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 PepsiCo (1977–1983), until he became chief executive officer (CEO) of Apple Inc. in April 1983, a position he held until October 1993. In 1987, Sculley was named Silicon Valley's top-paid executive, with an annual salary of US$10.2 million.
During Sculley's tenure at Apple, the company's sales increased tenfold from $800 million to $8 billion, while the period between 1989 and 1991 was regarded as the "first golden age" of Macintosh. Some attribute his success to the fact that he joined the company just when co-founders Steve Jobs's visions and Steve Wozniak's creations had become highly lucrative. Jobs and Sculley "clashed over management styles and priorities, Jobs focusing on future innovation and Sculley more on current product lines and profitability". Sculley won a power struggle leading to Jobs's ousting, and departed from Jobs's sales structure, instead deciding to compete with IBM in selling computers to the same types of customers. This strategy was initially successful due to the launch of fresh new Macintosh models for different segments which generated increasing profits. By the early 1990s, profits declined due to increasing competition from less expensive IBM PC compatibles running Windows 3.0. Sculley was ultimately 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.
Sculley is recognized 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 has invested in and has been involved with a number of high-tech start-up companies, and as of 2016 served as Chairman of the PeopleTicker and SkillsVillage.
Sculley was born in New York City, the son of Margaret Blackburn (Smith), a horticulturist, and John Sculley Jr., a Wall Street lawyer. Sculley 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.
Sculley received a bachelor's degree in architectural design from Brown University and an MBA from the Wharton School of the University of Pennsylvania.
Sculley began work at Marschalk Co. in New York City in 1963.
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.
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, including the two-liter bottle Sculley worked with DuPont to develop. 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 $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.
In 1974, Sculley became president of 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 $83 million and losses of $156.5 million. To make the food division profitable, Sculley improved product quality, enhanced accounts, and established financial controls. Within three years, the food division was making $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 results have been criticized as being caused by Pepsi's sweetness, rather than its superior taste.
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 president. Although commonly called the CEO of Pepsi, this was never the case. At the time of his departure, Don Kendall was CEO of Pepsi.
I think of you just like Woz and Markkula. You're like one of the founders of the company. They founded the company, but you and I are founding the future.
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 pitch to Sculley: "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?" Apple's president, Mike Markkula, wanted to retire and believed that 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 recent success, would give Apple an image of greater reliability and stability. In an interview with Authority Magazine, Sculley said that Jobs came to him and said "How did you do that? You had no money to speak of at Pepsi. "How did you pass Coca Cola?" And I responded, "Well, we call it experience marketing." The focus was on selling the experience, not the product.
When Sculley started at Apple, he got a $1 million signing bonus, $1 million in annual pay and options on 350,000 Apple shares. From the time Jobs and Sculley first met in 1982 until 1985, they had what they 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. Once Jobs took over the Macintosh project from Apple co-founder Steve Wozniak and early Apple employee Jef Raskin, he became the executive product manager 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's 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, allocating the additional money to hypothetically higher profit margins and to expensive advertising campaigns. Macintosh sold well and received excellent reviews, but it did not eliminate the IBM PC.
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. 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 where Jobs was the general manager.