Floppy Days 140 - Paul Terrell Interview - The Byte Shop Part 1

Episode 140 - Interview with Paul Terrell, The Byte Shop - Part 1 Patreon: https://www.patreon.com/FloppyDays Sponsors: 8-Bit Classics  Arcade Shopper   Hello, and welcome to episode 140 of the Floppy Days Podcast, for June, 2024.  I am Randy Kindig, your guide to this journey through vintage computer goodness. This month I’m bringing you another interview episode.  Paul Terrell is a name well-known in the annals of computer history; probably most famously for his kickstart of Apple Computer through the purchase of one of Steve Jobs’ and Steve Wozniak’s first batches of Apple I computers for his Byte Shop.  The Byte Shop was a very early computer store that was one of the few that existed in the world, at the time.  I’ve had an earlier introductory interview with Paul where numerous topics were covered in a more general manner.  I also talked with Paul about his time at Exidy working on the sorcerer computer.  In this interview, we focus primarily on The Byte Shop, how it got started, what it was like, and much more.  Through several conversations with Paul, the interview ran quite long, so this is part I of The Byte Shop discussion.  If you want to know what it was like to run a computer store in those early days, this is the interview for you!  Along the way, you’ll learn even more about just what the home and hobby computer scene was like in those days. New Acquisitions/What I’ve Been Up To American Computer and Robotics Museum - https://acrmuseum.org/  Vtech Pre-Computer Unlimited - https://vtech.fandom.com/wiki/PreComputer_Unlimited  USB-C Power Adapter for Atari 8-bit - https://mozzwald.com/product/atari-8-bit-usb-c-power-adapter/  USB-C Power Adapter for Apple IIc - https://mozzwald.com/product/apple-iic-usb-c-power-delivery-adapter/  Upcoming Shows Show list I maintain for the remainder of the current year - https://floppydays.libsyn.com/current-year-vintage-computer-show-schedule)  KansasFest, the largest and longest running annual Apple II conference - July 16-21 (in-person), July 27-28 (virtual) - University of Illinois in Springfield, IL - https://www.kansasfest.org/  Southern Fried Gaming Expo and VCF Southeast - July 19-21,  2024 - Atlanta, GA - https://gameatl.com/  Nottingham Video Game Expo - July 20-21 - The Belgrave Rooms, Nottingham, U.K. - https://www.nottsvge.com/  Fujiama - July 23-28 - Lengenfeld, Germany - http://atarixle.ddns.net/fuji/2024/   Vintage Computer Festival West - August 2-3 - Computer History Museum, Mountain View, CA - https://vcfed.org/events/vintage-computer-festival-west/   Silly Venture SE (Summer Edition) - Aug. 15-18 - Gdansk, Poland - https://www.demoparty.net/silly-venture/silly-venture-2024-se   VCF Midwest - September 7-8 - Renaissance Schaumburg Convention Center in Schaumburg, IL - http://vcfmw.org/  VCF Europe - September 7-8 - Munich, Germany - https://vcfe.org/E/  Teletext 50 - Sep 21-22 - Centre for Computing History, Cambridge, UK - https://www.teletext50.com/  Portland Retro Gaming Expo - September 27-29 - Oregon Convention Center, Portland, OR - https://retrogamingexpo.com/  Tandy Assembly - September 27-29 - Courtyard by Marriott Springfield - Springfield, OH - http://www.tandyassembly.com/  AmiWest - October 25-27 - Sacramento, CA - https://amiwest.net/  Chicago TI International World Faire - October 26 - Evanston Public Library (Falcon Room, 303), Evanston, IL - http://chicagotiug.sdf.org/faire/   Retro Computer Festival 2024 - November 9-10 - Centre for Computing History, Cambridge, England - https://www.computinghistory.org.uk/det/72253/Retro-Computer-Festival-2024-Saturday-9th-November/  Silly Venture WE (Winter Edition) - Dec. 5-8 - Gdansk, Poland - https://www.demoparty.net/silly-venture/silly-venture-2024-we   Meet The Listeners Brian Cox's site FVResearch.com - https://www.fvresearch.com/  Transcription of Interview-only Randy Kindig: All right. Today I'm with Paul Terrell. Paul, today we wanted to talk about the Byte Shop and, exactly what happened with that, how it got started, a lot of things about it. So maybe we could just kick it off by how did the idea of the Byte Shop come about and, how did that kind of get started? Paul Terrell: Okay, yeah basically I had a rep company called Repco in Mountain View, California. I started Repco in 1975, the beginning of the year and January sort of frame. Uh, with Repco it's a manufacturer's rep representative sales representative in a geographic territory. And Boyd and I had our partnership company for Northern California, Northern Nevada, Oregon, Washington, and Idaho. Paul Terrell: And then there was also another territory, the electronic rep association divides the country up into about 26 different geographical areas and then people, can join the ERA and become members of the ERA. Reps in those territories and with the association they have contractual information and they provide contact information with different manufacturers and such. Paul Terrell: