The Story of How Apple Came to Acquire Lala and Color

Aubrey Johnson who led design at Color reveals the story behind Apple's acquisition of Lala and Color.

Lala, a music service, saw some success in 2009. It managed to top Google searches for a specific song, ahead of iTunes, MySpace, and others. This was bad for iTunes as every click to Lala was a potential purchase. Lala then partnered with Google for the Google Music Beta making it even more dangerous.

The first offer for an acquisition of Lala actually came from Nokia who wanted to improve music on its mobile devices. The offer came in extremely low at $11 million. After receiving the Nokia offer, founder Bill Nguyen immediately called Google and told them Nokia was interested in purchasing the company. Although, Google's investment and engineering resources in Lala were seemingly about to end, they moved fasted and presented Nguyen with a lowball offer.

Bill then called Apple and explained they had offers from Nokia and Google to acquire the startup.

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. Apple successfully acquired Lala for roughly $80M (purchase price) with an additional $80M in retention bonuses for the remaining employees valuing the entire deal around $160M.

Notably, a few of the key members of Lala followed Bill to his next venture, Color, leaving millions in options on the table. Some of those same engineers eventually returned to Apple after Color failed and Apple acquired the remnants of the company (20+ engineers) for just $7 million.

Read More [via Gizmodo]