One painful meeting with Steve Jobs
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I understand large companies dealing with large amounts of money need to be ruthless, but I've always hated this kind of attitude (in general, not just Jobs)
edit: to be clear I'm not saying OP didn't pull the figures out of his arse, just that it quite clearly wasn't an attempt to be deceptive based on the language he used around it
Jobs would have had an estimate of what it would take to copy the feature - way less than $50m, just not quite as quickly.
It surely wouldn't have made a lot of difference (to Apple) if Jobs had laughed off the bluster, and negotiated back down to pretty much any number they liked, maybe even less than $50m.
But the asshole vibe from Jobs comes from the fact that he clearly didn't value the feature that much. It was more valuable to wait for his own team to build it slower, and send the CEO away with a flea in their ear pour encourager les autres. So I'm sure that story got heard by plenty of other potential Apple acquisitions, and saved Apple a lot of money down the line.
Why is not valuing the feature that much an asshole move?
I'm sure you'll figure out a way somehow. It's amazing how far people will bend themselves out of shape over Steve Jobs.
Of course it's reasonable for anyone in business to say "you're trying to bullshit me, so I'm not doing business with you". The OP agrees, end of story.
But - Jobs might have batted away OP's amateur bravado with grace, and still bought his company for any price he wanted (probably even less than it would have cost Apple to build!). Or he could have passed them over to a subordinate be let down.
Instead Jobs personally wanted to be known for cruel honesty, and for ordering a clone of a startup that he'd changed his mind about buying. I genuinely don't know whether he succeeded because or in spite of that kind of conduct.
Moral evaluation of his action I leave as an exercise for the reader.
Would you rather Jobs had NOT been transparent, and obscured his his thoughts behind niceties? Or perhaps he should have given a 30 minute negotiation coaching session to OP for free? He could do either of these, and others might, but this is business first and not necessary.
Very few negotiators can reverse their positions in nanoseconds and realize the better deal is no deal at all.
What I consider soft is lashing out over the smallest emotional slight, which Steve was famous for. I wish we would all stop pretending that the platonic ideal of a leader is having the emotional maturity of a toddler.
And this huge analysis about deceptive intent makes no sense. Of course the startup wanted a price as high as they can get.
Yet this story increased my esteem for Jobs.
Jobs knew going in that Apple could build the feature set themselves, and invited the company on the chance that they could do it faster with an aqui-hire. He'd prepared and knew his numbers also, although he didn't need or intend to discuss them.
Now, everything goes swimmingly, and then this guy asks about numbers and expresses concern that his investors won't accept that. Fair enough, legit, and Steve instantly responds "Don't worry, we'll make sure they accept it." That should be WAY MORE than enough of a statement from someone like Jobs - he and his team obviously have huge experience at this, and the guy should have dropped it, and taken back that information, now more prepared. He should also have read the room and noticed that the tenor had changed and that's as far as it should be pushed.
Now, he goes ahead and doubles down basically demanding more money. It is now just about the money. Had he stopped at "I think we're worth more", it probably would have just ended at Steve saying "I don't think so", and leaving it to Eddy, maybe they'd make a deal, maybe not.
But then he instantly doubled down again, saying "I Know it is" - basically saying he had a competing term sheet at that value — when he had nothing. If he'd actually had a $150MM term sheet, Steve might have said, "ok, we'll consider it", or "you should take that deal".
But when Steve saw that there was nothing to back up the statement, what earthly reason could he have to want to even talk with the guy anymore? His time is too valuable to talk to liars, and he instantly lost any interest in acqui-hiring them.
It's impressive how Jobs instantly saw the BS and adjusted his attitude to the new reality.
Perhaps it'd be a tad better had Jobs not flashed anger at his wasted time and interacting with liars, but instead expressed sadness at the opportunity lost - could be a bit softer, but why? The situation is the same - SJ will not want you in the company even at a $1 aqui-hire.
It's critical to understand the level of game being played, and play it well. This guy played like he was in some college seminar instead of the top pro level, and he got burned. Good he's taking it so realistically.
Exactly. The lesson of this encounter wasn't anything more than: Steve Jobs had power and was willing to use it at the drop of a hat to puff up his ego over a tiny thing. Maybe there was something strategic behind that or maybe he just had anger issues and enough power that he didn't have to do anything about them.
To me this seems like the "reality distortion field".
There's just no amount of "good negotiation" that is going to get Apple up from $50m to $150m here. Apple was willing to pay an acquihire amount of money and Ali wanted an acquisition that respected the last couple years of work they put in. The two sides were pretty far apart. So they didn't make a deal. That's all there is to it.