With Repco we're selling electronic products, but mainly, different kind of instruments, multimeters from companies that manufactured that, and companies would use reps when they were just getting started out and they couldn't afford to have direct sales people and offices all over the country. Paul Terrell: So they would hire a rep and typically pay about, oh, anywhere from 5 to 10 percent commission on sales that happened in that territory. And Boyd and I we're carrying power supply companies and instrument companies. One day I got a phone call from one of my customers at Stanford research facility in Palo Alto, California, and he was saying that he had just read about an Altair computer that used a 8080 Intel processor chip, and he was wondering why the products he was buying from me were costing so much. Paul Terrell: And basically the Altair computer was on the cover of Popular Electronics, and so he went ahead and ordered one of these.  They were for sale, mail order, and so I told him that I personally didn't believe that it could be sold for $439, I believe was the mail order price for this and it was in kit form rather than an assembled and tested computer. Paul Terrell: I told him that I thought that, basically that product was a paper tiger, and it would never really show up and that he should continue to buy the Intel processor cards from the company that we were representing, which was Prolog down in Monterey, California. And about a month later I got another phone call from this guy and he said “Hey, Paul”, he said, “if you're free for lunch, come on over because the paper tiger has arrived at Stanford Research and we're taking a look at it.” Paul Terrell: I went over there and sure enough, there was a computer and it did have a true Intel 8080 microprocessor chip included in there. And quite honestly it had a very professional Optima rack mounted case up that was part of the kit product.And so they were going to have to assemble the unit themselves, but to the computer, it it looked very much like a Data General with panel controls and lights and things and once again, rack mountable. And I got the information out of the documentation that they had received there with the product. And as soon as I got back to the office, I called MITS down in Albuquerque, New Mexico. And talked to Ed Roberts, who was the founder and the CEO of the company. Paul Terrell: And told Ed about my company Repco. He was changing his company from mail order four function calculators to these what he was calling a microcomputer and a personal computer. And I told them that, something as complicated as a computer, he’s going to have feet on the street for people to explain how this computer works and support the the product because it was a lot more sophisticated and capable than the four function calculator kits he was using, presently selling, and he agreed with me and invited me to come down to Albuquerque and talk to him about how he might be able to set up a sales rep organization nationwide because that was his intention. Paul Terrell: And he was getting all kinds of checks in the mail from people all over the country that had read this article and. And literally we're just sending off checks and ordering these kits. And he had a pretty tremendous back order at the time. Boyd and I contacted some of the reps that sold products like the Prologue and Control Instruments that we were representing.  And we were attempting to get other territories lined up for MITS so that he would have the kind of support that he wanted in the sales organization. Paul Terrell: And that's basically how we got introduced to personal computing and The Altair computer, and of course when we went down to Albuquerque to meet with Ed, Bill Gates and Paul Allen were at the premises. They had a little office on Route 40 going through the center of Albuquerque, and it was just one of those little strip centers that you see with retail stores and offices and we sat down with Ed, signed the contracts, signed up our territory for ourselves. And then, gave contact information that we had to bring more reps across the country on board and gave them some, information that made feel that these people could do a good job for him and he saw the products we were carrying and how they fit with the personal computer and Altair. Paul Terrell: We got the contract signed. We started to represent MITS and the Altair and what we did in the initial stages of it there was a group in Palo Alto that was meeting at Stanford's linear accelerator called Homebrew Computer Club. And this was a group of guys that, worked in the industry and that we were selling to. We were interested in joining the Homebrew Club and going to the meetings, and once again, basically representing MITS to the audience there and answering questions. Randy Kindig: Paul, did the Byte Shop actually exist yet? Was that an entity yet? Paul Terrell: No, no. The Byte Shop didn't exist at that time. It was just the rep company