In the last part we left two friends from Seattle’s Lakeside School scattered across the country: Bill Gates grinding through his freshman year at Harvard, Paul Allen writing code for Honeywell a subway ride away in Boston. They had spent their teens hunting free computer time on machines the size of refrigerators. What they lacked was a machine of their own — and a reason to build a company. In the first weeks of 1975, a newsstand handed them both.
A magazine cover changes everything
The January 1975 issue of Popular Electronics carried a photograph of an unassuming metal box covered in toggle switches and blinking lights: the Altair 8800, built by a small Albuquerque outfit called MITS — Micro Instrumentation and Telemetry Systems. Priced at just $439 as a kit and powered by Intel’s new 8080 chip running at a whopping 2 MHz, it was the first personal computer most hobbyists could actually afford. It would go on to sell around 25,000 units and is widely remembered as the first commercially successful personal computer.
Allen bought the magazine, and the story goes that he half-ran across Harvard Square to show Gates. The two of them saw the same thing everyone else in the emerging hobbyist scene missed. The Altair was a marvel of cheap hardware, but out of the box you programmed it by flipping switches on the front panel. It had no real language, no easy way for an ordinary person to make it do anything useful. If someone wrote a version of BASIC — the friendly, approachable language they had cut their teeth on — the Altair could become genuinely useful. And whoever wrote it first would own the software layer of an entire new industry.
The phone call, and the bluff
What happened next has become one of the founding legends of the software industry — and unlike most legends, it is essentially true. Gates picked up the phone and called MITS in Albuquerque, telling them he and Allen had a BASIC interpreter running for the Altair and asking to come demonstrate it. It was a bold pitch, because at that moment they had no such thing. They did not have a finished interpreter. They did not even have an Altair 8800 to run one on. What they had was confidence and a plan.
MITS, run by the gruff and visionary Ed Roberts, said the words Gates was hoping for: come show us. The bluff had bought them a deadline, and now they had to make it real.
The clever part was how they built software for a machine they didn’t own. Gates and Allen had spent years around DEC’s PDP-10 minicomputers, and Allen wrote a program that made the PDP-10 simulate the Altair’s Intel 8080 processor. That meant they could write and test their interpreter on Harvard’s big time-sharing computer, coding against a machine that existed only in software. Over roughly eight intense weeks, Gates hammered out the core of the interpreter, Allen built the tooling and simulation, and a Harvard classmate named Monte Davidoff joined to write the tricky floating-point math routines that let the language handle decimals. It was a punishing sprint of little sleep and a lot of cafeteria coffee.
The demo that launched a company
When it came time to show MITS, Allen was the one who flew to Albuquerque — older, with a beard, he looked more like someone who belonged in a business meeting. On the plane he realized they had never written the small loader program needed to get their interpreter into a real Altair, and reportedly scribbled it out during the flight. There was every reason to expect disaster: the code had never once run on actual hardware.
It ran. The paper tape loaded, the Altair came to life, and their BASIC responded. Ed Roberts and his team were sold. MITS agreed to distribute Altair BASIC, and the software that had never touched a real machine until that morning became a shipping product.
On April 4, 1975, in Albuquerque, Gates and Allen formalized their partnership. Gates coined the name by fusing “microcomputer” and “software” — Micro-Soft, hyphen included at first. Altair BASIC officially shipped as version 2.0, in 4K and 8K editions, on July 1, 1975: the company’s first product, and one of the first pieces of software ever written for a personal computer. Gates would soon drop out of Harvard entirely to make it his full-time work.
It is worth sitting with how improbable all of this was. A company was born from a magazine cover, a phone call promising something that didn’t exist, and eight weeks of code tested only against a simulation. The bet was not really on the Altair — that machine would fade within a few years. The bet was that computers were about to get cheap and personal, and that whoever controlled the software would matter far more than whoever built the boxes. Everything Microsoft became flows from that single, audacious insight.
But shipping a product and getting paid for it turn out to be two very different things. Next time: the Altair BASIC that everybody was using and almost nobody had bought — and the angry open letter that made Bill Gates famous.
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