The wild story of the lost iPhone prototype – SFGATE

It also set off a media frenzy outside Volker Staudt’s German beer hall, a mere 20 miles from Apple’s Infinite Loop headquarters.

“We’d have news crews come from all around the world, and the only thing we told them is we’re not going to give interviews about the phone,” Staudt told SFGATE, sitting alongside his wife and co-owner Mary Ann in their backyard beer garden.

In fact, the Staudts have never talked about the iPhone incident, until today.

“It really brought Apple security down,” Volker said.

Gourmet Haus Staudt started as a flower shop in the 1970s and added a beer hall and beer garden three decades later before becoming part of Bay Area tech lore in 2010. (Douglas Zimmerman/SFGATE)
Gourmet Haus Staudt started as a flower shop in the 1970s and added a beer hall and beer garden three decades later before becoming part of Bay Area tech lore in 2010. (Douglas Zimmerman/SFGATE)

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Volker’s parents, Lothar and Lucie Staudt, opened Gourmet Haus Staudt in 1974 as Flower Haus Staudt. The Staudts moved from Germany to America when Volker was a 1-year-old, and they sold flowers locally (including to Joe Montana, Volker boasts) until a Safeway opened a block away in the early ’80s. That forced them to abandon flowers and pivot to German specialty goods — think concrete deers, plastic dwarves and various Deutschland sundries — which the Staudts still sell today at 2615 Broadway. Volker took over the family business in 2007, leaving a high-paying job as a superintendent in commercial construction for what he expected to be maybe a year, tops. “The grocery store was just not a very exciting business,” he said.

Restless with his new line of work, Volker — who graduated from Sequoia High School just around the corner — tinkered with turning the grocer’s storage room into a bar.

“Literally, people were sitting on saw horses before I was even done,” said Volker, whose handiwork turned into what might be the Bay Area’s most authentic German beer hall. “Then the thing started getting popular because right in the beginning, that guy left his prototype iPhone.”

As the story goes, Powell’s phone was swiped by the patron sitting next to him at the bar, Brian Hogan, who has said he initially tried to return it to the original owner after thinking it to be nothing more than a lost iPhone 3GS. “I thought it was just an iPhone 3GS. It just looked like one,” he’d eventually tell Gizmodo. “I tried the camera, but it crashed three times.”

The day after he snagged the phone, it was remotely bricked (basically ceasing all phone functions), leading Hogan to take a closer look and quickly realize something was different. There was a camera on the front. Two barcodes on the back. The exterior didn’t feel right. So he decided to try to make a buck, shopping it to various tech blogs before eventually selling it to Gizmodo for $5,000. “You are looking at Apple’s next iPhone. It was found lost in a bar in Redwood City,” Jason Chen began in a Gizmodo piece published April 19, 2010, before an unending scroll of explanations detailing why it was, in fact, the yet-to-be-released iPhone 4.

“Before the Gizmodo story came out, Gray was a regular, and he kept calling every day saying, ‘Have you found a phone? Have you found a phone? ’ ‘Gray, no, we haven’t, but if we find one, we’ll let you know,’” Mary Ann recounts.

“He was panicking. I was like, ‘It’s just an iPhone. Go buy another one, dude,’” Volker said, laughing.

After the Gizmodo story dropped, coverage followed that evening with an outing of both the bar where it was lost (Gourmet Haus Staudt) and the Apple employee who lost it (Powell), a leak that is hard to even quantify at this point.

In the late 2000s and early 2010s, Apple’s next-gen iPhone releases at the Worldwide Developers Conference in San Francisco carried the sort of devout following usually only reserved for Lionel Messi or Taylor Swift. And this particular launch would bring with it all kinds of superlatives — it was the thinnest smartphone in the world at the time, it was the first iPhone with a front-facing camera and Apple’s state-of-the-art Retina display and, crucially, it would remain Apple’s flagship phone for a then-record 15 months.

Volker said the Staudts’ home phone started ringing right around the media blitz — a 5 a.m. call that startled the couple awake.

“We got a call from Channel 7 News,” Volker said. “They said, ‘We’re at your back gate. When are you going to be here?’ I thought the building had burned down. They go, ‘Did you hear about the phone incident?’”

All Volker could muster was “What phone?” before he and Mary Ann pulled out of their driveway in Santa Cruz’s Bonny Doon and headed for the bar.

When they arrived, they were greeted by more than a half-dozen news vans surrounding the bar. “All of our neighbors thought someone had died or something,” Volker said.

One of the first things Volker did after navigating the throng of TV reporters was email Jobs.

“I email Steve, and I said, ‘Steve, this is what happened. What do you want me to do? Can you please reach out and let me know? How do you want me to handle the situation?’” he said, noting that Jobs’ email was readily available online.

