Upgrade

00:00:00 ◼   ► Welcome back, everybody, to Designed in California.

00:00:13 ◼   ► When we last left you, we dropped you off in 1976, America's bicentennial.

00:00:21 ◼   ► I'm Jason Snell, joined across the pond by one of our old foes in the UK.

00:00:28 ◼   ► Why are we doing this?

00:00:29 ◼   ► Why is this what we're doing?

00:00:31 ◼   ► It's a 1776 thing, don't worry about it.

00:00:34 ◼   ► So it is 1976, American patriotism is at its peak, but also the computer industry is being

00:00:42 ◼   ► born.

00:00:43 ◼   ► When we last left you in 1976, Steve Jobs had tried to shop Apple around to lots of different

00:00:48 ◼   ► companies, ineffectively, perhaps it was the smell or the bare feet, perhaps it was that

00:00:55 ◼   ► nobody really valued two kids in their garage with a computer.

00:00:59 ◼   ► They could turn down Commodore before they could turn him down for his kind of ridiculously

00:01:05 ◼   ► over-hyped request for money.

00:01:08 ◼   ► So it's all kind of hanging there.

00:01:09 ◼   ► What are they going to do?

00:01:10 ◼   ► Now, we're going to back up just for a moment a little bit before Commodore came knocking

00:01:14 ◼   ► on the garage door and talk about sort of like the beginning of the Apple II and the partnership.

00:01:19 ◼   ► So Waz and Jobs fly to Philadelphia on TWA, an airline that no longer exists, but it does

00:01:27 ◼   ► put us in the 70s mindset.

00:01:29 ◼   ► Flying to Philly on route to Atlantic City on the Red Eye.

00:01:33 ◼   ► Atlantic City is the home of a computer show called PC76.

00:01:38 ◼   ► Whoa, I love it.

00:01:39 ◼   ► And they're nervous because there's buzz around a competitor from a company called Processor

00:01:44 ◼   ► Technology, who sounds very professional, which is funny when I tell stories from this

00:01:49 ◼   ► era because you're like, yeah, but it's not going to go well for them, is it?

00:01:52 ◼   ► Because I've never heard of them.

00:01:54 ◼   ► But they were very impressive.

00:01:55 ◼   ► The computer is called the Sol.

00:01:57 ◼   ► It's going to be announced.

00:01:58 ◼   ► It is yet another company founded in a garage.

00:02:01 ◼   ► This time it was a garage in Berkeley.

00:02:03 ◼   ► Right.

00:02:03 ◼   ► So in the East Bay and not the South Bay by members of the Homebrew Club.

00:02:07 ◼   ► So this goes back to what I was saying last time, right?

00:02:09 ◼   ► Like there were just a bunch of companies like Apple and they're all kind of like circling

00:02:14 ◼   ► around at this time.

00:02:15 ◼   ► Yeah.

00:02:16 ◼   ► And so really any of them could have been the ones.

00:02:19 ◼   ► Processor technology got money, right?

00:02:22 ◼   ► Like they, unlike Apple, they had money.

00:02:24 ◼   ► They hired a corporate sales staff.

00:02:27 ◼   ► They had people in suits and stuff.

00:02:30 ◼   ► Okay.

00:02:30 ◼   ► So just to set the stage here, I want to make sure that I got it correctly.

00:02:34 ◼   ► So PC76, this trade show, this actually happened before Commodore made the offer to them.

00:02:40 ◼   ► I have to back us up a little bit to tell you about this Apple II part of it.

00:02:43 ◼   ► I'm like a time traveler, Mike.

00:02:45 ◼   ► We're going to move around a little bit.

00:02:46 ◼   ► We're going to have to move around.

00:02:47 ◼   ► To get all these threads in order.

00:02:48 ◼   ► This is the story, Jason.

00:02:50 ◼   ► If it's a story, you can't just go chronologically.

00:02:52 ◼   ► We've got to jump around.

00:02:53 ◼   ► It needs to be told in the order that it needs to be told in.

00:02:56 ◼   ► So Woz is designing the Apple II at this time, right?

00:02:58 ◼   ► Like the Apple I was his previous project.

00:03:00 ◼   ► He moved on immediately.

00:03:01 ◼   ► He knew all the things that could be better about it.

00:03:03 ◼   ► But Apple is still trying to move those Apple I's, right?

00:03:07 ◼   ► I said last time they didn't sell a lot of them.

00:03:08 ◼   ► So they're going to go to this show and they're going to try to sell a bunch of Apple I's.

00:03:11 ◼   ► Steve Jobs knows they need to be there.

00:03:14 ◼   ► He knows they need to see the Saul because that is their competition.

00:03:17 ◼   ► A competition for whatever Woz is working on next.

00:03:20 ◼   ► And they're going to secretly show some people what the Apple II is going to do and how it's

00:03:25 ◼   ► going to beat the Saul.

00:03:26 ◼   ► Okay.

00:03:26 ◼   ► Now, as far as we know, this would be their first trade show?

00:03:31 ◼   ► Their first something like this?

00:03:32 ◼   ► I think so.

00:03:33 ◼   ► I think this is their first anything that resembles a trade show at all.

00:03:37 ◼   ► The Homebrew Computer Club was probably, I mean, there maybe were like clubs and stuff,

00:03:41 ◼   ► but this is a real trade show.

00:03:43 ◼   ► With buyers and all this kind of stuff.

00:03:45 ◼   ► I mean, it's a hobbyist.

00:03:46 ◼   ► Yeah.

00:03:47 ◼   ► It's probably, I would say, think of it like a cross between like a flea market and like

00:03:53 ◼   ► a hobbyist expo of like very niche parts.

00:03:56 ◼   ► It's not a big business yet, but there's a lot of interest in this growing area.

00:04:01 ◼   ► It was probably pretty shambolic, but for this era, it is the first trade show, I think,

00:04:06 ◼   ► that they show up at.

00:04:07 ◼   ► So guess who's on the flight?

00:04:09 ◼   ► This TWA flight sitting right behind Steve Jobs and Steve Wozniak.

