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Documentary, The Triumph of the Nerds: The Rise of Accidental Empires (1996) - Part 1 - Impressing Their
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00:00Hi, I'm Bob Cringley, and I'm here to tell you the incredible story of how personal computers
00:17took over the world. Why am I telling you this at a basketball game? Well, I like the game,
00:22but mainly it's because of that guy down there.
00:30His name is Paul Allen, and everything you see here belongs to him. The Portland Trailblazers
00:35basketball team, their arena, even the dancers. Thanks to personal computers, he has eight
00:43billion dollars to spend on such toys. Twenty years ago, Allen and his high school friend
00:49Bill Gates were running a two-man software company called Microsoft. Today, Allen is richer
00:56than God, and Gates is richer than Allen.
01:02Twenty years ago, young men like Paul Allen and Bill Gates invented the personal computer,
01:06and in doing so, launched a revolution that's changed the way we live, work, and communicate.
01:11It's hard to believe that twenty years ago, there were no personal computers. Now it's
01:14the third largest industry in the world, somewhere between energy production and illegal drugs.
01:19But the most amazing thing of all is that it happened by accident, because a bunch of disenfranchised
01:24nerds wanted to impress their friends.
01:54This is the story of how a handful of guys launched an industrial revolution, how they
02:09changed the culture of business, how they made history.
02:12I feel incredibly lucky to be at exactly the right place in Silicon Valley, at exactly the
02:19right time, historically, where this invention has taken form.
02:26It wasn't like we both thought it was going to go a long ways. It was like, we'll both
02:30do it for fun, and even though we're going to lose some money probably, we'll just have
02:34been able to say we had a company.
02:37All of us would get together and just hope we were right that the PC would become a big thing.
02:44You know, I'd stop and say, wow, the PC really has become part of the very fabric of the way people live.
02:50And we'd certainly surged with it, and I'd just stop and say, hmm, pretty incredible ride.
03:03Most of these people come from the place I call home, the Silicon Valley south of San Francisco, California.
03:09Growing up here near the electronics companies that give the place its name, these founders of the PC
03:14revolution were, for the most part, middle-class white kids from good suburban homes.
03:19But it's not their homes we're interested in. It's their garages.
03:23This is my garage, and this is all my junk.
03:32I'm probably one of the few guys in Silicon Valley who actually has room in his garage for a car.
03:37Most everyone else seems to use theirs to start computer companies and create great fortunes.
03:42But I don't have a fortune. I'm a failure.
03:45I've written computer programs that almost ran, and I've designed and built hardware devices that frankly didn't work at all.
03:51But I'm the ideal guy to tell the story of the personal computer business because I'm its premier gossip columnist.
03:57And everyone tells me all their secrets.
04:02Hello.
04:03And this is my home, where I write a gossip column for a computing magazine.
04:07Sorry about the mess.
04:10Institutions in constant change like the PC industry are driven by rumor and gossip, and I thrive on both.
04:16My electronic mail address is deluged with inside information about everything from product flaws to who's sleeping with whom.
04:25What ties these gossipers together is a desire for truth.
04:29These people and their love of technology have fueled the PC revolution.
04:33To understand them is to understand that revolution.
04:36So let's go find some.
04:46Meet Edwin Chin on a Saturday morning at the Weird Stuff warehouse.
04:52This could be 1976 or 1996, because there is always a new generation of techies like Edwin who hear the calling.
05:02Most other kids are watching TV, but not Edwin.
05:05You know, I'm interested in electronics and technologies and a hobby since I started when I was like six or seven, you know.
05:13How old are you now, Edwin?
05:15Ten right now.
05:19It's no coincidence that the only woman in the vicinity looks bored.
05:23Because this is a boy thing.
05:25The obsession of a particular type of boy who would rather struggle with an electronic box than with a world of unpredictable people.
05:32We call them engineers, programmers, hackers and techies.
05:35But mainly, we call them nerds.
05:38I think a nerd is a person who uses the telephone to talk to other people about telephones.
05:46And a computer nerd, therefore, is somebody who uses a computer in order to use a computer.
05:55And people have like different degrees of passion, different types of passion.
05:58You know, some people like they just like live databases and like fifth normal form is just like Nirvana.
06:03And they just quest for it, you know.
06:05That's like what gets them up in the morning.
06:07What do your friends think of you?
06:12Boy, he's a nerd.
06:15Yeah.
06:16But I don't mind. I'm used to being called a nerd.
06:20Can't have other people stop their dreams.
06:24And in Silicon Valley, the dream is to grow up to become a boy like this.
06:28It doesn't make any difference.
06:29Graham Spencer is chief programmer for Architects Software.
06:35Six guys who graduated from Stanford University and started a company just because they like each other.
06:42This is a modern day startup, but at heart, it's no different from PC pioneers like Apple or Microsoft, nerds who share a dream.
06:54Their hobby is their business and the culture they've created is identical to that of a thousand other technology companies.
07:00First, they dumped the idea of nine to five. In this industry, you can work any 80 hours per week you like.
07:09And then I've got my cap, which I use to cover my eyes and sleep in the early morning while everybody's coming in.
