98: Pirates of Silicon Valley
Mac vs PC. It’s a flame war that’s fueled by people on both sides who love to hate the other side. How did it all start? We’ll find out as we dig into the true story behind Pirates of Silicon Valley.
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About Pirates of Silicon Valley
July 21st, 1999. New York.
In a darkened room, two big screens showed the Macworld logo as everyone waited in anticipation for the keynote speech to kick off the expo. Then the screens changed to say something new: Steve Jobs, iCEO.
Thunderous applause and cheers greeted him as he walked on stage wearing his trademark black turtleneck and a pair of jeans.
Cheers turned to laughter as everyone realized it wasn’t Steve Jobs who walked out on stage.
About a month before the expo, on June 20th, 1999, TNT had premiered a made-for-TV movie about Steve Jobs and Bill Gates. The day after it aired, Steve Jobs picked up the phone and called the man who played him on screen, Noah Wyle. As Noah would later recount in an interview with Fortune Magazine:
We were under a very strict directive not to contact the people we were playing for fear that they would find something libelous in the script and shut the production down. So I didn’t. The day after the movie aired [in 1999], I was sitting in my living room and my phone with what I thought was my unlisted phone number rang.
“Noah?” said the voice.
“Yes,” I said.
“This is Steve Jobs.”
My heart started beating through my shirt. And he said—and I’ve memorized this—“I’m just calling to tell you I thought you did a good job. I hated the movie, I hated the script, I think if you had spent a little more time and a little more money and maybe a little more attention to detail, you could have had something there. But you were good.”
And all I could say was, “Thank you. Sir.”
“Listen, we do this thing every year called the Macworld convention. It’s in New York, at the Javits Center. There will be about 10,000 people there. And I think it would be hilarious if you came out on stage dressed as me and did the first five minutes of my keynote address. Are you interested?”
Noah Wyle’s presence at Macworld in 1999 was a surprise for many. But it’s clear from Noah’s recounting of the conversation with Steve Jobs that despite being a fan of Noah’s acting, he didn’t really like the storyline that we saw in Pirates of Silicon Valley.
But how well does it hold up to a check of historical accuracy?
Learn the true story behind Pirates of Silicon Valley
“I don’t want you to think about this as just a film.”
That’s what we hear Noah Wyle’s version of Steve Jobs say as he speaks directly into the camera to open the movie.
Then the camera pans around and we see that Steve is talking to Ridley Scott, who’s played by J.G. Hertzler. We’re on a film set, and soon we see a woman walking down the aisle of a dystopian room—hurling her hammer at the huge face on the screen. The message is clear: a single person vs a huge corporation. David vs Goliath. Us vs Big Brother.
After this, in the movie, we hear Joey Slotnick’s version of Steve Wozniak jump ahead 13 years later. This time in Boston, we see Steve Jobs talking and Bill Gates on screen. Steve Jobs says, “The era of competition is over.”
Apple and Microsoft working together.
This sandwiching of events over a decade apart is how the movie sets up the context of how things changed between Apple and Microsoft. So for our purposes today, let’s just say that both of the overarching events are true but we’ll focus on the earlier one first and work our way to the end.
That commercial we saw in the opening scene was the very first Macintosh commercial. It aired on January 22, 1984. It was, as the movie implies, intended to play off the totalitarian future as told in George Orwell’s novel, 1984.
The ad cost about $900,000 to make, and it really was Ridley Scott who directed it. He was just coming off hits like Alien and Blade Runner, so it’s clear that Apple was going big with their ad—they wanted to make a splash. And that they did.
Even today, that ad, which is simply called 1984, is seen by many as one of the greatest commercials of all time.
Going back to the movie, after seeing the ad we’re sent out to Berkley. The movie doesn’t indicate the year, but it’s clearly earlier than 1984 because Steve Jobs and Steve Wozniak, or Woz as he’s called, are in college together. It’s here we see the two Steves teaming up to work on something they called a blue box. Basically, Wayne Pére’s character, someone they just call “Captain Crunch”, found out that the toy whistle in the Captain Crunch box mimics perfectly the tones of AT&T’s long distance equipment.
