To think they can change 7 page

would plug each assembled board into the TV and keyboard to test it to see if it worked,” he said.

“If it did, I put it in a box. If it didn’t, I’d figure what pin hadn’t gotten into the socket right.”

Paul Jobs suspended his sideline of repairing old cars so that the Apple team could have the

whole garage. He put in a long old workbench, hung a schematic of the computer on the new

plasterboard wall he built, and set up rows of labeled drawers for the components. He also built a

burn box bathed in heat lamps so the computer boards could be tested by running overnight at

high temperatures. When there was the occasional eruption of temper, an occurrence not

uncommon around his son, Paul would impart some of his calm. “What’s the matter?” he would

say. “You got a feather up your ass?” In return he occasionally asked to borrow back the TV set so

he could watch the end of a football game. During some of these breaks, Jobs and Kottke would

go outside and play guitar on the lawn.

Clara Jobs didn’t mind losing most of her house to piles of parts and houseguests, but she was

frustrated by her son’s increasingly quirky diets. “She would roll her eyes at his latest eating

obsessions,” recalled Holmes. “She just wanted him to be healthy, and he would be making weird

pronouncements like, ‘I’m a fruitarian and I will only eat leaves picked by virgins in the

moonlight.’”

After a dozen assembled boards had been approved by Wozniak, Jobs drove them over to the

Byte Shop. Terrell was a bit taken aback. There was no power supply, case, monitor, or keyboard.

He had expected something more finished. But Jobs stared him down, and he agreed to take

delivery and pay.

After thirty days Apple was on the verge of being profitable. “We were able to build the boards

more cheaply than we thought, because I got a good deal on parts,” Jobs recalled. “So the fifty we

sold to the Byte Shop almost paid for all the material we needed to make a hundred boards.” Now

they could make a real profit by selling the remaining fifty to their friends and Homebrew

compatriots.

Elizabeth Holmes officially became the part-time bookkeeper at $4 an hour, driving down from

San Francisco once a week and figuring out how to port Jobs’s checkbook into a ledger. In order

to make Apple seem like a real company, Jobs hired an answering service, which would relay

messages to his mother. Ron Wayne drew a logo, using the

ornate line-drawing style of Victorian illustrated fiction, that featured Newton sitting under a

tree framed by a quote from Wordsworth: “A mind forever voyaging through strange seas of

thought, alone.” It was a rather odd motto, one that fit Wayne’s self-image more than Apple

Computer. Perhaps a better Wordsworth line would have been the poet’s description of those

involved in the start of the French Revolution: “Bliss was it in that dawn to be alive / But to be

young was very heaven!” As Wozniak later exulted, “We were participating in the biggest

revolution that had ever happened, I thought. I was so happy to be a part of it.”

Woz had already begun thinking about the next version of the machine, so they started calling

their current model the Apple I. Jobs and Woz would drive up and down Camino Real trying to

get the electronics stores to sell it. In addition to the fifty sold by the Byte Shop and almost fifty

sold to friends, they were building another hundred for retail outlets. Not surprisingly, they had

contradictory impulses: Wozniak wanted to sell them for about what it cost to build them, but Jobs

wanted to make a serious profit. Jobs prevailed. He picked a retail price that was about three times

what it cost to build the boards and a 33% markup over the $500 wholesale price that Terrell and

other stores paid. The result was $666.66. “I was always into repeating digits,” Wozniak said.

“The phone number for my dial-a-joke service was 255-6666.” Neither of them knew that in the

Book of Revelation 666 symbolized the “number of the beast,” but they soon were faced with

complaints, especially after 666 was featured in that year’s hit movie, The Omen. (In 2010 one of

the original Apple I computers was sold at auction by Christie’s for $213,000.)

The first feature story on the new machine appeared in the July 1976 issue of Interface, a nowdefunct

hobbyist magazine. Jobs and friends were still making them by hand in his house, but the

article referred to him as the director of marketing and “a former private consultant to Atari.” It

made Apple sound like a real company. “Steve communicates with many of the computer clubs to

keep his finger on the heartbeat of this young industry,” the article reported, and it quoted him

explaining, “If we can rap about their needs, feelings and motivations, we can respond

appropriately by giving them what they want.”

