In 1974, when Paul Terrell was running a sales representation company in Northern California, he got a call from friends who said they had seen a microcomputer in Popular Electronics for only $439. Terrell knew that no one could even get an 8080 chip on a PC board for that price, much less a power supply and a chassis and the rest. "My comment was that it was a paper tiger and forget about it," he said. "And a couple of months later, they called me back and told me to come on over and help them unwrap their paper tiger."
The Altair impressed Terrell. He contacted MITS in Albuquerque to see if it needed a sales representative in Northern California. MITS said it was primarily a mail-order company, but if he cared to meet MITS representatives at the National Computer Conference in Anaheim, California, that June, they'd be happy to talk. Terrell cared.
MITS showed up at the NCC with the MITSmobile. "You walked in and it had a refrigerator and a stove and a couple of computers set up," Terrell recalled. He talked with Ed Roberts and MITS's marketing manager. They got along well. Terrell felt Roberts did not really understand the sales representation business, but Roberts listened. In the end, they signed an exclusive sales representation contract whereby Terrell would promote the Altair and in turn receive a 5 percent commission on every MITS product shipped into Northern California, whether he had sold it or not.
After NCC, the MITSmobile toured the clubs in the Los Angeles area, meeting various people who had written in. Then it went north to the San Francisco Bay Area, where Terrell booked space in the Edwards Room at Rickey's Hyatt House in Palo Alto. The room held about 80 people. Between 200 and 300 showed up.
The following month, in July of 1975, Roberts called a sales representatives meeting in Albuquerque. Terrell and his partner, Boyd Wilson, along with the ten or so other Altair representatives in the country, flew to New Mexico, where Roberts showed them his shopping center factory, explained something of the history of MITS, and indicated the direction he wanted them to take.
Roberts also mentioned something else. "One of the principal things that came out of the meeting was that Ed had identified a crazy man in L.A.~Dick Heiser-who had approached him to try to retail computers across the countertop," Terrell said. Roberts wanted the sales representatives to find similar
crazy men in their own territories. The retail idea was worth pursuing, he thought. Terrell asked what kind of deal retailers would get. Roberts said he would give them a 25 percent discount, no matter how much they sold. When they got back on the plane, Terrell and Wilson discussed this arrangement. "It was an easy task to figure that 25 percent plus 5 percent was 30 percent-a helluva lot more money than we were making as representatives," he said. They decided to open their own outlet.
Terrell and Wilson commenced the process in August. Soon after, Byte magazine appeared. "I told Boyd that this magazine is real significant," Terrell said. "There's a real following here. So let's be the Byte Shop, and we'll sell a helluva lot of Byte magazines in addition."
Friends told him retailing computers wouldn't work. And some people, Terrell later mused, said it never snowed in Silicon Valley. Terrell recalled his friends' warnings as he watched the snow falling on December 8, 1975-the day he opened his Mountain View store in the heart of Silicon Valley.
Like most Altair dealers, Terrell quickly ran headlong into the MITS exclusivity policy. Terrell ignored it. He was selling all the Altairs he could get, about 10 to 50 per month, plus everything he could obtain from IMSAI and Proc Tech. The MITS edict, he concluded, was not only pointless, but, if he followed it, financially harmful as well. One day David Bunnell, then the MITS vice-president of marketing, called to cancel him as a dealer. Terrell argued that MITS should see the Byte Shop as rather like a stereo store, which carried many different brands and could turn a profit for them all. Bunnell waffled. It was Roberts's decision, he said. At the World Altair Computer Conference in March of 1976, Terrell approached Roberts directly. Roberts remained firm. Terrell was out.
At the time, Terrell was selling twice as many IMSAIs as Altairs, and he realized the MITS strategy of excommunication would ultimately hurt Roberts more than himself. He was still selling whatever he could get. He saw himself and John French, Heiser's Computer Mart competitor in Orange County, as conducting most of IMSAI's early business. They used to do battle for the product. Terrell would rent a van and drive it over to the back dock of IMSAI's manufacturing site in Hayward to collect his own and French's orders. Check in hand, he would ask, "You want cash on the barrelhead, boys?" It was hard-ware war.
Terrell had started his Byte Shop in December 1975. By January he was being approached by people who wanted to open their own stores. He signed dealership agreements with them, whereby he would take a percentage of their profits, and soon there were Byte Shops in Santa Clara, San Jose, Palo Alto, and Portland, Oregon. In March 1976, Terrell incorporated as Byte, Inc.
This was a hobbyist industry, and Terrell found the clubs critical to his business. They provided his customer base. Many of the hobbyists who attended meetings had not bought their machines yet, and those who had often wanted accessories. Club members proved particularly receptive to Terrell's message.
From the book Fire in the Valley. By Paul Freiberger and Michael Swaine.