February 25, 1981: Apple’s original CEO Michael Scott oversees mass layoffs and then throws a massive party. Apple’s layoffs follow a hiring boom that led to what Scott called a “bozo explosion” at the company. They are also the first sign that the fun startup culture of Apple’s early days is gone forever.
“I said that when I didn’t enjoy being CEO of Apple anymore, I quit,” he tells a crowd of Apple employees. “But now I’ve changed my mind – when I don’t enjoy being CEO anymore, I’m going to fire people until it’s fun again.”
For many people at Apple, this day is the worst in the company’s history.
Black Wednesday: Apple layoffs follow ‘bozo explosion’
At the time of the layoffs in 1981, Apple was growing incredibly fast. With nearly 2,000 people on the payroll, Scott thought the company had simply grown too big, too fast. The expansion led to what he called a “bozo explosion,” with Apple hiring people it didn’t consider A-players. (To learn how to avoid a bozo explosion in your company, read Apple evangelist Guy Kawasaki’s list of the top 10 “signs of bozoness.”)
Scott began the layoff process by asking each department manager for a list of employees Apple could lay off. He then compiled these names into a memo and circulated a list, seeking nominations for 40 people to face the axe. Scott then personally fired these people in a mass layoff that became known as Apple’s “Black Wednesday.”
“Typically, there is an upheaval in companies when things go wrong,” Andy Hertzfeld, then a systems programmer at Apple, told me for my book. The Apple Revolution. “Black Wednesday was one of the many shocks that happened at Apple when things were going great. Sales were doubling almost every month, so it was a little unusual, I would say.”
A poorly timed joke and “one of the ugliest things I’ve ever seen”
At the end of the day, Scott gathered the remaining Apple employees. In an attempt to lighten the mood, he made his joke about firing people until Apple became fun again. That would be bad at any time. Unfortunately, it turns out the Apple layoffs just kept coming.
“Meanwhile, managers are circling the crowd, tapping people on the shoulder, because it turns out they’re not done laying off people yet,” Bruce Tognazzini, who worked as Apple’s interface designer at the time, told me. “So people are pulled out of the garage one by one and told they don’t have a job anymore. It was one of the ugliest things I’ve ever seen. If you were at the bottom of the pyramid, you were usually fired because your boss did it. People felt they were useless when they weren’t. It was just a horrible thing.”
Apple is turning into a serious company after the bozo explosion
After the Black Wednesday layoffs, several Apple employees attempted to form a union called the Computer Professionals Union. Their first meeting never happened. For many employees, the layoffs marked the point at which Apple went from a fun startup to a serious company with a ruthless adherence to the bottom line.
In other words, Apple has grown up at this point. Apple co-founder Steve Wozniak was on his way out. And Steve Jobs cut his long hair and started dressing like a businessman.
It seemed to many that committee-driven projects like the ill-fated Apple III would soon become the norm in Cupertino.
In the end, it turned out to be the beginning of the end for Mike Scott as Apple’s CEO as well. The layoffs caused such bad feelings that influential Apple investor Mike Markkula demoted his friend Scott to the role of vice chairman. Markkula then entered the breach himself to keep the peace. Scott only stayed at Apple for a few more months.
