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 Pre-Work | Apple | The First Bite

Welcome to Breakout

In this experience, we’ll be looking at Apple, the largest consumer electronics company in the world.

Founded in 1976 by Steve Jobs and Steve Wozniak, Apple began as a pair of computer geeks in a Los
Altos garage and transformed into a perennial contender for the world’s wealthiest company – worth
over two point six trillion dollars in 2024. But before the company went on to revolutionize personal
computing, Apple’s early years were fraught with conflict and controversy. Differing visions for Apple’s
future led to bitter disagreements and power struggles among its top executives. Conflicting ideas
and personal antics threatened to implode a promising and innovative company.

Later, you will meet with your group to continue the experience. But for now, let’s dive in.

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 Pre-Work | Apple | The First Bite

Steve Wozniak was born in 1950 in San Jose, California – and, in many ways, was destined for a life
in technology. His father, Jerry, was an engineer at the Lockheed Corporation, and Jerry fostered his
son’s interest in engineering from a young age. Right away, Jerry and his wife, Margaret, knew that they
had a very intelligent son. Making sure that their son wouldn’t grow up to become arrogant from his
intellect, Jerry and Margaret raised Steve with values of kindness and honesty.

Wozniak excelled in his studies. Unfortunately, he was a bit shy, and he struggled to make friends
at school – classmates labeled him “a social outcast.” And throughout his teenage years, Wozniak
increasingly felt more comfortable in the presence of his beloved electronics.

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 Pre-Work | Apple | The First Bite

After graduating high school in 1968, Wozniak entered the University of Colorado Boulder. However, a
year later, he was expelled for hacking into the school’s computer system. After Colorado, he briefly
attended De Anza College, then moved on to Berkeley in 1971. While at Berkeley, he took graduate
classes in software and hardware engineering. That same year, Wozniak – alongside his friend Bill
Fernandez – designed and built his first computer. They called it Cream Soda.

1971 proved to be a pivotal year for Wozniak. Not only did he transfer schools and build his first
computer, he also met a man who would change his life. One day, Bill Fernandez introduced the
21-year-old Wozniak to a high-school friend of his. He was a 16-year-old electronics enthusiast named
Steve Jobs.

Steve Jobs was born in 1955 in San Francisco. At the time of his birth, his parents were two graduate
students. Feeling unprepared to raise a child, they made the decision to put the baby up for adoption.
Paul and Clara Jobs – a couple from Palo Alto, California – had been wanting a baby for years. They
adopted Steve, promising Steve’s birth mother that they would send him to college and pay for tuition.

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 Pre-Work | Apple | The First Bite

Jobs was a precocious and rebellious child. He was bored at school and felt unchallenged – this,
even after skipping a grade. Luckily for him, growing up in Silicon Valley meant that many of the Jobs’
neighbors were engineers. And for the inquisitive young boy, these engineers were all too happy to
introduce him to their electronic gadgets and gizmos. After immersing himself in this environment, a
12-year-old Jobs landed a summer position at Hewlett Packard, where he worked on an assembly line
building frequency counters. It was at HP that Jobs saw his first computer and, in his own words, “fell in
love with it.”

When Jobs and Wozniak met in 1971, the two quickly bonded over their shared fascination with
electronics. Later that year, Wozniak came across an article in Esquire about so-called “blue boxes.”
These were illegal devices that allowed users to place free phone calls by exploiting vulnerabilities
in the phone system. Wozniak and Jobs decided to build their own “blue box,” – only with one key
improvement. While other “blue boxes” were analog, the two Steves’ would make their “blue box”
digital. This, in effect, would make their device much more precise.

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 Pre-Work | Apple | The First Bite

After successfully building their digital blue box, Jobs – the more business savvy of the duo –
recognised an opportunity. He knew they could sell their devices and make some decent cash. The
friends started building dozens of blue boxes. They sold them for $150 each – about twice what the
device cost to build. Throughout the summer of 1972, Jobs and Wozniak sold their invention door-to-
door around Berkeley.

But by the fall, sales started to dwindle, and life moved on. Wozniak began an engineering job at
Hewlett Packard, and was finding less and less time to build the boxes. Meanwhile, Jobs enrolled at
Reed College in Portland, and soon lost interest in the business altogether. But the venture – though
short-lived – was incredibly formative. The two men ultimately came away realizing the massive
potential of innovative consumer technologies. As Jobs later told his biographer: “If we hadn’t made
blue boxes, there would have been no Apple.”

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 Pre-Work | Apple | The First Bite

Jobs only lasted one semester at Reed College. Eventually, he moved back in with his parents, and
in early 1974, got a job as a technician at Atari, the video game company. However, he wasn’t fully
satisfied. Jobs yearned for more – something spiritual. Jobs had always been fascinated by Eastern
philosophies. So, in the middle of 1974, he traveled to India in search of spiritual enlightenment. The
experience transformed Jobs on a personal level. But deep down, he still couldn’t shake a life in tech.
So, when he returned to the US in early 1975, bare-footed and with a shaved head, he went back to
work at Atari.

At no point, though, did Jobs or Wozniak lose touch. In fact, during this time, they started attending
meetings with the Homebrew Computer Club, a group of tech hobbyists who met to swap ideas
and try out their hardware. Ever eager to impress his fellow technicians, Wozniak started designing
and building a personal computer. After months of tinkering in his apartment, Wozniak successfully
demonstrated his handiwork to the Homebrew Club in March 1976. The group was impressed — and so
was Jobs.

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 Pre-Work | Apple | The First Bite

But more than that, Jobs was inspired. Wozniak had always intended to give his schematics away for
free. He wanted the other members of the Homebrew Club to benefit from his creation. Jobs, on the
other hand, recognized that Wozniak’s computer wasn’t just a project, it was a product – one that they
could manufacture, market, and sell. Wozniak was initially skeptical. But Jobs’ powers of persuasion
won out, and Wozniak agreed to form a company. Their first product would be a version of Wozniak’s
new personal computer – it would become known as the Apple I.

On April 1st, 1976, a partnership agreement was drafted: the two Steves would receive a 45% share in
the company. Jobs was in charge of marketing and business, and Wozniak oversaw product design.
Meanwhile, the final 10% stake was given to a man named Ron Wayne. Ron was a colleague of Jobs’
at Atari, and would serve as mediator between the two Steves. It was inside Ron Wayne’s suburban
Mountain View home where the agreement was signed – the founding moment of Apple Inc.

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 Pre-Work | Apple | The First Bite

But the excitement they felt at that moment would quickly become overshadowed. Success and
growth meant bringing in new people with more experience, which eventually led to a clashing of
egos. Early in their friendship, the two Steves had developed a harmonious relationship. But some
began to wonder whether one Steve was simply riding the coattails of the other.

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 Now that you’ve finished the Pre-Work,
explore the appendix below.

There, you will find critical information and

instructions on what to do next.
Appendix
 The next steps are to go to
app.breakoutlearning.com
and take the pre-session quiz.
The quiz takes no more than ten minutes.

Then, at your scheduled time, join the small-group discussion.

We hope you enjoy your Breakout Learning Experience!

Case authored by Olav Sorenson for the sole purpose of class discussion. Copyright © 2024 Breakout Learning, Inc.
This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Breakout Learning, Inc.