The Second Coming of Steve Jobs - Alan Deutschman [81]
If Steve wanted to take Pixar public, he would first have to get Ed, John, Ralph, and Bill to swap their profit-sharing points in exchange for a pile of stock options.
A very big pile of stock options.
Tens of millions of dollars’ worth of options.
Or they could block the deal.
They had Steve Jobs by the balls, and they knew it.
• • •
JOHN LASSETER hired a pit bull of a Hollywood lawyer and sicced her on Steve. The negotiations lingered on for months. But as autumn came and the debut of Toy Story neared, Steve finally acquiesced.
John would gain control of 800,000 shares. If the IPO went as planned, the stock would start trading at $14 a share, meaning that John’s stake would be worth $11.2 million. Steve was holding on to 30 million shares, which would be worth $420 million. And the rest of Pixar’s 140 staffers would get . . . very little.
Steve wasn’t being generous at all with his employees. He was trying to keep as much of the stock for himself as he possibly could. He held on to 80 percent of the company.
Ralph knew what was going to happen. It was all too painfully obvious: the “prospectus,” a Securities and Exchange Commission (SEC) filing that set forth all the terms of the deal, was going to arrive from the printers one day in October, and everyone at Pixar would read it that very first day and be outraged by the cruel disparities.
“There’s going to be blood in the hallways,” Ralph warned. He tried to push Steve to act more magnanimously toward their other colleagues. Steve could easily afford to give a $50 million gift to the rank and file and still keep the vast majority of Pixar’s stock for himself, which would ensure his unilateral control. But Steve wouldn’t consider it.
No one was certain why Steve wouldn’t spread the wealth more widely. Some of his colleagues thought it was because he feared ever slipping below 50 percent ownership and losing control of the company, as he had at Apple. Other observers, like Alvy Ray Smith, snidely said that Steve wanted to improve his chances of becoming a billionaire so he could call his best friend Larry Ellison and say that he had joined the club. And some people said that Steve was a fearsome negotiator who simply never gave away more than he had to.
• • •
MEANWHILE, an army of attorneys and auditors descended on Pixar and struggled to put together detailed financial statements to show the SEC. Pixar was an honest operation, but it wasn’t run like a real company. It had somehow gotten by without a financial executive for the four years between the layoffs in 1991 and the arrival of Lawrence Levy in 1995. Steve had cut the entire financial department except for one hapless employee who wasn’t even a certified public accountant. For a while she had tried keeping the books on a personal computer but she had trouble getting the software to work. For years Pixar had been run on an improvised “home checkbook” approach. The auditors were appalled: this was a company that wanted approval from the SEC to sell six million shares to the general public?
• • •
FOR THE FIRST HALF OF 1995, Steve remained a media outcast, shunned by the cadre of powerful editors in New York. His new public relations counselor, Kamini Ramini, would occasionally call her contacts at Business Week or The Wall Street Journal, who told her that they just weren’t interested anymore in Steve Jobs.
Later, when the media types began to hear the buzz about Toy Story, Steve saw a chance to rehabilitate his image. He had to go to New York for business in September, so he asked for informal meetings at several major publications for while he was there. This time, they said yes.
One morning he spoke in front of a dozen reporters and editors at the New York Times. Afterward, a writer on the technology beat, Steve Lohr, said that he wanted to profile him for the Sunday magazine, the showcase for the newspaper’s longest articles.
Steve Jobs was reticent. He wanted coverage about his professional comeback, but didn’t want to allow a powerful reporter to question him about his personality