00:04:14 ◼   ► It's processor technology who made the Saul.

00:04:17 ◼   ► Okay.

00:04:18 ◼   ► So they're all dressed in a corporate fashion, far more corporate than the Apple people,

00:04:23 ◼   ► which is a very, as I've established, a very low bar.

00:04:26 ◼   ► Yes.

00:04:26 ◼   ► But their computer, the Saul, it looks like a real computer.

00:04:31 ◼   ► It's got a keyboard and a motherboard and a tape drive.

00:04:36 ◼   ► All-in-one metal case.

00:04:38 ◼   ► It's a productized computer.

00:04:40 ◼   ► So this is the all-in-one.

00:04:42 ◼   ► We touched on the all-in-one before.

00:04:43 ◼   ► We spoke a lot about the Commodore PET, which came a little bit later.

00:04:46 ◼   ► Yeah.

00:04:47 ◼   ► This doesn't have a display.

00:04:48 ◼   ► Okay.

00:04:49 ◼   ► But it does have, I mean, it's basically, it's not what the Apple One was, which was a

00:04:53 ◼   ► loose circuit board that you had to add stuff to.

00:04:56 ◼   ► Okay.

00:04:57 ◼   ► This is a, you buy this box.

00:04:59 ◼   ► It comes in a metal case.

00:05:00 ◼   ► It looks like a piece of industrial equipment.

00:05:02 ◼   ► And it's got the keyboard and the motherboard and your storage drive all together.

00:05:07 ◼   ► All you have to do is hook it up to power and a display and you're good to go.

00:05:11 ◼   ► It looks like a product in a way that so many of these products, including the Apple One,

00:05:16 ◼   ► they just weren't products, really.

00:05:18 ◼   ► They were part of a kit.

00:05:19 ◼   ► This is a real product.

00:05:20 ◼   ► But it feels like this is what people were shooting for at this time, trying to build

00:05:25 ◼   ► a computer that was one box, essentially.

00:05:27 ◼   ► This is the next step.

00:05:29 ◼   ► And everybody knows it.

00:05:30 ◼   ► Steve Jobs certainly knows it.

00:05:31 ◼   ► Woz says that he knew that it was processor technology behind them on this flight because

00:05:38 ◼   ► of how they talked.

00:05:39 ◼   ► He said to Walter Isaacson, we could hear them talking in advanced business talk using business

00:05:45 ◼   ► like acronyms we've never heard before.

00:05:48 ◼   ► I will always love Steve Wozniak.

00:05:50 ◼   ► And the reason is because I believe even at this point, Steve Wozniak doesn't know what

00:05:55 ◼   ► any of these words mean.

00:05:56 ◼   ► No, no.

00:05:57 ◼   ► One of the prime movers behind the saw is Lee Felsenstein, who was the spiritual father of

00:06:04 ◼   ► the homebrew computer club.

00:06:05 ◼   ► Okay.

00:06:05 ◼   ► And he does a little peek over the seat to see what Jobs and Woz are doing.

00:06:11 ◼   ► And they're messing around with this computer mock-up they have in a cigar box.

00:06:16 ◼   ► And Michael Moritz, who wrote the book Return to the Little Kingdom,

00:06:20 ◼   ► described the prototype as forlorn and savagely deformed.

00:06:24 ◼   ► A printed circuit board screwed to a wooden base with wires sneaking between the chips.

00:06:29 ◼   ► It was a loser.

00:06:32 ◼   ► Ha ha.

00:06:33 ◼   ► Lee Felsenstein peeks over the seat.

00:06:35 ◼   ► He sees the stupid forlorn computer in a cigar box.

00:06:39 ◼   ► Oh, we have a metal case on our computer.

00:06:42 ◼   ► We have salespeople in suits.

00:06:44 ◼   ► These guys are not a serious threat.

00:06:47 ◼   ► And by the way, that mock-up is the Apple II, and it will destroy processor technology.

00:06:54 ◼   ► So, you know, I'm aware of the Apple II.

00:06:56 ◼   ► I know what it is, right?

00:06:58 ◼   ► Like, I've used one.

00:06:59 ◼   ► I have a sense of understanding it.

00:07:01 ◼   ► But I am looking forward, as we go through this series, to understanding exactly why it

00:07:08 ◼   ► was so much better than everything else.

00:07:10 ◼   ► Because it must have been so good to have come from these kinds of beginnings and destroy

00:07:17 ◼   ► products that ostensibly sound to me, in the way that you describe them, as just what the

00:07:23 ◼   ► Apple II was.

00:07:23 ◼   ► It is more technically advanced.

00:07:25 ◼   ► We'll get into this in a moment.

00:07:26 ◼   ► It is more technically advanced.

00:07:27 ◼   ► But this is the story of Apple at this point, right?

00:07:29 ◼   ► Which is that they're so unpolished that nobody takes them seriously, even though what's actually

00:07:34 ◼   ► happening is that their technology is incredible, because Waz is a genius.

00:07:38 ◼   ► And the first person who recognizes that is going to make a lot of money, right?

00:07:46 ◼   ► The first person who recognizes the genius, if they can recognize it before they go out

00:07:50 ◼   ► of business, will make a lot of money.

00:07:52 ◼   ► Because they are super technically proficient, thanks to Waz, but they do not have their act

00:07:58 ◼   ► together otherwise.

00:07:59 ◼   ► Also, just one last thing about the difference between the 70s and today.

00:08:02 ◼   ► They were allowed to do that sitting on an airplane.

00:08:04 ◼   ► Oh, yeah.

00:08:05 ◼   ► They had a thing in a cigar box with chips and wires.

00:08:08 ◼   ► If you got that out on the plane, you're going out the door.

00:08:11 ◼   ► It doesn't matter.

00:08:13 ◼   ► They put a parachute on you and you're out of there.

00:08:15 ◼   ► No.

00:08:15 ◼   ► Anything goes on these planes.

00:08:17 ◼   ► So we get to Atlantic City, right?

