Hi, I'm Bob Cringely - and I'm here to tell you the incredible story of how personal computers took over the world. Why am I telling you this at a basketball game? Well, I like the game - but mainly it's because of that guy down there. His name is Paul Allen and everything you see here belongs to him -- the Portland Trailblazer's basketball team, their arena, even the dancers. Thanks to personal computers, he has $8 billion to spend on such toys. Twenty years ago Allen and his high school friend, Bill Gates, were running a two-man software company called Microsoft. Today Allen is richer than God and Gates is richer than Allen. Twenty years ago, young men like Paul Allen and Bill Gates invented the personal computer and in doing so launched a revolution that's changed the way we live, work and communicate. It's hard to believe that twenty years ago there were no personal computers, now it's the third largest industry in the world, somewhere between energy production and illegal drugs but the most amazing thing of all is that it happened by accident because a bunch of disenfranchised nerds wanted to impress their friends. This is the story of how a handful of guys launched an industrial revolution. How they changed the culture of business, how they made history.

Steve Jobs
Co-founder, Apple Computer
Worth $1 billion
I feel incredibly lucky to be at exactly the right place in Silicon Valley, at exactly the right time historically where this invention has, has taken form.

Steve Wozniak
Co-founder Apple Computer
Worth $200 million
It wasn't like we both thought it was going to go a long ways, it was like, we'll both do it for fun and even though we're goin' to lose some money probably we'll just have been able to say we had a company.

Bill Gates
Co-founder, Microsoft
Worth $13 billion
Now all of us would get together and just hope we were right that the PC would become a big thing.

Steve Ballmer
Vice President Microsoft
Worth $3 billion
You know I stop and say wow the PC really has become part of the very fabric of the way people live and we certainly surged with it. I used to stop and say hmmm pretty incredible ride.

Most of these people come from the place I call home, the Silicon Valley, south of San Francisco, California. Growing-up here near the electronics companies that give the place its name, these founders of the PC revolution were for the most part middle class white kids from good suburban homes. But it's not their homes we're interested in -- it's their garages. This is my garage and this is all my junk. I'm probably one of the few guys in Silicon Valley who actually has room in his garage for a car, most everyone else seems to use theirs to start computer companies and create great fortunes, but I don't have a fortune - I'm a failure, I've written computer programmes that almost ran and I've designed and built hardware devices that frankly didn't work at all but I'm the ideal guy to tell the story of the personal computer business because I'm its premier gossip columnist and everyone tells me all their secrets. And this is my home where I write a gossip column for a computing magazine. Sorry about the mess. Institutions in constant change like the PC industry are driven by rumor and gossip and I thrive on both. My electronic mail address is deluged with inside information about everything from product flaws to who's sleeping with whom. What ties these gossipers together is a desire for truth. These people and their love of technology have fueled the PC revolution. To understand them is to understand that revolution. So let's go find some.

Meet Edwin Chin on a Saturday morning at the Weird Stuff Warehouse. This could be 1976 or 1996 because there is always a new generation of techies like Edwin who hear the calling. Most other kids are watching TV, but not Edwin.
Edwin: You know I've been interested in electronics and technology as a hobby since I started when I was like six or seven you know.
Q: How old are you now, Edwin?
A: Ten, right now.

It's no coincidence that the only woman in the vicinity looks bored, because this is a boy thing -- the obsession of a particular type of boy who would rather struggle with an electronic box than with a world of unpredictable people. We call them engineers, programmers, hackers, and techies, but mainly we call them nerds.

Douglas Adams
Sci-fi author
I think a nerd is a person who uses the telephone to talk to other people about telephones. And a computer nerd therefore is somebody who uses a computer in order to use a computer.

Christine Comaford
CEO Corporate Computing Int.
And people have different degrees of passion and different types of passion. Some people like just live databases, like 5th normal form is just like nirvana, they just quest for it you know, that's like what gets them up in the morning.

Q: What do your friends think of you?
Edwin: Boy, he's a nerd. Yeah, but I don't mind, I'm used to being called a nerd, can't have other people stop your dreams.

And in Silicon Valley the dream is to grow up to become a boy like this.... Graham Spencer is chief programmer for Architext Software -- six guys who graduated from Stanford University and started a company just because they like each other. This is a modern-day startup, but at heart it's no different from PC pioneers like Apple, or Microsoft -- nerds who share a dream. Their hobby is their business and the culture they've created is identical to that of a thousand other technology companies. First, they dumped the idea of nine to five. In this industry, you can work any 80 hours per week you like.

Mark Van Haren
Programmer, Architext
And then I've got my cap which I use to cover my eyes and (Oh yes) sleep in the early morning while everybody is coming in.

Bill Gates
We didn't even obey a 24 hour clock, we'd come in and programme for a couple of days straight. We'd - you know, four or five of us, when it was time to eat we'd all get in our cars, kind of race over to the restaurant and sit and talk about what we were doing, sometimes I'd get excited talking about things, I'd forget to eat, but then you know, we'd just go back and programme some more. It was us and our friends - those were fun days.

