
What Microsoft is this the Altair Basic of? - oskarth
http://paulgraham.com/altair.html
======
zw123456
This reminds me of my experience with Microsoft very early in my career. Way
back when MS was working on Windows 1.0, I was working for a start up company
and we were developing network management software for SNA Networks and
Mainframes. It was very advanced for the day and used a GUI but was done on
Mainframe computers and terminals. The company sold out to IBM and I chose to
take the money and run. A friend of mine referred me to MS because they needed
people with graphics experience. So I met with one of the team leaders and
went over and talked with them. At the time, Windows was very very primitive,
they had not yet figured out how to make the windows overlap and re-paint
(which we had figured out a long time before that). I actually felt sorry for
them at the time because I just could not imagine how they would ever catch up
with Apple, the Mac was just so much more advanced. It seemed to me like there
was no doubt that they would be out of business in a few years completely
replaced by Apple, it was just so obvious at the time to me. They offered me a
job but it was less money in terms of salary than another offer I had from a
Fortune 500 company, but at the time MS had a great stock option plan, but I
felt that was worthless based on my brilliant analysis of their prospects. So
I took the safe bet. I tell this story occasionally to younger people who are
trying to decide about what to do in terms of career choices. Sometimes the
wiser choice is to take the risk and follow the more exciting path. It is no
guarantee of success, but neither is taking the safe choice. Do what excites
you and put your energy into that. Just my view from the cheap seats.

~~~
AceJohnny2
> Sometimes the wiser choice is to take the risk and follow the more exciting
> path. It is no guarantee of success, but neither is taking the safe choice.

It's really just dumb luck. One thinks one can extract a lesson from this
hindsight, but how was the situation that led to your decision any different
than the 99 other startups that were just as lame but didn't make it?

> Do what excites you and put your energy into that.

Absolutely.

~~~
zw123456
True true. But if it is all dumb luck, then what the F, do want you want. I
guess that was my point.

~~~
TheOtherHobbes
It's not dumb luck. MS made a fortune from marketing and business politics,
not from cool technology.

MS was never primarily a tech company, it was a sales-and-marketing-and-M&A
company that happened to sell tech products.

So the 'Does this company have a future based on this product?' question is
misleading.

The important question is - how are they marketing the product? What
relationships do they have? What relationships are they building? What's the
sales and marketing culture like?

MS are poster children for this. Time and again they've marketed the crap out
of technically mediocre products with - mostly - great success.

AirBnb weren't exactly light on the marketing either. (Etc.)

~~~
discreteevent
If you completely dismiss their product then you would have missed Microsoft
because it's highly likely that at that point their marketing etc wasn't
great. That's the trap the article is warning against.

The more expert you are at something the more likely you will dismiss things.
PG recognises this bias and is trying to keep his mind open. You have fallen
straight into your own trap which is narrow mindedness presenting itself to
you as expertise.

They did have a product and they did go on to build many products. Many of
them are far from crap and solved really difficult problems including running
on all kinds of hardware, maintaining backward compatibility, rewriting their
main OS from scratch. Microsoft is not Coca Cola. PG is trying to see that in
other companies at a very early stage. (not giving him a free pass - I think
he still has other blind spots that annoy me - I have many more no doubt)

edit: No doubt, it's probably that combination of being an expert at something
but having a somewhat open mind that got PG started on his adventures in the
first place.

~~~
TheOtherHobbes
I have no idea if I would have dismissed the product. In retrospect, MS BASIC
had a 4K footprint which also included floating point. That certainly made it
stand out from the competition.

But I wonder if an investor might have noted that Gates had an interest in
aggressive market-building and income generation, as suggested in the scrappy
and public fight with the tape sharers and the eventual battle between MITS
and MS over royalties.

I wasn't paying attention at the time, but looking for similar patterns today
- in, say, Uber - suggest that there's a clear interest in aggressive and cut-
throat behaviour, which probably bodes well for future investment returns. (If
that's your main interest in a tech company - it's not mine).

I certainly don't think MS were crap at everything. But there's also no
denying that the user experience with many MS products was - and still is -
shockingly bad.

Office and XP were good-enough, with a few nice tweaks. But you have to
balance that against a long string of horrors (insecure VB macros, IE6, the
ribbon, Win 8 tiles, Win 95 series bugs, and on and on.)

So historically, the focus has always been on sales and using legal and
corporate lock-in to sell poor-to-good software.

It clearly hasn't been on creating state-of-the-art super-products and
assuming that quality will sell itself.

So I think the point stands - look at business culture and management attitude
to market building as a primary predictor. Product quality is not a predictor,
as long as it's good enough.

Being slightly better than average doesn't hurt, but there's no commercial
need to be a technical marvel.

------
ChuckMcM
Hah, the first time I met Bill Gates was at Percomp '78 in Long Beach
California. This was a pretty small personal computer conference, but
Microsoft was there pushing Altair BASIC. I had a Digital Group Z80 system
(which I considered to be waaaaay superior to the Altair in the way that only
a male high school student can project.) Bill was selling BASIC for $399, I
had paid $900 for my entire system (as a kit). He offered to let me work for
him and port it to the DG system, I declined. After all this guy was going
nowhere, who in their right mind would pay more than half the price of their
computer for BASIC right?

Looking back on that I cannot see any way in which I would have concluded
differently, given the information I had available, but that experience has
since given me insight to never dismiss an idea simply. I like to have solid
reasoning behind my mistakes :-)

~~~
veb
Shows that he believed in what he was doing, and kept at it no matter what.
Sounds like he got dismissed by a LOT of people seemingly (from reading posts
like yours, and other articles over the years). Pretty good effort I'd say!

