## John Sculley talks to The Site's Sam Whitmore
| Sam Whitmore: John Sculley, CEO of Live Picture. Thanks for joining us. John, what have you been doing in the last couple of years? You've been amassing some new plays in the market. New companies, maybe you can tell us about that. John Sculley: Well, it's been almost four years since I left Apple. And it took me a while to figure out the opportunities for someone who wanted to be an entrepreneur, who was a marketing person more than a technologist. And I wanted to live on the East Coast, but it became pretty clear that a lot of the really exciting things from a technology standpoint were happening on the West Coast. So I had to take it a step at a time and figure out exactly what I wanted to do. The first thing I did was to invest in a company called Live Picture. At the time it was a very small young company with fewer than eight people in it. And we were trying to look at what was going to happen beyond desktop publishing. If you could do newspaper quality ten years ago with desktop publishing, why couldn't you do magazine quality in the late 1990s? And then do it over the Internet. And Live Picture had some extraordinary technology that were invented in France-- basically, mathematical algorithms-- and we saw a chance to build a really neat company out of it. So that was really the first thing that I started doing. Whitmore: Tell us about Live Picture. Is it a product or is it a technology? Tell us about it. Sculley: Live Picture is software. And it's focused on the idea that people are accustomed to photographs that really look like photographs. Not almost like photographs, but exactly like photographs. They have very high quality expectations with a photograph. And the problem has been that when you work with pixels, particularly when you want to send photo images over the Internet, you either have to give up on the quality or wait an awfully long time to be able to get that image across the Net. And the approach that Live Picture took was, rather than work with pixels, it works with tiles of a resolution. So that if you have a 20-megabyte file for a photograph, then you can only display, maybe at the most on the highest resolution displays, 300 kilobytes an image. There is no point in moving the entire image file over just to display that. Without using all the size of the file. So what Flashpix does (which is the technology which we developed, eventually with Kodak and Microsoft, and Hewlett Packard) is enable you to take these very high-resolution photographs and be able to view them and print them as if they were done with traditional photography. Whitmore: So when you were at Apple, did you become enamored with this photographic rendering technology? Sculley: Well, I had always been interested in photography and helped the set up the Kodak Center for Creative Imaging years ago in Camden, Maine, where I live in the summertime. And of course, Apple had a lot of very talented people who were working on multimedia for many years. And I saw the opportunity to do something that wasn't tied to the Macintosh operating system, but that was really focused on whatever the personal computer happened be, whether it was a Mac or a Windows PC, and it was optimized for the web. And so, the Live Picture technology turned out to be absolutely superb for that. So we went out and said, small companies are the innovators, but large companies create the standards. They establish the market from a legitimate standpoint. And we got Kodak to invest in the company and got Microsoft, the largest desktop software company, and Hewlett-Packard, the largest desktop printer, to join in. And the four of us created this image file format which is like digital film, called FlashPix. Whitmore: So tell us about some of the other companies that you have a hand in these days. Sculley: Well, I basically decided to focus on things that I knew a little bit about and things that I actually enjoyed working on. There are so many people out there trying to figure out how to take advantage of this incredible era that we're in. New entrepreneurial companies have got to have at least some advantage over the next guy. And I felt the advantage that I could have was essentially reaching into the talent pool that had left Apple over the last four years, many of whom had tremendous experience in multimedia but had always been optimized to the Macintosh. So I've been putting together a collection of companies, all early-stage companies, made up of these talented Apple refugees, and we're out building everything from Internet-enabling technologies to content companies to companies that are doing solutions for large projects, like Live Picture is. And what started out to be something that I thought would occupy part of my time has turned into a full-time activity. Whitmore: So now you're flying back and forth, just like the old days. Sculley: Just like the old days. I'm on a plane at least once a week from East Coast to West Coast. I prefer to live in the East and work in the West. So I constantly shuttle back and forth. And it's actually the most fun I've ever had, because although I work as hard as I ever did, I don't have the stress or the politics that you get in a large organization, and I get to put all of my time against the things that I enjoy the most. I'm a marketing person, and I like the creative side of marketing and business, so I focus on that and then bring in talented people to work on other parts of the business. Whitmore: Did PepsiCo, because people may not remember you worked for Pepsi for many years, did PepsiCo have the same kind of talent, raw talent, raw ingenuity in its own way that Apple did? Sculley: Absolutely. Pepsi has always been a great talent resource. Not only for only for itself, but it has been an active talent pool for many other corporations, particularly in marketing, and marketing was the field that I've always practiced. So I find today that I'm drawing on relationships that go all the way back to Pepsi, but also many of the marketing ideas that we used years ago when we were doing big brand marketing, with the Pepsi Challenge and the Pepsi Generation