Mat Hostetter
Programmer, ARDI
BOB: Let's look in the refrigerator. Woah! We have coke and cold pizza.
MAT: I drink about two litres of coke a day.
BOB: Two litres of coke a day and do you like think of it as brain food?
MAT: It keeps me going you know, that and listening to heavy metal, and get caffeinated and hack.

Steve Wozniak
I'd sit down in my room on the floor with sheets of paper spread all around with my computer design I was working on. And always I noticed that I was up pretty late at night and I had lots of cokes - it's just part of that life.

Doug Muise
Software designer
A combination of stale pizza and body odour and spilt cola kinda ground in to the rug.

Joe Krause
President Architext
I 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. Ooh, that smells bad.

Doug Muise
Eating, bathing, having a girlfriend, having an active social life is incidental, it gets in the way of code time. Writing code is the primary force that drives our lives so anything that interrupts that is is wasteful.

What 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. Let me explain....Time for the Cringely crash course in basic computers, Part 1. This is a mainframe computer - all of these cabinets are one machine. In the old days all computers were this size they 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 two thousand users like this one, or a little notebook that serves only me. They process numerical data - adding, multiplying, comparing, - the 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. The 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 wth the data and in what order. These 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. It made computers a pain to use. Even worse, every type of computer spoke a different machine language. The ENIAC could compute the thirty second trajectory of a shell in twenty seconds. Operators required two days to program it do so. Then a US Navy captain named Grace Hopper solved the problem. She invented a computer language, English words that the computer itself could translate into binary code. Now users could type whole lists of instructions into a computer rather than flipping those damned switches. Like most things having to do with computers,that first language had a silly name - COBOL. It was followed by other languages like FORTRAN and BASIC and they all made computing just a bit more user-friendly. So 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. Mainframe 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. Eventually computer terminals did begin to appear in some schools, but most of us paid no attention. But 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.

Steve Wozniak
And I took this book home that described the PDP 8 computer and it just...oh, it was just like a bible to me. I 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, I fell in love with these little descriptions of computers on their insides, and 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.

Steve Jobs
So you would keyboard these commands in and then you would wait for a while and then the thing would go dadadadadada and it would tell you something out but even with that it was still remarkable - especially for a ten year old, that you could write a programme in Basic let's say or Fortran and actually this machine would sort of take your idea and it would sort of execute your idea and give you back some results and if they were the results that you predicted your program really worked it was an incredibly thrilling experience.

Nerds wanted their own computers right from the beginning, but it took a technological breakthrough to make that possible. This is it the chip the microprocessor, this is what allows you to have a mainframe computer on your desk. In the 1950s mainframes were as big as this garage and that's because they were filled with thousands of these - vacuum tubes or valves. Eventually the valves were made much smaller and replaced with transistors - still too big however to make a computer that could fit on your desk. What that took was further miniaturisation. Here we have a single piece of silicon etched with thousands of transistors. This microprocessor holds more than a million transistors and that's the secret of the personal computer and that's why they call it silicon valley not computer valley. These are the people who invented the microprocessor -- Intel. Intel was started 28 years ago by a handful of guys after a row with their old boss. Their microprocessors today power 85 percent of the world's computers. Intel not only invented the chip, they are responsible for the laid-back Silicon Valley working style. Everyone was on a first-name basis. There were no reserved parking places, no offices, only cubicles. It's still true today. Here's the chairman's cubicle.

BOB: Knock, knock I knocked at the door but there's no door. Gordon Moore is one of the Intel founders worth $3 billion. With money like that, I'd have a door.

Gordon Moore
Co-founder, Intel
In a business like this the people with the power are the ones that have the understanding of what's going on, not necessarily the ones on top. And it's very important that those people that have the knowledge are the ones that make the decisions. So we set up something where everyone who had the knowledge had an equal say in what was going on.

Intel's microprocessors kept getting more powerful. By 1974 they came out with the 8080, which had enough horsepower to run a whole computer. Only Intel didn't appreciate the brilliance of their own product, seeing it as useful mainly for powering calculators or traffic lights. Intel had all the elements necessary to invent the PC business, but they just didn't get it.

Gordon Moore
Looking back I know of one opportunity where an engineer came to me with an idea for a computer that would be used in the home. Of course it wasn't yet called a personal computer. And while he felt very strongly about it, the only example of what it was good for that he could come up with was the housewife could keep her recipes on it. And I couldn't imagine my wife with her recipes on a computer in the kitchen. It just didn't seem like it had any practical application at all, so Intel didn't pursue that idea.

This is the chip that launched the personal computer revolution. This is the magazine that announced it. In January 1975 featured on the cover was the world's first personal computer the Altair 8800. It was the crazy idea of an ex-airforce officer from Georgia - Ed Roberts.

