Macworld
magazine columnist (and
former Apple software evangelist) Guy Kawasaki had published a parody press release joking that
Apple was buying NeXT and making Jobs its CEO. In the spoof Mike Markkula asked Jobs, “Do
you want to spend the rest of your life selling UNIX with a sugarcoating, or change the world?”
Jobs responded, “Because I’m now a father, I needed a steadier source of income.” The release
noted that “because of his experience at Next, he is expected to bring a newfound sense of
humility back to Apple.” It also quoted Bill Gates as saying there would now be more innovations
from Jobs that Microsoft could copy. Everything in the press release was meant as a joke, of
course. But reality has an odd habit of catching up with satire.
Slouching toward Cupertino
“Does anyone know Steve well enough to call him on this?” Amelio asked his staff. Because his
encounter with Jobs two years earlier had ended badly, Amelio didn’t want to make the call
himself. But as it turned out, he didn’t need to. Apple was already getting incoming pings from
NeXT. A midlevel product marketer at NeXT, Garrett Rice, had simply picked up the phone and,
without consulting Jobs, called Ellen Hancock to see if she might be interested in taking a look at
its software. She sent someone to meet with him.
By Thanksgiving of 1996 the two companies had begun midlevel talks, and Jobs picked up the
phone to call Amelio directly. “I’m on my way to Japan, but I’ll be back in a week and I’d like to
see you as soon as I return,” he said. “Don’t make any decision until we can get together.”
Amelio, despite his earlier experience with Jobs, was thrilled to hear from him and entranced by
the possibility of working with him. “For me, the phone call with Steve was like inhaling the
flavors of a great bottle of vintage wine,” he recalled. He gave his assurance he would make no
deal with Be or anyone else before they got together.
For Jobs, the contest against Be was both professional and personal. NeXT was failing, and the
prospect of being bought by Apple was a tantalizing lifeline. In addition, Jobs held grudges,
sometimes passionately, and Gassée was near the top of his list, despite the fact that they had
seemed to reconcile when Jobs was at NeXT. “Gassée is one of the few people in my life I would
say is truly horrible,” Jobs later insisted, unfairly. “He knifed me in the back in 1985.” Sculley, to
his credit, had at least been gentlemanly enough to knife Jobs in the front.
On December 2, 1996, Steve Jobs set foot on Apple’s Cupertino campus for the first time since
his ouster eleven years earlier. In the executive conference room, he met Amelio and Hancock to
make the pitch for NeXT. Once again he was scribbling on the whiteboard there, this time giving
his lecture about the four waves of computer systems that had culminated, at least in his telling,
with the launch of NeXT. He was at his most seductive, despite the fact that he was speaking to
two people he didn’t respect. He was particularly adroit at feigning modesty. “It’s probably a
totally crazy idea,” he said, but if they found it appealing, “I’ll structure any kind of deal you
want—license the software, sell you the company, whatever.” He was, in fact, eager to sell
everything, and he pushed that approach. “When you take a close look, you’ll decide you want
more than my software,” he told them. “You’ll want to buy the whole company and take all the
people.”
A few weeks later Jobs and his family went to Hawaii for Christmas vacation. Larry Ellison
was also there, as he had been the year
before. “You know, Larry, I think I’ve found a way for me to get back into Apple and get
control of it without you having to buy it,” Jobs said as they walked along the shore. Ellison
recalled, “He explained his strategy, which was getting Apple to buy NeXT, then he would go on
the board and be one step away from being CEO.” Ellison thought that Jobs was missing a key
point. “But Steve, there’s one thing I don’t understand,” he said. “If we don’t buy the company,
how can we make any money?” It was a reminder of how different their desires were. Jobs put his
hand on Ellison’s left shoulder, pulled him so close that their noses almost touched, and said,
“Larry, this is why it’s really important that I’m your friend. You don’t need any more money.”
Ellison recalled that his own answer was almost a whine: “Well, I may not need the money, but
why should some fund manager at Fidelity get the money? Why should someone else get it? Why
shouldn’t it be us?”