By this time they had other competitors, in addition to the Altair, most notably the IMSAI 8080

and Processor Technology Corporation’s SOL-20. The latter was designed by Lee Felsenstein and

Gordon French of the Homebrew Computer Club. They all had the chance to go on display during

Labor Day weekend of 1976, at the first annual Personal Computer Festival, held in a tired hotel

on the decaying boardwalk of Atlantic City, New Jersey. Jobs and Wozniak took a TWA flight to

Philadelphia, cradling one cigar box with the Apple I and another with the prototype for the

successor that Woz was working on. Sitting in the row behind them was Felsenstein, who looked

at the Apple I and pronounced it “thoroughly unimpressive.” Wozniak was unnerved by the

conversation in the row behind him. “We could hear them talking in advanced business talk,” he

recalled, “using businesslike acronyms we’d never heard before.”

Wozniak spent most of his time in their hotel room, tweaking his new prototype. He was too

shy to stand at the card table that Apple had been assigned near the back of the exhibition hall.

Daniel Kottke had taken the train down from Manhattan, where he was now attending Columbia,

and he manned the table while Jobs walked the floor to inspect the competition. What he saw did

not impress him. Wozniak, he felt reassured, was the best circuit engineer, and the Apple I (and

surely its successor) could beat the competition in terms of functionality. However, the SOL-20

was better looking. It had a sleek metal case, a keyboard, a power supply, and cables. It looked as

if it had been produced by grown-ups. The Apple I, on the other hand, appeared as scruffy as its

creators.

CHAPTER SIX

THE APPLE II

Dawn of a New Age

An Integrated Package

As Jobs walked the floor of the Personal Computer Festival, he came to the realization that Paul

Terrell of the Byte Shop had been right: Personal computers should come in a complete package.

The next Apple, he decided, needed to have a great case and a built-in keyboard, and be integrated

end to end, from the power supply to the software. “My vision was to create the first fully

packaged computer,” he recalled. “We were no longer aiming for the handful of hobbyists who

liked to assemble their own computers, who knew how to buy transformers and keyboards. For

every one of them there were a thousand people who would want the machine to be ready to run.”

In their hotel room on that Labor Day weekend of 1976, Wozniak tinkered with the prototype

of the new machine, to be named the Apple II, that Jobs hoped would take them to this next level.

They brought the prototype out only once, late at night, to test it on the color projection television

in one of the conference rooms. Wozniak had come up with an ingenious way to goose the

machine’s chips into creating color, and he wanted to see if it would work on the type of television

that uses a projector to display on a movie-like screen. “I figured a projector might have a

different color circuitry that would choke on my color method,” he recalled. “So I hooked up the

Apple II to this projector and it worked perfectly.” As he typed on his keyboard, colorful lines and

swirls burst on the screen across the room. The only outsider who saw this first Apple II was the

hotel’s technician. He said he had looked at all the machines, and this was the one he would be

buying.

To produce the fully packaged Apple II would require significant capital, so they considered

selling the rights to a larger company. Jobs went to Al Alcorn and asked for the chance to pitch it

to Atari’s management. He set up a meeting with the company’s president, Joe Keenan, who was a

lot more conservative than Alcorn and Bushnell. “Steve goes in to pitch him, but Joe couldn’t

stand him,” Alcorn recalled. “He didn’t appreciate Steve’s hygiene.” Jobs was barefoot, and at one

point put his feet up on a desk. “Not only are we not going to buy this thing,” Keenan shouted,

“but get your feet off my desk!” Alcorn recalled thinking, “Oh, well. There goes that possibility.”