Repco. Uh, we had an office in mountain view, California. We were calling on all of the, aerospace companies and universities in the Northern California Bay Area as well as Oregon and Washington and Idaho. We would take trips up there to University of Oregon, University of Washington and then once again, anywhere where our manufacturing people had done some advertising, and people would fill out cards and information to get more product. Paul Terrell: And Boyd and I would show up on their doorstep and show them a demonstration of the product and sell it to them and get our commission. So that's how all of that kind of stuff worked at the time. And the computer stores there was no such thing. At the time nobody had thought about doing computer retail because, of course, there, there was no retail consumer pricing available. Paul Terrell: There were no computers. There were very few products that were even showing up in magazines or like the popular electronics. And so forth.  And these the computers that were out there Intel was just introducing their 8080 microprocessor chip. The first eight bit computer chip that they manufactured was the 8008. Paul Terrell: And the 4004 was a 4 bit computer chip, and then they went to the 4040 and the 8080, and that was a more advanced instruction set. And with one of our manufacturers, Prolog, we were actually teaching engineers and actually anybody that was interested in coming to our seminars. Paul Terrell: Prolog would have seminars on designing with a programmed logic design versus the traditional electronic chip designs that were going on by people making products with the semiconductor devices that were out there from companies like Texas Instrument and National Semiconductor and so forth. So the microprocessor was the heart of this thing. Paul Terrell: And it was really changing the way people were designing products so they had to learn about programmed logic design and how to do it and, of course, have the components available from the various manufacturers. And, once Intel had introduced everybody else started to get into the business Fairchild Instruments came out with the F8 microprocessor, Chip National Semiconductor came out with the SC/MP microprocessor. Paul Terrell: And so forth. So the industry was transforming at the component level. And of course with the heart of the product becoming a computer. Everybody else had to adapt to this new philosophy of electronic design and all the way up through aerospace companies. Paul Terrell: And then, of course, universities were always interested in and teaching new technologies to the students and so forth. Randy Kindig: You mentioned Boyd Wilson, right? He was your partner in a lot of this stuff at the time, right?And I know you're just getting ready to get into exactly how the Byte shop came about. Randy Kindig: So I'll just let you go there. Paul Terrell: Okay. Yeah, Boyd and I, basically, it was the two of us with a secretary bookkeeper that would answer the phones and take messages and so forth. And we would just travel around our territories.I had the peninsula of San Francisco and Boyd had the East Bay and so we split up our areas and we'll call on customers that way and what happened with the advent of computer retailing was that MIT has had a convention that they were holding in Albuquerque and they were bringing the reps and they invited the public to to come to Albuquerque to a private convention that they were holding at their facilities, and they had just moved from that little strip center on Route 40 out to an industrial park by the airport, and so they were showing off their new facilities. Paul Terrell: To everybody and anybody that was interested and of course, one of the things they were doing at this conference was to invite the people that had done some things with the Altair computer to bring the products and show off what it was capable of doing. Everybody, uh, showed up in Albuquerque at the I think they called it the WAC, the World Altair Computer Convention, WACC, and, once again the the people at MITS, when they were putting these kits together and they started to actually offer assembled computers as well. Paul Terrell: So part of this facility was dedicated to manufacturing Altair computers. But the majority of their sales were in the kits because all they had to do is bag parts and provide documentation to the technicians that were buying these things and the hobbyists and putting them together, and which was a very inexpensive process for them and provided them a lot of profit margin in the kit product. Paul Terrell: Whereas when they got into the assembly of the computers, that was much more complicated. They had to hire a technical staff that could fix these products. And as they came down the production lines, and of course, it took a lot longer to take that check from the customer and. And provide a product for him. Paul Terrell: When we went to the world convention at MITS we were introduced to other