07:15We didn't even obey a 24-hour clock. We'd come in and program for a couple days straight.
07:22We'd, you know, four or five of us, when it was time to eat, we'd all get in our cars and kind of race over to the restaurant and sit and talk about what we were doing.
07:30Sometimes I'd get excited talking about things I'd forget to eat, but then, you know, we'd just go back and program some more.
07:36It was us and our friends. Those were fun days.
07:38Let's look in the refrigerator. Whoa, we have Coke and cold pizza.
07:57I drink about two liters of Coke a day.
07:59Two liters of Coke a day. And do you think of it like as brain food?
08:03That keeps me going. That and, you know, listen to heavy metal and get caffeinated and hack.
08:13I'd sit down in my room on the floor with sheets of paper spread all around with my computer design I was working on.
08:18And always I noticed that I was up pretty late at night and I had lots of Cokes. Just part of, it's part of that life.
08:24A combination of stale pizza and body odor and sort of spilt cola kind of ground into the rug.
08:34I had brought some spaghetti to work and then forgot to wash out the container for the last couple of days, maybe six or seven if I had to be honest.
08:42Ooh, that smells bad.
08:47Eating, bathing, having a girlfriend, having an active social life is incidental. It gets in the way of code time.
08:55You know, writing code is the primary force. It drives our lives. So anything that interrupts that is wasteful.
09:03What is it about the internal logic of a computer that's so enticing? For one thing, such logic can be understood, as opposed to things that can't be understood at all, like the motivations of young women, say, or of the French.
09:22Let me explain.
09:23Time for the cringely crash course in basic computers, part one. This is a mainframe computer. All of these cabinets are one machine. In the old days, all computers were this size.
09:35They were tended by engineers in white coats, a kind of priesthood who took their jobs very seriously. Now, all computers work pretty much the same, whether it's a giant that serves 2,000 users like this one, or a little notebook that serves only me.
09:48They process numerical data, adding, multiplying, comparing. Fact is, if you can quantify it, a computer can handle it. It's the emotional stuff they don't know what to do with.
09:59The data must be put into a special binary code consisting only of ones and zeros. And you have to give the computer instructions also in code to tell it exactly what to do with the data and in what order.
10:11These instructions are called a program. In the early days, you put in the instructions by flipping switches or loaded them from paper tape. This was called machine language.
10:22It made computers a pain to use. Even worse, every type of computer spoke a different machine language.
10:28While the ENIAC could compute the 30-second trajectory of a shell in 20 seconds, operators required two days to program it to do so.
10:39Then a U.S. Navy captain named Grace Hopper solved the problem. She invented a computer language, English words that the computer itself could translate into binary code.
10:49Now users could type whole lists of instructions into a computer rather than flipping those damn switches.
10:56Like most things having to do with computers, that first language had a silly name, COBOL.
11:00It was followed by other languages like FORTRAN and BASIC, and they all made computing just a bit more user-friendly.
11:06So when some nerd tells you he's been up all night programming or writing software or hacking code, what he really means is he's been typing long lists of instructions into his computer.
11:15Mainframe computers were far from personal. They sat in big air-conditioned rooms at insurance companies, phone companies, and the bank, and their main function was to get us confused with some other guy named Cringely, who was a deadbeat and had a criminal record.
11:32Eventually, computer terminals did begin to appear in some schools, but most of us paid no attention.
11:39But there was usually one kid who did pay attention, falling in love with the digital purity of those ones and zeros. He was the nerd.
11:46And I took this book home that described the PDP-8 computer, and it just, oh, it was just like a Bible to me.
11:54I mean, all these things that for some reason I'd fallen in love with, like you might fall in love with a card game called Magic, or you might fall in love with doing crossword puzzles or something else, or playing a musical instrument.
12:03I fell in love with these little descriptions of computers on their inside. It was a little mathematics. I could work out some problems on paper and solve it and see how it's done, and I could come up with my own solutions and feel good inside.
12:15So you would keyboard these commands in and then you would wait for a while, and the thing would go ta-ta-ta-ta-ta-ta-ta-ta-ta-ta-ta-ta-ta-ta-ta and it would tell you something out.
12:24But even with that, it was still remarkable, especially for a ten-year-old, that you could write a program in Basic, let's say, or Fortran, and actually this machine would sort of take your idea
12:38take your idea and it would sort of execute your idea and give you back some results.
12:48And if they were the results that you predicted, your program really worked, it was an incredibly
12:51thrilling experience.
12:54Nerds wanted their own computers right from the beginning, but it took a technological
12:58breakthrough to make that possible.
13:01This is it, the chip, the microprocessor.
13:05This is what allows you to have a mainframe computer on your desk.
13:08In the 1950s, mainframes were as big as this garage, and that's because they were filled
13:12with thousands of these, vacuum tubes or valves.
13:16Eventually the valves were made much smaller and replaced with transistors.
13:20Still too big, however, to make a computer that could fit on your desk.
13:23What that took was further miniaturization.
13:25Here we have a single piece of silicon etched with thousands of transistors.
13:29This microprocessor holds more than a million transistors.
13:33And that's the secret of the personal computer.
