iWoz

by Steve Wozniak

  • o •

  The code was just about to the point where we could type “R Checkbook” to run the checkbook program or “R Color Math” to run the math program. I didn’t actually have a floppy disk operating system in two weeks, but we had a table on the disk that tracked and sectored each program occupied. Normally an operating system would read an index to the whole disk and when you requested “Color Math” it would look up in the index the list of tracks and sectors it occupied. We didn’t have this quite working the day we had to fly to Las Vegas, but Randy and I were sure we’d have it done in a few hours after we got there.

  So we got on the plane in San Jose and flew to Las Vegas.

  • o •

  That was a night Randy and I will never forget. It was our first time seeing the lights of Las Vegas. We were stunned by it. It was a much different and smaller strip than today, with much smaller hotels. There weren’t even as many of them as there are now, and many were old and tiny. But it was impressive. We’d never seen anything so lit up, that is for sure!

  Our motel was the cheapest place in town, the Villa Roma. It was near Circus Circus and we learned the route from there to the Las Vegas Convention Center. Randy and I did a lot of walking that night. I showed Randy, who was seventeen at the time, how to play craps and he won something like $35. At the convention center, we watched the late-night setup of all the booths. We set up in our booth and worked until about 6 a.m., finally getting everything working.

  At that point I did one very smart thing. I was so tired and wanted some sleep but knew it was worth backing up our one good floppy disk, with all the right data.

  I had some short programs that allowed me to read and write entire tracks. The floppy disk had thirty-six tracks. I decided to make a copy of this one floppy disk we had worked so long and hard to prepare. I only had two floppy disks with me so I decided to copy the good one to the blank. I inserted the good floppy and entered some data into memory to cause it to read track 0. Then I put in the blank floppy and used that data to write “track 0” on it. I did the same sequence for all thirty-six tracks. Backing up is smart, I always say.

  But when I finished this backup, I looked at the two unlabeled floppy disks and got a sinking feeling that I’d followed a rote pattern but accidentally copied the bad floppy to the good one, erasing all the good data. A quick test determined that this is what happened. You do things like that when you are extremely tired. So my smart idea had led to a dumb and unfortunate result.

  It meant that we would not, due to our tired state, have the floppy ready to show when the CES started in a few hours. What a bummer.

  We went back to the Villa Roma motel and slept. At about 10 a.m. I woke up and got to work. I wanted to try to rebuild the whole thing. The code was all in my head, anyway. I managed to get the good program reestablished by noon and took it to our booth. There we attached the floppy and started showing it.

  I can’t tell you how successful and noted it was at this show, particularly in comparison to the Commodore PET and Radio Shack TRS-80, which were at the CES as well.

  • o •

  The floppy disk made the computer fast, but it was a program named VisiCalc that made it powerful.

  Two guys in Boston, Bob Frankston and Dan Bricklin, worked closely with Mike Markkula to design it. And boy, was this the right product at the right time! And it was definitely the right program for the right machine.

  VisiCalc was a software product for business forecasting—it was designed to answer “what-if” scenarios. For instance, if we sell $100,000 worth of product X, how much revenue will we get? What if we sell half that? It was the earliest software program for doing spreadsheets on a personal computer, so that regular people working in business really had a high-tech tool.

  And VisiCalc was so powerful it could only run on the Apple II. Only our computer had enough RAM to run it. The Radio Shack TRS-80 and the Commodore PET definitely weren’t powerful enough. But we had the RAM, we had graphics onscreen and a two-dimensional display, and we were easy to use out of the box. And VisiCalc came out not on cassette, but on floppy disk. What a match.

  Our business just exploded when VisiCalc came out. And the Apple II market suddenly moved from hobbyist people playing games who didn’t mind waiting a few minutes for the program to load from tape, to business-type people who could load VisiCalc instantly.

  After a couple of months, the businesspeople were something like 90 percent of the market. We had totally missed this audience, we never thought of it. But it took Apple in a whole new direction.

  From 1,000 units a month, suddenly we went to 10,000 a month. Good god, it happened so fast. Through 1978 and 1979 we just got more and more successful.

  By 1980 we were the first company to sell a million computers. We were the biggest initial public offering since Ford. And we made the most millionaires in a single day in history up to that point.

  I believe the whole reason for this was the combination of the Apple II, VisiCalc, and the floppy disk.

  • O •

  Remember when I told you Mike had us copyright the software? Well, what a good move.

  After the CES, we found out about a new computer from a company called Franklin. It supposedly looked a lot like ours. It arrived at our building, and it looked so much like the Apple III was very interested.

  I thought, Hey, great. They copied my design. I wonder how much of it they copied. I didn’t expect they would’ve copied much of it. I figured engineers are trained to invent and design their own things. An engineer would never look at another person’s design and copy it, would they? No, that’s what they go to school for. They go to learn how to design their own things.

