The Company That Could Have Been Apple (and Microsoft and Adobe and Pixar)

In the 1970’s Xerox invented the future of computing. Ten years later, they had lost it all. Here’s what happened, and how you can avoid the same fate.

By Jordan DeLong, Ph.D.
October 23, 2018

On April 7th, 2007, a man named Charles Simonyi blasted off planet Earth and became the fifth tourist to visit space. He must have thought the thirty-million-dollar ticket was worth it, because in 2009, he went back into space, becoming the first space tourist to repeat the trip.

Simonyi could afford the hefty price tag. He may have entered the U.S. as an immigrant seeking opportunity, but at the end of his career he was a billionaire several times over. His fabulous wealth was the result of his role in the creation one of the first computer-based word processors, which eventually spun off into a collection of applications that today are used in offices around the world.

Early in his career, Simonyi was part of the development team at Xerox’s Palo Alto Research Center (PARC). In the 1970s, PARC had hired a group of engineers, programmers, and designers that, in retrospect, can only be described as legendary.

Word processing was an important breakthrough, but it was one of PARC’s lesser breakthroughs. In 1973, Xerox had developed the first truly personal computer, the Alto, that was designed to be the first windowed graphical user interface controlled by a mouse. The Alto had local-area network connectivity and could connect to the ARPANET (a precursor to the internet) to transfer files and email messages through a software client. Xerox also developed software that allowed users to “paint” the screen and then print the results exactly the way they appeared on the screen.

The Alto had small technical and software refinements that we take for granted today, including a keyboard that could recognize more than one keypress at a time, the ability to change fonts, and hard disk drives that could be swapped out and replaced. This computer was way ahead of its time.

So, why aren’t you reading this article on your new Xerox computer? How is it possible that Xerox, who had a decades-long head start on the rest of Silicon Valley, is completely unassociated with PCs today?


In 1979, a 24-year-old Steve Jobs struck a deal with the executives at Xerox: Jobs would allow the investment wing of Xerox to buy shares in Apple at a pre-IPO price, and in exchange Apple’s team of engineers would get to take an “open-kimono” tour of Xerox PARC. Over two visits, Apple engineers were given the ability to look under the hood of PARC’s most impressive innovations.

Four years later, Apple released the Lisa, which was the first Apple product to feature (you guessed it) a graphical user interface, mouse, and networking.

The Lisa cost $10,000 and never made a real splash, but it was only a year later that Apple simplified the design and released the first Macintosh, which was priced at $2495 and ignited a revolution in personal computing.

When diagnosing Xerox’s failures, many people blame Steve Jobs,him as some kind of idea-stealing boogeyman. Others blame the Xerox executive team, asserting that, in their profound short-sightedness, they essentially sold out their engineering team’s inspired work for peanuts. I’ll leave the finger pointing to others. The lessons of Xerox PARC are relevant to your team today: the lack of quality communication between Xerox’s executives and engineers made the whole fiasco possible.


There’s a special kind of pain that comes from others not understanding the value of your highly technical work. I speak from personal experience. During my years in academia, I grew accustomed to the brutal practice of presenting my research, only for my work to be judged as not important enough. Or not impactful enough. Or not newsworthy enough.

Rejection by faceless, non-expert administrators becomes a normal part of life when you’re a researcher, and it’s typical to feel a growing distance between yourself and those who judge your work. I think most academics understand what it’s like to make personal sacrifices that inevitably leave you feeling foolish as administrators and politicians divert funding dollars, yet again, towards short term “applied” fields instead of investing in foundational research that makes future breakthroughs possible.

And yet, we persist. We keep coding, keep researching, keep designing, keep engineering. We want our work to speak for itself. It is tempting to withdraw into our area of expertise, choosing to block out the practical realities looming outside our comfort zone. The hope is that maybe one day we’ll create something so beautiful and important that those who doubted us will finally be forced to sit at our table and learn why our work matters.

I think the folly of Xerox PARC shows us the stark truth–our work will never speak for itself. How could it, when others don’t (and shouldn’t be expected to) understand the language of our research? The executives at Xerox didn’t comprehend the earth-shaking importance of what their team had built; why would today’s researchers and engineers assume that the higher-ups in our organizations will be different? Technical mastery isn’t a daily requirement of their jobs, it’s a requirement of ours.

Trained experts are particularly susceptible to a cognitive bias called the “Curse of Knowledge.” As we become more and more familiar with our areas of expertise, it gets progressively harder to understand what it’s like not to have that knowledge. Working with a whole team of experts only exacerbates the problem, making it very hard to communicate the subject matter with anyone who isn’t as well versed.

Many of the participants in our SI-Suite workshops are brilliant research and analysis experts who, for various reasons, wish to communicate the value of their work more effectively. While we offer tools and guidance to develop, accelerate and master such skills, the encouraging truth is that storytelling ability is universal in humans. Still, despite that universality, technical experts may face challenges communicating, especially with non-experts. They often struggle to overcome the bias of their own unique points-of-view and speak the language of their audience.

