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

Posted:
in General Discussion edited January 2014
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."
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Comments

  • Reply 1 of 40
    time for ron to bat some light bulbs around...
  • Reply 2 of 40
    I feel sorry for him. I rarely comment on anything but this deserves my time to do it.
  • Reply 3 of 40
    chris_cachris_ca Posts: 2,543member
    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?
  • Reply 4 of 40
    jd_in_sbjd_in_sb Posts: 1,483member
    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.
  • Reply 5 of 40
    monstrositymonstrosity Posts: 2,182member
    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.
  • Reply 6 of 40
    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"



    http://www.xtimeline.com/evt/view.aspx?id=61421
  • Reply 7 of 40
    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.
  • Reply 8 of 40
    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.

  • Reply 9 of 40
    qualiaqualia Posts: 73member
    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.
  • Reply 10 of 40
    Yeah if by shuffling papers you mean $100 bills!
  • Reply 11 of 40
    kreshkresh Posts: 379member
    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.
  • Reply 12 of 40
    gotwakegotwake Posts: 111member
    He needs to stop saying he "knew that the enterprise would be successful," because if that were true, he would have stayed.
  • Reply 13 of 40
    MacProMacPro Posts: 17,892member
    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?



    rethought
  • Reply 14 of 40
    ochymingochyming Posts: 474member
    Not a big deal.

    He just didn't want to be dragged by two punks.
  • Reply 15 of 40
    axualaxual Posts: 244member
    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.
  • Reply 16 of 40
    stelligentstelligent Posts: 2,680member
    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.
  • Reply 17 of 40
    tbelltbell Posts: 3,146member
    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?



  • Reply 18 of 40
    solipsismsolipsism Posts: 25,726member
    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.
  • Reply 19 of 40
    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.
    Hypereality
  • Reply 20 of 40
    flaneurflaneur Posts: 4,495member
    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.
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