00:08:19 ◼   ► Flying to Philly, go to Atlantic City, New Jersey.

00:08:21 ◼   ► The show is not that interesting, because all they have is the Apple One out on the show

00:08:25 ◼   ► floor, and they sell some of them, which is great.

00:08:27 ◼   ► Yeah.

00:08:27 ◼   ► This is Atlantic City before they brought in gambling and casinos.

00:08:31 ◼   ► So it's super run down and dilapidated.

00:08:34 ◼   ► The hotel that this event is in and that they're staying in has holes in its walls and stuff.

00:08:39 ◼   ► It sounds really bad.

00:08:40 ◼   ► There are elderly people who live in this hotel who are watching these long-haired hippie types

00:08:46 ◼   ► in the elevators and in the hallways, and they're like, who are they?

00:08:49 ◼   ► Why are they here?

00:08:50 ◼   ► It sounds like a complete...

00:08:52 ◼   ► I mean, it actually sounds kind of like a sitcom.

00:08:53 ◼   ► Yeah.

00:08:54 ◼   ► But forget about PC76.

00:08:57 ◼   ► At night, up in their hotel room, Waz has hooked his Apple II up to the TV set in the room,

00:09:03 ◼   ► which at least the hotel had a TV set in the room, I thought, and has it spraying color graphics

00:09:11 ◼   ► all over the screen.

00:09:12 ◼   ► And again, when I talk about the Commodore PET, it didn't have color or graphics.

00:09:16 ◼   ► Apple II, color graphics.

00:09:19 ◼   ► And everybody who came into that room that they let peek at what Apple was working on realized

00:09:26 ◼   ► that they had something beyond what anybody else was doing, and Jobs knew it, and Waz knew

00:09:31 ◼   ► it.

00:09:33 ◼   ► And this is the moment when Commodore came knocking on the garage door with a cowboy hat,

00:09:37 ◼   ► and Steve Jobs made his outrageous demands.

00:09:40 ◼   ► After seeing everybody's reactions and what they knew about what the Apple II prototype in

00:09:45 ◼   ► a cigar box that looked forlorn, yes, yes.

00:09:48 ◼   ► But they knew they were way ahead.

00:09:50 ◼   ► They weren't ahead in making it a product yet.

00:09:53 ◼   ► But I think they knew that the Apple II was a next generation computer, if you will, from

00:10:01 ◼   ► what was coming out.

00:10:03 ◼   ► That that Sol was a nice computer and all, and that Commodore PET ultimately would be too.

00:10:09 ◼   ► But they lacked stuff that the Apple II was going to have, and that that put them ahead.

00:10:16 ◼   ► And I think that's why Steve Jobs made those outrageous demands to Commodore.

00:10:21 ◼   ► And I think because Steve believed in this and was, I think, was always a little more self-deprecating

00:10:32 ◼   ► about it and didn't value himself as much, it actually led to possibly the biggest conflict

00:10:40 ◼   ► the two of them ever had.

00:10:41 ◼   ► Huh.

00:10:42 ◼   ► Now this is very interesting.

00:10:44 ◼   ► So it feels like the perfect time for us to take a quick break.

00:10:48 ◼   ► I think so.

00:10:49 ◼   ► What will happen next?

00:10:50 ◼   ► Find out after the break.

00:10:51 ◼   ► Thank you so much for listening to this preview episode of Design in California.

00:11:00 ◼   ► We hope you're enjoying it.

00:11:01 ◼   ► We're outside Apple Park right now.

00:11:03 ◼   ► We are.

00:11:03 ◼   ► It's WWDC week.

00:11:05 ◼   ► And so we've been getting together.

00:11:07 ◼   ► We've been working real hard this week.

00:11:08 ◼   ► And all week we've been having people coming up to us, congratulating us about the success

00:11:12 ◼   ► we've had with the Kickstarter campaign.

00:11:14 ◼   ► So we should thank you because you've made that happen for us.

00:11:17 ◼   ► We are blown away with the success that we've had so far.

00:11:20 ◼   ► And it's enabling us to do so much for the show.

00:11:22 ◼   ► Right, Jason?

00:11:23 ◼   ► Yeah, that's right.

00:11:23 ◼   ► So we've got some stretch goals.

00:11:25 ◼   ► We've got some big plans for the coming year of episodes and beyond, honestly.

00:11:31 ◼   ► And so, yeah, at 175, we're going to add some more variations on our theme from Chris Breen.

00:11:36 ◼   ► We're going to order some more original artwork.

00:11:38 ◼   ► You haven't even seen the first original artwork.

00:11:40 ◼   ► We haven't even seen some of the first original artwork.

00:11:42 ◼   ► But that's something we're working on.

00:11:44 ◼   ► And then at $200,000, things get really crazy.

00:11:47 ◼   ► Yeah, we want to do an event, a Design in California event of some description in both San Francisco

00:11:55 ◼   ► and London at some point, probably in the first year of the show.

00:11:59 ◼   ► Yeah.

00:11:59 ◼   ► We're not sure exactly what they're going to be yet.

00:12:01 ◼   ► There will at least be meetups.

00:12:03 ◼   ► I would like there to be at least one of those be a live show.

00:12:06 ◼   ► Yeah, we'll see.

00:12:07 ◼   ► But we've got a lot of work to try and work out how that's going to come together.

00:12:10 ◼   ► We've only been doing this for a week and a half.

00:12:12 ◼   ► Yes.

00:12:12 ◼   ► And that, obviously, it being a stretch goal, right now it's just a dream.

00:12:16 ◼   ► Yeah.

00:12:16 ◼   ► It's a dream.

00:12:17 ◼   ► That may happen.

00:12:18 ◼   ► Yeah.

00:12:19 ◼   ► But no matter what happens, this show is happening.

00:12:21 ◼   ► And that's the thing we're so excited about.

00:12:22 ◼   ► We're obviously really busy here at WWDC this week.

00:12:25 ◼   ► We hope that you enjoyed Upgrade on Monday.

00:12:27 ◼   ► But once we get back home, we're full steam ahead and planning this show and making it the best it can be for you.

