TELL ME A LITTLE BIT ABOUT HOW YOU GOT STARTED IN THE SEMICONDUCTOR BUSINESS AND WHAT KIND OF JOBS YOU HELD.

Well while I was going to engineering school at USC, I got a job at Hughes Aircraft. And as part of that, I ended up managing the stores there. And I was working on a lot of pretty advanced electronic systems and because of that I learned a lot about the semiconductors that were available. And I also knew a lot of the reps, the sales guys. And I just learned more and more about it. And ended up after about four years at...at Hughes going to work at Fairchild in semiconductor marketing.

WHAT WAS IT LIKE WORKING FOR FAIRCHILD IN THE '60S?

It was great. It was wild and woolly, hard work and really being on the forefront of technology. It was great.

NOW WHEN DID YOU MOVE OVER TO INTEL AND WHAT WAS THAT LIKE?

I went to Intel in late '69, early '70. It was really interesting because Intel was a very small company at that time. My office was in the shipping cage. And no one had kept track of the inventory or the order backlog or any of those things. Because really there weren't very many orders. They were just beginning to...to ship their first product which was a 256 bit memory. And so that was the early days of Intel.

WHEN DID YOU FIRST HEAR ABOUT THE MICROPROCESSOR AND WHAT DID YOU THINK WHEN YOU HEARD ABOUT IT?

Well it was very exciting to me. I first heard about it as part of a development contract that Intel had with Datapoint. And Datapoint wanted Intel to make a single chip which would replace the circuit board in their dumb terminal. So we did a design to do that. And as part of that contract a guy by the name of Ted Hoff said well let's not just design what they had and put that on the chip. Let's design a more general purpose machine and put that on the chip and then make sure we can configure it so it will do what Datapoint wants. And oh about a year into it, Datapoint decided they were no longer interested in doing that. And we had a thing that we called the 1201. That was the internal number of it. And that's what eventually became the 8008. But in between since we didn't have any paying customers to help us on that development, we used the same idea to try and do a single chip, actually it was a chip set for a company in Japan who wanted to make a calculator, programmable calculator. And we did, only that was a four bit machine. We called that the 4004. So those were the first two commercially available computers on a chip.

DID IT STRIKE YOU, I MEAN WAS THIS A... AT THE TIME DID YOU THINK THIS IS A FUNDAMENTALLY DIFFERENT WAY OF DOING THINGS? OR WAS IT JUST INCREMENTAL?

Well it was one of those things where the technology came together. The, we were coming down the learning curve. We really couldn't build an 8008 on a chip when we tried, tried it first because the line widths were too large. But you knew it was coming. And five years earlier you wouldn't have considered trying to do a design like that because it was just too soon. You'd have to wait too long before you could make one. But then as you get closer and closer, you say well now's the time. Now we can get it all in one chip. And there were a lot of other considerations like the number of input and output pins that you need. And how you partition the system. And all of those things. It sounds easy when I say it, but it wasn't easy to make all of those myriad of decisions in order to end up with something that you actually could build on one chip...

WHAT WAS YOUR POSITION AT INTEL AND DID YOU SEE THE MICROPROCESSOR AS A FINAL CHANGE AT WHAT WAS GOING ON?

Well first I was marketing manager at Intel. I ran all the marketing. And microprocessor to me I said it before, it was really exciting. It really was exciting. When I was still in college two other of my classmates and I decided we wanted to design an electronic slide rule. Which was essentially a personal computer in a, in a box that big. And of course we were unable to do it. We actually did the designs. At that time there were no integrated circuits. So we did a lot of the calculations using mixers and Analog techniques. We did have some transistors in there and we ended up building one and then calculating what it would cost to manufacture them and they were about 300 bucks just for the parts. And we figured since you could buy a slide rule for $29.95, we might as well give that idea up. But the whole idea of having a computer that you could use to do things like calculations in math and all that sort of stuff had been with me all those years and seeing the microprocessor come along or a computer on a chip, even though when we introduced them they were several hundred dollars. It was obvious to everyone that they would eventually be $5 and $4, and $2 and $1. And when they got down to those kind of prices then we'd be able to do those really great things. So I just couldn't wait to see...see us move down the learning curve and watch what people would do with that technology.

YOU RETIRED AT AGE?

32.

32. YOU WANT TO TELL ME ABOUT YOUR RESEARCH PROJECT AND, THAT'S HOW YOU DESCRIBED IT TO ME THAT YOU DID A RESEARCH PROJECT ON HOW TO BE RETIRED.

Oh actually, not a research project but ah/l had always planned on becoming financially independent by the age 35. And it turned out that I met all the goals to do that at about age 30. And I decided that I didn't know what I would do with myself if I wasn't working. And I was really enjoying what I did at Intel. It was, it was a great company and a good job. And I really liked what I was doing. So I spent about two years just planning and thinking about what would I do if I didn't have to go to work every day. And some of the boring results of that were I decided I had to do some estate planning and write a will and...and so when I did retire I spent about six months getting rid of all the boring stuff. And getting our family finances organized which you never have time to do when you're working. You just, you don't do those things. And then it took a good year to figure out how to spend that time best. I had a long list of things I wanted to do. Learn how to read music. I'd been playing a guitar for 20 years and never learned how to read music Things like that. It took awhile to adjust to not working. And retired isn't really the right word. You actually work harder when you don't have to go to work every day. But you're working at things that you want to do when you want to do them. And so the fun quotient of life goes up, but so does the work quotient.

SO WHAT WAS YOUR SITUATION WHEN YOU GOT A CALL FROM VALENTINE? WHAT WERE YOU DOING AT THE TIME?

Well one of the things that I found out about not...not working was that I really...really missed the interaction with bright motivated people. And so after I "been retired for awhile" I started taking every Monday to help people write business plans, start companies, do things like that. And I only did it on Mondays. If you needed some help on Tuesday, I was not available. But Monday... Monday was my day. And so I helped a lot of people put plans together and get contacts and get financing. That sort of thing. And I never charged for that. I wasn't a consultant. I didn't want to be a consultant. I just wanted to have fun. And...and see people succeed which it was, it was a great thing to do. I enjoyed it. And Don Valentine had known each other for a number of years because he was at Fairchild in the early days and then he went to National. And you know this is a, everybody knows everybody situation./ And he knew that I was doing that and that I didn't charge people. And he had met the two Steves. And he said, well here's a job for Markkula, they need some help and they aren't going to pay for it. Because they didn't have any money. So he called me up and said why don't you go see these guys.

