A former Color employee, Aubrey Johnson, shares two stories behind the scenes of Apple’s acquisitions of Color and Lala, both firms were founded by Bill Nguyen before Apple’s acquisitions.
Like Pandora, Lala’s music was streamed from the internet rather than stored locally. This allowed users to listen to a catalog of over 7 million songs for free as a stream over the web — much like Pandora or Spotify today. Songs could also be purchased and downloaded, typically for a lower price than iTunes was offering.
Johnson shares that Lala’s biggest strength was that thanks to a placement deal wit Google, it was at or near the top for many searches of particular songs. This resulted in the firm grabbing sales that might normally go to iTunes. Google and Lala had also partnered together on Google’s Music service. Nokia and Google had both made offers for the firm, but Nguyen felt they were lowball offers, so he went to Apple to see if they would be interested in acquiring the company.
In late November , Nguyen was seated at the dinner table in Steve Job’s home on Waverly St in Palo Alto. Also present were Eddy Cue and Tim Cook and other Apple executives. Steve led the conversation while eating a beet salad:
“I’m going to give you a number, Bill, and if you like it, let’s do it and just be done with this whole thing. Okay?” Bill agreed.
Jobs passed a piece of paper to Nguyen and Bill nodded. The deal was done.
Following the acquisition, quite a few Lala employees left millions in options on the table and followed Nguyen. Apple is said to have brought some of those same employees back when the company purchased what was left of Color, getting more experienced personnel at a significantly lower price.