PepsiCo bailing out Coca-Cola, Marvel investing in DC to improve its market position, Microsoft saving Apple from bankruptcy: only one of these statements is true, and it involves neither superheroes nor sugary drinks.
Apple did not become the most successful company on the planet without passing through a period of absolute darkness, and that period was around mid-1997. The company had roughly 90 days of cash left. Steve Jobs took the stage at the Macworld Boston conference and dropped the mother of all bombs on the audience: a special five-year agreement with his eternal archnemesis, Bill Gates.
Bill Gates saved Apple, believe it or not
Let's explore one of Apple's darkest moments. The clock rewinds 25 years — we're in August 1997. Apple was in crisis. Sales had fallen from $11 billion in 1995 to $7 billion in 24 months. The spectacular failure of its previous CEOs and multiple internal development problems had led to the acquisition of NeXT and, of course, the formal return of Steve Jobs.
However, that wasn't enough. The "life support" from the banks would only keep Apple going for less than 90 days, and if nothing happened, bankruptcy would be inevitable. But on August 6, 1997, at the Macworld Boston conference, Steve Jobs pulled the biggest rabbit in the world out of his hat: Microsoft.
That's right: Microsoft, the company that dominated 90 percent of the market and that many Apple fans saw as directly responsible for their predicament, was rescuing Apple. The historic agreement included an investment of 150 million dollars in shares without voting rights, which Redmond committed to not selling for at least 36 months.
In addition, the agreement included the dismissal of pending lawsuits, cross-licensing of existing patents and those developed over the next five years, special collaboration on Java compatibility, the continued development of Microsoft Office for Mac for five years (absolutely critical for the business world), and the inclusion of Internet Explorer as the default browser on all Macintoshes.
The only aspect that appeased fans — to a certain extent — was the "non-voting" condition of the shares, meaning Apple wasn't mortgaging its future in the process. Now the question is: why? After brutal competition and such bitter exchanges, why did Microsoft give Apple a breath of oxygen?
We have to get past this notion that for Apple to win, Microsoft has to lose. - Steve Jobs
That was the core message: "We have to get past this notion that for Apple to win, Microsoft has to lose."
One key to understanding this is "1997". Microsoft was on top of the world, and its humble offices of the '70s were far behind… but Bill Gates's reputation at the time was hardly exemplary (nor was it at the beginning, when he accused hobbyists of being thieves). The FTC already had great interest in Redmond's practices, and the conflict with Netscape (which Microsoft essentially annihilated) was at one of its hottest points.
Gates didn't want his company divided, and by saving its great competitor, it sent the message that he wasn't a monopolistic monster. Of course, that didn't prevent official interrogations, constant criticism (even from Bill himself to his people) and public attacks, but Gates and Microsoft managed to escape the government's fire with minimal damage.
What happened to the shares? First, they were converted into common shares (removing the "non-voting" label), and then they were sold in 2003, on the recommendation of legal advisors. What would those shares be worth today? Considering the two splits and the conversion process… $55 billion.