Ed Roberts
Founder, MITS
If you look at it you know it was kind of grandiose almost megalomaniac kind of scheme you know and right now I couldn't do it because I could see right off there's no way you could do this. There isn't any way you could do this. But at that time you know we just lacked the eh the benefits of age and experience. We didn't know we couldn't do it.

BOB: Jesus Eddy a Silicon Valley garage has nothing on you.
EDDY: Everything you want to know about the microcomputer is probably in here in one form or another.

Here's the garage of Eddy Currie -- Ed Roberts' best friend. Eddy was present at the creation of the personal computer. Eddie also seems to have never met a piece of old computer junk he didn't like.

Eddy Curry
A lot of the audio tapes Ed and I used to send back a forth to one another in order to keep our phone calls down and one of the tapes, one of the tapes I found he got into discussion about the future as he saw it and what his dream was for the Altair. At that time it had not been named it was just called a computer ehm, but it was some very interesting stuff and certainly showed the kind of vision he had.

20 years after Ed Roberts' flash of brilliance, this exhibit is being held to celebrate the anniversary of the Altair. Like every other PC pioneer, Ed built his computer just because he wanted one to play with.

Ed Roberts
There were some of us that lusted after computers really at that time. All the computers in the world tended to be in big centres and you had to get permission to get close to them, and you know, nobody had access to computers. And the idea that you could have your own computer and do whatever you wanted to with it, whenever you wanted to, was fantastic.

And where was this all happening? It was far from Silicon Valley, Intel, or IBM. Out in the desert near the airport in Albuquerque, New Mexico, Ed Roberts ran a calculator company called MITS. Having an ugly building wasn't it's only problem - MITS was going bankrupt. Nobody was buying calculators and Ed needed $65,000 just to stay afloat.

Ed Roberts
And we went to the bank, we had a late night meeting and the issue was whether we closed MITS down or they loaned us an additional sixty-five thousand and I was asked how many machines that I think we would sell in the next year after it was introduced, and I said eight hundred, which was considered a wild-eyed optimist at that. Within a month after it was introduced we were getting two hundred and fifty orders a day.

The Altair wasn't even a computer, it was a computer KIT. Wow this is a pretty well equipped machine. You had to build it yourself and even then it usually didn't work. Still, the demand was amazing.

David Bunnell
Founder PC World and Mac World Magazines
There were actually people that came to MITS, a couple of people with camper trailers and camped out inthe parking lot waiting for their machines. I mean, they were so eager.

Eddy Currie
I mean I think everybody had sort of daydream, Ed Walter Mitteyed about owning a computer. The surprise was that it would be possible for the average college student, for example, who was living on bare subsistence, to actually buy a computer.

David Bunnell
This is what really amazed me was that people were so - there was a sort of pent up demand for having your own computer.

Eddy Currie
And if it could be that cheap what a wonderful thing.

This is an Altair computer - the first personal computer. And not just any Altair - this is Altair serial number 2, the second one made. The first Altair made was sent off to be photographed at a magazine and was lost in the mail. So this is the oldest personal computer in the world. Pretty historic junk but the question is what do you do with it? I mean it has a front panel with switches that you can click back and forth and some lights but in the back there's no place to connect a keyboard, there's no place to connect a monitor, there's no place to connect a printer, in fact there practically nothing at all that you can really do with this thing but back then 1975, the people who had it were thrilled. The nerds formed clubs to talk about their new toy. One of the first was the Homebrew Computer Club, which met on Wednesday evenings in a hall rented from Stanford University in Silicon Valley. Presiding over near-anarchy was Lee Felsenstein who pretended to be in charge.

Lee Felsenstein
And I would start the meeting by making a horrendous loud noise because everyone was talking and I had to get some attention somehow. And I would use it to call upon the person in question. I'd make threatening gestures with it. Most of us were in the electronics industry to a certain extent, there was also a stratem of physicians and there were a lot radio amateurs for instance finding a new technology that wasn't stale. But most of us were at a sort of middle level or downwards. We saw ourselves as crazed ignored geniuses or possibly geniuses but at least we could each hope to get our hands on a computer of our own.

The very uselessness of the Altair is what drove the hobbyists together. Roger Melen and Harry Garland started an early computer company. They came here to meet others and to figure out just what the heck could be done with this new toy -- a solution in search of a problem. There's no keyboard that I can see. The Altair was tedious to use. At first, the only way that data and instructions could be given to the computer was by flipping switches. Take something trivial like 2+2. Each 2 needed eight different switches to be flipped, then a ninth switch was used to load them all. 'And' required another nine switches. The answer 4 was if the third light from the left turned on. Eureka!

Roger Melen
So if you had a program that was a hundred bytes long you had to go this procedure a hundred times to load that in the memory.
HARRY GARLAND: It took a long time.
BOB: I bet it did and what happened if you lost power or if you lost your way in the middle?