All I could think of after reading your post was: ouch!

~~~
r00fus
Not to detract from his success, it also may have helped that he was
financially independent (had a big safety net) having come from a wealthy
family.

Things are different if you're worried about putting food on the table a
couple of months from now.

~~~
paulhauggis
If this really had anything to do with it, why did he keep going at all? After
all, what's the point in trying to start a company if you already have a
wealthy family and a safety net?

~~~
TeMPOraL
Because you want to, and not because you have to tread all the time to stay
fed and sheltered.

~~~
adventured
This theory is invalidated by Paul Allen.

They didn't have to worry about staying fed and sheltered, because they
generated revenue immediately. They built a real business.

~~~
paulhauggis
Exactly. If you look at the kids of wealthy people that don't have to ever
worry about money, they don't start their own businesses.

------
mixmax
I think there's a lot of survivorship bias in the statement that lame ideas
turn out to be visionary.

Just because many successful companies are built on ideas that at first seemed
ridiculous doesn't mean that ideas that seem ridiculous will be smash hits.
Actually, most ideas that seem ridiculous _are_ ridiculous.

If, however, a new market, technology or cultural bend turns up, an idea that
exploits it might seem ridiculous because it breaks with social norm or
accepted technological limitations but actually be viable. When Tesla started
building electric cars they were ridiculed because few people understood that
both the technology and the social acceptance was now at a point that made it
possible. Had they started ten years prior the idea _would_ probably have been
ridiculous.

The trick is to be able to see the difference between the snakeoil salesmen,
mad hatters and crazy inventors and the true visionaries. What makes this
really difficult is that noone, including the founders, knows whether they're
one or the other. There's a lot of luck and timing involved.

I'd also wager that the reason that mindblowingly successful companies often
start out as seemingly ridiculous ideas is that if they don't have any
competition in a niche that they can exploit. Microsoft, for example, were the
first to sell software. IBM laughed them out of the room because software was
just something that came with the hardware. The idea that you could sell
software seemed as crazy as selling sand in Sahara. But because of a
technological and cultural shift it was a good idea, and because it seemed
ridiculous to "real" companies they had the market to themselves for the first
vital years. Had they not been so lucky (or smart) with their timing noone
would know who Bill Gates is.

I think you might be able to conclude the following:

" _If you want merely to be well-off start a company that isn 't based on a
ridiculous idea. If you want a small chance of changing the world start a
company based on a ridiculous idea_"

~~~
bjt
I think the article more useful to VCs than to founders.

Good VCs worry about being pitched on the next Apple/Microsoft/Facebook/Google
and passing on it because of their own prejudices or lack of vision. I see the
article as an effort to consciously counter those prejudices.

But VCs have the luxury of being able to invest in a lot of companies. When
you have that luxury, you can afford to say "let's let a few lame ideas in
because they could grow huge".

You're right that potential founders don't have that luxury. Sinking 5-10
years of your life into a lame idea is overwhelmingly likely to have little
payoff for the founder.

~~~
mgkimsal
> "let's let a few lame ideas in because they could grow huge"."

Which seems to be the strategy used by most VCs anyway. The primary difference
is that may not (at the time) see some of those companies/ideas as 'lame'
themselves. But "invest in a large number because X will fail and we need one
homerun" seems to be the prevailing MO.

------
segmondy
I have to strongly disagree with this article. Altair BASIC was not lame for
it's time. It was GREAT! There was no OS, there were barely any assemblers,
you would have to toggle switches to binary representation to enter code in
home brew computer.

Without BASIC, You do have to first of all learn assembly programming, learn
to assemble it by hand and translate to hex/binary then flip it in. BASIC was
amazing for the time, anyone could and can program in BASIC.

Google was not lame for the time, search engines sucked, no one saw/used
google and said why? The first time we all used google we were hooked, we
didn't have to AND OR NOT our results, it found meaningful results from the
get go.

Now Facebook we could argue that about if it would take off, you might say,
why? There's already myspace. But I don't know that the Microsoft BASIC or
google search was lame in any way shape or form. If we all folks did was hear
about the idea, then yes, they would easily be brushed off, but after
implementation, it was a no brainer. Kinda like Tesla, all electric cars have
really sucked until Tesla showed you could make electric cars stylish, fun to
drive and with range.

