Meeting Bill

The one constant in my life those days was a Harvard undergraduate named Bill Gates, my partner in crime since we had met at Lakeside School when he was in eight grade and I was in tenth. Bill and I learned how to dissect computer code together. We had started one failed business and worked side by side on professional programing jobs while still in our teens.

Not knowing the future

One time I asked Bill, “If everything went right, how big do you think our company could be?” He said, “I think we could get it up to 35 programmers.” That sounded really ambitious to me.

New era of technology

In November 1971, Moore and Robert Noyce, the co-inventor of the integrated circuit, introduced the Intel 4004 microchip at the price of $200. The launch advertisement in Electronic News proclaimed “a new era of integrated electronics”.

Collaboration

Bill and I had already found a groove together. I was the idea man, the one who’d conceive of things and challenged me, and then homed in on my best ideas to help make them a reality. Our collaboration had a natural tension, but mostly it worked productively and well.

Affordability of technology

Affordability would change everything - not just for hobbyists, but for scientist and business people. And it seemed likely that the Altair could run an interactive language like BASIC, the idea dancing in my head for the past 3 years. We were looking at the first commercial personal computer.

Jumping before you are ready

“This is Paul Allen in Boston”, Bill said. We’ve got a BASIC for the Altair that’s just about finished, and we’d like to come out and shot it to you.” I admired Bill’s bravado but worries that he’d gone too far, since we’d yet to write the first line of code… Later I discovered that MIT’s own engineers doubted that an 8080 BASIC was possible.

Love your work

I was still young when my father first asked me what I wanted to do with my life. It was his way of imparting his laconic wisdom: “When you grow up and have a job, do something you love. Whatever you do, you should love it.” He’s repeat this to me over the years with conviction. Later I’d figured out what he meant: Do as I say, not as I’ve done. Much later, my mother told me that my father had wrestled with his career choice.

When he almost killed his pet dog…

As my father raised the basement windows to clear out the gas, he said, “You’ve got to be more careful with your experiments, Paul.” But i also heard what he didn’t say: He never told me to stop. In the Allen household, children were treated like grownups. .. Out parents encouraged us at whatever we tried, … They respected us as individuals who needed to find our own place in the world.”

Transformation in the technology world

In March, 1968, Hewlett-Packard introduced the first programmable desktop calculator. In June, Robert Dennar won a patent for a one-transistor cell of dynamic random-access memory, or DRAM, a new cheaper method of temporary data storage. In July, Robert Noyce and Gordon Moore cofounded InTel corporate. In December, at the legendary “Mother of all demos” in SanFrancisco, the Stanford Research Institutes’s Douglas Engelbart showed off his original versions of a mouse, a word processor , email and hypertext. Of all the epochal change sin store over the next 2 decades, a remarkable number were seeded over those 10 months: cheap and reliable memory, a graphical user interface, a killer application and more.

Learning BASIC

Only the most cursory documentation was furnished to help us. The BASIC manual was 50 odd pages long and I had consumed it in a day or 2. I memorized the 20 or so main keywords and how certain keys functioned on the Teletype. The language felt foreign for the first hour or so, and then it was - Oh Yeah, I get it.

First taste in personal computing

For young people today, this process might seem hopelessly laborious, like cracking a walnut with a Rube Goldberg machine. But for high school students in the lates 1960s, it was astounding to get “instant” feedback from a computer, even if you had to wait several seconds for the machine’s next move in a game of Yahtzee. In a sense, that time-sharing terminal marked my start in personal computing years before personal computers.

Meeting Bill in high School

You could tell 3 things about Bill Gates pretty quickly. He was really smart. He was really competitive; he wanted to show you how smart he was. And he was really really persistent. After that first time, he kept coming back. Many times he and I would be the only ones there.

Hackers

We were on the road to becoming hackers, in the original nonfelonious sense of the term: fanatical programmers who stretched themselves to the limit. As the author Steven Levy has noted, hacker culture was a meritocracy. Your status didn’t hinge on your age or what your father did for a living. All that counted was ingenuity and your hunger to learn more about coding.

How to learn

“The most effective way to learn was going hands-on with what was the top machine of the time, learning about how it worked, what it took to ‘make it or break it’”. Another approach was to stress-test a piece of software until it failed, when he’d scribble down what happened on a piece of paper and move on.

Schooling !== learning

My English teacher, Mr. Tyler dismayed by my chronic diffidence to homework, turned philosophical: “Paul is an enthusiastic and when in the grip of an enthusiasm, is almost totally irresponsible in other areas. How can one help such a student to see the error of his ways? I don’t know”

Going through the details

To grasp the architecture of an operating system like TOPS-10, I knew that i’d need to become fluent in its assembly code, the lower level language that spoke directly to the machine. Seeing my interesting, Steve Russell took me aside, handed me an assembler manual bound in glossy plastic and told me, “You need to read this”. In line with the do-it-yourself ethos of our world, nothing more than to be said.