The Altair may have been frustrating, but it drove the nerds to experiment, finding real uses for the useless box, turning it from a curiosity to a computer.

Lee Felsenstein
Steve Dumpier set up an Altair, ehm laboriously keyed a program into it. Somebody knocked a plug out of the wall and he had to do that all over again but nobody knew what this was about. After all, was it just going to sit and flash its lights? No.

Roger Melen
You put a little eh transistor radio next to the Altair and he would by manipulating the length of loops in the sofware - could play tunes.

Lee Felsenstein
The radio began playing 'Fool on the Hill'....Da da da, da da da....and the tinny little tunes that you could tell were coming from the noise that the computer was generated being picked up by the radio. Everybody rose and applauded. I proposed that he receive the stripped Philips Screw Award for finding a use for something previously thought useless. But I think everybody was too busy applauding to even hear me.

Roger Melen
It was a very exciting thing, it was probably the first thing the Altair actually did.

Turning the Altair into a useful tool required a programming language so users could type their programs in rather than flipping switches. What it needed was a version of some big computer language like BASIC, only modified for the PC. This was called a BASIC interpreter, but it didn't yet exist because the experts all thought that not even BASIC was basic enough to fit inside the tiny Altair memory. Yet again the experts were wrong. Here comes the guy who solved the problem. Twenty years after finishing the first microcomputer BASIC, Paul Allen is returning to Albuquerque for a celebration of that event -- this time with his $15 million jet and three foot red carpet. At a time when I was killing brain cells, this guy was founding an empire. He has come to eat rubber chicken in honor of the Altair's 20th anniversary.

I'd like to introduce to you - Paul Allen.

Allen co-founded Microsoft with his younger buddy from high school -- Bill Gates.

Paul Allen
One day in Boston, I was in Harvard Square I saw a cover of Popular Electronics with this thing that looked like what I had been imagining, and so I grabbed it off the shelf, I looked at it and I bought it and I ran back to Bill's dorm, and I think he was probably playing poker that night and usually losing money at that point. One of the few times when that's been the case.

Bill Gates
Paul showed that to me and then okay, here was a company that would be needing software.

Paul Allen
And he said OK we gotta call these guys up and see if this thing's for real.

Bill Gates
We realised that things were starting to happen, and just because we'd had a vision for a long time of where this chip could go, what it could mean er, that didn't mean the industry was going to wait for us while I stayed and - and finished my Degree at Harvard.

Paul Allen
So called up Ed you know, we told him we've got this Basic and it's you know just for your machine, and it's you know not that far from being done, and we'd like to come out and show it to you.

Bill Gates
So we created this BASIC interpreter. Paul took the paper tape er, and - and flew out. In fact, the night before, he - he got some sleep while I double checked everything to make sure that we had er, had it all right.

Paul Allen
But I had no idea what it was really going to be like to try to run the software. It had never been run on an actual computer before.

David Bunnell
He was very nervous about whether this would actually work. And then he got to the office and we all gathered around him and he put his fingers on the switches and he loaded BASIC with paper tape into the Altair.

Paul Allen
I was just I was so nervous....this is's not going to work and it worked.

David Bunnell
And it came up, and it could do a few little simple things.

Bill Gates
And it was amazing when Paul called me up and said the thing had worked the first time. And of course, it was incredibly fast.

Paul Allen
And it printed out memory size and I think Bill said it printed something. So I said yeah, yeah.

Bill Gates
Oh, that was - that was unbelievable. The fact that it really worked er, was - was - was a breakthrough.

David Bunnell
Maybe there wouldn't be a Microsoft if the screen hadn't come alive, who knows, it might all be quite different.

After the demo succeeded, Bill forgot about finishing university. Afraid of missing his chance to dominate the new industry, he joined Allen in what was then the the center of world microcomputing research -- among the sleezy bars and gas stations of Albuquerque, New Mexico.

David Bunnell
And they lived across the street from MITS in the Sundowner Motel, and the prostitutes and the drug dealers out on the corner, and they were writing BASIC for the Altair computer, and gradually they actually started Microsoft here in Albuquerque.

Paul Allen
We hired some of our high school friends basically to come down and eh stay with us in our apartment, which became very crowded.

Bill Gates
We were pretty young. We started when I was 19 and so we just had a lot of - a lot of energy.

David Bunnell
They worked really hard. They listened to really loud music, I could hardly stand to go to the software room sometimes because the music would be banging off the walls, mostly acid rock.

Paul Allen
You know we'd usually go out, eat pizzas and then go out and watch action movies.

David Bunnell
They would work all night long, and there were days when Bill Gates would be sleeping on the floor in the software lab.

Paul Allen
Sometimes it would be Bill and these two other guys all, you know, sitting on tables around the apartment with stacks and stacks of paper writing, converting the BASIC for the 8080.

