Long Bio (2/12)

The Apple I

Homebrew

While Steve had been away in India or Oregon, his geek friend Woz had been hired by Hewlett-Packard. To him, it was a dream job: a company full of passionate engineers just like him, where he could work on products for other engineers. However, in his spare time, he had cultivated his interest in designing computer circuits, and had joined a computer hobbyists association called the Homebrew Computer Club.

The emergence of personal computing

Computers existed for a long time before Apple was started. For example, arguably one of the first full-blown US computers ever built was ENIAC, in 1946. By the 1970s, the majority of large corporations were already equipped with computers. But those were usually huge mainframes in giant computer rooms, built and maintained by industry behemoth IBM.

Personal computing was based on a radically different approach. It claimed that computers could be used by mere mortals, private individuals instead of institutions. It was a revolutionary idea, and it’s no surprise it emerged in the Bay Area in the 1970s, after the hippie revolution and at the heartland of the electronics industry.

It all started in 1974, when Mountain View-based Intel introduced the world’s first microprocessor, the 8080. All sorts of hobbyists started to get interested in how to use this powerful yet relatively cheap new piece of technology. A huge leap forward was made when a man named Ed Roberts launched the Altair, out of Albuberque, New Mexico. It was a computer kit based on the 8080, which people could assemble by themselves, a lot like the Heathkits Steve Jobs worked on in his childhood.

The Altair was basically a box that could flash lights on and off. It didn’t do much until Bill Gates and Paul Allen, who had just founded a new company called Microsoft, wrote a BASIC interpreter for it in 1975. The word spread around all over the country in those personal computing circles (which mostly consisted of engineers, radio amateurs and other types of nerds). The Homebrew Computer Club, which operated from Stanford’s Linear Accelerator Center auditorium, was one of those groups. Hobbysits would go there to show off their latest machine or program they had worked on.

The Homebrew
Computer Club

Woz was impressed by the Altair (and by Microsoft’s BASIC interpreter), but he knew from his almost life-long experience in circuit design that he could do a much better job. So he started work on his own computer — which he decided to base on another microprocessor, MOS’s Technology 502. This was his new goal in life. While keeping his job at HP, he worked very hard at this computer board, and came up with an impressive result; a powerful computer (for the time) which worked with a keyboard and screen, not one that flashed lights — and all with amazingly few chips.

Woz showed his computer design to his friend Steve Jobs. Steve was impressed. He did not know much about engineering, but he could see there was a demand for having a computer to write software for, a computer for software hobbyists. He was especially excited to see that a lot of the qualified engineers at Homebrew were talking about Woz’s computer with admiration. So he suggested to sell it to them. He and Woz would assemble the computers themselves and sell the whole board at Homebrew meetings.

“Our own company”

Steve had a good argument. We were in his car and he said — and I can remember him saying this like it was yesterday: “Well, even if we lose money, we’ll have a company. For once in our lives, we’ll have a company.” That convinced me. And I was excited to think about us like that. To be two best friends starting a company.

Steve Wozniak in iWoz

To get the necessary $1,000 to start building the first boards, Steve sold his Volkswagen van, and Woz his HP 65 calculator. They thought about how to call the new company, and couldn’t come up with a good name, until one day, Steve said that they would call it Apple if they didn’t find anything better. And they didn’t — so Apple Computer was born.

The two friends sought help, and they got it from one of Steve’s colleagues from Atari, Ron Wayne. Wayne basically wrote the necessary paperwork to start a corporation and drew the company’s first logo. As a result, he got 10% of the company’s shares, while Steve and Woz split the rest (45% each).

Another problem was that Woz was still working for HP, and under the terms of his contract, all his work belonged to the corporation. The Apple computer was technically HP property. But Woz showed it to his bosses and they simply didn’t care about it. Woz was disappointed as his goal was to work for HP his whole life. He would have been delighted if HP had done a personal computer based on his design. It wasn’t Steve Jobs’ intention though.

