ch 4. the cost of goods sold

日本語 pt 2

Fear is the F in FTC. This is the point where you think of running, where fear takes over, where you realize you are not worthy, that you can’t feel your legs anymore and your voice is quivering. You are on the tracks. The train is coming. You can’t move. 

I did not know any better. I stood. I entered the room and did the meeting. There is no need to panic when you have no choice. Panic adds nothing but risk, and no one likes putting risk into a project. 

The Reality Distortion Field (RDF) was something Steve used at will, almost like a Jedi’s control of the Force – mind control. The greatest distorter of reality is fear.

Fear of not knowing. Fear of not fitting in. Fear of peer rejection. Fear of any rejection.

Fear of uncertainty. Fear of Steve.

If you are in sales and fear rejection, stop reading.

Get a new job.

Fear is surely good in some instances. For instance, it might keep you out of cars with intoxicated drivers. Anything which extends your life tends to be a good thing. That’s the type of fear you need to recognize and harness.

The only thing you need to fear is not fear itself, it’s you.

Your self.

Let fear be your inner governor, your better angel, the one that keeps your conscience, your code, whatever you call your morality – intact.

Compete against yourself and fear that battle. You need it to sell to Steve.

Fearing yourself means competing against yourself, the piece of you that wants to quit. 

Preparation helps quell fear, and I was prepared. I didn’t focus on Steve, I focused on the issue, the problem at hand. If you don’t believe the myth, it’s hard to fear the myth. Steve was no longer Steve Jobs. He was a client wondering how he could make more money.


Technology licensing professionals are the spice traders of the 21st century. The challenge is often not the technology, since often (you hope) technology stands on its own. The challenge is usually organizational and always economic. For Steve, it was Adobe’s royalty – the license fee on every copy of NeXTSTEP shipped in Japan.

Cost of goods (or cost of manufacturing) is something Steve was always hyper cognizant – like all clients, if they are not driving down costs, they are not doing their jobs.

The Cost of Goods was fear.

There are few better nirvanas in the business world than a healthy gross margin. Cost of goods is one reason you see so few true hardware companies today. Large companies, such as IBM have run away from hardware and its cost of manufacturing and cost of goods. Pure software models, like Adobe’s are envied and lusted after. 

If you are in the business of selling or licensing technology, you are always trying to do the impossible, add (or support) cost of goods sold to a client’s product. 

Conversely, if you are in the business of buying or licensing in technology, you are always trying to lower your cost of goods. 

The move away from the Motorola platform, which then had a healthy market share in the high-end workstation business, gave NeXT a new lease on life. But as Steve liberated himself from the costs of hardware manufacturing and its horrifying margins, he got an urge to start cutting software licensing costs. 

The Japanese issue was always different and forcibly complex. By fiat, anyone shipping Adobe Postscript into the Japanese market at the time had to bundle at least two Morisawa fonts with each copy of the operating system. The cost, while not germane to this conversation, was certainly a big deal to Steve, and I had to present a counter to his argument that he might as well substitute Adobe Postscript with an open source clone, like Ghostscript. This was in the early days of the open source movement, and clones were emerging when they made economic sense. I was afraid we were putting him in that corner.

At the time, HP was in the middle of kicking out Adobe Postscript from its LaserJet printer line, replacing it with its own brand of postscript, as compliant to the public postscript specification as they could make it.

This was a huge issue for us at Adobe. If you are not your brand, what are you? Cultivation of brand, especially in desktop publishing, was key, and in the Japanese market, it meant everything.

NeXT had to maintain a patina of quality, especially in a market where expecting quality. At the time, Adobe would have suffered greatly if Steve had decided to use a clone postscript engine for NeXTSTEP.

Steve was not impressed by what he considered to be a tax on his product in the Japanese market. Steve wanted to save money. He wanted relief. And as we introduced ourselves, he made that clear.



Which brings us back to fear. 

It was Steve, his minions (a cohort of minions), Julie, a whiteboard, some markers, and me from Adobe.

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