13:35And that's why they call it Silicon Valley, not Computer Valley.
13:42These are the people who invented the microprocessor, Intel.
13:48Intel was started 28 years ago by a handful of guys after a row with their old boss.
13:54Their microprocessors today power 85% of the world's computers.
14:01Intel not only invented the chip, they are responsible for the laid-back Silicon Valley
14:06working style.
14:07Everyone was on a first-name basis.
14:10There were no reserved parking places, no offices, only cubicles.
14:14It's still true today.
14:16Here's the chairman's cubicle.
14:17Knock, knock.
14:18I've knocked on the door, but there's no door.
14:21Gordon Moore is one of the Intel founders worth $3 billion.
14:26With money like that, I'd have a door.
14:29In a business like this, the people with the power are the ones that have the understanding
14:33of what's going on, not necessarily the ones on top.
14:36It's very important that those people that have the knowledge are the ones that make the
14:40decisions.
14:42So we set up something where everyone who had the knowledge had an equal say in what was
14:47going on.
14:50Intel's microprocessors kept getting more powerful.
14:53They soon had enough horsepower to run a whole computer.
14:57Only Intel didn't appreciate the brilliance of their own product, seeing it as useful mainly
15:01for calculators or traffic lights.
15:05Intel had all the elements necessary to invent the PC business, but they just didn't get
15:10it.
15:12Lucky for us, someone did.
15:16This is the chip that launched the personal computer revolution.
15:27This is the magazine that announced it.
15:31In January 1975, featured on the cover was the world's first personal computer, the Altair
15:378800.
15:38It was the crazy idea of an ex-Air Force officer from Georgia, Ed Roberts.
15:43Ed Roberts.
15:44If you look at it, it was kind of a grandiose, almost megalomaniac kind of scheme, you know.
15:51And right now I couldn't do it because I could see right off there's no way you could do this.
15:54There isn't any way you could do this.
15:57But at that time, you know, we just lacked the benefits of age and experience.
16:03We didn't know we couldn't do it.
16:07Twenty years after Ed Roberts' flash of brilliance, this exhibit is being held to celebrate the
16:12anniversary of the Altair.
16:15Like every other PC pioneer, Ed built his computer just because he wanted one to play with.
16:21There were some of us that lusted after computers, really, at that time.
16:25All the computers in the world tended to be in big centers and you had to get permission
16:29to get close to them and it was, you know, nobody had access to computers then.
16:35And the idea that you could have your own computer and do whatever you wanted to with it whenever
16:37you wanted to was fantastic.
16:45And where was all this happening?
16:47It was far from Silicon Valley, Intel, or IBM.
16:51Out in the desert near the airport in Albuquerque, New Mexico, Ed Roberts ran a calculator company
16:56called MITS.
16:58Having an ugly building wasn't its only problem.
17:01MITS was going bankrupt.
17:03Nobody was buying calculators and Ed needed $65,000 just to stay afloat.
17:07And we went to the bank and had a late night meeting and the issue was whether we closed
17:13MITS down or they loaned us an additional $65,000.
17:17And I was asked how many machines that I think we would sell in the next, in the next year
17:21after it was introduced.
17:22And I said 800 and was considered a wild-eyed optimist at that.
17:26Within a month after it was introduced we were getting 250 orders a day.
17:31The Altair wasn't even a computer.
17:33It was a computer kit.
17:34Whoa, this is a pretty well-equipped machine.
17:38You had to build it yourself and even then it usually didn't work.
17:43Still the demand was amazing.
17:45And there were actually people that came to MITS, a couple people with camper trailers
17:50and camped out in the parking lot waiting for their machines.
17:54I mean, they were so eager.
17:56I mean, I think everybody had sort of daydreamed or Walter Mitty about owning a computer.
18:01The surprise was that it would be possible for the average college student, for example,
18:06who was living on bare subsistence to actually buy a computer.
18:10This is what really amazed me, was that people were so, there was a sort of a pent-up demand
18:18for having your own computer.
18:19And if it could be that cheap, what a wonderful thing.
18:29This is an Altair computer, the first personal computer.
18:34And not just any Altair.
18:35This is Altair serial number two, the second one made.
18:40The first Altair made was sent off to be photographed at a magazine and was lost in the mail.
18:45So this is the oldest personal computer in the world.
18:50This is a pretty historic junk, but the question is, what do you do with it?
18:54I mean, it has a front panel with switches that you can click back and forth and some lights.
18:59But in the back, there's no place to connect a keyboard.
19:02There's no place to connect a monitor.
19:05There's no place to connect a printer.
19:08In fact, there's practically nothing at all that you can really do with this thing.
19:12But back then, 1975, the people who had it were thrilled.
19:23The nerds formed clubs to talk about their new toy.
19:27One of the first was the Homebrew Computer Club, which met on Wednesday evenings in a
19:31hall rented from Stanford University in Silicon Valley.
19:34Presiding over near anarchy was Lee Felsenstein, who pretended to be in charge.
19:39I would start the meeting by making a horrendous loud noise because everyone was talking and
19:45I had to get some attention somehow.
