NeXT's CIA deal gave Jobs a 5-year runway back to Apple

A classified CIA contract for roughly 20,000 NeXT workstations a year kept Steve Jobs' startup alive in the late 1980s, funding the five-year runway that carried him back to Apple.

"Without the NRO enabling Steve's maturity, he wouldn't have returned to run Apple as a turnaround CEO," Dain Ehring, who left the intelligence world in 1990 to work with Jobs at NeXT, said.

The deal, run through the CIA's classified "Program B" satellite reconnaissance initiative, saw NeXT ramp production from 100 machines in the first month to 5,000 a month. Workstations fitted aftermarket with Motorola chips and Intel graphics cards went to analysts at the National Reconnaissance Office, who used the high-resolution screens to scan satellite imagery and share briefings across a wide-area network.

When Apple bought NeXT in 1996, NEXTSTEP's operating system became the foundation for everything from Macs to iPhones. The episode shows how deeply the Pentagon's ties to Silicon Valley run — and why the current push, with the Pentagon planning to spend more than $1.5 trillion next year, echoes a relationship that once saved Apple itself.

A 20,000-unit order from an unnamed customer

The story begins in 1986, when the Cold War was in full swing and President Ronald Reagan was sending billions of dollars to the Pentagon for missile defense and spy satellites. Joe Romello and Jeff Harris, working on the CIA's classified "Program B" to develop satellite reconnaissance, believed Jobs — who had formed NeXT in 1985 after being pushed out of Apple — could supply crucial technology.

Jobs was not surprised by the approach. In February 1986 he had acquired the computer graphics division of George Lucas's Lucasfilm, which made the Pixar Image Computer. Pixar had been working with ESL, a Silicon Valley defense company, and had custom-built a computer for intelligence analysts to assess satellite images. ESL's president, Robert Kohler, a former senior CIA official, told Jobs that what NeXT was designed to do "for college students and professors and researchers, that's what the intelligence community does behind the door."

When Romello met Jobs in New York, he laid out the pitch: buy 20,000 NeXT workstations a year, with two modifications — a faster Motorola chip and a special Intel graphics card, installed aftermarket by CIA proxies. "We never told him what we were really after," Romello said. Jobs was eventually granted a top-secret security clearance so he could visit classified facilities.

NeXT desperately needed the sales. The company was beset by problems linked to Jobs' perfectionism, and its expensive workstations were out of reach for most individuals. University sales never materialized in large numbers. That left primarily the contract with the CIA, which almost no one knew existed. Publicly, NeXT said it had a federal contract as part of a partnership with ESL; even inside the government, the National Security Agency was the official buyer.

Only a few people at NeXT knew what was happening when mysterious visitors from Washington showed up. Dan'l Lewin, whom Jobs recruited from Apple, recalled half a dozen groups arriving, all looking like "off-the-shelf plain-clothes agents." The CIA brought in a team from Sun Microsystems to help ramp manufacturing. The computers were loaded on unmarked trucks, taken to a CIA front company for the chip and graphics modifications, then flown from Moffett Field on C-5 transport planes to classified destinations.

From spy satellites to the iPod

The workstations went to analysts at the NRO, who used them to detect whether a country had moved its military or was building a missile silo. The NeXTcubes, as they were called, allowed data to be shared across intelligence networks, putting freshly collected images in the hands of military personnel around the world. "We didn't use the word internet back then, but we called it just a 'wide area network,'" Romello said. The effect challenged the CIA's culture of centralized intelligence — what Romello called "the biggest unintended consequence" of the new computers.

The Soviet Union collapsed in 1991, and the CIA's mission shifted to rogue states, the rise of China, and terrorism. Jobs, meanwhile, had his eye on something beyond the Pentagon. In the mid-1990s he told Harris, then head of the NRO: "I'm going to redefine the music industry." In 1996, Apple announced it was buying NeXT, and Jobs returned to the company he had co-founded. A few years later he regained control, putting Apple on a trajectory to become the world's most valuable brand — and redefining the music industry with the iPod and iTunes.

Although NeXT's presence in popular culture was overshadowed by Apple, the DNA of its operating system, NEXTSTEP, became the foundation for Apple's products, from Macs to iPhones. Apple never became a major military contractor the way NeXT had been. After the Cold War, defense spending dropped nearly 30 percent by the end of the 1990s, just as the commercial PC market was exploding.

The most lasting impact of Jobs' brief convergence with national security is that it allowed Silicon Valley's most iconic entrepreneur to make his way back to Apple. The work with spy agencies gave Jobs "another five-year runway to harden and grow the business; to prove himself to shareholders and the market that he was a legitimate business leader, not just a kid who got lucky and could sell," Ehring said.

Now, as the Pentagon aims to spend more than $1.5 trillion next year and invests in new technologies like artificial intelligence, Silicon Valley is rebooting the relationship. Tens of billions of venture dollars are flowing into hundreds of new defense startups, with tech leaders citing patriotism and national renewal. The NeXT episode shows the deep roots of that relationship — and the role it played in allowing Apple's operating system to come into existence.

This article is for informational purposes only and does not constitute investment advice.