by Guruprasad

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Business card of the first company started by Bill Gates & Paul Allen (these guys later started Microsoft).

Yesterday, we saw how Bill & Paul got access to computers and got addicted to programming.

This part is a continuation to it, narrating about the events that happened before starting Microsoft.
As mentioned in the previous story, in 1970, the Computer Centre Corporation closed down, but Bill & Paul desperately wanted to work on computers. They were hired by Information Sciences Inc to write a payroll program and gave them unlimited computer time and some money in return and thus the wheel started rolling again. Upon realizing the potential of these students, their school asked them to write a program for scheduling classes with student entries. Bill was such a genius (and naughty), he wrote a program which would schedule classes and when the whole schedule is ready, the program would check for the lecture which had highest number of girls enrolled and add his name into that schedule :)

Going forward, These wizards realized that working for others is not going to sustain for long, so they thought of developing some product and sell it for profit. Thats how their first company, Traf-O-Data was formed. It was an embedded system product which would monitor road traffic, do processing and could be used for analysis by the traffic dept.

But it turned out to be a big flop because of its flawed business model. Because they had not even done a market research to try to find out who their potential customers would be, what would they want, and how much are they ready to spend. It seems the total cost of the product was $1500 and the only ones who were interested were municipalities who found it very expensive. Although it was worth because of the kind of monitoring and analysis it could do, the municipalities were not interested in such features. So, it was a big lesson for Bill & Paul.

If you search on the net, you can find that Traf-O-Data was a mild success and earned them $20,000 but dig a little more deeper and you can find Paul himself admitting that it was a big mistake and it actually caused them losses but taught them a lesson.

In 1973, Bill joined Harvard but his heart was still for computers. He was in contact with Paul and they used to discuss project ideas, programming ideas and most of the time, talk about starting a new company but they did not know what the company’s focus should be on. Already having learnt a lesson from Traf-O-Data, they were a little more cautious now.

This is all for now. In the next story using a different photo, we shall see how Bill & Paul were determined and optimistic about the computer industry taking off very soon. What triggered them to start Microsoft. What was the climax. All these narrations next time :)

Watch this 1-min clip in which Bill & Paul recall their experiences of Traf-O-Data (extracted from a documentary)