Apple Computer’s first order was from a Homebrew member called Paul Terrel. He was starting a new computer store called the Byte Shop, in Mountain View, and understood just like Steve that there was a demand for such fully-built computers. He ordered 50 of them, at $500 a piece. That was $25,000! It was a huge starting point for the young company, and got Steve and Woz very excited. They started putting together the parts in the Jobses’s garage, with help from Steve’s sister Patti and his friend from Reed, Dan Kottke. They paid them $1 a board. The parts for the Apple cost $220, while the computer was sold to Terrel for $500, who would usually put it in wooden boxes.

Steve and Woz also started selling the computer on their own. They agreed on the retail price of $666.66 (note that his price was based on a simple calculation — a 33% margin — and had nothing to do with the Satanic number of course). They showed it to the Homebrew folks in March 1976, but the response wasn’t that enthusiastic. So they went elsewhere, going from store to store and trying to sell them. They sold a couple hundreds this way.

This was the start of Apple Computer. Steve and Woz had bought the other co-founder Ron Wayne out for $800, and incorporated the company on April 1, 1976.

An Apple I computer inside a wooden box

Apple's early days

The day he finished work on his first computer, Woz started working on an improved design, the future Apple II. The Apple II was based on the Apple I’s design, but in many ways it was a huge breakthrough.

Dan Kottke and Steve at the Personal Computing Festival

First, it ran a lot faster with half as many chips. It also was the first computer that could produce color, with any color TV you would plug it into. It could handle high-resolution graphics and sound, and had a BASIC interpreter built-in. In short, it was the first computer that anybody who knew the BASIC programming language could use: it had what it took to launch the personal computing revolution.

The prototype for the Apple II was almost ready when Steve and Woz partook in the Personal Computer Festival, held in Atlantic City in the summer of 1976. But it was not ready enough to be shown to the public. Steve and his friend Dan Kottke were trying to sell the Apple I from their Apple Computer booth, while Woz was working on finishing the Apple II. The visitors were not impressed by the Apple I, a board sold by these two amateur bearded young men, while MITS, which sold the Altair, had a huge booth with music, dancers and business suits. Steve learned a lot that day.

After the Apple II was finished, Steve went looking for investors. He talked to several venture capitalists, who were already legions in the Valley. The first to show up was Don Valentine. He turned Steve and Woz down, but he did give them a hand by passing them the name of another potential investor, Mike Markkula. Mike was a former Intel employee who had made millions and retired early. He was 34 when he met with Woz and Steve, and he bought into their vision. He was also quite aware of the potential returns on his investment:

We’re going to be a Fortune 500 company in two years. This is the start of an industry. It happens once a decade.

Mike Markkula to Steve and Woz, quoted in iWoz

Steve and Mike Markkula in front of Apple's new logo

Mike drew up a business plan. He wanted to put in $250,000 to build 1,000 machines. This was a huge number by the young men’s standards. Woz was also told that for this to happen, he had to leave HP. At first he refused, since he was a huge admirer of HP and planned to work there his whole life. But Steve lobbied him hard into it, and in the end Woz relented.

Mike Markkula also insisted that Apple advertise for its new computer. He called up one of his friends, Regis McKenna, who was one of the most renowned advertisers in the Valley. While they worked with Steve Jobs on Apple’s first ads, an art director called Rob Janoff designed a new logo for the company. The only thing Steve asked him was: “Don’t make it cute.” He was the one who came up with the bitten apple (so that it wouldn’t look like a tomato), as well as the striped colors — to emphasize the Apple II’s ability to display color.

Rod Holt, a friend of Steve Jobs’, was hired to build a switching power supply and design a mold for the Apple II’s plastic case. Mike Markkula later also hired a fourth guy, Mike Scott, to run the startup, whose first offices were moved to Stevens Creek Boulevard in Cupertino.

The West Coast Computer Faire

The new company got ready to show off their product at the West Coast Computer Faire, a conference held in San Francisco in April 1977. It was only a prototype, but the plastic case definitely made the Apple II look like a professional product. Steve negotiated a prime spot for Apple’s booth, and took precious advice from both Mike Markkula and Regis McKenna. That’s why he bought his first suit for the occasion.

My recollection is we stole the show.

Steve Jobs in Triumph of the Nerds

Apple Computer received 300 orders for the Apple II on the show alone, twice as much as the total number of Apple I’s ever sold! But this was just the beginning.