Steve Jobs wanted customers to understand the Apple Store “with one sweep of the eye,” as if they were gods standing on Mount Olympus. Indeed, the iconic outlets seem to speak for themselves. Bright, uncluttered, and clad in glass, they couldn’t contrast more sharply with the big-box labyrinths they were designed to replace.
Neither could their profit margins. Since launching in 2001, the instantly recognizable Stores have raked in more profits—in total and per square foot—than any other retailer on the planet, transforming Apple into the world’s richest company in the process. Yet the very transparency of the Apple Store, paradoxically, conceals how those profits are made.
When we think of “tech,” we rarely think of retail stores, and when we think of “tech workers” we rarely think of the low-waged “geniuses” who staff them. Almost all media coverage of tech companies encourages us to forget that the vast majority of their employees are not in fact coders in Silicon Valley: they’re the suicidal assemblers of your phone, the call-center support staff, the delivery drivers, and the smiling shop floor staff who make up the majority of Apple’s workforce.
The first open secret of the Apple Store, in other words, is people. The place is far less focused on fancy gadgets than might be assumed. In fact, the Apple Store was explicitly designed as a brand embassy rather than a dedicated source of technical knowledge. As Ron Johnson, the former Target executive who came up with the concept, told the Harvard Business Review, “People come to the Apple Store for the experience—and they’re willing to pay a premium for that . . . Apple is in the relationship business as much as the computer business.”
Johnson and Jobs wanted ambassadors whose ostensible role was not to sell products—uniquely, Apple Store employees do not receive a commission—but to create positive customer sentiment and repair trust in the brand when it broke. That was hard to do if your stuff was lumped in with everyone else’s in a big electronics store, overseen by third-party staff lacking any special expertise or interest in what you wanted to sell.
The goal was to take full control of the brand image while humanizing it. The problem, however, was that humans can be rather unruly.
No Sticks, No Carrots
Fortunately for Apple, someone had been hard at work fixing that bug. In 1984 a group of professors at Harvard Business School published a book, Managing Human Assets, aimed at updating workplace organization for a new era. Previously, the book argued, labor discipline could be achieved in a relatively straightforward top-down manner, but now it required something else. “The limitations of hierarchy have forced a search for other mechanisms of social control,” the authors said. The mechanisms they proposed consisted, at root, of treating employees as nominal stakeholders in business success, within narrow limits that would increase rather than challenge shareholder profitability.
Managing Human Assets was based on the first new compulsory course at the Harvard Business School in a generation, launched in 1981. Johnson started his MBA at Harvard the next year, graduating as the book itself was released. Reading Johnson’s Apple Store as the mechanical translation of Managing Human Assets would of course be reductive—yet key features of the Apple Store’s practice bear an unmistakable similarity to it.
Johnson found the first cohort of Apple Store employees by personally interviewing every manager and offering jobs to upbeat staff working for competitors. Then he developed a training program for the in-house production of “geniuses.” (Jobs reportedly hated the term at first, finding it ridiculous. True to form, he asked his lawyers to apply for a patent the following day). How do you create an engaged, happy, knowledgeable workforce that can pass, however implausibly, as an entire battalion of geniuses in towns across the country? More importantly, how do you do all of that without the stick of the authoritarian boss or the carrot of a juicy commission?
Apple’s solution was to foster a sense of commitment to a higher calling while flattering employees that they were the chosen few to represent it. The Genius Training Student Workbook is the vaguely comical title of the manual from which Apple Store employees learn their art. Prospective geniuses are taught to use empathetic communication to control customer experience and defuse tension, aiming to make them happy and relax their purse strings. It might be expected that Apple Store employees are, as their name implies, tech gurus with incredible intellects. But their true role has always been to use emotional guile to sell products. Before they get to do that, though, Apple uses similar techniques to foster their own relationship with the brand.
By counterintuitively raising the bar of admission, crafting a long series of interviews to weed out the mercenary or misanthropic, Johnson soon attracted more applicants than there were posts. Those keen enough to go through the onerous hiring process were almost by definition a better “fit” for the devotional ethos of the brand, far more receptive to the fiction that they weren’t selling things but, in an oft-repeated phrase, “enriching people’s lives,” as if they’d landed a job at a charity. “When people are hired,” Johnson explained, “they feel honored to be on the team, and the team respects them from day one because they’ve made it through the gauntlet. That’s very different from trying to find somebody at the lowest cost who’s available on Saturdays from 8 to 12.”
While not the lowest, the cost of these eager staff was still low—both relative to industry averages, to the amount they made for the company, and to the $400 million that Johnson earned in his seven years at Apple. Lower wages also had another, less obvious effect. As Apple Store managers explained to the New York Times, the lack of commissions meant that the job didn’t pay well enough to support those with dependents: older workers were functionally excluded from representing the brand without the need for a formal policy—or the attendant specter of discrimination lawsuits that it would raise. Deploying psychology, not the maximizing calculus of economic rationality (money), allowed Apple to turn hiring and wages into managerial props.