Bill Gates
I still know the source code by heart, and that was er, er, a work of love, you know, we just kept tuning and tuning that thing. And - and so that kind of craftsmanship paid off.

BASIC let the Altair be used for both fun stuff and real work. People attached terminals to the computer and began writing games, word processors, and accounting programs. Most of us didn't notice but soon there was thriving industry for enthusiasts. By the end of 1975, dozens of other companies were building microcomputers.

Ed Roberts
We created an industry and I think that goes completely unnoticed. I mean there was nothing - every aspect of the industry when you talk about software, hardware, application stuff, dealerships, you name it, it was all in a mess.

Bill Gates
It was a wild time. It was a very exciting time. And the first user convention - where we got people to come in and tell us what they were doing, what they were excited about, and other companies like Processor Technology or Imsai or Comemco got going as add-on companies. These companies are long-forgotten, but they were the - the humble beginnings of the - of the PC industry.

Left in the hands of those early hobbyists the PC might never have made it to the shopping mall. Reaching the wider market required a different type of vision. Enter the flower children of California, who thought the PC was, well, groovy.

Steve Jobs
Remember that the Sixties happened in the early Seventies, right, so you have to remember that and that's sort of when I came of age. So I saw a lot of this and to me the spark of that was that there was something beyond sort of what you see every day. It's the same thing that causes people to want to be poets instead of bankers. And I think that's a wonderful thing. And I think that that same spirit can be put into products, and those products can be manufactured and given to people and they can sense that spirit.

To help you understand all this, I will now take off my clothes.

Jim Warren
And he says well frame relay is scaleable.

Jim Warren knows better than most what the hippy movement did for the PC. A sixties radical himself, he staged the West Coast Computer Faire -- for a time the biggest computer show in the world. The Faire was where the PC really arrived. It's also where Jim got rich.

BOB: So eh Jim is this where you hold all your meetings?
JIM: Uhm as many as possible - sure why not.
BOB: This is how silicon vallye entrepreneurs conduct business?
JIM: Oh I don't know if it's how entrenpreneurs conduct business.

Believe it or not, Jim once taught mathematics at a Catholic girls school.

JIM: Bubbles Bob?
BOB: Sure.

Jim was immediately fascinated by the PC like many Bay Area hippies. The California counter culture was crucial to the PC's development.

Jim Warren
And the whole spirit there was working together, was sharing. You shared your dope, you shared your bed, you shared your life, you shared your hopes. And a whole bunch of us had the same community spirit and that permeated the whole Home Brew Computer Club. As soon as somebody would solve a problem they'd come running down to the Home Brew Computer Club's next meeting and say hey everybody you know that problem that all of us have been trying to figure out how to solve, here's the solution, isn't this wonderful? Aren't I a great guy. And it's my contention that that is a major component of why Silicon Valley was able to develop the technology as rapidly as it did, because we were all sharing - everybody won.

Out of this creative show-and-tell came Apple Computer, the first mass market PC company. The Apple founders, a couple of recent graduates from Homestead High were regulars at Homebrew meetings. Steve Wozniak was the technical wizard and Steve Jobs was the visionary who saw microcomputers as a possible business. But Apple wasn't their first business. Woz & Jobs had once built a device to cheat the phone company - they called it a blue box.

Steve Wozniak
Blue boxes were devices that could put tones into your phone and direct the phone company to switch your calls anywhere in the world for free and it was kind of...kind of weird for people to imagine that how could this worldwide phone system let you put a few little tones into your phone just like punching a touchtone phone, put the right tones in and it would direct your call anywhere in the world for free.

Steve Jobs
And it turned out we were at Stanford Linnear Accelerator Centre one night and way in the bowels of their technical library way down at the last bookshelf in the corner bottom rack we found an AT&T technical journal that laid out the whole thing and that's another moment I'll never forget - we saw this journal we though my God it's all real and so we set out to build a device to make these tones.

Steve Wozniak What we'd do is we'd walk into a dorm with a big tape recorder and we'd set the tape recorder on the floor and play the phone through it, hook up the phone with alligator clips so that everyone in the room could hear the phone conversations. And I was master jokester, and then I would get on the phone and dial some countries to show how easy it was. I would dial The Ritz in London and make a reservation and dial something and dial a joke in Sydney, Australia and everybody was really amazed by these things and so one time I said I could call the Pope. I called into Italy and asked for the number of The Vatican and eventually got the call into The Vatican. And I said this is Henry Kissinger - I didn't even use an accent. This is Henry Kissinger and I'd like to speak to the Pope about the summit trip, he was on a summit trip. And they said oh wait wait a minute we'd have to wake him up. It was like 4:30 in the morning there. And I hung on the line and they said we're waking him up, we're waking him up and finally the Bishop came on who was the highest Bishop up who was going to be the translater for the Pope and he said you're not Henry Kissinger and I went into a little accent and said oh yes I am you can call me back at this call-back number and I gave them a weird number where they'd call it back, I'd call a different number, we'd talk to each other but they don't know my phone number and eh they never called back - but it was a good - I woke him up.

