Apple's third founder sold his 10% for $800. The first document was about debt, not a garage

Apple’s first document is a partnership agreement dated April 1, 1976. It was written by the third founder, Ron Wayne, and set the shares at 45% for Steve Jobs, 45% for Steve Wozniak and 10% for Wayne. The 10% was there to break ties when the other two disagreed.

Twelve days later that 10% had become $800. Wayne filed an amendment with the county registrar and left the partnership, receiving $800 for giving up his share and, about a year later, $1,500 for agreeing to make no future claims.

Apple’s founding is usually told through the garage. What the first document recorded, though, was not a place but who owned how much and who was liable for how much debt. Listed companies fall outside this site’s criteria for cases, so only the first year of the founding is followed here, as a column.

From the April 1976 agreement to incorporation in January 1977

Most of these figures rest on books and magazine records. The only contemporaneous document that survives is the first agreement.

The twelve days in which 10% became $800

The reason given for Wayne’s departure is liability. In a partnership, the partners personally carry the partnership’s debts. To meet Byte Shop’s order, Jobs had arranged a $15,000 credit line to buy parts, and Byte Shop was a slow-paying customer. Compared with the two younger founders, Wayne had more personal assets at risk.

What happened can be read as structure. Holding 10% meant holding not only 10% of the profit but also personal liability for the partnership’s debt. Wayne gave up that combination for $800. At a point when the value of the share could not yet be seen and only the size of the liability could, the desk thinks this was a reasonable calculation.

The timing is disputed, though. Wayne’s exit is put at twelve days after the agreement, while Wozniak said in an interview that he left a few months later.

Beside the $1,300 story sat a $15,000 credit line

The story of Apple’s money usually starts with a calculator and a van. Wozniak sold his HP calculator, Jobs sold his Volkswagen microbus, and together they raised about $1,300.

The money behind the first production run was of a different order. Byte Shop ordered 50 units at $500 each, $25,000 in all. On the parts side, Jobs had a $15,000 credit line and asked the parts supplier for payment terms of 30 days. Use the customer’s purchase order as backing, and push payment for supplies further out. Their own $1,300 was only one piece of that arrangement.

What follows is inference: that sequence looks like the actual design of the first year. Lock in the buyer first, use the order to win credit for supplies, deliver and collect, then pay. The calculator and the van make the memorable story, but what moved the business was the purchase order and the payment date.

The garage was where things got assembled and sold

The garage story has a correction from Wozniak himself. In 2014 he said in an interview that the idea of starting in a garage was an overblown myth. Most of the design was done at his desk at HP, and the garage was where finished machines were brought, made to work and carried off to a store that paid cash.

About 200 units were built, and within nine or ten months all but 25 had sold. Records of how many were made and sold survive, but there is no record of where how many hours were worked. The story of the place grew to fill the part that went unrecorded.

Incorporation came nine months later

The partnership became a corporation on January 3, 1977. At that point Mike Markkula put in $80,000 to $92,000 personally and secured a credit line of $170,000 to $250,000 from Bank of America. His share at incorporation is given as 26%, the same as each founder’s.

Moving from partnership to corporation shifts liability for debt onto the company. The worry Wayne carried under the first agreement was exactly the kind incorporation resolves nine months later. Wayne received $1,500 even after incorporation as part of a promise to make no further claims against the incorporated company.

Co-founder splits break the same way in small businesses

Co-founding wobbles over how ownership and liability are divided at much smaller scales too. The operator of this site has written, in its own series, about how a SaaS started by two new-graduate colleagues broke over the division of capital. Traffic Think Tank rewrote its founders’ equity agreements before selling.

The list setting Apple beside other legendary companies is in the column tracing 22 founding legends to their sources.

What could be confirmed

The limits need stating. Most numbers here rest on biographies, memoirs and magazine records, not the books of the time. The timing of Wayne’s exit conflicts between twelve days and a few months. Markkula’s contribution and credit line vary by source, and his share at incorporation appears as 26% in one account and a third in another. It is reported that Wayne sold his copy of the agreement for $500 and that the same document later sold at auction for $2.51M, but the year and auction house could not be confirmed in what was read.

The first document recorded liability, not a place

From Apple’s first year, the only contemporaneous documents that survive are the partnership agreement and the filing that amended it. What they record is who held what percentage and who carried the debt. The garage appears nowhere.

The 10% Wayne gave up would later be described in enormous sums. In April 1976, though, what came attached to that 10% before any prospect of profit was personal liability for a $15,000 credit line. The founding story speaks of a place, and the first document speaks of liability. To follow the numbers, the latter is the one to trust.