CHAPTER 7
Ed Roberts was my senior by twelve years, a fact that shaped his first encounter with computers. When he was stationed at Kirtland Air Force Base in Albuquerque in the 1960s, its weapons lab had one of the world’s most powerful computer installations: two Control Data Corporation 6600s, the fastest mainframes in captivity. But Ed never got to touch them. He had to hand his batch cards over for processing, “and I always thought it was a bad way to go,” as he later explained. “I thought everybody ought to own their own computer, and I thought that for years and years.”
In 1969, when I was at C-Cubed, Ed founded a new company in his garage: MITS, for Micro Instrumentation and Telemetry Systems. He began in the model rocket electronics business, then shifted to handheld electronic calculator kits. When Texas Instruments killed the market with cheap mass-produced models, and MITS was about to go under, Ed turned to the idea that had nagged at him since Kirtland: “a real, fully operational [personal] computer that … could do anything that a general purpose minicomputer of the time could do.” His “ultimate gadget,” as he called it, would be a sensation if he could pull it off. There was nothing close to it on the market.
Like me, Ed was following the chips. When he got wind of the 8080 microprocessor, he wangled some handwritten data sheets from an Intel rep before the release date. Looking at the specs, Ed could see that the microprocessor was fast and powerful enough to support the type of computer he’d been talking about, a machine he could sell in kit form for under $400. He made a deal with Intel for a thousand chips at $75 apiece, a steep discount. To get a loan, he told his bank that he could sell eight hundred machines in the first year, or four times as many as his private estimate.
Within weeks of the Popular Electronics bombshell, prepaid orders flooded into MITS from two thousand customers. Many sent cash for what was basically a proof-of-concept prototype, a bare-bones machine with no keyboard, no display, and just 256 bytes of memory. Because Bill Yates had yet to design the interface cards for a Teletype or audiocassette hookup, the only way to get data into the Altair was through the front-panel switches. A tiny 50-byte program required hundreds of settings in just the right order. But some people didn’t care; they figured they’d buy the Altair now and decide what to use it for later.
The mail in Ed’s office piled nearly to the ceiling. The balance in his checking account swung a half-million dollars from red to black in six weeks. His skeleton staff, cut from ninety to fewer than twenty after the calculator meltdown, was swamped. Ed found himself at the head of a movement to give people the technology they’d wanted for a long, long time. In the words of David Bunnell, MITS’s vice president of marketing, the Altair “liberated that technology to make it available to anybody who had a brain.”
I RETURNED TO Albuquerque as MITS’s “director of software development” just after Easter, in April 1975. After asking for two weeks’ salary in advance, I moved into the Sand and Sage Motel on Central Avenue, the old Route 66, just across the street from the Cal-Linn building—a strong selling point, because I had no car. (I’d left the Chrysler with Bill, who lent it to an acquaintance. It disappeared for good after that.)
The MITS software department was at the far end of the building, next to a vacuum cleaner repair shop. Our space was maybe a thousand square feet: a walk-in reception area with our terminals along one wall, and then a row of doorless cubbyholes that barely held a desk and two chairs apiece. I took the one at the front—I had my pick, as I had no staff. A month later, I’d be joined by Gary Runyan, whom Ed had hired to create an internal accounting system, and a month after that, I got a secretary. To keep the office from getting too noisy, Gary would wheel the Teletype into the bathroom whenever he printed out a listing.
I’d come at a frenetic time, with all hands on deck to answer customer phone calls and sort through the growing order backlog. A few days after I arrived, the company published the first issue of Computer Notes, edited by David Bunnell, one of the first periodicals devoted to microcomputers. On his inaugural front page, David hailed our software’s arrival: “Altair BASIC—Up and Running.” Though we were still months from shipping, Ed Roberts knew that our software gave the Altair a strategic edge over the competition that was sure to follow. Our relationship was perfectly symbiotic. Bill and I benefited from Ed’s distribution and marketing networks, while MITS, a classic early innovator, got out front with our programmer-friendly language and dedicated support and upgrades.