and other marketing events of that type. Whitmore: So, tell us again, specifically, what are some of the companies, besides Live Picture, that you are involved in? Sculley: Well, I'm interested in education. And I've always felt that there was a huge opportunity to step beyond what had been done with personal computers in the 1980s, getting Macs in schools, Apple II in schools, and that we could do a lot more once they were networked. And one of the companies that we have is called Seismic Entertainment. We're doing real-world adventures where we can teach young people about science and geography and the ecosystem. And we can do it by letting them visit remote locations around the world like the Mayan ruins in Mexico or the Taylor Valley in the South Pole, where the Mars meteorite was discovered with some evidence of DNA. So that's called Seismic Entertainment. We're using RealSpace technology, which is another one of our technologies, and LivePicture technology, which is one of our companies. I was also interested in what are the challenges of the knowledge economy, and one of the biggest ones is if people can't read, we have a real problem. And as most people know today, the reading skills of kids have really gone down in the past several decades, so that you've got kids who are eight years old and they can't even read the headline of a newspaper. And some of them make their way all the way through high school and graduate and they still can't read. That's obviously a burden no kid should have to live with. And so we've started another company in New York called Serious Thinking. Serious Thinking is made up of the former creative team and education team out of Sesame Street, the head of creative at Jim Henson Productions and a few others from places like Nickelodeon. And we are doing a children's literacy project, which is the largest project since Sesame Street was launched almost thirty years ago. We're doing a joint venture in a television series with WGBH that goes on air in the fall of 1998. We're doing over 150 different books for kids. And we'll do a Web channel as well as bringing together over 25 different outreach organizations that are all interested in reading. So that one is a project which has hopefully a lot of value to society as well as something that's fun to work on. Whitmore: So you've discovered that there's fun after all the trials and tribulations you've been through at two very large, distraught companies. Sculley: Well, I don't think that Pepsi is particularly distraught. Pepsi is an extremely successful company and continues to be. So, I think it's a lot more fun, though not as much as doing what I do today, which is working with really bright young people who are building their own companies and want to be entrepreneurs. It just wasn't possible to start your own company when I came out of business school, back in the 1960s. And today we've got CEOs of companies who are in their thirties or early thirties, but the one thing they don't have is experience. And so what someone like me can really do is bring some of the experience, which in many cases you learn from your mistakes. So that experience is more valuable than your successes. And I can help be an advisor, counsel in many different ways a lot of these very talented and high-energy young people. Whitmore: Let's talk about Apple. Do you stay in touch with those folks? Do you know any of the new guard there? Sculley: Well, I have not really been in touch much with the new guard. I know, of course, many of the people who have been there. I've been in pretty constant touch with the people who have left and with people who are looking to leave. So I'm well connected, but I'm not at all involved in the current top management. Whitmore: What should Apple do? Sculley: Well, I think Apple had some extraordinary opportunities, even over the past twelve months, that for one reason or another didn't happen. Today I think perhaps that the single best opportunity Apple has is the brand. It has an extraordinary, world-class brand. It's been tarnished, but it can be polished. And it can be brought back. And I believe that the operating system wars are over. It's pretty clear that the Wintel platform is immensely successful. That the economics in terms of cost of goods, in terms of research and development going behind it, is extraordinary. No matter how good any new operating system is, it's going to be very hard to match what's happened today with the Wintel platform. But the Mac is still a better product. I still use Macs. And so why not start to build on the industry standard and start to add some of Apple's magic on top of that? And start marketing again with the kind of really good marketing that Apple had for so many years. I think Apple could be a very successful company if it did that. I don't think that you have to leave the Mac customers in a lurch. I think someone should even think of splitting the company into two different companies. And if they want to build a new operating system with NeXT, they may be great. Steve Jobs is a tremendously talented product developer. Go do that with the Macintosh operating system, and go build out a future with Mac, but why not also go build out the franchises that Apple has with education and in the home and in multimedia and publishing? I just don't know how it's realistic to protect a sixty percent market share in K-12 education with a product that has less than six percent of the market. It's not realistic. You've got to listen to your customers, and there's still a lot that Apple could do with the Apple brand, particularly with the Internet. Whitmore: There are groups of Apple users, Guy Kawasaki being probably the most famous. These folks are rabidly anti-Windows, anti-Microsoft, and there is a backlash against that Macophile, to use the term, and perhaps a more even-handed or at least an open-minded approach about Window and Windows API might translate to better health for Apple. Is that what you're saying? Sculley: Well, look, I think that Apple has something that very few products companies ever have. And that is tremendously loyal users, even through all of the problems