The sense of higher calling and flattery doesn’t stop with the hiring process, of course. Make it through the gauntlet and you are “clapped in” by existing employees: given a standing ovation as if receiving a prize. The clapping, according to employees, continues until new hires, perhaps after a confused delay, begin clapping too, graduating from outside spectator to part of the performance—part of the team. Leave the company and you’re “clapped out.”
Products are clapped, customers waiting overnight to buy them are clapped, their purchases are clapped, claps are clapped. Clap, clap, clap. “My hands would sting from all the clapping,” said one manager. Claps, cheers, performances of rapturous engagement provided, by design, a ready-mixed social glue to bind teams together, reaffirming both the character of the brand and employees’ cultish devotion to it.
The Genius Training Student Workbook schools prospective geniuses in a similar set of methods to manage customers. In effect, the Workbook trains employees to train customers to love Apple. It teaches emotionally savvy, algorithmic solutions to customer gripes, such as the “three Fs”: Feel, Felt, Found—then offers a series of role-playing scenarios to rehearse them.
Here’s an example from the book, meant to be role-played by trainees:
Customer: This Mac is just too expensive.
Genius: I can see how you’d feel this way. I felt the price was a little high, but I found it’s a real value because of all the built-in software and capabilities.
When customers run into trouble with their products, geniuses are encouraged to sympathize, but only by apologizing that customers feel bad, lest they implicate Apple’s products as the source of the trouble. In this gas-lit performance of a “problem free” brand philosophy, the very language with which to articulate discord is erased: many words are actually verboten for staff.
Do not use words like crash, hang, bug, or problem, employees are told. Instead say does not respond, stops responding, condition, issue, or situation. Avoid saying incompatible; instead use does not work with. Staff have reported the absurdist dialogues that can result, like when they are not allowed to tell customers that they cannot help even in the most hopeless cases, leading customers into circular conversations with employees able neither to help nor to refuse to do so.
Staging the Genius
All these performances—genius, surreal, or tragicomic as they may be—take place on a platform managed just as carefully as the staff. This stage, the second key ingredient to Apple’s lucrative relationship business, is so obvious that it’s easy to overlook. Jobs and Johnson wanted to control every detail, like the specific color of the bathroom signs, or ensuring that every store had just one entrance, to manage the customer experience. Apple has trademarked almost every aspect of its stores, from stairs to display tables to storage racks. Even the supposedly “intuitive” layout, so obvious that it can be understood by all, is considered unique enough to warrant a suite of intellectual property protections.
Like a true artist, the company has also turned faults into features through its control of space, as demonstrated when Apple decided to launch their first store in New York City. The only available location on Fifth Avenue was a spot near Central Park owned by mogul Harry Macklowe, empty for seven years. No other retailer had wanted to rent it for a rather basic reason: the space was a dark concrete cave. Undeterred, Apple built a hardened glass staircase and a cube to let sunlight (and customers) stream down through it. The store has become the third most popular tourist attraction in the city and the most profitable store in the world, a monument to Apple’s apparent power to defy retail gravity. The glass cherry on top is, predictably, trademarked.
Yet even as this austere cube has levitated into history, the Apple Store itself has recently started to evolve. In part to counter the falling sales volume of a saturated market, Apple has spent the past two years overhauling its stores to work even harder. Potted trees have been added to give a green splash to the signature gray and, in a move so ridiculous it’s almost certain to be a hit, the Genius Bar has been rebranded the “Genius Grove.” Windows are opened to blur the distinction between inside and outside, and the stores are promoted as quasi-public spaces. As the new head of retail at Apple, former Burberry executive Angela Ahrendts (2017 salary: $24,216,072), told the press, “We actually don’t call them stores anymore. We call them town squares.”
The town square. It’s an almost quaint symbol of participatory civic life—a world away from the big-box sprawl that characterized the retail imaginary of the late 20th century, or even the digital isolation of the 21st. Apple’s goal has been to create spaces for people to just hang out in, extending the original insight that focusing on everything other than cold hard cash will paradoxically be the best way to rake it in. Apple has continued to buy former public buildings or prominent places within them—think of the Apple Stores in Grand Central or the former Prince Street Post Office in New York, or the Carnegie Library in Washington, D.C.—while also repurposing actual town squares like Piazza Liberty in Milan, all to give a sense of grandeur, permanence, and public provision.
In Ahrendts’s vision, "the store becomes one with the community." But the real hope seems to be closer to the opposite, that the community will become one with the store. Like the gentrification pushing the poor out of their neighborhoods, Apple’s role-playing of civic virtue redefines the public, and does so by excluding most people from it. Yet Apple’s ability to creatively reinterpret the line between public and private runs far deeper than this, into Apple’s products themselves.
The word “genius” in Latin originally meant “deity of generation and birth,” gaining the idea of intellectual ability in the 16th century. Like “genesis,” it suggests a theological account of novelty: divine creative power. To be a genius, in this sense, is to be someone who in-spires, who breathes life into a void. Witness the hagiographies of Saint Steve Jobs by people like Walter Isaacson—innovators are modern mystics possessed with powers of the divine.