Using this idea, Woz turns it into the blue box—a way to make free long distance phone calls.
That is true.
Steve Wozniak first found out about the person nicknamed “Captain Crunch” because of an article in Esquire magazine about telephone hackers known as phone phreaks. Although the movie doesn’t mention his real name, the person known as “Captain Crunch” was John Draper.
It was pure coincidence, but John was the one who figured out that the seemingly harmless toy in a box of Captain Crunch cereal could be used to do something illegal—make free telephone calls. After Woz read the article in Esquire, he reached out to John and learned more about it.
It’s not likely that Woz cared that it was illegal—which it was—but he used his genius to build boxes that replicated the idea.
In fact, one of the scenes we see in the movie is when Steve Jobs and Steve Wozniak pranked the Pope by calling him on one of the blue box devices. That actually happened. Steve Wozniak pretended to be the United States Secretary of State at the time, Henry Kissinger. But Woz didn’t actually talk to the Pope. Someone called up the real Henry Kissinger first and quickly realized the other call wasn’t him.
Blue boxing was popular until the 1990s after the FBI got involved, arrested some of the hackers while telephone companies changed their technology.
Back in the movie, after deciding not to build a career out of something illegal that would certainly land them in hot water, Steve Wozniak builds a computer. But then, we see the room filled with smoke. The reporters enter his room to find Joey Slotnick’s version of Woz laughing with Steve Jobs, waving away the smoke. Woz laughs and explains it caught fire.
That’s true. The computer did catch fire. Although Woz didn’t build it with Steve Jobs like the movie shows. He built it with someone who isn’t even in the movie at all. That would be a man named Bill Fernandez. Bill would go on to become the fourth overall employee at Apple.
The day was June 14th, 1971, and it was the very first computer built by Steve Wozniak. There wasn’t a monitor or keyboard like we have on today’s computers. It really consisted of about 20 chips on a board that made up a whopping 256 bytes of RAM.
Yes, that’s bytes. Not kilobytes, which is a thousand bytes. Not megabytes, which is a million bytes. Of course, these days we have gigabytes which is a thousand megabytes. So that first computer from Woz was a far cry from the computers we’re used to dealing with today.
It accepted computer programs through a series of punch cards. After computing the program, it’d indicate the results through a series of flashing lights.
Oh, and Bill and Woz dubbed it the “cream soda computer” because their building process involved consuming quite a bit of cream soda.
Back in the movie, after getting this sort of introduction from Steve Jobs and Steve Wozniak, we head over to the Harvard where Bill Gates, Paul Allen and Steve Ballmer are together.
Bill Gates is played by Anthony Michael Hall, Paul Allen is played by Josh Hopkins and Steve Ballmer is played by John DiMaggio.
We first see Bill as he’s playing poker. Then, after seeing an ad in a magazine, he and Paul decide to try writing a programming language for a new computer called the ALTAIR.
Of course, the scene we see in the movie isn’t really any one in particular, but just to get the gist across that Bill Gates was a fan of poker—and that’s true. Steve Ballmer would later recall many of the all-night poker games that he played with Bill Gates at Harvard.
At these games, Bill was known to have won and lost hundreds or even thousands of dollars at a time.
If you pause the movie like I did, you can clearly see when Josh Hopkins’ version of Paul Allen hands Anthony Michael Hall’s Bill Gates the copy of Popular Electronics with the computer on it, you’ll see the cover claims: World’s First Minicomputer Kit to Rival Commercial Models…ALTAIR 8800.
And looking at the cover, we can see the magazine they’re using in the movie is the January 1975 edition of Popular Electronics.
And it is true that Paul Allen was the first to see the magazine, immediately buying a copy and sharing it with his friend. So is the next scene we see in the movie when Bill Gates calls up the company that makes the ALTAIR 8800 and insists they can be the ones to develop a programming language for the computer.
After scrambling to develop the language for the ALTAIR 8800, in the movie, we see Paul Allen go to MITS to try and sell their product. He returns to Bill’s place with an ALTAIR 8800 in hand—it worked!