startup companies that were making products that would plug into the Altair computer and provide other capabilities. A good example of this is a company called Cromemco, which had a color a video card that would plug into an Altair computer, and it was called the Dazzler, and you could actually program them. Paul Terrell: Color graphics for an application. You might have with a Dazzler card and Heuristic Systems had a voice recognition card that they had provided. So you could see that these hobbyists and people out there were starting companies. To create other products to to go with this personal computer. Paul Terrell: And uh, the marketplace was starting to mature with more than one manufacturer. The people at Cromemco actually focused in on the more professional side of computing and built a ruggedized version of the Altair computer that Boyd and I were selling to the state of California, and the engineers at in Sacramento were using those computers for the ramp controllers on the interstate highways and also on the canal system that they had built had controlled the water flow from all of the dams in California. So there were some serious applications that were happening and companies that were being formed to address those kinds of markets. Paul Terrell: Processor Technology was another company that originally started making cards. They had a serial board that you could plug into if you wanted to attach your Altair to a modem and communicate over the phone lines with other computers and they eventually created the processor technology SOL computer; so I could see that the industry was growing to the point where you could have more than one manufacturer You could have a number of manufacturers and of course at Repco, we approach these companies to represent their products as well. Paul Terrell: And but what happened at the Altair meeting that we had in Albuquerque was Ed Roberts had told us that one of the customers in the Los Angeles area was starting a computer store. It was Dick Heiser and his wife, who worked for RAND Corporation, down by the L. A. airport had opened up a Arrowhead computer store on Sepulveda Boulevard, and he was selling the kits to the public in this computer store, and so it told us that when we got back to our territories after the convention that we should try and identify customers of that sort, rather than the types of people that were presently buying the products. And so I asked that at the meeting what could we offer a retailer for for getting into that business?  And he said he was giving Dick a 25% discount on his computers. And that was his purchase price. And the Sales reps, we were all getting 5 percent for all of the MITS products that shipped into our territory. And so on the way to the airport, I asked Boyd what was going to be the name of the computer store, because 5% plus 25% was 30%, and I much prefer the 30% margin from 5%.  When we got on the plane, I had picked up a magazine at the airport, it was called Byte Magazine, and it was from a company in New Hampshire, that was one of the new startup companies in this personal computer industry. Paul Terrell: They were in the magazine business and they were following the hobbyist market. And there, there were a number of new magazines that were coming out at the time uh, to join people like Popular Electronics, Radio Electronics. Which had been around in the CB radio market and addressing hobby people and electronics engineers and technicians and so forth. Paul Terrell: And so Byte magazine was on the racks on and we should call the store that we were going to start in Northern California, the Byte Shop. And people would think that maybe we were associated with the magazine and it would give us some factor for Byte Shop. so That was our plan. And when we landed it took me about 3 months to go from our Repco office complex to the Mountain View area that had good visibility in retail.  They say that the three rules are location, location and location.  The highway, the road, that goes from San Jose all the way up to San Francisco is called El Camino Real, the King's Highway, and parallels the Highway 101, which was the, connector for everybody that and of course, it also parallels the the railroad tracks for all the commuters and so forth. Paul Terrell: So I decided that El Camino real was where the Byte Shop should be located and we should have a, we should find a place. So it was about a thousand square feet and had good visibility to the road that we could shoot our products and that's what we found at 1063 West El Camino in Mountain View, California. Paul Terrell: That's where the original Byte Shop was, number one, was.  