Silicon Cowboys

We never ever had any idea

that this would be as explosively

successful as it was.

Fastest to Fortune 500

and fastest to over a billion?

I would've just said you're blowing smoke.

Compaq is the story of how David takes on Goliath,

and it's not easy, but when you do it,

it fundamentally changes society.

We hope you, too, come to believe that the Compaq

is an important landmark in the short history

of the personal computer field.

Thank you.

Compaq was basically

prying open a lock box.

It's analogous to somebody

saying we're going to put Google out of business.

Are you a Mac or a PC?

The reason they don't say Mac or an IBM is because of Compaq.

You cannot get to the iPhone without

the original Compaq portable.

Man, if you're looking for action.

Man, Houston's the town.

Here's the action town.

One of the first things

I bought when I got a real job, which

was a sacker at a grocery store making $0.45 an hour,

was a '53 Ford for $350.

We'd take our cars way out to North

Houston where it was deserted roads

and maybe run a few races.

And I ain't jivin'.

Street drag racing, like you see in the movies

where you're going around Dead Man's Curve.

Man, Houston's the town.

There weren't any video games.

That car was my computer.

I loved working on it.

I'd change spark plugs, and set the points on the distributor,

and adjust the timing, and that natural inclination

to try to understand how it worked

and to not be afraid of taking it apart and working on it.

I got a lot of enjoyment out of it.

Speak and Spell, a revolutionary learning

aid from Texas Instruments.

It almost thinks.

We were very lucky to have

a high tech company, like Texas Instruments, in Houston.

The learning can go on with the Texas

Instruments TI-30.

Specially designed for high school students

to help them find the wonder of numbers never ends.

That's where I wanted to go,

and I got the job and that really got me started

in high tech electronics.

The bosses asked me to take a small team of people

to develop an intelligent terminal.

It was a predecessor to the PC.

He called me up and said, Bill,

would you come work for me and be my business

development manager?

I came out of Texas A&M,

electrical engineering degree.

Bill was the marketing guy,

and he was a good one.

Jim was the engineering guy, and even though I was an engineer

by background, I was really sort of

the business guy, the general manager type.

While TI was a great place, as the fun became less

and less over time, Rod and Bill and I would quip to each other,

like, let's go do something.

We were seeing what was going on in Silicon Valley.

You wandered around,

there was still a lot of fruit trees.

It was a lot of empty space.

There was no Silicon Valley as we think of it today.

It started out as purely

hobbyist, not commercial.

You had to solder your own connections

and build your kits.

You had the microprocessor become available

in the very early 1970's, and you

saw a lot of hobbyists coming up with new ways to use it.

When we were out there

it was just exhilarating to be around these guys

and to see their enthusiasm.

The VP of engineering of a small company

would pull up in his Ferrari, which at TI you're

never going to have a Ferrari.

Maybe you can rent one once.

What are we doing?

It was like, oh my goodness, this

is what I would like to do.

Seeded this sense of we ought to go do something together.

Let's just go do something.

Wasn't about getting rich.

It wasn't about building a computer.

It was really about starting a company that

would be a good place to work.

Bill said, why don't we come over

to my house Thursday at 7:30.

And we said, let's do that.

We can at least have a beer.

We bought a thing called Entrepreneur's Manual.

Because surely that'll tell us how to put

together a successful company.

We sit at a table, we each have our piece of paper

with us and a pen, and we're going to start

taking notes about what we say.

It's like, OK, what do we do now?

Let's talk about all the possibilities.

One of the things we did, sort of,

traditionally, was we would go out and eat Mexican food.

Pepe's Tacos restaurants.

Treat yourself to the wonderful world

of Mexican food and authentic Mexican atmosphere.

Bill and I always wanted

to do a Mexican food restaurant, so we brought that up.

Maybe a Mexican food restaurant.

We didn't really want to do

a Mexican food restaurant.

What a stupid idea that would've been.

Pepe's Tacos restaurants

are the family fun place to be.

We finally decided, as you would hope, I guess,

that we ought to stick with what we knew.

And we toasted the beginning of starting a company.

You're probably on your way

up to the top of the ladder.

Texas Instruments, a terrific company.

And you did a silly thing like quit to try to start

your own computer company.

People must have thought you were nuts.

We went to the credit unions

and took out loans.

I knew that I could last 6 months

after I sold my wife's car.

I had three small children, and a wife,

and mortgage.

I'd actually, recently married Rhonda.

I was meeting a lot of her extended family,

and it would be like, what do you do?

Well, I've actually left my job, and I want to start a company.

Oh, that's great.

What is that going to be?

Well, we hadn't decided yet.

And you quit your job?

Yes.

And you could tell they were thinking, poor Rhonda.

The success of IBM had

come about through mainframe computers.

IBM was making big computers

to sell to big companies.

Computers were treated as a priesthood,

and only the priests could touch them,

and everyone else looked through a glass wall.

Eventually, the users wanted to get

hold of that computing power.

IBM wanted to maintain control

over the computing industry as they

had during the 60's and 70's.

Let's build something for the masses

that they can buy and become a commodity.

Everyone else was struggling

to get a permanent foothold.

First PCs, Apple II, Commodore, RadioShack...

It was still a tiny market.

The game changer was when IBM entered the market in '81.

IBM, International Business Machines,

has entered the small computer market for the first time.

It's expected to have a major impact

on what is now the fastest growing sector

of the computer business.

IBM said, we're going

to go from selling million dollar computers

to a few thousand people, to $1,000 computers

to a few million people.

IBM's personal computer

is designed for office, school, or home use.

It's aimed at exactly the same market as its competitors.

It's expected to be sold very aggressively.

And the race was on.

This was going to cause that market to explode.

Sales of personal computers

are so hot this Christmas, Santa Claus may have to replace

his reindeer with microchips.

850,000 people bought home computers

in the United States last year.

The industry expects, this year, more than 3 million will.

We're no longer on the verge

of the personal computer revolution.

We're right in the midst of it with more and more people

jumping aboard every day.

Osborne was being very successful

with an extraordinarily ugly portable.

And Rod had purchased the IBM PC,

so he could write business plans on it,

and it became obvious to him that that PC,

if it was portable, that would be a good product.

What popped in my head was, well,