessly imitated. Jeff Robbin led a team that worked closely with Jobs on the iconic software interface.

Along the way, more than 100 engineers within Apple worked on the project, hundreds more at the companies that would supply subsystems. And of course, iTunes and the online music store developed in parallel with the iPod share credit for the device's success.

The iPod project got under way officially in March 2001, with Jobs demanding a product out for Christmas. That meant it would have to be in mass production by October—seven months away. So the tiny team acted more like hunter-gatherers than like farmers. They didn't start from scratch; they had to rely on existing projects within the company, adapting them to their goals. Apple's display group helped them choose screen technologies and build the display drivers and related components. The power supply group took the specs from the iPod team and designed the ”wall wart,” Rubinstein says, as well as the ­power-management circuitry that would go inside the device. And the mass storage team worked closely with Toshiba to finish the tiny hard drive, which had simply been a prototype when Rubinstein saw it. They debugged the design, tested it, and helped Toshiba shake out the production process.

Rubinstein told his Toshiba colleagues he'd buy every 1.8-inch drive the company could make. ”They were a little surprised,” Rubinstein recalls. And that was all he told them until Jobs officially introduced the iPod. ”I told them not to worry; it was for a hot new product,” he recalls. If at some point they figured it out on their own, they never let on to Rubinstein.

Convincing people throughout the company to take a little time for this top-secret skunk-works effort wasn't hard, Rubinstein notes, even though most people at the company weren't aware that the project existed. People were pulled over to iPod development as needed; ”the hard part was focusing them back onto their normal jobs,” he says.

Meanwhile, the Silicon Valley economy was slipping into free fall as the dot-com boom went bust. Apple stock fell from $55 a share in mid-2000 to around $12 a share in mid-2001. ”We just kept our heads down,” Rubinstein recalls. ”We were busy. We thought when the economy turned around we'd be well positioned.” Then, just as iPod production began in China, with kinks in the manufacturing process still being worked out, the 9/11 terrorist attacks rocked the world. The ensuing security measures trapped some of the key engineers on the project in China and left others stuck in the United States trying to get overseas to the factories.

Nevertheless, by October, just as Jobs had decreed, iPods were rolling off assembly lines. They worked well, except for one nasty bug. At roughly 10 hours of use, ”battery life was good,” Rubinstein says, ”but a bug made it look like batteries were going bad.” A software update a few months later fixed the problem.

From the moment he'd seen the 1.8-inch disk drive, Rubinstein hadn't had much doubt that the eventual product would be a runaway hit. But even he was unprepared for the visceral ­reaction it provoked—even in himself. ”We all wanted one,” he says, ”and that's usually key. And everyone who used one loved it.”

Okay, you may know some of that history. But what you probably don't know is that during the precise period the iPod design saga was playing out, a whole other drama was unfolding in Rubinstein's personal life. Just before the discussions about doing a little music player began in September 2000, Rubinstein met Karen Richardson, then CEO of E.piphany, a company launched by Rubinstein's close friend Steve Blank.

Blank knew what Rubinstein was looking for in a woman—”smart, tough, and pretty,” he says, ”maybe in that order,” and Richardson had it. Blank was also pretty sure that Rubinstein was right for Richardson. People had been trying to introduce the two for years, but busy schedules got in the way. ”It was like the Keystone Cops,” Blank recalls. ”My wife and I kept having these big events. We'd invite them both. First one made it, the other didn't. Then the other made it, and the first one didn't.”

Finally, Blank got them both to his house for a small dinner party. Within 30 days they were an item.

So, in the midst of shepherding the iPod and running the rest of Apple's mechanical engineering, chip design, industrial design, and several other departments, Rubinstein was also helping to plan a wedding for 13 October 2001—10 days before the planned iPod launch, postponed a bit so that Rubinstein could get away for a one-week honeymoon to local beach retreats Big Sur and Stinson Beach. Rubinstein had to interrupt his honeymoon only once to go to the office to recut the audio track for the video to be shown at the launch.

The reaction at the introduction was mixed. People thought the new device was cool, Rubinstein says, but at $399, overpriced. ”I told everyone, ’Look at what some people will pay for a pair of Nikes.' ” It's an interesting comparison, in view of the fact that he himself looks for discounts on last year's sneakers.

Sales were solid but not spectacular. As it turned out, the obstacle wasn't price but PC compatibility. In intense debates within the company, Rubinstein supported opening up the iPod to Microsoft Windows. He based his argument on his experience with the AirPort Express wireless base station, which actually did support PCs but lacked a PC setup assistant and a dedicated marketing channel. As a result, AirPort didn't do nearly as well as it could have, had the company gone after the PC market. But the internal thinking was that the purpose of AirPort products was to sell more Macs. ”We didn't understand that it would be a multibillion-dollar business, so we basically handed the business to Linksys.”

Rubinstein didn't want Apple to repeat that mistake with the iPod. It didn't. Within six years of its introduction, Apple sold 100 million iPods. By comparison, DVDs sold 44 million units in the same ­initial time span.

Even as he took the helm of the newly created iPod division, Rubinstein began talking to Jobs about making a graceful exit from Apple. He gave Jobs 18 months' notice—time enough to bring out the next generation of iPods, the Video iPod and the Nano—and even get the iPhone team assembled and some of the core technologies in place.