WHAT DID HE TELL YOU ABOUT THEM?

I don't think I want to put that on camera.

WHAT DID YOU SEE IN YOUR OWN EYES WHEN YOU WENT TO GO MEET THEM?

Two really young guys who had a real passion for building a computer that they could afford to own. And Woz had done what I thought was a magnificent job of the architecture and the design and the, actually the product definition of what turned out to be an Apple II. He'd already done the Apple I and it was, it had some problems. And so he took that information and made the corrections and developed the Apple II. And I looked at it and I said this is the first affordable useful computer for people. And the two guys really didn't have the background and experience to start a company and make it successful. So I agreed to help them. I had no intention of going back to work.

I STEPPED ON YOUR ANSWER. IF YOU COULD GO, WHAT HAPPENED AFTER YOU, KIND OF HOW THAT KIND OF EVOLVED INTO THE BEGINNING OF APPLE COMPUTER COMPANY.

Well what I said I would do for them is show them how to write a business plan. Get it written, introduce them to some venture capital people so they could get the funding they needed. Probably find them some additional people that could help them manage the business. Get a team together. And so we started out to do just that. And during the process it became obvious that neither of the Steves was really the kind of person who could get things down on a piece of paper and present them in a way that would accomplish what they wanted to do. And the more I got involved with it, the more I started to write parts of the plan. And ended up, basically writing the business plan. And that was my mistake because it was really an exciting proposition when I got through with it. And so I decided I'd finance it and go hire somebody to run the company and put it together.

I MEAN HERE YOU'RE ONLY WORKING BUSINESS PLANS ON MONDAY TO SUDDENLY SAY I'M GOING TO DIVE BACK INTO IT AGAIN.

Yeah. Well it was just too...too big an opportunity. You know we could change the way people live. That was on the plate. And build a Fortune 500 company in less five years. That had never been done before. There were just lots of reasons to to offset my desire not to go back to work. And it just became overwhelming. So away we went.

QUITE A BIT OF A LONG TRIP TOO. NOW KEN OLSEN LOOKED AT THIS TECHNOLOGY. AND PEOPLE I THINK AT INTEL LOOKED AT THIS TECHNOLOGY. HP LOOKED AT THIS TECHNOLOGY. YOU WRITE DOWN A BUSINESS PLAN SAYING WE'RE GOING TO BE A FORTUNE 500 COMPANY. WHY WERE YOU SO SURE?

I guess, I'd been thinking about those kind of things for fifteen years at that point in time. And to me it was obvious. People said boy you can't, that was really a big leap. It wasn't a leap for me at all. It was, how can you not see this is going to happen. It's completely a given. And if this company doesn't do it another one will. Or another one will. It's bound to happen. I didn't have any...any concern at all that it wasn't going to happen. If I did have a concern it was well are we a year too early? How are we going to educate the general public that there is such a thing as a personal computer and it's actually worth a thousand dollars. If you walked up and down the street in 1976 and asked a hundred people, would you like to have a personal computer, they'd say a what? 99 out of a hundred would say a what. Two years later you could walk up and down the same street and ask the same 100 people if they'd like to have a personal computer and they'd say, I don't know. What do you do with it. They'd maybe heard of it. And at that same time you'd say well what do you think one might be worth? They really wouldn't have any idea, but it wasn't, you know maybe $50 bucks to try one. It wasn't anywhere near a perceived value of a thousand dollars. Two years after that maybe twenty out of a hundred people would say yes I would like to have a personal computer and I might spend, oh I don't know maybe over $500. So you know trying to get that the general public to know that there were such things as personal computers and they could afford them, and they were worth what you had to pay was a big job.

IF WE CAN GET SPECIFIC IN TERMS OF SOME THINGS HERE. WHEN YOU CAME IN AND SAID OKAY LET'S MAKE THIS A COMPANY, WHAT WAS YOUR FINANCIAL CONTRIBUTION?

For Apple?

YEAH, BACK IN WHATEVER IT WAS.

Well the business plan said we'd need about $140,000 to get the company off the ground. And from that point I figured we could have a positive cash flow and a profitable situation. And I didn't want Apple to begin as a company that didn't have relationships with the banks, didn't have a credit line, didn't operate like a real company. So I want down to the Bank of America and I said look I'll guarantee a loan, but I want you to loan these guys or give them a credit line up to $140,000. And here's our business plan, here's how we expect to use the money. here's how we'll draw it down. Here's how we'll pay it back. And as soon as we've gotten to a point where we've paid back most of it, I want you to take me off of the loan guarantee so that you have the relationship with the company not with me. Because it's the company that we're trying to build. And we hit that plan to within a thousand dollars month by month, through the whole thing. We spent exact...exactly $140,000 maybe before we started going back up. And after that was all over the guys from Bank of America said it was the first time ever that they'd had a relationship with a new company that they met their plan at all. And moreover met their plan on a month by month basis. So you know we played the money back and we had net return earnings by September of '77 and started in January of '77.

MY QUESTION WON'T BE HEARD. SO IF YOU COULD INCORPORATE MY QUESTION...

So anyway the way all of that worked, I ended up taking the bank out of their remaining position. And my total investment in cash in Apple was $91,000.

WOULD APPLE HAVE HAPPENED WITHOUT YOU OR SOMEONE LIKE YOU?

I don't think Apple in particular would have happened unless the two Steves could find somebody like me or some collection of people to fill in expertise that they didn't have between the two of them.

WHAT DID YOU SEE IN THE TWO STEVES? YOU MENTIONED A LITTLE BIT ABOUT WOZ. WHAT ABOUT JOBS THAT MADE YOU BELIEVE YOU COULD BUILD A COMPANY AROUND?

Well I didn't think of building a company around the two Steves at all. We thought of building a company together. And to attract people that we needed to do things that we couldn't do to get financing. And...and to build a company. It wasn't building a company around me or Steve or Mike Scott or ah. Rod Holt or any of the other people that were there initially. It was let's go build a company. There wasn't a thought of...