19:47And I would use it to call on the person in question.
19:51I'd make threatening gestures with it.
19:56Most of us were in the electronics industry to a certain extent.
19:59There was also a stratum of physicians.
20:02And there were a lot of radio amateurs, for instance, finding a new technology that wasn't
20:05stale.
20:07But most of us were at a sort of middle level downwards.
20:12We saw ourselves as crazed, ignored geniuses, or possibly geniuses, but at least we could
20:18each hope to get our hands on a computer of our own.
20:22That's not much in them.
20:26The very uselessness of the Altair is what drove the hobbyists together.
20:30Roger Mellon and Harry Garland started an early computer company.
20:34They came here to meet others and to figure out just what the heck could be done with
20:38this new toy.
20:39A solution in search of a problem.
20:41There's no keyboard that I can see.
20:43The Altair was tedious to use.
20:45At first, the only way that data and instructions could be given to the computer was by flipping
20:49switches.
20:50Take something trivial like two plus two.
20:53Each two needed eight different switches to be flipped, then a ninth switch was used to
20:57load them all.
20:59Add required another nine switches.
21:01The answer four was if the third light from the left turned on.
21:05Eureka!
21:06So if you had a program that was a hundred bytes long, you had to go through this procedure
21:10a hundred times to load that in the memory.
21:12It took a long time.
21:14I bet it did.
21:15And what happened if you lost power or you lost your way in the middle?
21:18You cried.
21:19The Altair may have been frustrating, but it drove the nerds to experiment, finding
21:25real uses for the useless box, turning it from a curiosity to a computer.
21:30Steve Dompier set up an Altair, laboriously keyed a program into it.
21:38Somebody knocked the plug out of the wall, and he had to do that all over again.
21:42But nobody knew what this was about.
21:44After all, was it just going to sit and flash its lights?
21:47No.
21:48You put a little transistor radio next to the Altair, and he would, by manipulating the
21:53length of loops in the software, could play tunes.
21:57The radio began playing The Fool on the Hill, in the tinny little tunes that you could tell
22:05were coming from the noise that the computer was generated, being picked up by the radio.
22:11Everybody rose and applauded.
22:13I proposed that he receive the Stripped Phillips Screw Award for finding a use for something
22:18previously thought useless.
22:20But I think everyone was too busy applauding to even hear me.
22:23It was a very exciting thing.
22:25It was probably the first thing the Altair actually did.
22:31Turning the Altair into a useful tool required a programming language so users could type their
22:36programs in rather than flipping switches.
22:40What it needed was a version of some big computer language like BASIC, only modified for the PC.
22:45This was called a BASIC interpreter.
22:48But it didn't yet exist because the experts all thought that not even BASIC was BASIC enough
22:52to fit inside the tiny Altair memory.
22:55Yet again, the experts were wrong.
22:59Here comes the guy who solved the problem.
23:02Twenty years after finishing the first Microcomputer BASIC, Paul Allen is returning to Albuquerque for
23:07a celebration of that event.
23:09This time with his 15 million dollar jet and three foot red carpet.
23:16At a time when I was killing brain cells, this guy was founding an empire.
23:23He has come to eat rubber chicken in honor of the Altair's 20th anniversary.
23:29Paul Allen co-founded Microsoft with his younger buddy from high school, Bill Gates.
23:43One day in Boston, I was in Harvard Square and I covered popular electronics with this
23:48thing that looked like what I had been imagining and so I grabbed it off the shelf and I looked
23:52at it and I bought it and I ran back to Bill's dorm and I think he was probably playing
23:57poker that night and usually losing money at that point, one of the few times when that's
24:02been the case.
24:05Paul showed that to me then, okay, here was a company that would be needing software.
24:12And he said, okay, well, we got to call these guys up and see if this thing is for real.
24:16We realized that things were starting to happen and just because we'd had a vision for a long
24:21time of where this chip could go, what it could mean, that didn't mean the industry was going
24:26to wait for us while I stayed and finished my degree at Harvard.
24:30So we called up and, you know, we told him, we've got this basic and it's just, you know,
24:35for your machine, it's not that far from being done and we'd like to come out and show it to you.
24:40So we created this basic interpreter.
24:42Paul took the paper tape and flew out.
24:46In fact, the night before, he got some sleep while I double-checked everything to make sure
24:51that we had it all right.
24:53But I had no idea what it was really going to be like to try to run the software.
24:57It had never been run on an actual computer before.
25:01He was very nervous about whether this would actually work and he got to the office and we
25:06all gathered around and he put his fingers on the switches and he loaded basic in with paper tape
25:13into the Altair.
25:14You know, I was just, I was so nervous.
25:17I just, this is just, it's not going to work.
25:18It worked.
25:19And it came up and it could do a few little simple things.
25:23And it was amazing when Paul called me up and said the thing had worked the first time.
25:27And of course, it was incredibly fast.
25:29And it printed out memory size and I think Bill said, well, it printed something.
25:33So I said, yeah, yeah.
25:35Oh, that was, that was unbelievable.
25:37The fact that it really worked was, was, was a breakthrough.
25:41Maybe there wouldn't be a Microsoft if it hadn't, if the screen hadn't come alive.
