Starting Apple
An excerpt from Fire in the Valley, Third Edition by Michael Swaine and Paul Freiberger
I met the two Steves. They showed me the Apple I. I thought they were really right on.
— Mike Markkula
Jobs and Woz had discovered that they were a good team. Jobs, inspired by the blue box and Breakout experiences, was eager to find a way to make this pay off. But the inspiration would have to come from Woz, and it was Homebrew that gave him that inspiration.
Woz Discovers Homebrew
Breakout wasn’t Woz’s only extracurricular project while at HP. He also designed and built a computer terminal. Jobs had heard that a local company that rented computer time needed an inexpensive home terminal to access the company’s large computer. Jobs told Woz about it, and Woz designed a small device that used a television set for a display, much like Don Lancaster’s TV Typewriter. More significantly, around this same time Woz began attending the Homebrew Computer Club meetings.
Homebrew was a revelation for Woz. For the first time, he found himself surrounded by people who shared his love for computers, and who were more knowledgeable about computers than any of his friends, or sometimes even himself. He attended his first Homebrew meeting only because a friend of his at HP told him a new club was forming for people interested in computer terminals. When he first arrived at Gordon French’s suburban garage, he felt a little out of place. Club members were talking about the latest chips, the 8008 and the 8080, and Woz was unfamiliar with them. There, too, he learned about this new computer an individual could actually buy, called the Altair. Club members were interested in the video terminal he designed, however, and that encouraged Woz. He went home and studied up on the latest microprocessor chips. He bought the first issue of Byte and made it a point to attend the biweekly Homebrew Computer Club meetings.
Woz was inspired by Jim Warren’s and Lee Felsenstein’s visions that these devices could and should be used for social good. These things could help stop wars, he thought as he listened to Felsenstein talk about using computers for the antiwar movement.
“It changed my life,” Woz recalled. “My interest in computers was renewed. Every two weeks the club meeting was the biggest thing in my life.” And Woz’s enthusiasm, in turn, invigorated the club. His technical expertise and innocent, friendly manner attracted people to him. He quickly developed a following. For two younger club members — Randy Wigginton and Chris Espinosa — Woz became the prime source of technical information, as well as their ride to meetings. (They didn’t have their driver’s licenses yet.)
Woz couldn’t afford an Altair, but he watched with fascination as others brought theirs to the gatherings. He was impressed by the way Lee Felsenstein chaired the meetings. He realized that many of the home-built machines shown at the club resembled his Cream Soda Computer, and he began to feel that he could improve on their basic designs. But the 8080 was out of his price range. What he needed was a low-cost chip.
Then he learned that MOS Technology was going to sell samples of its new 6502 microprocessor chip at the upcoming Wescon electronics show in San Francisco for only $20. At the time, microprocessors were generally sold only to companies that had established accounts with the semiconductor houses, and they cost hundreds of dollars apiece. The Wescon show did not permit sales on the exhibit floor, so Chuck Peddle, the designer of the 6502, rented a hotel room to make the sales. Woz walked in, gave his 20 bucks to Chuck Peddle’s wife, who was handling the transactions, and went to work.
Designing the Apple I
Before designing the computer, Woz wrote a programming language for it. BASIC was the hit of the Homebrew Computer Club, and he knew he could impress his friends if he could get BASIC to work on his machine. “I’m going to be the first one to have BASIC for the 6502,” he thought. “I can whip it out in a few weeks and I’ll zap the world with it.” He did wrap it up in a few weeks, and when he finished, he set to work making something for it to run on. He considered that the easy part: he already had experience building a computer.
Woz designed a board that included the 6502 processor and interfaces connecting the processor to a keyboard and video monitor. This was no mean feat. The Intel 8008, which Popular Electronics had ignored in publishing the groundbreaking Altair story, was arguably far more suited to be used as the brain of a computer than the 6502 processor. Nevertheless, Woz finished the computer within a few weeks. Woz took his computer to Homebrew and passed out photocopies of his design. The design was so simple that he could describe it in just one page and anyone who read the description could duplicate his design. The consummate hobbyist, Woz believed in sharing information. The other hobbyists were duly impressed. Some questioned his choice of processor, but no one argued with the processor’s $20 price tag. He called his machine an Apple.