Steve Jobs somehow pulled a trick, though, convincing Ali that the reason everything went sour is that Ali was a bad negotiator. Just because he's Steve Jobs doesn't mean he knows the "correct" valuation of your startup! He's just trying to bully Ali into revealing whether there are other offers on the table.
The principles of negotiation here are simple... Ali had to find another company willing to pay a lot more than $50m. There's no way that a lot of talking to Apple is going to change how they view a small acquihire target.
I mean, saying "I know X" when in reality you aren't 100% confident... that's completely a Steve Jobs move! How many times did he say a product was absolutely amazing, when actually it's kind of just a middling quality Apple product?
OP says he would have taken less than $150m ("we tried in vain to negotiate some lower number"). Whether that lower number would be under Apple's highest number, is unknown. So your point is well taken that "bad negotiator" is a bit subjective and assumes that a deal could have been struck.
Was it a mistake? In retrospect it would have made Ali more money, but I don't know, maybe iLike still had some chance of succeeding on its own at that point. Maybe it was just a calculated risk that didn't pan out.
Maybe the perfectly charismatic negotiator could have squeezed an extra 10% out of Apple but that just isn't that important compared to the decision of "should we sell the company for approximately 50m, or not?"
Steve floated $1/user. In isolation, that's a fine initial consideration.
The OP's reaction - "that means we didn't create any initial value" - is 100% accurate response.
What you do with that epiphany is what's important.
In the end, iTunes Genius Sidebar didn't last long either.
These are both pretty subjective. But Jobs only got to attack one of them. "I think" would have been even easier to attack.
The CEO in question seems to have disengaged for subjective reasons related to points surrounding his ability to perceive himself from positions of weakness. As you said, he wasn't being deceptive, more like authentic and open. This Jobs didn't care for, in the sense of offering it room in the negotiation.
Jobs rightly perceived that you can negotiate powerfully with those in positions of emotional vulnerability if you develop subjective criticisms and refine them into more objective language via generalizations. But he had his own blind spots as well; it's more like he was lucky that op didn't take a different approach...but op was in a difficult place to begin with, this being Apple's platform.
What whould have been a better approach?
But a better approach, that really depends on a lot of things. More than just words to say in the meeting context.
Anyway...
Jobs cared a lot about people as capital; he also cared about impact, creativity, and especially insight. He admired the big picture, but a huge problem for him was that he couldn't easily live in it. I think this was extremely frustrating and kept him floating in the limbo-like DMZ between daily details and the big picture.
So here's an approach I would have liked to try:
"OK, so you just heard about the software and how we think it's pretty neat. But you don't want the software. We know you're not that dull. It's really a story about our people, the developers who know Apple customers, and who have helped us build up a cult following. And we have new concepts underway that are even better. If you knew what we had planned, in the big picture, you'd sh*t your pants."
Then I'd talk about how universal the ideas are. Then because I'm a time traveler and op's situation is annoying, and I want to get in a little jab for op, maybe I'd add,
"But these days our problem is trust. Can we really trust the platform we're building on? Look at these platforms. People are stuck between two of them, at home and at work. We want to look forward and imagine what future trusted platforms look like, too. Maybe you want us to experience something like that trust in dealing with Apple, but then again maybe you're just like all the rest..."
So, "stealing the idea" is an oxymoron, like "led zeppelin".
To the one in the receiving end, you can choose to get intimidated by a larger than life personality like Steve Jobs, and focus on what he said to you and get crushed by any admonition or, conversely, lose your head by any praise.
This is not any good. Rather, look at the situation for what it is. It’s a mini-game. Good or bad outcomes should only inform future actions, and not be allowed to take over your thought process for unnecessarily long periods.
If you use "intrinsically abstract English language in a subjective way" in multi-million dollar deals or in medicinal practice, and you stand to benefit from it, then you could very well be a liar, or if sincere extremely dangerous to others...
To be clear it took a lot of stones for this guy to tell his story and clarify what his intent was. Deep respect.
Then you read about how he treated his family and his employees - he was just a tiny thing of a human being. It's sad - like a self-contained parable about how to not live your life.
He learned a lesson that day and there was subsequently less shittery in the world from then on than there would have been.
Win win for decent humans.
if you don’t pay for inexperience there I don’t know where you will
https://twitter.com/apartovi/status/1447324896904638467?t=ou...
Conflating writers with CEOs doesn't make a lot of sense. One creates art, another creates value.