But that’s not the whole story.
Most tech enthusiasts and historians consider the ALTAIR 8800 to be the very first personal computer. It was built by a company called Micro Instrumentation Telemetry Systems, or MITS, which we can see in the movie behind Gailard Sartain’s character, Ed Roberts. He’s the guy we see answering the phone when Bill calls.
The real Ed Roberts was both the founder of MITS and designer of the ALTAIR 8800. At the time, he didn’t really expect it to be a massive success. In April of 1974, Intel released their most powerful CPU yet, the Intel 8080. Normally they sold for about $300 each, but Ed managed to get a great deal on a bulk purchase for only about $75 a pop.
That’s the chip Ed used in the ALTAIR 8800, and the lower price of the CPU helped bring down the cost of the computer itself to something quite affordable—only $439. That’s about the same as $2,200 today.
After Paul and Bill found out about the ALTAIR 8800, they sent a letter to Ed Roberts at MITS asking if he’d be interested in buying the BASIC programming language for the machine. Both Paul and Bill had learned BASIC earlier in high school, and wanted to sell an interpreter for the ALTAIR 8800.
So they didn’t develop the programming language, that was done John Kemeny and Thomas Kurtz in the 1960s, but they were going to develop the ability for the ALTAIR 8800 to be able to interpret the language.
Ed was interested, it’d seem, and called the number on the letter only to get a wrong number. However, Bill followed up later on and called Ed, and the rest, as they say is history.
Oh, and that first letter came from a company called Traf-O-Data. That’s what Bill Gates and Paul Allen called their company at first. And for what it’s worth, Paul Gilbert was also a part of Traf-O-Data. He’s not in the movie at all.
The name might seem odd, but it makes sense if you know what they did. You know those tiny little rubber hoses that cities will run along the road? Those collect traffic data.
Traf-O-Data’s primary purpose was to take that data from the traffic counters and process the data into readable reports.
Paul Allen flew to MITS headquarters in Albuquerque to show them how they’d managed to get the BASIC programming language working on the ALTAIR 8800. The very first test Paul did was by entering in the command, Print 2 + 2. The computer responded with a simple number: 4.
Just like the movie shows, it worked!
They managed to get the BASIC programming language on the ALTAIR 8800 and sold it for a whopping $500—even more than the computer itself! But they made a deal with MITS, so if someone bought the ALTAIR 8800, they’d get the ability to program with the BASIC language for only $75 more.
That was in March of 1975, so that’d be about $350 today.
But as you can probably guess, that’s quite a far cry from Traf-O-Data’s purpose, so on April 4th, 1975, the pair formed a new company to sign the deal with MITS. In an interview in Fortune Magazine 20 years later, Bill Gates and Paul Allen explained the name was a bit of a joke at first:
Bill Gates: When we signed that first contract with MITS, we referred to ourselves as “Paul Allen and Bill Gates doing business as Micro-Soft.” I don’t remember why we spelled it with a hyphen and a capital “S.” We put a credit line in the source code of our first product that said, “Micro-Soft BASIC: Bill Gates wrote a lot of stuff; Paul Allen wrote some other stuff.” We never officially incorporated until 1981.
Paul Allen: We had talked about a lot of different names back in Boston, and at some point I said, “Well, the totally obvious name would be Microsoft.”
Bill Gates: We also had mentioned names like Outcorporated Inc. and Unlimited Ltd., but we were, you know, joking around. We talked a lot about whether we should call it Allen & Gates, but decided that was not a good idea.
Paul Allen: Yeah. Because companies like DEC and IBM weren’t named after personalities, they would have a longevity and identity way beyond the founders…
Bill Gates: …and it seemed like a law firm or like a consulting company to call it Allen & Gates. So we picked Microsoft even before we had a company to name.
Back in the movie, we see some text on screen that gives us a time and place. It’s the Computer Faire. San Francisco, 1977.