00:12:33 ◼   ► Absolutely.

00:12:33 ◼   ► So thanks to those who have supported us.

00:12:35 ◼   ► There will be more stuff happening this month.

00:12:38 ◼   ► Yep.

00:12:38 ◼   ► You have plenty of opportunity.

00:12:40 ◼   ► If you want to look at some of the new information and some of the various higher tiers, you could upgrade your pledge.

00:12:45 ◼   ► If you are still thinking whether you want to support it or not, you know, you've got time.

00:12:49 ◼   ► You've got until the end of the month.

00:12:49 ◼   ► We would appreciate your support.

00:12:51 ◼   ► The money that goes into this project will help us make it better.

00:12:53 ◼   ► And we're really excited to get started with that.

00:12:55 ◼   ► But if you can't, don't forget, this will be a show that's available for everyone.

00:12:59 ◼   ► Like, there will be a free version of this show when it launches later in the year.

00:13:02 ◼   ► So however you can support the show, whether that's by tuning in, by sharing it, or by going to the design.fm and signing up for the Kickstarter campaign, it all makes a massive difference.

00:13:12 ◼   ► And most importantly, thank you for listening.

00:13:14 ◼   ► And we hope you're enjoying these sample episodes.

00:13:17 ◼   ► They're only running to the end of the month.

00:13:19 ◼   ► Don't worry.

00:13:19 ◼   ► We're not going to be posting two upgrades every week forever just through the end of the month.

00:13:24 ◼   ► Thank you so much.

00:13:25 ◼   ► That's it.

00:13:26 ◼   ► Now back to the show.

00:13:26 ◼   ► All right.

00:13:31 ◼   ► So welcome back to Designed in California.

00:13:33 ◼   ► And so in the timeline now, we've gone to the computer show.

00:13:39 ◼   ► PC76 USA.

00:13:41 ◼   ► USA.

00:13:41 ◼   ► It's the, thank you, it's the bicentennial.

00:13:44 ◼   ► We were aware of that, which is really good news for everyone.

00:13:46 ◼   ► Yep.

00:13:46 ◼   ► Statue of Liberty, boats, flags.

00:13:49 ◼   ► Brilliant.

00:13:49 ◼   ► Love it.

00:13:50 ◼   ► Fireworks.

00:13:50 ◼   ► Fantastic.

00:13:51 ◼   ► And so people are aware of what Apple's building.

00:13:54 ◼   ► The word is getting out about the Apple II.

00:13:56 ◼   ► Slowly.

00:13:57 ◼   ► Yeah.

00:13:58 ◼   ► They're very slowly revealing to people that they've got something here.

00:14:01 ◼   ► But they're still selling Apple I's.

00:14:02 ◼   ► Commodores come knocking.

00:14:04 ◼   ► Yeah.

00:14:04 ◼   ► Steve Jobs made his demands.

00:14:06 ◼   ► But then Steve says, you know what?

00:14:08 ◼   ► Forget about this Commodore.

00:14:09 ◼   ► Yeah.

00:14:10 ◼   ► We're not doing this.

00:14:10 ◼   ► Yeah.

00:14:11 ◼   ► They're shady.

00:14:12 ◼   ► We're not going to go with them.

00:14:13 ◼   ► So just to remind everybody, Apple Computer Company is a partnership.

00:14:18 ◼   ► It's not an incorporated company yet.

00:14:20 ◼   ► As we talked about at the end of our Apple at 50 episode, that didn't happen until 77.

00:14:25 ◼   ► It was a partnership registered April 1st, 76.

00:14:29 ◼   ► And when Ron Wayne got cold feet, he backed out of his 10% tiebreaker share.

00:14:33 ◼   ► It's 50-50 between the two Steves.

00:14:34 ◼   ► But part of the agreement of the partnership is that Woz owns the rights to his creations.

00:14:44 ◼   ► It's more of a marketing and distribution and productizing partnership than it is a full-on

00:14:50 ◼   ► intellectual property agreement.

00:14:52 ◼   ► This is not a corporation that Woz has contributed his intellectual property to.

00:14:56 ◼   ► And as a result, Woz owns his stuff.

00:14:59 ◼   ► The stuff that Steve is trying to sell is owned by Woz.

00:15:02 ◼   ► I don't think this was smart.

00:15:04 ◼   ► As we're going to discover, I think that it was a smart move from Jobs in that it may have

00:15:08 ◼   ► been the only way that he could have gotten Apple to happen.

00:15:10 ◼   ► Ah.

00:15:11 ◼   ► Okay.

00:15:11 ◼   ► That Woz was not prepared to be giving away the fruit of his labor, especially if he was

00:15:17 ◼   ► still kind of like dreaming about...

00:15:19 ◼   ► He's still working at HP.

00:15:20 ◼   ► He's still dreaming about selling this to HP or someone else.

00:15:24 ◼   ► But you can also see the friction this might lead to if Jobs is trying to sell the company

00:15:28 ◼   ► for a lot of money and it's a 50-50 partnership, but the underlying technology is really their

00:15:32 ◼   ► greatest asset and that's owned by Woz.

00:15:34 ◼   ► Steve Jobs, has he earned the 50%?

00:15:37 ◼   ► Not at this point.

00:15:38 ◼   ► Not at this point.

00:15:39 ◼   ► Not yet.

00:15:39 ◼   ► He will, but not yet.

00:15:41 ◼   ► And that is part of the issue here.

00:15:42 ◼   ► So Woz, again, he does his own thing.

00:15:45 ◼   ► He follows his muse.

00:15:46 ◼   ► He builds his technological creations.

00:15:50 ◼   ► But over the last year, as they've been talking about what the Apple II is going to be, he's

00:15:54 ◼   ► been arguing with Steve Jobs.

00:15:55 ◼   ► It's this push and pull between a product visionary and a technical visionary about what the end

00:16:02 ◼   ► results should be.

00:16:02 ◼   ► Expansion slots so that you can add cards later to a computer to make it do different things.

00:16:08 ◼   ► Woz wants eight of them.

