Apple picker Raj Aggarwal, who worked at a telecommunications consultancy called Adventis. He met with Steve Jobs twice a week for several months, in an August 15 interview, he explains how Steve Jobs persuaded the US operator AT&T to provide its services to the iPhone, based on an unprecedented profit-sharing agreement.
In 2006, Adventis together with Bain & Co. purchased by CSMG. Aggarwal worked there as a consultant until 2008 before leaving the firm to found Boston-based Localytic.
Localytic has over 50 employees and “provides analytics and marketing platforms to mobile apps running on a billion devices, over 20 in total. Companies that use Localytic to guide their allocation of mobile marketing budgets to enhance the lifetime value of their customers include Microsoft and the New York Times,” says Aggarwal.
As everyone knows, in June 2007, when Jobs first launched the iPhone, he made an agreement with AT&T, according to which Apple would receive a portion of the operator's earnings. A study conducted at Harvard Business School and titled Apple Inc. in 2010 writes: “As the exclusive US carrier for the iPhone, AT&T has agreed to an unprecedented profit-sharing deal. Apple received around ten dollars a month for each iPhone user, which gave the apple company control over distribution, pricing and branding.”
Aggarwal, who worked for Adventist, which advised Jobs in early 2005, says Jobs was able to make the deal with AT&T because of his personal interest in the details of the iPhone, because of his effort to build a relationship with carriers, because of his ability to make such requests, which others will find unacceptable, and with the courage to bet on the main possibilities of this vision.
Jobs was said to be different from other CEOs who tasked Aggarwal with implementing a strategy. “Jobs met with the CEO of each operator. I was surprised by his directness and effort to leave his signature on everything the company did. He was deeply interested in details and took care of everything. He made it," recalls Aggarwal, who was also impressed by the way Jobs was willing to take risks to make his vision a reality.
"At one boardroom meeting, Jobs was upset because AT&T was spending so much time worrying about the riskiness of the deal. So he said, 'You know what we should do to stop them complaining? We should bill AT&T for one billion dollars and if the deal doesn't work, they can keep the money. So let's give them one billion dollars and shut them up.' (Apple had five billion dollars in cash at the time).” describes Aggarwal's plight.
Although Jobs ultimately did not offer AT&T cash, his determination to do so impressed Aggarwal.
Aggarwal also considered Jobs unique in his shocking demands, explaining: "Jobs said, 'Unlimited calling, data and texting for $50 a month - that's our mission. We should want and go after something disproportionate that no one will want to accept.' He could come up with such outrageous demands and fight for them – more than anyone else could.”
With the iPhone, AT&T soon had twice the profit per user of its competitors. According to the study Apple Inc. in 2010 AT&T had an average revenue per user (ARPU) of $95 thanks to the iPhone, compared to $50 for the top three carriers.
The people at AT&T were proud of the deal they made with Jobs, and of course they wanted everything Apple had to offer. According to my February 2012 interview with Glen Lurie, then president of Emerging Enterprises and Partnerships, AT&T's exclusive partnership with Apple was in part the result of Lurie's ability to build a reputation with Jobs and Tim Cook based on trustworthiness, flexibility, and making quick decisions.
As a way to build that trust, Jobs needed to be sure that Apple's iPhone plans would not be leaked to the public, and Lurie and his small team apparently convinced Jobs that they were trustworthy about the iPhone's untouchable business details.
The result was that AT&T had an exclusive offer to provide iPhone service from 2007 to 2010.
Perfect! :)
If you want to do it properly, you have to do it yourself :-) No one understood how this seemingly meaningless request would be important for the next steps in fulfilling a specific vision...
In short, a perfect businessman :-)