25:46Who knows?
25:47It might all be quite different.
25:55After the demo succeeded, Bill forgot about finishing university.
25:59Afraid of missing his chance to dominate the new industry,
26:02he joined Allen in what was then the center of world microcomputing research
26:06among the sleazy bars and gas stations of Albuquerque, New Mexico.
26:11And they lived across the street from mitts in the sundowner motel.
26:19And the, the prostitutes and the drug dealers are out on the corner.
26:22And they were, uh, writing basic for the Altair computer.
26:26And, uh, gradually they actually started Microsoft here in Albuquerque, so.
26:31We hired, uh, some, some of our, uh, high school friends basically to come down and, uh, uh,
26:38stay with us in our apartment, which became very crowded.
26:40Well, we were pretty young.
26:42We started when I was 19.
26:44And so we just had a lot of, a lot of energy.
26:47They worked really hard.
26:49They, uh, listened to really loud music.
26:52I could hardly stand to go in the software room sometimes,
26:54because the music would be banging off the walls, mostly acid rock.
26:58You know, we'd usually go out, eat, eat pizzas, and then go out and watch, uh, action movies.
27:08Uh, they would work all night long.
27:14And there were days when Bill Gates would be sleeping on the floor in the software, uh, lab.
27:19And sometimes it would be Bill these two other guys, all, you know, sitting on tables around the
27:25apartment, uh, with stacks and stacks of paper, right, converting to basic for the 8080.
27:31I still know the source code by heart.
27:33And that was, uh, uh, a work of, of love.
27:37You know, we just kept tuning and tuning that thing.
27:39And so that kind of craftsmanship paid off.
27:43Basic let the Altair be used for both fun stuff and real work.
27:52People attached terminals to the computer and began writing games, word processors,
27:56and accounting programs.
27:59Most of us didn't notice, but soon there was a thriving industry for enthusiasts.
28:03By the end of 1975, dozens of other companies were building microcomputers.
28:08We created an industry, and I think that goes completely unnoticed.
28:13I mean, there was nothing.
28:15Every aspect of the industry, when you talk about software, hardware, application stuff,
28:19dealerships, you, you name it, was all done at once.
28:21It was a wild time.
28:22It was a very exciting time.
28:24And the, the first user convention, where we got people to come in and tell us what they were doing,
28:30what they were excited about.
28:31And other companies, like Processor Technology, or MSI, or Commemco,
28:37got going as add-on companies.
28:39These companies are long forgotten, but they were the, the humble beginnings of the, of the PC industry.
28:47Left in the hands of those early hobbyists, the PC might have never made it to the shopping mall.
28:53Reaching the wider market required a different type of vision.
28:56Enter the flower children of California, who thought the PC was, well, groovy.
29:02From the safety of secret committees, they talk about the danger of war.
29:13Remember that the 60s happened in the early 70s, right?
29:15So we have to remember that.
29:16And that's sort of when I came of age.
29:17So I saw a lot of this.
29:19And to me, the spark of that was that there was something beyond sort of what you see every day.
29:30Far from the smell of the gun.
29:33It's the same thing that causes people to want to be poets instead of bankers.
29:39And I think that's a wonderful thing.
29:41And I think that that same spirit can be put into products.
29:46And those products can be manufactured and given to people, and they can sense that spirit.
29:50To help you understand all this, I will now take off my clothes.
29:54And he says, well, why?
29:56And he says, well, frame relay is scalable.
29:59Jim Warren knows better than most what the hippie movement did for the PC.
30:03A 60s radical himself, he staged the West Coast Computer Fair for a time the biggest computer show in the world.
30:10The fair was where the PC really arrived.
30:13It's also where Jim got rich.
30:15So, Jim, is this where you hold all your meetings?
30:18As many as possible. Sure. Why not?
30:24This is how Silicon Valley entrepreneurs conduct business?
30:27I don't know whether it's how entrepreneurs conduct business.
30:28Believe it or not, Jim once taught mathematics at a Catholic girls' school.
30:32Bubbles, Bob? Sure.
30:34Okay.
30:35Jim was immediately fascinated by the PC, like many Bay Area hippies.
30:40The California counterculture was crucial to the PC's development.
30:44And the whole spirit there was working together, was sharing.
30:49You shared your dope.
30:50You shared your bed.
30:52You shared your life.
30:55You shared your hopes.
30:57And a whole bunch of us had the same community spirit.
31:01And that permeated the whole Homebrew Computer Club.
31:04As soon as somebody would solve a problem, they'd come running down to the Homebrew Computer Club's next meeting,
31:09say, hey, everybody, you know that problem that all of us have been trying to figure out how to solve?
31:13Here's the solution. Isn't this wonderful? Aren't I a great guy?
31:16And it's my contention that that is a major component of why Silicon Valley was able to
31:22develop the technology as rapidly as it did, because we were all sharing. Everybody won.
31:29Out of this creative show and tell came Apple Computer, the first mass market PC company.
31:35The Apple founders, a couple of recent graduates from Homestead High, were regulars at Homebrew meetings.