Steve Dowling, the VP of communications for Apple, called Volker four days later and told him to keep doing what he was doing — which in this case was not giving interviews.

“That iPhone thing put us all over the map,” Volker said.

Gourmet Haus Staudt was one of the Bay Area’s best German bars even before it was forever linked to Apple’s iPhone. (Douglas Zimmerman/SFGATE)
Gourmet Haus Staudt was one of the Bay Area’s best German bars even before it was forever linked to Apple’s iPhone. (Douglas Zimmerman/SFGATE)

According to a source who worked at Apple at the time, every security presentation after the phone was stolen included a mention of the lost prototype and Gourmet Haus Staudt. Three separate New York Times stories published in 2010 also mentioned Gourmet Haus Staudt (the only three mentions of the bar in the Times ever): one about the iPhone prototype incident, one about the emergence of Redwood City as a tech hub and one “36 Hours in Silicon Valley” travel dossier, in which the bar is described as “a low-key place for engineers to gab about new software compilers, their Python wizardry and Android A.P.I.’s.” 

Then the story went global.

For three years after, Gourmet Haus Staudt was inundated with international visitors. “There was a pilgrimage of Apple junkies from Japan and China and Germany, and they’d ask, ‘Which chair did it happen at?’ And they would take pictures in the chair,” Volker said.

The beer responsible for Powell’s downfall that fateful night, Weihenstephaner Vitus — a wheat buck beer from Germany containing 7.7% alcohol by volume — also got a fair amount of publicity thanks to Powell’s final Facebook post before losing the phone: “I underestimated how good German beer is,” he wrote. It also led to a loyal following at the bar — at one point, Gourmet Haus Staudt was selling more Vitus than any other bar in the world (it still has a plaque commemorating the honor).

“Germans were super proud because it was Vitus, a German beer, that brought down Apple,” Mary Ann said. “That was the ‘Men in Black’ of tech companies back then. The security was insane.”

A New York Times story published just nine months before the security breach detailed the extreme lengths the company went to in order to keep product releases under wraps.

“Few companies, indeed, are more secretive than Apple, or as punitive to those who dare violate the company’s rules on keeping tight control over information,” the Times wrote. “Employees have been fired for leaking news tidbits to outsiders, and the company has been known to spread disinformation about product plans to its own workers.”

Penetrating the Apple security fortress while breaking the law had consequences for everyone involved.

Police raided the Fremont home of then Gizmodo editor Chen, broke down his door when he didn’t answer and then seized external hard drives, four computers, two servers, phones and other items from his home — a raid that the Reporters Committee for Freedom of the Press and other groups argued violated federal and state law.

Jobs also suggested that Gizmodo tried to “extort” Apple via an email exchange between Jobs and Gizmodo editors in which the gadget blog listed conditions to be met before it would hand the prototype back to Apple. But San Mateo County District Attorney Steven Wagstaffe said there wasn’t sufficient evidence to charge Gizmodo or Chen with possession of stolen property or extortion.

And then there was the fallout for the iPhone thief: Hogan and an accomplice pleaded no contest to theft of lost property and were sentenced to 40 hours of public service and ordered to pay just $250 each in restitution to Apple.

The Staudts also banned Hogan permanently from Gourmet Haus Staudt, while Apple forced its own ban from the bar on Gray — though it doesn’t sound like that ban was enforced very strictly.

Gray kept his job in spite of the lost prototype and worked on Apple’s iOS software for another seven years before leaving the company in 2017. This initial interview with the Staudts was done a year ago in hopes SFGATE would be able to track down Powell, but many attempts to reach him for this story were unsuccessful.

Thirteen years later, Volker said Gourmet Haus Staudt has gone from The German Bar In Redwood City Where The Guy Lost The iPhone to simply The German Bar In Redwood City, which is just fine with the Staudts, who have built quite the Bay Area community and are now passing the bar on to the third Staudt generation. Their son Grant, who started as a dishwasher at the bar and now owns a resurrected dive bar of his own in Santa Cruz called Mission West, is slowly taking over the day-to-day operations of Gourmet Haus Staudt.

The Staudts’ Haus of 49 years (and counting) will remain in a family that has grown considerably over the years, both literally and figuratively. Volker’s niece met her husband here. They’ve had one couple get married in the bar. My wife and I even decided to have our third child on our way to a dinner at Gourmet Haus Staudt. It has that kind of effect on people. The shared tables, the bright smiles, the giant beers, the feeling that you’re in a place unlike any other in the San Francisco Bay Area.

Just remember when you go to keep a close eye on your phone.