Apple's big idea had been Computing for the Rest of Us. But the company increasingly found itself hostage to the margins and quarterly results generated by its business model, which was built around premium hardware. Its share of the PC business was limited as it became addicted to selling computers at much higher margins and prices than its competition. Its intuitive, friendly interface was the justification for those margins, but that business model and Apple's position were threatened by none other than Microsoft. In 1986 we had all seen Windows 1.0, and while it posed no threat to the Macintosh operating environment at the time, we understood what it meant. Microsoft's toe, even its whole foot, was in the water. At some point it would develop a product that was good enough. Then the competition would look sufficiently like Apple to erode Apple's margins and back it into a corner of its own making, with declining share and profit.
Along with many others inside Apple, I was a strong proponent of licensing the Macintosh operating system in order to preempt Microsoft in setting the standard for user-friendly computing. After all, it was Apple's birthright, its overriding mission. It would mean cannibalizing our own model, sacrificing margins for volume and market share, but it seemed better than circling the wagons and defending an ever-declining piece of the PC business. Apple's general counsel, my boss, asked me to develop a licensing plan for the Mac operating system, with safeguards for protecting Apple's basic interests.
In a first step toward a new strategy, a colleague and I were assigned to negotiate a license of the Mac look and feel to Apollo Computer in Massachusetts, one of the leading manufacturers of workstations at the time. My partner, Mike Homer, was a prodigy in Apple's marketing organization. He was facile with technology and had a flair for sales and marketing. Later he would play a crucial role at Netscape. The two of us tag-teamed the negotiations with Apollo for months, flying back and forth across the country, coordinating with the mother ship in Cupertino, and eventually reaching an agreement.
Now all we needed was the signature of John Sculley. Mike brought the agreement to Apple's executive staff, fully expecting it to be signed and the company to announce it was finally licensing the operating system to others. Negotiating the deal had been a deliberate process, the outcome of a calculated strategy for which there had been something of a consensus. What happened instead—typical Apple management style at the time—was that pent-up reservations about our margins and business model surfaced and carried the day. Sculley caved in at the eleventh hour. We barely managed to catch the Apollo people, en route to Cupertino for the final signing and celebration, at Logan Airport in Boston.
The news was more than an embarrassment. Arguably, refusing to license the Mac OS was a fatal mistake for Sculley and his management team, and a critical misstep for Apple. No one could know what might have happened if Apple had gone ahead with that agreement and with licensing the operating system to other manufacturers.
Sculley's Apple subordinated the company's big idea to the business model. That model was not the essence of Apple. It was simply that moment's best means of realizing value from the big idea. The business model can and should change over time, as the world changes. Ultimately, when the big idea was lost, the market and Apple's employees could no longer find a reason to support Apple's business. Their fanaticism faded to ambivalence.
I was curious about whether Lenny was following the example of Sculley's Apple even before he'd been able to start the business. Was he selling the business model rather than the big idea—whatever it was—that had attracted Allison and him to Funerals.com in the beginning?
Business conditions are forever changing. You need to reconsider your strategies and business models constantly and adjust them where necessary. But the big idea that your company pursues is the touchstone for these refinements. Ditching the big idea in order to deal with business exigencies leaves you without a compass. I always advise companies to define their business in terms of where it's going, what it's becoming, not simply where it is. Set the compass, then work hard to clear a path, knowing that you may meander as you stumble upon obstacles but will always keep heading toward the same coordinates.
I sent Lenny an e-mail confirming that I looked forward to meeting him and Allison next Monday and went outside to pester the dogs.
Chapter Seven
THE
BOTTOM
LINE
“ONE MEGA, double, decaf, nonfat latte, please.”
“Oh, a Why Bother?” Connie winked at me. “You do live dangerously.”
I handed her my $2.49 and headed to my usual table just outside the door. Why bother, I thought, with a drink that has so little soul, that looks like the real thing, but that has lost its punch through some tedious processing. The portions keep getting larger, but the zest has been replaced with a faint trace. Perhaps it was time to return to drip.
I took a sip of hot foam and hoped for something more satisfying from Lenny's revised business plan, version 8.0, which I put on the table in front of me. I'd arrived early to spend a few minutes reviewing it. If Lenny's claims were true, this version answered all the nagging questions and set Funerals.com on the path to greatness.
I glanced through it. He had reworked the market and share estimates to more aggressively dominate a slightly smaller market. He had added a section explaining how he'd find prospects, primarily through referrals from healthcare professionals who work with the dying and survivors. He had even prepared an organizational chart, with himself as CEO and Allison as VP of marketing. The rest of the boxes were blank. Including Allison in the plan was Lenny's wishful thinking. All in all, he had made a few tactical improvements, but it was still “Better-Faster-Cheaper” caskets. Lenny was prepared to try, it seemed, to squeak by in his presentation. I wondered how Frank and his partners would react.
I looked up to see Lenny and a woman who had to be Allison walking across the parking lot. Far taller than Lenny, Allison seemed to take one stride to his two. Lenny was gesticulating, nearly hopping with excitement as they approached. Allison smiled as Lenny pointed me out, said something, and laughed. An inside joke I'd have to suss out later. The VC meeting must have gone well.
“Randy, it couldn't have gone better!” Lenny bellowed when he was nearly upon me. As he reached for my hand, he added, “Frank was great. He pulled for us. I feel really good about this.”
No armlock this time. Instead he patted me on the shoulder. We were buddies now. “Thanks to you, Randy.”
Yeah, right.
He introduced Allison as his “partner.”
“You two want something to drink?” he said. “On me.”
I pointed at the half-full cup before me. Don't get me started again, I thought. Lenny went off to the counter.
Allison and I shook hands, and she pulled a white plastic chair from the adjoining table and sat down.
“So it went pretty well?” I asked her, trying to conceal my concerns.
“I think so,” she said. “Lenny's very pleased.” If there was a hint of doubt in her voice, she was carefully masking it.
Dressed conservatively in a dark suit and white blouse with a navy scarf, Allison kept her hair pulled back modestly from her face. She and Lenny made a matched pair. But the similarity ended there. With her height and bearing, Allison's quiet confidence was the antithesis of Lenny's edgy energy. I would be surprised, I thought, if she were the spin machine he was. At the moment, in her look and manner, she seemed reserved, or perhaps just reflective. She probably hadn't known what to expect when she agreed to accompany Lenny for this meeting.