In September Chuck Peddle of the Commodore computer company came by the Jobs house to

get a demo. “We’d opened Steve’s garage to the sunlight, and he came in wearing a suit and a

cowboy hat,” Wozniak recalled. Peddle loved the Apple II, and he arranged a presentation for his

top brass a few weeks later at Commodore headquarters. “You might want to buy us for a few

hundred thousand dollars,” Jobs said when they got there. Wozniak was stunned by this

“ridiculous” suggestion, but Jobs persisted. The Commodore honchos called a few days later to

say they had decided it would be cheaper to build their own machine. Jobs was not upset. He had

checked out Commodore and decided that its leadership was “sleazy.” Wozniak did

not rue the lost money, but his engineering sensibilities were offended when the company came

out with the Commodore PET nine months later. “It kind of sickened me. They made a real crappy

product by doing it so quick. They could have had Apple.”

The Commodore flirtation brought to the surface a potential conflict between Jobs and

Wozniak: Were they truly equal in what they contributed to Apple and what they should get out of

it? Jerry Wozniak, who exalted the value of engineers over mere entrepreneurs and marketers,

thought most of the money should be going to his son. He confronted Jobs personally when he

came by the Wozniak house. “You don’t deserve shit,” he told Jobs. “You haven’t produced

anything.” Jobs began to cry, which was not unusual. He had never been, and would never be,

adept at containing his emotions. He told Steve Wozniak that he was willing to call off the

partnership. “If we’re not fifty-fifty,” he said to his friend, “you can have the whole thing.”

Wozniak, however, understood better than his father the symbiosis they had. If it had not been for

Jobs, he might still be handing out schematics of his boards for free at the back of Homebrew

meetings. It was Jobs who had turned his ingenious designs into a budding business, just as he had

with the Blue Box. He agreed they should remain partners.

It was a smart call. To make the Apple II successful required more than just Wozniak’s

awesome circuit design. It would need to be packaged into a fully integrated consumer product,

and that was Jobs’s role.

He began by asking their erstwhile partner Ron Wayne to design a case. “I assumed they had no

money, so I did one that didn’t require any tooling and could be fabricated in a standard metal

shop,” he said. His design called for a Plexiglas cover attached by metal straps and a rolltop door

that slid down over the keyboard.

Jobs didn’t like it. He wanted a simple and elegant design, which he hoped would set Apple

apart from the other machines, with their clunky gray metal cases. While haunting the appliance

aisles at Macy’s, he was struck by the Cuisinart food processors and decided that he wanted a

sleek case made of light molded plastic. At a Homebrew meeting, he offered a local consultant,

Jerry Manock, $1,500 to produce such a design. Manock, dubious about Jobs’s appearance, asked

for the money up front. Jobs refused, but Manock took the job anyway.

Within weeks he had produced a simple foam-molded plastic case that was uncluttered and

exuded friendliness. Jobs was thrilled.

Next came the power supply. Digital geeks like Wozniak paid little attention to something so

analog and mundane, but Jobs decided it was a key component. In particular he wanted—as he

would his entire career—to provide power in a way that avoided the need for a fan. Fans inside

computers were not Zen-like; they distracted. He dropped by Atari to consult with Alcorn, who

knew old-fashioned electrical engineering. “Al turned me on to this brilliant guy named Rod Holt,

who was a chain-smoking Marxist who had been through many marriages and was an expert on

everything,” Jobs recalled. Like Manock and others meeting Jobs for the first time, Holt took a

look at him and was skeptical. “I’m expensive,” Holt said. Jobs sensed he was worth it and said

that cost was no problem. “He just conned me into working,” said Holt, who ended up joining

Apple full-time.

Instead of a conventional linear power supply, Holt built one like those used in oscilloscopes. It

switched the power on and off not sixty times per second, but thousands of times; this allowed it

to store the power for far less time, and thus throw off less heat. “That switching power supply

was as revolutionary as the Apple II logic board was,” Jobs later said. “Rod doesn’t get a lot of

credit for this in the history books, but he should. Every computer now uses switching power

supplies, and they all rip off Rod’s design.” For all of Wozniak’s brilliance, this was not

something he could have done. “I only knew vaguely what a switching power supply was,” Woz

admitted.