While Bill cranked away at Harvard to build our BASIC’s more powerful 8K and 12K versions, I spent my days consulting with Bill Yates and helping with technical questions from our growing client base. I put the machine through its paces for visiting reps and took an unending stream of calls from frustrated buyers. It wasn’t easy to assemble an Altair, which required more than a thousand solder connections before you could power it on. Some of our customers were engineers, but others were lawyers and dentists and car mechanics with no background in computer technology. After taking months to finish the assembly, they’d labor to toggle in a small demo routine. Then they’d call me.
CUSTOMER: I don’t think my Altair works.
ME: Are all the lights on in front?
CUSTOMER: Yes, they’re all on, but it still doesn’t work.
ME: OK, you’re going to have to buy some memory.
CUSTOMER: Oh yeah, memory. What’s that?
Here was the problem: To boost its profit margin, MITS had stopped shipping the minuscule 256-byte memory card that was bundled with the first batch of $398 kit machines. When you booted up a machine without a card, all the lights went on simultaneously, a bad sign. I’d tell the poor customers that they’d need at least 1K static memory ($176 in kit form) or a 4K dynamic memory board ($264). Few seemed irritated or angry at the news. They were just happy to have their own computer, and I knew how they felt. I’d been thrilled when Ed gave me an Altair to use at home.
Some callers were a little odd. One began, “I’m having a problem, listen to this.” The next thing I heard was the sound of a dial-up modem, a horrendous screech that nearly ruptured my eardrum. The caller said, “Does that sound like RS-232 to you?” I told him that I couldn’t diagnose his problem by ear, then walked him through the solution.
Eddie Currie, Ed Roberts’s general manager and milder alter ego, got one customer who insisted that his Altair wouldn’t work right because he and the computer had a personality conflict. Eddie said, “Well, how do you think we can resolve this?”
And the customer said, “Maybe you could send me another Altair with a personality more like mine.”
AFTER HARVARD LET out for the summer, Bill and Monte joined me in Albuquerque. We rented a furnished two-bedroom apartment on the ground floor of the Portals, a five-minute drive from MITS. It was a standard medium-rise apartment building, with shag carpeting and a courtyard swimming pool that we never used. Later we added Chris Larson, a younger Lakeside student who’d originally been conscripted for Traf-O-Data. Bill and I each took a bedroom, while Monte and Chris made do with the couch or floor.
In need of transportation, I bought my first new car, a metallic blue hatchback Chevy Monza. Bill came with me to pick it up, and we had a hilarious time getting it home. I’d never used a stick shift before, and I’d pop the clutch and stall every twenty feet. Bill tried, with similar results. The Monza was a high-powered little number with a V-8 engine and an undersize clutch that I’d burn out once a year.
I did MITS business all day, then stayed on as Bill, Monte, and Chris trickled in to work on our BASIC. I’d arranged a cheap timesharing deal with the local school district, which made its PDP-10 available late in the afternoon. After editing our programs on the trusty ASR-33 Teletype, we’d have someone shoot down each day to the schools’ office and pick up our listings from their fast line printer. Later on we’d lease a DECwriter terminal and install it in our living room.
Our day’s highlights were our meals: Furr’s Cafeteria for chicken-fried steak; Mr. Powdrell’s Barbecue for beef sandwiches, with old Mr. Powdrell still tending the smoker; Long John Silver’s when we missed Seattle seafood. After hours, we’d often wind up at Denny’s, where we’d be so revved up from our work that we’d freak out the waitresses. I remember a night when one of them looked from one pale face to the next and asked, “Are you guys speeding?”
“No,” Monte replied, “we’re programmers.”
After dinner we often took in the latest action movie before heading back to the office to code for hours. When I finally got home, I’d unwind by plugging in my Stratocaster and trying to play along with Aerosmith or Jimi Hendrix. (Monte preferred Emerson, Lake & Palmer; Bill played R & B or sang at the top of his lungs to Frank Sinatra’s “My Way.”) One night, as I lay in my bed in the dark, someone pushed through my window and into my room. I shouted and he fled. A few nights later, I found my prized Stratocaster gone.