“I think if I went back to Apple, and I didn’t own any of Apple, and you didn’t own any of
Apple, I’d have the moral high ground,” Jobs replied.
“Steve, that’s really expensive real estate, this moral high ground,” said Ellison. “Look, Steve,
you’re my best friend, and Apple is your company. I’ll do whatever you want.” Although Jobs
later said that he was not plotting to take over Apple at the time, Ellison thought it was inevitable.
“Anyone who spent more than a half hour with Amelio would realize that he couldn’t do anything
but self-destruct,” he later said.
The big bakeoff between NeXT and Be was held at the Garden Court Hotel in Palo Alto on
December 10, in front of Amelio, Hancock, and six other Apple executives. NeXT went first, with
Avie Tevanian demonstrating the software while Jobs displayed his hypnotizing salesmanship.
They showed how the software could play four video clips on the screen at once, create
multimedia, and link to the Internet. “Steve’s sales pitch on the NeXT operating system was
dazzling,” according to Amelio. “He praised the virtues and strengths as though he were
describing a performance of Olivier as Macbeth.”
Gassée came in afterward, but he acted as if he had the deal in his
hand. He provided no new presentation. He simply said that the Apple team knew the
capabilities of the Be OS and asked if they had any further questions. It was a short session. While
Gassée was presenting, Jobs and Tevanian walked the streets of Palo Alto. After a while they
bumped into one of the Apple executives who had been at the meetings. “You’re going to win
this,” he told them.
Tevanian later said that this was no surprise: “We had better technology, we had a solution that
was complete, and we had Steve.” Amelio knew that bringing Jobs back into the fold would be a
double-edged sword, but the same was true of bringing Gassée back. Larry Tesler, one of the
Macintosh veterans from the old days, recommended to Amelio that he choose NeXT, but added,
“Whatever company you choose, you’ll get someone who will take your job away, Steve or Jean-
Louis.”
Amelio opted for Jobs. He called Jobs to say that he planned to propose to the Apple board that
he be authorized to negotiate a purchase of NeXT. Would he like to be at the meeting? Jobs said
he would. When he walked in, there was an emotional moment when he saw Mike Markkula.
They had not spoken since Markkula, once his mentor and father figure, had sided with Sculley
there back in 1985. Jobs walked over and shook his hand.
Jobs invited Amelio to come to his house in Palo Alto so they could negotiate in a friendly
setting. When Amelio arrived in his classic 1973 Mercedes, Jobs was impressed; he liked the car.
In the kitchen, which had finally been renovated, Jobs put a kettle on for tea, and then they sat at
the wooden table in front of the open-hearth pizza oven. The financial part of the negotiations
went smoothly; Jobs was eager not to make Gassée’s mistake of overreaching. He suggested that
Apple pay $12 a share for NeXT. That would amount to about $500 million. Amelio said that was
too high. He countered with $10 a share, or just over $400 million. Unlike Be, NeXT had an actual
product, real revenues, and a great team, but Jobs was nevertheless pleasantly surprised at that
counteroffer. He accepted immediately.
One sticking point was that Jobs wanted his payout to be in cash. Amelio insisted that he
needed to “have skin in the game” and take the payout in stock that he would agree to hold for at
least a year. Jobs
resisted. Finally, they compromised: Jobs would take $120 million in cash and $37 million in
stock, and he pledged to hold the stock for at least six months.
As usual Jobs wanted to have some of their conversation while taking a walk. While they
ambled around Palo Alto, he made a pitch to be put on Apple’s board. Amelio tried to deflect it,
saying there was too much history to do something like that too quickly. “Gil, that really hurts,”
Jobs said. “This was my company. I’ve been left out since that horrible day with Sculley.” Amelio
said he understood, but he was not sure what the board would want. When he was about to begin
his negotiations with Jobs, he had made a mental note to “move ahead with logic as my drill
sergeant” and “sidestep the charisma.” But during the walk he, like so many others, was caught in
Jobs’s force field. “I was hooked in by Steve’s energy and enthusiasm,” he recalled.
