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Third Apple co-founder sold 10% stake to avoid paper-pushing, risk

post #1 of 41
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Ron Wayne, the Apple co-founder who sold his 10 percent stake in Apple for just $2,300, said in an interview this week that he backed out of the company because he feared his role would involve shuffling papers for the rest of his life.

In an interview with Bloomberg Television earlier this week, Wayne and another Apple co-founder Steve Wozniak discussed the early days of the company.

According to the interview, Steve Jobs brought Wayne on as a "trustable person." He was given a 10 percent stake to serve as a mediator for Jobs and Wozniak, who each held 45 percent.

"He had more of a mature adult mentality and had strong formulas of how things go and how companies are run and what they do right and what they do wrong," Wozniak said. "He sat down at a typewriter and typed out all this legalese, looked like it came from a lawyer for our partnership agreement. So I was very impressed by Ron."

Jobs and Wayne had spent "quite a bit of time together" at Atari, where Jobs worked prior to starting Apple. After learning that Jobs and Wozniak were planning to start a computer business, Wayne offered his help. "Steve Jobs was a very dynamic person to start with. He was fun to be with. We spent quite a bit of time together," Wayne said.



"He had a modest disagreement with Steve Wozniak over some philosophical issue, and I happened to be there at the time. We had a conversation in which, successfully, I was able to get the issue resolved," he continued. "At the moment, Steve Jobs was very impressed with that bit of diplomacy and suggested immediately that we form a company with he and Wozniak each having 45% and myself having 10% as a philosophical tie-breaker in the case of any disputes in the future."

But, just 12 days after Apple was formed in 1976, Wayne sold his stake for $800, receiving an additional $1,500 later that year in exchange for forfeiting any claims against the company. Given Apple's current value, Wayne's 10 percent share would have been worth more than $35 billion today.

When asked why he pulled out of the company, Wayne said he "knew that the enterprise would be successful," while noting that nobody could have predicted the level of success that Apple would go on to reach. "In addition to that, I think Steve Jobs had an idea in the back of his head based upon the fact that I had rebuilt the documentation system for Atari. He was very impressed with the system and certainly wanted to have that as part of the new enterprise," Wayne went on to say.

Apple co-founder Ron Wayne

"The only problem with that was I could see myself looking ahead in the future as leading a major office in the back of the company shuffling papers for the rest of my life. That wasn't exactly the future I had in mind for myself."

Wozniak said he was shocked by Wayne's decision, noting that, later in life, he came to believe that Wayne may have been scared off because of the potential risks of starting the company without any capital.

"I figured it was because we were getting parts on credit, building the computers with no money, and selling them for cash to pay off the credit. If anything fell through in that plan Steve Jobs had no savings account or money or friends or relatives with money, and neither did I, so our adult supervision, Ron, might be on the hook for the money. I thought that might have scared him off, that he was taking a majority of the risk and he only got 10%."

Wayne admitted that the risk had played a part in his decision, especially given previous experiences as an entrepreneur. Prior to working with Jobs, he had started a slot machine company that failed.

"A year or so before I had formed my own corporation and it came to a kind of sticky end and I spent two years buying my way out of that mess, and there was the risk involved and whether or not I would be able to survive if the whole thing blew up," said Wayne.

He says he doesn't regret the decision, though. "I also realized the fact that I was standing in the shadow of a couple of really brilliant guys here the level of my creativity couldn't possibly match theirs. As I said, I would have wound up doing rather mundane work."

Wozniak confessed that, since he and Jobs were younger, the risk wasn't as much of an issue for them. "We went through project after project after project during my college years, his high school and his college years, before we started Apple. When it came to starting Apple, boy, things were gung-ho," he said.

"Steve Jobs pretty much was so young he didn't need any income and money, so we just survived on -- it was moonlighting for a while. You do that out of your house, you do it out of your garage, and it never came up, 'do we throw in the towel because we are not making any money yet?' Never came up."

