Paul Wood remembers meeting the founders at a trade show in 1978. Woz was in bib overalls and Jobs wore a goofy plaid suit.
From Tim Galbraith’s “‘The worst trade ever’?: Seven investors who sold Apple stock on IPO day—and missed out on billions,” posted Thursday in Fast Company:
Wood, who is now retired, told me he remembers visiting Jobs and Steve Wozniak at a drab back-corner booth at CES, back in the days when the well-known trade show had a summer edition in Chicago as well as its annual presence in Las Vegas. Jobs was wearing a goofy plaid suit and Wozniak wore bib overalls. Wood was no early fan of the deal, but as he performed the background checks with customers and suppliers a different picture began to emerge.
“We were convinced this was going to be an educational play—computers in schools. We had no concept of a personal computer market,” recalled Wood. He had the Apple business plan and started to haircut every assumption he could find, but his more conservative calculations still projected Apple growing like wildfire. Continental Illinois invested $504,000 in August 1978. On IPO day that stake was worth $40 million. The firm sold $5 million of the position at the IPO to get back 10 times its original investment and still held 1.5 million shares of house money. Wood, who went on to co-found private equity firm Madison Dearborn Partners, had no regrets when Continental Illinois trimmed the position and locked in gains to contribute to the bank’s overall earnings. Its original stake was a 78-bagger in 28 months. It would take 30 years before an Apple IPO investor would see a 78-fold return.
My take: Fun exercise. Galbraith tracked down six others who sold that day. The joke is that none of them regret it.