Steve Jobs
What we learned was that we could build something ourselves that could control billions of dollars worth of infrastructure in the world - that was what we learnt was that us two you know, we're not much, we could build a little thing that could control a giant thing and that was an incredible lesson. I don't think there would ever have been an Apple computer had there not been blue boxes.

The first Apple computer was primitive. It was cobbled together by Woz to impress his friends at the Hombrew meetings.

Steve Wozniak
Everybody was interested in computers so I started getting a crowd around me because even although I was too shy to raise my hand and say anything in a club meeting - after the club meetings I would put my computer that I had built and every week it had a little bit more working on it too but I would set it down and let people type on the keyboard and I would explain what's in it. If they would come up to me and ask the question I can answer eh you know nowadays I would have the ability to tell them what it is you know and be a little bit more promotional but back then I could only answer questions that they asked me but a kinda group started gathering around me. And Steve Jobs saw that I had a lot of interest around me at the club and he said let's start selling it and let's make this company. He came up with the name Apple and eh and eh thatÍs how it started.

Apple was at best a funky company...started by a couple of teenage hackers who had previously been working as Alice in Wonderland characters in a local shopping mall and they started it in this garage right here. The first Apple computer was built here, now there are more than ten million in use around the world. And I was there - well for a short time I was an employee of Apple Computer, employee number 12 and one day I helped move materials out of this garage. At the time Steve Jobs said that the company was short of loot so he offered to pay me in company shares, but I held out for the money - my mother still reminds me of that incident. The Apple 1 was even less of a computer than the Altair -- a single circuit board that came with neither a case nor a keyboard. Still, Steve Jobs managed to sell 50 Apple 1's. That experience showed Jobs there was a market for a real computer -- the Apple II.

Steve Jobs
It was very clear to me that while there were a bunch of hardware hobbyists that could assemble their own computers, or at least take our board and add the transformers for the power supply and the case the keyboard and go get, you know, et cetera, go get the rest of the stuff. For every one of those there were a thousand people that couldn't do that, but wanted to mess around with programming - software hobbyists. Just like I had been when I was, you know, ten, discovering that computer. And so my dream for the Apple 2 was to sell the first real packaged computer.

Steve Jobs's dream was impossible. It needed too many chips, making the product too complicated and expensive to build. But Woz didn't know it was impossible.

Steve Wozniak
And then I got in to a way of why have memory for your TV screen and memory for your computer, make them one, and that shrunk the chips down, and I shrunk the chips here, and why not take all these timing circuits and I looked through manuals and found a chip that did it in one chip instead of five, and reduced that, and one thing after another after another happened. I wound up with so few chips, when I was done I said hey, a computer that you could program to generate coloured patterns on a screen, or data or words or play games or anything it was just the computer I wanted, you know, for myself pretty much, but it had turned out so good. He said I think we have a computer we could sell a thousand a month of. How can you sell a thousand a month, you know?

Steve Jobs
But we needed some money for tooling the case, things like that, we needed a few hundred thousand dollars.

Steve Wozniak
That was a lot of money for two people who had nothing in their lives to speak of, didn't have a 400 dollar bank account.

Steve Jobs
So I went looking for some venture capital.

The scruffy 19 year-old seduced the conservative world of venture capitalists. The man Jobs persuaded to part with his cash was Arthur Rock, the inventor of venture capital and the man who had originally funded Intel. At least the Intel boys had graduated from university and owned suits.

Arthur Rock
Venture Capitalist
Well, he wore sandals and he had long, very long hair and a beard and a moustache, but very articulate. He was, I think at one time in his life, and it was probably when I first met him that he ate nothing but fruit.

Bob: So as a mainline venture capitalist, is this...
Arthur: This is not the norm. This is not the norm.

With money in hand and under occasional adult supervision from an ex-Intel manager named Mike Markkula, Woz & Jobs finished the Apple II and ordered a local factory to build 1000 machines. Two years passed between the Altair and the Apple 2. And in that time a lot of things changed. We went from a computer that was designed for hobbyists and engineers and certainly looked like a piece of test equipment to a computer that looked like a piece of consumer electronics and we can thank Steve Jobs for that - his sense of design demanded that this structural foam case be used for the Apple 2 - the first case of its type on a personal computer. And not that there wasn't good engineering inside either. The Apple 2 was a model of efficient engineering - here's the floppy disk drive controller for example. There are eight chips here where previously there would have been thirty-five. This is an amazing bit of engineering that we can attribute to Steve Wozniak who is certainly the Mozart of digital design and all told it turned the Apple 2 into a sensation. The Apple II was launched at Jim Warren's West Coast Computer Faire -- one of the first big microcomputer shows. The 1978 show drew thousands of attendees and dozens of exhibitors -- many of them members of the Homebrew Computer Club, which spawned most of the early microcomputer companies. But there was only one company showing something that looked like a modern personal computer. Right by the entrance, in a prime spot negotiated by Steve Jobs, sat the Apple II. It mesmerized all who saw it. One later became a top Apple programmer.

