To think they can change 6 page

his memory with Nolan Bushnell and Al Alcorn. “I remember talking about the bonus money to

Woz, and he was upset,” Bushnell said. “I said yes, there was a bonus for each chip they saved,

and he just shook his head and then clucked his tongue.”

Whatever the truth, Wozniak later insisted that it was not worth rehashing. Jobs is a complex

person, he said, and being manipulative is just the darker facet of the traits that make him

successful. Wozniak would never have been that way, but as he points out, he also could never

have built Apple. “I would rather let it pass,” he said when I pressed the point. “It’s not something

I want to judge Steve by.”

The Atari experience helped shape Jobs’s approach to business and design. He appreciated the

user-friendliness of Atari’s insert-quarter-avoid-Klingons games. “That simplicity rubbed off on

him and made him a very focused product person,” said Ron Wayne. Jobs also absorbed some of

Bushnell’s take-no-prisoners attitude. “Nolan wouldn’t take no for an answer,” according to

Alcorn, “and this was Steve’s first impression of how things got done. Nolan was never abusive,

like Steve sometimes is. But he had the same driven attitude. It made me cringe,

but dammit, it got things done. In that way Nolan was a mentor for Jobs.”

Bushnell agreed. “There is something indefinable in an entrepreneur, and I saw that in Steve,”

he said. “He was interested not just in engineering, but also the business aspects. I taught him that

if you act like you can do something, then it will work. I told him, ‘Pretend to be completely in

control and people will assume that you are.’”

CHAPTER FIVE

THE APPLE I

Turn On, Boot Up, Jack In . . .

Daniel Kottke and Jobs with the Apple I at the Atlantic City computer fair, 1976

Machines of Loving Grace

In San Francisco and the Santa Clara Valley during the late 1960s, various cultural currents

flowed together. There was the technology revolution that began with the growth of military

contractors and soon included electronics firms, microchip makers, video game designers, and

computer companies. There was a hacker subculture—filled with wireheads, phreakers,

cyberpunks, hobbyists, and just plain geeks—that included engineers who didn’t conform to the

HP mold and their kids who weren’t attuned to the wavelengths of the subdivisions. There were

quasi-academic groups doing studies on the effects of LSD; participants included Doug Engelbart

of the Augmentation Research Center in Palo Alto, who later helped develop the computer mouse

and graphical user interfaces, and Ken Kesey, who celebrated the drug with music-and-light

shows featuring a house band that became the Grateful Dead. There was the hippie movement,

born out of the Bay Area’s beat generation, and the rebellious political activists, born out of the

Free Speech Movement at Berkeley. Overlaid on it all were various self-fulfillment movements

pursuing paths to personal enlightenment: Zen and Hinduism, meditation and yoga, primal scream

and sensory deprivation, Esalen and est.

This fusion of flower power and processor power, enlightenment and technology, was

embodied by Steve Jobs as he meditated in the mornings, audited physics classes at Stanford,

worked nights at Atari, and dreamed of starting his own business. “There was just something

going on here,” he said, looking back at the time and place. “The best music came from here—the

Grateful Dead, Jefferson Airplane, Joan Baez, Janis Joplin—and so did the integrated circuit, and

things like the Whole Earth Catalog.”

Initially the technologists and the hippies did not interface well. Many in the counterculture saw

computers as ominous and Orwellian, the province of the Pentagon and the power structure. In

The Myth of the Machine, the historian Lewis Mumford warned that computers were sucking

away our freedom and destroying “life-enhancing values.” An injunction on punch cards of the

period—“Do not fold, spindle or mutilate”—became an ironic phrase of the antiwar Left.