Wozniak continues to have a bright outlook for Apple as Tim Cook takes over for Jobs, who resigned as CEO on Wednesday but will remain with the company as Chairman of the Board. "Steve [Jobs] would not leave this company not feeling it has got a good push for right now to keep the ways of thinking that lead to the great products that Steve has employed. He has been an example...Short-term, I would expect Apple might come up with home run after home run after home run again."
post #2 of 41
time for ron to bat some light bulbs around...
post #3 of 41
I feel sorry for him. I rarely comment on anything but this deserves my time to do it.
post #4 of 41
Quote:
Third Apple co-founder sold 10% stake to avoid paper pushing,

So why did he sell the stock?
Was he required to get rid of it when he quit?
post #5 of 41
Steve Jobs also sold all of his Apple stock (at the time of his exit in 1985) so lets not give Ron too hard of a time here. Sounds like he is a very nice guy.

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post #6 of 41
Quote:
Originally Posted by jd_in_sb View Post

Steve Jobs also sold all of his Apple stock (at the time of his exit in 1985) so lets not give Ron too hard of a time here. Sounds like he is a very nice guy.

Not really comparable.

I was once asked to be on the board of directors for a company which has since done very well. I knew I could have made a lot of money. But similarly, I declined because of the thought of working with a bunch of idiots for the rest of my life.

Looking back, great decision.
post #7 of 41
Quote:
Originally Posted by jd_in_sb View Post

Steve Jobs also sold all of his Apple stock (at the time of his exit in 1985) so lets not give Ron too hard of a time here. Sounds like he is a very nice guy.

No actually Steve sold his shares except ONE SINGLE SHARE. Just another example of his "Business Smarts"

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post #8 of 41
So, according to the co-founders, Steve Jobs wanted to split his shares evenly with his friend Woz (at 45% each) and give Ron Wayne 10% just for being tie-breaker? I'm going to link to this story the next time some hater accuses Jobs of taking advantage of Woz.

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post #9 of 41
I met him once a few years ago along with Daniel Kottke who was a friend of Steve and one of Apple's early employees. Both gentelmen were extremely nice.
post #10 of 41
It kind of sucks for the people like Wayne. Even if they say they don't regret it, you know it still has to sting. Then again, hindsight is 20/20 and it's not until the last 10 years that Apple became the company it is now.
post #11 of 41
Yeah if by shuffling papers you mean $100 bills!
post #12 of 41
I think I might have done the same if I was Ron. Woz was working for HP and Woz had not recieved a waiver of ownership from them over the Apple 1.

I can see how he did not want to wind up in a lawsuit between Hewlett-Packard and the fledgling Apple.
post #13 of 41
He needs to stop saying he "knew that the enterprise would be successful," because if that were true, he would have stayed.
post #14 of 41
Quote:
Originally Posted by Chris_CA View Post

So why did he sell the stock?
Was he required to get rid of it when he quit?

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post #15 of 41
Not a big deal.
He just didn't want to be dragged by two punks.
post #16 of 41
Hindsight is 20/20 ... but no one could have really known how it could have turned out. It's sounds astonishing now, but had Apple failed (and it nearly did), he would have been on the other side.
post #17 of 41
Quote:
Originally Posted by axual View Post

Hindsight is 20/20 ... but no one could have really known how it could have turned out. It's sounds astonishing now, but had Apple failed (and it nearly did), he would have been on the other side.

The question is - what was on the other side? It doesn't sound like he was committing any personal capital and really had little to lose except for time and a steady income. Failed entrepreneurism is often not a bad thing. Many of the most successful entrepreneurs failed at least once. I think the bottom-line was that he didn't have the entrepreneurial spirit. Nothing wrong with that, but it's rather obvious that was the reason and not the so-called paper-shuffling, IMO.
post #18 of 41
He didn't sell his stocks. Apple at the time was not incorporated so there was no stock. It was governed by a partnership agreement whereby Ron owned 10 percent of the business. That probably required him to be involved with the company by actually working.

The guy seems nice enough, but Woz says the guy left because he was worried about being stuck with any liability if Apple got in trouble. Jobs and Woz had no money and were doing everything on credit. If things tanked, Ron was the only guy with money and as a partner would be liable for any money the partnership incurred. He had just got done buying himself out of another venture gone bad. That makes more sense to me. Yet, if so, he should have talked the other two into incorporating sooner and that would have solved his problem.

Also the guy's share of Apple today would be much less because to go public, Jobs and Wozniak had to sell some of their interest in the company. So it is fair to assume Ron would have had to give up some of his share as well.