As the summer wore on, Bill and Monte fell into the habit of working until sunup or whenever the school system said we had to stop. I can picture Bill debugging BASIC on a Teletype in the corner, flipping through the printout listing in his lap and typing with fierce intensity. He lived in binary states: either bursting with nervous energy on his dozen Cokes a day, or dead to the world. He’d work until drained and then curl up on the floor in his office and be asleep within fifteen seconds. Sometimes I’d return to MITS in the morning and see Bill’s feet sticking out of his office doorway in a pair of scuffed loafers.
Working the equivalent of two jobs and programming on the weekends, I logged crazy hours myself. One day blurred into the next, as my journal attests:
7:30 AM—left work for home. Ate omelet. Sleep.
4:00 Work. Meet w/Eddie & Chamberlin. Want to know royalty situation.
6:00 Dinner.
7:00 Work—organic stuff. Can’t find notebook, where is it?!
9:45 Go home for a while. Sleep.
2:00 Wake up. Go to work. Put tables in BASIC.
That was life in Albuquerque: so much code, so little time.
BY JULY 1975, our 4K and 8K BASICs were ready to ship. Prepping the orders with a hand-powered winder, I’d thread in the paper tape, hook my finger in one of the winder’s holes, and spin, a big advance over rolling by hand. We were thrilled to see those tapes boxed for shipping—our baby, going out into the world.
In Boston and the Bay Area, in labs and corporations like Honeywell, microcomputers were viewed as a passing fad. But the doubters didn’t faze us. We were certain that the tech establishment was wrong and we were right, and the proof came each day in the mail sacks bulging with orders for the Altair and our BASIC. In that little ramshackle building in Albuquerque, it felt as though anything was possible.
OUR ONE PRODUCT was 8080 BASIC, and MITS was our only customer; our interests were aligned. We’d been working on a handshake with Ed for months, but now we were ready to formalize the relationship. After some back-and-forth on the numbers, Bill went to a local attorney to have the papers drawn. In return for “the exclusive right and license” to sell our BASIC worldwide for ten years, MITS would give us $3,000 up front, plus per-copy royalties of $30 to $60, depending on the version. We’d receive 50 percent of gross receipts from BASIC licenses bought without hardware sales. Sublicenses to third-party OEMs, the original equipment manufacturers who made their own computers, would also be divided fifty-fifty. Since Bill and I retained ownership of our software, we were free to initiate these deals.
Our lawyer inserted one other clause to protect us. Paragraph 5, titled “Company Effort,” stated: “The company agrees to use its best efforts to license, promote, and commercialize the PROGRAM. The company’s failure to use its best efforts as aforesaid shall constitute sufficient grounds and reason for termination of this agreement by Licensors. …”
One day that July, Ed came in waving the contract and saying, “I trust you guys. I’m going to sign this right now. I don’t even have to read it.”
Bill and I just looked at each other. Though we didn’t think we were ripping Ed off, the contract was clearly crafted in our favor. Bill said, “You don’t want another lawyer to review it?”
Ed said, “No, I’m sure it’s fine.”
In the life of any company, a few moments stand out. Signing that original BASIC contract was a big one for Bill and me. Now our partnership needed a name. We considered Allen & Gates, but it sounded too much like a law firm. My next idea: Micro-Soft, for microprocessors and software. While the typography would be in flux over the next year or so (including a brief transition as Micro Soft), we both knew instantly that the name was right. Micro-Soft was simple and straightforward. It conveyed just what we were about.
From the time we’d started together in Massachusetts, I’d assumed that our partnership would be a fifty-fifty proposition. But Bill had another idea. “It’s not right for you to get half,” he said. “You had your salary at MITS while I did almost everything on BASIC without one back in Boston. I should get more. I think it should be sixty-forty.”
At first I was taken aback. But as I pondered it, Bill’s position didn’t seem unreasonable. I’d been coding what I could in my spare time, and feeling guilty that I couldn’t do more, but Bill had been instrumental in packing our software with “more features per byte of memory than any other BASIC we know,” as I’d written for Computer Notes. All in all, I thought, a sixty-forty split might be fair.