After circling the long blocks a couple of times, they returned to the house just as Laurene and
the kids were arriving home. They all celebrated the easy negotiations, then Amelio rode off in his
Mercedes. “He made me feel like a lifelong friend,” Amelio recalled. Jobs indeed had a way of
doing that. Later, after Jobs had engineered his ouster, Amelio would look back on Jobs’s
friendliness that day and note wistfully, “As I would painfully discover, it was merely one facet of
an extremely complex personality.”
After informing Gassée that Apple was buying NeXT, Amelio had what turned out to be an
even more uncomfortable task: telling Bill Gates. “He went into orbit,” Amelio recalled. Gates
found it ridiculous, but perhaps not surprising, that Jobs had pulled off this coup. “Do you really
think Steve Jobs has anything there?” Gates asked Amelio. “I know his technology, it’s nothing
but a warmed-over UNIX, and you’ll never be able to make it work on your machines.” Gates,
like Jobs, had a way of working himself up, and he did so now: “Don’t you understand that Steve
doesn’t know anything about technology? He’s just a super salesman. I can’t believe you’re
making such a stupid decision. . . . He doesn’t know anything about engineering, and 99% of what
he says and thinks is wrong. What the hell are you buying that garbage for?”
Years later, when I raised it with him, Gates did not recall being that upset. The purchase of
NeXT, he argued, did not really give
Apple a new operating system. “Amelio paid a lot for NeXT, and let’s be frank, the NeXT OS
was never really used.” Instead the purchase ended up bringing in Avie Tevanian, who could help
the existing Apple operating system evolve so that it eventually incorporated the kernel of the
NeXT technology. Gates knew that the deal was destined to bring Jobs back to power. “But that
was a twist of fate,” he said. “What they ended up buying was a guy who most people would not
have predicted would be a great CEO, because he didn’t have much experience at it, but he was a
brilliant guy with great design taste and great engineering taste. He suppressed his craziness
enough to get himself appointed interim CEO.”
Despite what both Ellison and Gates believed, Jobs had deeply conflicted feelings about whether
he wanted to return to an active role at Apple, at least while Amelio was there. A few days before
the NeXT purchase was due to be announced, Amelio asked Jobs to rejoin Apple full-time and
take charge of operating system development. Jobs, however, kept deflecting Amelio’s request.
Finally, on the day that he was scheduled to make the big announcement, Amelio called Jobs
in. He needed an answer. “Steve, do you just want to take your money and leave?” Amelio asked.
“It’s okay if that’s what you want.” Jobs did not answer; he just stared. “Do you want to be on the
payroll? An advisor?” Again Jobs stayed silent. Amelio went out and grabbed Jobs’s lawyer,
Larry Sonsini, and asked what he thought Jobs wanted. “Beats me,” Sonsini said. So Amelio went
back behind closed doors with Jobs and gave it one more try. “Steve, what’s on your mind? What
are you feeling? Please, I need a decision now.”
“I didn’t get any sleep last night,” Jobs replied.
“Why? What’s the problem?”
“I was thinking about all the things that need to be done and about the deal we’re making, and
it’s all running together for me. I’m really tired now and not thinking clearly. I just don’t want to
be asked any more questions.”
Amelio said that wasn’t possible. He needed to say something.
Finally Jobs answered, “Look, if you have to tell them something, just say advisor to the
chairman.” And that is what Amelio did.
The announcement was made that evening—December 20, 1996—in front of 250 cheering
employees at Apple headquarters. Amelio did as Jobs had requested and described his new role as
merely that of a part-time advisor. Instead of appearing from the wings of the stage, Jobs walked
in from the rear of the auditorium and ambled down the aisle. Amelio had told the gathering that
Jobs would be too tired to say anything, but by then he had been energized by the applause. “I’m
very excited,” Jobs said. “I’m looking forward to get to reknow some old colleagues.” Louise
Kehoe of the
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