00:16:10 ◼   ► Jobs wants two of them.

00:16:13 ◼   ► You'll never need more than two for a printer and a modem, I think he said.

00:16:18 ◼   ► Woz is like, no, no, no, no, no.

00:16:20 ◼   ► It needs to be eight.

00:16:20 ◼   ► Woz wins that argument, by the way.

00:16:22 ◼   ► But you can see why there might be tension between them.

00:16:26 ◼   ► Steve Jobs is kind of an assassin of joy, right?

00:16:29 ◼   ► Woz is like, I made this thing.

00:16:30 ◼   ► And Steve's like, no, no, no, that's too many things.

00:16:32 ◼   ► I don't want that.

00:16:33 ◼   ► He's, because there's a push and pull here.

00:16:35 ◼   ► Woz is floating free and inventing what he wants.

00:16:39 ◼   ► And Steve Jobs, we know, already at this point, has some product sense.

00:16:44 ◼   ► And he's like, I don't want to do that.

00:16:46 ◼   ► I do want to do this.

00:16:47 ◼   ► And if you're Woz, you're pushing against that.

00:16:50 ◼   ► You're maybe not used to having a partner who is going to push back on what you want to do with your technology and with your designs.

00:16:57 ◼   ► And then on top of that, Steve Jobs is now standing in the way of the nice people at Commodore.

00:17:02 ◼   ► Shady, but, you know, the nice people at Commodore who maybe want to offer money for Woz's invention.

00:17:07 ◼   ► But Steve overprices it and walks away.

00:17:11 ◼   ► And then even if they had gotten paid, Steve would take half the money.

00:17:14 ◼   ► Do you think Woz saw it that way?

00:17:15 ◼   ► Do you think that the money or anything like this was something that bothered Woz to that degree?

00:17:22 ◼   ► I don't know.

00:17:23 ◼   ► You know, Woz doesn't seem super money oriented, but at the same time, he's always had more money than God, basically, since Apple was a success.

00:17:30 ◼   ► And so maybe back then he was more concerned about it.

00:17:33 ◼   ► Maybe the money is more of a symbol of ownership as opposed to actually what it buys you.

00:17:38 ◼   ► I think it's pride.

00:17:38 ◼   ► I think it's that he is the creator and he has inscribed a lot of value into what he creates.

00:17:44 ◼   ► He was also demoralized in Atlantic City.

00:17:47 ◼   ► You know, Steve Jobs was gleeful.

00:17:49 ◼   ► He realized what we said earlier.

00:17:52 ◼   ► Woz's designs were way ahead of the Sol.

00:17:54 ◼   ► Yeah.

00:17:54 ◼   ► And Jobs is thinking about the power of that, like, nice all-in-one computer case that the Sol came in.

00:18:00 ◼   ► Jobs, I think in this period, when they go to Atlantic City, when they get the offer from Commodore or make the offer to Commodore, I guess, Jobs, at this point, I think, sees the path to success for Apple.

00:18:13 ◼   ► So he's like, if we can put our incredible machine inside one of these cases, we blow everybody away.

00:18:20 ◼   ► Yeah.

00:18:20 ◼   ► And so that's the vision of the future.

00:18:22 ◼   ► Right.

00:18:22 ◼   ► And maybe it's literally glass half full, glass half empty.

00:18:25 ◼   ► But Woz looks at processor technology and he says, well, they're a real company.

00:18:30 ◼   ► They got, like, their salespeople wear suits.

00:18:33 ◼   ► They're like HP, a real legitimate company.

00:18:36 ◼   ► Woz is working with teenagers and people in their early 20s.

00:18:39 ◼   ► Remember, he's in his mid-20s.

00:18:41 ◼   ► His business partner never showers.

00:18:43 ◼   ► You know, like, what is he doing here?

00:18:46 ◼   ► Maybe he should just take his inventions, which he owns, and go somewhere better.

00:18:50 ◼   ► And just to be clear about the difference in age between them, because we think of them as a pair.

00:18:55 ◼   ► Steve Jobs is much younger than Steve Wozniak.

00:18:58 ◼   ► Woz is married.

00:19:02 ◼   ► He's spending late nights working on this Apple stuff while also working at HP.

00:19:06 ◼   ► His wife feels neglected.

00:19:08 ◼   ► His family is concerned that the schlunky-looking guy with dirty hair and bare feet, that's an actual quote from Woz's sister, is exploiting their innocent genius brother, trying to get him to quit his good job and neglect his marriage.

00:19:22 ◼   ► It is a bad dynamic, especially when you consider everybody around Steve Wozniak.

00:19:28 ◼   ► Didn't know Woz was married at this point.

00:19:30 ◼   ► Yeah.

00:19:31 ◼   ► I always think of them as two young single guys, is how I've always imagined them.

00:19:34 ◼   ► No, Woz is, like, 26 and married, newly married, his first wife.

00:19:40 ◼   ► Okay.

00:19:41 ◼   ► He's had many.

00:19:41 ◼   ► Oh.

00:19:42 ◼   ► So then, so bad dynamic, schlunky-looking guy with dirty hair and bare feet, right?

00:19:46 ◼   ► Woz's sister says that.

00:19:47 ◼   ► Not great.

00:19:47 ◼   ► Then Steve Jobs withdraws from the Commodore deal before they can even find out if there's an offer to be made or a counteroffer to be made.

00:19:53 ◼   ► Yeah.

00:19:53 ◼   ► That money could have paid off debts, could have gotten Wozniak a sweet job building his dream computer.

00:20:00 ◼   ► Remember, he couldn't even go to college for more than, like, a year at a time because he couldn't afford it.

00:20:04 ◼   ► He had to go back and work and make money to pay for another year of college.

00:20:07 ◼   ► I think it is very clear and has been clear across this story so far, to me at least, Woz doesn't care if he owns the business that is producing this computer.

00:20:17 ◼   ► He would have given it all to HP if they would have said yes.

00:20:20 ◼   ► Yes.

00:20:21 ◼   ► It was purely about who will let me build this.