The conventional wisdom on Rubinstein's departure was that he'd had a bitter falling-out with the notoriously mercurial Jobs. Not so, Rubinstein says. ”I just wanted to take a break,” he explains. ”There was nothing negative about it. We announced [the resignation] to Wall Street six months before I left. I was not leaving because I was mad. I was just tired. I had worked with Steve for 16 years. He said that I deserved an award for that. We did some really great products together.”

Jobs, says Rubinstein, drove him to do things he wouldn't have done on his own. ”And I added the discipline and execution that it takes to continue getting products out the door,” he says. ”We did well together.”

Rubinstein left Apple in the spring of 2006 a rich man; the profit from the stock options he exercised in 2004 alone was $26.3 million. He would never have to work again. But he knew he would.

He went to Mexico. Some years before, he had bought land in a coastal community on the Pacific. He planned to build a 1500-square-meter house on the property from a design by the Mexican architect López Baz y Calleja. Rubinstein decided to supervise the construction, which had already begun.

”Supervise” quickly came to mean ”minutely engineer,” especially for the house's extensive and state-of-the-art technical subsystems. He designed the home's computer networks, of course, along with its electrical system and backup systems that would compensate for Mexico's frequent outages. He designed a water system that stores drinking water from the city's irregular supply and filters it, along with a separate system that collects and stores rainwater for irrigation. He even helped design a compact waste-treatment plant for the house.

He approached the house as though it were a big iPod. He looked around, found the best components, and then designed custom systems to make them work together. For example, here was one problem: the heat pump that warmed the Jacuzzi was slow. Solution: integrate that system with the house's robust hot-water system, using heat exchangers and various controllers and timers to allow the recirculating water to pick up heat from the house system.

His pal Blank had just finished building a big house when construction on Rubinstein's began. Blank recalls giving Rubinstein a tour that included his pool house, a Rube Goldberg nightmare of crisscrossing pipes and labyrinthine connections—typical, he says, for pool plumbing. ”I think he was rolling his eyes,” Blank says, chuckling. He recently saw Rubinstein's pool water system and was stunned. ”The plumbing looks like a circuit board layout,” he marvels. ”I don't know how he did it. There's not a single pipe that crosses another.”

Rubinstein spent a year and a half working on the house, running, biking, kayaking, scuba diving, and just hanging around with his wife. He got regular calls inviting him to serve on corporate boards but turned every single one of them down. After the insanity at Apple, it was just too much fun doing nothing.

Then, in May of last year, he got a call from Elevation Partners principals Fred Anderson and Roger McNamee, along with Palm CEO Ed Colligan. Elevation was considering buying a 25 percent stake in Palm and taking on the challenge of transforming the company. They wanted to know if Rubinstein would be willing to come on board if the purchase went through.

Rubinstein had been a friend of Anderson and McNamee for years but had never met Colligan. So a few days later Colligan flew down to Mexico so the two could spend a few days getting to know each other. The fact that the struggling Palm, a once-innovative leader, was in a position similar to Apple's at the time Rubinstein joined appealed to him. And he saw a lot of potential in mobile devices; there would be multi­ple winners, and Palm could easily be one of them. ”I liked the idea of another recovery project,” he says. ”I also love doing products and being in a space where the trend is your friend.”

They weren't asking him to take on the full-time responsibility of running the company—Colligan would do that. Instead, Rubinstein would oversee major decisions and get involved in the nitty-gritty details as much or as little as he felt he should. He would set Palm's course. But he'd also have a little time for a personal life—in ­theory, anyway. Rubinstein took only a day or two to decide to go for it.

So now he's executive chairman of Palm, where he runs product development. He spent his first few months tweaking the ­company's product plans. Now he's pushing those plans forward, sometimes from his management seat, sometimes getting into the design work itself. And he spends a fair amount of time working his industry contacts to recruit engineers, software writers, and other tech specialists.

On a typical day, Rubinstein catches up on e-mail and phone calls on an 8:00 a.m. train from San Francisco. At the Mountain View station he hops on a Caltrain shuttle, just another middle-aged engineer in a cotton shirt and jeans, which takes him to Palm's Sunnyvale offices; he arrives around 9. He'll leave Palm between 6:30 and 7 p.m., earlier if he has scheduled meetings in San Francisco. Then he'll have dinner with his wife.

And so far, at least, it looks like that idea of having a personal life wasn't a pipe dream. On Fridays he works from home. He'll spend time in his home office on weekends, but he takes off for long runs and bike rides through San Francisco or Marin County. He spends a few weeks a year at his Mexico digs; they're fully wired, and the IP phone he uses for his main contact number can ring him just about anywhere.

Palm hasn't yet announced any of the products that originated under Rubinstein, although he has tweaked some recently released products and says that quality and reliability are improving. He helped cancel several projects, including an ultrathin laptop just before it was scheduled to ship. He expects the first products completely designed under his watch to begin hitting the market in 2009.

These days, Blank says, Rubinstein is ”a product development machine. Steve [Jobs] beat him into becoming this machine, but he doesn't need to be beaten any more; maybe that's why he left. He understands every part of product design, from idea through manufacturing. Everything.”

What Rubinstein still has to prove is whether he's a creative genius as well as a brilliant implementer. ”The jury is out on that,” Blank says. But he adds that he personally has made a big investment in Palm stock.

Everywhere in the world Rubinstein goes, he sees people with iPods. None of them know that this lanky American made the iPod happen. He doesn't have Jobs's instant recognizability, and that's just fine with him.

”As an engineer,” he says, ”you couldn't ask for any more than what I'm doing. I helped turn Apple around; I helped create the iPod. My role is to make people happy with great products. I'm just a product guy.”

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