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Chapter 15: West Coast Ambush

“EVIDENTLY HE'S always late,” said Aileen Lee, John Doerr’s associate. It was almost 8:30 A. M., half an hour after the meeting was supposed to start, and everyone in the locked and guarded ballroom was still waiting for Steve Jobs. The December 8 meeting at the Hyatt Regency near the San Francisco airport had been Doerr’s idea. He wanted Dean to brainstorm about Ginger with him and some friends, including Jobs and Jeff Bezos. The three billionaires could spare only a couple of hours, so Doerr’s request required a long trip for a short meeting.

Brian Toohey didn’t mind. Barely settled in as Ginger’s new vice president of regulatory affairs, he was still dazzled by Dean’s roster of acquaintances and didn’t mind some inconvenience to meet these West Coast business icons. Tim Adams and Mike Ferry felt a bit more jaded and exasperated. Traveling to and from San Francisco chopped two days out of a schedule with no fat in it. Tim and Mike also suspected, as did Dean, that Doerr was setting them up for an ambush on his home turf. But all of them also realized that people who invest $38 million sometimes need their hands held, so Tim, Mike, and Brian had each put together a PowerPoint presentation for what Tim called “another dog and pony show.”

In addition to Jobs and Bezos, their audience would include Bob Tuttle, Dean’s top lieutenant; Michael Schmertzler, representing the $38 million investment of Credit Suisse First Boston; Bill Sahlman, professor of Entrepreneurial Studies at Harvard Business School and the yenta who had introduced Dean to Doerr and other investors; and Vern Loucks, a minor investor in Ginger as well as a board member. Schmertzler had changed his mind about not coming, probably because of his evergreen suspicions of Doerr.

Brian, keyed up, got to the ballroom early to check the audio-visual equipment. By the time the others arrived, he had filled the screen with a giant photo of Dean, wearing jeans and sitting on an iBOT, smiling widely as he shook President Clinton’s hand in the Oval Office.

The smile was missing as Dean pushed a tall hotel luggage carrier into the ballroom. The carrier held a couple of large black duffels, oddly protuberant, and some taped-up cardboard boxes, including an old Apple computer box. Dean instructed the security guard to lock the ballroom doors and not to let anyone enter without permission from someone inside.

When the doors were locked, he opened the duffels and the boxes, removed a couple of chassis and control shafts, and assembled two Gingers using a screwdriver and hex wrenches. He finished in ten minutes, turned one on, and began tearing around the ballroom, looking happier with every revolution. Jeff Bezos arrived. Dean zipped up to him, stopping sharply at his shoe tips. Bezos didn’t flinch.

“See how much I trust you?” said Bezos.

“Is that good judgment?” said Dean.

Bezos claimed the other Ginger, and his laugh soon gusted through the ballroom. Doerr entered wearing casual clothes and old sneakers. Dean surrendered his Ginger to him. Everyone was having too much fun to mind Jobs’s tardiness.

Dean didn’t mind either, for other reasons. He had flown his jet to San Francisco yesterday, carrying the Gingers. A limo hired by Doerr had whisked him and the machines to Jobs’s house, where the two of them spent the afternoon. Jobs did most of the talking. Ranting, really, about Ginger’s design. So Dean more or less knew what Jobs was going to say today and wasn’t in a great hurry to have the Ginger guys hear it.

The others were so intent on Ginger that they didn’t notice Jobs walk in. He was dressed even more casually than Dean, in sneakers, a black turtleneck, and Levi’s in which a white pocket poked out of a big front hole. There was a hole in his wallet pocket, too. Within a couple of minutes, after some quick introductions, everyone settled around the big square table, Jobs at one corner, flanked by Dean and Doerr.

“Good morning to everyone,” said Tim, smiling at the front of the table. “Before we start, we’d like to ask you to hold your questions until after each presentation.”

“Yeah, right!” snorted Bezos, followed by that honking laugh.

“Otherwise we might as well not be here,” said Jobs.

“How long is your presentation?” asked Doerr.

“Each pitch is about ten minutes.”

“I can’t do that,” said Jobs. “I’m not built that way. So if you want me to leave, I will, but I can’t just sit here.”

Tim studied Jobs for a moment, then turned to the screen and put up a spec sheet about the two models of Ginger, Metro and Pro. “As you can see—” began Tim.

“Let’s talk about the bigger question,” interrupted Jobs. “Why two machines?”

“We’ve talked about that,” said Tim, “and we think—”

“Because I see a big problem here,” said Jobs. “I was thinking about it all night. I couldn’t sleep after Dean came over.” There were notes scribbled on the palm of his hand. He explained his experience with the iMac, how there were four models now but he had launched with just one color to give his designers, salespeople, and the public an absolute focus. He had waited seven months to introduce the other models. Bezos and Doerr nodded as he spoke.