But by the early 1970s a shift was under way. “Computing went from being dismissed as a tool

of bureaucratic control to being embraced as a symbol of individual expression and liberation,”

John Markoff wrote in his study of the counterculture’s convergence with the computer industry,

What the Dormouse Said. It was an ethos lyrically expressed in Richard Brautigan’s 1967 poem,

“All Watched Over by Machines of Loving Grace,” and the cyberdelic fusion was certified when

Timothy Leary declared that personal computers had become the new LSD and years later revised

his famous mantra to proclaim,

“Turn on, boot up, jack in.” The musician Bono, who later became a friend of Jobs, often

discussed with him why those immersed in the rock-drugs-rebel counterculture of the Bay Area

ended up helping to create the personal computer industry. “The people who invented the twentyfirst

century were pot-smoking, sandal-wearing hippies from the West Coast like Steve, because

they saw differently,” he said. “The hierarchical systems of the East Coast, England, Germany,

and Japan do not encourage this different thinking. The sixties produced an anarchic mind-set that

is great for imagining a world not yet in existence.”

One person who encouraged the denizens of the counterculture to make common cause with the

hackers was Stewart Brand. A puckish visionary who generated fun and ideas over many decades,

Brand was a participant in one of the early sixties LSD studies in Palo Alto. He joined with his

fellow subject Ken Kesey to produce the acid-celebrating Trips Festival, appeared in the opening

scene of Tom Wolfe’s The Electric Kool-Aid Acid Test, and worked with Doug Engelbart to create

a seminal sound-and-light presentation of new technologies called the Mother of All Demos.

“Most of our generation scorned computers as the embodiment of centralized control,” Brand later

noted. “But a tiny contingent—later called hackers—embraced computers and set about

transforming them into tools of liberation. That turned out to be the true royal road to the future.”

Brand ran the Whole Earth Truck Store, which began as a roving truck that sold useful tools

and educational materials, and in 1968 he decided to extend its reach with the Whole Earth

Catalog. On its first cover was the famous picture of Earth taken from space; its subtitle was

“Access to Tools.” The underlying philosophy was that technology could be our friend. Brand

wrote on the first page of the first edition, “A realm of intimate, personal power is developing—

power of the individual to conduct his own education, find his own inspiration, shape his own

environment, and share his adventure with whoever is interested. Tools that aid this process are

sought and promoted by the Whole Earth Catalog.” Buckminster Fuller followed with a poem that

began: “I see God in the instruments and mechanisms that work reliably.”

Jobs became a Whole Earth fan. He was particularly taken by the final issue, which came out in

1971, when he was still in high school,

and he brought it with him to college and then to the All One Farm. “On the back cover of their

final issue” Jobs recalled, “was a photograph of an early morning country road, the kind you might

find yourself hitchhiking on if you were so adventurous. Beneath it were the words: ‘Stay Hungry.

Stay Foolish.’” Brand sees Jobs as one of the purest embodiments of the cultural mix that the

catalog sought to celebrate. “Steve is right at the nexus of the counterculture and technology,” he

said. “He got the notion of tools for human use.”

Brand’s catalog was published with the help of the Portola Institute, a foundation dedicated to

the fledgling field of computer education. The foundation also helped launch the People’s

Computer Company, which was not a company at all but a newsletter and organization with the

motto “Computer power to the people.” There were occasional Wednesday-night potluck dinners,

and two of the regulars, Gordon French and Fred Moore, decided to create a more formal club

where news about personal electronics could be shared.

They were energized by the arrival of the January 1975 issue of Popular Mechanics, which had

on its cover the first personal computer kit, the Altair. The Altair wasn’t much—just a $495 pile of

parts that had to be soldered to a board that would then do little—but for hobbyists and hackers it

heralded the dawn of a new era. Bill Gates and Paul Allen read the magazine and started working

on a version of BASIC, an easy-to-use programming language, for the Altair. It also caught the

attention of Jobs and Wozniak. And when an Altair kit arrived at the People’s Computer

Company, it became the centerpiece for the first meeting of the club that French and Moore had

decided to launch.

The Homebrew Computer Club

The group became known as the Homebrew Computer Club, and it encapsulated the Whole Earth

fusion between the counterculture and technology. It would become to the personal computer era

something akin to what the Turk’s Head coffeehouse was to the age of Dr. Johnson, a place where

ideas were exchanged and disseminated. Moore wrote the flyer for the first meeting, held on

March 5, 1975, in French’s Menlo Park garage: “Are you building your own computer? Terminal,

TV, typewriter?” it asked. “If so, you might like to come to a gathering of people with like-minded

interests.”