It’s here that Noah Wyle’s version of Steve Jobs sheds his anti-corporate persona, donning a suit and tie. The new look is a shock to Woz, but perhaps not quite as much of a shock as what happens next:
As soon as the doors open, the crowd rushes to only one booth—Apple’s booth.
Among the throng is Paul Allen and Bill Gates. Bill introduces himself to Steve Jobs—the first meeting between the two we see in the film. Steve seems a little overwhelmed by the crowd and dismisses him. Dejected, Bill Gates walks away.
This, too, is true. Well, I couldn’t find any proof that the very brief meeting between Bill Gates and Steve Jobs happened here, but the rest of it is cemented in history.
The date was April 16th, 1977. Apple Computers was planning to launch their second computer a couple months later, the aptly-named Apple II. It was at the First West Coast Computer Faire in San Francisco when the public got their chance to see the Apple II for the first time.
And the Apple II came dressed to impress!
It had color video, game paddle inputs, seven slots for peripherals, a built-in speaker, support for up to 48K in RAM—that’s memory—and came ready for BASIC.
Although the movie doesn’t really mention this, the reason why Bill Gates and Microsoft reached out to Apple was because of the Apple II.
You see, originally it was Steve Wozniak who wrote BASIC for the Apple II. That’s why Steve Jobs turned down Bill Gates’ offer to use the version of BASIC that Microsoft had just finished writing for the MOS Technology 6502 processor.
The 6502 was the chip used in the Atari 2600, Nintendo Entertainment System, Commodore 64 and, of course, the Apple II.
Like the Atari 2600 or the NES, Woz originally assumed a huge market for the Apple II would be gaming. In an article he wrote for Gizmodo, Steve Wozniak explained:
I was a fan of computer games and knew that as soon as I had a computer of my own I would want to type in all these games to play. Judging by my own feelings, I assumed that this would be a key to starting a home computer revolution.
So when Woz coded BASIC, he decided to strip out floating point math—numbers with decimals—because games didn’t really need anything more complicated than that. Plus, that saved him a few weeks of coding time. The downside, though, was that it made the initial version of BASIC for the Apple II a little less powerful and not able to take advantage of Apple II’s high resolution graphics.
Well, high resolution for the time.
And the consumers noticed. They started complaining about the simplified version of BASIC and by the time 1978 rolled around, Microsoft’s version of BASIC was pre-installed in ROM on the Apple II.
As a fun little fact, that version of BASIC was referred to as Applesoft BASIC—a mashup of Apple and Microsoft.
Going back to the movie, the next major plot point happens when Bill Gates, Paul Allen and Steve Ballmer show up at IBM’s offices. During the meeting, Bill Gates explains to the IBM businessmen that he knows they’re working on a personal computer to compete with Apple. Microsoft can provide the operating system—DOS.
Then, in the middle of the meeting, the movie sort of pauses for a moment. We see John DiMaggio’s version of Steve Ballmer break the fourth wall and talk directly to the camera. He explains to us that what we’re watching right here—this moment—it’s amazing. Not just amazing, it’s historic.
He goes on to explain the reason this moment was so important was because it was the moment of creation for one of the greatest fortunes in the history of the world—Bill Gates, who’s the richest guy in the world because of what started in this room.
That’s sort of true.
Let’s start with that last part. Bill Gates isn’t the richest person in the world. But that’s now—as of this recording. In 1999 when Pirates of Silicon Valley was released, Bill Gates was the richest person in the world. That’s when, according to Forbes magazine, he had a net worth of about $90 billion dollars.
Second place on that list was Warren Buffet at a measly $36 billion.
Oh, and third and fourth place? Paul Allen at $30 billion and Steve Ballmer at $19.5 billion.
So who’s the richest person in the world now? At least as of this recording, that would be Amazon’s CEO Jeff Bezos at $93.1 billion.
And for what it’s worth, as of 2017 Bill Gates still had $86 billion—he was the richest person in the world for the previous four years until Bezos took over.
The meeting we saw in the movie was true. Well, I don’t know if that’s exactly how it went down, but the overall gist is true.