Executives have their own expertise (and biases) that guide their decision making, and understanding their perspective is key to helping them see and fully comprehend the value of your work. Out of all the game-changing inventions created at Xerox PARC, it shouldn’t be surprising that the one that was actually embraced and supported by the executive team was the first laser printer. It was huge, expensive and unrefined, but executives immediately understood what high-quality, high-speed printing could mean not only to printing professionals, but to small businesses and households.

We technical experts need to be advocates for our own work. It may be awkward to step outside our comfort zone, but it is better than being dismissed or sidelined. There is no cavalry coming to help spread our message. It’s up to us.

For scientists, this means finding ways of telling our stories to the public. Back in the early 1800s, the Royal Institution was the Xerox PARC of its day, discovering and naming new elements such as Potassium, Calcium, and Chlorine. In 1825, Michael Faraday created the now-famous Christmas Lecture, using elaborate sets, props, and compelling speakers to highlight the wonders of science to the general public.

In a particularly noteworthy lecture, Faraday himself broke down the chemical reactions that make a candle work, a compelling topic for a pre-electrified world.  Faraday was a technical genius, but during the public lecture he spoke in plain, simplified language that was accessible to everyone. His impact was immense; decades later Albert Einstein would keep a picture of Faraday on his study wall, right next to Isaac Newton.

For those working in business, this means learning to “speak executive.” Just like Faraday needed to ground a complex topic like chemical reaction within the humble candle, you need to ground your next proposal in what your executives understand best. Many people didn’t understand the potential of electricity until Faraday showed them a now classic scene – electricity being used to turn on a light bulb.

If the Xerox executives would have had even a basic understanding of the revolution that the personal computer would unleash, Steve Jobs would never have been allowed near the building.


As an executive, you are busy trying to keep the ship afloat. You have your own experience and expertise, as well as a big helping of responsibility. There simply isn’t enough time in the day for you to read every single report or attend every presentation, so you learn to triage. You need information that helps you make effective decisions and for people not to waste your time on inconsequential matters.

Was Xerox’s deal with Apple honestly so bad? At the time, Xerox was allowed to buy 100,000 shares of Apple at $10 a share. Considering stock splits, Xerox’s initial investment of $1 million would be worth roughly $1.2 billion dollars today. Financially, Xerox did OK.

The true tragedy for Xerox wasn’t financial loss. It was that they gave up their most valuable resource – a team of engineers that had created, quite literally, a prototype of the future. The engineers were understandably livid that their monumental work had been sold out for something as relatively meaningless as a million dollars in stock; and by 1984 most of the team that created the Alto had left, either to create their own companies or to work for others who understood their vision.

John Warnock was one such engineer who had major frustrations with Xerox management. Warnock had invented a printer interface that would allow for precise control and layout of images on the page, opening the door for people to write, layout, and print their own documents independently. After leaving Xerox, Warnock would join up with another PARC alum (Charles Geschke) and start a company called Adobe Systems, named after the creek that ran behind the garage they worked out of.

Another pair of engineers, Alvy Ray Smith and David DiFrancesco, helped develop PARC’s early version of Paint and eventually became the world’s leading experts in computer graphics and rendering. For years after Xerox, they worked for Lucasfilm and in 1986 went on to co-found their own company named Pixar.

Two engineers at PARC, Robert Metcalfe and David Boggs, developed the Ethernet connection in 1973; yet even with interested clients, Xerox management failed to move the project beyond the experimental . Metcalfe left out of frustration in 1979, founding a company called 3Com that would dominate the network hardware market for decades.

There are more examples, but I want to return to serial space tourist Charles Simonyi. While at PARC, Simonyi was a part of creating the Bravo X word processor for the Alto; but after Jobs’ visit, he was ready to leave. Robert Metcalfe, his former colleague, gave Simonyi a list of names he should contact. Simonyi chose to work for a company that had recently relocated to Washington named Micro-soft and became its 40th employee. He recruited his former PARC mentee, Richard Brodie, in 1981, and they began developing programs that would become Word, Notepad, Excel, and Access.

In the 1970’s, Xerox PARC was poised to become the top technology company in the world. They had developed the most advanced hardware, had hired the best engineers, and were situated in the heart of Silicon Valley. But instead of taking over the world, management failed to realize what PARC had built. Tired of dealing with management’s lack of vision, engineers took it upon themselves to become more entrepreneurial.

And that is the lesson for executives. As hard as it may be, you owe it to yourself and your business to empathize with your experts and try to listen to what they’re passionate about. In a now-famous quote, Steve Jobs said that “It doesn’t make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do.” Hiring, supporting, and empowering your experts is critical. Fail to do it, and you may wind up creating competitors who understand your product better than you do.

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