Jobs’s father had once taught him that a drive for perfection meant caring about the

craftsmanship even of the parts unseen. Jobs applied that to the layout of the circuit board inside

the Apple II. He rejected the initial design because the lines were not straight enough.

This passion for perfection led him to indulge his instinct to control. Most hackers and

hobbyists liked to customize, modify, and jack various things into their computers. To Jobs, this

was a threat to a seamless end-to-end user experience. Wozniak, a hacker at heart, disagreed. He

wanted to include eight slots on the Apple II for users to insert whatever smaller circuit boards and

peripherals they might want. Jobs insisted there be only two, for a printer and a modem.

“Usually I’m really easy to get along with, but this time I told him, ‘If that’s what you want, go

get yourself another computer,’” Wozniak recalled. “I knew that people like me would eventually

come up with things to add to any computer.” Wozniak won the argument that time, but he could

sense his power waning. “I was in a position to do that then. I wouldn’t always be.”

Mike Markkula

All of this required money. “The tooling of this plastic case was going to cost, like, $100,000,”

Jobs said. “Just to get this whole thing into production was going to be, like, $200,000.” He went

back to Nolan Bushnell, this time to get him to put in some money and take a minority equity

stake. “He asked me if I would put $50,000 in and he would give me a third of the company,” said

Bushnell. “I was so smart, I said no. It’s kind of fun to think about that, when I’m not crying.”

Bushnell suggested that Jobs try Don Valentine, a straight-shooting former marketing manager

at National Semiconductor who had founded Sequoia Capital, a pioneering venture capital firm.

Valentine arrived at the Jobses’ garage in a Mercedes wearing a blue suit, button-down shirt, and

rep tie. His first impression was that Jobs looked and smelled odd. “Steve was trying to be the

embodiment of the counterculture. He had a wispy beard, was very thin, and looked like Ho Chi

Minh.”

Valentine, however, did not become a preeminent Silicon Valley investor by relying on surface

appearances. What bothered him more was that Jobs knew nothing about marketing and seemed

content to peddle his product to individual stores one by one. “If you want me to finance you,”

Valentine told him, “you need to have one person as a partner who understands marketing and

distribution and can write a business plan.” Jobs tended to be either bristly or solicitous when

older people offered him advice. With Valentine he was the latter. “Send me three suggestions,”

he replied. Valentine did, Jobs met them, and he clicked with one of them, a man named Mike

Markkula, who would end up playing a critical role at Apple for the next two decades.

Markkula was only thirty-three, but he had already retired after working at Fairchild and then

Intel, where he made millions on his stock options when the chip maker went public. He was a

cautious and shrewd man, with the precise moves of someone who had been a gymnast in high

school, and he excelled at figuring out pricing strategies, distribution networks, marketing, and

finance. Despite being slightly reserved, he had a flashy side when it came to enjoying his newly

minted wealth. He built himself a house in Lake Tahoe and later an outsize mansion in the hills of

Woodside. When he showed up for his first meeting at Jobs’s garage, he was driving not a dark

Mercedes like Valentine, but a highly polished gold Corvette convertible. “When I arrived at the

garage, Woz was at the workbench and immediately began showing off the Apple II,” Markkula

recalled. “I looked past the fact that both guys needed a haircut and was amazed by what I saw on

that workbench. You can always get a haircut.”

Jobs immediately liked Markkula. “He was short and he had been passed over for the top

marketing job at Intel, which I suspect made him want to prove himself.” He also struck Jobs as

decent and fair. “You could tell that if he could screw you, he wouldn’t. He had a real moral sense

to him.” Wozniak was equally impressed. “I thought he was the nicest person ever,” he recalled.

“Better still, he actually liked what we had!”