Allen Baum spotted the flyer on the HP bulletin board and called Wozniak, who agreed to go

with him. “That night turned out to be one of the most important nights of my life,” Wozniak

recalled. About thirty other people showed up, spilling out of French’s open garage door, and they

took turns describing their interests. Wozniak, who later admitted to being extremely nervous, said

he liked “video games, pay movies for hotels, scientific calculator design, and TV terminal

design,” according to the minutes prepared by Moore. There was a demonstration of the new

Altair, but more important to Wozniak was seeing the specification sheet for a microprocessor.

As he thought about the microprocessor—a chip that had an entire central processing unit on

it—he had an insight. He had been designing a terminal, with a keyboard and monitor, that would

connect to a distant minicomputer. Using a microprocessor, he could put some of the capacity of

the minicomputer inside the terminal itself, so it could become a small stand-alone computer on a

desktop. It was an enduring idea: keyboard, screen, and computer all in one integrated personal

package. “This whole vision of a personal computer just popped into my head,” he said. “That

night, I started to sketch out on paper what would later become known as the Apple I.”

At first he planned to use the same microprocessor that was in the Altair, an Intel 8080. But

each of those “cost almost more than my monthly rent,” so he looked for an alternative. He found

one in the Motorola 6800, which a friend at HP was able to get for $40 apiece. Then he discovered

a chip made by MOS Technologies that was electronically the same but cost only $20. It would

make his machine affordable, but it would carry a long-term cost. Intel’s chips ended up becoming

the industry standard, which would haunt Apple when its computers were incompatible with it.

After work each day, Wozniak would go home for a TV dinner and then return to HP to

moonlight on his computer. He spread out the parts in his cubicle, figured out their placement, and

soldered them onto his motherboard. Then he began writing the software that would

get the microprocessor to display images on the screen. Because he could not afford to pay for

computer time, he wrote the code by hand. After a couple of months he was ready to test it. “I

typed a few keys on the keyboard and I was shocked! The letters were displayed on the screen.” It

was Sunday, June 29, 1975, a milestone for the personal computer. “It was the first time in

history,” Wozniak later said, “anyone had typed a character on a keyboard and seen it show up on

their own computer’s screen right in front of them.”

Jobs was impressed. He peppered Wozniak with questions: Could the computer ever be

networked? Was it possible to add a disk for memory storage? He also began to help Woz get

components. Particularly important were the dynamic random-access memory chips. Jobs made a

few calls and was able to score some from Intel for free. “Steve is just that sort of person,” said

Wozniak. “I mean, he knew how to talk to a sales representative. I could never have done that. I’m

too shy.”

Jobs began to accompany Wozniak to Homebrew meetings, carrying the TV monitor and

helping to set things up. The meetings now attracted more than one hundred enthusiasts and had

been moved to the auditorium of the Stanford Linear Accelerator Center. Presiding with a pointer

and a free-form manner was Lee Felsenstein, another embodiment of the merger between the

world of computing and the counterculture. He was an engineering school dropout, a participant in

the Free Speech Movement, and an antiwar activist. He had written for the alternative newspaper

Berkeley Barb and then gone back to being a computer engineer.

Woz was usually too shy to talk in the meetings, but people would gather around his machine

afterward, and he would proudly show off his progress. Moore had tried to instill in the

Homebrew an ethos of swapping and sharing rather than commerce. “The theme of the club,”

Woz said, “was ‘Give to help others.’” It was an expression of the hacker ethic that information

should be free and all authority mistrusted. “I designed the Apple I because I wanted to give it

away for free to other people,” said Wozniak.

