20 minute read
Supporting Steve Jobs: An Iconic Apple CFO Shares His Story
Part One: Growing Up Graziano
JM: You look terrific and thank you for doing this!
Thanks! I just turned 81 on Thanksgiving Day.
JM: Let’s begin by talking a little bit about your background because it had a disproportionate impact on you. I dare say, of all the people who went to St. Clement School over the years, you must rank high up in its Hall of Fame. I know about your childhood, but for the benefit of readers, can we spend a little time talking about your childhood?
Sure. As you know, Joe, my parents struggled all their lives. They didn’t have much. My father was born in 1904, and my mother in 1908, the eldest in a family of nine children. At age sixteen, she had to leave high school and go to work at the shoe mills in New Hampshire. She would live up there for the week, take the train back to Boston on Friday, and give the money she earned to her father to help support the rest of the family. She worked all her life the whole time I was in elementary and high school, and then college.
I too worked all the time as a kid because my whole upbringing was one of struggle. My parents had no money. Starting at eight years old, I worked on the streets, shining shoes, selling newspapers you know, “Extra, extra, read all about it! Get your Record here!” I got mugged and dragged into alleys; I was beaten up by thugs who stole my money.
JM: I sold those same newspapers!
I took any kind of job I could. I worked in a German bakery when I was thirteen and did that all through high school.
JM: Wow! I did not have those kinds of troubles. But, regardless, my question is, “Where were our parents?”
Good question. My parents were always working I was left on my own to do as I pleased. I lived in a very tough area. As I got older, I hung with a very tough crowd. We got in a lot of trouble, and I got in a lot of fights. I’ve got a pretty good scar on my face from one. (Points to his scar.)
JM: I was there for that fight, Joey. Someone hit you with a rock!
Joe’s
Right! One of my neighborhood friends. He became a famous eye surgeon. Some bullies used to beat me up, and I finally retaliated and beat the crap out of them. Luckily, I never ended up in jail, but a lot of my friends did, and a few were killed in jail. I could have easily gone down that path.
JM: How did you manage to take a different, and dare I say, better path?
It’s interesting and kind of a miracle that I steered clear of what happened to some of my friends. Despite the fact that I was with a tough crowd, I got great values from my parents. My parents were very strict. In those days, you'd get hit with a broomstick or a belt if you did something wrong. Also, I went to a parochial school where you really learned right from wrong and developed good morals and good character; otherwise, you were thrown out Maybe school was my refuge I did very well in school I was comfortable at St Clement. It was small, with a graduating class of ninety kids, and we were taught by the very strict Sisters of Saint Joseph.
JM: Some of those sisters were wonderful, some, less so. I remember they relied on the generous application of corporal punishment for the slightest infraction. They would mete out physical punishment at the drop of a hat. Even in first grade, kids who needed to use the restroom during class were singled out and instructed to get the short-handled broom from the clothes closet and give it to the nun. She would beat the child, and then the child was allowed to use the bathroom. It was cruel and unusual punishment. Needing to use the bathroom during school hours was, I guess, a serious violation of school’s rules.
That’s true, but at the same time, I did love school. I was an honor roll student, but my family life was miserable. My mother and my father argued loudly all the time. I withdrew into my own world, and that kept me safe. Joe (Mandato), you moved away when we were in high school, and we sort of stayed in touch until we didn't.
My brother, Anthony (we called him Butch), left the house at a young age. He was a really tough guy, and he was bigger and smarter than me, but he went to a public high school, not St. Clement, and it was not a good place. He got known for being one of the tough guys, always breaking heads
Maybe it’s awful to talk about all of this because my parents worked very hard just to keep food on the table and clothes on our backs, and they never gave up on us or left us They could’ve easily said, "Screw this," like some people do. They sacrificed I've got to give them credit. Unfortunately, I also looked at them and thought, "Holy Toledo, there's no way I want to have the life they've had." I was driven I constantly said to myself, "I'm never going to fall into the trap of poverty. I don't belong here. I absolutely do not belong here. I’ve got to get out of here."
I was driven to be financially independent as soon as I could be. Of course, that was only a dream because I was hanging with that tough crowd I didn’t recognize any of this while it was happening–only upon reflection. Looking back, I often say, "How the hell did a kid from the streets of Somerville, getting in fights with cops, stealing property, and doing crazy things with a rough crowd, end up becoming a board member of Apple and a successful executive in Silicon Valley?" I don’t like to brag about it I’m just talking about the contrast of worlds because it’s crazy.