Quote:
Originally Posted by Chris_CA View Post

So why did he sell the stock?
Was he required to get rid of it when he quit?
post #19 of 41
If he had maintained that 10% share he'd likely be the richest man in the world in another year or so… though we can do "what if" scenarios with everyone and everything so it's ultimately a moot point.
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post #20 of 41
Quote:
Originally Posted by Ochyming View Post

Not a big deal.
He just didn't want to be dragged by two punks.

True. Apple's rags to riches story is more of an outlier than the norm. I mean, what if Gil Amelio decided to buy Be instead of NeXT? Apple would likely not be (pun intended) in existence (at least as we know it today). It might be a struggling, has-been company, another victim of the Microsoft ascent to the top of the food chain, which was exactly what Apple was in 1996. If that had happened, I doubt Ron Wayne would feel like he had made the wrong call about Apple, because the story would have been: "Apple was started by two guys in a garage in the 70s, ascended to its peak by the 80s, declined under competition from PC clones in the 90s, was sold to Sun/Oracle/HP in 1997. Where are they now?" And Steve would probably be living a low-profile life as Disney's largest individual shareholder. And we'd be listening to Sansa or Diamond Rio MP3 players and texting each other with our Palm Treo running WIndows Mobile, and Motorola would still be selling millions of RAZRs.

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post #21 of 41
Quote:
Originally Posted by Suddenly Newton View Post

True. Apple's rags to riches story is more of an outlier than the norm. I mean, what if Gil Amelio decided to buy Be instead of NeXT? Apple would likely not be (pun intended) in existence (at least as we know it today). It might be a struggling, has-been company, another victim of the Microsoft ascent to the top of the food chain, which was exactly what Apple was in 1996. If that had happened, I doubt Ron Wayne would feel like he had made the wrong call about Apple, because the story would have been: "Apple was started by two guys in a garage in the 70s, ascended to its peak by the 80s, declined under competition from PC clones in the 90s, was sold to Sun/Oracle/HP in 1997. Where are they now?" And Steve would probably be living a low-profile life as Disney's largest individual shareholder. And we'd be listening to Sansa or Diamond Rio MP3 players and texting each other with our Palm Treo running WIndows Mobile, and Motorola would still have selling millions of RAZRs.

A nice nightmare scenario. I mean it, no sarcasm.

You could add that Ron Wayne, who seems like a great guy, might be gone if he'd stayed involved, a victim of stress and despair.

He does a great interview in "Welcome to the Macintosh," for those who haven't seen that movie.
post #22 of 41
Quote:
Originally Posted by Qualia View Post

Then again, hindsight is 20/20 and it's not until the last 10 years that Apple became the company it is now.

Incorrect. The Steves became millionaires during the Apple II days.
post #23 of 41
Quote:
Originally Posted by AppleInsider View Post

shuffling papers for the rest of my life

Turns out those papers would have been stacks of hundred dollar bills.
post #24 of 41
I knew these guys back in the old days, though not very well, when I would attend some meetings of the Homebrew Computer Club. I'm a New Yorker, but my job would require I get to California every month or so for a time. I'd try to arrange my trip when a meeting was scheduled. Sometimes I'd see them, and other guys who are well known today.

I had turned down an offer in 1968 from a friend to form a computer company shortly after beginning college. He's a brilliant guy, but at that time I thought it was crazy to form a computer company, especially at our ages. It became pretty successful. I figured if the chance came up again with someone who had a good idea, I'd take it. But, the conversation never came up in the club. Too bad.
post #25 of 41
Quote:
Originally Posted by Flaneur View Post

A nice nightmare scenario. I mean it, no sarcasm.

You could add that Ron Wayne, who seems like a great guy, might be gone if he'd stayed involved, a victim of stress and despair.

He does a great interview in "Welcome to the Macintosh," for those who haven't seen that movie.

On the other hand, he could have left, as the Woz did, as Paul Allan did, and as many other founders and early employees of other major companies have done, while retaining their stock.

I don't know the complete reason why he left, but I do believe his experiences with his own finances had the largest part of it. No one is forced to remain an employee of a company they founded. And even if they are, as the Woz is, it's just for the sake of appreciation. He's smart enough to have known that.
post #26 of 41
Quote:
Originally Posted by Goldenclaw View Post

Turns out those papers would have been stacks of hundred dollar bills.

