On January 3, 1977, Apple Computer was incorporated in California. It was a big day for Steve Jobs and his partner Steve Wozniak, who had been operating with almost no capital backing out of a garage. Mike Markkula, who had come on as the third partner and capital investor, would also remember this as a milestone occasion, as it was the day he took a twenty-six percent stake in a company that would soon be worth billions. The fourth man, the one who wasn’t there that day and wasn’t celebrating at all, was Ron Wayne, the man who fatefully sold his ten percent stake in Apple Computer for two thousand three hundred dollars.
Ron Wayne stumbled into his ownership stake. He first met Jobs years earlier while working at Atari and the two struck up a friendship. Jobs, who had an entrepreneurial spirit from the day he was born, was inspired by Wayne’s former role as the founder of a slot machine business, and even tried to convince Wayne to leave Atari with him and set up a new business together. Wayne rebuffed the aspirational young Jobs, but remained in his life as something of a mentor.
After Jobs left Atari and began work on what would become the Apple 1 with Steve Wozniak, he continued to turn to Wayne for business and management advice. At one particular juncture, Jobs asked Wayne to help him convince Wozniak of the merit in letting Apple Computer own the designs for the circuitry he was developing. Over a two hour meeting at Wayne’s apartment, the two were successful in convincing Wozniak to assign his designs to Apple, and Jobs was so grateful for both that occasion and Wayne’s contribution to the team that he offered him a ten percent stake in the company going forward. Wayne himself drew up the original partnership agreement, which the three men signed in April of 1976.
But Ron Wayne quickly had a change of heart. Steve Jobs was an ambitious character, and once he started talk of his big plans and all the money they would need to borrow to pursue them, Wayne began to rethink his position. Their partnership was not a corporation, and so if they were sued or found liable for debts, there was a chance that the courts could go after Wayne’s personal assets, a risk Wayne decided to great to bear. Within days of signing the original agreement, Wayne returned to the courthouse and submitted paperwork to legally remove himself from the partnership. Jobs and Wozniak bought out his ten percent with two thousand three hundred dollars, paid in two installments.
Just eight months later, based on the price at which Markkula bought his twenty-six percent stake, Wayne’s ten percent would have been worth roughly thirty-thousand dollars, a full thirteen times return on his investment. Jobs biographer Walter Isaacson estimates that Wayne’s ten percent would have been worth more than 2.6 billion dollars in 2010, which is return so astronomical it doesn’t make sense to calculate. And while it is tempting to ridicule Wayne for passing on such an incredible opportunity, at the time he likely made the prudent decision. Nine times out of ten, the company started by teenagers fails rapidly, and only one in a million goes on to be the major success that Apple Computer became. Wayne ultimately made the wrong choice, but he also made the right one for him.