JM: You defied the odds! Let’s talk about your mother for a second because I observed her to be a strong and opinionated woman and a real character. Tell me more about her influence on you.
My mother was a huge influence on me. She grew up during World War I, the stock market crash, and the Depression. She suffered a lot, especially because she had to give up a lot of her life to help support the family. A few of her brothers went into the service in World War II, and one of them was killed and a couple were wounded. My mother became very cynical and negative. I guess she kind of knew there could be a lot better life, and she knew she didn't have that better life. She had many regrets. She
Though life wore down Mr. and Mrs. Graziano, they nonetheless instilled the right values in their son.
JM: Your parents argued a lot, loudly!
Yell is an understatement! The whole neighborhood could hear it. It was embarrassing. I'd go crawl into a closet somewhere.
Sometimes, my mother would drive with us up to Arlington and Winchester, nicer neighborhoods, and she'd point to all the nice homes. One time, we’re in Arlington, I’m in the back of this old, late '40s Oldsmobile, and she points up at a nice house up on the hill.
She says, "A lawyer lives in that house. And I could have married him."
She had all these regrets. I’d ask myself in those moments, “So, what are we to you?” Everybody else was always better, which was not a good thing because it affected me deeply. No matter what, I subconsciously always thought everyone else was better than me. Later in life, I had to specifically focus on these feelings and overcome them
JM: Your father was an interesting character, too.
He was. Here’s a memory about him that you might remember As kids, we rode our bikes everywhere Since my parents didn’t have extra money, Christmas and birthday gifts were scant. American bikes were heavy and had fat balloon tires and only one gear. Bikes from England started to appear, mostly in Cambridge because the rich kids at Harvard and MIT had them I think you or one of the other kids got a Raleigh for Christmas
JM: Not me! I had a Huffy with fat tires.
I just remember someone got a Raleigh, and whatever the case, I wanted one in the worst way. One day, my father took me to his butcher store in Roxbury, and we went around the corner into a dark shop where there were loads of bikes. Looking around and seeing the shady characters there, I quickly figured out the bikes were stolen. In any case, my father bought one for me. It was black and looked like a Raleigh, but the controls were made of pot metal, and the saddle was not leather. Owning that bike bothered me a lot, as it implied I was not worthy of anything more. The other kids in the neighborhood aways had better things and more toys. I’m telling you this story because I’m going to come back to this idea later. Make sure I do come back to it later.
JM: I will. Listen, when it got close to graduation time from St. Clement, what were you thinking, and how did you end up choosing to go to college and choosing Merrimack? I myself borrowed $10 from Charlie Cardillo to apply to one school, and I had no sense on how, why, or where to go. But making
the decision to go to college is a big deal because of the cost and the absence of the counsel on how to go about it. All the adults in my life said, “Go to work at the water company or something like that. You can retire for life after 25 miserable years.” Why not do that?
Joe, it was my parents! We had no counselors or prep to decide, but my parents understood how important it was it was a chance to “get ahead.” My mother really knew I should go to college. She was a very, very street-smart woman who, as I have said, also became very cynical and negative. I chose Merrimack because it was a small school like St. Clement, and the tuition was low. We never had any money, and when I was deciding to go to college, we as usual couldn't afford anything I commuted to college in a carpool. I was the first person in my large, extended family to go to college.
In 1962, my father passed away at the age of 58 from a brain tumor. It was a defining moment because I almost dropped out. For the last two years of college, my mother and I lived in the projects run by the public housing authority, on Mystic Ave. in Somerville. I worked the entire time I was in school and college I had jobs that were all heavy labor, working in factories, driving trucks and delivering goods, that type of thing. The projects and the jobs kept me going, though I said to myself, “I cannot possibly live my whole life the way I’m living it now.”
In college, I had a tough time acclimating to a whole new world. I didn't even have enough money to buy my textbooks. For many of my courses, I never bought or even had a textbook.
When I went into business, after college, I had this mental image of being lesser than other people in business because of my upbringing and not going to an Ivy League school. It took a while to shake that off and understand that I didn’t need to care about those things. I learned that others were not necessarily smarter or better than me. I've had Rhodes Scholars and people from the top schools in the country working for me. But, it took a while to realize that I could hold my own at that level.