00:20:25 ◼   ► He doesn't care if he's building it.

00:20:27 ◼   ► That's it.

00:20:27 ◼   ► He wants to build it and he wants to be, I think he wants that to be his job, right?

00:20:33 ◼   ► That's the living the dream of, like, now me making this computer is what I do, not what I moonlight at while I am working on whatever HP is doing.

00:20:41 ◼   ► Although I think he does like the idea of wherever he builds it, that you have some control over it in the sense that he will argue with Jobs about how many slots there are.

00:20:49 ◼   ► Like, he wants to be a decision maker.

00:20:51 ◼   ► And I think that there is a little bit of innocence here, right, where he's thinking, if a legitimate business will enable me to make these computers, which I love doing, and that'll be my job.

00:21:01 ◼   ► And it'll be a legitimate corporation with benefits and an office and I can go in and all of that.

00:21:06 ◼   ► Like, that's the dream.

00:21:08 ◼   ► Part of that dream is probably a little more innocently, like, I will control this and still have my freedom to do this.

00:21:14 ◼   ► But the fact is, whatever pushback Steve Jobs is giving him, if he got consumed by a big corporation and was given a whole management structure and stuff, it would have been way worse, right?

00:21:24 ◼   ► Like, it would have been a rude awakening, I think.

00:21:26 ◼   ► He just doesn't know this yet.

00:21:27 ◼   ► Yeah.

00:21:28 ◼   ► I don't think he's thinking like that.

00:21:30 ◼   ► So, what's Steve Wozniak going to do?

00:21:32 ◼   ► All of us know, Woz is a teddy bear of a man.

00:21:37 ◼   ► He is proud, for certain.

00:21:39 ◼   ► He is a little needy of recognition, but he's a sweetheart.

00:21:44 ◼   ► There's no doubt about it.

00:21:46 ◼   ► Through and through, he's a sweetheart.

00:21:47 ◼   ► And I can say from personal experience, as somebody who discovered fairly late in life, like when I was in my 40s, that I am a textbook conflict avoider.

00:21:59 ◼   ► I recognize Woz's whole vibe here.

00:22:01 ◼   ► Yeah.

00:22:01 ◼   ► I get it.

00:22:01 ◼   ► Yeah.

00:22:02 ◼   ► I get it.

00:22:03 ◼   ► Game recognizes game.

00:22:04 ◼   ► I recognize.

00:22:07 ◼   ► It's like, yeah, I have some issues, but I'm not going to start.

00:22:11 ◼   ► Can I avoid this conflict?

00:22:13 ◼   ► Mike, you know who's not a conflict avoider?

00:22:17 ◼   ► Okay.

00:22:17 ◼   ► Steve's dad, Jerry.

00:22:19 ◼   ► Okay.

00:22:20 ◼   ► Welcome to the show, Jerry Wozniak.

00:22:22 ◼   ► Welcome.

00:22:23 ◼   ► He's burst in like the Kool-Aid man.

00:22:26 ◼   ► He was an electrical engineer at Lockheed for his entire life.

00:22:30 ◼   ► Now, I'm going to read something that Michael S. Malone wrote in his excellent book, Infinite Loop.

00:22:35 ◼   ► And I agree with this, but it definitely comes from a perspective.

00:22:39 ◼   ► Okay.

00:22:40 ◼   ► Which is, he's trying to explain how Jerry Wozniak views the world.

00:22:44 ◼   ► This is what Malone says.

00:22:45 ◼   ► Jerry Wozniak was as naive about the true nature of business as his son, like we were saying.

00:22:51 ◼   ► He was a good man and a good father, but a lousy businessman.

00:22:54 ◼   ► R&D always believes it makes the real contribution to a company's success, while management merely follows behind sweeping up the credit.

00:23:04 ◼   ► Management knows better, but is forever embarrassed about not being clever enough to work on the new inventions in the lab.

00:23:12 ◼   ► So, it's this classic, right?

00:23:14 ◼   ► Like, whatever part of the business you're in, you think it's the most important part of the business, and everybody else is stealing your thunder.

00:23:21 ◼   ► And what Malone is saying about Jerry Wozniak is, from Jerry Wozniak's perspective, as an electrical engineer, the engineers are the people who create all the value for the company.

00:23:30 ◼   ► And everything else is just sort of sucking on that value and taking all the credit and taking all the money, which is, I mean, that's a real dynamic.

00:23:41 ◼   ► It is.

00:23:41 ◼   ► I've seen that in my career, too.

00:23:43 ◼   ► The salespeople at the company I worked for, they looked at their sales figures and said, well, all the money the company makes is from us, so we're the most important part.

00:23:54 ◼   ► And all the editorial people were like, well, we create the product that the salespeople sell into, and if the product didn't exist, there'd be nothing to sell.

00:24:01 ◼   ► We're the most important part of the company.

00:24:03 ◼   ► And the danger is if you really go down that path and think, I have all the value and you have none.

00:24:08 ◼   ► That's the danger.

00:24:09 ◼   ► And what Malone is saying is, this seemed to be what Jerry Wozniak felt about that dynamic between his son and this barefoot guy, Steve Jobs.

00:24:20 ◼   ► Not sure whether at this point, but definitely at points in their relationships, is exactly how Jobs and Wozniak feel about each other.

00:24:29 ◼   ► Wozniak will believe that he has all of the technology and the technical skills, all that matters.

00:24:35 ◼   ► And Jobs will believe he has all of the business and marketing ideas, and that is all that matters.

00:24:40 ◼   ► I want to be clear as I tell the rest of this story.

00:24:43 ◼   ► This is not the first fight between the Steves.

00:24:48 ◼   ► They've argued about product stuff before.

00:24:51 ◼   ► However, this is the most important one.

00:24:56 ◼   ► Okay.

00:24:57 ◼   ► And it has ramifications for the rest of their relationship.

00:25:00 ◼   ► So Jerry Wozniak decides he's not a conflict avoider.

00:25:05 ◼   ► He's going to do something about this.