  I walked over to the main building to look at it. There it was, and I was shocked. The printed circuit board inside was exactly the same size as ours. And every single trace and wire was the same as ours. It was like they’d taken our Apple II board and Xeroxed it. It was like they’d just Xeroxed a blank Apple II board and put in the exact same chips. This company had done something no honorable engineer would’ve done in their effort to make their own computer.

  I couldn’t believe it.

  Well, at the next computer show I attended, I immediately went up to their booth and told the president, who was in the booth, “Hey, this is just a copy of ours.” I was all upset.

  “This is ridiculous,” I told him. “You copied our board. You just copied it. Which means I am your chief engineer, and you don’t even give me credit for being your chief engineer.”

  The president looked at me and said, “Okay. You’re our chief engineer.”

  And I was happy and walked away, but now that I think of it, I should’ve asked him for a salary!

  We did sue them later, and I found out their argument for doing it. They claimed there were legal reasons that gave them the right to copy the Apple II. They were arguing that because there was such a huge software base of programs for the Apple II, it was unfair to exclude them. They claimed they had a right to build a computer that could run that software base, but that argument sure didn’t make sense to me.

  The case took a couple of years. They lost, and we did get money from them. Just a few hundred thousand dollars, not the millions I thought it was worth. But it was enough to stop them.

  More About the Floppy Disk

  The floppy disk was invented by Alan Shugart in 1967, when he was working at IBM. The first floppies were 8 inches across—and they were called floppies because they were on a thin, bendable piece of magnetic material. Later, floppies went to a smaller format, the 5.25-inch format.

  Later on, when they were in an even smaller 3.5-inch format and in a nonbendable plastic cover, people started calling floppies “diskettes.”

  Chapter 15

  The Woz Plan

  Just before we went public in late 1980, a guy called me and asked whether he could buy some shares of my stock at $5 a share. He wanted to buy 10 percent of it.

  I
loved the idea, because it meant I could afford to buy Alice and myself a house. We were still living in the Park Holiday Apartments in San Jose, paying a rent of $150 a month.

  But I like to do things different. I valued the employees at Apple—there were more than a hundred by then—as a community. I’d had that philosophy about a company being like a community since my first job, and maybe even earlier.

  So I decided it would be better to sell some of my stock to employees and let them benefit, rather than some outside investor.

  It was apparent to a lot of people at this point that Apple was going to have a very successful IPO—that, reasonably, the stock was going to be worth a whole lot more than $5, at any rate. And top executives and founders at Apple had a lot of stock. We were all likely to make millions. But a lot of other employees were left out, the majority of them.

  I decided I was going to offer to sell some stock really cheap to people who deserved it. Regular employees didn’t get all the

  stock options the executives got. Which wasn’t fair. So I came up with something I called the Woz Plan. Any engineer or marketing person could buy 2,000 shares from me at a really low price of $5.

  Almost everybody who participated in the Woz Plan ended up being able to buy a house and become relatively comfortable. I’m glad of that. But at first our lawyers told me I wasn’t going to be allowed to sell stock to all these people. They told me they had to be sophisticated investors or something. But finally our attorney, A1 Eisenstat, said, “Okay, Steve, you can do it.”

  Then there was the matter of some of our earliest employees who didn’t get stock at all. Randy Wiggington, who’d helped me do the floppy disk, had been there before we started Apple even. Chris Espinoza, Dan Kottke, and my old neighbor Bill Fernandez were other examples. These employees weren’t just around, they offered the inspiration that really allowed me to do the great stuff. I thought of them as part of the family, part of the family that had helped me design the Apple I and Apple II computers.

  I gave each of them stock worth about a million dollars.

  In those days, giving stock away to people you thought deserved it was just unheard of. Companies at the time just didn’t give stock to all the workers. They were like, “Why should we give these people stock? They did what they did for what they got paid and they didn’t have stock.” Never would any company go back and say, “Okay, well, you were real nice. So now I’ll give you some stock.” So this was different because I was giving them my own stock—like a gift—it wasn’t coming from the company.

  • o •

  I think behind the scenes Steve thought I was weak because of this—sort of ditching the company a little bit in kind of a sellout. But I sold that stock at about $5 a share to forty people in the Woz Plan—2,000 shares a pop—and then I was able to buy a really nice house for me and Alice. I bought it in cash. I figured, once you own a house, it’s great. All you have to worry about is

  the maintenance of the house if you don’t have a job or anything. So I bought it and owned it outright.

  It wasn’t a very big house, but it was a nice house. It was probably the very favorite house of my life. It was just beautiful— located in the middle of the Santa Cruz Mountains, in Scotts Valley. It was an all-wood house—knotty pine with the holes in the wood. There was a big master bedroom upstairs. And I remember I could walk upstairs through the bedroom and walk out onto a balcony and look down into the family room and a little aviary with a bunch of windows. I had a gate out front with a wooden mural I had done of dogs. I got my first huskies there. I loved everything about that house.

