ColdFusion - The Sad Story of Apple's Third Co-Founder

Starting point is 00:00:00 Hi, welcome to another episode of Cold Fusion. The tale of Apple's humble beginnings is one that most technology enthusiasts would be familiar with. It's a classic. In April, 1976, 21-year-old Steve Jobs and 26-year-old Steve Wozniak began building their technological empire from the garage of Steve Jobs' parents' home. Steve Wozniak had the technology skills, and Steve Jobs was the one who knew how to sell it. It was a match made in heaven, and what they created together has now grown into a $2 trillion company. It's an inspirational tale of two friends succeeding against the odds.

Starting point is 00:00:37 But what most people don't know is that there was a third player in those early days. While Jobs and Wozniak can be credited for the overall success of the company, the diehard Apple historians consider this third founder an essential part of the story. His name was Ronald Gerald Wayne, the lesser-known co-founder of the Apple Computer Company. He's a living example of the cautionary tale about letting your past failures blind you from success. For Ronald, this would be a multi-billion dollar lesson. Born in Cleveland, Ohio, Ronald Wayne had a relatively unremarkable childhood, but he was always a curious child and really wanted to understand how things worked.

Starting point is 00:01:27 In 1953, he graduated from the School of Industrial Arts in New York. After this, he would embark on a journey of self-education in electrical mechanical engineering and product development. At age 22, he would move west looking for opportunity. Ronald worked various jobs throughout his 20s and early 30s, and in 1971, he would start his own business. For nearly five years, Wayne operated an engineering firm named Scion that was based out of Las Vegas and fittingly specialized in slot machines. Sadly, this business would eventually fail. Now, Wayne was a gifted engineer, but running a business wasn't something that he excelled at. He told Colt of Mac in 2014, quote,

Starting point is 00:02:08 I discovered very quickly that I had no business being in business. I was far better working in engineering. In an uncharacteristic act for most businessmen, Ronald Wayne spent the entire year following the business collapse, paying back everyone who had invested in his company. He personally felt responsible for their losses. He bought all the shares back at exactly the price the investors paid for them, feeling compelled to make things right with everyone who had put faith

Starting point is 00:02:35 him. The failure of his business was a deeply traumatic experience for Wayne and shaped his tendency to avoid risk moving forward, a key part to this story. Later on, accepting that running a business wasn't for him, Wayne landed a job as chief draftsman at the newly found Atari video game company. And this was where he met a man named Steve Jobs and his friend, Steve Wozniak. The first time that Wayne was approached about a possible business opportunity by Jobs, it did. didn't go well. Despite knowing about Wayne's previous failures in the slot machine industry, Jobs was eager to partner up after coming into some money. Steve Jobs told Wayne that he had access to $50,000 and asked him if he was interested in getting back into the slot machine

Starting point is 00:03:24 business. Wayne would say that that would be the quickest way for him to lose $50,000. Now, Wayne was not particularly fond of jobs, as were most that worked with him. Wayne even went so far as to say that if he had the choice between Steve Jobs and an ice cube, you would nuzzle up to the ice cube for warmth. But he did recognise the then-21-year-old's passion and drive, so when the offer for the next business venture came, Wayne wasn't so quick to turn it down. In 1976, Wayne invited Jobs and Wozniak to his home. It was going to be a night of a very heated debate about computer design. According to Wayne, these debates were a regular occurrence, but this night was different.

Starting point is 00:04:09 As the night wore on, their discussions became passionate and they all began down a path of unlimited possibility. Remember, at this point, the CPU microprocessor was only a few years old. Personal computers weren't officially a thing. Only DIY hobbyist kits existed. After hours of debate, Steve Jobs proposed that the three of them should start their own company, with the two steves at the helm and Wayne as a lesser owner. From the beginning, Jobs and Wozniak were clear that this was going to be predominantly their company, a decision that Wayne did not oppose given his experience after owning a business. The structure was pitched like this.

Starting point is 00:04:50 Jobs and Wozniak would hold a 45% stake each, leaving 10% for Wayne. He would act as a tiebreaker on decisions, whether two steves couldn't agree. Ronald Wayne, who was 41 at the time, would act as the adults in the room to reign in the two highly ambitious Headstrong, 21 and 25-year-old Steve's. Wayne agreed, and on April 1st, 1976, the Apple Computer Company was born. During his early days with Atari, Wayne built the internal corporate document systems. Using those skills, he got to work on the Apple Partnership Agreement, outlining each founder's role within the startup. Steve Jobs would be responsible for electrical engineering and marketing. Wozniak would oversee electrical

Starting point is 00:05:33 engineering and Wayne would oversee mechanical engineering and documentation. Once this was settled, Steve Jobs would sell his VW microbus for a few hundred dollars and Wozniak would sell his HP calculator for $500 and with the money they got to work building their first prototype of the Apple One, a computer kit that allowed hobbyists to tinker with the new and wonderful world of PCs. Wayne was responsible for writing the manual for the Apple One and he also designed Apple's first logo, a Victorian woodcut image of Isaac Newton sitting beneath an apple tree. Around the border read the quote, A Mind Forever Wandering through strange seas of thought alone. It was from William Wordworth's piece, The Prelude. This logo would be replaced a year later by the multicolored

Starting point is 00:06:19 two-dimensional Apple design, which would become iconic in time. Everything was now in place for this exciting startup. The paperwork was complete. The prototype was ready. And $15,000 in funding had been secured to buy materials. The first unit produced was used in a high school math class. About 200 units were produced and basically all of them sold within 10 months. Very soon after, Jobs sold about 50 computers to the Biteshop computer store at about $500 each. It was now full steam ahead for Apple Computer. But just 12 days after signing the agreement, Wayne had resigned. He sold his share of the company back to the two steves for $800. Now that Apple has become a global success story, it's easy to question Wayne's thought process.