00:25:07 ◼   ► And he tells his son, Mark Wozniak, he's going to confront Steve Jobs.

00:25:12 ◼   ► And this is his plan.

00:25:13 ◼   ► This is a quote that Mark Wozniak has verified.

00:25:17 ◼   ► I'm going to make the little son of a bitch cry, and that'll be the end.

00:25:21 ◼   ► Okay.

00:25:22 ◼   ► Okay.

00:25:23 ◼   ► So Jerry's got it out for Jobs at this point.

00:25:26 ◼   ► Yeah.

00:25:26 ◼   ► And so one September evening in 1976 at the Wozniak's house, Jerry Wozniak springs into action.

00:25:31 ◼   ► And he tells Steve Jobs, quote, because again, overheard by Mark Wozniak, you don't deserve

00:25:37 ◼   ► s**t.

00:25:37 ◼   ► You haven't produced anything.

00:25:39 ◼   ► You haven't done anything.

00:25:41 ◼   ► Now, to Steve Jobs' credit, while he did, as predicted, absolutely burst into tears.

00:25:46 ◼   ► So congrats to Jerry Wozniak then.

00:25:48 ◼   ► He did what he set out to do.

00:25:50 ◼   ► He also told Jerry Wozniak he didn't appreciate everything he'd done for the company.

00:25:54 ◼   ► And he told Woz, look, if we're not 50-50, you can just have the whole thing.

00:25:59 ◼   ► He calls their bluff.

00:26:01 ◼   ► He says, if you believe I have no value, take it.

00:26:05 ◼   ► But I believe this is a 50-50 partnership.

00:26:09 ◼   ► And Michael Malone's book, which is, again, it's out of print.

00:26:12 ◼   ► Somebody bring it back in print.

00:26:14 ◼   ► It's such a good book.

00:26:14 ◼   ► His accounting of this moment is so great.

00:26:16 ◼   ► Steve Jobs, he says, this kid with the least amount of work experience in the room,

00:26:20 ◼   ► was the one who was right.

00:26:22 ◼   ► Malone says, his 50% share might be stretching things a bit after the first six months, but

00:26:29 ◼   ► would be low in light of things to come.

00:26:31 ◼   ► In the ever-repeating story of high tech, engineering leads only for the first few months of a new

00:26:37 ◼   ► revolution.

00:26:37 ◼   ► And thereafter, marketing is king.

00:26:39 ◼   ► Moreover, if there hadn't been a Wozniak, Jobs would have found somebody else.

00:26:44 ◼   ► Without Jobs, Wozniak would still be a low-grade engineer at Hewlett-Packard.

00:26:48 ◼   ► Brutal.

00:26:49 ◼   ► Maybe not wrong.

00:26:50 ◼   ► What I would say is, I don't think Steve Jobs was ever going to find another Wozniak.

00:26:54 ◼   ► He might have found another muse, another technical person, but I don't think they would have ever

00:26:59 ◼   ► possibly been as brilliant as Steve Wozniak.

00:27:01 ◼   ► I don't think that that actually would have happened.

00:27:03 ◼   ► As for the other part, I think there's some truth in that.

00:27:06 ◼   ► As brilliant as Steve Wozniak was, I'm not sure, given everything we know about him, especially

00:27:11 ◼   ► up to now, he was ever going to be visible enough to his employers for them to see his

00:27:19 ◼   ► genius.

00:27:19 ◼   ► And he might have been content to work on his tinkering out of the office and then just kind

00:27:25 ◼   ► of put in the work at the job during the day.

00:27:28 ◼   ► Well, or in that he would do important things at his job because somebody recognized he was

00:27:33 ◼   ► good, but he was never going to wrestle for the credit of them.

00:27:37 ◼   ► Yeah.

00:27:37 ◼   ► I think that's the point is that he was a genius, but maybe a bit of a pushover.

00:27:41 ◼   ► Yeah.

00:27:42 ◼   ► And that would he have succeeded in a corporate environment?

00:27:44 ◼   ► Would he have been allowed to flourish in the way?

00:27:47 ◼   ► You know, maybe.

00:27:49 ◼   ► And if somebody had identified the Apple II and had been like, oh my God, and they had bought

00:27:52 ◼   ► the design and put him to work building an HP computer or whatever, maybe he would have

00:27:57 ◼   ► ended up being a rock star.

00:27:59 ◼   ► He certainly had rock star talent, but would he have stood out?

00:28:02 ◼   ► I don't know.

00:28:03 ◼   ► Yeah, I think time tells, even at this point, but time as we go into the future tells that

00:28:09 ◼   ► Woz is a pushover.

00:28:11 ◼   ► Like, unfortunately, that is part of his personality.

00:28:13 ◼   ► I don't know if he knows it at this point, but Jobs obviously eventually learns it and pushes

00:28:19 ◼   ► Woz over and pushes him to the point that he will leave.

00:28:23 ◼   ► So, this is a really sad moment.

00:28:26 ◼   ► Malone's book says that this argument is like a crossing of the Rubicon.

00:28:31 ◼   ► According to Randy Wiginton, who was one of those teenagers working for Apple at the time,

00:28:35 ◼   ► in a different book called Icon by Young and Simon, Randy Wiginton said,

00:28:41 ◼   ► The friendship between Woz and Jobs dissolved in that period.

00:28:45 ◼   ► By the time of the Apple II's introduction, there was not much pretense left.

00:28:50 ◼   ► Ooh.

00:28:51 ◼   ► That's sad.

00:28:52 ◼   ► It didn't really last very long from this point then, really, did it?

00:28:56 ◼   ► Yeah.

00:28:56 ◼   ► The Apple II wasn't even finished yet.

00:28:58 ◼   ► Not even close.

00:28:59 ◼   ► Apple Computer hadn't even been incorporated yet.

00:29:02 ◼   ► It's still 1976.

00:29:05 ◼   ► It's only like six months after they registered the company.

00:29:09 ◼   ► I appreciate that because it's hard to keep the timeline.