WHAT WAS IT ABOUT THOSE TWO THAT MADE YOU BELIEVE THAT YOU COULD BUILD A COMPANY THAT WOULD MAKE A COMPUTER THAT WOULD SELL.

Well the computer was basically already made. Woz had done the design. There were, there were a few little nits to take care of. But they were nits. They weren't major design flaws or breakthroughs that we had to do. It was done. So it wasn't, there wasn't a risk of not having a product. The risk was could we, could we sell the product. Not could we design one. And I already talked to you about that. I didn't think there was any risk. Other people sure did.

ANYBODY COME TO MIND? ANYBODY COME TO YOU AND SAY GEE WHAT ARE YOU DOING?

Oh there were a lot of people saying you've got to be out of your mind, you know. People from Intel had...had looked at a business plan for a personal computer and said there's no market. It'll never sell. So they thought I was crazy.

LAST LAUGH LAUGHS BEST.

Well not a laugh. I could have been wrong.

THAT'S TRUE.

Only one way to find out.

SURE. WHAT WAS JOBS LIKE BACK THEN? ...GO BACK TO THE FIRST DAY YOU MET HIM? WHAT WAS YOUR IMPRESSION OF STEVE JOBS?

Oh, very hippy like. But both Steves were eloquent. They, you know could speak well. And obviously had...the technical talent to build the Apple II. And you know as I mentioned a few minutes ago, they were young and not talented in things like management and business and other areas.

DO YOU THINK IT WOULD HAVE HAPPENED WITHOUT YOU?... HOW IMPORTANT WAS THE WEST COAST COMPUTER FIRM?

Oh that was fun. That was our first chance to make a big thing out of Apple. And no one expected Apple to be there at all. No one had really heard of Apple. It was in March of 1977. And we decided we were going to go there with a flair. And we really scrambled. We were working the night before to put boards into three prototype Apple II cases that were all hand made. Then we succeeded and we got them to work. And we rented the booth space that was directly opposite the main doors. And I went up and had a booth outfit make us a really nice looking backlit panel booth and we got an Advent TV. Do you remember Advent projection TVs? They were, they'd just been out for a short time. And we hooked Apple IIs up to that Advent TV and we set the screen right where as you walked in the door to the computer fair that's what you would see. And of course we just ran away with the show. And we took orders and we...we asked for cash in advance. And that got us more money to buy more parts. And we shipped on time. And we had a wonderful time at that show. It was we were all exhausted, but it was really incredible.

WHAT DID YOU THINK WHEN YOU... I MEAN THIS WAS PROBABLY YOUR FIRST CHANCE OF LOOKING AT THE INDUSTRY. YOU HADN'T BEEN TO ATLANTIC CITY FAIR?

There really wasn't an industry.

WHERE DID YOU GET THE SENSE OF, YOU JUST SAID I'M BUYING INTO THIS COMPANY. WE THINK IT'S GOING TO WORK. WHAT DID THE WEST COAST TELL YOU HOW APPLE WAS GOING TO DO?

Oh not a whole lot. Because part of the business plan said, and correctly so, that the only people that would buy what we had initially were hobbyists. And the West Coast Computer Fair was a hobbyist's show. And so the...the whole thrust of that was to tell the hobbyist community that we had a personal computer that they'd want. And from that point of view it was a great success. But as an indicator of whether or not the average American would buy an Apple II, it didn't tell us anything.

WOZ RECOLLECTED THAT YOU WENT TO HIM AT THE END OF THE FAIR AND SAID, "WE'RE GOING TO MAKE IT."

Yeah because we'd... we'd made a mark with the hobbyist. And that was going to be enough to get us to positive cash flow. And then we could bootstrap. Because then we had the opportunity to go spend money on trying to get into the home market. Or trying to get into the educational market. Or eventually trying to get in the business market. So what it did is it said we've got a chance now, a real chance. We've got some breathing space... The alternative to that would have been, why don't we spend the money, we're out.

SO IN TERMS OF THE HURDLES THAT APPLE HAS HAD TO JUMP OVER, AND THERE HAVE BEEN SEVERAL, NOW IMPORTANT IS THIS?

I think it was really important that we succeeded in the hobby business. And we chose to go the West Coast Computer Fair and that was an easy way for us to do that. Didn't seem easy at the time. It was quick more than anything.

I WAS READING SOMEWHERE THAT YOU AND REGIS, WAS IT, JUST WENT TO HAVE JOBS GO BUY HIS FIRST SUIT OR SOMETHING.

Yeah. There are a lot of stories like that.

ANY OTHERS?

Not for, not on tape.

CAN YOU CLEAN THEM UP AND USE ONE?

You can ask Steve about them. He'll tell you if he wants to.

OKAY. WHO WERE THE FIRST GROUP OF, OH WHEN DID YOU MOVE INTO THE STEVENS CREEK BUILDING? WAS THAT YOUR IDEA TO MOVE INTO THAT BUILDING?

Yeah we did that right in January of '77. Right after we incorporated.

INCORPORATE MY QUESTION.

Okay. Well once we decided to form a company and incorporate and be a real business entity, we decided that we ought to have a facility someplace. And since I lived in Cupertino and it was close, we picked a place in Cupertino right behind the Good Earth restaurant. It had orange carpet. It was about 1,500 square feet if I remember right. And that's where we started.

WHEN DID MIKE SCOTT COME ABOARD AND HOW IMPORTANT WAS HE TO HAVE?

Mike Scott started in late February or early March of '77. And he and I share the same day as a birthday and we went out to lunch for his birthday and my birthday. And I had an ulterior motive. I wanted to hire him away from National Semiconductor and have him run Apple. And he agreed to do that.

HOW IMPORTANT WAS IT?

I think immensely important. He doesn't get enough credit for what he did for Apple. He's an extremely brilliant person. Who has the added ability to pay infinite detail to details. Infinite attention to details. He could tell you every resister, screw, nut and bolt that was going down that production line and how many cases were available. How many were coming in the next day, how many orders we had, who we were going to ship them too. At any time day or night. How many employees we had. I mean really has a marvelous mind. Highly motivated guy and very competent. Good engineer. And a, and a person who's intolerant of goof-ups or incompetence. And Mike did a, just a great job of working with all the people and getting Apple on the straight and narrow track, under control with positive cash flow and that was exactly what he was supposed to do and he just did a great job of it.