This was not an outlook that Bill Gates embraced. After he and Paul Allen had completed their

BASIC interpreter for the Altair, Gates was appalled that members of the Homebrew were making

copies of it and sharing it without paying him. So he wrote what would become a famous letter

to the club: “As the majority of hobbyists must be aware, most of you steal your software. Is this

fair? . . . One thing you do is prevent good software from being written. Who can afford to do

professional work for nothing? . . . I would appreciate letters from anyone who wants to pay up.”

Steve Jobs, similarly, did not embrace the notion that Wozniak’s creations, be it a Blue Box or

a computer, wanted to be free. So he convinced Wozniak to stop giving away copies of his

schematics. Most people didn’t have time to build it themselves anyway, Jobs argued. “Why don’t

we build and sell printed circuit boards to them?” It was an example of their symbiosis. “Every

time I’d design something great, Steve would find a way to make money for us,” said Wozniak.

Wozniak admitted that he would have never thought of doing that on his own. “It never crossed

my mind to sell computers. It was Steve who said, ‘Let’s hold them in the air and sell a few.’”

Jobs worked out a plan to pay a guy he knew at Atari to draw the circuit boards and then print

up fifty or so. That would cost about $1,000, plus the fee to the designer. They could sell them for

$40 apiece and perhaps clear a profit of $700. Wozniak was dubious that they could sell them all.

“I didn’t see how we would make our money back,” he recalled. He was already in trouble with

his landlord for bouncing checks and now had to pay each month in cash.

Jobs knew how to appeal to Wozniak. He didn’t argue that they were sure to make money, but

instead that they would have a fun adventure. “Even if we lose our money, we’ll have a

company,” said Jobs as they were driving in his Volkswagen bus. “For once in our lives, we’ll

have a company.” This was enticing to Wozniak, even more than any prospect of getting rich. He

recalled, “I was excited to think about us like that. To be two best friends starting a company.

Wow. I knew right then that I’d do it. How could I not?”

In order to raise the money they needed, Wozniak sold his HP 65 calculator for $500, though

the buyer ended up stiffing him for half of that. For his part, Jobs sold his Volkswagen bus for

$1,500. But the person who bought it came to find him two weeks later and said the engine had

broken down, and Jobs agreed to pay for half of the

repairs. Despite these little setbacks, they now had, with their own small savings thrown in,

about $1,300 in working capital, the design for a product, and a plan. They would start their own

computer company.

Apple Is Born

Now that they had decided to start a business, they needed a name. Jobs had gone for another visit

to the All One Farm, where he had been pruning the Gravenstein apple trees, and Wozniak picked

him up at the airport. On the ride down to Los Altos, they bandied around options. They

considered some typical tech words, such as Matrix, and some neologisms, such as Executek, and

some straightforward boring names, like Personal Computers Inc. The deadline for deciding was

the next day, when Jobs wanted to start filing the papers. Finally Jobs proposed Apple Computer.

“I was on one of my fruitarian diets,” he explained. “I had just come back from the apple farm. It

sounded fun, spirited, and not intimidating. Apple took the edge off the word ‘computer.’ Plus, it

would get us ahead of Atari in the phone book.” He told Wozniak that if a better name did not hit

them by the next afternoon, they would just stick with Apple. And they did.

Apple. It was a smart choice. The word instantly signaled friendliness and simplicity. It

managed to be both slightly off-beat and as normal as a slice of pie. There was a whiff of

counterculture, back-to-nature earthiness to it, yet nothing could be more American. And the two

words together—Apple Computer—provided an amusing disjuncture. “It doesn’t quite make

sense,” said Mike Markkula, who soon thereafter became the first chairman of the new company.

“So it forces your brain to dwell on it. Apple and computers, that doesn’t go together! So it helped

us grow brand awareness.”

Wozniak was not yet ready to commit full-time. He was an HP company man at heart, or so he

thought, and he wanted to keep his day job there. Jobs realized he needed an ally to help corral

Wozniak and adjudicate if there was a disagreement. So he enlisted his friend Ron Wayne, the

middle-aged engineer at Atari who had once started a slot machine company.

