March 5, 2005 – Late 1970s Silicon Valley Gold Miners

March 5, 2005 – Late 1970s Silicon Valley Gold Miners

In 1978, public relations in Silicon Valley was relatively new. It was a service provided largely by advertising agencies, whose revenue came from producing print ad and placing them in publications for clients, a very lucrative business back then. I got into PR after being an editor for a now-defunct technical magazine produced by a small mom and pop publishing company based in Littleton, Massachusetts. Less than nine months after joining the magazine, I had come to the attention of Palo Alto-based Regis Mckenna advertising and Public Relations then handling Intel as their flagship account as well as several other high-tech companies. With my background in computers and experience as an editor, I was hired at what I considered back then an exorbitant salary. Upon arrival I was made account executive for Intel. When Apple Computer got its first round of financing and came to the agency’s door demanding advertising and PR, I was also assigned PR AE for them as well.

Apple was by far the more exciting client to have at the time. The PC was then called the home computer to distinguish it from “real” computers that did real work computing the trajectory of rockets launched from Camp Kennedy, computing the payroll for the U.S. Military, and ensuring that passengers got sold a seat on commercial airlines. The PC caused a great deal of consternation among the high priests of computing back then, IBM and Digital Equipment Corp. There is a word-of-mouth story about Ken Olson, the founder of Digital, seriously asking what the average citizen needed with a computer. The truth is back then the average citizens needed a computer to mine gold in what was looming as the next great gold rush to emerge from California. It was clearly evident in the first West Coast Computer Faire held in San Francisco’s Brooks Hall.

Jim Warren, the man responsible for the faire knew there were a lot of start-up companies that had hardware and software to sell and they needed a market to reach potential buyers. When the show opened people were lined up for blocks waiting to get in and it wasn’t free, you had to pay. When you entered the place it was capitalism in the raw: rows and rows of tables with circuit boards, computer terminals, and rack mount boxes all drawing lots of power and generating lots of heat. Behind these tables were nerds with white shirts, ties, and pocket protectors, wearing polyester pants with geometric weaves—the business dress of the day. Among the buyers were similarly clad customers, but there were a lot of the last wave flower children mingling with the nerds. Unfulfilled after a decade of free love and homegrown pharmaceuticals, these born again entrepreneurs wandered the halls with dollar signs dancing in the heads. Out of this human wave of innovation sprang up companies with names life Morrow Design, Ohio Scientific, Altair, Vector Graphics, and thousands more, most going broke with a handful moving from bankruptcy, right into a new venture with a new name and fresh credit.

When Apple got started, there was already a very successful PC company called Commodore Computers and its product was the PET. Apple II came along and the two competed to be joined by a third, Radio Shack, with its TRS80 or as it was affectionately called the Trash 80. The Apple II and the PET were powered by the 6502 processor, the Trash 80 by the Intel 8080. A CPU designer named “Chuck” Peddle was the father of the 6502 and it was the alternative to the 8080, which was the engine in most of the other no-name machines—I say no-name because most lacked any brand marketing to build one. The other distinction was that the no-name machines made by Altair and the others were going into small business who wanted to replace expensive computers from the well-known computer giants with systems that cost 100 times less in some cases.

The PET, Apple II, and the TRS80 were finding their way into homes and into small software shops developing software to run on these machines. Game guys were the first to make a killing off these platforms but that didn’t happen until the advent of the floppy disk drive. Up until then, programs and data for these three systems were loaded onto and off these machines with a cassette tape recorder and it was a painful process that only the truly committed would endure. The story of the floppy disk began at IBM, who developed an 8-in. diameter disk to go onto computer equipment to run diagnostic programs. Ex-IBMers saw a gold mine selling these disk drives to emerging no-name computer companies and left Big Blue to start floppy disk drive companies like now-defunct Shugart Associates.

Shugart had been selling 8-in. floppy drives to one of the major customer in the late 1970s and early 80s, Wang Labs, who back then made dedicated word processors. Dr. An Wang, who in 1983 funded the restoration of Boston’s Wang Center, came to Shugart and asked for a floppy disk drive that was smaller than the 8-in. unit. The folklore goes—and I’ve heard slightly different versions from different Shugart sales guys—that a Shugart salesman asked if what Dr. Wang was looking for was about the size of a cocktail napkin. It was and the 5 ¼-in floppy drive came into being. The second part of the folklore, details a meeting between Shugart's then CEO, Don Massaro and Apple founder Steve Jobs. Upon learning about the smaller drive, he approached Massaro and demanded to have Shugart’s entire production of the smaller storage units. Massaro explained nicely he would get a much smaller allotment, but the result was the second major product, I did the PR release for, the Apple Disk II. It was a hit from the very beginning. Suddenly these small home computers were real machines.

My time at the Regis McKenna agency was a whirlwind of activity, with strategy meetings between Apple and the agency trying to fathom what people were actually doing with these computers. There were games being developed for the machine as well as checkbook and recipe programs. We had photo shoots where we put the computer into interesting settings in the home. I helped a French television crew film the PC in a house in the Oakland Hills. Another photographer from a European magazine wanted shots of a family using the computer. My two daughters were photographed playing games, the agency’s office manager Rhoda was photographed in the kitchen looking up recipes. The whole strategy was to portray the computer as the machine for the “every person”—pretty prophetic though the applications have certainly changed.

That change began in May 1979, when a software program called VisiCalc came out for the Apple II and everyone suddenly realized that the PC was really a personal productivity tool. VisiCalc, created by Dan Bricklin and Bob Frankston, two college students in Boston, was the first spreadsheet program. Bricklin used the program to analyze a business case at Harvard Business School: the “Pepsi Challenge” ad campaign. The program became an instant hit and drove sales of Apple II machines with Disk II drives. The success of VisiCalc sent more gold miners back to their keyboards looking for their VisiCalc. A handful found it; the rest came up empty.