I opened that on my birthday in 1975, December 8th, 1975. We introduced the Byte Shop to the world. Randy Kindig: Boyd was your partner in this when you started that or was he not? Paul Terrell: Yeah. Yeah. This was a this was a spinoff of Repco the rep company agreement that we had. Paul Terrell: And eventually we would incorporate, uh, Byte Incorporated, ran the dealership program that we put together when we expanded the stores. It also encompassed Byte manufacturing, because we actually created our own computer. Compatible to the Altair computer, compatible to the Cromemco, compatible to processor technology. Paul Terrell: It's becoming the standard in the personal computer industry. Everybody was designing their products to be plug compatible to the what they call the S100 Bus that Ed Roberts had originally designed in his first Altair computer. We, corporation-wise, we had different operations going and so we were expanding our facilities as well. Paul Terrell: We went from… Boyd actually ran the rep company once the Byte shop got started it got my full time, so it was hiring other people to go on sales calls for my territory. plus we had 13 different manufacturers that we were selling products for. But my focus was totally on the personal computer business. I was going to all of the home brew computer meetings that were being held. Paul Terrell: And so eventually my office moved from the office in Mountain view of Repco to the Byte Shop. The idea originally was that being in the electronics industry we would go to all of the events that were happening and there were a couple of major conventions that were that we would go to annually, the fall joint and spring joint computer conferences, and those conferences were focused on people that were in the computer industry. Paul Terrell: These are companies that are in the computer business or needing computers, they would go to these conventions to see what was new and available to them. Obviously, the university people were invited to these shows and these were shows where you had to pay hundreds of dollars to get admission and you had to be qualified to even get into the show. Paul Terrell: So there was no way that the general public had any kind of a show that they could go to , so hence here's another opportunity for the entrepreneurs out there. There was a company in San Francisco that did a show called the country fair and that was a a show that was created once again because personal computers became an industry. Paul Terrell: And so just as there was an opportunity in the magazine business, there was an opportunity in retailing, there was also an opportunity in publishing with the magazines and now show business. For me once again, since the shows before computer fair started, the shows were you had to be qualified and working in the industry to even see the products. It occurred to me that I had an opportunity with the Byte shops like Barnum and Bailey created this expression called the “greatest show on earth” when it came to town. And so I saw an opportunity when the Byte shop came to town to create the greatest show in town which which was computers in your Byte shop. And you could come into the store. You could see the products. You could use the demonstration units. Paul Terrell: You could have a hands on capability. And so there was a lot of showmanship involved in in putting these stores together because we were trying to educate the general public on what you could do with computers and and give them access to them. So that's what was happening. In the retail area and of course once we started selling the Altair computers to the public and and these other companies we were getting recognition. Paul Terrell: And, the idea of retail, I would have customers come in one day and buy a computer from me and then come back a couple of weeks later and say they want to open a store what was the opportunity for them to be the Byte shop of Campbell, California or the Byte shop of Palo Alto and or the Byte shop of Santa Clara. Paul Terrell: So it occurred to me that this computer retail thing could become very much like what Radio Shack was doing. Their electronics parts stores and the different products they were offering to the public and at the time the products that they were offering were pretty much the CB radio was the big thing for computer hobbyists and electronics people. Paul Terrell: Tandy Corporation, the parent of Radio Shacks, they were franchising their stores, they had company owned stores, and they were manufacturing their own brand of radio products under the Realistic name, so you could buy a Radio Shack Realistic CB unit or a cassette player or radio, they had their own private label of products, which gave me the idea that my shops could do the same sort of thing, that we could create our own products there. Paul Terrell: and obviously, if we're manufacturing the product, we are the manufacturer, so we get to have the profit margins that are associated with that as well, in terms of a business opportunity for us. As the the Byte shop expanded, we were also competing with other individuals that would open up their store and they didn't feel that there was a value and just like anything else, whether you're the food business or whatever there's branding out there. Randy