IS IT FAIR TO SAY HE RAN THE COMPANY?

He absolutely ran the company. I was chairman of the board. Mike was president and CEO, and I was vice president of marketing. So he worked for me and I worked for him. And that was just fine.

WHAT ABOUT JOBS AND WOZ AT THAT POINT?

They worked for Mike.

WHAT WAS IT LIKE IN THOSE, YOU KNOW WEST COAST COMPUTER FAIR YOU'VE GOT SOME ORDERS COMING IN, EIGHT EMPLOYEES.

That's about right. We had five in February and probably eight in March.

MIKE SCOTT WAS TELLING ME YOU WERE TESTING THE PACKAGES BY DROPPING OFF HIS GARAGE ROOF.

Yes we did that. We tried shipping them around the country and have them shipped back to us. And we'd look at them and go oh my gosh. If a customer is going to see this we have to do something about this. We found out they were dropping them off the back of 747s in Dallas. And we just whshhhhl Yeah.

WHAT WAS IT LIKE? WAS IT EXCITING, VIBRANT, FRUSTRATING?

All of the above. Exhilarating.

MY QUESTION WON'T BE HEARD. WHAT WAS IT LIKE?

Well it was just a fast paced, exhilarating, exciting environment. When we ran up against snags it was frustrating, but we seemed to build together and overcome all of those things. Oftentimes with 18 hour days and 20 hour days.

YOU QUICKLY WENT FROM SEMI-RETIREMENT TO FULL SCALE WORK DIDN'T YOU?

You bet. Didn't take long.

TOOLING KIND OF ALMOST ENDED APPLE'S RISE, DIDN'T IT?

Well those were one, that was one of the little glitches we had to overcome. We had some great problems with our first case manufacturer and getting them on time was a problem and then getting them so that the lids were flat instead of humped. I can remember we had a hard time with the connector that held a lid on. We used to pronged meeting connector. And the material that the cases were made out of was not willing to accept the adhesive on the bottom of those connectors. So they'd work for about a week and then you'd pull the lid off one day and the connectors would come off with it. We were forever putting new connectors on those till we changed the design.

AND A SCREW OR SOMETHING?

No, no screws. We just had a better case design and a way to secure the lid.

LOOKING BACK TO THAT TIME PERIOD, HOW WAS THE APPLE II DIFFERENT FROM OTHER COMPUTERS AVAILABLE AT THE TIME?

Oh in a whole lot of ways. The Apple II was the first single board computer. It was the first computer to use dynamic ram. It was the first computer to use an ordinary television set as a display device. It was the first completely self contained computer with a power supply and a case and a keyboard. You didn't have to assemble it or do anything, just plug into your television set and plug it into the wall and away you go. It was the first computer to have BASIC and ROM. It was there were, you could make a list of about twenty things that sent the Apple II head and shoulders in front of all the other guys that were fooling around on the business at that time.

FROM A MARKETING STANDPOINT, HOW WAS APPLE DIFFERENT? YOU SAW A DIFFERENT MARKET.

Yeah I saw a general purpose...I saw a broad...broad market for computing technology in a small affordable package. In areas of database kinds of things, in computation and calculation, there wasn't any spreadsheet programs at that point. And hadn't figured out that you could make a great spreadsheet. There were some guys on the East Coast that figured that one out. But the usefulness of a small computer... to me was, you know as long as it didn't cost too much you couldn't live without one. When I was retired the first time I had a Model 33 Teletype in my study, sort of like this room that was hooked up to Timeshare. And I did all my business stuff on the Timeshare computer. So it was like having a personal computer except it went at ten characters a second and it was very noisy. And the storage that you used with that was paper tape. So I had these rolls of punched paper tape that had all my financial data on it.

THAT LED TO A CHECK WRITING PROGRAM AND THAT LED TO THE DISK DRIVE. CAN YOU TELL ME THAT?

They were all kind of reacting to what the hobby market wanted. And we were, we had a different vision.

WHAT WAS THAT VISION?

We...we wanted to make computers that everybody could use, not just hobbyists. That meant we had to have some programs that could run out of the can and so that people didn't have to write their own. And we had none at the computer fair. And that was the genesis of things like checkbook, and color math, and finance two, and all the Johnny Appleseed programs.

REGIS, I GUESS JOBS FOUND REGIS, OR TALKED REGIS INTO WORKING WITH HIM. WHAT WAS HIS ROLE IN THE EARLY APPLE? WHAT DID HE DO?

Well when the two Steves were doing Apple I, they had gone to see Regis and Regis said I don't want to mess with you guys. And then after that was in early '76. And then after we wrote the business plan and decided to go make a company out of it, I had worked with Regis because of my Intel time. And knew his capabilities and knew what he and his company could do and so I went to see Regis and I said Rege, I want you to take this company on. He said, "No way. I don't want to have anything to do with those guys." And I said no this is different. And take this on for three months and I'll pay the bills personally so you won't have to worry about it. This is going to be a real company. So he said okay. And that... that's how we started off with Regis.

WHY DIDN'T REGIS WANT TO?

The, both of the Steves were pretty off the wall at that point. And I don't think Regis felt that what they were going to do or were trying to do was going to go anywhere. And I think he did it as a favor to me basically to, in the beginning. And I said well we want four color ads, we want two page spreads. We don't want these little newspaper black and white down in the corner things. We use logo and I want a four color logo because were the only comp... another one of those firsts. We were the only computer that had color. All the other guys were black and white. So in order to make something out of a color machine, you have to show people the color. And so we bit the bullet right off the bat knowing the difference in costs between color cepts and black and white.

I READ SOMEWHERE THAT FOR THE FIRST ADVERTISING, I GUESS THE FIRST REAL BIG ADVERTISING CAMPAIGN, YOU JUST SAID, LET'S SPEND $300K, $300,000 AND YOU WANTED TO DOUBLE THAT.

Yeah.

TELL ME WHY, HOW THAT CAME ABOUT AND WHY WERE YOU SO CERTAIN THAT THIS MADE SENSE?