Note from me, Joe Mandato: I want to share this excerpt from a book someone gave me a long time ago, Street Corner Society: The Social Structure of an Italian Slum by William Foote Whyte It’s a book about the North End of Boston when Joe and I were growing up near there. In the passage, Whyte is interviewing a man named Chick, and I think the passage expresses perfectly how inferior poor Italians felt with respect to education and social standing: “The Italian boys down here have that feeling of inferiority. I have it myself. I really mean that. When I hear that some people think I’m pretty good, I wonder what it is that I have. I can’t see it. I’m not just pretending when I say I feel inferior. That’s the truth . . . I think the only way to overcome inferiority is to go out and mingle with other people. Until you can mingle in, you will never overcome that feeling.
I asked Chick how he happened to go to Ivy University Law School.
I took a law course with Professor Martini at St. Patrick’s. I was proud that an Italian was teaching the law course. I asked him where I should go for my law studies. He suggested St. Patrick’s law school. So I made my applications, and I was going there when I met a lawyer named Marino. He asked me why I didn’t go to Ivy Law School, instead. I said: “I know my own limitations. I couldn’t get into a place like that. I’ll be content to stay in my own station.”
He told me: “Chick, don’t be a jackass. If you’ve got the marks, you can get into Ivy, and a degree from Ivy will mean much more to you than one from St. Patrick’s.”
I thought it over. I went home and talked with my mother. It would cost me $420 to go to Ivy, not counting books, or carfare. It would cost only $250 at St. Patrick’s. I made a bargain with my mother. If she would pay my tuition, I would pay for everything else. She asked me how she could be sure that I would keep to my bargain. I told her that if I didn’t, I would just drop out. So she agreed. And that’s the bargain we’ve been keeping ever since . . . I was anxious to be the first Italian boy from Cornerville to go to Ivy Law School. I made my application and sent in my marks along with a letter from Mr. Brown. He boosted me to the skies. A few days later, I heard that I was accepted.”
JM: Yeah. Being different in way that was “less-than” was a difficult thing to accept, even later in life. It's always dwelling somewhere in your mind right? What happened after college?
I went into public accounting with a small CPA firm in Danvers (Massachusetts). I moved my mother and myself out of the projects. We actually moved back into our old house on 763 Broadway in Somerville. In late 1966, I got a draft notice. I then took the exam for the Marine Corps Officer’s candidate school. Before I could accept, my younger brother Butch along with two of his friends enlisted in the Marine Corps. As a result, I was exempted.
A few years later, I got lucky. One of my college classmate's brothers was working at Ernst & Ernst, one of the “Big Eight” CPA firms. I interviewed three times and went through all kinds of testing. They hired me in the consulting division. I ended up working in both the consulting and accounting sides of the business.
In late 1968, I got married. My wife, Mary Ann, was working as a flight attendant for TWA, her regular route being Boston to San Francisco round-trip. We used to travel a lot because she had unlimited passes to travel anywhere in the world. You showed up at the gate, showed them your pass, and got on the plane. We traveled all over. We used to go to San Francisco a lot. In 1971, TWA planned to shut down its Boston base and gave Mary Ann the opportunity to transfer to San Francisco.
I was doing pretty well, but as an Italian kid from Merrimack College (Joe, I hope your readers will forgive me for saying this), I saw Ernst & Ernst as a white, Anglo-Saxon, Protestant firm. In my mind, there was no way I’d become a partner there. Also, I couldn't see myself being a partner in a CPA firm, anyway, which is all to say that when Mary Ann had the chance to transfer, we said, "What the hell let's go to California!"
When I asked Ernst & Ernst for a transfer, they said no. The economy in '70 was not good. Lockheed in the Bay Area was laying off thousands of people. Boeing up in Seattle had just cratered. We drove across the country, and as soon as we arrived, I needed a job. I ended up getting a job at a place on Sand Hill Road.
Sand Hill Road is now famous. In '71, it looked like a part of the Stanford University campus, which it bordered. The campus is green and picturesque as far as the eye can see. This was pure luck. For everyone who’s ever been successful, I’ve always found luck has played a big part. If they don’t tell you that, they’re not telling you the truth! There's always an element of luck! If people say, "It's all me," they're full of crap. Think about the luck of ending up in Silicon Valley before it was really Silicon Valley, but when it was on the cusp of becoming what it became.
I immediately started making a name for myself in the valley. My career took off I worked very hard, and I always did a good job, which I was proud of.
