Most of the focus of the past week has been on Apple’s 50th anniversary. Apple doesn’t spend too much time looking back. But amid the celebrations and a slower news week, it’s as good a time as any for the Apple community to reflect on where it all began (and maybe bust a myth or two along the way).
50 years ago in 1976, Apple was founded in a humble garage. Or so the story goes. With Apple co-founders Steve Jobs and Steve Wozniak designing, assembling and engineering the Apple I from Jobs’ family home. While there is some truth to this, it’s not the full story…
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A hobbyist and a visionary.
The founding of Apple wasn’t defined by a single moment in a garage. It was a remarkable chain of events that began with Steve Wozniak building a remarkably efficient personal computer in his free time while working for Hewlett-Packard (HP). It was a hobbyist project driven by curiosity more than any business ambition. Wozniak in his enthusiasm, did initially offer the design to HP but they rejected it. But what good is an idea or passion project without people to share it with? When Wozniak showed it off at meetings of the Homebrew Computer Club, it became clear to members of the club that this wasn’t just a hobbyist project for tinkering. It had real potential and people wanted one. One of the members was Steve Jobs.
Jobs recognised the commercial potential immediately. He believed so much in the project that he pushed to turn Wozniak’s initial design into a product. Wozniak for his part has initially intended to share the schematics for free. But the design was unusually streamlined and elegant. It used fewer chips and could output to a display instead of just a series of blinking lights. It was built with the mindset that computing should be accessible. You can see why this appealed to Jobs. He didn’t just see the design for what it was, but for what it could become. Jobs believed that people wouldn’t just want a set of instructions or a bag of parts. His view was that people would be willing to pay for a fully assembled board that “just worked”.
From vision to reality.
Jobs wanted to make his vision for Wozniak’s design a reality. But even if they could produce fully assembled boards, they needed distribution partners. Somebody to sell through to the end customer. He approached the Byte Shop, one of the first personal computer retailers. Through his legendary powers of persuasion, aided by an impressive presentation at the Homebrew Computer Club, Jobs convinced the owner, Paul Terrell, to buy 50 units. But only if they were delivered fully assembled. That condition was an obstacle. It meant sourcing components at scale, committing to delivering a consistent product, not just a one off. Not to mention the hefty upfront costs. Nonetheless, Jobs got the purchase order.
To fulfil the order, 21 year old Steve Jobs began the difficult task of sourcing. He convinced Cramer Electronics, an established components retailer to give him a hefty line of credit. $15,000 no less. How did a 21 year old waving around a piece of paper manage to do that you might ask? With a little help from Paul Terrell that’s how. Cramer called Terrell who confirmed the legitimacy of the purchase order. Job’s convincing pitch had secured the funding and crucially, the parts needed.
Now that the parts were sourced, a basic assembly was set up in the Jobs family garage. So as the story goes, the famous garage isn’t where the Apple I was invented. But it was the place where the invention started to form into a consumer product. And where Jobs and Wozniak later executed the idea to sell it to the masses. Circuit boards were built and tested and prepared for delivery. But Apple still didn’t formally exist as a company. Enter Apple’s third co-founder.
Ronald Wayne.
In the early 1970’s, Steve Jobs was working for Atari. There he met Ronald Wayne. Wayne was an older, more experienced engineer and draftsman with many years of experience. While Jobs was younger and less experienced, the two connected quickly. Wayne was known for being detail oriented, practical and good at turning rough ideas from concept into structured plans. It balanced out Jobs’ more instinctive, fast paced style.
As Jobs and Wozniak began to turn the Apple I into a business, Jobs decided to bring Wayne in because of his experience. Wayne had already been through a failed business venture so he understood contracts, risks and the realities of running a company.
Wayne’s role in the founding of the company was very specific. He was responsible for drafting Apple’s initial partnership agreement. The ownership structure was simple with both Jobs and Wozniak retaining a 45% stake with Wayne taking 10%. Wayne would provide a level of adult oversight over the junior partners and help to break deadlocks. His stake served as something of a ‘casting vote’. Wayne also created the original Apple logo as well as some of the firms initial documentation.
Wayne’s tenure at the company was short lived. Just 12 days after Apple was officially formed, Wayne sold his 10% stake back for a mere $800. The main reason was a real concern about the financial risks. Unlike his younger partners, he had real, tangible assets that could be seized if Apple failed. Cramer Electronics expected to be paid back for a $15,000 line of credit after all.
Fulfilling the Apple I order.
After Wayne stepped away, Apple didn’t slow down. If anything, things started to speed up. Jobs and Wozniak doubled down on the Byte Shop order. And they really did need to execute well. If the order wasn’t fulfilled, if they failed to deliver, they were going to be in financial ruin.
Wozniak spent his time on circuit board design, soldering and tested and debugging. Jobs for his part helped with assembly, albeit to a lesser extent. Jobs placed components on boards and aided in simpler assembly steps. But most of Jobs’ focus was on securing the parts and managing the relationship with their creditor and supplier.
The two Steves’ worked around the clock, day and night. But with hard work and determination, Jobs and Wozniak fulfilled the Apple I order. You can imagine Paul Terrell’s surprise when the Apple I was delivered as just an assembled board. No case or monitor. Terrell however kept his promise and paid up, roughly $500 per unit. Apple had proven that it could build, albeit at a small scale. And that they could sell a finished product. But Apple still wasn’t officially incorporated. And technology never stands still.
The Apple II.
Right from the start, Apple has been firmly focused on building the next thing. So much so that even while the Apple I order was still being fulfilled, Wozniak began to design the Apple II. Key improvements would include colour graphics, a built in keyboard and full plastic casing. Moving away from a fully assembled board, into more of a complete, out of box experience. Much more aligned with what Terrell had expected.
Given the scale of Apple’s ambition for the Apple II, Jobs knew that they needed help. Jobs connected with a former executive at Intel named Mike Markkula. This was a key moment for Apple. Markkula invested $250,000 into Apple, helped to write Apple’s business plan and bought in some established leadership experience.
With Markkula’s backing, Apple incorporated in 1977. No longer just a hobbyist project, but a fully formed company. A company with staff and wide industry expertise. It enabled the launch of the Apple II in 1977 to the masses. The Apple II is regarded as one of the first truly mass market personal computers. And it’s what really put Apple on the map.
Apple Inc.
While the Jobs family garage might not be the exact place that Apple was founded, the symbolism is what’s really important. A humble, relatable character if you will in a much bigger story. After all…the best stories are the ones that we can relate to. And what could be more honest and grounding than the story of two kids changing the world from their parent’s garage? The rest as they say is history.
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