Return to the Little Kingdom

by Michael Moritz

  When Jobs turned up at the Byte Shop in Mountain View carrying twelve bulging printed circuit boards packed in thin gray cardboard boxes, Terrell was dismayed. “There was nothing. Steve was half right.” The fully assembled computers turned out to be fully assembled printed circuit boards. There was quite a difference. Some energetic intevention was required before the boards could be made to do anything. Terrell couldn’t even test the board without buying two transformers to power the computer and the memory. Since the Apple didn’t have a keyboard or a television, no data could be funneled in or out of the computer. Once a keyboard had been hooked to the machine it still couldn’t be programmed without somebody laboriously typing in the code for BASIC since Wozniak and Jobs hadn’t provided the language on a cassette tape or in a ROM chip. Though Wozniak could type in 4K bytes of code in an hour, that was hardly a practical arrangement for even the most zealous hobbyist. Finally, the computer was naked. It had no case. Despite all the shortcomings and all his reservations, Terrell took delivery of the machines and paid Jobs, as he had promised, in cash.

  Jobs was trying to balance everything, relying on instincts and common sense to cope with the daily rush of surprises. Aware of the importance of image he arranged for a polished corporate address by renting a mail-drop box in Palo Alto. He hired an answering service to help give the impression that Apple was a steady enterprise and not a fly-by-night operation. He also started to recruit some help and looked to familiar faces for support.

  The steady, dependable Bill Fernandez had not been invited by Hewlett-Packard to transfer with the rest of the calculator division to its new base in Oregon and was looking around for work. Still living at home in Sunnyvale, Fernandez thought that Apple might someday offer him the chance to become an engineer. Jobs went through the pretense of an interview, asked some cursory questions about digital logic, and made his first job offer. Fernandez asked for a formal written contract and became Apple’s first fulltime employee. “I was the only legitimate Indian. The rest were chiefs. . . . I was basically the gofer.”

  To keep track of the money Jobs asked his college friend, Elizabeth Holmes, who was working as a gem cutter in San Francisco, to monitor the Apple checkbook and keep a journal recording cash expenses. Holmes, who dropped by the Jobs household once a week and was paid the standard four dollars an hour, noticed that “Steve was working very, very hard. He was very directed and not very sentimental.” Meanwhile, Jobs also kept Dan Kottke abreast of progress, invited him to Los Altos for the summer, and promised some work. When Kottke arrived, Clara Jobs turned the family couch into a bed.

  As work started on the second batch of fifty computers, Paul Jobs buckled to reality and suggested Apple continue its business in the garage. “It was easier to empty out the garage than try and fight it out in the house. My cars could sit outside. Their stuff couldn’t.” Jobs temporarily retired from renovating cars, which in the summer of 1976 were Nash Metropolitans, and set about altering the garage. He cleared a long brown workbench that he had salvaged, years before, from an office in San Francisco. Loose parts were tucked into small drawers carefully labeled, MACHINE SCREWS, WASHERS, TOOTH-WASHERS, COTTER PINS, and RUBBER INSULATED CLIPS. Bulkier items were stored in a small loft above the garage along with items like dismantled lasers. Jobs lined the garage with plasterboard, rigged up extra lights, installed an extra telephone, and rehung a framed certificate that commemorated his first crossing of the equator in October 1944. He refused to move one item: a sparkling, firehouse-red trolley crammed with wrenches, pliers, spanners, and screwdrivers.

  Gradually the garage started to fill. A large schematic of the computer hung on one wall. Paul Jobs built a “burn-in box” the shape of a long, plywood coffin to test the computers. It was large enough to house twelve boards which could run all night long under the uncompromising gaze of some heat lamps. The younger Jobs bought a metal workbench with a neon light from the firm that supplied Hewlett-Packard, a dispenser for three-inch-wide filament tape for the packing cartons, and a top-of-the-line postage meter. Bill Fernandez examined the purchases. “Steve was always very, very tight with money. He always wanted to get the best value for the least amount of money. Steve always wanted to make things of high quality and have high-quality equipment. He always wanted to do it right.”