~~~
S_A_P
I was in college when google first launched. I remember distinctly at the time
AltaVista was the best search engine, but I still rarely got relevant pages
from searches. I dont think that in the early days I remembered getting much
better results from Google, but eventually it was pretty clear cut for me. I
do remember in around 2004-2005 some folks I worked with were thinking of
starting a "new" search engine, and that it would far surpass Google. I can
say I thought that was a pretty lame idea. Of course to a large degree I think
that Uber and AirBnb are a bad idea, but you cant argue with valuations....

~~~
vram22
>I was in college when google first launched.

I was working in a company at the time. Happened to be one of the early people
there to know about Google. Tried it out. A few days later told a friend, who
was sitting at the desk next to me, about it. He tried it with a search;
results came back in 0.x seconds (even in those days, 1997 or so), then
muttered: "That's fast."

------
yatoomy
This seems to me a clarification of the strategy PG proposed during a talk at
PyCon 2012 and an essay called "frighteningly ambitious startup ideas". It is
a great way to think about and frame how to judge startup ideas.

Mainly centering around high potential technology, overlooked ideas and
opportunities that these startups can take advantage of.

My question becomes, and it seems PGs, how can you do this without the value
of hindsight. One one hand, you could sit and reason why startup x or your
startup idea is the Microsoft in this scenario. But you can also easily delude
yourself.

Pebble, IMO, is shaping up alot like early Apple did. They are entering a
competitive industry with a new product, facing a goliath and have a huge
emphasis on their design & focus on developer. Which makes me believe history
will repeat itself. That if we have the Apple for wearables, there should be,
or soon, a Microsoft for wearables.

Just a thought, would love any point for/against.

For reference:

[http://paulgraham.com/ambitious.html](http://paulgraham.com/ambitious.html)
[https://www.youtube.com/watch?v=R9ITLdmfdLI](https://www.youtube.com/watch?v=R9ITLdmfdLI)

~~~
seiji
_PG proposed during a talk at PyCon 2012_

That was a great talk. Everybody should re-watch it. Even if just for the one
off question "why does HN violate the HTTP spec by sending invalid line
endings?" (Answer: "because it works for me!")

------
MichaelGG
Did MS start out to just write BASIC for the Altair? Or if asked would they
have said they were going to write software for computer users? The second
phrasing doesn't sound so lame. And I imagine you can come up with a lame
sounding subset for many companies.

Edit: I get the point that companies might have a larger scope and to look out
for it but deliberately trying to come up with a lame tagline seems... Off?
Did AirBNB really set out just to offer a single place with air mattresses?
Like no plans?

~~~
chubot
I don't know for sure, but AirBNB had the weird domain name
airbednbreakfast.com or something, and it still has pretty weird company name
too. It's not really what you would choose for disrupting the hotel industry.

By decades of media coverage, "Microsoft" evokes images of a behemoth. But try
to imagine what the name "Microsoft" must have sounded like -- it doesn't
sound very ambitious. It sounds a little lame. If you planned to be the
biggest company in the world, would you name your company "Microsoft"?

Microsoft was started when Gates was 20 or something. I think a lot of 20 year
olds are just trying to make something interesting. Some are dreaming of
taking over the world, but those are the types that probably don't actually do
it.

I think you can see a similar thing with Linux. If you look at Linus's
original mail announcing Linux, it doesn't sound like he has any goals to run
on the majority of servers, mobile phones, many desktops, and tons of embedded
devices.

He even insisted it would never be portable past i386!!!

I agree with pg that a lot of these people are living in the future and don't
necessarily realize that they're going to be riding this hockey stick growth.
Even if you're doing it, I'm sure it's hard to predict. There's hundreds of
decisions and improvements you have to make along the way. There's no one idea
or feature to implement to get that big.

~~~
kryptiskt
> But try to imagine what the name "Microsoft" must have sounded like -- it
> doesn't sound very ambitious. It sounds a little lame. If you planned to be
> the biggest company in the world, would you name your company "Microsoft"?

They certainly were no match for the ambitions of Intergalactic Digital
Research.

~~~
chubot
Ha! I didn't know Digital was originally called that. That's a beautiful
irony.

[http://www.digitalresearch.biz/HISZMSD.HTM](http://www.digitalresearch.biz/HISZMSD.HTM)

------
bootload
_" What Microsoft is this the Altair Basic of?"_

... then figure out, _' Which IBM will let itself be duped?'_. If MS hadn't
made the DOS deal with IBM PC, would the Microsoft we know now, have happened?
This is of course counter-factual, because MS was a raging success.

It's a great question to ask though.

------
levlandau
While he didn't know Microsoft would pioneer it, Bill Gates says he knew that
there'd be a software industry.

While he didn't know Facebook would pioneer it, Mark Zuckerberg says he knew
that all software would be social.

While he didn't know Google would pioneer it, Larry Page said he knew that the
fast growing web would eventually need a good way to search.

While he didn't know Viaweb would pioneer it, Paul Graham said he knew that
ecommerce sites would eventually be created by software.

And so on....

I respect the fuzziness and path dependence of startup growth but boy do I
respect people who can see the future now, make it happen and end up being
correct. Even more props to people who make it happen multiple times [e.g.
Joel Spolsky, Elon Musk]

~~~
sangnoir
While he didn't know WebVan would pioneer it, Loius Borders says he know
ecommerce would rule the world.

