Tren Griffin+ Your Authors @trengriffin I work for Microsoft. Previously I was a partner at Eagle River, a private equity firm established by Craig McCaw. I am on the board of directors of Kymeta. Aug. 12, 2019 2 min read + Your Authors

1/ One of the best ways to teach someone about business is to tell a story. One such story is how a prior business experience contributed to the success of Microsoft. Traf-O-Data was created in 1972 by Bill Gates and Paul Allen to convert road volume data and into reports.

2/ Gates: "One summer day in 1972, when I was sixteen and Paul was nineteen, he showed me a ten paragraph article buried on page 143 of Electronics magazine [about Intel releasing the 8008 microprocessor.] We wondered what we could program the 8008 to do." 

3/ Gates: “8008 wasn't capable of running a BASIC Interpreter. The 8008 is basically an 8-bit machine with no programmable stack. Doing this traffic analysis software was pushing the limits. Paul Gilbert knew how to do crazy wire wrapping.” 

4/ Two years after they started to make the device “we had a working prototype machine (built on a $1,500 budget). Traf-O-Data was a good idea with a flawed business model. [Traf-O-Data's total net losses were ~$3,494]" recalled Paul Allen. 

5/ “States began to provide traffic-counting services for free and our business model evaporated. While Traf-O-Data was technically a business failure, the understanding of microprocessors we absorbed was crucial to our future success." Paul Allen 

6/ Gates: “By the time I went to Harvard [in the fall of 1973], the 8080 was just coming out, which was the first good general purpose microprocessor chip.” “We were walking through Harvard Square in December 1974 and saw Popular Electronics magazine.” 

7/ "Traf-O-Data was seminal in preparing us to make Microsoft's first product a couple of years later. We taught ourselves to simulate how microprocessors work using DEC computers, so we could develop software even before our machine was built." 

8/ Allen: “Bill and I had a big edge in speed and productivity with our Traf-O-Data development tools.” Anyone competing against Bill and Paul to create a version of BASIC that ran on the Altair PC needed a 8080 simulator.

BASIC for the Altair PC shipped in February of 1975.

9/ 25iQuiz: How did the effort of Bill Gates to create the hardware needed for the Traffic-O-Data computer as a 17 year old business founder impact his belief in the relative importance of software as expressed in his 1994 Playboy interview? 

You can follow @trengriffin.


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