In fact, there have been several significant events in recent history that were started because someone used a smartphone to do something. Unless one of the bystanders watching what happened to George Floyd was carrying a camcorder that day, the public would probably have never known about it.
I imagine Steve Jobs will probably be relevant in our cultural memories for the next few generations. But his relevance will probably fade, just as people today have heard the name 'Howard Hughes' but are only barely aware of his importance and impact.
>I replied that our last round had been two years earlier, pre-launch, at a $50M valuation.
>Steve said, “we’d probably acquire you for $50 million.” My heart sank. I couldn’t imagine telling our team that their years of work had created no new value.
The biggest mistake was conflating valuation on paper with liquid value. The team’s years of work had turned an entirely theoretical $50M into $50M in cash. The value created was $50M minus however much the funders actually gave the company. As an extreme example, suppose I offer to buy a one billionth share of a startup for $1 today, thereby giving the startup a $1B valuation on paper. It would be insane to call it a failure if that startup actually managed to sell itself for $1B or even $500M two years down the road.
Another question is, what will the employees pursue once they know that their acquisition strategy will not work? I’m sure the employees are skilled, so I would hope they have an alternative: 1. pivot, 2. Show off their achievements when applying to other companies
From the investor’s perspective, while certainly not a resounding success, not necessarily an abject failure either. Perhaps in those two years the nature of the market the company competes in becomes clear and the investor realizes that they had grossly overvalued the company. Perhaps the company is actually worth $10. Then, by some miracle, someone offers to buy the company at something close to its initial overvaluation. Breaking even or even losing 50% of your investment is preferable to losing 100% of it.
In this particular case, given that both Apple and Facebook were both able to implement this company’s entire product in a matter of weeks, I’d say the investor’s initial valuation was inflated, and they should have been happy to break even.
The investor's initial valuation was inflated because the company failed to develop anything that would be worth an exit appropriate to that valuation.
Absolutely correct, but who are the shareholders? If the investor owns less than half of the company, then the majority of the shareholders comprise the founder and employees, who would come out way ahead selling their company at initial valuation. As you said, the goal of a company is to maximize all shareholders’ returns, not just the investor’s return.
> The investor's initial valuation was inflated because the company failed to develop anything that would be worth an exit appropriate to that valuation.
Why is the investor faultless here? Valuation could just as easily have been inflated because the investor failed to do proper due diligence in accurately estimating how much the company is truly worth.
Do you ever invest in one of his ventures again?
The idea that the investor is at fault if he gets hoodwinked is logic of the con man though: the mark is equally at fault!!!
A corollary is that the company's founders would be way more "successful" raising money from investors who value their company least.
PS: In case you are running a startup, consider selling me 10% of your shares for $1, so that you'll look successful a couple years later as long it hasn't gone bust yet.
You are making a funny but you are not exactly wrong: yes, you should be looking for investment deals where you are likely to get a return on your investment.
Most investors get into a company expecting a high probability of losing their money. They invest on the basis that they'll get it right and make a significant profit every few deals, not that they'll win every time. Coming to a deal to sell to Apple (in the face of losing everything by having Apple and FB eat your lunch) at the same valuation as 2 years prior is absolutely not a failure event. It's a huge win. Practically every investor would invest again.
When you invest, you are dealing in probabilities and potentialities. When you exit, you are dealing with actualities. When you actually lose money, it is one of your failures, not one of your successes.
I think what actually happened was the deal fell through and Apple ate their lunch anyway, right? What do you call that?
FriendFeed didn’t really go anywhere but they did in fact pioneer the use of “like” as an interest graph builder within the context of a social network. If you’re at YC, I am sure Paul can tell you the real story on this (which I don’t know myself, but I’m sure it’s good). In terms of the basic concept of the like action, however — there was a failed dotcom (like.com I think?) that really started the whole idea in the web world. Well, that and all of the fake profiles people were creating on Friendster and MySpace for the things they liked, which everyone involved in the industry was noticing as an “emergent behavior.”
This guy’s claim is almost as comical as all of the people who claim they came up with the Facebook Platform, yet can’t come up with a compelling platform strategy to save their lives, or the lives of any of their employers.
I guess Steve was right (and I’m sure he walked into that meeting with some background intel).
...Facebook copied our signature feature: the “iLike button.” (They were kind enough to call in advance to inform us.)
That's how the story reads to me.
After all, that's at least 24 tweets. But this horse has been so badly beaten to pulp...
Once you disable Adblock, you realize that clicking on almost anything will show a modal asking you to create an account (feels like playing minesweeper to find the links that will work). That modal - once opened - is unclosable until you make the account or start over. It’s incredibly frustrating to repeatedly enter this unclosable UI.