  Clara Jobs, who scooted into the garage to use the washing machine, clothesdryer and sink, was recovering from a gallbladder operation. When her son occupied the kitchen table and turned it into a miniature office, she worked around him. When the answering service called with messages, she took notes or relayed them. When the doorbell rang she acted as receptionist, serving coffee to parts salesmen and prospective customers. She tolerated her son’s infatuation with carrots and cleared up Wozniak’s McDonald’s hamburger wrappers and soft-drink cartons after some of the frequent all-night vigils spent chasing elusive bugs in the computer. When Wozniak’s wife of six months called in tears, it was Clara Jobs who provided consolation. And when tempers flared in the garage Paul Jobs invariably provided some perspective. “What’s the matter?” he would ask. “You got a feather up your ass?” Eventually Paul and Clara Jobs started joking to their friends that they were paying the mortgage in exchange for kitchen, bathroom, and bedroom privileges.

  Steve Jobs asked Ron Wayne to draw schematics of the computer that would be suitable for a small manual and also to produce a logo for the company. In his apartment Wayne balanced a light table on a living-room table and produced a whimsical pen-and-ink drawing that had the tones of a monochrome engraving for a nineteenth-century college calendar. It was a portrait of Isaac Newton, quill in hand, resting against the trunk of a tree bearing one apple wreathed in an ethereal glow. Wrapped around the edge of the picture was a scroll that carried a line from Wordsworth’s “The Prelude”: NEWTON—A MIND FOREVER VOYAGING THROUGH STRANGE SEAS OF THOUGHT, ALONE. Wayne also started work on a four-page manual using an IBM electric typewriter which, with careful reckoning, could justify text at both margins. This spawned an argument over the use of background tones, with Jobs insisting that a gray shade be used for parts of the schematic. When the gray obliterated some of the detail, Wayne said, “We’re both to blame. You for suggesting it. Me for listening to you.”

  Jobs displayed a similar concern for appearance when Kottke and he drafted Apple’s first advertisement. The pair sat at the kitchen table with Jobs spitting out ideas while Kottke cleaned up the grammar. When the advertisement was set in type, Kottke recalled that Jobs was “meticulous about the typeface.” Kottke meanwhile tried to immerse himself in electronics, reading manuals about the 6502 microprocessor and trying to catch up on what he’d missed during his adolescence. On one occasion he and Jobs tried to convert one of the computers into a makeshift clock. Unable to keep his friend in full-time employment, Jobs found him some extra work at Call Computer where Kamradt was still cursing the hidden quirks of Wozniak’s Computer Conversor.

  The prodding from the Byte Shop’s Paul Terrell forced Jobs to pressure Wozniak to come up with an interface that could load BASIC into the computer from a cassette tape recorder. Wozniak, fully occupied with the computer, arranged for another engineer at Hewlett-Packard to design the interface in return for a royalty on sales. The design was unsatisfactory; it couldn’t read the data properly from the tape and the duo had to buy out the engineer for $1,000. Wozniak flinched. “We weren’t going to go ahead with our design and then pay him for each one we sold.” Wozniak, who had no experience designing interfaces and had never dealt with data stored on cassette tapes, rigged up the simplest possible design: “It worked.” Mounted on a small two-inch-high printed circuit board, the interface plugged into the main board.

  As a sales incentive a cassette tape of BASIC was included with the $75 interface card and the Apple advertising copy stated: “Our philosophy is to provide software for our machines free or at minimal cost.” The one-page advert carried the slogan: BYTE INTO AN APPLE and boasted about “A Little Cassette Board
That Works,” though it could be relied on to cope only with cassettes running on expensive tape recorders. There was a tentative tone about the ad that was reflected in the line “The Apple Computer is in stock at almost all major computer stores.”