The date was November 10th, 1980. Well, again, I guess I don’t know if that’s actually when Bill Gates first approached IBM. But November 10th was when IBM signed the contract to have Microsoft provide their own operating system.
That would end up being MS-DOS, or the Microsoft Disk Operating System. And it’s also true that Bill Gates managed to convince the higher-ups at IBM to let Microsoft retain all the rights to MS-DOS. IBM didn’t really care because they were focused on the hardware. That’s what the movie is referring to as being the historic moment that created the world’s largest fortune.
Instead of just selling software to IBM, the genius move by Bill to convince IBM to license it from them allowed Microsoft to continue licensing it to other hardware manufacturers—each time, growing Microsoft’s fortune.
Something the movie doesn’t mention, though, is a theory that many historians think might’ve played into this historic deal—that Bill Gates might’ve had help from his mom. You see, Bill Gates’ mom, Mary, was on the board of directors at United Way. One of the other board members was none other than IBM’s then-President John Opel. So did Mary Gates help her son land the meeting with IBM? Maybe. But she wasn’t in the room, so I’m not sure if it really matters who helped coordinate the meeting.
By that, I mean, if you knew someone in your family who might be able to give you a big break, how many of us wouldn’t take advantage of that?
Oh, and yet another fun fact the movie doesn’t show is that before IBM and Microsoft made their deal, IBM actually wanted to work out a deal with someone else. The most popular operating system at the time was one called CP/M and it was written by a man named Gary Kildall.
But Gary’s wife refused to sign an NDA with IBM when they met, so IBM decided to meet with Microsoft. The rest, as they say, is history.
Going back to the movie, after Apple II’s success, we see Apple the company is doing pretty well. There’s a new office, and then there’s a scene where Noah Wyle’s version of Steve Jobs argues with a woman named Arlene outside of Apple’s offices.
At first he insists the baby isn’t his, even though Arlene insists it is. Then, a little later, he tracks her down and insists that she name the baby Lisa.
I couldn’t verify those exact scenes. After all, some of those scenes were just Steve and Arlene so it’s not like there’s the same sort of documentation as a contract signed between Microsoft and IBM.
The overall gist of what’s going on is true, though. Steve Jobs did have a daughter. Her name is Lisa, just like the movie says, and it’s true that for a long time Steve refused to admit that Lisa was his.
Even when he named the next Apple computer The Lisa, Steve Jobs refused to admit it was named after her for a while. We see this little bit in the movie, too, when we see Noah Wyle tell one of Apple’s other employees that it’s not named after his daughter.
Initially, he claimed it stood for “Locally Integrated Software Architecture.”
But…Lisa was born in 1978 and The Lisa was released in 1983, so a lot people don’t really believe that acronym was the purpose for the name. Some have even joked that it was a backronym, meaning Steve started with the name Lisa and made up words to make it fit—so he wouldn’t have to admit it was named after the daughter he refused to admit was his biological daughter.
Steve Jobs refused to admit Lisa was his daughter for a long time, even getting to the point of requiring a DNA test to start paying child support. The DNA test proved Lisa was, in fact, his daughter, legally requiring Steve Jobs to start paying $385 a month in child support. That sum went up after Apple’s IPO made Steve Jobs a millionaire…all the way up to $500 a month.
If you listened to the episode of Based on a True Story where we learned about the 2015 movie simply called Steve Jobs—that’s the one starring Michael Fassbender, not the 2013 film called Jobs with Ashton Kutcher—you’ll know that many years later, Steve Jobs admitted that, “Obviously it was named for my daughter.”
Oh, and as for Arlene, that wasn’t her real name. It was Chrisann Brennan. Technically they were never married, so Steve Jobs and Chrisann Brennan’s daughter is Lisa Brennan-Jobs.
Back in the movie, Noah Wyle’s version of Steve Jobs has his next genius moment when he tours a Xerox facility. Along with some of his engineers from Apple, Steve walks in and is amazed at the new technology Xerox is working on. They call it a graphical user interface and it’s navigated using a little wired box called a mouse.