Joe’s brother, Anthony “Butch” Graziano, lost a leg in Vietnam and died from injuries incurred during and after Vietnam. Joe’s uncle, Anthony Guerriero, a Marine, lost his life in WWII. They are his heroes.
JM: Personally, I found Silicon Valley to be as close to a meritocracy as you could find, right?
Yes! I frequently say that to people. When I used to talk to students, I talked about how Silicon Valley was like an open field where I could get ahead without a lot of crap. The only time I was sort of discriminated against was in Boston, before I went to Ernst & Ernst (To be clear, I was never discriminated against at Ernst & Ernst; I just thought I might be.) I was interviewing with a large CPA firm in Boston. I had spent a lot of time at the beach that summer I tan very easily, so I was very dark skinned The partner in charge of the CPA firm looked at me during the interview. "Are you always that color?" he asked.
When he asked that question, and the way he asked it, I knew I wasn't going to be a fit But Silicon Valley it was a meritocracy. It was wide open if you really worked hard, and I benefited from that.
TWO: A SILICON VALLEY CFO
In this Part Two of my four-part interview transcript with Joe Graziano, we learn about how Joe became a top finance professional in 1970s and ‘80s Silicon Valley. Working with Andy Grove offered him some formative lessons, but we especially learn about the start of Joe’s relationship with Steve Jobs. Although Joe’s street smarts and natural brilliance helped shape Apple, his relationship with Jobs was not all wine and roses. Joe’s personal anecdotes gave me a fantastic, in-the-trenches look at the finance function in the tech industry's formative years. (To read Part One, click here.)[BECCA WILL ADD LINK]
JM: Did you have great mentors along the way?
Joe Graziano: Believe it or not, the one thing I never had in life was a mentor. I know a lot of people talk about having a mentor, and I know many people try to be mentors. I think that’s a great thing, but I didn't have a lot of guidance. People in the Bay area certainly helped me with my career. They referred me to people who referred me to people, but I didn't have a mentor. For me, it was a matter of working my butt off, doing a good job, observing how everyone around me did things, and sort-of scoring points by working longer and harder than others. It was kind-of like collecting successes and then building and building and building upon them.
As a kid on the streets of Somerville, I did learn street smarts, and I’d say street smarts were my mentor. Street smarts are huge. From street smarts, you learn how to interact with people, who to trust and who not to trust, how to read situations, pattern recognition, and how to connect the dots. You're constantly absorbing situations and figuring out how best to handle them. If you're smart enough, you get through it all. I think that was a skill or attribute I had.
JM: Similar to street smarts is the idea of common sense, don’t you think?
Absolutely! Common sense is priceless. I think young people today most likely don't get that opportunity because of “helicopter parents.” Kids are shuttled to and from school and don’t play in the street like we used to do. We used to go everywhere during the day. God Almighty, our parents didn't know where the hell we were. Talk about free-range children we were everywhere. We'd get on the subway and travel to the other side of Boston at seven years old. You learn things from that, especially common sense
JM: So true. You were governed by daylight: get home before dark. So, anyhow, you’re at this NYSElisted company on Sand Hill Road . . .
Yes, so when I got to California in early June of ‘71, my first job was as the controller of a subsidiary of a public company in Menlo Park, Arcata National Corporation. Arcata National had owned Redwood Park in Arcata, California and had sold a good part of it to the government, netting Arcata National millions of dollars. A couple of Stanford Business School guys took over the company to use the proceeds to create a new subsidiary in the communications industry. They couldn't close their books because this new subsidiary was all screwed up. I went in there as a controller and worked crazy hours seven days a week and pulled off a miracle. I created the books; I created a computer system everything!
The CFO of the parent company was ecstatic with what I did, as were the auditors, Arthur Young Later I ended up becoming the CFO for two of Arcata’s subsidiaries in the communications industry. We eventually sold the communications divisions to General Dynamics. They wanted me to go to St. Louis as the financial officer. I was about thirty years old, there was no way I was going to St. Louis.
Instead, I interviewed with a person starting a new company in Palo Alto near Xerox Park, called the Electric Power Research Institute (EPRI), which researches the best ways to achieve safe and reliable power across the country. The president was a nuclear physicist who had worked on the Manhattan Project. I was the fifth employee at the organization. I walked into a completely empty building, absolutely nothing there, and I built the financial organization from scratch. I had to create the
