“Initially,” Anderson remembers of those early days, “Steve simply didn’t engage. Amelio always had these formal staff meetings, and Steve attended one shortly after MacWorld. It was kind of boring, and Steve didn’t like how it was going. So in the middle of the meeting he just got up and walked out. I know what he was thinking—this guy is a bozo.”
That’s exactly what Steve told me again a couple of weeks after MacWorld. “I know I’ve said it before, but Amelio is a total bozo,” he said. “He is the absolute wrong person to be leading Apple. I don’t know who the right person is, but it definitely is not him.”
LIKE RUBINSTEIN AND Tevanian at NeXT, Lasseter and Catmull were “keepers.” So, early in 1997, during the very months when he was studying the hapless Amelio, Steve decided he wanted to safeguard their future by renegotiating Pixar’s distribution contract with Disney CEO Michael Eisner—the only man other than Jean-Louis Gassée whom Steve ever described to me as “evil.” (This was several years later, when relations between Disney and Pixar reached an all-time low.)
Toy Story had become the undisputed blockbuster of the 1995–1996 holiday season, eventually garnering $361 million in worldwide box-office receipts. Some $45 million of that went to Pixar. That was a lot of revenue for a first movie, but meager fare when compared to what Disney pocketed for financing and distributing the film. Furthermore, Pixar had no share of the video rights, which of course would be substantial for a family film this popular.
With work well under way on Pixar’s next movie, A Bug’s Life, Steve decided to right this wrong. With $130 million of IPO cash in hand, Pixar didn’t need Disney to finance its films. And if it could pay for its own productions, why should it earn a mere 12.5 percent of box-office receipts? Steve decided he wanted to tear up the very deal that had saved the company just five years earlier.
“Nobody in Hollywood wants to take any risk,” he told me a year later. He truly was proud that he and Lawrence Levy had studied Hollywood closely, and had learned enough to understand how Pixar could cut a great deal in an industry that thrived on plundering the “dumb money” of starstruck outsiders. “You can’t go to the library and find a book titled The Business Model for Animation,” Steve explained. “The reason you can’t is because there’s only been one company [Disney] that’s ever done it well, and they were not interested in telling the world how lucrative it was.”
Steve put in a call to Eisner, and headed to Hollywood to renegotiate. “What we wanted to do with our new deal was far beyond what anybody else [other than Disney] had ever done,” he crowed. “And far more sophisticated, because in Hollywood, there are very few relationships between companies. There are relationships between companies and individuals, like between a major studio and Steven Spielberg, or a small production company like an Amblin and a studio. But there are very few relationships between peer companies. But that’s how we wanted to think about ourselves. In terms of producing animated films, we wanted to think of ourselves as a peer of Disney’s own animation business.”
On the surface, his entreaty seemed arrogant, quixotic, and ungrateful. It had barely been a year since the debut of Toy Story, a film that had been made possible only by the endorsement and support of the world’s most successful animation company. But as was true so often when Steve negotiated, the audacity of his demand was matched by his cool and accurate appraisal of the landscape. Six years earlier, when Katzenberg was running animation and Disney had held all the power, Steve had quickly agreed to their terms. But now Eisner was at war with Katzenberg, who was building up DreamWorks Animation with the intent of besting Disney Animation. His new studio had set off a talent war, leading to, among other things, a series of escalating offers to Lasseter from both Disney and DreamWorks.
Steve saw the opportunity and calmly made the most of it. The IPO and Toy Story had changed everything about the relationship: Pixar held a lot more of the power now, and there was nothing Eisner could do. Steve’s underlying threat to Eisner was simple: give Pixar a new deal now, or the company would walk after its existing three-movie deal expired. Losing Lasseter and Pixar to Katzenberg or another studio would have been disastrous for Disney. In the end, however, the negotiation wasn’t as fraught as it might have been. “For us to go in there and say we’d finance half of our films, well, they hadn’t heard that very often,” Steve told me. “Michael appreciated that, and all of a sudden we were no longer a production company, we were a co-financier.” Eisner was offended by Jobs’s temerity, but the terms of the new deal were fair, giving each side half of all profits. On February 24, 1997, a new, five-movie deal was signed. Strand by strand, Steve was wrapping up the remaining loose ends of his decade in the wilderness.
THE STORY I published in Fortune in March 1997 infuriated nearly everyone at Apple. Titled “Something’s Rotten in Cupertino,” it portrayed a company in utter disarray. It included several unflattering anecdotes about Amelio, and was equally critical of his two predecessors, Sculley and Spindler, and of the Apple board of directors. Amelio would call me a “literary ax-murderer” in his memoir, On the Firing Line: My 500 Days at Apple.
The story, along with some other critical press around the same time, added to the public beating Amelio had started taking after MacWorld. Its indictment of the Apple board put more pressure on the directors. By that time, the director with the most credibility and authority was its chairman, Edgar S. Woolard Jr., who was CEO of DuPont, the chemical giant. The more Woolard learned about Apple’s woes, the more he knew that Amelio didn’t have the right stuff to save the company. “Ed started asking questions, like ‘How’s morale, Fred?’ ” Anderson remembers. “And I’d say, ‘It sucks, Ed.’ ” Anderson hid nothing from the chairman; the strategy was ill-conceived, the company was not going to hit its targets, and Anderson was planning to leave if Amelio stayed on.
Meanwhile, Steve had decided to undermine Amelio. He made that crystal clear on June 26, when, after the expiration of the six-month waiting period Amelio had insisted on, he dumped all but one of the shares he’d gotten for selling NeXT, without bothering to tell anyone at Apple. Once again, he held on to a single share so he would be eligible to attend Apple’s annual meeting. It was not an exercise in profit-taking. The value of those 1.5 million shares had dropped $13 million during those six months. But the sale was a high-decibel vote of no confidence. Amelio felt stabbed in the back, and he had been. On July Fourth, Ed Woolard called Amelio at his vacation home at Lake Tahoe to tell him he was fired. Then the chairman called Steve to see if he would be willing to come back as CEO.
Steve had cut Amelio’s legs right out from under him. He’d had no qualms about that once he’d decided that the Doctor was a bozo. (In private, he would also call him a “doperino.”) But that didn’t mean he himself was ready to take on the job of running Apple. According to his wife, Laurene, he was still torn about whether to go back. The two of them debated the matter endlessly. She felt that he was the only person who could save the company, and she knew he still loved Apple. She knew, too, that her husband was most fulfilled when he was tackling something gripping and important. But Steve wasn’t sure. The long, drawn-out experiences of salvaging NeXT and Pixar had chastened him. Pixar was on the way up. The frustrations of NeXT could now be tossed into the dustbin of history. But did he really want to try to ride to the rescue of Apple when it hardly resembled the company he had tried to build? Was he even convinced it had the people and resources to become competitive? Did he want to work that hard, now that he had a young family? Did he want to risk what was left of his reputation by tilting at windmills? These questions were all on his mind. He had to become convinced that enough of the “true” Apple remained before he would ever consider taking ultimate responsibility for it.