Andy Hertzfeld
Apple Computer Designer
As a grad student I went to the first West Coast Computer Faire because I was interested in personal computers, and just on a tiny little table, like a picnic table almost - just covered with a tablecloth there was this Apple 2 and I swear, in my memory, it seems to have a halo around it now. It just drew me right to it.

Steve Jobs
My recollection is we stole the show, and a lot of dealers and distributors started lining up and we were off and running.

Bob: How old were you?
Steve: Twenty-one.
Bob: Twenty-one!

Following the West Coast Computer Faire, the next two years were ones of explosive growth for Apple, with thousands of customers literally arriving on the doorstep of the tiny office in Cupertino, California. Sales and profits grew so quickly that Apple had more money than the company could spend. And the company was very young. The founders were in their twenties and some employees were even younger, like 14 year-old Chris Espinosa, who never left. He still works at Apple, almost 20 years later.

Chris Espinosa
Manager, Media Tools, Apple
And there would be public demonstrations of our product every Tuesday and Thursday afternoon at 3 o'clock and that was good because it was after school. So I would get out of my, you know sophomore-junior year of high school, I would ride my little moped down to the Apple offices and at 3 oÍclock I'd give the demonstrations of the Apple 2.

Steve Wozniak
When we were in the office it was hey jokes and we were wiring up people's phones to do weird things, just every one of us I mean there wasn't a person in Apple I don't think for a couple of years that was you know super serious. We were lucky, we had like the hot product of its day.

Chris Espinosa
And some of the people that I did original demos to came up to me years later and said you know I founded a hundred million dollar chain of computer stores based on the demo you showed me one Tuesday afternoon at Apple. It was really fun.

Steve Wozniak
It went so successful that all of a sudden Steve and I wouldn't have to worry about work for the rest of our lives. And then it got even more successful and more successful after that, and eh it was sort of a shock.

The Apple II set a new standard for personal computers and showed there was some real money to be made. Rival companies popped-up all over, but the market was still hobbyists -- guys with big beards who thought a good use for their computer was controlling a model train set. But for microcomputers to be taken seriously, they had to start doing things that needed doing -- functions that were useful, not just for fun.

The enthusiast had its limits. To reach the rest of us the Apple 2 needed what nerds call a killer application. Software that's so useful that people will buy computers just to run it. For the Apple II, this application was called VisiCalc. It came straight from the blackboards of the Harvard Business school. Invented by a graduate student, Dan Bricklin with his programmer friend Bob Frankston, VisiCalc was the first electronic spreadsheet. A spreadsheet is a tool for financial planning, bringing together for the first time the seduction of money with the power of microcomputing. Dan Bricklin's professor at Harvard showed how companies used a grid of numbers on a blackboard to work out profits and expenses.

Dan Bricklin
VisiCalc Inventor
Sixty down here and your profit would be this minus this which gives you forty. And then well let's see what's the sales growth, say there's a ten percent...

The trick to a spreadsheet is that all the values in the table are related to the others. So changes in one year would ripple through the table, affecting prices and profits in subseqent years. Students were asked to calculate how future profits would be affected by various business scenarios. It was called running the numbers and they did it laborously by hand.

Dan Bricklin
Well let's say your initial costs have a hundred fixed costs at the beginning so now you have a minus twenty is how much you make the first year and in the second year you have a hundred but your variable is say let's say twenty-five so now your losing what is it - it's a pain in the neck I wasn't very good at this stuff - eighty what - no no no - fifteen - minus fifteen right and eventually your making money, what year do we make money and how much does the cost of money that's what running numbers was.

Because each value was linked to others, one mistake could mean disaster.

Dan Bricklin
It blows your all number afterwards because you make all your calculations based on the other numbers before them. If I had miscalculated...

Dan, who had worked as a programmer, started daydreaming about how he could use a computer to replace the tedious hand calculations.

Dan Bricklin
I imagined that there was this magic blackboard that did like word processing does word wrapping - if you make a change to a word it automatically pulls everything back, well why no recalculate in the same way? So that if I change my number, you know, I should have used ten per cent instead of twelve per cent, I could just put it in and it would recalculate everything and go through it you know and that would be this idea of an electronic spread sheet.

Following a model that's common today, Dan Bricklin designed the program, but got his friend Bob Frankston to write the actual computer code. After months of programming late at night when computer time was cheaper, the Harvard Business School blackboard came to life.

