February 25, 1981: Apple CEO Michael Scott oversees a mass firing of employees, then holds a massive party.
“I used to say that when being CEO at Apple wasn’t fun anymore, I’d quit,” he tells a crowd of Apple staffers. “But now I’ve changed my mind — when being CEO isn’t fun anymore, I’ll just fire people until it is fun again.” For many people at Apple, the day is the worst in company history — and an early sign that the fun startup culture of the early days are gone forever.
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The Apple bozo explosion
At the time, Apple was growing incredibly quickly. With almost 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 employing people he did not consider A-players.
He started by asking each departmental manager for a list of staffers Apple could cut loose. He then compiled these names into one memo and circulated the list, seeking nominations for 40 people that would face the ax. Scott then personally fired these people in a mass layoff that became known as Apple’s “Black Wednesday.”
Apple layoffs: ‘Black Wednesday’
“Usually shakeups within companies happen when things are going badly,” Andy Hertzfeld, then a systems programmer at Apple, told me for my book The Apple Revolution. “Black Wednesday was one of a number of shakeups which took place at Apple when things were going great. Sales were doubling almost every month, so that was a little unusual I would say.”
At the end of the day, Scott assembled the remaining Apple staffers. In an attempt to lighten the mood, he made his joke about firing people until Apple became fun again. This would have been bad at any time. Unfortunately, it turned out that the layoffs kept coming.
“Meanwhile there are managers circulating through the crowd, tapping people on the shoulder, because as it turns out they hadn’t finished firing people yet,” Bruce Tognazzini, who worked as an Apple interface designer at the time, told me. “So people are getting pulled out of the garage one by one and told they no longer have a job. It was one of the ugliest things I’ve ever seen. If you were at the bottom of the pyramid you typically got fired because your boss did. People were made to feel that they were useless, when they weren’t. It was just a terrible thing.”
Apple transitions into a serious company
In the aftermath of Black Wednesday, a few Apple employees tried to start a union under the name the Computer Professionals Union. Their first meeting never happened. For a lot of people at Apple, this marked the point at which Apple transitioned from a fun startup into a serious company with a ruthless adherence to the bottom line.
To put it another way, this was the point at which Apple grew up. Steve Wozniak was on his way out of Apple. Steve Jobs had cut his long hair and begun dressing like a businessman.
To many people, it seemed like committee-driven projects like the ill-fated Apple III would soon become the norm in Cupertino.
Ultimately, this turned out to be the beginning of the end for Mike Scott as Apple CEO, too. The layoffs generated such bad feelings that influential Apple investor Mike Markkula demoted his friend Scott to the role of vice chairman. Markkula then stepped into the breach himself to keep the peace. Scott only stayed at Apple for a couple more months.