Overnight millionaires - the American Dream becomes true
Apple II was a revolutionary product and "opened a new chapter in the history of data processing.") Its introduction had an "earthshaking impact" and as the "best-selling computer of any size ever built") it boosted the company at an enormous speed. Star ting with sales of $775,000 in 1977, Apple reached $50 million two years later and sold more than 35,000 computers. The explosive growth continued, and in 1981, the company had already climbed up sales of $335 million. This rapid pace of expanding was real ly spectacular - even for a Silicon Valley start-up. Within only five years, Apple entered the Fortune 500 - the "fastest any firm had ever done that.") From a garage based venture it had become the "fastest-growing company in American business history." )
In 1980, Regis McKenna's public relations (PR) agency started an ad campaign in major newspapers to establish Apple as a serious company in the business world and to prepare the company's first public sale of stock at the end of the year.
In the "most oversubscribed initial public offering since Ford went public in the mid-1950s,") on December 12, 1980, Apple's 4.6 million public shares were sold within an hour. By the end of the day, the stock had jumped by $7 to $29. More than 40 people at Apple suddenly became millionaires. Steve Jobs, who held most of the stock, was worth $256.4 million (he was only 25 years old), Mike Markkula got $237 million (his second big score after Intel) and Steve Wozniak was $135.6 million rich. They became ove rnight millionaires - a phenomenon, which is characteristic for Silicon Valley.
Starting with a product developed by Wozniak's enthusiasm for electronics and constructed in a garage, Jobs had built up a successful company, which finally went public. This was a highlight in the young company's history. The two Steves had made it and re alized the American Dream. Looking at all those successful companies in Silicon Valley which made their founders overnight millionaires, however, one has to take into account that only 20 percent of all start-ups survive and can go public.
But if an entrepreneur fails and his firm goes bankrupt, he will get a second chance in Silicon Valley, and maybe then his start-up will succeed. Therefore, having witnessed a company's failure has some positive effects, because you will learn from your mi stakes and be more experienced at a new venture.
The foundation of a new high-tech firm is usually based on a special idea or a product, which seems to be demanded by the market. In the case of Apple it is the personal computer; or Intel which was started to produce semiconductor memory chips based on a new technique. Frequently, bright engineers leave their company, because their innovative idea was rejected by the management, and start a so-called spin-off (e.g. Fairchild, Intel). To build up the new company, entrepreneurs need capital. This financial b acking is vital for the new start-up and is provided by venture capitalists, who in turn receive a certain share of the company, and often give helpful advice to the new entrepreneurs. When this enterprise is successful and the company goes public after so me years, founders often find themselves as overnight millionaires and venture capitalists receive a very high yield on their invested capital (perhaps ten or hundred times as much).