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didn't make it easy. You had to sign all these
funny agreements that sort of said
I...IBM could do whatever they wanted,
whenever they wanted
and use your secrets however they - they felt.
But so it took a little bit of faith.
Jack Sams was looking for a package from Microsoft
containing both the BASIC computer language
and an Operating System.
But IBM hadn't done their homework.
They thought we had an operating system.
Because we had this Soft Card product that
had CPM on it, they thought
we could licence them CPM for this new
personal computer
they told us they wanted to do, and we said well,
no, we're not in that business.
When we discovered we didn't have -
he didn't have the rights to do that
and that it was not...he said but I think it's ready,
I think that Gary's got it ready to go.
So I said well, there's no time like the present,
call up Gary.
And so Bill right there with them in the room,
called Gary Kildall at Digital Research
and said Gary, I'm sending some guys down.
They're going to be on the phone. Treat them right,
they're important guys.
The men from IBM came to this Victorian House
in Pacific Grove California,
headquarters of Digital Research, headed by
Gary and Dorothy Kildall.
Just imagine what its like having IBM come to visit,
its like having the Queen drop by for tea,
its like having the Pope come by looking for advice,
its like a visit from God himself.
And what did Gary and Dorothy do?
They sent them away.
Gary had some other plans and so he said well,
Dorothy will see you. So we went down the three
of us...
IBM showed up with an IBM non-disclosure and
Dorothy made what I...
a decision which I think it's easy in retrospect to say
was dumb.
We popped out our letter that said please don't tell
anybody we're here,
and we don't want to hear anything confidential.
And she read it and said and "I can't sign this".
She did what her job was, she got the lawyer
to look at the nondisclosure.
The lawyer, Gerry Davis who's still in Monterey
threw up on this non-disclosure.
It was uncomfortable for IBM, they weren't used
to waiting.
And it was unfortunate situation - here you are in a
tiny Victorian House,
its overrun with people, chaotic.
So we spent the whole day in Pacific Grove
debating with them
and with our attorneys and her attorneys and
everybody else about whether or not
she could even talk to us about talking to us,
and we left.
This is the moment Digital Research dropped
the ball.
IBM, distinctly unimpressed with their reception,
went back to Microsoft.
Bill Gates isn't the man to give a rival
a second chance.
He saw the opportunity of a lifetime.
Digital research didn't seize that, and we knew
it was essential,
if somebody didn't do it, the project was going
to fall apart.
We just got carried away and said look, we can't
afford to lose the language business.
That was the initial thought - we can't afford to have
IBM not go forward.
This is the most exciting thing that's going to
happen in PCs.
And we were already out on a limb,
because we had licensed them not only Basic,
but Fortran, Cobol Assembler er,
Typing Tutor and Venture.
And basically every - every product
the company had
we had committed to do for IBM in a very short
time frame.
But there was a problem.
IBM needed an operating system fast and
Microsoft didn't have one.
What they had was a stroke of luck - the ingredient
everyone needs to be a billionaire.
Unbelievably, the solution was just across town.
Paul Allen, Gates's programming partner
since high school,
had found another operating system.
There's a local company here in CL called
CL Computer Products
by a guy named Tim Patterson and he had done
an operating system
a very rudimentary operating system that was
kind of like CPM.
And we just told IBM look, we'll go and get this
operating system from this small local company,
we'll take care of it, we'll fix it up, and you can still
do a

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