On April 1st, 1976, 47 years ago, a little computer company called Apple Inc. was founded in Cupertino, California. Most of us know that the company had two co-founders named Steve. Steve Jobs and Steve Wozniak. But did you know that there was a third co-founder named Ronald Wayne? This little-known third co-founder is actually the guy who provided all the money and early business expertise that enabled Apple to get off the ground back in 1976. And in return for taking a chance on two unproven nerds, this third founder was given a 10% equity stake in Apple.
So why have you almost certainly never heard of Ronald Wayne? Surely he’s one of the 100 richest people in the world? Has he been too busy over he last few decades sipping Mai-Tais and bedding super models on his billion dollar private island? Well, not exactly. Unfortunately, in addition to being the third founder of the most valuable company on the planet, Ronald G. Wayne ALSO has the distinction of being the person who made the worst financial decision in history….
Let’s Travel Back To 1976
In the early part of 1976, Steve Jobs was toiling away as a lowly technician at Atari while Steve Wozniak worked as an engineer for Hewlitt-Packard. Wozniak and Jobs had been friends since meeting at Homestead High School in Cupertino, California. At some point early that year, Wozniak built the hardware, operating system and circuit boards for a very basic computer that he would eventually call the Apple 1. It was Jobs who actually suggested the name after returning from a fruit farm where he had subsisted on nothing but apples for more than 10 days straight. In his eyes, the name “Apple” was “fun, spirited and not intimidating,” perfect for a piece of unfamiliar technology. It was also Jobs who suggested that Wozniak manufacture his Apple 1 as a commercial product that other computer enthusiasts could purchase–Wozniak was planning to just give everything away for free. In order to do that, they would need to raise some money and form a company.
One of Jobs’ co-workers at Atari was a man 20 years his senior named Ronald Wayne. Jobs became particularly enamored with Wayne after learning that he had experience starting and running companies. Prior to becoming Atari’s Chief Product Engineer, Wayne had run a handful of mildly successful companies in the slot machine industry. When it came time to launch Apple, Wayne was the perfect professional complement to the untested Wozniak and Jobs.
A Company Was Born
On April 1st, 1976 the Apple Computer Company was founded by Steve Jobs, Steve Wozniak and Ronald Wayne. In exchange for 10% of the company, Ronald Wayne was expected to draw up the partnership documents, write the very first Apple 1 manual and provide a general level of “adult supervision” for the young upstart. He also ended up designing the very first Apple corporate logo. Four months later, the very first Apple 1 computers went sale for $666.66 (roughly $3,500 today’s dollars).
The Apple 1 was an instant smash hit that opened the door for the Apple 2 which was an even bigger success. In 1976, Apple’s revenues were $175,000. In 1977 revenues grew to $2.7 million. Apple went public in 1980. The public offering made over 300 employees at Apple instant millionaires. That year it generated $117 million in sales. Here is Apple’s original logo and the original signed corporation founding papers… note the third signature:
Giving Up A Fortune
Amazingly, in 1982, just five years after launching the company, Apple earned over $1 billion. By then, both Jobs and Woz were each personally worth hundreds of millions of dollars.
So what happened to Ronald Wayne? He must have made millions as well, right? Wrong. Unfortunately, Ronald Wayne did not stick around long enough to see Apple soar to such great heights. In fact, just 12 days after forming the company with Woz and Jobs, Ronald decided to sell his entire stake back for the measly sum of…
In fairness, Ronald ended up receiving an additional $1,500 a few months later that fully relinquished all his future claims against Apple. $800 + $1,500 = $2,300. Today that’s the inflation adjusted equivalent of $3,000.
Ronald Wayne essentially sold 10% of what would some day become the largest corporation in the world, for around $3 grand. Why on earth would he do that?
When Jobs, Wayne and Wozniak launched Apple, the type of partnership they formed would hold each founder personally liable for any debts incurred by the company or any of its members. In other words, Wayne could have been on the hook personally for any debts these crazy 20-year-old hippie computer nerds ran up. This may have been a valid concern at the time. Not only did Ronald Wayne already own several other companies and assets that he did not want to risk losing, but he also wasn’t exactly confident that two kids with zero business experience, who made a new fangled gadget no one had ever heard of, had a chance in hell at being successful.
How Much Money Did Ronald Throw Away?
It’s impossible to know how much of his stock Ronald would have eventually sold off at various points during Apple’s existence as a public company. Maybe he would have sold some shares at the IPO, maybe he would have sold some when Steve Jobs was fired in the 1985. Steve famously sold his entire stake except for ONE share after being fired by the company’s board due to poor company performance. There are a thousand scenarios.
On the other hand, if by some chance Ronald had managed to hold onto his 10% stake to the present, based on Apple’s market cap right now, today would have a net worth of…
That would make him the richest person in the world by a margin of around $70 billion.
What Happened to Ronald Wayne?
After getting bought out of Apple, Ronald went back to work for Atari. He left Atari in 1978 to work at the Lawrence Livermore National Laboratory. He spent some time working for a small electronics company. He later owned a stamp shop. Over the years, Steve Jobs made a handful of attempts to bring Ronald back to Apple, but he resisted every time.
He wrote a book about the constitution. He’s a collector of gadgets and memoriabilia, but he famously did not own a single Apple product for his entire life until 2011 when a fan gave him an iPad 2 at a tech conference.
For the last decade he has been retired and living in a mobile home in rural Nevada. He is not a billionaire. He is not a millionaire.
When asked about making what some would consider the worst decision in financial history, Ronald says he has no regrets:
“Do I regret selling my share of Apple? No, that has been my answer ever since day one and will be my answer until I die. There were several reasons why I separated myself from Apple. First of all, my passion was not computers, it was slot machines. I had a passion for them my whole life and I wanted to design them.“
“I was in my 40s, [Wozniak and Jobs] were in their 20s, it was like catching a tiger by the tail. If I had stayed with Apple, I would have wound up the richest man in the cemetery.“
How would you feel knowing that you gave up a $100-200 billion+ dollar lottery ticket? Could you live with yourself? Can you sort of understand Ronald’s reasoning back in 1976, for wanting to extricate himself from Apple? Either way, I bet April 1st is a particularly tough day every year for Ronald Wayne.