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PART THREE Defining the Future i sas te eau o bethe eet Dney—ot eae Dey be the ne Ore Mogul [semi ores erart0 ma Sos ce aain ped oe pte even tough ou ave known atthe ie, Pa was bout fo ame pr ein al wave that woud tm into ood of spect nesting tha tw ook ack on-—in mot ces wih retarted com bom "when tee afta gone kang on dor king rane inet rn to lend hs IPO, the bane al ut lage i i ce Invest ely wat copes at remaking money be va ld. Yow ft have fo show acon f scr prima yes nd sabe anager Al very sen the acaped widom of ery pa ne iment bake, ce that se mon at, company ld Nesp Communion had managed to ek he ues (none oF those Sra-yord tncdencs tat camo occ with acon frequency the company found im Ct had worked br for ‘iy fay Shand Ed Cama asp of hoa pre om- pute qaphic tam on Long) Nepal ben bins Toray fing var pedo tat alowed pepo connect 0 24 icin the stil not-much-understood universe ofthe Internet. It had never Shown a profit yet in that overheated environment somehow the bus- ‘est pres sw a unique potential, Writes vied with one another ta describe an ever brighter potential future forthe company, whi ‘used clamor for the stock. Trading opened at $28 and bythe time the exchanges closed at the end ofthe fist day, the price had doubled. Jim Clk’ holding was worth hal billion dollars ‘Numbers ite those caused some ofthe more aggresive investment bbankersto see an portunity. Steve's instinct ed him to shit his focus. Instead of going with one of the prestigious big-name New York City firms, ever the hands-on manage he decided to work with local oxt- fit that would allow him to keep a close eye onthe progress. He asked around and chose the San Francisco-based Robertson Stephens, which describes itself as‘a boutique investment frm.” ‘Thesucces of this IPO cout shape Steve's whole future. He diet want to makea bad choice so he alked t some institutional investors, asking them whether they'd be war of becoming involved inthe IPO if the lead firm were Robertson Stephens instead of, sy, Goldman Sachs & Co, He was reassured “Al of them sid the West Coat guys ‘would beas good. And half prefered it because the California firms] ‘est them better” he sid. Robertson Stephers was delighted to get the busines, wth company chaizman Sanford Robztson noting thatthe [New York firms have always come in and just skimmed the cream off the top, taking only the very best offerings” Not this time. ‘Steve made thee work easier, n no small part because of his instint bout the timing. By scheduling the IPO just a week aftr the Toy Story ‘opening, Steve woulda have to rely onthe wsual dog-and-pony show, in which the executives ofthe company travel © major ities across the Unite States in hopes of convincing local stockbrokers and investment fiams to tlk up the company to their customers. Instead, he woud be ‘dng onthe coattails ofthe massive Disney publicity campaign. Evry investor inthe country would be bombarded with the Pixar name just ar the opportune moment. “The 1PO took place onthe last Tuesday of November 1995 one week to the day after the Toy tory opening. In the early hours of the moening select few ofthe top Pixar tam showed upat the offices of Robertson Mogd 45 Stephens in downtown San Francisco, Trading was due to begin in Pixat—symbol PIXR—on NASDAQ at 7:0 a. West Coast time. The firm had set wp arrangement in thee trading room so that the Pixar visitors could witnes the scene fsthand ‘Former Pixar executive Pam Keni sys, “Roberton Stephens was magnificent building on Market Street” She recalls thatthe group inched Ed Catmull, chief financial ofier Larry Levy, Job Laster, Ralph Guggenheim, and Bill Reeves, "Steve waslat but he raced inst ‘The stock had been set to begin wading at $22. Steve's financial advisers had argued forthe $12 to $14 range. Sew knew that the lower price would mean less money to Pixar—once the inital shares have been sod, any Further price increases put money in se pockets ofthe traders and the speculators and the company wouldn't direty bene- fit He insisted on the higher price, and when Steve makes his mind, Ihe sucks the ar out of the roam and arguing is ate i not dangerous Tieenty-two dollar it was, ‘The higher price represented a significant risk. Maybe investors ‘would figure that ano-proft company just wasn't worth that much If any shares being offered remained unsold by the end of the da, Steve ‘would be faced with humiliation and small catastrophe, The flue to sella the shares would scare investor, who would stat to sell driving the price down, ‘Steve fobs certainly had a mised recordin judging the marke; the failure ofthe NeXT computers was all the proof anyone needed. This time, though, he was dead right. Exactly at seven ook, the ticker showed active trading in PIXR. ‘The Pasar group sat watching the rows of traders at their comput cers “There were some wo wete specifically handing our eary stock sales” Pam says,“and they would gesture to each other as son aseach fer came in So we could se and hear everything a the stock rose in price "Those moments are sil vivid in her memory: "The Pixar eon, who had been struggling to survive for over ten years by then, was cuuphoric—everyone privately muliplying their stack options by the current price to determine their net worth, We all ad a toast with Steve's favorite Odwalla carot juice to celebrate” By the end ofthe first half hour the stock was trading at $49, PIXR, ‘had mote than double its opening price Suddenly Steve Jobs had, on paper, what entrepreneurs and executivesat least, those in Silicon Valley—affectionately call f-k-jou money: enough that you never have to worry about what anybody de think, Not tat Steve had ever spent mc tine worry- ing about thi, except inthe case ofthe few people he envied for their financial muscle tke Bill Gates, Waren Buffet, and Larry Elson By the end of he day, the price ad settled back toa slightly ess impressive but stil famustic 39, Steve Jobs was billionaire Attorney Lawrence Levy who hud joined Pixar as its CRO and had helped to lead the way othe initial public offering, had @ paper profit (of $62 milion at the end ofthe first day He was thirty-six years old. Atorney Larry Sonsini had become a buddy of Steve's and had sccepteda place on Psa'sboard. His rm was Wilson, Sonsini 2 preem- {net laf in Silicon Vly and favored y high-tech start-up entre- preneurs through the go-go years, Steve's Los Anges entertainment ‘tormey Skip Bitenham, who had also become a friend, was another ito accepted a seat on the board. Both held stock options that became worth more than $1.1 milion asa result of thesingle day's wading, ‘Within the company, four men were blessed by the IPO but not ‘rough Steve's willing generosity. Disney had originally insisted that these four be harnessed to long-term arrangements with Pixar, s that, if Tay Story proved tobe suecesfl, the creative team would be locked in to work on the other pictures covered by the Disney contrac, [a eashange for their commitment, each of the four—Bd Catmal John Lasseter, Ralph Guggenheim, and technical director Bill Reeves —had been given a participation deal that cut them in on a small share of profits rom the movies. But in making aerangements forthe IPO, Steve learned thatthe participation deals wouldn't fly—investors don't accep the idea that employees ae dipping into profits that should go to stockholders ‘Steve was burned up atthe da, but he had to find something that would induce the four to waive their profit participation, The worst, part ws that he didnt have much of a negotiating position, He had Mood 247 to get their agreement. When the deal was finally worked out, Steve, ‘with thiety milion shares, still owned a whopping 75 percent of the