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 is already behind it.

The bozo explosion

At the time, Apple was growing incredibly quickly — and, with it, the number of employees that had been hired. With almost 2,000 people employed, Scott felt that the company had simply grown too big, too fast. It had led to what he referred to as a “bozo explosion,” in which there were people employed by Apple who weren’t considered A-players.

He started out by asking each departmental manager for a list of names they thought could stand to be cut loose. He then compiled these names onto one memo and circulated the list, asking that 40 names to be nominated. Scott then personally fired these people in a mass layoff that became known as “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, Mike Scott assembled the remaining Apple staffers together. 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 weren’t yet over.

“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,” then Apple interface designer Bruce Tognazzini 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 that they were made to feel that they were useless, when they weren’t. It was a just a terrible thing.”

Transitioning 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 was never held. For a lot of people at Apple, this was 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 now on his way out of Apple, Steve Jobs had cut his long hair and began dressing like a business man, and — for many people — it seemed like commitee-driven projects like the ill-fated Apple III were going to be the norm.

Ultimately, this turned out to be the beginning of the end for Mike Scott, too. Such was the extent of the bad feeling directed his way over the layoffs that Mike Markkula was compelled to demote his friend to the role of vice-chairman and to step into the breach himself in order to keep the peace. Mike Scott stayed at Apple for a couple more months, before leaving.