“You’re sure your market is upscale consumers for transportation?” said Jobs.

“Yes, but we know that’s a risk for us,” said Tim, “because we could be perceived as a toy or a fad.”

If they charged a few thousand dollars for the Metro and it was a hit, said Jobs, they could come out with the Pro later and charge double for industrial and military uses.

Tim’s eyebrows shot up approvingly. He looked at Dean, whose face was a mask, so he turned elsewhere. “Mike?” he said, looking at Mike Ferry for a marketing opinion.

“It’s a good point,” said Mike, giving his usual noncommittal response.

“What does everyone think about the design?” asked Doerr, switching subjects.

“What do you think?” said Jobs to Tim. It was a challenge, not a question.

“I think it’s coming along,” said Tim, “though we expect—”

“I think it sucks!” said Jobs.

His vehemence made Tim pause. “Why?” he asked, a bit stiffly.

“It just does.”

“In what sense?” said Tim, getting his feet back under him. “Give me a clue.”

“Its shape is not innovative, it’s not elegant, it doesn’t feel anthropomorphic,” said Jobs, ticking off three of his design mantras. “You have this incredibly innovative machine but it looks very traditional.” The last word delivered like a stab. Doug Field and Scott Waters would have felt the wound; they admired Apple’s design sense. Dean’s intuition not to bring Doug had been right. “There are design firms out there that could come up with things we’ve never thought of,” Jobs continued, “things that would make you shit in your pants.”

There wasn’t much to say to that, so after a pause Tim began again: “Well, let’s keep going, because we don’t have much time today to—”

“We do have time,” said Doerr curtly, changing his own ground rules. “We want to get Steve’s and Jeff’s ideas.”

“The problem at this point is lead time in our schedule,” said Tim.

Jobs snapped his head from Doerr on one side to Dean on the other, as if he’d been slapped. “That’s backwards,” he said, his voice rising. “Screw the lead times. You don’t have a great product yet! I know burn rates are important, but you’ll only get one shot at this, and if you blow it, it’s over.” Agitated, he turned to Bezos. “Jeff, what do you think?”

“I think we’d do a disservice to the machine if we didn’t give a great design firm a chance,” said Bezos in a calm, soft voice, trying to lower the volume. “I think Steve is right—that as he so elegantly put it, they could do things that would make us shit in our pants.” Jobs grunted.

After another pause, Tim moved on to the issue of service, determined to move ahead despite the punches coming at him. Within two sentences, Jobs was on him again. Tim put up his next slide, about the new plant, but again Jobs came at him with a flurry of half-insolent questions. Where are you building a plant? Why are you building a plant? Why are you manufacturing the machine yourselves?

Partly, explained Tim, because giving our code to someone else would be a great risk. Not a good reason, in Jobs’s view, because the code could easily be reverse-engineered. No it couldn’t, said Tim. Could, said Jobs. He added that Tim should be spending money and management time on other things, especially since there was no way he could convince any world-class manufacturing and procurement people to move to New Hampshire, for god’s sake, his tone implying that only slow-witted rubes could bear such a place. Dean lifted an eyebrow.

“We have an adequate staff,” said Tim defensively, but it sounded as weak as the adjective. Tim had lost control of the meeting. That was probably Doerr’s plan all along. Dean sat silently, offering no help or defense as Jobs rampaged through Tim’s presentation.

Brian Toohey spoke next, on the regulatory obstacles Ginger would face and how he intended to overcome them. Brian was a big, burly man who knew how to boom his voice, which may explain why he got two minutes into his spiel before Jobs began interrupting. Doerr suggested that instead of going through each slide, everyone should “take a study hall and read the deck” that Brian had handed out, then ask questions. Bezos had already read it, so he started chatting quietly (for him) with Dean.

“Jeff, have you read the entire deck?” said Doerr in a schoolmaster’s voice.

“Yes, John, I have,” said Bezos, amused.

When the study hall ended, Bezos held up Brian’s hand-out. “I think this plan is dead on arrival,” he said. “The U.S.A. is too hostile.” The “car guys” were going to lobby against Ginger and they were going to win.

“No they’re not,” said Brian, smiling.

Bezos suggested starting slow, using one city or country as an experimental station. Once Ginger’s benefits were clear, the company would have a wedge to pound into U. S. regulations. The perfect place to begin, thought Bezos, was Singapore. “You only have to convince one guy, the philosopher king, and then you have four million people to test it.”

