As the world celebrated Steve Jobs’s life last week, I recalled a lesson he taught me. My one meeting with Steve didn’t end well. It’s one of my most painful memories, and a warning to startup CEOs about the danger of taking hype too far. Here’s the story. (1/n)
It was 2008 and Apple was interested in my startup. I was CEO of iLike, a once-hot music app that was under pressure from both the record labels and the Facebook platform on which our business had been built. /2
Our dream and best hope was for Apple to acquire us. They were interested, and they invited us to Cupertino to pitch Steve Jobs and Eddy Cue. I was tense and giddy at the prospect of meeting Steve. So were my cofounders @HadiP (my twin brother) and @NatBro. /3
@hadip @natbro We drove together to Apple’s HQ and waited in the lobby with baited breath. Eventually, we were ushered to the executive suite. Steve was friendly and welcoming. He greeted us and said he’d heard good things about us. /4
@hadip @natbro At first, our pitch stumbled (we couldn’t do a demo because the executive suite WiFi was down lol). We recovered and shined. Hadi and Nat crushed it. Steve was leaning in and nodding. I couldn’t believe how well it was going. I was beaming and full of adrenaline. /5
@hadip @natbro Near the end, Steve said, “I like you guys. You make good arguments. You seem like you’d fit in here at Apple. We want to buy your company. I’ll let Eddy work out the details with you.” I wish I could preserve that beautiful moment. /6
@hadip @natbro At this point, I impetuously asked, “before you go, can we discuss what range you’re considering?” This was a rookie move. I wish my mistakes had ended there. There was worse to come. /7
@hadip @natbro Steve focused his gaze on me and asked, “how much is your revenue?” And also, “what was your last financing valuation?” /8
@hadip @natbro I replied that our last round had been two years earlier, pre-launch, at a $50M valuation. Since then, we’d amassed 50M+ active users. /9
@hadip @natbro Steve said, “we’d probably acquire you for $50 million.” My heart sank. I couldn’t imagine telling our team that their years of work had created no new value. /10
@hadip @natbro I replied, “I don’t think our investors would accept this.” (We’d been hoping to raise new money at a $150M valuation, and had floated this to potential new investors. There’d been some interest, though no serious takers.) /11
@hadip @natbro Steve said, “Don’t worry, we’ll make sure they accept it.” He added that Apple could easily build all our features if we didn’t want to sell. /12
@hadip @natbro I replied, “Steve, I think we’re worth at least three times that.” /13
@hadip @natbro And then, my terrible mistake, a moment that I’ve regretted ever since: “Actually, I *know* we’re worth three times as much.” /14
@hadip @natbro As soon as I blurted out that word, I knew it was a mistake. The distinction between “think” and “know” was a lie. Steve pounced on it instantly. /15
@hadip @natbro “Did you say you ‘know’ you’re worth more? You have another offer?” Steve Jobs's gaze pierced holes through me. “Bullsh**. You’re lying to me. You’re full of sh**. We’re done here.” /16
@hadip @natbro I don’t remember what exactly happened next. It’s all a blur. Steve left the room. My cofounders and I mumbled through the next few minutes with Eddy. We must have left soon after. All I remember is that I’d ruined everything and let down our whole team. /17
@hadip @natbro I’ve replayed that encounter more times than I can count. Not a week goes by that I don’t think about it with shame and wonder how it might have played out differently. No matter what I’ve accomplished since, I live with the feeling of losing someone’s trust. /18
@hadip @natbro The deal didn’t fall apart until weeks later. Eddy did his best to keep the talks open, and we tried in vain to negotiate some lower number. /19
@hadip @natbro At one point, on a later call, Steve told me point-blank, “you’re a liar and I don’t trust anything you say.” This wasn’t necessary. I’d already learned my lesson. The hard truth is, I can’t blame him: trust can be ruined with a single word, and it’s not easy to rebuild. /20
@hadip @natbro Soon after, Apple released the “iTunes Genius Sidebar,” a ripoff of our iLike Sidebar for iTunes. Then, Facebook copied our signature feature: the “iLike button.” (They were kind enough to call in advance to inform us.) Within a year, we sold our company for a loss. /21
@hadip @natbro Never overplay your hand when negotiating a major deal -- especially not against a stronger player. There are ways to be a strong negotiator without lying. /22
@hadip @natbro I’ve shared this story privately with many of the CEOs and students I mentor through @Neo. (@RoxanneBras referenced it in a recent blog about fundraising:
inc.com/roxanne-petrae…
@hadip @natbro @neo @RoxanneBras Steve Jobs was an amazing pitch man. His storytelling brought the future to life. He taught me to be paranoid of the fine line between hype and lying: it can be as subtle as one word. If you cross that line, it can destroy you. I’m grateful to him for this lesson. /end
P.S. For a trip down memory lane, here’s an article from that year: https://t.co/8ILZxQY9AC (Also: *bated, not baited. Typos!)
latimesblogs.latimes.com/technology/200…