Of course, those are commonplace things today, but at the time no one had heard of them and, according to the movie, Xerox executives didn’t really think they were anything special. They pretty much give it away to Steve Jobs by letting him peek behind the curtain. Apple takes the graphical user interface and mouse concept and runs with it, building out what would be their next computer after the Apple II—the Macintosh.
That is true.
The computer they saw was the Xerox Alto, which was named after the Palo Alto Research Center where it was developed. It was there that, in 1979, Steve Jobs managed to get a peek at what they were working on. The movie doesn’t really mention this, but it wasn’t like Xerox let Apple’s engineers tour their Palo Alto Research Center for free. In return, Xerox was given the ability to buy stock options in Apple.
As soon as he saw it, Steve knew the graphical user interface was something special. So, essentially, Steve Jobs took the idea for the mouse and graphical user interface from the Xerox Alto. But he wasn’t alone.
Steve Jobs, along with his team at Apple, and Bill Gates, along with his team at Microsoft, both agreed that graphical user interfaces, or GUIs, were the future for computing.
Hot off their deal with IBM for MS-DOS, originally, Bill Gates agreed to a deal with Apple. Essentially, Apple’s engineers were building the operating system with a GUI, but Steve Jobs knew a computer needs more than just an operating system.
So the idea was that Microsoft would help build software with a GUI for the Macintosh.
In an interview much later, Bill Gates would recall:
The Lisa had all its own applications, but of course they required a lot of memory, ah, and we thought we could do better, and so Steve signed a deal with us to actually provide bundled applications for the first Mac, and so we were big believers in the Mac and what Steve was doing there.
Apple was developing two applications, MacWrite and MacPaint, in-house for the Macintosh. Microsoft was going to provide two other programs, Chart and File, as well as a new spreadsheet program—Excel.
But Bill Gates wanted to retain the rights to their new graphical software. He wanted to be able to create software with a GUI for computer companies other than Apple. This wasn’t unique—remember Microsoft basically did the same thing with IBM for MS-DOS.
Steve Jobs, on the other hand, wanted to limit the competition. So eventually the two agreed that Microsoft wouldn’t create any graphical software for other computer companies for up to a year after the Macintosh began shipping in January of 1983.
Except there’s only one problem with that.
The deal just assumed the Macintosh would release in January of 1983. It didn’t. It got delayed.
Remember that ad we saw in the beginning of the movie? We talked about it at the beginning of this episode, too.
1984. That’s when the Macintosh came out. January 24th, 1984, to be a little more specific.
Before that happened, though, Bill Gates announced that Microsoft was working on an operating system of their own that had a graphical user interface. That operating system was called Microsoft Windows, and initially it would be designed to work with IBM’s computers.
Was that breaking Microsoft’s agreement with Apple?
Clearly, Steve Jobs felt that way. What the movie didn’t really show was that Steve Jobs had convinced the execs at Xerox that Apple could make the technology Xerox had created affordable for the market. And of course there’s the stock that Xerox got out of the deal. In 1979, Apple was still a private company but was on the verge of going public—which they did in 1980.
While I can’t say what Steve Jobs was thinking at the time, the deal between Apple and Xerox was that Apple got something and Xerox got something. Businesses do these sort of deals all the time. It makes sense.
But on the other hand, Bill Gates apparently didn’t feel it was breaking any agreement when he made the announcement for Windows on November 10th, 1983.
If you remember, the agreement was that Microsoft wouldn’t create graphical software for anyone else for a year after Macintosh’s shipment in January of 1983.
In all of my research, as far as I can tell, there was nothing in the original agreement that said anything about delays.
So when the new Macintosh didn’t ship until January of 1984, that would’ve been right when the agreement ended.
Which means, when Bill Gates announced on November 10th, 1983 that Microsoft was going to be working on their own operating system with a GUI, he was technically within his rights. After all, it’s not like it was released within that year. The first version of Windows didn’t ship until November 20th, 1985, well after the agreed-upon year.
In the movie, we see a scene where a furious Steve Jobs screams at Bill Gates. Anthony Michael Hall’s version of Bill Gates calmly replies to Steve’s shouting with a metaphor that Microsoft didn’t steal the idea of the GUI from Apple—both Apple and Microsoft stole the idea of the GUI from Xerox.
