How And Why Steve Jobs Bought Lala

A former Color employee Aubrey Johnson shares a story about Apple's acquisitions of Lala and Color, which both were founded by Bill Nguyen.

Lala's music was streamed over the Internet instead of stored locally. The service allowed users to listen to a collection of more than 7 million titles as a stream over the Internet – much like Spotify and Pandora today. Users could also buy and download songs usually for a lower price than Apple’s iTunes was offering.

According to Johnson, Lala's biggest advantage was that its songs was displayed at or near the top for many Google search results for particular songs, due to a search placement agreement with Google. As a result, the company was taking sales away from iTunes. Also Lala and Google had collaborated on Google's Music service. Both Google and Nokia made very low offers for the company, so Nguyen approached Apple to see if they would be interested in purchasing his company.

In late November [2009], 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.

After the purchase, many Lala engineers left the company with Nguyen, leaving million in options they got as sale/retention bonuses. But later some of them joined Apple when it “ackhired” Color’s engineering team consisting of 20 members.