...that doesn't quite have the same ring, does it? There is a _lot_ of
survivorship bias at play here. Thousands of individuals had convictions that
their instincts were right as as well - but it turned out poorly for them.
Luck and timing plays a big part in success, but more often than not, hn
ignores this.

~~~
levlandau
How does this change the point that there are entrepreneurs who have instincts
about the market AND timing that turn out to be right?

The broader point is Peter Thiel's --> You are not a lottery ticket.

The best example might be Jeff Bezos and his business plan. Elon Musk has been
consistent for ~ 20 yrs about the areas he set out to work on since college
and he's followed that through. It's not dumb luck. It's skill + luck. The
skill part of the equation is oft dumbed down in favor of the randomized
success algorithm. People who are able to repeat their successes multiple
times e.g. Joel Spolsky, Elon Musk, David Duffield, Rich Barton are especially
skilled and it would be disingenuous to attribute their successes to some
luck/timing that they were not ultimately mostly responsible for creating or
noticing.

~~~
dputtick
To counter your example: on their second, third, fourth companies repeatedly
successful entrepreneurs have all the benefits from the first success. As a
result, they are far less reliant on luck in relation to funding, talent,
getting the word out, etc. For your example to fully prove your point, you
would need to find entrepreneurs who have repeatedly changed their name and
identity between each of their successes.

------
GuiA
Selection bias and post hoc rationalization. You can always frame success in
any way you want- it'll sound good, because if the company's successful then
your argument proves itself. How many successful companies don't fit the mold
that was just described? I can think of many examples that had fairly
straightforward road to success: Facebook, Dropbox, Stripe, usw.

The real measure of a theory is how successful it is at predicting whatever it
predicts. So out of all of the companies that you predicted could become the
next "Microsoft of X", how many did? If your method doesn't perform better
than randomized selection, then it's worthless. I suspect that's the case
here.

Of course, the law of large numbers combined with the high returns offered by
tech companies means that even if investors aren't performing better than a
randomized process, they feel like their theories about what makes a
successful companies/entrepreneur are valid.

Here's an experiment that will never happen, but that I'd love to see YC
perform: for a given batch, select who makes it to the batch randomly from the
pool of preselected applicants (you want preselected applicants and not all
applicants because it's fairly likely that the 90% of people who are applying
with their "Facebook for cats" idea that they came up with after beers 2 hours
before the submission deadline won't make it. Or will they?). Then, look how
that batch performs. It wouldn't be surprising if the batch performed no worse
or no better.

------
jhallenworld
Give Bill Gates more credit: his vision certainly went beyond BASIC. They had
a directed effort to provide microprocessor versions of all popular (or
business significant) languages. For example, they had Fortran and Cobol
before they had MSDOS.

------
nartz
How does framing the question this way lead to deeper thinking or rather,
yield different answers, than the typical questions of 'whats the bigger
picture' or 'whats the company vision' ?

~~~
seiji
Reasoning based on concrete examples is easier to convey to other human meat
brains for understanding and retention. If you start off with "big picture" or
"vision" you're already into meaningless buzzword territory, and any
discussion quickly derails practical advice/progress/suggestions.

Examples first, details later.

The Altair->Microsoft example also emphasizes the minimum condition necessary.
What seems small but could be big (given the proper market growth and a mother
who's also an IBM executive to get you free connections+business)?

Also see this great example:
[https://news.ycombinator.com/item?id=9082844](https://news.ycombinator.com/item?id=9082844)

------
Alex3917
My own side project sounds so comically bad that I don't even bother
describing it to folks anymore. Usually when they ask why anyone would use it,
I just pretend to be surprised and say, "Oh, I guess we never thought about
that." Multiples times people have gotten so angry by how bad they think the
idea is that they've actually started visibly shaking, which is a lot of fun
in public at meetups or whatever.

The good thing though is that it keeps us totally focused on building our MVP.

I think part of the issue is that the most successful startups aren't
successful because of new hardware or software, but because of the new social
practices they enable. And while Apple releasing a new iPhone every year has
gotten people really good at evaluating new hardware and software, most people
don't have the same level of proficiency at evaluating novel forms of social
interaction. (Even though it's totally learnable.)

~~~
bglazer
Well you can't just dangle that out there and then not actually describe your
idea!