(Courtesy of Apple Computer Inc.)
The Apple I had only the bare essentials. It lacked a case, a keyboard, and a power supply. The hobbyist owner had to connect a transformer to it in order to get it to work. The Apple I also required laborious assembly by hand. Woz spent a lot of time helping friends implement his design.
Steve Jobs saw a great financial opportunity in this skeletal machine, and urged Woz to start a company with him. Woz reluctantly agreed. The idea of turning his hobby into a business bothered him, but Jobs, as usual, was persistent. “Look, there’s a lot of interest at the club in what you’ve done,” he insisted. Woz conceded the point with the understanding that he wouldn’t have to leave his job at Hewlett-Packard, which he loved.
Starting a Company
They founded the company on April Fool’s Day, 1976 (an appropriate date for two pranksters), together with a third partner, Ron Wayne. An Atari field service engineer, Wayne agreed to help found the company for a 10 percent stake. Wayne immediately started work on a company logo, a drawing of Isaac Newton seated under an apple tree.
Jobs sold his Volkswagen microbus and Wozniak sold his two prized HP calculators to pay for the creation of a printed circuit board. The PC board would save them the trouble of assembling and wiring each computer — a task that was forcing them to clock 60-hour work weeks. Jobs figured they would be able to sell the boards at Homebrew.
But Jobs wasn’t content to sell boards merely to hobbyists. He also began trying to interest retailers in the Apple. At a Homebrew meeting in July 1976, Woz gave a demonstration of the Apple I. Paul Terrell, one of the industry’s earliest retailers, was in attendance. Jobs gave Terrell a personal demonstration of the machine. “Take a look at this,” Jobs told Terrell. “You’re going to like what you see.”
Jobs was right. Terrell did like the machine, but he didn’t immediately place an order. When Terrell told Jobs the machine showed promise and that Jobs should keep in touch, Terrell meant what he said. The machine was interesting, but there were a lot of sharp engineers at Homebrew. This computer could be a winner, or some other machine might be better. If Jobs and Wozniak really had something, Terrell figured they’d keep in touch with him.
The next day, Jobs appeared, barefoot, at Byte Shop. “I’m keeping in touch,” he said. Terrell, impressed by his confidence and perseverance, ordered 50 Apple I computers. Visions of instant wealth flashed before Jobs’s eyes. But Terrell added a condition: he wanted the computers fully assembled. Woz and Jobs were back to their 60-hour work weeks.
The two Steves had no parts and no money to buy them, but with a purchase order from Terrell for 50 Apple I computers, they were able to obtain net 30 credit from suppliers. Jobs didn’t even know what net 30 meant. Terrell later received several calls from parts suppliers who wondered whether Jobs and Woz really had the guarantee from Terrell that they claimed they did.
Jobs and Woz were now in business. But even though they had successfully worked together under time pressure in the past, they knew they couldn’t do this task alone. The parts had to be paid for in 30 days, and that meant they had to build 50 computers and deliver them to Paul Terrell within the same time period. Jobs paid his stepsister to plug chips into the Apple I board. He also hired Dan Kottke, who was on summer break from college. “You’ve got to come out here this summer,” Jobs told Kottke. “I’ll give you a job. We’ve got this amazing thing called 30 days net.”
Terrell got his 50 Apple I machines on the 29th day, and Apple Computer was off and running. Jobs ran the business. All of the 200 or so Apple I computers eventually built were sold either through a handful of computer stores in the Bay Area or by a parcel service out of Jobs’s “home office” (initially his bedroom, and later his parents’ garage). The Apple I was priced at $666, the so-called Number of the Beast from the Book of Revelation, evidence that the prankster spirit was alive and well at Apple.
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