Inside Steve's Brain - Leander Kahney [6]
In the first quarter of 1996, Apple reported a loss of $69 million and laid off 1,300 staff. In February, the board fired CEO Michael Spindler and appointed in his place Gil Amelio, a veteran of the chip industry with a reputation as a turnaround artist. But in the eighteen months that Amelio was on the job, he proved ineffectual and unpopular. Apple lost $1.6 billion, its market share plummeted from 10 percent to 3 percent, and the stock collapsed. Amelio laid off thousands of workers, but he was raking in about $7 million in salary and benefits, and was sitting on $26 million in stock, according to the New York Times. He lavishly refurbished Apple’s executive offices and, it was soon revealed, negotiated a golden parachute worth about $7 million. The New York Times called Amelio’s Apple a “kleptocracy.”3
But Amelio did several things right. He canceled a raft of money-losing projects and products, and trimmed the company to stem the losses. Most important, he brought Jobs back to Apple. Amelio purchased Jobs’s company, NeXT, hoping that its modern and robust operating system could replace the Macintosh operating system, which was becoming very creaky and old.
The NeXT purchase came about by accident. Amelio was interested in buying the BeOS, a fledgling operating system built by a former Apple executive, Jean Louis Gassée. But while they were haggling, Garret L. Rice, a NeXT salesman, called Apple out of the blue, suggesting they take a look. Apple’s engineers hadn’t even considered NeXT.
His interest piqued, Amelio asked Jobs to pitch the NeXT operating system. In December 1996, Jobs gave Amelio an impressive demonstration of NeXT. Unlike the BeOS, NeXT was finished. Jobs had customers, developers, and hardware partners. NeXT also had a full suite of advanced and very highly regarded programming tools, which made it very easy for other companies to write software for it. “His people had spent a lot of time thinking about key issues like networking and the world of the internet—much more so than anything else around. Better than anything Apple had done, better than NT, and potentially better than what Sun had,” Amelio wrote.4
During negotiations, Jobs was very low key. He didn’t oversell. It was “a refreshingly honest approach, especially for Steve Jobs,” Amelio said.5 “I was relieved he wasn’t coming on like a high-speed train. There were places in the presentation to think and question and discuss.”
The pair hammered out the deal over a cup of tea in Jobs’s kitchen at his house in Palo Alto. The first question was the price, which was based on the stock price. The second question concerned the stock options held by his NeXT employees. Amelio was impressed that he was watching out for his staff. Stock options have traditionally been one of the most important forms of compensation in Silicon Valley, and Jobs has used them many times to recruit and retain key staff. But in November 2006, the SEC launched a probe into more than 130 companies, including Apple, that embroiled Jobs in accusations of improperly backdating options to inflate their worth. Jobs denied knowingly breaking the law, and the SEC dropped its investigation in 2008.
Jobs suggested they go for a walk, a surprise to Amelio but a standard Jobs tactic. He likes to walk and talk.
“I was hooked in by Steve’s energy and enthusiasm,” Amelio said. “I do remember how animated he is on his feet, how his full mental abilities materialize when he’s up and moving, how he becomes more expressive. We headed back for the house with a deal wrapped up.”6
Two weeks later, on December 20, 1996, Amelio announced that Apple was buying NeXT for $427 million. Jobs returned to Apple as a “special advisor” to Amelio, to help with the transition. It was the first time Jobs had been at the Apple campus in almost eleven years. Jobs had left Apple in 1985 after a failed power struggle with John Sculley. Jobs had quit before he could be fired, and he had set up NeXT