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The Rise of Microsoft, Part 1: Two Kids and a Teletype

Two Kids and a Teletype

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Every empire has an origin story, and Microsoft’s begins not with a product or a boardroom but with a machine that a group of mothers bought at a rummage sale. In 1968, the Mothers’ Club at Lakeside School — a private prep school in Seattle — took the proceeds from a used-goods sale and did something almost no school in America was doing: they bought computer time. A clattering Teletype terminal was wheeled into a small room, wired up to a distant General Electric time-sharing computer, and left there for the students to discover. Most of them shrugged. Two of them never really walked away.

A room, a terminal, and two boys who wouldn’t leave

One was a small, intense eighth-grader named William Henry Gates III — born in Seattle on October 28, 1955, and known to his family as “Trey.” The other was Paul Gardner Allen, two years older, born January 21, 1953, the son of a University of Washington librarian. Allen had already been at Lakeside since 1965. When the teletype arrived, the two found each other in that cramped computer room, and a friendship formed over the shared thrill of typing commands into a keyboard and watching a machine somewhere far away obey.

It is hard to overstate how strange this was. In 1968, computers were million-dollar mainframes locked behind glass, tended by men in white coats. The idea that a thirteen-year-old could sit at a terminal and make one do things was intoxicating — and expensive. The rummage-sale fund evaporated in weeks. But by then Gates and Allen had caught something that would define the next fifty years of their lives: the conviction that they could bend these machines to their will, if only they could keep getting at them.

Learning to hustle for computer time

Getting more time meant getting creative. Gates and Allen — along with fellow Lakeside students Ric Weiland and Gates’s close friend Kent Evans — formed what they called the Lakeside Programming Group. Their first big break came from a local outfit called the Computer Center Corporation, nicknamed “C-Cubed,” which ran a DEC PDP-10. The company had a problem: its software kept crashing. The teenagers had a solution: they would hunt down the bugs, methodically documenting every way they could make the system fall over, in exchange for something better than money — free hours on the machine. They practically lived there, some nights sneaking out of the house to keep coding until dawn.

Their reputation grew, and so did the jobs. The group later wrote a payroll program in COBOL for a firm called Information Sciences Inc., an arrangement that paid them in both royalties and computer time. These were not toy exercises. Real companies were paying real teenagers to write software that ran a real business — and the boys were absorbing, years ahead of their peers, the hard lessons of what it takes to make code work when someone else is depending on it. They were so hungry for material that, by Allen’s own account, they went dumpster-diving behind C-Cubed to fish out discarded printouts of operating-system source code, studying it like scripture.

Loss, a first company, and a fork in the road

The Lakeside years were not all triumphant. In 1972, Kent Evans — Gates’s partner in a project to automate the school’s class scheduling — died in a mountain-climbing accident. It was the first real grief of Gates’s young life, and he has spoken of it since as a wound that never fully closed. He turned to Allen to help finish the scheduling program. (Gates, it is said, quietly arranged the algorithm so that he landed in classes with a favorable ratio of girls.)

That same year the pair aimed higher. Intel had just released a new microprocessor, the 8008, and Gates and Allen founded a small venture called Traf-O-Data to build a machine that could read and tabulate the paper tapes cities used to count traffic. The business barely made money, and the hardware was famously temperamental. But writing software to simulate a processor that neither of them could easily afford to own taught Allen something crucial: you could bootstrap an entire computer’s behavior in code. That idea would matter enormously, and soon.

Then, in 1973, the paths diverged — briefly. Gates, a strong student despite the all-night coding, enrolled at Harvard. Allen, who had scored a perfect 1600 on the SAT, went to Washington State University, dropped out after two years, and took a programming job at Honeywell in Boston — conveniently close to Harvard Yard. The two friends were within a subway ride of each other again, and Allen kept pushing a restless question at Gates: what if the next wave of computers wasn’t giant machines rented by the hour, but small ones that ordinary people could own?

They didn’t have an answer yet. But they had spent six years preparing for a question exactly like it. The teletype in that Seattle classroom had done its work.

Next time: a magazine cover, a computer called the Altair, and a phone call promising software that didn’t yet exist.


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