Kindig: So were you aware of other computer stores that were opening around the country? Like, Stan Veit I know was opening one on the East coast, I think shortly after you did and Ray Borrell, the data domain here in Indiana, which is where I'm located so that's why I have an interest there. Were you aware of these other ones were opening up and how did that impact what you were doing? Paul Terrell: Yeah it's funny you say that because a lot of those stores were also being created by the the sales reps that were out there, the people that, that we got into the rep business, they obviously saw what Repco was doing with Byte Shops and in our territory. And there were a bunch of other people that from the rep community that opened up stores and there were computer marts, computer shops, computer all sorts of things, data domain, and, once again, some of these people actually came to us and wanted to be a Byte Shop at some point and there was, at some point they decided there wasn't value in it that we weren't offering them enough for them to come in under our label or what have you and some people are just independent. So anyway, but a lot of these people became friends. Stan Veit and I were close friends for a number of years because he got into the magazine business and when he got out of his store and so forth. And of course, the industry changed pretty significantly when IBM came in, it got a lot more serious and, and so forth. Paul Terrell: But we basically, my idea was to create a a dealership that would add value and and give somebody a decent return on investment for the business that they were starting, and that's an interesting statement right there.  Return on investment, because we got a lot of publicity at the Byte Shops being there and right in the heart of Silicon Valley and growing our operation there. Paul Terrell: There were a lot of people that would come to the West Coast. Charlie Tandy was 1 of them that flew out in his corporate jet and hired the guy that was in charge of national semiconductors, a SC/MP microprocessor, to go to work for him and design the TRS 80. And of course, Charlie, when he was out there, walked all my Byte Shops and saw what was going on, and how we were conducting business, and so forth. Paul Terrell: And of course, one of the members of my board of directors, happened to be good friends with Nugent, who was a guy that worked for Tandy and his accounting department back in Dallas, Fort Worth. So we actually got information on his whole franchise program for us to put together our dealership program and I keep referring to our program as a dealership program versus franchise and that's for a very specific reason. Boyd and I actually started Repco with $10,000 apiece, and so we capitalized the rep company at $20,000, and then we're trying to take that business and spin off this new Byte Shop business, or Byte Incorporated, and that was the only capital investment we had in the company, we were basically expanding the operation as we could through the profits that we were making in terms of our dealerships. And the dealership, yeah, franchising is very controlled by the the government, and so there's a lot of rules and laws that you have to follow to to actually get a franchise in the state that you're wanting to operate in so we basically couldn't afford the expense of the lawyers that would be involved in putting a franchise agreement together. And once again, not having any idea how successful computer retailing was going to be we were trying to be very cautious with our money and our investments. So we had created a program where we would… we were actually looking at the tire stores Goodyear, Firestone.  Those are dealerships that sell products out there. Paul Terrell: And we were looking and saying those guys are able to skirt the laws of a franchise here. They're they're just dealership. So let's model the Byte Shops after a dealership and we'll charge the 5 percent fee that we get as a rep in the territory. And our fee for a dealership was 5 percent of the gross of the store and that's what people would pay us to be able to use the trademark of Byte Shop, the affordable computer store, and there was also a couple of other things that we did that we wanted. We knew eventually, as we were more profitable and had the money available, we would actually implement a full franchise program, like McDonald's and all the other franchises do out there. Paul Terrell: We created kind of a look and feel of the store. We had some graphics that we would put in our demo unit. And it said “one giant step for mankind, the personal computer”. And we were playing off of NASA's landing on the moon sort of thing. We felt that the personal computer was as significant as that sort of thing. Paul Terrell: And so we would provide the the wall art for the Byte Shops so that we would have a consistent theme about it, but very careful not to do all of the requirements that would put us in the franchise business.