------
frik
Read this:

* Bill Gates's memoir/vision book, _The Road Ahead_ (1995)

* Paul Allen's memoir book, _Idea Man: A Memoir by the Cofounder of Microsoft_ (2011)

Watch this:

* _Pirates of Silicon Valley_ TV movie (funny but accurate, based on _Triumph of the Nerds_ interviews)

* _Triumph of the Nerds_ (TV docu, 1996, by R. Cringely)

* _Nerds 2.0.1_ (TV docu, 1998, by R. Cringely)

~~~
dredmorbius
Appreciate the "read / watch" recommendations, but to what specific end /
meaning?

~~~
frik
The early years of Microsoft, a history lesson.

------
ksk
They're not all the same - two of those companies - Facebook and Google
initially had no clue about funding their companies. MS and Apple sold actual
products that people could buy. As startups they did the really really hard
work of convincing a bunch of people to open their wallets and pay hard cash
for a product. I think this is a far more valuable exercise that attempting to
create something that's popular by giving it away for free, and then selling
some advertising product/platform/service that has a nebulous value which is
often supported by spying/data-mining users. (aka Investor Story time
[http://idlewords.com/bt14.htm](http://idlewords.com/bt14.htm))

------
graycat
PG sounds like it's okay to invest time, effort, code, money, etc. in a
project without having any idea why it might work, and his justification is
Microsoft, Facebook, Google, etc.

Okay:

I grew up not far from a nice public golf course. It had some par 3 holes.
Sure, on such a hole, it's possible to make a hole in one.

Okay, for a year track all the hole in one successes and see how many were by
expert golfers and how many were by people lucky to have a round at 10 over
par.

So, conclude from this that for a hole in one it doesn't help to be good at
golf? Nope! Instead, on that course there were so many more poor players than
expert ones that, likely, net, just from luck, there were more successful hole
in one shots from the poor players than from the expert ones.

Or, case #9,284,387,437 of how to lie with statistics!

But, let's consider some other examples:

Ike wanted some pictures of the USSR and sent some U-2 airplanes. Too soon one
got shot down, and then someone called Kelly Johnson at Lockheed, and he
noticed a new engine developed by Pratt and Whitney in their Florida
operation: The engine was a turbojet until about Mach 2.5 at which time it
became a ram jet and, thus, could go on to Mach 3+ without overheating the
engine.

So, get some titanium, design some aerodynamics especially good for supersonic
flight, and get an airplane that could fly at Mach 3+, at 80,000+ feet, for
2000+ miles without refueling. Then the US got a lot of good pictures, and the
Lockheed plane, the SR-71, never got shot down.

There are many more examples from GPS, the F-117, the first Xerox copier, etc.

These examples are cases of hole in one with high payoff and low risk from
just routine work after the initial planning and review of the plans.

Commercial version?

Okay: Xerox, the IBM System 360, the Intel 386, Cisco IP routers, the Bell
Labs work in optical fibers and Ga-Al-As heterojunction lasers, the Sony work
on Blu-ray optical disks, etc.

Lesson: It really is possible to pick a good target, plan carefully, execute
with low risk, and be successful. For just one team, poor work and luck are
not better.

------
ramigb
Could someone please rephrase the title of the article to me? thank you.

~~~
dang
How might this company turn into something huge, the way that Altair Basic
turned into Microsoft?

------
Fuzzwah
Its a fun thought experiment, but I think it falls down when you start to
consider how many "right bets" Microsoft, Apple and Google made. The other
examples are no where near as mature and, to me, are still working on their
initial idea.

The 3 I mentioned I think much of their success comes from implementing their
first ideas very well and attracting the excellent talent which allowed them
to pivot or broaden when other things came along.

Of course that then lands you back on another familiar YC idea of investing in
teams rather than ideas.

------
WalterBright
The thing is, any of those early tech companies could have been an Apple or
Microsoft. There was nothing special about Altair Basic. Other companies
didn't because they made disastrous mistakes along the way - see "In Search of
Stupidity" by Chapman.

Microsoft grew into a behemoth by making crucial decisions at several key
turning points, and avoiding making disastrous mistakes.

------
moron4hire
But how do we account for the perennial bad ideas? The 15th time we get
pitched "stock market for small businesses" or "social network for coupons"?

Are these good ideas that are just too boring to have attracted a good team
yet? I've heard these ideas going back and forth for 10 years now. After 10
years, _nobody_ has gotten it right? Or are they lazy ideas that appeal to
get-rich-quickers who think they can play the startup game? What is it?

I understand the value of "don't make fun", and it's something I really
struggle with in my own life. I've (unfortunately) been on both sides of that
exchange, and frequently feel bad about my involvement in it. It's a weird
world we live in where you can't just keep your mouth shut sometimes. It's
probably a sign of internet addiction. I digress.

But I also have to consider things from the standpoint of someone who is being
pitched by non-technical founders on these ideas. "It _might_ be a good idea"
isn't enough.

~~~
VLM
Companies can fail because of bad idea, but also finance/capitalization,
personal issues, bad execution...

Want a huge fight? Assign the dreaded smart watch to one of those reasons for
past failure and likely near future. Or "the smart house". Or "voice control"
or alternative UIs in general.