that Apple has had in the past few years. So I don't think that the issue is do you abandon the Mac loyalist. My sense is that you try to recognize that much smaller market, because Windows is there. And it doesn't do everything that Mac does, but it does a lot of what the Mac does. And in the case of the Internet, it may actually be ahead of the Macintosh in some ways. So that's why I say the best opportunity may be in splitting the company. And Mac is a great brand; go build a Macintosh brand, add the NeXT operating system technology, whatever they choose to do. I'm not a technologist. But why drag the Apple brand down at the same time? The Apple brand has a tremendous franchise of people who are maybe indifferent to the technology, but love the experience. And I think that there are people who are clever enough at Apple who would know how to do things on top of that Intel platform. However, that's not obviously anything anyone asked me for, nor do I expect anyone to do that. You just asked me the question of what I thought. And I love Apple, and I love the Macintosh, and I just hope those guys pull it out. We're all rooting for them. I think that everybody wants to see Apple pull this thing out. Whitmore: I think you're right about that. You had mentioned the Internet, John. What's the most exciting aspect about the Intenet for you? Sculley: Well, for me because I'm a basically a creative person and a marketing person and a visual person, I'm excited by the possibilities of entirely new ways of experiencing a medium. This is not television. It is not broadcast, one-to-many, and you sit there passively and watch it. For the first time, we have a way of dealing one-to-one with everybody, where the experience can be customized and where the user is in control of what they want to see. It may be time-shifting of the programming, it may be navigating to follow a random path that interests you at that particular moment. The interactivity and the customization and the community that is possible with the Internet is entirely different than anything that we ever had with telephones or anything we ever had with television. It opens up all kinds of possibilities for society, from the way that health care is delivered to the way that work is done, to the way that we spend our free time. I'm just excited to be able to work on small parts of it, because it's going to take thousands of companies to realize the potential of the Internet. Where we are today is like where we were with CB radio before cellular telephones: an interesting curiosity, but very little utility. I'm looking forward to when we get to some real utility, not just for intranets and extranets, but when we get real utility for the mass markets, and I think that's going to come in the early 21st century. I believe that photorealism and televisual experiences with rich sound as well as photo quality images are going to be a part of it. I think that the content that takes advantage of that are all things that I'm very excited about. Whitmore: John, will the Internet ever be regulated the way the FCC regulates broadcasting in this country? Sculley: Boy, I hope not. The first really good news that we saw out of the government was the proposal put forward by Ira Magaziner that government's role is to create a predictable environment for enterprise to be able to operate in. Not to highly regulate a new medium. And if they in fact deliver on that, then that will be extremely important. There really are no traditional boundaries on the Internet. I mean, how do you determine where the boundary is between one nation and another nation in cyberspace? If we start putting in regulations before we really understand it, I think we will make terrible mistakes. We'll learn how to have good practices. We learned how to have good practices in terms of the kind of decent content that you have on television, and in the movies, in the newspapers, and I suspect we'll figure that out as time goes on in this new medium, the Internet. Whitmore: I'd like to go back to your portfolio of companies. And we've talked about maybe Windows isn't so bad. Will the Macintosh remain the prime instrument of graphical creation with computing, or will it even out? Sculley: Well, I think it's already started to even out. Companies that were entirely Mac are now starting to see more and more of the development start to shift over to Windows. We are building Windows and Macintosh applications. And we just launched new Macintosh applications. So we want to be as loyal to the Mac as we can, but the reality is that the market is shifting, and it is shifting very rapidly. I think it particularly started to shift over the past sixty days, because in the past sixty days, the indications from Apple were there was going to be a new operating system, a terrific operating system, but it wasn't going to be tomorrow. And it was not totally clear how it was going to relate to the current Macintosh running on a Power PC. I think that uncertainty has been unsettling for developers. I've seen more changes in just my anecdotal experiences in the past 30, 45, 60 days, than I have in the past few years. Whitmore: Are there URLs that people can go to about the companies that you are investing in. Or any cool company that you should look at. Sculley: Well, I'll just tell you a few of them. One of them is the old eWorld team that was at Apple. It's now called Live World Productions. Another one is Seismic Entertainment, and they're just bringing up chat scenes, which we showed at Demo '97 this week. Another one is LivePicture, which is one word. We are shipping now a consumer application called LivePix, which is a very fast, very high-quality, $49 personal productivity pack so that people can take photos that have been scanned in or created with a digital camera and be able to create composited calendars or newsletters or photo images. And do it without any particular computer skills. So those are a few. I could go on, but I think that's a pretty good start. Whitmore: Do you have an email address that viewers could correspond with you at? Sculley: Well, mine's relatively simple: it's jsculley@sculley.com.