I wonder if NeXT was really that much of a failure, considering that ultimately today we use many of it's software technologies. I used to be a NeXT programmer and am always amazed how much of it is still there today in OS X..
With this line of reasoning Xerox PARC was a completely success and every "seed" that lives today in the human history too. But business success metrics are very cynical and NeXT was a business failure.
Hm, business history of NeXT as gleaned from Wikipedia:
1985: Founded by Steve Jobs using a bunch of his own money.
1987: "[Ross Perot] invested $20 million in exchange for 16% of NeXT's stock, valuing the company at $125 million."
1989: "Canon invested US$100 million in NeXT, giving it a 16.67% stake, making NeXT worth almost $600 million." [editor's note: on paper]
1992: "The company reported sales of $140 million in 1992, encouraging Canon to invest a further $30 million to keep the company afloat."
1996: "Apple paid $429 million in cash which went to the initial investors and 1.5 million Apple shares which went to Steve Jobs."
So, please tell me where the business failure is. What I see here is a company that appears to have turned $150 million in venture funding (plus an unknown amount of Steve Jobs' cash) into a valuable operating system platform, $429 million in cash, 1.5 million shares of Apple Computer, and complete control of Apple Computer itself, which as we all know proved to be an extremely valuable commodity in the hands of the former employees of NeXT.
But Wikipedia is not a balance sheet, and I suppose it's possible that this account I've pieced together leaves out something like half a billion dollars in investments by otherwise unknown and unremarked parties. Can anyone out there show me a history of NeXT that is substantially different than the one above? Because until then I must conclude that the people who think of the story of NeXT as a "business failure" don't know how to count money.
EDIT: Excellent, I found a contemporary account of the Canon investment in the NYT to spell it all out for us:
The Canon investment will dilute Mr. Jobs's ownership of Next to 50 percent. He started the company with $7 million of his own and later invested another $5 million. Next employees own 20 percent. H. Ross Perot, the Texas billionaire who invested $20 million in 1987, owns 12.5 percent, and Stanford University and Carnegie Mellon University, which have invested a total of $1.3 million, have a combined stake of less than 1 percent.
Please, tell me again what a terrible, terrible failure this was.
It was a terrible failure. And I say that as a guy who loved the product so much I still have boxed copies of the NeXT OS in one closet or another.
If the company was once priced at >$600m and the company sold for $429m (plus less than $10m in Apple stock) then it was a clear loser. Canon alone could have ended up with $200m in cash with a perfectly safe investment. In venture terms, that's a failure.
It was also a failure in terms of meeting any goal set originally. Almost nobody bought the hardware. Almost nobody bought the OS. Almost nobody bought their Windows development tools, their last gasp of a product. It was a brilliant product, but as businesses goes, it was one smoking crater after another.
Moreover, that was a pity sale. Nobody else in the world would have bought NeXT. Nobody needed Jobs or the OS; Apple, uniquely, was doomed without both. Without that, NeXT would have been out of business within a few years. Those sale terms were crafted to make Jobs happy to come on board, and for no other reason.
I can't argue with this, I guess, except to say that if this counts as a terrible failure we need a bunch of new words to describe all the much, much bigger failures that we've seen over the last twenty years.
After living through all these massive bubbles and frauds, I guess I have a pretty high standard for failure. "Failure to make more profit than an index fund" is not a success, I'll admit, but Canon could have done worse, oh so much worse. They didn't win, but emerging from all that risk without a total loss? Can we score it as a mulligan?
And I'll definitely push back on this whole "pity sale" concept. Just because Steve Jobs found the one and only way in the world to turn his looming total loss into a mulligan plus the seeds of future empire doesn't mean he lost. This isn't chess. Companies aren't competing on some kind of infinite, uniform ideal grid, they compete in the real world, and money is money, even if they have to call in every favor and exploit every advantage.
You can score it however you like, and I grant it wasn't a total disaster, but by the standards of high-tech investments, it was definitely a failure, albeit a gracefully executed one.
I will stand by the notion that it was a pity sale. The CEO is not a salable company asset. That Apple bought NeXT for so much as a way to make Jobs happy doesn't mean that NeXT did well; it just means that Apple really wanted Jobs. (Correctly, as it turns out.) Props to Jobs for cashing out his investors rather than just pocketing the money, though.
Apple did really want Jobs. But they also really wanted NeXT's operating system. The month before they bought NeXT, every pundit was predicting they'd buy the BeOS instead, because they all knew that Mac OS 9 wasn't going to cut it.
And now here I am, working on a system all of whose libraries have entry points prefixed with "NS".
Well, whatever. History rarely politely conforms to our categories. I suppose we could declare NeXT to be a "disaster" relative to every other company founded by Steve Jobs.
In the sense that Bernie Madoff's investment firm was a success for Bernie Maddoff, sure, I guess. But as far as achieving his stated aims, definitely a failure. Similarly a failure on the standard by which high-tech investments are judged.
