Drop Out of Harvard to Start Microsoft

Setting

It is January 1975. Paul Allen has seen the cover of Popular Electronics featuring the Altair 8800, the first personal computer kit. He rushed to show Bill Gates. The realization is that the "computer on every desk" revolution is starting now. If they don't act immediately to provide the software layer (BASIC) for these machines, someone else will, and the opportunity to set the standard will be lost. Bill is currently a student at Harvard; Paul is working at Honeywell.

People

• Responsible: Bill Gates, Paul Allen
• Approvers: Bill Gates (and his parents, purely for support)
• Consulted:
• Informed: Harvard Administration

Alternatives

Option A: Stay in School

Pros:

• Harvard degree provides a safe, prestigious career path.
• Less financial risk.
• Can continue learning computer science theory.

Cons:

• The PC revolution is happening now.
• Someone else (e.g., Gary Kildall) might establish the standard for PC software.
• "We're going to miss it."

Option B: Drop Out and Move to Albuquerque

Pros:

• First-mover advantage in writing software for the Altair.
• Ability to focus 100% on the company.
• Being physically close to MITS (Altair manufacturer) in Albuquerque.

Cons:

• High risk of failure.
• Leaving a prestigious university.
• Albuquerque is far from the tech hubs/Seattle.

Decision

Chosen: Option B

Rationale: The window of opportunity to define the software platform for personal computers is narrow. The "cost" of dropping out is low (Bill can always return), but the cost of missing this wave is infinite. "Software" as a product doesn't really exist yet; they have the chance to invent it.

Consequences

Positive

• +Founded Micro-Soft (later Microsoft).
• +Successfully delivered BASIC to MITS.
• +Established the first industry-standard programming language for PCs.

Negative

• −Bill never graduated (though later received honorary degree).
• −Significant crunch time and stress in the early days.