068 – Simple as 1-2-3 – 1983

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Spreadsheet:  a kind of program that lets you sit at your desk and ask all kinds of neat ‘what if?’ questions
and generate thousands of numbers instead of actually working.  Dave Barry

Mitch Kapor, during his master’s in counselling psychology at MIT’s Sloan School of Management, taught TM and worked as a computer programmer, but never graduated.  His friend Eric Rosenfield was running MIT’s TROLL on a time-share computer which proved very costly in computer time so Kapor helped him out by writing whaty he called TinyTROLL for the Apple II.

Kapor joined Personal Software where he applied Tiny TROLL to the VisiCalc software, producing VisiPlot to plot graphs and VisiTrend.  He licensed this for 37.5% royalty, earning around $500,000 before VisiCorp paid him $1.2m to own it outright.  While working with VisiCorp he saw the prototype IBM PC and decided to invest most of his windfall in developing a spreadsheet for it.

Jonathan Sachs was a FORTRAN programmer at MIT who produced a COBOL system for point-of-sale terminals.  Working at Data General he acquired an Apple II and a VisiCalc manual.  Trading as Concentric Data Systems he wrote a spreadsheet program called SuperComp which was distributed by Access Technology.  Sachs retained rights in the source code which he later developed for DEC and planned CP/M versions.

Kapor founded Micro Finance Systems where Sachs joined him to produce a prototype spreadsheet written in C language which was faster and smaller in code terms than the 8088 assembler.  He also discovered that writing to the screen memory buffer meant the screen refreshed more quickly.  These decisions were crucial and optimised the software to the IBM-PC. 

Kapor decided to create a bundled spreadsheet, graphics program and word processor.  His meditation experience provided the name – the product became Lotus 1-2-3. 

Just before launch the team was able to review Context MBA and Sachs decided not to include a WP in 1-2-3.  He saw it as responsible for the Context’s slowness – so spreadsheet, graphics and database it became.

Compared with VisiCalc and Context MBA it was the clear winner when it swept into existence in 1983 and soon became the IBM-PC killer app.  Budgeted to sell $1m, it achieved over $54m in 1983 and $150m in 1984.

Kapor was approached by Bill Gates and they agreed a draft heads of agreement to merge.  The Lotus direct sales force was the attraction to Gates.  However the Lotus CEO, Jim Manzi, scuppered the deal.  Eventually in 1995 IBM acquired Lotus for $3.5bn.

Launches and IPOs did not always run smoothly.  Eagle Computers had a business in CP/M-based computers when in 1982 it launched a close copy of the IBM-PC, the Eagle 1600.

The underwriters withdrew the IPO and refunded all investments.  It was brought back to the market several months later but the value had been radically reduced.  By 1986 Eagle was out of business.

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