Markkula proposed to Jobs that they write a business plan together. “If it comes out well, I’ll

invest,” Markkula said, “and if not, you’ve got a few weeks of my time for free.” Jobs began

going to Markkula’s house in the evenings, kicking around projections and talking through the

night. “We made a lot of assumptions, such as about how many houses would have a personal

computer, and there were nights we were up until 4 a.m.,” Jobs recalled. Markkula ended up

writing most of the plan. “Steve would say, ‘I will bring you this section next time,’ but he usually

didn’t deliver on time, so I ended up doing it.”

Markkula’s plan envisioned ways of getting beyond the hobbyist market. “He talked about

introducing the computer to regular people in regular homes, doing things like keeping track of

your favorite recipes or balancing your checkbook,” Wozniak recalled. Markkula made a wild

prediction: “We’re going to be a Fortune 500 company in two

years,” he said. “This is the start of an industry. It happens once in a decade.” It would take

Apple seven years to break into the Fortune 500, but the spirit of Markkula’s prediction turned out

to be true.

Markkula offered to guarantee a line of credit of up to $250,000 in return for being made a onethird

equity participant. Apple would incorporate, and he along with Jobs and Wozniak would

each own 26% of the stock. The rest would be reserved to attract future investors. The three met in

the cabana by Markkula’s swimming pool and sealed the deal. “I thought it was unlikely that Mike

would ever see that $250,000 again, and I was impressed that he was willing to risk it,” Jobs

recalled.

Now it was necessary to convince Wozniak to come on board full-time. “Why can’t I keep

doing this on the side and just have HP as my secure job for life?” he asked. Markkula said that

wouldn’t work, and he gave Wozniak a deadline of a few days to decide. “I felt very insecure in

starting a company where I would be expected to push people around and control what they did,”

Wozniak recalled. “I’d decided long ago that I would never become someone authoritative.” So he

went to Markkula’s cabana and announced that he was not leaving HP.

Markkula shrugged and said okay. But Jobs got very upset. He cajoled Wozniak; he got friends

to try to convince him; he cried, yelled, and threw a couple of fits. He even went to Wozniak’s

parents’ house, burst into tears, and asked Jerry for help. By this point Wozniak’s father had

realized there was real money to be made by capitalizing on the Apple II, and he joined forces on

Jobs’s behalf. “I started getting phone calls at work and home from my dad, my mom, my brother,

and various friends,” Wozniak recalled. “Every one of them told me I’d made the wrong

decision.” None of that worked. Then Allen Baum, their Buck Fry Club mate at Homestead High,

called. “You really ought to go ahead and do it,” he said. He argued that if he joined Apple fulltime,

he would not have to go into management or give up being an engineer. “That was exactly

what I needed to hear,” Wozniak later said. “I could stay at the bottom of the organization chart,

as an engineer.” He called Jobs and declared that he was now ready to come on board.

On January 3, 1977, the new corporation, the Apple Computer Co., was officially created, and

it bought out the old partnership that

had been formed by Jobs and Wozniak nine months earlier. Few people noticed. That month

the Homebrew surveyed its members and found that, of the 181 who owned personal computers,

only six owned an Apple. Jobs was convinced, however, that the Apple II would change that.

Markkula would become a father figure to Jobs. Like Jobs’s adoptive father, he would indulge

Jobs’s strong will, and like his biological father, he would end up abandoning him. “Markkula was

as much a father-son relationship as Steve ever had,” said the venture capitalist Arthur Rock. He

began to teach Jobs about marketing and sales. “Mike really took me under his wing,” Jobs

recalled. “His values were much aligned with mine. He emphasized that you should never start a

company with the goal of getting rich. Your goal should be making something you believe in and

making a company that will last.”

Markkula wrote his principles in a one-page paper titled “The Apple Marketing Philosophy”

that stressed three points. The first was empathy, an intimate connection with the feelings of the

customer: “We will truly understand their needs better than any other company.” The second was

focus: “In order to do a good job of those things that we decide to do, we must eliminate all of the

unimportant opportunities.” The third and equally important principle, awkwardly named, was

impute. It emphasized that people form an opinion about a company or product based on the

signals that it conveys. “People DO judge a book by its cover,” he wrote. “We may have the best

product, the highest quality, the most useful software etc.; if we present them in a slipshod

manner, they will be perceived as slipshod; if we present them in a creative, professional manner,

we will impute the desired qualities.”