Wayne knew that it would not be easy to make Wozniak quit HP, nor was it necessary right

away. Instead the key was to convince him that his computer designs would be owned by the

Apple partnership. “Woz had a parental attitude toward the circuits he developed, and he wanted

to be able to use them in other applications or let HP use them,” Wayne said. “Jobs and I realized

that these circuits would be the core of Apple. We spent two hours in a roundtable discussion at

my apartment, and I was able to get Woz to accept this.” His argument was that a great engineer

would be remembered only if he teamed with a great marketer, and this required him to commit

his designs to the partnership. Jobs was so impressed and grateful that he offered Wayne a 10%

stake in the new partnership, turning him into a tie-breaker if Jobs and Wozniak disagreed over an

issue.

“They were very different, but they made a powerful team,” said Wayne. Jobs at times seemed

to be driven by demons, while Woz seemed a naïf who was toyed with by angels. Jobs had a

bravado that helped him get things done, occasionally by manipulating people. He could be

charismatic, even mesmerizing, but also cold and brutal. Wozniak, in contrast, was shy and

socially awkward, which made him seem childishly sweet. “Woz is very bright in some areas, but

he’s almost like a savant, since he was so stunted when it came to dealing with people he didn’t

know,” said Jobs. “We were a good pair.” It helped that Jobs was awed by Wozniak’s engineering

wizardry, and Wozniak was awed by Jobs’s business drive. “I never wanted to deal with people

and step on toes, but Steve could call up people he didn’t know and make them do things,”

Wozniak recalled. “He could be rough on people he didn’t think were smart, but he never treated

me rudely, even in later years when maybe I couldn’t answer a question as well as he wanted.”

Even after Wozniak became convinced that his new computer design should become the

property of the Apple partnership, he felt that he had to offer it first to HP, since he was working

there. “I believed it was my duty to tell HP about what I had designed while working for them.

That was the right thing and the ethical thing.” So he demonstrated it to his managers in the spring

of 1976. The senior executive at the meeting was impressed, and seemed torn, but he finally said it

was not something that HP could develop. It was a hobbyist product,

at least for now, and didn’t fit into the company’s high-quality market segments. “I was

disappointed,” Wozniak recalled, “but now I was free to enter into the Apple partnership.”

On April 1, 1976, Jobs and Wozniak went to Wayne’s apartment in Mountain View to draw up

the partnership agreement. Wayne said he had some experience “writing in legalese,” so he

composed the three-page document himself. His “legalese” got the better of him. Paragraphs

began with various flourishes: “Be it noted herewith . . . Be it further noted herewith . . . Now the

refore [sic], in consideration of the respective assignments of interests . . .” But the division of

shares and profits was clear—45%-45%-10%—and it was stipulated that any expenditures of

more than $100 would require agreement of at least two of the partners. Also, the responsibilities

were spelled out. “Wozniak shall assume both general and major responsibility for the conduct of

Electrical Engineering; Jobs shall assume general responsibility for Electrical Engineering and

Marketing, and Wayne shall assume major responsibility for Mechanical Engineering and

Documentation.” Jobs signed in lowercase script, Wozniak in careful cursive, and Wayne in an

illegible squiggle.

Wayne then got cold feet. As Jobs started planning to borrow and spend more money, he

recalled the failure of his own company. He didn’t want to go through that again. Jobs and

Wozniak had no personal assets, but Wayne (who worried about a global financial Armageddon)

kept gold coins hidden in his mattress. Because they had structured Apple as a simple partnership

rather than a corporation, the partners would be personally liable for the debts, and Wayne was

afraid potential creditors would go after him. So he returned to the Santa Clara County office just

eleven days later with a “statement of withdrawal” and an amendment to the partnership

agreement. “By virtue of a re-assessment of understandings by and between all parties,” it began,

“Wayne shall hereinafter cease to function in the status of ‘Partner.’” It noted that in payment for

his 10% of the company, he received $800, and shortly afterward $1,500 more.

