Heidi Roizen: ‘What I Learned Negotiating With Steve Jobs’

Candid Portraits of Celebrities by Norman Seeff, 1970s-80s

Candid Portraits of Celebrities by Norman Seeff, 1970s-80s

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I’m a sucker for business stories, well-told. This is one. I promise if you get to the part where Heidi Roizen says “That’s when the light bulb came on…” you’ll want to make the jump and read more. Take it away Heidi:

Heidi Roizen writes:  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.

“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…”

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.

I slogged down to my car feeling like I had just blown the biggest deal of my life.  Lucky for me, someone had followed me out.

Dan’l Lewin, one of the NeXT co-founders, had a cubicle within earshot of Steve (actually, at that time, every employee was within earshot of Steve.) Dan’l had been working with me in background over the last few weeks and we’d developed a good relationship. If this deal did not get done, it was going to end up being his job to find someone else, so he really wanted me to get the business. Dan’l put his arm around my shoulder, and said one sentence, which I will never forget.

“Make it look like fifty percent,” he said.

“But I can’t afford to pay fifty percent!” I complained.

“I get that you can’t afford to pay fifty percent of gross,” said Dan’l, “but Steve wants to see 50% on that contract. So figure out a way to make a contract that you can live with that also says 50% at the bottom.”

That’s when the light bulb came on…Read more…

Operating Partner, DFJ

http://www.heidiroizen.com

2 Comments on “Heidi Roizen: ‘What I Learned Negotiating With Steve Jobs’”

  1. No-name says:

    Reblogged this on Dancing Doll Fins.

  2. […] Pundit from another Planet I’m a sucker for business stories, well-told. This is one. I promise if you get to the part […]


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