  Alice and I didn’t stay together in that house very long, though. Even though we now had money like we’d never dreamed of, it wasn’t enough to make up for the fact that we had different interests. She wanted to go out every night with her friends. I wasn’t into that. I wanted to stay home and work. I didn’t want to get divorced—I never wanted to get a divorce, ever. I’m the kind of guy who always wanted to get married to someone forever, and I wanted that with Alice.

  But what could I do? I mean, by then the Apple stock was worth so many hundreds of millions of dollars, and she just told the counselor we were seeing that she wanted to see who she was without me and be on her own in life. She never once said to the counselor that I worked too hard, which is kind of a myth about my divorce that got in the press later. No, that’s not what she said. She said she wanted to be on her own.

  Let me tell you that I opposed that divorce as strongly as I could. I never wanted to get divorced in my life. But finally I realized there was no way to stop it. So I just took Alice to a park in Cupertino and wished her well and said goodbye. I walked back to Apple feeling really different. Different like it was time to move on. Alice was gone.

  • o •

  By this time Apple had its own building on Bandley Drive. By 1981 computers all of a sudden became the happening thing in life. There were articles in newspapers and magazines and TV shows talking about computers; it was just immense. Computers, personal computers, and home computers—suddenly everyone was wondering if they were going to make our lives better in the future, lead to better education systems, cause us to be more efficient and more productive. It looked like computers were going to enlighten us, improve our brains, let us think less and get correct answers sooner.

  There was also a constant stream of articles in the trade press comparing our product with others on the market, and because we were the best technically, we were always rated as the best product. We were the one everyone wanted the most.

  There were also stories about how we were just two people, Steve and I, and how we’d started with nothing and suddenly were so successful. We got all this publicity and all the benefits from it. Sales. Fame. We were just the hot, shining star.

  In December of 1980, Apple’s stock went public on the NASDAQ exchange.

  • o •

  It was the most successful IPO up to that time. It was on the front page of every major newspaper and magazine. Suddenly we were legendary. And rich. Really rich.

  This was a pretty amazing accomplishment. After all, we had started from virtually nothing. It turned out Mike Markulla was right. We really were going to be a Fortune 500 company in five years.

  Just a year later, we were going head to head with IBM’s first personal computer, the IBM PC. Nonetheless, we had this major, major IPO. We also had the Apple III, a machine targeted to business, coming out—there were just rumors of it—and I think that

  was part of the reason the timing was right. (Another reason was that because so many people had received shares, the reporting hassle to the SEC was harder than going public!)

  That computer, the Apple III, was a strong, strong statement to the business world. It was like, after this incredible Apple II phenomenon, we were suddenly going to be able to compete with the then-new IBM PC.

  • o •

  The Apple III had some terrible problems, though. It was nothing like the Apple II, which was reliable all the time. I’m serious. You could buy an Apple II on eBay today, and it’ll work. There is no modern product that is as reliable. In every speech I give, I talk to people who are still running Apple lis, and they say those machines are still running after this many years.

  No, the Apple III had hardware problems, serious ones. It would get to a store, for instance, boot up a couple of times, and then it would crash. Sometimes it wouldn’t even boot up at all. My brother had a computer store by this time in Sunnyvale, and he told me Apple engineers would come down to fix it, but they could never get a machine that worked. Never. The first few months of the Apple III went by, and many of the stores had the same experience. Every Apple III came back not working. And what do you do when you’re a computer dealer and this happens? Well, you stop selling it and you keep selling the original machine, the Apple II. That’s why the Apple II was going to be the largest-selling computer in the world for at least three more years. In fact, by 1983 it would hit a hug
e milestone—it was the first computer to sell a million units!

  So why did the Apple III have so many problems, despite the fact that all of our other products had worked so great? I can answer that. It’s because the Apple III was not developed by a single engineer or a couple of engineers working together. It was developed by committee, by the marketing department. These

  were executives in the company who could take a lot of their power and decide to put all their money and resources in the direction of their own ideas. Their own ideas as to what a computer should be.

  Marketing saw that the business community would be the bigger market. They saw that the typical small businessman went into a computer store, bought an Apple II, a printer, the VisiCalc spreadsheet program, and two plug-in cards. One was a memory card, which allowed them to rim larger spreadsheets. And the other was an eighty-column card, which allowed them to present eighty columns of characters across the video display, instead of the normal forty. Forty columns was the limit of American TVs.

  So they came up with the idea that this should all be built into a single machine: the Apple III. And it was built.

  Initially there was virtually no software designed for the Apple III. Yet there were hundreds of software programs you could buy for the Apple II. So to have a lot of software right away, Apple built the Apple III as a dual computer—there was a switch that let you select whether the computer started up as an Apple II or as an Apple III. (The Apple III hardware was designed to be extremely compatible with the Apple II, which was hard to improve on.) It couldn’t be both at once.

  And it was here they did something very wrong. They wanted to set the public perception of the Apple III as a business computer and position the Apple II as the so-called home hobby machine. The little brother of the family. But get this. Marketing had us add chips—and therefore expense and complexity—to the Apple III in order to disable the extra memory and eighty-column modes if you booted it up as an Apple II.