PASSING BY THE MITS loading dock one day, I saw boxes stacked high with eight-inch floppy disk drives, the new storage devices recently introduced by IBM. Each one had a capacity of 243K (nearly a quarter of a megabyte), which would “enable the Altair 8800 to function as a really sophisticated computer system,” as Computer Notes promised that July. Floppy disk drives were a giant step toward a personal machine that rivaled minicomputers for functionality. An 8K program that took thirteen minutes to load using paper tape, or five minutes with an audiocassette, needed only a few seconds on a floppy.
But Altair owners wouldn’t be able to use the new drives until Bill wrote our stand-alone Disk BASIC, so called because of its primitive internal file system, and I was getting nervous. As summer drew to a close, I kept prodding him to get started: “Bill, it’s almost time for you to go back to school and you haven’t written a single line of code.”
“It’s OK, I’m thinking about it,” he’d say. “I’ve got the design in my head.”
Then it was: “Bill, you’re leaving in ten days. Can you really get this done?”
“Yeah, I can do it. Don’t worry about it.”
Shortly before Labor Day, Bill checked into a hotel with three legal pads and ten pencils. Five days later he came out with thousands of bytes of assembly language code. He typed it into a terminal, handed me the legal pads, and said, “OK, you’re gonna have to finish debugging it. I’ve got to go.” Then he was off to Harvard.
Later on, as the company grew and his executive duties multiplied, Bill would get fewer opportunities for such high-wire creativity. In a way, that was too bad—he had a rare gift for programming.
IN SEPTEMBER 1975, I flew east to observe Ed Roberts’s latest marketing ploy in action. A college student named Mike Hunter was on a six-month, sixty-city tour in a Dodge camper van known as the MITS-Mobile, showing off the marvels of the Altair. I joined him at a Holiday Inn in Huntsville, Alabama, where Mike set up three computers on a folding table. By six o’clock, most of the sixty chairs were filled at ten dollars a head, then five times the cost of a movie. The crowd was heavy with dyed-in-the-wool hobbyists and engineers from central casting: pocket protectors, slide rules, horn-rimmed glasses, crew cuts. It felt as though we’d traveled back in time to 1962.
Mike began with a three-hour seminar, using Ed’s homemade slides: an hour on the history of computer hardware; an hour on our software; an hour on the Altair. After a Q & A, the engineers got to play with the computers. “Is that a dummy model?” someone asked. In retort, Mike swiftly toggled in the bootstrap loader and ran Lunar Lander with our 4K BASIC. Doubters would check under the table, looking for cables to some minicomputer they imagined had to be hidden behind the partition. They found it hard to believe that such a little box could run a real program, or that you could buy a bona fide computer for the cost of a high-end scientific calculator. But once they saw it was real, the engineers became almost giddy with enthusiasm. Mike won over a lot of customers that night.
Back in Albuquerque, with Altair sales smashing the $1 million mark in its first year on the market, MITS expanded back to nearly a hundred employees. I continued to tune our BASIC, and took pains in writing its user manuals. I loved getting responses like this one, from a happy customer in Washington State:
I’ve seen and used other BASICs, but byte-for-byte, Altair is the most powerful BASIC I’ve seen. … The level of your documentation is, for me though, the high point. Sections for those who know nothing and sections for those who know a lot, plus sections that “normal” people can read and understand.
In a number of phone calls to Harvard, I pressed Bill to help me take Micro-Soft to the next level. I projected that our royalties would soon support him in Albuquerque, and in November Bill convinced his parents to allow him to take a leave of absence. But when our 1975 royalty statement arrived, we were sorely disappointed. Our revenues totaled a mere $16,005. By Bill’s calculation, fewer than one in ten Altair buyers were purchasing BASIC. It was hard to fathom, because the machine was next to worthless without it.
Finally we figured out why our sales were so low. People had a good reason not to buy our software.
Many of them were getting it for free.
THE PROBLEM BEGAN with Ed Roberts’s pricing policy. With the base Altair kit costing around four hundred dollars, Ed barely broke even on the machines themselves. The real money for MITS was in peripherals, like the memory cards that plugged into the Altair’s bus. When Intel and Texas Instruments ran short of memory chips, Ed turned to an off-brand called Signetics, whose chips were hopelessly flaky. I started getting calls, less friendly this time, from people who’d invested in 4K of memory and still couldn’t load BASIC. I’d see Bill Yates tearing his hair out in the engineering department over defective Signetics cards. As David Bunnell and Eddie Currie later acknowledged in PC Magazine, “… the probability of getting a 4K memory board to work when assembled from [an Altair] kit was remote. And the likelihood that it would continue to work would easily have been rated zero.”