If you can convince a couple people the only reason the cuecat failed was
their capitalization structure, then the world is doomed to a flood of plastic
cat barcode readers and barcodes all over legacy media. Not all the different
from QR codes (aren't they officially dead now?)

------
pitchups
With 20/20 hindsight it is easy to connect the dots that led to Microsoft's
dominance of the PC industry. And although the Altair Basic may have led to it
- it in itself was not enough to catapult them to their future success. Their
big break came from their deal with IBM for the Operating System. And that
deal was literally gifted to them due to a confluence of many factors - with
luck playing a huge part in it.

In fact Gates directed IBM to approach Gary Kildall of Digital Research for
the OS. But Kildall skipped the first meeting with IBM and his team at DR
dilly-dallied on signing a standard NDA with IBM and could not reach an
agreement. IBM went back to Gates for an answer for the OS. [1]

Had DR not dropped the ball on the IBM deal, the future would have been very
different for Microsoft, and for DR and for the world. It is all of course
counterfactual - but who knows - the world may have been running on CPM/2015,
and Gates and Allen would have been running a successful PC software company -
selling compilers and languages for it.

It Gates and Allen's ability to turn this fateful second chance into what we
now know to be the deal of the century. In fact, Microsoft used this chance to
sell QDOS (Quick and Dirty OS) - from a lone programmer (Dave Patterson)
working across the lake in Seattle on a port of CP/M to 8086 - to IBM. IBM was
not aware of this small company (Seattle Computer Products). Later it was
found that QDOS literally "stole" CP/M code and function calls. DR sued but
IBM settled the suit with DR by bundling CPM/86 with the PC - but selling it
for $240 as opposed to $40 for PC DOS. CP/M never had a chance. And the rest
as they say is history...

[1]
[http://en.wikipedia.org/wiki/Gary_Kildall](http://en.wikipedia.org/wiki/Gary_Kildall)

EDITS: typos

------
jonathanjaeger
The Google and AirBnB references seem on point, but were people skeptical of
Facebook being a good idea? Sure there were naysayers who thought Facebook
couldn't beat MySpace or break out of the college campuses, but people did
love Facebook pretty early on and weren't hating on the product (it was
"cool").

~~~
seiji
The 0th version of facebook was literally "illegal stalking as a service."
Outgrowth from that, and from ignoring the "we're accessing your systems
illegally and you can't stop us" part, grew the horrible monster choking the
Internet today.

------
peteretep

       > Often the founders themselves didn't know why their ideas
       > were promising. They were attracted to these ideas by
       > instinct, because they were living in the future and they 
       > sensed that something was missing.
    

This is confirmation bias

------
VLM
Youngsters are notorious for thinking history began when they got involved.
See also, sex, drugs, music, dance...

Anyway I am sad to report that PDP8s and Decmates were widely available (if
you had friends in the right places, surplus, repaired scrap, etc) but DEC
insanely wanted to charge $3000 or whatever for the OS8 license. I think even
Fortran and basic were separately licensed and billed products. It was nuts.
You could get an old -8 for free, more or less, (back then, now they sell for
thousands on ebay) but legal software was insanely priced. Microsoft disrupted
the market at a mere $300. That's what made them interesting right from the
start, the dinosaurs of the industry didn't understand the imploding ratios of
hardware cost to software cost. Sure the hardware is dropping in price so
something that cost a corporate buyer $10K in '63 might only cost $1K in '73
but its not like software was getting even on dollar cheaper so if legacy corp
buyers will pay $3K per seat for OS-8 I guess we'll keep right on charging $3K
till they go away or we go away. Well guess how that turned out?

The above is based on my Dad's experiences although I was a kid watching
watching it all unfold at that time.

------
defen
It would be cool if PG could reveal whether he used this test, and what the
answer was at the time, for any of the YC "big successes" (Which I'm defining
as Airbnb, Dropbox, Stripe, Justin.TV/Twitch, Heroku and Reddit)

------
pedalpete
I still think Uber sounds lame. But really, aside from the survivor bias, is
what PG trying to say, very similar to the YC interview question
[paraphrasing] "what do you know that nobody else knows?".

That question lead us to be able to define the product we're currently working
on, when we had spent months coming up with a good description and totally
missed it. It actually helped me sell myself (and a few of the team members)
on how big our idea could be.

My guess is that each example PG gives, the founders would have an answer to
that question where they would say "we're [re-]defining an industry
because..."

------
rwmj
I had a similar feeling when egroups[1] was announced. We were all using
mailing lists at the time, and what was clever about that? The clever bit was
that end users didn't have to set up and host majordomo themselves. Now
egroups itself never came to much, but the idea of taking complex applications
(mailing lists, email, CRM, ..) and turning them into SaaS is pretty massive.

[1]
[https://en.wikipedia.org/wiki/EGroups](https://en.wikipedia.org/wiki/EGroups)

------
tempodox
This article shows beautifully how this is all just random. Of course it helps
to be an enterprising person with an optimistic outlook. Failures are far too
normal to be impressed by them.

But seriously, who is really able to tell which extravagant nice-to-have (or
even too-ridiculous-to-be-wanted) will be next week's must-have? If there was
a way to find that out, we finally would have understood humanity.

So cheers to all with above-average stats at guessing who will be the next big
Dollar Sign.

------
InclinedPlane
The problem with advice like this is that it's not nearly as useful as it
seems. The biggest problem here is that typically it takes a visionary to
recognize a visionary in the early stages, before any of the vision has
actually been realized. And that's only part of the equation, there's also
talent, ability to execute well, and luck of course.

If you're a time traveler from the future, sure you bet on Bill and Paul,
because you know how that turns out. But let's say you're a time traveler from
an alternate timeline, or an alien from a more advanced planet, can you still
tell who to bet on? Even if you had the knowledge to know how people would use
computers in the future and what sorts of things would be most in demand,
Microsoft wasn't necessarily the best bet way back in the Altair Basic era.
Back then the obvious choice would have been Gary Kildall and Digital Research
who had CP/M, a serious operating system that was light years ahead of the
competition in the late '70s. It took several bizarre twists and turns for
Microsoft to end up on top, but it was far from foreordained that they would.
Other obvious competitors included Lotus and VisiCalc, folks who seemed poised
to have strong offerings nestled in the bosom of a growing computer industry.

What Microsoft had that the others lacked was sticktoitiveness, adaptability,
and business savvy. They were willing to do what ever it took to ride to the
top, whereas other companies were satisfied with "merely" massive runaway
success. And that showed up in surprising and non-intuitive ways. DR built
CP/M from the ground up and invested heavily in making it the best they could.
Microsoft bought a clone of CP/M that was written in 6 weeks for $75k because
they needed an OS to deliver to IBM for the IBM PC, and they thought that was
a reasonable business arrangement to be in. In no way does that sound like
sound engineering or sound business strategy, but it turned out to be one of
the most pivotal events in computing history. It was Microsoft's tenacity and
their desire to make billions where others were content to make only billions
that brought them to the top of the industry, things that weren't really
obvious until after they happened.

For venture capitalists this problem isn't a big deal, because they can just
play the lottery and invest in Digital Research as well as Microsoft and Lotus
and all the reasonable bets. For people looking for "the next microsoft" to
work at, the problem is much more difficult, if not fundamentally impossible.

------
hyperpallium
They made something easier, in a growing market.

Their big break was DOS. Getting offered to do an OS for the PC was luck, but
they scrappily exploited it to the hilt: they didn't even _have_ an OS; their
license terms allowed them to sell to (future) clones; they sold it far
cheaper than the competition.

------
zak_mc_kracken
There's some serious sharp shooter fallacy going in this article.

The bottom line is that most of the startups based on a lame idea are, indeed,
lame. It's all too easy to focus on the ones that succeeded.

------
ja27
Starting a company to make a paid browser when Mosaic is already free.

