Traf-O-Data

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Traf-O-Data was a partnership between Bill Gates, Paul Allen, and Paul Gilbert. The partnership was intended to develop a traffic counter that recorded data on punched tape. It was a small computer which was used to help measure traffic flow by using a rubber cord, as well as software to process the data.

Traf-O-Data was also the first company founded by Bill Gates.

Traf-O-Data

In 1971, a company called Logic Simulation was inventorying the streets in Kent, Wash. They placed traffic counting boxes, which had a hose going from the box across the street, on some streets. Each time a car crossed the hose, the box increased its count. The results were recorded as holes punched into paper tape, one of the main computer storage media of the time.

Bill Gates, a high school student, got a job processing the data. He was to count the holes in the paper tape and produce a report. He also transcribed the results onto punch cards to be transferred into another computer. Rather than doing all the work himself, Gates hired fellow students at Lakeside School.

One of these fellow students was Paul Allen. In 1972, Gates and Allen purchased an Intel 8008 chip for building an automated car-counting machine. They formed a company that Gates would call Traf-O-Data. Its headquarters was Allen’s dorm room at Washington State University. Paul Gilbert, a friend of Gates and Allen, designed the hardware while Gates and Allen wrote the software. Because the hardware did not yet exist, they tried to write a program on the Washington State University IBM System 360 to simulate the 8008 chip. That way, they could program on the IBM System 360 and transfer the program to the Traf-O-Data device when it was finished.

Around this time, defense contractor TRW was looking for programmers. Both Gates and Allen were hired. While there, Allen developed the 8008 simulator to run on the TRW PDP-10 computers. This allowed Gates and Allen to begin work on the Traf-O-Data software.

After leaving TRW, Gates was accepted into Harvard University. With everything going on in his life, Traf-O-Data barely limped along. By 1974, Gilbert had finished the hardware, and Gates had mostly finished the software. However, the company had no device to automatically read the paper tapes.

An acquaintance of Gates’ father came up with a solution. The device would feel the paper tape with specialized metallic fingers to count the holes. It became known as the squeeze reader. A prototype worked well and a representative of the King County Engineering Department was invited to Gate’s parents’ home to see a demonstration. The squeeze reader failed completely, and no sale was made.

Traf-O-Data, now a partnership between Gates, Allen, and Gilbert, needed a professional paper tape reader. Gates used $3,400 of his own money to purchase an Enviro-Labs Model GS-311 Paper Tape Reader. Traf-O-Data used the device to process the paper tapes generated by traffic counting boxes and produced some revenue. Eventually, the State of Washington offered free traffic processing services, ending this revenue. In May of 1979, Traf-O-Data sent letters to clients saying they were suspending business. Gates’ first business had failed.

Much of the details of Traf-O-Data are lost. This is to be expected since the business was started and run by teen-agers. Gates has claimed that Traf-O-Data had revenues of $20,000 to $30,000 per year over its life. More reliable estimates put the amount closer to $10,000 to $20,000 total.

Some timelines report that Traf-O-Data was renamed Microsoft. This is incorrect. This fallacy is based, no doubt, on the fact that Gates and Allen were involved in starting both Traf-O-Data and Microsoft. Although Traf-O-Data did not become Microsoft, it is no doubt true that the experiences Gates and Allen had with Traf-O-Data helped both of them when they started Microsoft.