Meanwhile, a new wave of computer clubs had been energized by the MITS-Mobile and Computer Notes. At the Homebrew Computer Club in Silicon Valley, a carpenter named Steve Dompier programmed the Altair to “play” a song by generating interference on an adjacent radio that was tuned between stations. (Dompier’s opening number was the Beatles’ “Fool on the Hill.”) But Altair buyers soon wanted more than tinny renditions of pop tunes, and they needed our BASIC. But why purchase it for $75 when a facsimile could be churned out for no charge?
Hobbyists had a hard time accepting software as intellectual property, a concept with little precedent. It wasn’t until the year of the Altair’s release that a national commission declared that computer programs, “to the extent that they embody an author’s original creation, are proper subject matter of copyright.” The Homebrew Computer Club wasn’t far removed from the hippie ethos of Haight-Ashbury. Members freely shared software like “Tiny” BASIC, a minimalist program out of Stanford, and why should our program be any different? During a MITS-Mobile stop in Palo Alto, one Homebrew associate reportedly helped himself to our BASIC interpreter and punched out fifty duplicates to distribute at the club’s next meeting. And that was only the beginning.
David Bunnell was a former antiwar activist who came from a newspaper family in Nebraska and didn’t mind stirring up controversy. (He’d later become the preeminent publisher of personal computer magazines, including PC Magazine, PC World, and Macworld.) In September 1975, David used Computer Notes to admonish “a few of our customers for arrogantly, and I think foolishly … ripping off MITS software.” The following month, Ed Roberts wrote that anyone “who is using a stolen copy of MITS BASIC should identify himself for what he is, a thief.” But nobody seemed to be listening, and our royalties languished into the New Year.*
“This just isn’t right,” Bill said. “We’ve worked so hard on this thing, and people are just ripping us off.” I felt the same way—would all those eighteen-hour days be for naught? Fed up, Bill penned “An Open Letter to Hobbyists” for the February 1976 issue of Computer Notes. Identifying himself as “General Partner, Micro-Soft” (likely the first published use of the name), he explained how we’d developed our BASIC and how our royalties thus far amounted to less than two dollars per hour of our time.
Why is this? As the majority of hobbyists must be aware, most of you steal your software. Hardware must be paid for, but software is something to share. Who cares if the people who worked on it get paid?
Is this fair? … One thing you do [by stealing software] is prevent good software from being written. Who can afford to do professional work for nothing? … The fact is, no one besides us has invested a lot of money in hobby software. … Most directly, the thing you do is theft.
Although Bill had gone no further than David or Ed, he provoked a much angrier reaction. Maybe it was his stinging sarcasm, or the fact that David got Bill’s letter published in half a dozen hobbyist periodicals. The Southern California Computer Society threatened a class action suit for defamation. Jim Warren, editor of Dr. Dobb’s Journal of Computer Calisthenics, wrote:
There is a viable alternative to the problems raised by Bill Gates in his irate letter to computer hobbyists concerning “ripping off” software. When software is free, or so inexpensive that it’s easier to pay for it than to duplicate it, then it won’t be “stolen.”
Though we received no checks from repentant pirates, the debate became part of a gradual climate change. While theft remained common, both end users and commercial firms began to accept that software, like hardware, had intrinsic value.
Ed Roberts was furious that Bill’s letter had gone out on MITS letterhead without his authorization. He insisted on a follow-up in Computer Notes two months later, in which Bill stuck to his position “about the stealing that was going on,” but made clear that he was not a MITS employee. (Earlier, after Bill had lobbied for compensation for his work on Altair software, Ed briefly put him on the MITS payroll. According to a pay stub dated September 19, 1975, Bill received $90 for a forty-hour week, or $2.25 per hour.)