00:29:12 ◼   ► Doing this show so far, and one of the reasons that I wanted us to do this show together,

00:29:17 ◼   ► is because so much happens so fast.

00:29:21 ◼   ► It does.

00:29:22 ◼   ► That it's reductive in the way that a lot of these stories are told.

00:29:26 ◼   ► Yeah, and so many different things are happening simultaneously.

00:29:28 ◼   ► One of the reasons why I do sometimes sort of skip forward and back is I'm trying to

00:29:32 ◼   ► follow these narrative threads, and if you did it just chronologically, it would be a mess.

00:29:36 ◼   ► I'm trying to follow these individual threads.

00:29:39 ◼   ► So in this case, yes, it's all happened so fast.

00:29:42 ◼   ► We haven't even gotten back to the point where we left our Apple at 50 episode, actually.

00:29:50 ◼   ► Okay.

00:29:51 ◼   ► Because there's so much else going on here.

00:29:53 ◼   ► So I think this is basically the end of the tight childhood-esque relationship between Steve Jobs

00:30:00 ◼   ► and Steve Wozniak.

00:30:01 ◼   ► From this point on, they are business partners, not really friends.

00:30:06 ◼   ► It's sad to think about that, but it was almost immediately, almost immediately, they went into

00:30:12 ◼   ► business together, at which point they really were business partners and not friends.

00:30:16 ◼   ► By the way, you know, for all of the ultimatum of Woz's dad, they didn't dissolve the partnership.

00:30:23 ◼   ► I mean, Jobs clearly pulled something off in that moment.

00:30:28 ◼   ► He called their bluff.

00:30:28 ◼   ► And Steve Wozniak was not willing to walk away from the partnership, but it ruptured their

00:30:33 ◼   ► friendship.

00:30:33 ◼   ► But at the same time, and it may have kind of taught Jobs a lesson at that moment, because

00:30:39 ◼   ► maybe he was a little bit scared of Jerry.

00:30:40 ◼   ► Yeah.

00:30:41 ◼   ► So after all this, guess what?

00:30:43 ◼   ► We're back to Mike Markala again.

00:30:44 ◼   ► I keep mentioning it.

00:30:45 ◼   ► Welcome back, Mike.

00:30:47 ◼   ► Welcome back to the show, Mike Markala.

00:30:48 ◼   ► Apple has now failed to sell itself.

00:30:50 ◼   ► So they've stopped now.

00:30:52 ◼   ► They're done now.

00:30:53 ◼   ► We're trying to sell this company.

00:30:54 ◼   ► Yeah.

00:30:54 ◼   ► That's the end of it.

00:30:55 ◼   ► Okay.

00:30:55 ◼   ► Yeah.

00:30:56 ◼   ► Venture capitalist Don Valentine, who Jobs had been referred to by Nolan Bushnell at Atari.

00:31:00 ◼   ► So like they go to Atari and Bushnell's like, no, no, no, no, no.

00:31:02 ◼   ► You put the feet on the president's desk.

00:31:05 ◼   ► It's not going to work.

00:31:06 ◼   ► But he says, go talk to Don Valentine.

00:31:07 ◼   ► He's a VC.

00:31:08 ◼   ► Maybe he'll help.

00:31:09 ◼   ► Don Valentine referred to Apple as renegades from the human race.

00:31:13 ◼   ► That was the line.

00:31:13 ◼   ► But even Valentine was like, they're clueless, but they're kind of charming, these kids.

00:31:22 ◼   ► Maybe they're worth a shot in the dark.

00:31:24 ◼   ► I'm not going to invest in them, but I know someone who might be interested.

00:31:30 ◼   ► So he's looking through his mental Rolodex.

00:31:34 ◼   ► It's 1976.

00:31:36 ◼   ► It might be an actual Rolodex.

00:31:37 ◼   ► It's not a metaphor in 76.

00:31:39 ◼   ► No, it's like an actual metal thing with cards in it.

00:31:43 ◼   ► People's names on them.

00:31:44 ◼   ► For a marketing-focused expert, he's thinking, who could get their act together, right?

00:31:48 ◼   ► Think about how the Saul has a whole sales force with suits, and then there's Steve Jobs.

00:31:54 ◼   ► A marketing-focused expert might be able to bring them into the real world where they wouldn't be renegades for the human race.

00:32:00 ◼   ► And he suggests Mike Markala.

00:32:03 ◼   ► Don Valentine knows Mike Markala.

00:32:05 ◼   ► This is the chain that leads to Apple.

00:32:07 ◼   ► It's quite an interesting causal chain, which is Steve Jobs worked at Atari.

00:32:10 ◼   ► He knew Nolan Bushnell, who was the CEO, who recommended Don Valentine, the VC, who did not want to invest in them, but thought enough to refer them to somebody, kind of felt bad that he was going to just say no, and says, why don't you talk to Mike Markala?

00:32:26 ◼   ► Mike Markala also sees something in these two guys.

00:32:30 ◼   ► He gets a demo of that Apple II that Waz is working on, and he decides, let's build a business plan.

00:32:37 ◼   ► He sets sales goals.

00:32:39 ◼   ► He invests some of his own money.

00:32:41 ◼   ► He gets the company a quarter of a million dollar line of credit at Bank of America.

00:32:46 ◼   ► And, as we've established before, on January 3rd, 1977, the actual 50th anniversary of Apple Computer, they file incorporation papers for Apple Computer Incorporated.

00:32:58 ◼   ► This is the real birthday.

00:33:00 ◼   ► And so, with Mike Markala on the scene, Apple can be a company.

00:33:06 ◼   ► What they're going to need is a product.

00:33:08 ◼   ► And that product is going to be the Apple II.

00:33:12 ◼   ► But what is it going to be, Mike?

00:33:14 ◼   ► What are they going to put in front of people that is going to sell better than the Apple I, which you had to put in a cigar box?

00:33:23 ◼   ► Well, that is the question we will answer on the next episode of Design in California, so people can look forward to that.

00:33:29 ◼   ► Next time, we will dive in to the rise of the Apple II.

00:33:44 ◼   ► Thank you.