31:41Steve Wozniak was the technical wizard, and Steve Jobs was the visionary who saw microcomputers
31:46as a possible business.
31:49The first Apple Computer was primitive.
31:52It was cobbled together by Woz to impress his friends at the Homebrew meetings.
31:56Everybody was interested in computers, so I started getting a crowd around me,
31:59because even though I was too shy to raise my hand and say anything in a club meeting,
32:03after the club meetings, I would put my computer that I had built.
32:07And every week it had a little bit more working on it, too. But I would set it down and let people
32:11type on the keyboard. I would explain what's in it. If they come up to me and ask a question,
32:15I can answer. Nowadays, I would have the ability to tell them what it is and be a little bit more
32:21promotional. But back then, I could only answer questions that they asked me. But I got a group
32:25that started gathering around me. And Steve Jobs saw that I had a lot of interest around me at the club,
32:29and he said, let's start selling it. And let's make this company, came up with the name Apple, and
32:35and that's how it started.
32:42Apple was at best a funky company, started by a couple of teenage hackers who
32:47previously had been working as Alice in Wonderland characters in a local shopping mall. And they
32:52started it in this garage right here. The first Apple Computer was built here. Now there are more than
32:5710 million in use around the world. And I was there. Well, for a short time, I was an employee
33:02at Apple Computer, employee number 12. And one day, I helped move materials out of this garage. At the
33:08time, Steve Jobs said the company was short of loot. So he offered to pay me in company shares. But I held
33:14out for the money. My mother still reminds me of that incident. The Apple One was even less of a
33:21computer than the Altair, a single circuit board that came with neither a case, nor
33:27a keyboard. Still, Steve Jobs managed to sell 50 Apple Ones. That experience showed Jobs that there
33:34was a market for a real computer, the Apple Two. It was very clear to me that while there were a
33:41bunch of hardware hobbyists that could assemble their own computers or at least take our board
33:46and add the transformers for the power supply and the case and the keyboard and go get a, you know,
33:50etc., go get the rest of the stuff. For every one of those, there were a thousand people that
33:55couldn't do that but wanted to mess around with programming, software hobbyists, just like I had
34:02been when I was, you know, 10, discovering that computer. And so my dream for the Apple Two was to
34:07sell the first real packaged computer. Steve Jobs' dream was impossible. It needed too many chips making
34:16the product too complicated and expensive to build. But Waz didn't know it was impossible.
34:23And then I got into a way of why have memory for your TV screen and memory for your computer make them
34:28one. And that shrunk the chips down. And I shrunk the chips here. And why not take all these timing
34:34circuits? I looked through manuals and found a chip that did it in one chip instead of five and reduced
34:38that. And one thing after another after another happened. I wound up with so few chips. When I was done,
34:43I said, hey, a computer that you could program to generate colored patterns on a screen or data
34:49or words or play games or anything. And it was just the computer I wanted, you know, for myself pretty
34:54much. And, uh, but it had turned out so good. He said, I think we have a computer we could sell a
34:59thousand a month of. How can you sell a thousand a month, you know? But we needed some money for tooling
35:05the case and things like that. We needed, we needed a few hundred thousand dollars. That was a lot of money
35:10for two people who had nothing in their lives to speak of, didn't have a four hundred dollar bank
35:14account. So I went looking for some venture capital. The scruffy 19-year-old seduced the
35:20conservative world of venture capitalists. The man Jobs persuaded to part with his cash was Arthur
35:25Rock, the inventor of venture capital and the man who had originally funded Intel. At least the Intel
35:31boys had graduated from university and owned suits. Well, he, uh, wore sandals and he, uh, had long
35:39very long hair and beard and mustache, but very articulate. He, uh, was, I think he, at one time
35:50in his life, and it was probably when I first met him, that he ate nothing but fruit.
35:57So as a mainline venture capitalist, is this, is this? This is not the norm. This is not the norm.
36:04With money in hand and under occasional adult supervision from an ex-Intel manager named
36:14Mike Markala, Waz and Jobs finished the Apple II and ordered a local factory to build 1,000 machines.
36:23Two years passed between the Altair and the Apple II, and in that time a lot of things changed. We went from
36:29a computer that was designed for hobbyists and engineers and certainly looked like a piece of
36:33test equipment to a computer that looked like a piece of consumer electronics. And we can thank
36:39Steve Jobs for that. His sense of design demanded that this structural foam case be used for the
36:44Apple II, the first case of its type on a personal computer. And not that there wasn't good engineering
36:49inside either. The Apple II was a model of efficient engineering. Here's the floppy disk drive
36:55controller for example. There are eight chips here where previously there would have been 35.
36:59This is an amazing bit of engineering that we can attribute to Steve Wozniak, who was certainly
37:04the Mozart of digital design. And all told, it turned the Apple II into a sensation.
37:15The Apple II was launched at Jim Warren's West Coast Computer Fair, one of the first big microcomputer
37:20shows. The 1978 show drew thousands of attendees and dozens of exhibitors, many of them members of
37:26the Homebrew Computer Club, which spawned most of the early microcomputer companies. But there was only
37:32one company showing something that looked like a modern personal computer. Right by the entrance,
37:37in a prime spot negotiated by Steve Jobs, sat the Apple II. It mesmerized all who saw it.