Vern Loucks, who had been quietly watching the fireworks up to this point, said, “You mean Goh Chok Tong. He’s not a king, he’s the prime minister. I can get us in to see him if we want to do that,” he added.

Michael Schmertzler hadn’t said much. Now he asked when they should instigate a strategic leak to arouse interest in the product.

But Jobs was still shaking his head at Bezos’s suggestion. Because of the Internet, he said, slow was no longer possible. People would learn about Ginger in a flash of bits and bytes, and would want one now. So a small launch in a foreign place was foolish, because if the machine was unavailable in the U. S., the company would blow its chance for $100 million of free publicity in its biggest market. Plus, Singapore was a nest of pirates, and the company would end up spending a fortune fighting them. If the company wanted a slow, controlled launch, better to start on a handful of U. S. college campuses.

“If you show this to Hennessy,” Jobs said to Doerr, referring to John L. Hennessy, president of Stanford University and a world-class engineer, “he’ll shit in his pants.” Evidently Hennessy did that more readily than Jobs did. “And if you offer to give him a hundred of them if he’ll run a safety study and a usage study, that’s a done deal in ten minutes,” continued Jobs. “You do that at ten colleges and maybe at Disney, so people can see them but not buy them.”

But he warned that even this sort of slow launch was filled with dangers. If one stupid kid at Stanford hurt himself using a Ginger and then announced on-line that the machine sucked, the company was sunk, because there was no way to control that or counter it if people couldn’t ride one for themselves. With a big fast launch, on the other hand, a few malcontents wouldn’t be heard above the general hoopla. “I understand the appeal of a slow burn,” he concluded, “but personally I’m a big-bang guy.” For the first time that day he smiled. “The risk with a fast burn,” he continued, “is that it exposes you to your enemies. You’re going to need a lot of money to fight thieves.”

“We have a few things they can’t get,” said Dean. “Specialty components with only one source.”

“They’ll figure out a way around that,” said Jobs.

“I’ve spent nine years looking,” said Dean, “and I don’t think so.”

“I think the emphasis of this conversation is wrong,” said Bezos. “You have a product so revolutionary, you’ll have no problem selling it. The question is, are people going to be allowed to use it?”

Jobs said he lived seven minutes from a grocery and wasn’t sure he would use Ginger to get there. Bezos agreed. Schmertzler wondered if it might be wiser to start with commercial sales. Bezos liked the idea—it was safer and could give the business a solid foundation for growth.

By then it was 10:30. Bezos and Jobs had to leave. As they stood, Dean rose too. He had been almost silent, listening to Jobs like everyone else. Now he thanked Jobs and Bezos for coming. “This is the most energetic discussion we’ve ever had,” he said, “and like all good energetic discussions it leaves you with more questions than answers, and leaves you questioning everything you thought you knew.” He paused. “And that’s good.”

As an inventor, he meant it. But uncertainty was not an investor’s favorite state, so Dean wanted to be sure that Doerr and Schmertzler hadn’t lost sight of two things through the smoke of Jobs’s bombardment. All the talk about small launches at colleges or in foreign cities or among industries worried him. So he reminded them about the serious problems that Ginger could help solve.

“If we really believe that this is a big idea,” he said, “then we need to remember that what big ideas do is make new ways to see things. We shouldn’t try to put a big idea into a niche.” He looked around the table. The first person to speak—surprise!—was Jobs.

“I don’t worry about the big idea,” he said, “because if enough people see the machine, you won’t have to convince them to architect cities around it. People are smart and it’ll happen. That’s the story of the PC. Nobody had any idea how they would be used, and look what happened.”

“I think we all agree with the big idea, Dean,” said Bezos. “That’s why we’re here, not to make $3 billion in the golf cart market.”

Very nice, but neither Jobs nor Bezos had a dime invested in Ginger, and Dean hadn’t heard from anyone who did. Maybe it was time to throw a bone. “But you can still make money on the niche markets if you want to,” said Dean, patting Schmertzler on the shoulder.

“Dean, we’ve all made plenty of money,” said Doerr, sounding offended. “We’re not here for the money. Please retract your comment.”

How rich. Here was a $38-million investor acting as if money didn’t matter, like a gambler lighting a cigar with a $1,000 bill. Dean smiled and apologized for suggesting that his investors might prefer to make money instead of changing the world. Schmertzler shifted his eyes from Doerr to Dean, wearing a look that mixed disbelief with consternation. Changing the world would be nice, said the look, but first let’s recover our investment and compound it.