Starting point is 00:07:11 But at the time, Apple was just one of many startups forming in residential basements and garages. It's estimated that 20% of small businesses fail within the first year, 50% within the first five years, and 65% within the first 10 years. With the gift of hindsight, we all know that Apple was a safe bet. But to Wayne, this was a big gamble, and a gamble that he had to. lost before. The two steves were still young, there was little to lose in terms of assets if things went poorly. As a part of the partnership agreement, all parties involved would be responsible for any debt incurred by individual members. Wayne understood the risks. He had

Starting point is 00:07:52 experienced what it was like to run a business from the ground firsthand, and he knew that the store who had placed the initial orders of the Apple One, the bite shop, was notoriously loose with payment schedules. Wayne was very spooked by how much. how fast things were moving. The anxiety from his previous business failure got the better of him. The decision to resign will likely go down in history as one of the biggest missed opportunities

Starting point is 00:08:16 ever made in business. Did you have any doubt that Apple would be a successful company? None. It was the right product at the right time. So why did you sell out? My passion wasn't computers in the first place. It was slot machines. I also knew that I was standing in the shadow,

Starting point is 00:08:35 giants and as a result I knew I was never going to have a product of my own to develop so with that being said I bet you're all wondering just how much money did Ronald Wayne miss out on exactly how much his 10% share in Apple would be worth today is entirely speculative but today a 10% share in Apple would be worth $229 billion but it's likely that over that time his shares would have been diluted. There would have been many decisions made over the decades that make it impossible to predict exactly how much Wayne would be worth today. But given Apple's current $2.3 trillion market cap, it's safe to say that Wayne would comfortably be a multi-millionaire, perhaps even a billionaire,

Starting point is 00:09:22 had he held onto even a fraction of his share. Following his departure from Apple, Wayne continued to work various roles throughout California. He stayed with Atari until 1978. After this point, he would then leave and work for Lawrence Livermore National Laboratory, and later for a small electronics firm called LDF semiconductors. Apple went public in 1980 and Wayne had moved on. Not long after, Wayne decided to pursue his other passion and opened a collector's store dealing in stamps and coins. For a time, his store was quite successful,

Starting point is 00:09:58 but following the collapse of the stamp market and two break-ins, he was forced to close the shop and operate the business from home. Sadly, in another cruel twist of fate, Ronald Wayne would lose his life savings during a home robbery. He had retired and moved to Florida with 145 ounces of gold and $3,000 worth of silver to his name. Sadly, after the robbery, his savings were never recovered and he was forced to sell his home to recoup the losses.

Starting point is 00:10:25 Ronald Wayne is now living in a mobile home park in Nevada where he still collects stamps, rare coins and other artefacts. In the early 2010s, he published two books. One was, Adventures of an Apple co-founder, a memoir about his brush with fame and fortune, and the other, insolence of office, an in-depth look at the origins, evolution, and nature of money. And he's currently in the process of crowdfunding a third book titled, Counterfeit Trust and the Nature of Money, a further investigation into global monetary systems. Although he would never work at Apple again, Ronald Wayne did keep in touch with the two Steve's.

Starting point is 00:11:02 Both Steve Jobs and Steve Wozniak would speak exceptionally high of Wayne and regularly praised him in interviews for being kind, intelligent and a gracious man and those qualities can be seen in how Wayne conducted himself since leaving Apple. Surprisingly, Wayne regularly states that he does not regret the decision to leave the company and he stands by his cautious approach. In his mind, he made the best decision with the information available to him and he's happy to live with that choice. you must often think of what could have been with Apple.

Starting point is 00:11:35 I mean, do you? I knew exactly what would have been if I had a state with a company. I would have wound up heading a very large documentation department at the back of the building, shuffling papers for the next 20 years of my life, and that was not the future that I saw for myself. Ronald Wayne does have one regret, though. In the early 90s, he sold his original copy of his Apple contract for $500. At the time, this seemed like a good deal, as he could have never predicted just how passionate

Starting point is 00:12:06 Apple memorabilia collectors would become. He said that the contract had been sitting in a filing cabinet, collecting dust, and he couldn't understand why he would need to hold onto it. Fifteen years later, the same contract sold at an auction for $1.59 million. After hearing the news of the sale, Ronald Wayne said, quote, In that, you have the story of my life. And that ends the story of Ronald G. Wayne. The guy who was there at the beginning of one of the most successful companies in history,

Starting point is 00:12:39 but decided to turn away. How do you think you would feel if you're in his situation? It's interesting to think about. If you want to see more Apple history, I have a documentary about the team that created the iPhone. It's a wild tale of unfair treatment, behind-the-scenes stories, and a workplace pressure so vast that it ruined marriage.

Starting point is 00:12:58 This episode has an exclusive interview with one of the original iPhones key team members, so this is definitely worth checking out if you haven't seen it already. And lastly, for those of you who follow my music, I have a new album out now if you want to listen to it. I'll leave a link below. Anyways, thanks for watching. My name is DeGogo, and you've been watching Cold Fusion. And I'll catch you again soon for the next episode. Cheers, guys.

Starting point is 00:13:23 Have a good one.

ColdFusion - The Sad Story of Apple's Third Co-Founder

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