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March 18, 1999

From the Garage to the Boardroom:
The Steve Jobs Story

A Look at the Chairman of Apple Computer and Pixar

by Rick Munarriz (TMFEdible@aol.com)

Shortly after he was born in 1955, Steven Paul was adopted by Steve and Clara Jobs. He was raised in Mountain View, California, not too far from what would later become Silicon Valley.

Sensing that their son was not adjusting well at school, the family moved to Los Altos, where he attended Homestead High School. A technology buff at an early stage, and by some accounts a loner, Steve wound up working summers at Hewlett Packard (NYSE: HWP). It was there where he first met Steve "Woz" Wozniak. Woz was a gadget wizard and at the time he was perfecting an illegal blue box. The blue box would attach to a telephone and allow for free long distance calls. Steve helped Woz with a few blue box sales and a friendship was forged.

After graduating from Homestead, Steve enrolled at Reed College, a few hours north in Portland, Oregon. He struggled through his first semester before doing what many teenaged computer whizzes do -- he dropped out. It was the rebellious anti-establishment move of choice at the time. Woz, too, was a dropout and left the University of California at Berkeley without a diploma.

Steve worked a few odd jobs, including a summer stint at an apple orchard which would one day serve as the inspiration for Apple Computer (Nasdaq: AAPL). In 1974 he joined his friend Steve "Woz" Wozniak at Atari. Developing video games for the console powerhouse should have been fulfilling for the tech-inspired duo, but it proved to be short-lived. Steve only wanted to save up enough money to pay for an excursion to India. Once he did, he moved on. Woz tired as well and went back to Hewlett Packard.

When Steve returned to California after his spiritual expedition to India, he began to attend meetings of Woz's Homebrew Computer Club. At Steve's urging, Woz eventually left his position at Hewlett Packard for a more exciting venture. Steve and Woz turned the Job family's garage into a workshop and set out to build a personal computer.

Steve was just 21 years old. Woz was five years his senior. What the elder had in technological proficiency Steve made up for in business smarts and ambition. Without the luxury of venture capital, the two gave up their most prized possessions to fund the company. Steve sold his Volkswagen. Woz ditched his prized scientific calculator.

After a year of garage toil the Apple I was born. The first sale was for a few dozen machines to the nearby Byte Shop. Despite its limitations (the computer had all of 4k of memory) it became one of the first personal computers to be mass-produced. Marketed at the demonic price of $666, sales of the monitorless computer (it plugged into the back of television sets) ran just shy of the million dollar mark.

Soon the Apple II was rolled out and became a huge success. Steve sought out a new market -- school children. He saw children as potential long-term Apple customers and set out to place Apple systems in schools. By this time IBM (NYSE: IBM) had entered the personal computer market. Steve managed to beat IBM to the classroom, but Apple would eventually lose its stronghold.

Three years later, riding a wave of pioneering success, Apple Computer was taken public by Hambrecht & Quist and Morgan Stanley -- providing Steve and Woz the means to buy all the VW vans and HP scientific calculators that money can buy. The shares were priced at $22 and popped to $29 on the first trading day, giving the company a market capitalization of just over $1 billion.

While the company would continue to flourish, including the Macintosh rollout just four years later, both Woz and Steve would eventually get weeded out of the very company they had founded. It all started in 1983 when Steve convinced John Sculley to leave Pepsi (NYSE: PEP) and become Apple's president. "If you stay at Pepsi, five years from now all you'll have accomplished is selling a lot more sugar water to kids," Steve said. "If you come to Apple you can change the world."

Sculley may not have changed the world in general, but he did change Steve's world as he had come to know it. While the two had initially hit it off, soon their differences became apparent. Sculley was a purist businessman who saw Steve as a counterculture liability. Steve grew to see Sculley as incapable of understanding the computer industry. In 1985, just a few months after Woz left the company, a power struggle ensued and Steve lost.

Steve took some time off to travel through Europe, pondering his next step. Inspired by a lack of high-end computerized machinery he formed NeXT. The hardware company proved to be a bigger failure than the ill-fated Apple III, but there was promise in the operating system.

In 1996, three years after Sculley resigned from Apple, the company bought out the remains of NeXT, a move to get Steve back into the company's good graces. Steve was already being lauded as a visionary, mostly on the heels of his 1986 majority stake purchase of the computer-animation studio Pixar (Nasdaq: PIXR) from George Lucas. Steve had helped cut a production deal with Disney (NYSE: DIS) and after Pixar's 1995 Toy Story became the second-highest grossing animated feature film of all time he got Disney to sweeten the pot.

Apple investors cheered the return of Jobs. Initially brought on as a consultant and interim-chairman, he has stripped the "interim" prefix to lead the company permanently.

That is where Steve is today, living a dual life. He is actively overseeing Apple's return to consistent profitability on the heels of the successful iMac and G3 system introductions. Since he has rejoined Apple the shares have regained their winning ways. Meanwhile he continues to monitor his investment in Pixar as it readies for the home video release and first Disney-animated DVD release of A Bug's Life in April and the theatrical release of Toy Story II for the holiday season.

Like the iMac, Steve's life has been a very colorful adventure. Like Toy Story's Buzz Lightyear, it might very well be "to infinity and beyond."

~.~


We've only scratched the surface here on the dynamic life of Steve Jobs. For some further information, we suggest reading Apple : The Inside Story of Intrigue, Egomania, and Business Blunders. For a brief online reference that was instrumental in this feature's research try The Steve Jobs Helipad.

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Apple's Fruitful Earnings -- Fool Plate Special -- 4/16/98
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The State of Apple -- Fool on the Hill -- 3/30/98
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