Ed’s friction with Bill had been simmering for some time. Though still in his early thirties, Ed seemed like someone from our parents’ generation. His five sons called him “sir,” and he could intimidate you in a fatherly way. But nobody intimidated Bill, who wouldn’t feign politeness if he thought someone was wrong. When Bill pushed on licensing terms or bad-mouthed the flaky Signetics cards, Ed thought he was insubordinate. You could hear them yelling throughout the plant, and it was quite a spectacle—the burly ex-military officer standing toe to toe with the owlish prodigy about half his weight, neither giving an inch.
Ed was troubled, too, by the countercultural ambience in his growing software department, where we’d crank up Hendrix or Blue Oyster Cult for energy. Apart from my beard, which I grew long in Albuquerque, my own style was conventional: dark slacks, blue shirts, and loafers. But a fair number of my staff considered shoes optional, along with shaves, haircuts, and hygiene. “You can bring the customers in to see Paul,” Ed would tell his people, “but keep them away from the rest of that department.”
Beneath the surface, Ed and Bill had a lot in common. They were equally driven and persistent, and both thought they were smarter than just about everyone else. (Usually they were right.) Ed respected people who were creative and productive, and he understood our value to MITS. One day he brought an old friend to our office and said, “I can’t control these guys. But they’re so smart I’ve got to keep them. They’re just so good at what they do.”
AROUND THE TIME of Bill’s letter, the Altair boom enabled MITS to move into larger quarters near the airport. I received a promotion to “vice president of software,” though I don’t recall getting a raise. A month later, MITS staged the World Altair Computer Convention at the Airport Marina Hotel. For three days, Albuquerque was the undisputed capital of the personal computer subculture. People came from nearly every state—and from Japan, Taiwan, and Australia—to exchange ideas and share their excitement. The star panelist was Ted Nelson, the wild-eyed author of the underground sensation Computer Lib. (Nelson also co-invented hypertext, by which words in one article can link to a related page, a pervasive aspect of today’s Web.) He summed up his wild philosophy in four maxims: “Most people are fools, most authority is malignant, God does not exist, and everything is wrong.”
The convention was Ed Roberts’s finest hour, save for one ominous development out of Silicon Valley. Processor Technology rented a suite at the hotel to promote their more reliable static memory cards, which plugged neatly into the Altair’s open-architecture bus. When David Bunnell ripped up their sign in the hotel lobby, I realized that MITS had stronger competition than it had banked on. Early innovators rarely stay way out in front for long. Everybody sees what’s been done and starts to copy the heck out of it, and sometimes the followers do a better job. One year after the Altair’s breakout in Popular Electronics, IMS Associates started shipping the IMSAI 8080, an aluminum-cased Altair clone with commercial-grade plastic paddle switches, a snap-in front panel, and a superior 20-amp power supply. The following summer brought contenders like Processor Technology’s Sol, with an integrated keyboard and handsome walnut frame. A dozen others waited in the wings.
Ed Roberts no longer had the microcomputer market virtually all to himself. In February 1976, a MITS ad claimed that there were “more Altair computers up and running than all the other general-purpose microcomputers combined.” But by the time MITS came out with the improved Altair 8800b that spring, it had lost precious ground. By the end of the year, its market share would fall to 25 percent, against 17 percent for IMSAI and 8 percent apiece for Processor Technology and Southwest Technical Products. The trend was not encouraging for Ed. But for two young men in the software business, it was the sound of opportunity knocking.
IN APRIL 1976, Micro-Soft hired its first salaried employee: Marc McDonald, an old friend from Lakeside. He moved in with us at the Portals, soon to be followed by Ric Weiland. By summer, Bill was back from school. After borrowing my car one night, he woke me from a sound sleep. “They put me in a holding cell and you’re my phone call,” he said. “Can you get me out? It’s terrible in here!” Picked up for speeding on Central Avenue, he’d given the arresting officer a hard time and was thrown in with the drunks. He wasn’t thrilled with his fellow inmates, in particular the inebriated one who was throwing up next to him. I was short on cash for the bondsman, so I went to Bill’s room and grabbed a mound of change on his dresser. It was just enough to spring him.
Sometimes I wondered why Bill drove so fast; I decided it was his way of letting off steam. He’d get so wound up in our work that he needed a way to stop thinking about the business and the code for a while. His breakneck driving wasn’t so different from table stakes poker or edge-of-the-envelope waterskiing. They were all needed escapes.