You think it’s all over once you’ve disabled Adblock and created an account? Nope! Now you are harassed at every opportunity to “download the app”
The buy was probably already questionable even for $50m, a number Steve probably already knew even before they entered the room. The exchange showed that the founders were going to be stubborn about the price.
So in the end this isn't "trust is everything in business, and Steve was offended" but simply "don't jump into negotiations with your pants down".
What I think is slightly unreasonable and probably a sub text a few people is that anyone, the CEO of this company or not, thought that their value added to customers was worth $150 million to Apple. It was music suggestion and a like button.
Clearly nothing the Apple couldn’t and didn’t just copy.
$150 million for that? Perhaps another explanation is that Steve Jobs heard that number, realize the after enough of these meetings and acquisitions that dollars had lost their meaning, but this wasn’t worth it.
> And then, my terrible mistake, a moment that I’ve regretted ever since: “Actually, I know we’re worth three times as much.” /14
I don't see how it's reasonable at all to pounce on this as a lie if you mean it in the sense of having a strong belief and say this when asked to clarify.
Did you read the entire Twitter thread ?
Higher up in the thread the guy said that Steve asked him
> “how much is your revenue?” And also, “what was your last financing valuation?”
To which the guy gave him the answers.
For the guy to then go back and arrogantly say “Actually, I know we’re worth three times as much.”
I would call that a lie, wouldn't you ?
He only just gave Steve the hard numbers a few minutes before, and now he's claiming he "knows" they are worth more ?
I'm afraid I'm on Steve's side on this one, i.e. "Don't waste my time and I won't waste yours".
Business negotiations should always take place around hard facts and figures. If you start to try to introduce fluffy subjective nonsense that you cannot back up with facts into the discussion, like this guy did, you'll most likely be shown to the nearest door.
I get that, but labelling someone a liar is much stronger than this.
Ultimately in this story I think the crux lies in the guy's failure to take the "work out the details with Eddy" hint. That was the real point of no return, everything else after that was just a case of when, not if, the things would fall apart.
Eddy (or the Eddy like character in other scenarios) is the guy who has more time for you than the CEO and is likely more willing to give you more rope to hang yourself in terms of exploring things like valuation boundaries.
By seeking to go above the Eddy in the room and negotiate "right there" with the CEO in the room you are only opening yourself up to being eaten for breakfast. The CEO has a million things on their mind and likely doesn't have the time or mental capacity for the details. By openly seeking to go above the Eddy in the room, you are openly both stepping on Eddy's toes and potentially sending a message to the CEO that you don't trust the Eddy. Thinking you can close an M&A deal then and there with the CEO just like you would sell a widget is a bit arrogant and naïve.
With that much shame involved, some ego-protection would be expected.
50 million. He just asked Steve jobs to hand over some large fraction of 100 million to his investors.
Steve was a product guy. This guy just showed he cared more about his rent-seekers-on-capital than the real creators.
That’s a fundamental disconnect.
Starts at 26m50s
Edit: Loved watching it by the way, thank you for the link!
If Steve leaned over to me and changed price during negotiation, or told me to fire everyone who didn't want to move from Boston to Cupertino (if that wasn't part of the original deal), I would have walked.
But that laugh, saying a project would have taken 6 months but only given 4 weeks... stop glorifying martyrdom people!
As a computer person who loves them, Steve made them worse not better. We live in a world where most computers are now locked down, spyware laden, ad serving, micro transaction sucking, subscription rent seeking, pieces of garbage. When I look at iPhones and iPads I get sad for the children.
Interesting in that some of those items Apple pushes for, and some of those items Apple pushes very hard against.
It is, as someone else said, about leverage. And board-room dynamics. Jobs probably did not care if it was 50Mi, 150Mi or 1Bi. He cared it was a fair price, sure. But he was there to seal the deal, not to worry about peanuts or negotiate that. He probably didn't even care about the actual numbers if it was under 1Bi.
And after all it's what, 50Mi for a sidebar? They just rebuilt it. It's a feature not a product. Take the money.
But the kind of mental gymnastics people in the comments section do to defend Steve is impressive.
I'll have you know I'm not that rude in meetings like Steve was :P
It would have been better to just say "make us an offer" without making any claims at all, and then leave it up to the negotiation.
On the other side, lying to investors these days about revenue, customers, or financials can get you screwed if things go south. Even if it's just in a pitch deck.