And the movie is pretty accurate here. Even down to the metaphor that we see used in the movie. Much later, one of the ten Apple employees who were present for the verbal tongue lashing from Steve Jobs would recall the conversation:
“You’re ripping us off!” Steve Jobs shouted. “I trusted you, and now you’re stealing from us!”
Bill Gates stayed calm. Then, after a brief moment’s pause, he spoke, “Well, Steve, I think there’s more than one way of looking at it. I think it’s more like we both had this rich neighbor named Xerox and I broke into his house to steal the TV set and found out that you had already stolen it.”
Or, as Bill Gates himself would recall Microsoft’s stance on it many years later: “We sort of say, ‘hey, we believe in graphics interfaces, we saw the Xerox Alto, too’.”
That example of stealing a TV from their rich neighbor, Xerox, is very close to the dialog used in the movie.
One of the reasons for it being so close to what was really said is because of how historically significant that moment was. Many historians point to that conversation as being the moment when the whole Mac vs PC battles began. You know what I’m talking about—the ones that still exist to this day. If you don’t know what I’m talking about, just tell one of your friends with a Mac how Windows is better—or vice versa—and you’ll find out what I mean.
Sure, IBM and Apple were competitors before this. But this is when Steve Jobs and, by extension, Apple, saw Microsoft as competitors, too.
As the movie draws to a close, we see some text on screen that we’re now at the St. Francis Hotel in San Francisco. Ella Fitzgerald is singing at Steve Jobs’ 30th birthday. Then we see some of Apple’s early employees—the people you think would be Steve Jobs’ best friends by now—all scramble when they’re asked to perform a toast.
And by that, I don’t mean they’re scrambling to do it. They’re all scrambling to avoid being the one that has to toast Steve Jobs. No one wants to do it. It’d seem no one likes Steve Jobs.
Finally, and we’re still in the movie’s timeline here, Steve Wozniak convinces John Sculley to do the toast. John does, ending it with something to the effect of, “To the man without whom none of this would’ve happened. Steve Jobs, truly a guiding light. A man who sees the future.”
Then we see text on screen that explains three months later, John Sculley fired Steve Jobs.
The basic gist of that is true, but there’s more to the story.
The 30th birthday party was real. The date was February 24th, 1985. And it is true that the jazz legend Ella Fitzgerald sang at his party, although from what I can gather it’s not likely she knew who he was.
While it’s also true that a lot of Apple employees had grown to dislike Steve Jobs because of his abrasive nature—we see that throughout the film as he belittles employees and yells at them when they aren’t working up to his standards. But there’s something the movie doesn’t mention is the moving five-minute long video that some folks from Apple put together for Steve’s birthday.
You can actually find it on YouTube—one of the Apple employees who was there posted it on Facebook after Steve Jobs passed away, and it subsequently made its way to YouTube. I’ll add a link to it in the resources section for this episode over at basedonatruestorypodcast.com.
So, I suppose you could say some people at Apple didn’t like Steve Jobs. He wasn’t an easy person to work for…but I think it’d be safe to say a lot of people at Apple respected him for the genius he was.
That brings us to the text that says John Sculley fired Steve Jobs three months after he gave the toast at Steve’s 30th.
That’s true. Sort of. John Sculley did toast Steve Jobs at his birthday party, but technically he didn’t really fire Steve Jobs. But…for all intents and purposes, he sort of did. The movie might be able to get away with that because Steve himself said multiple times that he was fired.
For example, in 2005 at a commencement speech, Steve Jobs said:
We had just released our finest creation—the Macintosh—a year earlier, and I had just turned 30. And then I got fired. How can you get fired from a company you started? Well, as Apple grew, we hired someone who I thought was very talented to run the company with me, and for the first year or so, things went well. But then our visions of the future began to diverge and eventually we had a falling out. When we did, our Board of Directors sided with him. And so, at 30, I was out… and very publicly out. What had been the focus of my entire adult life was gone, and it was devastating.