Twelve spots too late for that joke...see #11
post #27 of 41
Quote:
Originally Posted by melgross View Post

On the other hand, he could have left, as the Woz did, as Paul Allan did, and as many other founders and early employees of other major companies have done, while retaining their stock.

I don't know the complete reason why he left, but I do believe his experiences with his own finances had the largest part of it. No one is forced to remain an employee of a company they founded. And even if they are, as the Woz is, it's just for the sake of appreciation. He's smart enough to have known that.

True that one's recent loss affects one's next move. Your other post here reflects that too: the chance not taken.

Suddenly Newton was imagining an outcome where things at Apple didn't turn out like they did. Good ol' Ron Wayne might not be with us today if he hadn't pulled out, especially during the early years of development. Same thing.

In both interviews I've seen with him, years apart, he's an elegant guy seemingly at peace with himself. Judging by the size of his yachts, Paul Allen isn't.

Woz is great no matter what hits him.

Update: Thinking about it, and reading between the lines, the last thing an independent soul like Ron Wayne would be able to do is working on the documentation, doing the tech writing, under a fierce genius like Steve Jobs, or a fuzzy genius like Woz. I'm totally guessing, but I think he, Ron, could see nothing but insane drudgery in that. And like he says, he had his own ideas.
post #28 of 41
Quote:
Originally Posted by Suddenly Newton View Post

So, according to the co-founders, Steve Jobs wanted to split his shares evenly with his friend Woz (at 45% each) and give Ron Wayne 10% just for being tie-breaker? I'm going to link to this story the next time some hater accuses Jobs of taking advantage of Woz.

No one made Wayne agree to those terms. He wasn't doing any of the big design work so he felt it was fair and agreed to it who are we to say he was taken advantage of. Especially when we have hindsight to look at

Given that he wasn't a part of the actual design work, it is a stretch to call him a co-founder in my opinion

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post #29 of 41
Slow news day? LOL
post #30 of 41
Quote:
Originally Posted by Flaneur View Post

True that one's recent loss affects one's next move. Your other post here reflects that too: the chance not taken.

Suddenly Newton was imagining an outcome where things at Apple didn't turn out like they did. Good ol' Ron Wayne might not be with us today if he hadn't pulled out, especially during the early years of development. Same thing.

In both interviews I've seen with him, years apart, he's an elegant guy seemingly at peace with himself. Judging by the size of his yachts, Paul Allen isn't.

Woz is great no matter what hits him.

Update: Thinking about it, and reading between the lines, the last thing an independent soul like Ron Wayne would be able to do is working on the documentation, doing the tech writing, under a fierce genius like Steve Jobs, or a fuzzy genius like Woz. I'm totally guessing, but I think he, Ron, could see nothing but insane drudgery in that. And like he says, he had his own ideas.

In addition to what I said, individuals insulate their personal finances from the companie's finances. There is no reason why he should have thought he would be personally liable for any debts the company incurred. Unless of course, his knowledge of finances isn't as good as we're led to believe. I never had any personal liability from any of my companies. The only thing he might have lost is any money he loaned the company. And in that case, he could have been listed as a primary creditor, i.e., someone who gets put at, or near the front of the line in case of bankruptcy.

Well, he could have left, as I said. But I doubt anyone in his position would ever be stuck with writing documentation once the company rose to a large enough size. I wrote most of the manuals for the company I was a partner in that manufactured pro audio equipment. But we were a small company, and I enjoyed doing it. If we had grown to several times the size, we would have hired people to do that. I still would have looked it over.

And of course, he wasnt a lawyer, so he couldn't have done any real legal work for the company. At worst, he would have become the COO, or, if qualified, the CFO, though that position looks doubtful to me. But they have people do actually do much of the drudge work.
post #31 of 41
Quote:
Originally Posted by charlituna View Post

No one made Wayne agree to those terms. He wasn't doing any of the big design work so he felt it was fair and agreed to it who are we to say he was taken advantage of. Especially when we have hindsight to look at

Given that he wasn't a part of the actual design work, it is a stretch to call him a co-founder in my opinion

A co-founder just has to be someone who co-founded the company. (s)he doesn't have to do any work at all.
post #32 of 41
Money isn't everything. Some guys are extremely aggressive with stock ownership (Larry E and Bill G and countless others). Occasionally, they win big and win they do, they go down as the richest people.

