Return to the Little Kingdom_ Steve Jobs and the Creation of Apple - Michael Moritz [112]
Off the bat Markkula knew that alliances with a couple of experienced financiers were worth far more than the weight of their investments. Though his personal investments had been successful enough, Markkula had no direct experience dealing with any of the 237 or so firms that made up the venture-capital industry and which, in exchange for stock, provided financing to young companies. Originally, Markkula had wanted to wait until Apple had proved that it could produce its computer before turning to the venture capitalists, knowing that he would get a better price for the company stock if he could demonstrate that Apple wasn’t in desperate need of money. In the fall of 1977, the troubles with the quality of the case threatened to exhaust Apple’s credit line and left Markkula with no choice. Even the profit from sales of the computer were barely sufficient to keep Apple in business. The company’s needs were so dire that Markkula and Scott supplied an injection of almost two hundred thousand dollars to bind things over until negotiations for more money could be formally concluded.
Once again Apple turned to familiar faces. Hank Smith had been one of Markkula’s colleagues at both Fairchild and Intel. He was an exuberant man with bouncy ginger hair who had left Intel and moved to New York to become a general partner of Venrock the venture-capital arm of the Rockefeller family. In the informal hierarchy of venture funds, Venrock, ranked among the best, and there was the additional advantage that it had not yet financed any microcomputer companies. Markkula first approached Smith in the spring of 1977 and for several months Venrock monitored Apple’s progress. John Hall, who had helped write the business plan, called on Venrock and discussed Apple’s prospects with two of the partners. When Smith was on the West Coast, visiting other Venrock investments, he made a point of dropping by Apple’s Cupertino office. The venture-capital firm made about seven investments a year, but there was nothing apart from a personal relationship that drew its people toward Apple. Hank Smith said, “We probably wouldn’t have looked at Apple had I not known Mike Markkula.” Eventually, in the fall of 1977, Markkula was invited, along with Jobs and Scott, to meet Venrock’s other partners and present their projections for Apple.
Though the earlier plan had been considered aggressive, Apple, despite all the problems with the quality of the case, had been beating its projections. The presentation concealed much of the rush that had preceded it. Though Markkula had written a prospectus and based much of his forecast on financial projections supplied by Gary Martin, touch rather than science carried the day. Sherry Livingston watched while the forecasts were made. “It was a joke the way they came up with projections. There were so many projections they’d almost flip a coin.”
Nevertheless, the business plan reflected the semblance of order and sense of focus that Markkula and Scott brought to Apple. The night before the presentation to the Venrock partners in New York, Scott remained in Cupertino with most of the rest of the company munching slices of pizza and helping to copy, staple, collate, and bind the prospectus. Clutching a dozen copies he caught a red-eye flight to New York, took an early morning nap at the Hilton, and then accompanied Hank Smith, Markkula, and Jobs to the Venrock offices. With the arrangement tentatively closed, the trio made for the airport. Scott saw some former colleagues from National Semiconductor queuing for standby tickets and decided to treat himself and his companions