This is a pretty awesome find by the Wall Street Journal.
We dug into the archives for The Wall Street Journal’s story on December 12, 1980, the day of Apple’s hotly anticipated IPO…. Apple made less than $100 million from selling stock to the public — or what Apple makes now in roughly eight hours of sales.
Perhaps the best detail in the Journal’s story was that Massachusetts regulators prohibited individual investors in the state from buying Apple IPO shares. Why? Because they deemed Apple’s IPO “too risky” under rules “aimed at weeding out highfliers that don’t have solid earnings foundations.” Well…Apple earned more than $19 billion over the last nine months through June 25.
Hilarious. Perhaps we can all agree that over-regulation isn’t always the best policy. Does anyone know if those regulations are still in force? Image of the 1980 newspaper article on the flip.
1980 was a very different time, both with respect to technology and the financial industry. 401k’s were just starting around then. Wall St. hadn’t yet convinced the middle class that buying individual stocks wasn’t speculative. The common advice back for small investors was to invest in mutual funds, not individual stocks. Note that some other states (like Texas) were also banning the sale of Apple stock.
This was also before the IBM PC was launched, which legitimized personal computing. Apple’s product line consisted of the Apple II which was considered a hobbyist machine, with a limited market. You could number the community of users in the tens of thousands. This was the era of IBM mainframes and upstart minicomputers from the likes of DEC and Wang. The Arpanet which became the internet hadn’t even adopted its current networking technology of TCP/IP. It was a speculative stock. Microsoft had similar skepticism when they went public.
It’s easy to look back and think it was over-regulation but given the situation I think it was a prudent decision. Perhaps if we had such prudence in the late ’90’s the dot com bubble wouldn’t have happened.
Apple was a textbook case of egregious mismanagement during the eighties. These regulations are, like blue-sky laws, intended to protect individuals from the kind of scams that were prevalent just prior to the Great Depression. The eventual success of Apple doesn’t make these regulations inappropriate, just as the financial success of a lottery winner doesn’t make the playing the lottery a wise investment strategy.
Not many small investors have the ability to ride through the protracted period of abysmal performance by Apple. Most companies that demonstrate such ineptness do not come roaring back the way Apple did in 2005 — twenty five years after its IPO.
As extraordinary as Steve Jobs was, a big part of what makes his story so memorable was his comeback after making such a colossal mess the first time around — not many CEOs get such a second chance, and not many are able to take such great advantage of those rare opportunities.
I knew Steve Jobs. I had the pleasure of working with him during the Macintosh launch and again during the NeXT launch. He was an extraordinary man, but he was very much human. Apple had the technology to put the Macintosh look and feel on every desktop (I know, I created it and sold it to them between 1984 and 1986). It was the explicit decision of Steve Jobs to instead attempt to use the Macintosh software as a lever to force the purchase of Apple hardware. That decision is among the great “bonehead” mistakes of corporate history — it is the reason why Microsoft subsequently dominated the world by doing the same thing itself (Windows 3.0) several years later.
If the history of the personal computer industry offers any insight into how we might change the relationship between government and industry, I suggest that a far more appropriate focus might be on Microsoft and the abject failure of the government to rein in its egregiously monopolistic practices.
The triumph of Steve Jobs was a personal victory. I think it offers precious little insight into the world of government and regulation.