Dan Bricklin
Now weÍve set this up, OK. Then we type a new value in, then I'm going to take that one hundred, I'm going to change it right and here, it recalculated! Woa! That saved me so much time. People who saw it and went and got it like an accountant, I remember showing it to one around here and he started shaking and said that's what I do all week, I could do it in an hour you know, you know, they would take their credit cards and shove them in your face. I meet these people now they come up to me and say I gotta tell you you know...
BOB: You changed my life.
DAN: You changed my life. You made accounting fun and...

Bob Frankston
VisiCalc Programmer
You have to remember what it was like in those days we did not use the word spreadsheet cause nobody knew what a spreadsheet was. I came up with the name visible calculator or visicalc because we wanted to emphasise that aspect.

VisiCalc hit the market in October, 1979, selling for $100. Marv Goldschmitt sold the first copies from his computer store in Bedford, Massachusetts. After a slow start VisiCalc took off.

Marv Goldschmitt
What it did in our society, it gave people who were obsessed with numbers, whether they were in business or at home, how much am I worth today, what's my stock portfolio worth, how am I doing against budget on this project. It gave them an ability to play with scenarios and change it and say well, what if I do this. So it put people in a sense in control of the thing that lots of people in our society feel is driving them and that's numbers.

The spreadsheet was every businessman's crystal ball. It answered all those 'what if' questions. What if I fire the engineering department? What if I invest $10 million in pantyhose futures? Look! I'll be rich in under a year and have slimmer thighs at the same time! The Computer says so! The effect of the spreadsheet was enormous. Armed with an Apple 2 running Visicalc a twenty-four year old MBA with two pieces of dubious data could convince his corporate managers to allow him to loot the corporate pension fund and do a leverage buy-out. It was the perfect tool for the eighties...the lead decade where money was everything and greed was good. In five years, the PC had gone from a hobbyist's toy to an engine that shaped the times we lived in. Thanks to VisiCalc the Apple II made history.

Steve Wozniak
Everybody you talked to just seemed excited about talking about what we were doing. And there was this huge media explosion, kind of like the Internet is receiving today, of this is the happening thing. You read about it over and over and over, and every time you took an airplane flight you read about it, in every newspaper every week you'd read something about small computers coming, and Apple was one of the highlight companies so we were being portrayed as a leader of a revolution, and we really felt that we were a leader of a revolution. We were going to change life a lot.

Pretty good for a company started in a garage three years before. But not all the PC pioneers made great fortunes. Dan Bricklin decided not to patent his spreadsheet idea. Though more than 100 million spreadsheets have been sold since 1979, Bricklin and Frankston haven't earned VisiCalc royalties in years.

Dan Bricklin
You know, looking back at how successful a lot of other people have been it's kind of sad that we weren't as successful...

Bob Frankston
It would be very nice to be gazillionaires, but you can also understand that part of the reason was that that's not what we're trying to be.

Dan Bricklin
We're kids of the Sixties and what did you want to do? You wanted to make the world better, and you wanted to make your mark on the world and improve things, and we did it. So by the mark of what we would measure ourselves by, we're very successful.

And what about Ed Roberts? Three years and 40,000 computers after assembling that first Altair, the fun was over for Ed. MITS was just another player in what had become a competitive market for personal computers. Roberts sold his company in 1978 and started a new life. He went back to his native Georgia and retrained as a doctor.

Ed Roberts
I hadn't really thought anything at all about it for the last few years until people started taking credit for things that we did at MITS eh that's the only thing I think about. It irritates me when I think about the things that we did at MITS and we took all the heat for that other people have tried to take credit for and that frustrates me.

While Ed Roberts invented the personal computer, it was the founders of Apple who got rich. When Apple went public in spectacular fashion in 1980, Jobs and Woz became multimillionaires. The nerds had inherited the earth.

Steve Jobs
I was worth about over a million dollars when I was twenty-three and over ten million dollars when I was twenty-four, and over a hundred million dollars when I was twenty-five and ehm it wasn't that important ehm because I never did it for the money.

Steve Wozniak
It was just a little hobby company like a lot of people do not thinking anything of it. I mean it wasn't as though we both thought it was going to go a long ways. It was like we'll both do it for fun but back then there was a short window in time where one person who could sit down and do some neat good designs could turn them into a huge thing like the Apple 2.

It's astonishing that at the beginning of 1975 nobody owned a personal computer all there was was a mock-up on a magazine cover yet within five years there had emerged here in Silicon Valley a billion dollar industry. An unhealthy fascination with technology on the part of a few adolescents had awakened the nerd within us all. PC companies were sprouting like mushrooms to meet the enormous demand. Apple had emerged as the top fungus and had taken fifty per cent of the market. To the boys in Cupertino, every day seemed like Christmas...but Scrooge was around the corner. There was a company that everyone associated with the word computer, a company that expected, no demanded to dominate its market - IBM - Big Blue was on the move and Silicon Valley would soon be feeling the reverberations.

On to Part 2...

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