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What I Learned Negotiating With Steve Jobs - generally worth a read, especially if you are a start-up founder trying to sell anything

steve jobs angry

Fresh out of Stanford Business School, I started a software company, T/Maker, with my brother Peter. He was the software architect and I was, well, everything else. Our little company was among the first to ship software for the Macintosh, and we developed a positive reputation among the members of the nascent developer community, which led us to expanding our business by publishing software for other independent developers. Two of our developers, Randy Adams and William Parkhurst, went to work for Steve Jobs at his new company, NeXT, and that’s how I ended up head to head with Steve Jobs. 

Turns out, Steve had a problem and Randy and William thought I could be the solution. Steve had done an “acquihire” of the developers who had written the Mac word processor MacAuthor. In order to make the deal economics work, Steve had promised to publish MacAuthor and pay royalties to the developers. But now, with the world’s attention on his new startup, how would it look to have NeXT’s first product be a word processor for the Mac?  Randy and William suggested to Steve that if I were to be the publisher, the problem would be solved.  Steve liked the idea, and invited me in to talk about it.My first meeting with Steve lasted well over an hour. He grilled me about packaging, channels, distribution, product positioning and the like. I must have passed the test, as he invited me back to negotiate a publishing deal. I spent the next three weeks preparing detailed timelines, package mockups and drafting a very specific contract based on our experience with the other developers we had already published.

On the appointed day, after waiting in the lobby for 45 minutes (this, I would come to learn, was par for the course for meetings with Steve), I was called up to Steve’s cubicle. I remember to this day how completely nervous I felt. But I had my contract in hand and I knew my numbers cold.

Shortly into my pitch, Steve took the contract from me and scanned down to the key term, the royalty rate. I had pitched 15%, our standard. Steve pointed at it and said,

“15%? That is ridiculous. I want 50%.”

I was stunned. There was no way I could run my business giving him 50% of my product revenues. I started to defend myself, stammering about the economics of my side of the business. He tore up the contract and handed me the pieces. “Come back at 50%, or don’t come back,” he said.

Read on for the punchline - it's good:

Stashed in: Steve Jobs, Business Advice, Negotiation, Awesome, Stories, Selling!, business

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This is great business advice:

Understand the needs of the other person:  In business school, I learned that negotiation is “the process of finding the maximal intersection of mutual need.” At first I did not understand Steve’s needs, but when I reflected on it after being banished from his cubicle, I came to realize that this deal was not important to NeXT in terms of dollars or future, but important for Steve to get the 50% he promised his developers.  Once I got that, it was relatively easy to come up with a contract that met his needs but also met mine.  People are not often as clear as Steve was — it sometimes takes extra work and lots of iterative communications to find out what the other person truly wants, but the process creates better, more sustainable deals.

what a fun article!

The author Heidi Roizen has done many things, including this:

Interview with her about it:

She's also very well known for her networking skills & abilities. My management class had a Harvard Business School case study on her when we talked about networking.

Cool. And now she is a venture capitalist:

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