Jobs had not tempered his way of dealing with employees. “He applied charm or public humiliation in a way that in most cases proved to be pretty effective,” Tribble recalled. But sometimes it wasn’t. One engineer, David Paulsen, put in ninety-hour weeks for the first ten months at NeXT. He quit when “Steve walked in one Friday afternoon and told us how unimpressed he was with what we were doing.” When Business Week asked him why he treated employees so harshly, Jobs said it made the company better. “Part of my responsibility is to be a yardstick of quality. Some people aren’t used to an environment where excellence is expected.” But he still had his spirit and charisma. There were plenty of field trips, visits by akido masters, and off-site retreats. And he still exuded the pirate flag spunkiness. When Apple fired Chiat/Day, the ad firm that had done the “1984” ad and taken out the newspaper ad saying “Welcome IBM—seriously,” Jobs took out a full-page ad in the Wall Street Journal proclaiming, “Congratulations Chiat/Day—Seriously . . . Because I can guarantee you: there is life after Apple.”
Perhaps the greatest similarity to his days at Apple was that Jobs brought with him his reality distortion field. It was on display at the company’s first retreat at Pebble Beach in late 1985. There Jobs pronounced that the first NeXT computer would be shipped in just eighteen months. It was already clear that this date was impossible, but he blew off a suggestion from one engineer that they be realistic and plan on shipping in 1988. “If we do that, the world isn’t standing still, the technology window passes us by, and all the work we’ve done we have to throw down the toilet,” he argued.
Joanna Hoffman, the veteran of the Macintosh team who was among those willing to challenge Jobs, did so. “Reality distortion has motivational value, and I think that’s fine,” she said as Jobs stood at a whiteboard. “However, when it comes to setting a date in a way that affects the design of the product, then we get into real deep shit.” Jobs didn’t agree: “I think we have to drive a stake in the ground somewhere, and I think if we miss this window, then our credibility starts to erode.” What he did not say, even though it was suspected by all, was that if their targets slipped they might run out of money. Jobs had pledged $7 million of his own funds, but at their current burn rate that would run out in eighteen months if they didn’t start getting some revenue from shipped products.
Three months later, when they returned to Pebble Beach for their next retreat, Jobs began his list of maxims with “The honeymoon is over.” By the time of the third retreat, in Sonoma in September 1986, the timetable was gone, and it looked as though the company would hit a financial wall.
Perot to the Rescue
In late 1986 Jobs sent out a proposal to venture capital firms offering a 10% stake in NeXT for $3 million. That put a valuation on the entire company of $30 million, a number that Jobs had pulled out of thin air. Less than $7 million had gone into the company thus far, and there was little to show for it other than a neat logo and some snazzy offices. It had no revenue or products, nor any on the horizon. Not surprisingly, the venture capitalists all passed on the offer to invest.
There was, however, one cowboy who was dazzled. Ross Perot, the bantam Texan who had founded Electronic Data Systems, then sold it to General Motors for $2.4 billion, happened to watch a PBS documentary, The Entrepreneurs, which had a segment on Jobs and NeXT in November 1986. He instantly identified with Jobs and his gang, so much so that, as he watched them on television, he said, “I was finishing their sentences for them.” It was a line eerily similar to one Sculley had often used. Perot called Jobs the next day and offered, “If you ever need an investor, call me.”
Jobs did indeed need one, badly. But he was careful not to show it. He waited a week before calling back. Perot sent some of his analysts to size up NeXT, but Jobs took care to deal directly with Perot. One of his great regrets in life, Perot later said, was that he had not bought Microsoft, or a large stake in it, when a very young Bill Gates had come to visit him in Dallas in 1979. By the time Perot called Jobs, Microsoft had just gone public with a $1 billion valuation. Perot had missed out on the opportunity to make a lot of money and have a fun adventure. He was eager not to make that mistake again.
Jobs made an offer to Perot that was three times more costly than had quietly been offered to venture capitalists a few months earlier. For $20 million, Perot would get 16% of the equity in the company, after Jobs put in another $5 million. That meant the company would be valued at about $126 million. But money was not a major consideration for Perot. After a meeting with Jobs, he declared that he was in. “I pick the jockeys, and the jockeys pick the horses and ride them,” he told Jobs. “You guys are the ones I’m betting on, so you figure it out.”
Perot brought to NeXT something that was almost as valuable as his $20 million lifeline: He was a quotable, spirited cheerleader for the company, who could lend it an air of credibility among grown-ups. “In terms of a startup company, it’s one that carries the least risk of any I’ve seen in 25 years in the computer industry,” he told the New York Times. “We’ve had some sophisticated people see the hardware—it blew them away. Steve and his whole NeXT team are the darnedest bunch of perfectionists I’ve ever seen.”
Perot also traveled in rarefied social and business circles that complemented Jobs’s own. He took Jobs to a black-tie dinner dance in San Francisco that Gordon and Ann Getty gave for King Juan Carlos I of Spain. When the king asked Perot whom he should meet, Perot immediately produced Jobs. They were soon engaged in what Perot later described as “electric conversation,” with Jobs animatedly describing the next wave in computing. At the end the king scribbled a note and handed it to Jobs. “What happened?” Perot asked. Jobs answered, “I sold him a computer.”
These and other stories were incorporated into the mythologized story of Jobs that Perot told wherever he went. At a briefing at the National Press Club in Washington, he spun Jobs’s life story into a Texas-size yarn about a young man
so poor he couldn’t afford to go to college, working in his garage at night, playing with computer chips, which was his hobby, and his dad—who looks like a character out of a Norman Rockwell painting—comes in one day and said, “Steve, either make something you can sell or go get a job.” Sixty days later, in a wooden box that his dad made for him, the first Apple computer was created. And this high school graduate literally changed the world.