  It was certainly in stock at the Byte Shops. It was almost always in stock. Despite the koa-wood cases that were supplied by a local cabinetmaker, Paul Terrell and his cast of refugee engineers and programmers found that the Apple computers weren’t selling as quickly as the Altair or the IMSAI 8080, a computer that would run software written for the Altair and was sold by IMS Associates, another small company on the San Francisco Peninsula. Terrell, who was in the middle of a frantic eleven months during which he masterminded the opening of seventy-four Byte stores across North America, couldn’t afford to stock $10,000 worth of slow-moving computers in shops that had monthly sales of only $20,000. At his headquarters he spent much of his time asking skeptical outsiders—who muttered about his precarious balance sheet and poked at the Formica counters—whether they could remember what the first one hundred McDonald’s looked like. As for the Apples he recalled, “We had problems unloading them.”

  For a few weeks Jobs and Kottke tooled along El Camino, delivering the computers and encountering teenagers in the stores. Some, too young to drive, had discovered that if they timed it right they could catch the No. 21 and No. 22 buses of the Santa Clara Transit District and visit every Byte store in an afternoon. The teenagers formed a permanent part of the decor, playing with the computers laid out on the table, feeding paper-tape programs into the computers, and performing small programming chores in return for free magazines.

  On these weekly rounds. Jobs typed into the Apple a demonstration program that paraded the message THIS IS AN APPLE COMPUTER across a television screen. Some of the Byte Shop managers found Jobs tough to handle. One, Bob Moody, said, “It was difficult at best. Steve wasn’t the guy to deal with. He was very fidgety and very abrupt.” Terrell was a bit more patient and reassured Jobs about the name of Apple Computer. “He came flying into the Byte Shop, buzzing at a hundred miles per hour. ‘It’s the goddamn logo. People think it’s horseshit. We’ve got to change the name. Nobody is going to take it seriously.” Terrell, who had endured similar taunts after he gave his store a name most people mistook for a sandwich bar, passed on a piece of homespun wisdom: “Once people understand what the name means, they will never forget you. If it’s difficult, people will remember it.” The Apple price tags of $666.66 also brought trouble. They prompted a stream of angry telephone calls from a group of Sikhs who were convinced that the price had evil significance. When the horror movie The Omen, which also contained frightening references to strings of sixes, started playing in local theaters, the calls increased. After repeatedly explaining that there was no mystical reference in the price, Jobs utterly exasperated, finally told one irate caller, “I took the two most spiritual numbers I could think of: 777.77 and 111.11 and subtracted one from the other.”

  Ron Wayne was worried about more temporal matters. The size of the contract with the Byte Shops, which had gained a reputation for not always managing to pay bills on time, and the prospect of having to underwrite one tenth of any loss that Apple might incur, proved too much. Wayne left the partnership in the summer of 1976 and typed out a formal letter which he hoped absolved him of all responsibility. “I had already learned what gave me indigestion and I was beginning to feel the months running by. 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.”

  Though they had lost Wayne, by the time they decided to build a second batch of a hundred computers Jobs and Wozniak had established some credit. The local bank managers still refused to place any faith in Apple but there were others who would. Wozniak had an informal credit line with his pal Allen Baum who had bailed him out of previous scrapes. Jobs and Wozniak explained their predicament and asked for a $5,000 loan which they promised to repay as soon as the computers were sold. Baum and his father, Elmer, stumped up the money and wrote up a loan agreement for a year with the provision that it could be renewed quarterly. Allen Baum considered his money safe. “I had no doubt that it would be repaid. Steve Jobs had this silver tongue that could talk anyone into anything.” Elmer Baum wasn’t quite so sure. “I did it because he was Allen’s friend. I was in pretty bad shape financially but Steve gave me a pitch. If I hadn’t known him, I would have thought he was really good.”

  Most of the people connected with Apple were cautious, and contrary to the usual picture of small businesses, they were all wary of loss. Each had his own method for absorbing any risk that might crop up. Wozniak was supported by the regular paycheck from Hewlett-Packard. Ron Wayne decided he couldn’t afford to take any chances while the Baums insured their gamble by charging a hefty interest on their loan. Bill Fernandez made sure that he received a contract. Steve Jobs risked something else—devoting years of his life to the business and becoming consumed by Apple.