First company

In that first flush of entrepreneurship, we had grandiose dreams about the money coming our way. Armed with our easy to read data charts on hourly traffic flow, municipalities would know just where to place their stoplights or to focus their road repairs. Wouldn’t every public works department in the world want a Traf-O-Data machine?

Learning from business

In hindsight, Traf-O-Data was a good idea with a flawed business model. We had done no market research. We had not foreseen how hard it would be to get municipalities to make capital expenditures or that officials would be reluctant to buy machines from students. For Bill, Traf-O-Data’s failure would serve as another cautionary tale. Above all, we learnt that it is hard to compete with “free”.

Learning from failures

In my experience, each failure contains the seeds of our next success - if you are willing to learn from it. bill and I had to concede that our future wasn’t in hardware or traffic tapes. We’d have to find something else.

Pressures of life…

… got a $12,500 job offer from Honeywell. Bill received an offer there as well, and it seemed like an ideal arrangement; we could make a descent living while doing our own things on the side. Then, after I accepted the job and prepared to take another leave from Wazzu, Bill changed his mind and decided to back to Harvard. I suspected heavy pressure from his parents, who had more traditional ideas.

Naming Microsoft

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. … Micro-Soft was simple and straightforward. It conveyed just what we were about.

Price strategy

Our strategy was to price our products so low that it wouldn’t pay for hardware companies to develop their own BAISC, especially since it would delay their entry into the market to do so.

Growth

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 5 or 6 programmers for a year. Though we still relied on MITS’ marketing team to help with OEM sales, our business was growing fast. Our time, as Microsoft became the language development company for personal computers industry, its partners divided labour to play to their strengths. Bill focussed on legal and contract issues, drummed up new business, and navigated our license sales. Whenever, I pointed him to a new micro-computer, he’d be all over it to try to sell our software.

IBM deal with Microsoft

And no one, including us, foresaw that the ICM deal would ultimately make Microsoft the largest tech company of its day, or that Bill and I would become wealthy beyond our imagining. As I look back at my live, I’d propose that my successes were the product of preparation and hard world. Yes I was lucky to get early programming opportunities in high school and at C-Cued; to have a father with the keys to a major library system; to find a partner in Bill who could take my ideas and magnify them; to cross paths with Ed Roberts, who needed to buy what we were able to build, just at the right time. But it was no accident that I was positioned to take advantage of those breaks. IBM came to Microsoft in the first place because we had pushed the frontier for microcomputer language with more prescience and boldness than anyone else.

The one button mouse debate with Steve Jobs

“You know Paul, this is all about simplicity versus complexity. And nobody needs more than 1 button on a mouse.” I said, “Steve, people have more than one finder and there’s going to be things they might want to do with a right click too!” … He believed in making entry-level experience as un-intimidating as possible - and there was usually one and only one correct way to do things. At Microsoft, we tried to balance simplicity with power.

Collaboration

Bill was right. Our great string of successes had married my vision to his unmatched aptitude for business.

High pressure, always on the go

To be fair, he had a tough tough job. In the high-tech field, there’s tremendous pressure even when you’re doing well; you have to run incredibly hard just to hold your competitive position. As Bill told Tom Brokaw on an NBC special in 1995, technology was “a very scary business. If you fall behind technically, no matter how much your past successes has been, it’s no guarantee that you’ll keep doing well in the future.”

Changing leadership styles and why it’s important (probably similar in politics or business as well)

Leaders tend to stick with the style that made them successful. In Bill’s case, the tried and true formula was hyper aggression and super-competitiveness. When your company becomes the industry leader, though, the game changes and you need to ease off to avoid too much resentment from the rest of the ecosystem.

From language to applications - climbing up the abstraction ladder

From the start, we’d built Microsoft around the premise that our products would be universal. Wherever the general-purpose micro-computer market went, we’d be there. But as personal computing matured from an enthusiast subculture into the mass medium, I came to see that languages would be soon outweighed by applications. Out mission could be at risk unless we built out own spreadsheet, and our own word processor and data base as well.

Failing at the top

How did a company once at the forefront of technology and change fall so far behind? It’s a thorny question, with roots that go back decades, but I believe it boils down to 3 broad factors: scale, culture and leadership.

Other challenges in Microsoft

… They all said the same thing: too many semi-competent managers, too much in-house politics among the fiefdoms and silos of principal product lines. Windows Vista was the dead canary in the coal mine.