Focus on building things people want and building a sustainable company that can grow and continue to provide benefit. Not the tech startup equivalent of house flipping where you build something that's not meant to last in hopes of flipping for a return. When you raise venture capital, especially, these stakes are poor.
Build to last. Build to compete. Build to make your customers thrilled. Never build to flip.
The company was eventually sold at a loss rather than breaking even, so the true market value was ultimately less than what Jobs was offering when the claim was it was worth 3x more.
“You’re meeting the CEO. No matter what you talk about - Never, ever, ever discuss price with the CEO. You both have people who will do that for you.”
> Steve said, “we’d probably acquire you for $50 million.” My heart sank. I couldn’t imagine telling our team that their years of work had created no new value.
It was probably the valuation that was incorrect, or is invalidated by recent market changes. It could have been worth that much then, the value of the then-static product/users decreased, value was created since, but it's still only worth the same now.
> “Did you say you ‘know’ you’re worth more? You have another offer?” Steve Jobs's gaze pierced holes through me. “Bullsh*. You’re lying to me. You’re full of sh*. We’re done here.”
Steve had keen senses and didn't appreciate being lied to. Basically if you don't have another offer, how could you 'know' that?
Well all this time later, it’s fairly interesting to see how that Apple acquisition I wanted to see didn’t come to be. Ah well.
What did we get instead. I think iLike went to MySpace, and Apple announced Ping?
$50M isn't greed when that amount was already invested into the venture. You accept that offer you're repaying your investors and walking away with nothing.
Apple was leveraging their position to lowball a smaller company. Ultimately the smaller company upset the bigger one, and even the "charity" was withdrawn, and the bigger company used their vast wealth/resources to crush the smaller.
It wasn't "greedy" to ask for over $50M, because $50M was what was already invested into the company. When another company wants to acquire you, it is normal and expected for you to make profit on that acquisition. 3x current valuation isn't, to me, "greedy." Quite reasonable in fact.
It sounds like it was all about pride for Jobs, small guy was cocky enough to speak up to him so he had to punish him by dropping the deal so he knows his place.
I thought the previous round was $50MM. So those investors would get back their original cash, and all the other employees/investors would essentially cash out at that value.
I got to see him behind closed doors in meetings when he was at NeXT. If you want to see Steve Jobs in a private meeting, watch the scene in the movie Glengarry Glen Ross where Alec Baldwin tells the salesmen that they are losers because the Baldwin character drives a more expensive car. Steve literally did that in one meeting, answering a question about why he didn't do such-and-such with a "I drive a Porsche and you drive a General Motors car" as his argument for why his superior wisdom must not be questioned by losers.
No, that wasn’t the lie. From the horse’s mouth:
“I was intentionally pretending we had another offer, and he detected it.”
My point is the irony of feeling bad and learning a lesson about being completely honest when caught by a master famed for "reality distortion". Reality distortion is almost literally truth stretching. No doubt the master of doing it was a master at detecting it, but that didn't mean he was deeply committed to the truth himself. He was deeply committed to and famously skilled at manipulating but not being manipulated, which is not at all the same thing.
https://twitter.com/apartovi/status/1447324896904638467
It is not about "someone who was convinced his company was worth more" being called a liar for saying he "knew" it.
> Jobs may be remembered as the man who brought the human touch to our digital devices. But perhaps his greatest – and hardest-won – accomplishment was bringing the human touch to Steve Jobs.
How do we evaluate someone who exercised wanton cruelty and dismissal of others' lives, but who worked on earning the capacity to change? What does it mean that he got the chance to evolve and make good as a rich man, where so many others would not?
At the end of the day, sometimes we have to just let the story be the story and give up on our anxiety to compress it into simpler, more digestible themes.
[1]: https://www.rollingstone.com/culture/culture-news/the-steve-...
i hate adding to the steve jobs circle jerk, but i think this is actually kind of smart if we can momentarily suspend our disgust for his character.
the fact is that steve and everyone he's in the room with are there because they worship money. that's the social contract with every job. he has the most, and if you want some of his, you have to be quiet and listen even if he's being unbearable.
> but i think this is actually kind of smart
> the fact is that steve and everyone he's in the room
> with are there because they worship money. that's the
> social contract with every job
I'm lucky in that I no longer work because if I don't my family won't eat, but that was once why I worked, and it's why most folks hold jobs.
Even the folks in that room probably cared about their career/power/influence/personal mythology more than they did about their bank account balance -- and yes, those two things are related but distinct.
but yeah maybe "worship" is the wrong word when i extend it to every job. the fact is whatever our motivations, we still show up to work every single day, and we do it for money.