Jobs left but Bezos decided to stay for Mike Ferry’s marketing report. Though Bezos said he wouldn’t use Ginger at work or to run errands because he liked to walk, he loved the machine and would want one to show friends. He didn’t like the marketing plan’s emphasis on college campuses, where Ginger would be competing with bikes, which were cheaper, faster, provided exercise, and didn’t need charging. Better to launch in a big city, he said, where people wanted cars but couldn’t afford them—a place like Singapore.

Aileen Lee, Doerr’s young associate, spoke for the first time. Could Mike Ferry state Ginger’s “value proposition”? Trendy M.B.A.-jargon for “gimme the headline.” Lee had made a list of significant new products and assigned each a value proposition. Next to cell phone, for instance, she put “allows wireless telephone communication.” Next to fax machine she put “allows visual transmission of documents over phone lines.” And so on for the PC, the PDA, and other products. What, she asked, would Mike put next to Ginger?

Mike seemed flummoxed and began rambling about the different markets for Ginger.

Answer her question,” said Doerr sharply. “What would you put next to us?” He paused infinitesimally, then bored in again. “You’re the marketing guy. You should know.” Another tense pause. “I’ll answer if you can’t.”

“I think it’s a really good question,” said Mike blandly. “And—”

Doerr snorted in disgust and shook his head, then looked at Dean to see if he realized that his marketing director was a dinosaur.

Bezos and Doerr had to leave, but Doerr still seemed keyed up. He had drawn several conclusions from the meeting, he said. First, they needed a value proposition. Second, until they got the product right, the launch was indefinitely on hold. Bezos asked Dean how he felt about that.

“I think the design can be fixed with relatively small impact on the launch date,” Dean said carefully.

“We get to do something like this so rarely,” said Doerr, sounding righteous again. “We shouldn’t launch until Steve Jobs wets his pants.”

“Until he shits his pants,” said Bezos.

“It’s going to be a messy meeting,” said Loucks.

“Especially if we all agree with him,” said Dean.

Dean didn’t doubt Doerr’s noble motives, but he knew that if they missed the launch date, Ginger would need more money, because the burn rate at that point would be millions of dollars per month. Money might not matter to Doerr at the moment, but it always mattered to Dean. If Ginger needed more funding, Kleiner Perkins and Credit Suisse First Boston would offer it eagerly—for a bigger share of his company. That wasn’t going to happen, whether or not Steve Jobs thought the design sucked.

Doerr, Bezos, and Schmertzler left. The group took a break. Mike Ferry looked agitated. Aileen Lee’s question about a value proposition felt like a cheap shot to make her look good. Tim Adams seemed relaxed and was smiling. He found the idea of a value proposition ridiculous at this point; they hadn’t even done any significant consumer testing. It was equally ridiculous to suggest delaying the launch until Steve Jobs befouled himself. The meeting had confirmed the Ginger team’s suspicions that the whole thing had been a set-up. They hadn’t been invited all the way to California so that Jobs and Doerr could pat them on the back. They had expected to get creamed no matter what they said, and they had been right. The meeting resembled the carnival game where the goal is to pound down every head that pops up.

Doerr had arranged a parade of other tourists. Ray Lane showed up first. A short, trim, practical-looking man, he had helped Larry Ellison build Oracle but had recently joined Kleiner Perkins as a partner. Randy Komisar bustled in wearing faded jeans, black cowboy boots, and a black leather jacket loaded with zippers. Komisar called himself “a virtual CEO” and had advised several Silicon Valley start-ups. Bill Campbell, a wiry guy with a raspy voice, was the CEO and chairman of Intuit. They all signed confidentiality agreements and took Ginger for a spin.

Dean launched his spiel about the Big Idea and cars and pollution, then showed the home-made Ginger video, narrating it as he had dozens of times. He was such a superb salesman partly because he never tired of making the pitch.

Komisar loved the technology. He predicted that Ginger would be ubiquitous someday, but that changing people’s attitudes and getting on sidewalks would take a decade. He counseled patience. If Dean tried a fast ramp-up by “spending hard against the adoption curve,” he would waste a lot of money. Instead, go slow and build a track record at places such as Disney or national parks or police departments.

Campbell’s succinct advice: “Get a Japanese partner tomorrow.”

Bob Tuttle asked their opinions of the machine’s design and aesthetics. Not bad, said Komisar. Acceptable, said Campbell. Sahlman told them that Jobs thought it sucked.

“That’s just Steve,” said Komisar.

“I’ve seen him just kill his designers,” said Campbell, who sat on Apple’s board. He asked how Jobs had liked riding Ginger.

“The first time he rode it,” said Dean, “after thirty seconds he said, ‘This is the most amazing piece of technology since the PC.’”

©Steve Kemper. All rights reserved. Cannot be reproduced without consent of the author.

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