“The weather here is exceptional,” I wrote home that spring. “The sun is shining but there are always cool breezes—and all the plants are just starting to bloom. I’m sure Dad would enjoy it!” But had my parents seen my complexion, they’d have known I wasn’t getting much sun. My work was so all-consuming that the rest of my life went on hold, and Rita and I canceled our plans for marriage. At age twenty-three, I just wasn’t ready.
The personal computer market was exploding, with new machines emerging by the month. Later that year, we made our first sales to third-party manufacturers: Data Technology Corporation, National Cash Register, Citibank, General Electric. All were for flat fees, which locked us in as the exclusive provider of BASIC for their machines. Our strategy was to price our products so low that it wouldn’t pay for hardware companies to develop their own BASIC, especially since it would delay their entry into the market to do so. But after a $50,000 sale to GE, Bill had seller’s remorse. As he wrote to me:
I think we got bargained down to a very very low level in the GE deal and unless we get the [royalty] protection we need in that, I don’t think it is a good deal for MITS or us. … The main idea is to get a good deal that doesn’t require much work for as much money as possible without being too inconsistent with other sales of BASIC. …
A short time later, we licensed BASIC to NCR for $175,000. Even with half the proceeds going to Ed Roberts, that single fee would pay five or six programmers for a year. Though we still relied on MITS’s marketing team to help with OEM sales, our business was growing fast. Over time, as Microsoft became the language development company for the personal computer industry, its partners divided the labor to play to their strengths. Bill focused on legal and contract issues, drummed up new business, and navigated our license sales. Whenever I pointed him to a new microcomputer, he’d be all over it to try to sell our software.
It was my task to guide our programmers as we crafted BASIC for a mushrooming OEM clientele, adding features and fixing bugs. I did a good deal of the grunt work myself and made sure that our products got delivered and properly implemented and upgraded. But my most vital charge was to chart our future. Where Bill eyed tomorrow’s markets, I looked to a more distant horizon. What would our customers want six months or a year from now, and what did we need to do to get it to them before anyone else?
Our primary task was to adapt BASIC, our bread-and-butter product, for a new group of microprocessors now competing with the Intel 8080. This work had kicked off the previous fall, when MITS announced an Altair for Motorola’s new 8-bit chip. It gathered steam with the release of the 6502 chip from MOS Technology at an unheard-of $25. For each new microprocessor, I created a new set of development tools on the PDP-10, while Ric helped with the BASIC interpreter rewrites. Though the work was a grind, I was glad to extend our company’s reach. Bill and I aimed to provide all language software for every microcomputer on the market. Those BASIC adaptations would be the bedrock of our revenue for years to come.
I also kept pushing to extend our work into other programming languages. In August we hired Steve Wood to develop an 8080 FORTRAN compiler to broaden our clientele among scientists and engineers. When our FORTRAN-80 was released the following April, we were no longer just “the BASIC company.” We had a second product line.
* * *
BY OCTOBER 1976, Micro-Soft had outgrown our living room. We ordered swivel chairs and desks from a discount house and moved to our first real headquarters, a leased suite of four offices just off Central Avenue. The decor was modest and the offices small, but they had spectacular views of the thunderstorms scudding across the desert valley.
As business pressures weighed on Ed Roberts, our interests grew less complementary. To maximize Micro-Soft’s revenue, we needed to distribute our software as widely as possible; in Ed’s perfect world, we’d sell it to Altair owners exclusively. Our relationship became strained when he jammed me to release a version of BASIC that had fallen behind schedule.
“But it’s got bugs in it,” I told him. “You can’t ship something with so many problems. The customers are going to kill us.” We might deliver late, but I always wanted our products to be top quality before they were released. I’d seen what had happened to MITS with its off-brand memory cards, and how a lemon could permanently tarnish a company’s reputation. After a shouting match, Ed gave in. In November I resigned from MITS and moved full-time to Microsoft, the trade name we had registered with the State of New Mexico around that time. With Bill about to quit college for good and Chris Larson back on board, we leased another four offices early in 1977. We were at full strength now, our forces joined, ready to rock ’n’ roll.