Well it, the decision making process of Apple in the very early days was really easy. Because it was a proposition of either get to a critical mass large enough to stay alive when IBM gets in the business before they do, or we'll get squashed. And so there was no, there was no alternative that said let's make a nice little $50 million company out of this. That wouldn't work. That...that plan was...was...ah given failure. So we either had to become a very large company very fast or we...we were broke. That was it. And so making a decision to spend an appropriate amount of money on a really good advertising campaign that would imply to those people who saw those ads that we were for real to me it was a no brainer. You just do it. Because we're either there or we aren't. And the same thing applied to order processing systems and other things like that. Scotty and I put in an order processing system sized for a half billion dollar company when we were shipping about a million a month. And it had multiple commission structures and multiple shipping point capability. And all of the bells and whistles that you would need to easily run a half billion dollar company. And so we never hit that plateau that a lot of companies hit where they just can't seem to handle all the paperworks and they can't process the orders right and they don't ship on time. They don't know what backlog they have. And we never had any of those troubles.

CAN WE TALK SPECIFICALLY ABOUT THE MECHANIC. BECAUSE THAT'S AN INTERESTING... HERE'S A PR, YOU KNOW PUBLIC RELATIONS WHIZ. I MEAN HE HAD MADE HIS NAME ALREADY AND HE'S SAYING I THINK YOU SHOULD ONLY SPEND $300, AND YOU'RE SAYING $6. ONE, CAN YOU RELATE THAT STORY FOR US AND TELL WHY YOU WERE SO CERTAIN.

Well when we put together the first advertising campaign, Regis came back with a quote of about $300 grand to do it. And I felt that maybe that wasn't enough to accomplish what we really wanted to get done. And to build brand recognition to the level that we wanted to have it. And I guess to a lot of people, including Regis, it seemed a little overzealous for such a small company to want to spend such a large amount. And we ended up not spending as much as I wanted to spend. But we had one beautiful well done advertising and promotion campaign.

HOW WAS YOUR ADVERTISING DIFFERENT FROM, I'M THINKING NOW, I GUESS YOU HAD PLAYBOY AND SCIENTIFIC AMERICA AND...

Oh we tried a lot of stuff. We did advertise in Playboy, Scientific American, in industry kinds of magazines, IEEE and Electronics and those things as well. But we wanted to get out there in front of everybody as quickly and as impactfully as we could to say look, this is new. This isn't the old stuff. We've got a whole new opportunity for people.

WOZ WAS RELATING A STORY THAT YOU HAD SAID TO HIM, WHICH WAS THAT EVERY 10 YEARS OR SO THERE'S THIS WINDOW WHERE A START UP COMPANY CAN MAKE AN IMPACT. WHAT WERE YOU MEANING BY THAT AND HOW DID THAT FIT THE APPLE SITUATION.

Well, there again, when Ted Hoff conceived of putting a computer architecture all on one chip, instead of a custom design to do something that had been done before, he could do that because he knew that the semiconductor technology learning curve was coming down to the point where the device geometries were small enough that you could do that within a year or so. That same thing was true with the personal computer approximately ten years later. Dynamic RAM was getting cheaper. If you could put it all one circuit board so you didn't have to spend the cost of a bunch of connectors and wires to go between, from...from one to the other and use inexpensive microprocessor. We chose the 6502. The reason we chose the 6502 was it was the highest volume, cheapest microprocessor in the market. When we, when we started the company, we reviewed whether or not we should change CPU chips and use the Intel chip for example, because I came from Intel. And it was just overwhelming. That was the cheap one. Use that one. It works. So use that one. Anyway I think the cost of what you needed to make, a usable, useful, utilitarian computing device came to the point where you could put it all together in one box if you were clever. And Woz's design was absolutely clever. And truly elegant. I still love the things he did in there. There wasn't a wasted bit anyplace. So then you get a package of...of features and performance at a cost level that all of a sudden makes sense that didn't used to. And then this new market is created. So that's what happened when the microprocessor got put on a single chip, all of a sudden the cost of that computing power and the performance that you could get reached a balancing point. And design engineers started using it. Prior to that they were too expensive or they didn't quite do what they wanted and so on. And I think that's happening again.

WHY DID APPLE HAVE SO MUCH MORE MEMORY THAN OTHER PEOPLE? HOW MUCH MORE MEMORY DID IT HAVE THAN OTHER PEOPLE? LET'S TALK '77, '78, LEADING UP TO THE DISK DRIVE.

Well we had the ability to put up to 64K bytes of RAM in the Apple II. When we first shipped, we had 4K bytes. And Scotty and I spent, and Woz spent, I can't tell you how many hours writing programs that would fit in that 4K of RAM of different kinds so that people could have something they could use. And the cost of memory was coming down and as the cost of memory came down we just came putting more memory in. And of course people could always buy more to begin with. But our objective was to get systems with large enough amounts of RAM out in high enough quantities that you could really do some worthwhile stuff. Now 48K, Apple II became a pretty common memory size. And that then allowed the third party applications developers to write truly useful programs like VisiCalc for the Apple II.

WHY DIDN'T YOUR COMPETITORS HAVE EQUAL AMOUNTS OF RAM? HOW MUCH OF A COMPETITIVE ADVANTAGE HAVING THAT MUCH MEMORY?

It was different for different competitors. Some guys were trying to make the cheapest possible machine like the Commodore PET. And of course that won't put very much memory in it. Other guys had provision for more memory, but in general it was a real pain in the neck to add that memory. And one of the things that we did was we put those nice little slots in the Apple II which allowed us to change memory size, and so on without any great deal of difficulty. The other thing most people don't realize about the Apple II design was that another first was the Apple II had a switching power supply. And that all the other guys had these great big transformer power supplies and the box was real heavy. And if you wanted to put peripheral slots into those designs, you would overtax the power supply and things would get hot. And you have a problem. So we designed that switching power supply to have enough capacity that you could fill up every one of those eight slots and power those cards, whatever they might do, and we still didn't even have to have a fan. So we were really way ahead in a whole lot of areas.

HOW DID THE IDEA TO BUILD A DISK DRIVE COME ABOUT AND WHAT WAS LEADING THROUGH THAT UP TO THE INTRODUCTION?

Well the the Apple I had a cassette interface that fundamentally didn't work. And ah...

APPLE I OR APPLE II?

