How Steve Jobs Buys a Company and Why Apple Bought Lala

Aubrey Johnson, a former Color employee, shares two stories behind the scenes at Apple's acquisitions of both Color and Lala -- both firms were founded by Bill Nguyen before being acquired by Apple for two very different reasons.

Like Pandora, Lala's music was streamed from the internet rather than stored locally. This allowed users to listen to a catalog of over 7 million songs for free as a stream over the web -- much like Pandora or Spotify today. Songs could also be purchased and downloaded, typically for a lower price than iTunes was offering.

Lalacolorlogos
Johnson writes that Lala's biggest strength was that it was at or near the top for many Google searches of particular songs, thanks to a search placement deal with Google. As a result, the firm was siphoning sales away from iTunes. As well, Google and Lala had partnered on Google's Music service. Both Nokia and Google made lowball offers for the firm, and Nguyen headed to Apple to see if they'd be interested in buying his company.

In late November [2009], Nguyen was seated at the dinner table in Steve Job’s home on Waverly St in Palo Alto. Also present were Eddy Cue and Tim Cook and other Apple executives. Steve led the conversation while eating a beet salad:

“I’m going to give you a number, Bill, and if you like it, let’s do it and just be done with this whole thing. Okay?” Bill agreed.

Jobs passed a piece of paper to Nguyen and Bill nodded. The deal was done.

After the acquisition, a number of Lala employees left the company with Nguyen, leaving millions in options on the table. Later, Apple apparently bought back some of those same engineers when the company purchased the remnants of Color, getting more experienced personnel for a significant savings.

Update: Johnson's post has been removed.

Top Rated Comments

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99 months ago
Nice.

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Chances are Google has more revenue & profits than Apple. They have a search engine, Android, RELIABLE Maps, etc.

This is false... There's a reason AAPL (~468 bln) is more than 2x the size of GOOG (~231 bln).
Score: 35 Votes (Like | Disagree)
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99 months ago
Like a BOSS!! Only Steve Jobs
Score: 32 Votes (Like | Disagree)
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99 months ago

Oh please... Without Google, Apple is nothing.


Please explain.

I agree that without Google the Internet would be a very different, and arguably less useful place. Google revolutionized search and forced every other player to adapt or die.

Anyone else remember the smattering of search engines one used to employ for different types of searches before Google came along and changed everything? I do.

Still, I can't really see how a Google-less world would have any significant effect on Apple. Well, except without Google Microsoft might still be relevant and Apple fanboys would still be fighting Microsoft fanboys...
Score: 27 Votes (Like | Disagree)
Avatar
99 months ago
Tips on how Steve Jobs bought a company:

1) He made an offer
2) It was accepted

For bonus points, pass the offer on a piece of paper for added oomph.
Score: 23 Votes (Like | Disagree)
Avatar
99 months ago

Chances are Google has more revenue & profits than Apple. They have a search engine, Android, RELIABLE Maps, etc.

Well, they are both publicly traded companies. Lets take a look at last quarter's results...

GOOG: 14b revenue, 2.7b profit
AAPL: 36b revenue, 8.2b profit.
Score: 19 Votes (Like | Disagree)
Avatar
99 months ago

becasue AAPL has 3x the amount of outstanding shares compaired to goog?


Stop now you're making yourself look foolish
Score: 18 Votes (Like | Disagree)

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