The intensity of growth is such that even those who came to Apple untutored couldn't help leaving tutored -- sometimes in disciplines different from what they intended. In 1982, at age 22, legislative aide David Beaver was hired to help Apple president Steven Jobs navigate the world of politics. Instead, Beaver got drawn into the world of software when he learned how to write code. "I didn't set out to have a career in high tech," he admits, "but at Apple I realized I was better at programming than politics." Beaver left and founded the Automation Group Inc., a custom programmer serving businesses that own Macintoshes.
"It wasn't just the hard skills," appends five-year Apple sales-and-marketing veteran Shawn Miller, "I also got the confidence I needed to do it." "It" being I Love My Nanny, the child-care service she founded in 1988. (See "Shawn Miller: Inspired," page 4.) Miller later saw her husband, Larry, leave an Apple executive position to lead optical-character-recognition firm Caere Corp., now a $215-million public company. Much the same thinking persuaded an engineer named Steven Jobs to quit his first out-of-college job and give computer making a try. His then boss: Nolan Bushnell, founder of the then-four-year-old start-up Atari Corp.
An atmosphere that tolerates error reaps invention. In the early phases of any company's growth, the focus is more on getting product out the door than on establishing hierarchical boundaries. "We used to kid that what Apple lacked most was adult supervision," says Bill Cleary about Apple's formative years. But the outcome was serious: "We could make mistakes there -- big ones -- and not lose our jobs." After keeping his job in corporate marketing for four years, Cleary went on to found CKS Partners Inc., and brought in two other Apple alumni.
All told, Inc. traced more than 100 fiscal entities to roots at Apple. Given time, undoubtedly we would find hundreds more. But we still wouldn't have reached the end. So we rest our case and go on to describe some mechanisms by which, in any small-business growth setting, the multiplier effect unfolds.
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The High-Stakers
Individuals whose yield from one small-business investment enables them to fund additional small businesses
A conundrum: Steven Jobs and Steve Wozniak got their shares of Apple for nothing. Where did the hundreds of millions of dollars they later cashed out with come from?
When a start-up is founded and flourishes, capital is minted from thin air. The phenomenon can go on forever, as investors take profits and reapply them to founding more new businesses, each time by bigger multipliers than the last.
Early Apple backer Arthur Rock risked $57,600 for about 4.5% of the start-up in 1977. Rock sold a portion three years later, when Apple went public at $22 a share. Not to worry: as of mid-1993, the venture capitalist still had an untapped $40 million worth.
At the time Apple's initial public offering was staged, in December 1980, San Francisco underwriter Hambrecht & Quist was a tiny regional banker. "Suddenly, there we were, comanaging this major deal," says H&Q's Bill Hambrecht. "It catapulted us into the world, it elevated our credibility. 'The Folks Who Brought You Apple' became our tag line." The ME result: in 1980 H&Q did $557 million in underwritings; in 1983, more than $2 billion.
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The Bankrolled
Individuals who sell their stock holdings or save income to get enough money to capitalize their own start-ups
Apple Computer was partially funded, in 1977, with $250,000 from the pocket of Mike Markkula, who, for the purpose, cashed in stock options he'd been granted by his former employer, Intel Corp. Thus was set in motion a major dynamic of the ME: internally propagated money.
Apple immediately put aside 20% of its shares to reward workers with. All else being equal, that portion today is worth about $1.3 billion, or $90,000 per present employee. But even at the humblest company that proffers options to lure key people, some recipients are more equal than others.
Eased out of Apple in 1985, cofounder Jobs gradually shed some 6 million shares of Apple stock. Still only 30, he committed about $80 million of the proceeds to start software developer NeXT Computer Inc. Eventually, H. Ross Perot, founder of Electronic Data Systems (itself a once-small business), paid $20 million from the proceeds of his sale of EDS for a 16% share in NeXT -- exactly 100 times the dollar amount Markkula had invested 10 years earlier for the same proportion of Apple.
Not every entrepreneurial casher-out is motivated to build an operating business. Marketing executive Paul Dali threw his chips into 3I, a venture-capital firm. Karyn Frances Gray threw hers into watercolors and is now a nationally known painter.
And here's what happens when everybody in a company qualifies for options: ex-secretary Louise Stanley converted a relatively modest share of Apple into Details, a retail merchandiser.
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The Experiential M.B.A.'s
Individuals who acquire sufficient management acumen to found and run their own businesses
In the early years of a small business, proceedings are mainly ad hoc. No harm done: management experiments that turn out not to work are paid for by experiments that do.
"Where else could you get that kind of education?" marvels Radius Inc. CEO Charles W. Berger, who started as Apple's treasurer in 1982 at 29 and was promoted to its senior team by age 31. "We had more responsibility than we would at a big company, and more authority to do something with that responsibility, because there was a lack of corporate infrastructure to place boundaries on it."