Had he stayed on and kept his 10% stake, at the end of 2010 it would have been worth

approximately $2.6 billion. Instead he was then living alone in a small home in Pahrump, Nevada,

where he played the

penny slot machines and lived off his social security check. He later claimed he had no regrets.

“I made the best decision for me at the time. Both of them were real whirlwinds, and I knew my

stomach and it wasn’t ready for such a ride.”

Jobs and Wozniak took the stage together for a presentation to the Homebrew Computer Club

shortly after they signed Apple into existence. Wozniak held up one of their newly produced

circuit boards and described the microprocessor, the eight kilobytes of memory, and the version of

BASIC he had written. He also emphasized what he called the main thing: “a human-typable

keyboard instead of a stupid, cryptic front panel with a bunch of lights and switches.” Then it was

Jobs’s turn. He pointed out that the Apple, unlike the Altair, had all the essential components built

in. Then he challenged them with a question: How much would people be willing to pay for such a

wonderful machine? He was trying to get them to see the amazing value of the Apple. It was a

rhetorical flourish he would use at product presentations over the ensuing decades.

The audience was not very impressed. The Apple had a cut-rate microprocessor, not the Intel

8080. But one important person stayed behind to hear more. His name was Paul Terrell, and in

1975 he had opened a computer store, which he dubbed the Byte Shop, on Camino Real in Menlo

Park. Now, a year later, he had three stores and visions of building a national chain. Jobs was

thrilled to give him a private demo. “Take a look at this,” he said. “You’re going to like what you

see.” Terrell was impressed enough to hand Jobs and Woz his card. “Keep in touch,” he said.

“I’m keeping in touch,” Jobs announced the next day when he walked barefoot into the Byte

Shop. He made the sale. Terrell agreed to order fifty computers. But there was a condition: He

didn’t want just $50 printed circuit boards, for which customers would then have to buy all the

chips and do the assembly. That might appeal to a few hard-core hobbyists, but not to most

customers. Instead he wanted the boards to be fully assembled. For that he was willing to pay

about $500 apiece, cash on delivery.

Jobs immediately called Wozniak at HP. “Are you sitting down?”

he asked. Wozniak said he wasn’t. Jobs nevertheless proceeded to give him the news. “I was

shocked, just completely shocked,” Wozniak recalled. “I will never forget that moment.”

To fill the order, they needed about $15,000 worth of parts. Allen Baum, the third prankster

from Homestead High, and his father agreed to loan them $5,000. Jobs tried to borrow more from

a bank in Los Altos, but the manager looked at him and, not surprisingly, declined. He went to

Haltek Supply and offered an equity stake in Apple in return for the parts, but the owner decided

they were “a couple of young, scruffy-looking guys,” and declined. Alcorn at Atari would sell

them chips only if they paid cash up front. Finally, Jobs was able to convince the manager of

Cramer Electronics to call Paul Terrell to confirm that he had really committed to a $25,000 order.

Terrell was at a conference when he heard over a loudspeaker that he had an emergency call (Jobs

had been persistent). The Cramer manager told him that two scruffy kids had just walked in

waving an order from the Byte Shop. Was it real? Terrell confirmed that it was, and the store

agreed to front Jobs the parts on thirty-day credit.

Garage Band

The Jobs house in Los Altos became the assembly point for the fifty Apple I boards that had to be

delivered to the Byte Shop within thirty days, when the payment for the parts would come due. All

available hands were enlisted: Jobs and Wozniak, plus Daniel Kottke, his ex-girlfriend Elizabeth

Holmes (who had broken away from the cult she’d joined), and Jobs’s pregnant sister, Patty. Her

vacated bedroom as well as the kitchen table and garage were commandeered as work space.

Holmes, who had taken jewelry classes, was given the task of soldering chips. “Most I did well,

but I got flux on a few of them,” she recalled. This didn’t please Jobs. “We don’t have a chip to

spare,” he railed, correctly. He shifted her to bookkeeping and paperwork at the kitchen table, and

he did the soldering himself. When they completed a board, they would hand it off to Wozniak. “I

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