37:44My recollection is we stole the show. And a lot of dealers and distributors started lining up and
37:51we were off and running. How old were you? 21. 21. Yeah.
38:03Following the West Coast Computer Fair, the next two years were ones of explosive growth for Apple,
38:09with thousands of customers arriving on the doorstep of the tiny office in Cupertino, California.
38:15Sales and profits grew so quickly that Apple had more money than the company could spend.
38:21And the company was very young. The founders were in their 20s and some employees were even younger,
38:27like 14-year-old Chris Espinoza, who never left. He still works at Apple almost 20 years later.
38:33There would be public demonstrations of our product every Tuesday and Thursday
38:37afternoon at three o'clock. And that was good because it was after school. So I would get out
38:43of my, you know, sophomore, junior year of high school, I would ride my little moped down to the
38:48Apple offices. And at three o'clock, I'd give the demonstrations of the Apple II.
38:53When we were in the office, it was, hey, jokes and wiring up people's phones to do weird things.
38:57Just every one of us. I mean, there wasn't, there wasn't a person in Apple, I don't think,
39:01for a couple of years that was, you know, super serious. We were lucky. We had, like,
39:06the hot product of its day. And some of the people that I did original demos to came up to me years
39:12later and said, you know, I founded a hundred million dollar chain of computer stores based
39:17on the demo you showed me one Tuesday afternoon at Apple. It was really fun. It went so successful
39:23that all of a sudden, Steve and I wouldn't have to worry about work for the rest of our lives.
39:27And then it got even more successful and more successful after that.
39:30Yeah. And, uh, it was sort of, sort of a shock.
39:34The Apple II set a new standard for personal computers and showed there was some real money
39:40to be made. Rival companies popped up all over, but the market was still hobbyists. Guys with big
39:46beards who thought a good use for their computer was controlling a model train set.
39:50...loads in the actual program. But for microcomputers to be taken seriously,
39:56they had to start doing things that needed doing. Functions that were useful, not just for fun.
40:04Over 2,000 programs. The enthusiast market had its limits. To reach the rest of us,
40:09the Apple II needed what nerds call a killer application. Software that's so useful that
40:14people will buy computers just to run it. For the Apple II, this application was called
40:20Visicalc. It came straight from the blackboards of the Harvard Business School.
40:27Invented by a graduate student, Dan Bricklin, with his programmer friend, Bob Frankston,
40:31Visicalc was the first electronic spreadsheet. A spreadsheet is a tool for financial planning,
40:38bringing together for the first time the seduction of money with the power of microcomputing.
40:45Dan Bricklin's professor at Harvard showed how companies used a grid of numbers on a blackboard
40:50to work out profits and expenses. The trick to a spreadsheet is that all the values in the table
41:05are related to the others. So changes in one year would ripple through the table affecting prices and
41:11profits in subsequent years. Students were asked to calculate how future profits would be affected by
41:16various business scenarios. It was called running the numbers, and they did it laboriously by hand.
41:22Well, let's say your initial costs have 100 fixed costs at the beginning, so now you have a minus 20
41:29is how much you make the first year. And then the second year you have 100, but your variable,
41:35let's say, is 25. So now you're losing, what is it? There's a pain in the neck I wasn't very good at this time.
41:4280, what? No, no, no. We failed. We just lost it. Minus 15, right? And then eventually you're
41:49making money. What year do we make money? And you know, and how much does the cost of money?
41:52That's what running the numbers was. Because each value was linked to the others,
41:57one mistake could mean disaster. It blows all your numbers afterwards because you make all your
42:02calculations based on other numbers before them. If I had miscalculated... Dan, who had worked as a
42:07programmer, started daydreaming about how he could use a computer to replace the tedious hand
42:12calculations. I imagine that there was this magic blackboard that did like word processing does
42:17word wrapping. If you make a change to a word, it automatically pulls everything back. Well,
42:21why not recalculate the same way? So that if I changed my number, you know, I should have used 10%
42:26instead of 12%. I could just put it in and it would recalculate everything, go through it. You know,
42:31and that would be this idea of an electronic spreadsheet. Following a model that's common
42:37today, Dan Bricklin designed the program but got his friend Bob Frankston to write the actual
42:42computer code. After months of programming late at night when computer time was cheaper,
42:48the Harvard Business School blackboard came to life. Now we set this up, okay? Then we type a new
42:53value in. Okay, here I'm going to take that 100. I'm going to change it, right? And here, recalculate. Whoa!
42:59That saved me so much time. People who saw it and went and got it, like an accountant,
43:04I remember showing it to one around here, and he started shaking and said, that's what I do all
43:10week. I could do it in an hour. And I could do, you know, you know, and they would take their credit
43:14cards and shove them in your face. I meet these people now. They come up to me and say, I got to
43:18tell you, you know, it's... You changed my life. You changed my life. You made accounting fun.