For the rest of his career, Jobs would understand the needs and desires of customers better than

any other business leader, he would focus on a handful of core products, and he would care,

sometimes obsessively, about marketing and image and even the details of packaging. “When you

open the box of an iPhone or iPad, we want that tactile experience to set the tone for how you

perceive the product,” he said. “Mike taught me that.”

Regis McKenna

The first step in this process was convincing the Valley’s premier publicist, Regis McKenna, to

take on Apple as a client. McKenna was from a large working-class Pittsburgh family, and bred

into his bones was a steeliness that he cloaked with charm. A college dropout, he had worked for

Fairchild and National Semiconductor before starting his own PR and advertising firm. His two

specialties were doling out exclusive interviews with his clients to journalists he had cultivated

and coming up with memorable ad campaigns that created brand awareness for products such as

microchips. One of these was a series of colorful magazine ads for Intel that featured racing cars

and poker chips rather than the usual dull performance charts. These caught Jobs’s eye. He called

Intel and asked who created them. “Regis McKenna,” he was told. “I asked them what Regis

McKenna was,” Jobs recalled, “and they told me he was a person.” When Jobs phoned, he couldn’

t get through to McKenna. Instead he was transferred to Frank Burge, an account executive, who

tried to put him off. Jobs called back almost every day.

Burge finally agreed to drive out to the Jobs garage. “Holy Christ, this guy is going to be

something else,” he recalled thinking. “What’s the least amount of time I can spend with this

clown without being rude.” Then, when he was confronted with the unwashed and shaggy Jobs,

two things hit him: “First, he was an incredibly smart young man. Second, I didn’t understand a

fiftieth of what he was talking about.”

So Jobs and Wozniak were invited to have a meeting with, as his impish business cards read,

“Regis McKenna, himself.” This time it was the normally shy Wozniak who became prickly.

McKenna glanced at an article Wozniak was writing about Apple and suggested that it was too

technical and needed to be livened up. “I don’t want any PR man touching my copy,” Wozniak

snapped. McKenna suggested it was time for them to leave his office. “But Steve called me back

right away and said he wanted to meet again,” McKenna recalled. “This time he came without

Woz, and we hit it off.”

McKenna had his team get to work on brochures for the Apple II. The first thing they did was

to replace Ron Wayne’s ornate Victorian woodcut-style logo, which ran counter to McKenna’s

colorful and playful advertising style. So an art director, Rob Janoff, was assigned to create a new

one. “Don’t make it cute,” Jobs ordered. Janoff came up with a simple apple shape in two

versions, one whole and the other with a bite taken out of it. The first looked too much like a

cherry, so Jobs chose the one with a bite. He also picked a version that was striped in six colors,

with psychedelic hues sandwiched between whole-earth green and sky blue, even though that

made printing the logo significantly more expensive. Atop the brochure McKenna put a maxim,

often attributed to Leonardo da Vinci, that would become the defining precept of Jobs’s design

philosophy: “Simplicity is the ultimate sophistication.”

The First Launch Event

The introduction of the Apple II was scheduled to coincide with the first West Coast Computer

Faire, to be held in April 1977 in San Francisco, organized by a Homebrew stalwart, Jim Warren.

Jobs signed Apple up for a booth as soon as he got the information packet. He wanted to secure a

location right at the front of the hall as a dramatic way to launch the Apple II, and so he shocked

Wozniak by paying $5,000 in advance. “Steve decided that this was our big launch,” said

Wozniak. “We would show the world we had a great machine and a great company.”

It was an application of Markkula’s admonition that it was important to “impute” your

greatness by making a memorable impression on people, especially when launching a new

product. That was reflected in the care that Jobs took with Apple’s display area. Other exhibitors

had card tables and poster board signs. Apple had a counter draped in black velvet and a large

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