But equally important and valuable people conduct their affairs differently -- sometimes more prudently -- and end up poorer as a result. Steve Jobs could easily be the richest man in the world, but he didn't organize his Apple shares in that particular way. Same for other titans of industry. Early Facebook / google employees too probably.

Net worth is pretty meaningless, anyway. I have enough net worth to stay fed. After that it gets to be more and more academic.
post #33 of 41
Quote:
Originally Posted by melgross View Post

In addition to what I said, individuals insulate their personal finances from the companie's finances. There is no reason why he should have thought he would be personally liable for any debts the company incurred. Unless of course, his knowledge of finances isn't as good as we're led to believe.

Number one, it sounds like the company wasn't incorporated. That means it's three people using credit to buy stuff, paying back the creditors when they sold something. It certainly wasn't an LLC, which shields individuals from the company's liabilities.
post #34 of 41
Quote:
Originally Posted by Qualia View Post

It kind of sucks for the people like Wayne. Even if they say they don't regret it, you know it still has to sting. Then again, hindsight is 20/20 and it's not until the last 10 years that Apple became the company it is now.

My guess is he has to say that for the sake of his own sanity. Otherwise he'd be in a cheap motel with a bottle of Jack Daniels in one hand and a loaded .44 magnum in the other.

I was offered a job about 14 years ago with a startup concern. They couldn't pay my full rate, so they wanted to make up the difference in stock options. I refused their offer, as it was just too risky in my mind. About 3 years ago they were bought out by a Fortune 500 company. My stake would have probably been worth a few hundred thousand - certainly less than a million by the time of the buyout.

As you say, hindsight is always 20/20. But even for that relatively small amount, I try not to think about it if I'm drinking... or cleaning my guns. For $35 billion, I'd be on permanent suicide watch.

But if he's really OK with it, good for him. Money truly isn't everything.
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post #35 of 41
His excuse about shuffling papers is weak, at best.

The man could have worked for a decade and then left worth a fortune. Then he could start up any business that he wanted.

He's a very nice man but not much vision in the old chap.
post #36 of 41
Quote:
Originally Posted by mdriftmeyer View Post

His excuse about shuffling papers is weak, at best.

The man could have worked for a decade and then left worth a fortune. Then he could start up any business that he wanted.

He's a very nice man but not much vision in the old chap.

Tough-minded as always, this time maybe too tough. Usually I agree but this time . . .

He did exactly what he should have done, given the situation at the time. Woz said it was about integrity, and he's right. No way was Ron Wayne going to put up with the "it's not good enough" treatment from Jobs. He's clearly a mensch. But he was not from the counterculture, which is what he means by "they were very bright guys," or words to that effect, don't remember exactly. There was a gulf, impassible for someone of principled independence. That's the way I read it at least. All speculation, of course.
post #37 of 41
Interesting the reactions to this story. Everybody can know everything after the fact, especially well after. Knowing something in advance, especially well in advance, is the real trick -- and involves more luck than any other thing. Anyone could have grabbed a brass ring if only they'd known what it was in advance.

Some make it sound otherwise -- that it would be obvious in well before the fact that a company created by "two smart guys" would 35 years later become one of the most successful in the world. We should know that most "two smart guys" enterprises go nowhere and have a nasty habit of flushing everyone involved down the toilet.

So while we're talking about Ron Wayne's ability to live a happy life even knowing that he could have been as rich as a sheik, we might also talk about Steve Wozniak. He dropped out of Apple in the early '80s and proceeded to blow most of the money he'd made to that point on projects he cared about, some nice, others just plain silly. He lives a fairly modest life now, but by all accounts, a contented one.

So really this is a story about living without regrets. If you don't develop that skill, you're going to be an unhappy person no matter how your material life turns out, because everyone looking back, if they are going to be honest, will clearly see their woulda-shoulda-coulda moments. So I give Ron Wayne high marks for not living in the past, for moving forward with his life without regrets. In the end, that's what it's all about.
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post #38 of 41
Isn't that Grandpa from the Munsters?
post #39 of 41
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Originally Posted by Friscosooner View Post

Isn't that Grandpa from the Munsters?

That's a great start here.

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post #40 of 41
Based on his early choices, chances are if he had stayed with Apple it might not have become the company it is today.
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