The Apple I. And the Apple I had some other problems. As a matter of fact the very first thing we did when we incorporated was we recalled all the Apple Is. Because I didn't want them to give Apple its reputation. And we got almost all of them back. There are a few still out there, but we got most of them back. And we just said we'll trade you for an Apple II. And it's better and of course of those guys, they wanted the latest and greatest. And anyway the cassette interface was built into the Apple I. And the idea there was to have a very, very inexpensive, external, non-volatile storage. And you used one of these little $30 portable cassette tape recorders to store your programs or your data. And it was, it was very unreliable. So we tried to improve that design for the Apple II. And we did. But we still couldn't cope with the problems of various tape decks having a different skew in the head and if you didn't record your tape on the same one you wanted to play it back on and you might not get to read your program in, we just couldn't overcome those problems. And we didn't want to spend what it cost to use industrial style tape cassettes. So we basically threw out the idea of using the cassette altogether. And said we've got to go to a disk drive. And that got Woz going on the design for a disk interface. And a disk operating system. And by January of the next year, we had it working. Not very well, but we had it working and we showed it at the Consumer Electronics Show in '78.

CAN YOU TELL ME, I MEAN WOZ HAD COME UP WITH MOST OF EVERYTHING FOR THE APPLE II. WHO, WELL I REMEMBER WHEN YOU WERE TELLING ME THAT THESE ARE THINGS YOU NEED TO DO. CAN YOU RELATE THAT STORY TO ME?

I'm not sure which one you had in mind. '

These are things that we need to do as a corporation. And at the top of the list was disk drive.

Oh yeah we...we had those lists. And people would get together and start knocking them off one at a time. And we needed a lot of software so we put together a program to get third party developers. And we also put together a program to distribute share ware. We had lots of software that people could get for free. Just pay for the price of a disk or a cassette. Or type it in.

I GUESS I'M MORE CURIOUS ABOUT WHERE THE IDEA FOR DOING DISK DRIVES STARTED. WHO DID IT AND WHAT WAS THE...

Well I don't think anybody could claim credit for being the father of the Apple disk drive concept. I think it was just an obvious, everybody knew we had to have some better storage mechanism. And the only game in town was disk drive. The typical solution was to go with eight...eight inch drive. And that didn't please us at all. I mean we just didn't like the idea of eight inch drives. And the five and a quarter had just begun to be available. And we said boy that's our size. That's what we need. And we developed it.

YOU DIDN'T USE THE STANDARD VARIETY. WOZ CAME UP WITH AN ENTIRELY DIFFERENT DESIGN.

Woz came up with an entirely different design. Well, the drive itself was pretty much the standard variety except that Scotty and I know more about semiconductors and materials and things like that. Concluded that nobody in the world knew how to make the heads right. And that was what was slowing down the introduction of five and a quarter inch floppy disks. So we got some people who knew how to do that and developed our own head and actually went in, we started making our own disk drives. We'd buy the mechanisms from somebody else and then put our heads with it. And we for a time were the worlds largest supplier of five and a quarter floppy disk drives. And that includes a period when the volume was...was really pretty high. So it never was our desire to be in the disk drive business but we had no choice because we couldn't buy them. And so we did make our own and we also made another marketing decision that I think was a very, very good one. There were other people who were beginning to offer five and a quarter inch drives. And they were all in the $800 to $1,000 price range. And we concluded that could make a small profit at the $400 price range. And the other guys were just trying to make too much money or their designs weren't quite good enough. And so we introduced the the Disk II at $495 and special introductory offer of $395. And just blew the other guys out of the water. We were it.

WE NEED THAT PORTION AGAIN. HOW IMPORTANT WAS THE PRICING DECISION OF THE DISK DRIVE?

Well when we were getting ready to introduce the, disk two is what we call that drive, we looked at the marketplace and found that other people were charging between $800 and $1,000. And we thought that we could make a small profit at about $400. And we really were anxious to dominate the...the part of the market that used data and needed a removable medium, nonvolatile kind of storage. So we introduced our Disk II at $495 with a special introductory offer for a month of $395. And just essentially took the rest of the guys out of the marketplace.

THE REST OF THE GUYS AT THAT POINT WERE?

Commodore, not Radio Shack yet. Processor Technology, IMSAI. I can't remember all the names anymore.

I WANT TO LEAD UP WITH A STORY WHICH I HAD TALKED WITH BRICKLIN AND FRANKSTON AND I SAID WHY DID YOU DESIGN FOR THE APPLE II? AND HE SAID MEMORY AND DISK DRIVE.

Right.

IF YOU COULD RELATE THAT STORY AND HOW IMPORTANT WAS VISICALC? IS THAT WHAT MADE APPLE?

Oh I don't think VisiCalc made Apple. We would have succeeded if there hadn't been a VisiCalc. VisiCalc just made it that much easier for us. It was really the first extremely useful product software product. And the reason it was written for the Apple II I think was because there was plenty of memory available and we had external disk drive that was reliable. In addition to which we had a very minimal but perfectly useful disk operating system. And probably there wouldn't have been a VisiCalc if there weren't an Apple II. If you really want to think about it there were, there was a marriage made in heaven there.

BACK TO THE DISK DRIVES, I THINK MIKE SCOTT TOLD ME THAT YOU WENT OUT AND KIND OF CORNERED THE MARKET ON SOME KEY PIECES OF EQUIPMENT. THAT'S ONE OF THE REASONS WHY COMPETITORS DIDN'T GET INTO THE BUSINESS.

Yes we did do that.

WHAT DID YOU DO?

Well we wherever it was possible I should preface this. We were fierce competitors. Fair, reasonable, but fierce. We wanted to win and we wanted to get big fast. And we were really battening down the hatches for IBM's entry. And IBM turned out to be later than we anticipated. But that's really what we were after is to get big enough, strong enough so that we can weather the storm when the big guys get in. And so when we had opportunities to guarantee our supply, to get a lock on something that was critical for the...the performance or the success of a particular product. We would do that. And we were, we were good at it.

GIVE ME AN EXAMPLE OF DISK DRIVES. WHAT WAS THAT?

Oh in the disk drive area other people didn't know how to make the heads consistently. They'd be able to make a batch and they'd get some that worked and then they'd make another batch, and none of them worked. And part of the solution to that required some pretty involved physics and things that even had to do with semiconductor technology. And so we got that expertise and designed our own heads and then we farmed out that process to people who were required to sell them only to us. So we had the best, the best disk drive and the cheapest disk drive.

