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.”
iShrewd March 24, 2014