~~~
kstenerud
Free and pretty crappy & limited. When you can do better than the free crappy
shit, people will pay. It was the same with Athena vs Motif.

------
shirro
Perhaps as harder call is, which MS-DOS is this the CPM-86 of?

------
eklavya
I got the article and it's nice. However I am having a hard time trying to
understand(english wise) this sentence - What microsoft is this the Altair
Basic of?

How to parse it?

~~~
ahpeeyem
What [future gigantic corporation] is this the [first small product] of?

~~~
eklavya
Thanks :)

------
navait
Any idea sounds awful if you phrase it right. Any idea sounds good phrased
right. I don't think this is a good metric at all to evaluate a start-up.

------
based2
[http://en.wikipedia.org/wiki/Accidental_Empires](http://en.wikipedia.org/wiki/Accidental_Empires)

------
pi-squared
Unusually short, and I feel very biased essay with examples from 3 big(est)
companies out of hundreds of thousands (more?). #NotConvinced

------
logfromblammo
The title would have been better worded as follows:

"How does this Altair BASIC become a Microsoft?"

------
serve_yay
What Microsoft was Aereo the Altair Basic of? :)

(The problem of silent evidence.)

------
pekk
As long as that realization is tempered with this one:

"The fact that some geniuses were laughed at does not imply that all who are
laughed at are geniuses. They laughed at Columbus, they laughed at Fulton,
they laughed at the Wright brothers. But they also laughed at Bozo the Clown."

~~~
bztzt
what, are you saying Bozo the Clown wasn't a success? :)

~~~
pekk
Sometimes something is laughed at not because it is out-of-the-box genius
which will do well defying all expectations, but because it is actually
ridiculous and will fail.

------
frozenport
Wrong wrong wrong. For example, the guys at Google spent years doing research
in the field before starting their company. Clearly MS achieved success with a
different product than they had begun with.

------
turbostyler
How many times can he make this same blog post with different wording?