BY INTENTION.

Right. By design.

WHAT WAS STEVE JOBS ROLE IN THE COMPANY IN '78, '79?

Well as you know Steve is not an engineer. He's technically astute but he's just not, he's not an engineer. He's more interested in the aesthetics of things and how the case design looked. And is the feature set right. Is this the, you know the real stuff that we really want. And he's a very bright guy. So as with most start-ups, everybody does a little bit of everything. when you're that small, over that time frame up until '78 we went from 5 to 35, to 100 people kind of numbers. And if we needed somebody to write a program, whoever was available would write the program. And if we needed somebody to go visit a potential dealer, pretty much whoever had the time or whoever was least loaded...

THE MOST SLEEP.

Right. Or had had the most sleep would...would do that. We did have, you know I did the marketing and so 99 percent of the interaction with dealers and wholesalers, I would do. But if I was booked up or if I was out of town and Steve would do it or Scotty would do it. By that time we had another fellow there by the name of Gene Carter. And Gene was another one of the real contributors to...to Apple. So Steve's role was to do what he was good at. Whenever we had something that needed doing. And he's a multi-talented guy. So we didn't have any problems.

DURING THE MEDIA BLITZ THAT HIT APPLE IN 1980, AS YOU WENT PUBLIC AND, I DON'T KNOW IF IT WAS YOUR DECISION OR REGIS'S DECISION, WAS TO TELL THE STORY OF WOZ AND JOBS. AND YOU WEREN'T PART OF THAT, SCOTTY WASN'T PART OF THAT. WHY?

Well first and foremost I'm not a very public person as you know. This is the second interview I've done on video in twenty years? I don't know. A long time. And I didn't start Apple to get public recognition or, that wasn't part of my...my goal. And the two Steves are young guys and that was really exciting to them to have the limelight and the recognition for what they'd done. And so that was just a very complimentary situation. And they wanted to do that. And I didn't want to do that. And Scotty didn't want to do that. So it worked out great. We said you're it. And I think Steve Jobs in particular enjoyed his notoriety. And Woz to this day, he'll...he'll tell you himself, loves to go to a computer club meeting, an Apple II computer group meeting. And have people tell him what a great job he did. And...and he enjoys that. And he did do a great job.

TACTICALLY, I THINK WHEN WE HAD BREAKFAST THE OTHER DAY YOU SAID IT WAS HELPFUL AS WELL BECAUSE THAT'S TIME CONSUMING.

It's very time consuming. And that allowed Scotty and I to run the company and when all the media guys needed to talk to somebody, Steve could fill in. We didn't have to do that. And he loved it. So it worked out great. Everybody got what they wanted.

HOW DID YOU FEEL PERSONALLY AS APPLE WAS SUCCEEDING? WHEN APPLE WAS MEETING THESE, WHAT SOME PEOPLE WOULD HAVE SAID ARE CRAZY OPTIMISTIC GOALS OF BECOMING A FORTUNE 500 COMPANY?

Oh I was just pleased as punch and looking for, when we started the company I committed to the two Steves that I'd spend four years at it. I figured I could get it done in four years or we'd be flat on our backs. And I was looking forward to turning over my daily responsibilities and going back to being retired at the end of four years. And would have done that had Scotty not had some problems that caused he and Apple to part company. And there wasn't anybody else to run the, run the darn thing. So I agreed in 1981 to run Apple until we could find a replacement.

DO YOU REMEMBER THE DAY APPLE WENT PUBLIC?

We didn't throw a party or anything. The underwriters threw a party and I went to that, but it wasn't a big deal. It was business as usual. We didn't really need the money. And to this day Apple has never spent the money that it raised from either venture capitalists or from going public. It's gone into working capital and that balance has never gone below what it was prior to the time those things happen. So we've always been able to generate cash at a rate that was sufficient to keep financing the growth of the company.

HOW DID YOU FEEL PERSONALLY? YOU WERE THEN WORTH A LOT OF MONEY.

No different. It's like when you have a birthday, somebody says, "Well you feel any different, you're a year older?" No, you don't feel any different.

I CAN'T BELIEVE THAT SOMEHOW.

Well it doesn't make major changes. Gives you some additional freedoms maybe on luxuries. And when you have luxuries you appreciate them. When you and then if your situation changes you don't have the luxury anymore and you say boy it was sure great while I had it. But that's not any different whether you had a lot of money or not.

WHAT WAS IT THAT YOU, AT SOME POINT WAS THERE A POINT WHERE YOU SAID, GOD WE'RE MAKING IT. WE'VE MADE IT. WAS THERE ANY POINT THAT YOU REMEMBER THAT IT KIND OF HIT YOU AND YOU SAID AH HA?

Not really. It was always we...we made it. Or we're going to be broke and then I'll know we didn't. So it was, there wasn't a time that all of a sudden one day we said well now we're big enough. We've got the we've accomplished our goals. And it was always a situation of trying to position ourselves and get ourselves in shape to go the next step.

HOW MANY TIMES DID YOU BET THE COMPANY?

Oh I'd say about three maybe. Or if we would have been dead wrong we probably would have gone under.

AND WHY DID YOU FEEL THE NEED TO BET THE COMPANY?

There wasn't any other choice. Those were, like I said, easy decisions. If you know you must grow at a certain rate I'll give you an example. We decided that and easy to calculate, we decided that at any point in time, we met our growth rate, that less than half of the employees would have been with the company more than six months, because you keep hiring, you know. And we said, how do you manage? How do you make sure people know what they're supposed to do? We're going to have this incredible management problem. Where the managers won't know how they're going to tell someone that works for them what they're supposed to do. So we said, we're going to manage by values. We're going to share a vision. We're going to make sure everybody understands what that vision is. We're going to try and get the best and the brightest people, and we're going to say, this is what we're trying to accomplish. Here's a hunk. Let me know when you're done. And make sure that those people understand that we want to do things right, understand the philosophy of the company. You know, if somebody was going to do a new magazine at Apple, nobody ever considered doing it on newsprint style paper; we're going to do it on good quality 40 lb paper. And nobody ever considered doing it in monochrome. It's going to be four colors. And the photography is going to be great. And the text and the writing is going to be easy to read, well written even right down to our instruction manual. Have you talked to Jeff Raskin yet?