43:23You have to remember what it was like in those days. We didn't want, we did not use the word
43:26spreadsheet, because nobody knew what spreadsheet was. I came up with the name Visible Calculator,
43:32or Visicalc, because you wanted to emphasize that aspect. Visicalc hit the market in October 1979,
43:39selling for $100. Marv Goldschmidt sold the first copies from his computer store in Bedford,
43:45Massachusetts. After a slow start, Visicalc took off. What it did in our society, it gave people who
43:52were obsessed with numbers, whether they're in business or at home. How much am I worth today?
43:56What's my stock portfolio worth? How am I doing against budget on this project? It gave them the
44:02ability to play with scenarios and change it and say, well, what if I do this? So put people,
44:09in a sense, in control of the thing that lots of people in our society feel is driving them,
44:13that's numbers. The spreadsheet was every businessman's crystal ball. It answered all those
44:22what-if questions. What if I fire the engineering department? What if I invest 10 million dollars
44:29in pantyhose futures? Look, I'll be rich in under a year and have slimmer thighs at the same time.
44:35the computer says so. The effect of the spreadsheet was enormous. Armed with an Apple II running Visicalc,
44:49a 24-year-old MBA with two pieces of dubious data could convince his corporate managers to allow him
44:55to loot the corporate pension fund and do a leverage file. It was the perfect tool for the 80s,
45:00the midday, when money was everything, and greed was good. The money seemed limitless. Investments,
45:11cash flow. The whiz kids, many fresh out of college, drawn here by the lure of big money.
45:17He'd made millions for himself and other selling junk fonds. Forecasts or plans. A group that has been
45:23motivated by greed. Visicalc can help you work faster. In five years, the PC had gone from a hobbyist's
45:33toy to an engine that shaped the times we lived in. Thanks to Visicalc, the Apple II made history.
45:41Everybody you talked to just seemed excited about talking about what we were doing.
45:45And, uh, there was this huge media explosion, kind of like the internet is receiving today,
45:51of this is the happening thing. You read about it over and over and over. And every time you took
45:55an airplane flight, you read about it. In every newspaper, every week, you'd read something
45:58about small computers coming. And Apple was one of the highlight companies. So we were being portrayed
46:03as a leader of a revolution. And we really felt that we were a leader of a revolution. We were going
46:08to change life a lot. Pretty good for a company started in a garage three years before.
46:14But not all the PC pioneers made great fortunes. Dan Bricklin decided not to patent his spreadsheet
46:21idea. Though more than 100 million spreadsheets have been sold since 1979, Bricklin and Frankston
46:27haven't earned Visicalc royalties in years. You know, looking back at how successful a lot of other
46:32people have been, it's kind of sad that we weren't as successful. It would be very nice to be
46:36gazillionaires. But it can also understand that part of the reason was that that's not who we're
46:45trying to be. We're kids in the 60s. And what did you want to do? You wanted to make the world better.
46:50And you wanted to make your mark on the world and improve things. And we did it. So by the mark of what
46:55we would measure ourselves by, we're very successful.
46:58And what about Ed Roberts? Three years and 40,000 computers after assembling that first Altair,
47:08the fun was over for Ed. Mitts was just another player in what had become a competitive market
47:13for personal computers. Roberts sold his company in 1978 and started a new life. He went back to his
47:20native Georgia and retrained as a doctor. I hadn't really thought anything at all about it until the
47:25last few years when people started taking credit for things that we did at Mitts.
47:30And that's the only thing I think about. It irritates me, the things that we did at
47:33Mitts that we took all the heat for that other people are trying to take credit for. And that
47:38frustrates me. While Ed Roberts invented the personal computer, it was the founders of Apple who got rich.
47:45When Apple went public in spectacular fashion in 1980, Jobs and Woz became multi-millionaires.
47:52The nerds had inherited the earth. I was worth, um, about over a million dollars when I was 23
48:02and over 10 million dollars when I was 24 and over a hundred million dollars when I was 25.
48:09Um, and it's, it wasn't that important, uh, because I never did it for the money.
48:17It was just a little hobby company like a lot of people do, not thinking anything of it. I mean,
48:23it wasn't, it wasn't like we both thought it was going to go a long ways. It was like,
48:27we'll both do it for fun. But back then there was a short window in time where one person who could sit
48:33down and do some neat, good designs could turn them into a huge thing like the Apple II.
48:53It's astonishing that at the beginning of 1975, nobody owned a personal computer. All there was,
48:59was a mock-up on a magazine cover. Yet within five years, there had emerged here in Silicon Valley,
49:05a billion dollar industry. An unhealthy fascination with technology on the part of a few adolescents
49:10had awakened the nerd within us all. PC companies were sprouting like mushrooms to meet the enormous
49:16demand. Apple had emerged as the top fungus and had taken 50 percent of the market. To the boys in
49:23Cupertino, every day seemed like Christmas. But Scrooge was around the corner. There was a company that
49:28everyone associated with the word computer, a company that expected, no, demanded to dominate
49:34its market. IBM. Big Blue was on the move and Silicon Valley would soon be feeling the reverberations.
49:58propeller ee-
50:12Oh-au-au-au-au-au-au-au-au-au!
50:18endație-
50:21And
50:21craig
50:23ee-
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