------
michaelochurch
I think that the lesson you'd draw from many of these successes is something
like this:

    
    
        1. Find a specialty or niche that you care about.
        2. Excel in it.
        3. ????
        4. Profit!
    

First, look at #1. For Microsoft, this was putting a modern (by the standard
of the time) language on microcomputers as the PC era began. For Facebook, it
was improving the way people manage and form weak ties. For Google, it was
improving search.

These ideas seemed "lame" for businesses because they were hobbyist projects,
but done to excellence because of the passion that was behind them. Still,
hobby + excellence doesn't always make a business. You need a lot of help, and
that help can be hard to summon.

Of course, there are also counterexamples. If Evan Spiegel excels at anything,
it's writing creepy emails to his frat brethren. He's clearly not a
technologist, and that applies to most of the VC darlings in this round, which
is why it's going to be horrible for a lot of people when the chickens come
home to roost and these P&D fake-tech companies have no buyers. But enough
about that...

Where there's confusion, I'd say, is at step #3. To what extent is excellence
(even in something that seems "lame", insofar as being impossible to build a
business on, like fixing web search) going to get noticed and draw enough
backing to overcome the extreme "pointiness" (as opposed to well-roundedness)
that comes with narrowly-focused excellence (which seems, to most, to be a
hobby project at best and obsessive at worst). And what are the odds? I don't
know what the answers are.

I did #1 and #2 when I optimized hand-luck out of a trick-taking game,
Ambition. (
[https://docs.google.com/document/d/1S7lsZKzHuuhoTb2Wj_L3zrhH...](https://docs.google.com/document/d/1S7lsZKzHuuhoTb2Wj_L3zrhHZh5IEKBDf56ExgErv4o/edit)
) It's been published in a few gaming magazines (mostly abroad, as in Hungary
and Japan) but generally hasn't caught on, and I doubt it'll ever make me
rich. I guess you can say that step #3 isn't automatic. But I'm not sure that
that's a bad thing. Excellence doesn't need to produce wealth to be valuable,
and doing something to make money makes excellence almost impossible in
practice, anyhow. (Excellent products can make money, but products that are
optimized for money-making are rarely excellent, because value-creation and
value-capture are separate disciplines and antagonistic toward one another at
the highest levels of performance.)

One thing I admire about Paul Graham (despite differences) is that he does
place a value on excellence, as you can see in his work on Lisp. He
understands excellence as a virtue (which is admirable) and believes that the
market will reward it (which is debatable; we agree that there is correlation
but would disagree on its strength). For his part, he tried to make an
excellent Lisp (Arc) and showed a strong aesthetic sense. It didn't catch on.
Rich Hickey made a Lisp that was, at the time, uglier but because it ran on
the butt-ugly JVM, and you had a lot of S-expressions that looked more like
(.addEventListener thingy other-thingy) than (map (comp f g) list).

Eight years later, most of Clojure is beautiful (unless you peer into the
innards) because of the work it has attracted. All I'm saying is that it's
hard to predict who'll win. If it was 2006 and someone told you that in half a
decade, the best Lisp would be on the JVM, you'd laugh in that person's face.
And yet... that's what happened.

I think we can agree that excellence, because of the narrowness of focus it
often (and not always, but often) requires, will lead a person to be thought
"lame". (There is also the extremely slow process through which true
excellence is recognized.) In 2006, many would've written Rich Hickey off as a
barely-employed ex-musician trying to do the impossible (write a beautiful
Lisp on top of the JVM) and unsellable (who'd buy it)? And yet Cognitect has
shown that Clojure's excellence _is_ sellable. From the statically typed world
we seem similar slow uptake: Haskell's over 25 years old and just starting to
be recognized as a practical language for "real programming". Full agreement
exists on #1 and #2.

What about #3: the "????" term that leads from focused, diligent excellence to
freely flowing money? Before Silicon Valley, I feel like Americans were more
honest about the _lack of_ a strong relationship between excellence and
financial success. People understood the "starving artist" concept, and that
writers of trash novels (e.g. _Fifty Shades of Gray_ ) would economically
outperform people writing genuine literature. (That said, don't write off
Tolkien, King, or Rowling just 'cause they do "genre lit"; they're
fantastically skilled.) The problem with Silicon Valley exceptionalism is that
these people believe that they've transcended the nonexistence of a causal
arrow between excellence and financial success. That leads to a naive optimism
at first, and later to a self-serving sense of "meritocracy" that's divorced
from reality. The _truth_ about item #3 in the above is that it's _very_
random and we have almost no insight into how it actually works, and that's
upsetting but I don't know what to do about it.

------
beaugunderson
"lame" is an unfortunately ableist choice of words (it appears five times in
the article and many times here the comments).

for information on why it's problematic try this:
[http://www.disabilityandrepresentation.com/2013/09/14/ableis...](http://www.disabilityandrepresentation.com/2013/09/14/ableist-
language/)

------
zerop
"If you're going through hell, keep going." \- Winston Churchill

~~~
xdjfjm
in a way self-proved in context. Thank you.