This is the creation myth of Silicon Valley, whose prime pulpit is the Genius Bar, and it is tightly connected to questions of justice. If Apple is the origin of all that it creates, then it might seem fair that they keep the proceeds, particularly when they’re nice enough to let us use their free Wi-Fi. After the company recently won the race to surpass a one trillion dollar valuation, CEO Tim Cook emailed staff to explain, “Financial returns are simply the result of Apple's innovation, putting our products and customers first, and always staying true to our values.”
While seductive, this story is, like the Apple Store itself, a managed, theological fiction. Jobs wasn’t a saint—he was a control freak. Similarly, Apple’s system of operation, as we have seen, is less the result of genius than of capture and control. Semiconductors, microprocessors, hard drives, touch screens, the internet and its protocols, GPS: all of these ingredients to Apple’s immense profitability were funded through public dollars channeled into research through the Keynesian institution called the US military. They are the basis of Apple’s products, as the economist Mariana Mazzucato has shown.
Even the most distinctive parts of Apple’s lineup turn out to owe their existence to public funding. In 2000, for example, the US military’s in-house R&D arm, DARPA, sought to build a “virtual office assistant” for military use. The agency funded the Stanford Research Institute (SRI) to develop the assistant, which SRI then commercialized using Reagan-era legislation allowing public research to be converted into private property. To that end, SRI formed a spin-off company called SIRI. Thanks to a voice artist and the undisclosed sum Apple paid for the company in 2010, you can now talk to SIRI yourself on your state-funded phone.
Apple’s extraordinary wealth is not simply a reward for innovation, or the legacy of “innovators” like Steve Jobs. Rather, it flows from the privatization of publicly funded research, mixed with the ability to command the low-wage labor of our Chinese peers, sold by empathetic retailers forbidden from saying “crash.” The profits have been stashed offshore, tax free, repatriated only to enrich those with enough spare cash to invest in a belief in future profitability.
But, as the public well from which it has drawn past innovations runs dry, the company’s ability to repeat the success of the iPhone is evaporating. Federal funding for scientific research is in deep decline, and Apple isn’t likely to make up the gap. To keep profitability high, Apple is moving to ever-more-luxury price tags (like the iPhone XS Max) and expanding its ability to extract rent by controlling the creativity of others (through Apple Music or the App Store), all while its embassies sell a different story with a smile.
Command and Control
All of this raises interesting questions about how Apple—and with it, capitalist accumulation more broadly—should be understood. Marx, on whose edifice most contemporary critiques of capitalism are built, assumed a cutthroat market that pushed prices ever downward. “The battle of competition is fought,” he wrote in the third volume of Capital, “by cheapening of commodities. The cheapness of commodities depends, ceteris paribus, on the productiveness of labor, and this again on the scale of production.” Yet this analysis is far from adequate to understand how Apple is now able to charge over a thousand dollars for a phone—and not just because it’s hard to convincingly explain how the same labor of Apple’s geniuses, combined with that of Foxconn’s manufacturers, is transformed into climbing prices, or why similar labor performed in stores like J.C. Penney is not.
Instead, we could do worse than redeploy a concept recently resuscitated to think about Big Tech companies like Amazon: monopoly. As Lina Khan has argued in an influential article, Amazon has avoided regulatory intervention, despite its growing control over digital commerce and infrastructure, because price rather than market structure has become the optic for viewing corporate power. Amazon’s prices are low, so where’s the problem?
This definition of monopoly is quite new, developed by Chicago School acolytes like Richard Posner, a judge and economist, and Robert Bork, a former Attorney General and failed Supreme Court nominee. Part of the so-called “Law and Economics” movement (essentially the view of law as economics), they dissolved problems of monopoly into neoclassical price theory. Monopoly became the ability to raise prices above market norms, an exception to an otherwise equitable rule. Despite the obvious differences, political and theoretical, between this and Marx’s critique, both positions find ironic unity in their belief that markets are essentially competitive, and governed by the icy calculation of maximizing motives.
As we have seen, however, Apple’s success relies on something different. Apple neither hires nor sells to the homo economicus of economic theory—it produces emotive, devoted disciples. Apple neither cheapens commodities to battle the competition, nor does it raise prices above market norms for the simple reason that it has created its own. Instead, Apple suggests that monopoly is less an exception to the rule of competitive capitalism than something that speaks to its core. Here the connection between management and monopoly becomes clearer, because one is simply the scaled version of the other: Apple’s profits, at root, are a product of its power to control.
Apple’s ability to govern its employees, supply chains, and image allow it to restrict behavior and creativity in its interests—try getting a genius to say “crash,” the company to pay tax, or your music out of your iPhone. Apple’s ability to assert proprietary control over public goods, from the town square to government research, allow it to generate income far in excess of anything it could hope to wring from its staff. Apple’s performance of friendliness and innovation allow it to soothe customers while convincing both them and investors that it is the source of a happier, richer destiny. Apple’s profit does not come from packaging the labor of the past, in other words, but from the power to organize the present in a way that makes others believe that it is inventing the future.
Rather than clap the company’s ability to sell us that narrative, we should question it. We should use Apple’s history to help imagine something different—perhaps a future in which Apple is made public again.