The genesis of Apple
When the first batch of printed circuit boards was ready, Jobs began hustling up customers. At a Homebrew Computer Club meeting, Jobs gave a demonstration of the “Apple Computer” to Paul Jay Terrell, who operated the Byte Shop—arguably the first retail computer store chain in the country. Terrell was intrigued and asked Jobs to keep in touch. The very next day, a barefooted Jobs dropped in on Terrell at his store in Mountain View and exclaimed, “I’m keeping in touch.” As testament to Jobs’ salesmanship, Terrell agreed to buy 50 computers for $500 each, cash on delivery. There was only one catch to the $25,000 order: Terrell wanted fully assembled computers.
The trio had originally planned to produce bare circuit boards for $25 each and sell them for $50 to hobbyists who would populate them with the necessary chips and other parts. They didn’t have the money necessary to buy all of the parts required to build 50 complete computers, but Jobs was undaunted. On April 6, he obtained a three-month $5,000 loan from Elmer and Allen Baum, then he convinced suppliers to extend 30 days’ credit on $15,000 worth of parts.
The young, ambitious Jobs had no qualms about going into debt to fulfill the Byte Shop order, but the seasoned Wayne was anxious. He wasn’t convinced Terrell would pay for the computers, and the legal nature of a partnership agreement meant that he had unlimited personal liability for any debts incurred by Apple. Just four years prior, Wayne underwent the emotionally painful experience of folding Siand, his own Las Vegas-based engineering firm. Wayne didn’t want to risk another financial failure, so on April 12—less than two weeks after Apple’s founding—he renounced his 10 percent interest for a one-time payment of $800. “I had already learned what gave me indigestion,” explained Wayne years later. “If Apple had failed, I would have had bruises on top of bruises. Steve Jobs was an absolute whirlwind and I had lost the energy you need to ride whirlwinds.”
The Apple I.
Also troubling was that Wozniak hadn’t obtained a legal release from HP for his computer. It wasn’t until April 28 that he requested same. Fortunately, HP promptly granted the release on May 5. Freed from the financial liabilities of the partnership agreement, Wayne spent his free time consulting on projects such as designing an enclosure for the Apple Computer that had roughly the same shape eventually used on the Apple II, but with a tambour front like on a rolltop desk.
Meanwhile, Jobs roped in sister Patti and Reed College buddy Daniel G. Kottke to help furiously build the Byte Shop’s computers by hand for a buck a board before the bill for the parts was due. Contrary to the widely held belief that Apple was started in a garage, the operation actually began in a bedroom at 11161 Crist Drive in Los Altos (the house number changed to 2066 when the land was annexed from the county to the city in late 1983), where Jobs was living with his adoptive parents, Paul R. and Clara. It wasn’t until the bedroom became too crowded that the operation moved to the garage.
Terrell was a bit dismayed when Jobs showed up to deliver a batch of motherboards stuffed with components. When Terrell asked for “fully assembled” computers, he meant the whole works: a case, power supply, monitor, and keyboard. Nonetheless, Terrell kept his word and handed over the cash, allowing Apple to pay off its parts suppliers with just one day to spare. The Byte Shop “finished” the computers by putting them into handmade cases with power supplies and keyboards.
Jobs was excited. Apple had made roughly $8,000 in profit, and he was planning to expand the business by going farther into debt with parts suppliers to build even more computers. Jobs’ ambitious plans required more money than orders were generating, so in August he approached his former boss, Nolan Bushnell, who recommended he meet with Don Valentine of the legendary venture capital firm Sequoia Capital that backed Atari. At the time, Valentine wasn’t interested, but he in turn referred Jobs to Armas Clifford “Mike” Markkula Jr., 34, who had worked under him at Fairchild Semiconductor. Markkula had retired a year prior, after making a small fortune on his stock options at chip makers Fairchild and Intel.
While Jobs was securing the financing necessary to feed Apple’s growth, Wozniak stuck to what he loved: improving the functionality of his computer. The original Apple Computer was a lot better than the other kit computers of the day, but it was a far cry from an easy-to-use device. Programming the thing required meticulously entering hexadecimal data by hand before you could even begin to use BASIC. At Terrell’s urging, Wozniak solved the data entry problem with a simple $75 card that plugged into the computer’s sole expansion slot and allowed the loading of programs stored on standard audio cassettes. Wozniak continued to work on improving his original computer, and by late August he had a working prototype of what would become known as the Apple II.