Ten years later, John Sculley gave his answer to Steve Jobs’ claims of being fired in an interview at the Engage 2015 Conference in Prague. John said:
Steve was never fired. He took a sabbatical and was still chairman of the board. He was down, no one pushed him, but he was off the Mac, which was his deal – he never forgave me for that.
Then a little later, he explained further:
He started NeXt and was sued by the board for hiring Apple engineers, but he was never fired by Apple.
Whether or not he was fired is semantics because the end result was that Steve Jobs left Apple. We learn a little more about this in the Steve Jobs episode of Based on a True Story—check that out to learn more about what happened to Steve when he left Apple.
Back in today’s movie, though, the final moments on the screen take us all the way back to the beginning of the movie. We see a closeup of Noah Wyle’s version of Steve Jobs on stage. Then we hear a voice behind him.
The camera cuts to a wider shot and we can see Bill Gates on the video screen above Steve Jobs. Bill remarks that it’ll be interesting working together. Steve nods, “Yeah. It is.”
Then the final text on screen says Microsoft now owns part of Apple. Then it claims Bill Gates is currently the wealthiest man in the world.
Well, we already learned that’s not quite true for Bill Gates. But we can give the movie a pass because in 1999 when the film was released it was true.
What about the part where Microsoft owns a part of Apple?
This is another case of the movie being sort of true and sort of false.
Although it’s worth pointing out that the scene in the movie with Bill Gates up on the big screen was very accurate—even down to what they’re wearing. You can find photos of the real event online. I’ll make sure to link to those over at basedonatruestorypodcast.com.
So after Steve Jobs was fired, or kicked out or just left—however you want to phrase that—Apple did well for a while. Things were fine for a while, but as the years ticked by it’d become clear that things weren’t the same without Steve Jobs’ passion and vision.
Meanwhile, Steve Jobs sold most of his Apple stock and used those funds to start a new computer company called NeXT in 1984. Then in 1986, he bought a company he’d wanted to pick up while he was at Apple but he couldn’t convince Apple’s board to buy.
On his own now, Steve didn’t need approval. So he bought a part of Lucasfilm, Ltd. for $10 million. That part was the computer graphics division, and Steve Jobs, John Lasseter and Ed Catmull renamed the division-turned-company Pixar Animation Studios.
At Microsoft, things were going great. Windows 95 was released on August 24th, 1995 and it was flying off the shelves.
Over at Apple, not so much. In fact, things were so bad that Apple’s board decided the only thing that could save them would be to bring back their estranged founder.
So they did.
In December of 1996, Apple bought NeXT. That’s the computer company Steve Jobs started after leaving Apple. But most historians don’t think Apple was interested in NeXT—their technology was virtually non-existent. They just wanted Steve back.
But Steve Jobs knew he couldn’t bring Apple back by himself. So it was, like the movie says, Bill Gates and Microsoft who helped. They bought $150 million worth of Apple’s stock. It wasn’t voting stock, so it wasn’t like Microsoft had control over Apple, though. That’s why a lot of people say it’d be incorrect to imply that Microsoft owns a part of Apple.
But, technically, they did. That $150 million in stock gave Microsoft about 150,000 shares of preferred Apple stock. That was converted to common stock a few years later and, in 2003, Microsoft sold off all of their Apple stock.
In retrospect, they might be sad about that. Today, that $150 million worth of preferred Apple stock way back then would be worth about $10 billion today.
Of course, it’s not like Bill Gates was, or is, hurting for money.
With all of this history between Bill Gates and Steve Jobs, you’re probably wondering—after all of this—why would Apple turn to Microsoft for help so soon after Steve Jobs came back to the company?
Maybe that last little bit could be why—being so soon. It’d seem that when Steve Jobs came back to Apple, things were a little worse than a lot of people might’ve realized. So maybe Steve turned to the one person he knew he could get a quick supply of cash from—no doubt biting back his own pride in the process.
In a 2010 interview, Steve was asked how bad things were for Apple when he got back. His reply was simple:
We were 90 days from going bankrupt.