  The tension between mysticism and the business of assembling computers was caught in a gently sardonic correspondence with Dan Kottke who had returned to school in the East. On one occasion Kottke mailed Jobs a mystical photograph and enclosed a note which read in part: “After performing an extensive prana to the lotus feet of suchness, gaze lovingly upon picture with cosmic thoughts of cosmic relevance and profundity until phone rings. Answer phone, haggle furiously and refuse to sell for less than 2.3 million.”

  But there were some aspects of Apple that Jobs enjoyed. “I was getting a chance to do some things the way I thought they should be done. I felt I had nothing to lose by leaving Atari because I could always go back.” For Jobs corporations were large and ugly and like Lockheed. They bribed senators. They arranged kickbacks. They paid for three-martini lunches. Jobs recalled, “I didn’t want to be a businessman because all the businessmen I knew I didn’t want to be like. I thought that living in a monastery had to be different from being a businessman.” The private turmoil was the center of long discussions with those around him. Bill Fernandez padded along on midnight walks around Los Altos and Cupertino and provided a sounding board. Ron Wayne noticed that “Steve was searching. He seriously questioned whether he should pursue Apple.” Wayne, for one, did not provide much reassurance, telling Jobs that he ran the risks of Frankenstein and predicted he would get swallowed in the maw of the company he was creating.

  There was an older, wiser fountain of advice. Kobin Chino was a Zen monk whom Jobs met after he returned from India. Chino had been active in the San Francisco Zen Center as a student of Suzuki Roshi, author of Zen Mind, Beginner’s Mind, a reflective handbook for followers of Zen. Chino lived at a small Zen center in Los Altos and Nancy Rogers, who had followed Jobs and Kottke to India, was living in a tent near the ranch, taking meditation courses. Jobs visited her frequently and talked both to her and to Chino about abandoning Apple and heading for a Zen monastery in Japan. Both Chino and Rogers listened. The former was amused at the dilemma and, in broken English, advised Jobs to pursue the business, telling him that he would find business to be the same as sitting in a monastery. Jobs did some more soul searching. “I had a sense that Apple would be consuming. It was a real hard decision not to go to Japan. Part of me was a little concerned because I was afraid if I went I wouldn’t come back.” Nancy Rogers felt “Steve was afraid of Apple. He thought he’d turn into a monster.”

  In the late summer of 1976 the managers and engineers at other computer, semiconductor, and video-game companies did not think that Apple posed a monstrous threat. At Atari, according to Nolan Bushnell, “We were up to our asses in alligators,” so the hobby computer market would have been a peripheral distraction for a company whose central line of business revolved around entertainment and video games. At the semiconductor houses like National Semiconductor and Intel Corporation, some enthusiasts formed small task forces, pored over magazines like Byte and Interface Age, clipped
advertisements of some of the small companies that were advertising single-board computers, and paid visits at predictable and appropriate ports of call. They knocked on the doors of companies like MITS. They were given demonstrations of the Alto Computer which was being developed at Xerox’s Palo Alto Research Center. They talked to the editors of the People’s Computer Company. They read industry surveys drawn up by research companies—which, in most cases, were little more than a man, a computer, and a cloudy crystal ball. They talked to some investment analysts at New York banks and were altogether thorough and dutiful. Then they retreated to their homes and offices to draw up arguments and marketing plans to convince their superiors of the bright future of microcomputers. They told them of the large number of hobbyists, of the puny competition, and of how semiconductors made up at least half the cost of a microcomputer.

  Most of the chiefs were unimpressed. They thought the market for assembled microcomputers would be limited to hobbyists and most still bore the scars of earlier attempts to sell consumer items. Some years before, other young men had mustered similar arguments and had persuaded them to build digital watches and calculators. The results had been painful. The chiefs had discovered that expertise in one area wasn’t something that could be transferred to another and that technical superiority wasn’t enough to sway the consumer. Rapid price cutting and competition from the Orient had left some semiconductor companies with warehouses full of unsold calculators and watches.