NO, BUT I HEARD THAT IT WAS.

Oh it was. And that thing was so well written. And easy to read. It had a little humor in it. Just the right amount. And it was very clear. People could understand it and enjoy reading it. It wasn't "Geez, I've got to go read the instruction manual." And so people understood that...That philosophy and you didn't need to have a whole layer of management to go running around looking over people's shoulder, saying "don't use newsprint." And I think had we not adopted that we would have hit another one of those plateaus that most companies hit where they don't have enough competent middle management.

WHAT WAS THE VISION?

Well the vision was the personal computer. And it was pretty easy to articulate that. You know everyone today knows what that vision was. So it's...it's It was easy to have everybody striving toward a common goal, make it more powerful, make it cheaper, make it easier to use. That begat the Macintosh.

ONE PERSON, ONE COMPUTER. WAS THAT JARGON?

No that was, that still is true.

I STEPPED ON YOUR WORDS.

One person, one computer, that was not jargon. That has been and still remains to be one of Apple's objectives. Not the only objective but one of them.

NETWORKING CHANGES...THE QUESTIONS I HAVE, I WANT A BASIC SUMMARY. HOW DO YOU THINK THE PERSONAL COMPUTER HAS CHANGED? THE COMPUTING FIELD AND HAS IT CHANGED SOCIETY?

Well I think it's made a major change in the way people use the technology of computing. The field of computing hasn't changed a whole lot. We've gotten a lot better at implementing what we want to implement. We've made things go faster, we've made them cheaper. We've made them more user friendly and all those things. But the technology that has been used to do that is fundamentally the same. People knew about parallel processing technology many...many years ago. And now we're talking about risk. And those... those things are all things that people study in...in college. And they become more or less economical and more or less applicable to certain markets as things... things change. But the way people perceive the value of computing technology and the use of computing has changed markedly in the last ten years. And I think the personal computer is just one existence proof of that. If you look around at everybody's kitchen today you find microwave ovens that have little computers inside that work the keyboard. There are computers in almost every car that's manufactured today and that computer runs the engine and calculates the proper mixture and makes less smog for everybody to breathe. And makes the engine more efficient and you get better gas mileage. So computers and that technology has invaded many, many areas of the way people live. And I think personal computers have been a big part of that. Not, certainly not the whole social change that's been brought about. And basically they've either made things possible to do that we couldn't do before, or they made things that we used to do easier. And that's what it's all about.

THINKING OF THE IMAGE OF THE COMPUTER AS THIS THING THAT YOU PUT, A HUMAN BEING GIVES THE INPUT, A HUMAN BEING GETS THE OUTPUT. HOW DID THAT IMAGE CHANGE FROM 72, YOU KNOW PRE-HOBBYISTS, PRE-APPLE COMPUTER 2?

The analogy I like to use is the fractional horse power motor. When something other than horses and oxen was invented early on, it was something like a steam engine that was a huge behemoth that sat beside the river. And maybe there'd be belts and pulleys that went out to a saw or to a sewing machine or something else. And if you wanted to use it as a person, you had to go to it. And then that whole idea of...of generating power, physical power got implemented in a, in a large electric motor. And still you had to go to it. They could take it away from the river now but you still had to go to it to use its power. Then they invented the fractional horse power motor. So you could take the motor where you wanted to go. You could take it with you. You could put it in a fan in your living room and cool things off. You could put it in a watch. You could put it in a drive mechanism to make the seat of your car go up and down. And today people interact with something on the order of a hundred fractional horsepower motors every day. And don't even realize it really. And I think the computer has moved in an analogous fashion from the ENIAC that took a small stream to keep it cool and ten people around it all the time to keep it running. And if you wanted to use it you had to go to it to the person, personal computer of today that you can take with you. That's very similar.

HAVE WE REACHED A LIMIT IN TERMS OF WHAT SEMICONDUCTORS ARE ABLE TO DO? AND IF NOT WHAT ARE THE IMPLICATIONS?

It doesn't seem to me that we've reached the limits yet. I don't, I'm not sure that anyone knows where the limit is at this point. People like Carver Mead and other are better to answer that question than I. Certainly I can see a point in time where computers will be three orders of magnitude cheaper than they are today. So instead of having the power that's in a Macintosh cost a $1,000, it'll cost a dollar. I can see no reason why that shouldn't continue but it's..it's not too difficult to think about computers that are essentially free. Not truly free, but are so inexpensive that you can use them with impunity. And when we get to that point, you begin to wonder what are we going to do with all this power even if it is free. And that's a very, very exciting proposition.

WHERE DO YOU THINK IT'S GOING TO BE? WHAT DO YOU SEE IS GOING TO HAPPEN IN THE NEAR TERM?

Well I think we need to do some work on how to use distributed intelligence. So that we can interact and deal with lots of smart things that talk to one another. And I don't think we understand how do to that very well yet. But it's coming.

LOOKING BACK AT IT ALL, WHAT STRIKES YOU THE MOST ABOUT THIS STORY ABOUT?

Well I think the thing that I'm most proud about and pleased with is that Apple created an environment where some really great people could grow and become friends and accomplish a lot and there are people today who are either still at Apple or ex-Apple employees who treasure the time they spent there. And feel Apple's sort of a part of them and...and they're a part of Apple. Apple's a good company, a good strong company. And it's all because of the great people there. And I think Apple gave back to those people a very worthwhile thing. And that's... that's the most fun about Apple.

ANYTHING YOU WANT TO SAY BEFORE WE GO?

Yeah I suppose one thing. There's a...a general, a general belief that there was a lot of luck in Apple's being successful. And certainly there was some element of luck. But I think most people just don't appreciate the amount of hard work, the number of mistakes that we made. You know we looked like we were perfect from the outside. But we were open minded. We would try new things. We'd do it and see if it worked. If it didn't work, we were willing to say that doesn't work we've got to do it a different way. And that people really worked awfully hard to make Apple succeed. And I...I really don't chalk it up to luck very much. I think that it was hard work and bright intellectually capable people who figured out how to make Apple succeed in real time while we were doing it. And that's where the credit should go. Not to lady luck.