Information Letter 3     Initial Stock Distribution

Information Letter 4

Information Letter 4 followed Letter 3 by a month, and brought the participants up to date on the organisation plan as it stood after being processed by the lawyers and the California Commissioner of Corporations. Shortly before this letter was written, we had showed prototypes of the Autodesk product and MicroCAD, the product which ended up being called AutoCAD. Dan Drake is again the author.

MSP Information Letter #4

by Dan Drake
April 2, 1982

This letter summarizes what has happened since the last letter and what we expect to do next. The plans are based on what we think is the consensus of all the people who have expressed an opinion. Now that we've recovered from the Computer Faire, we're going to move ahead as fast as possible, so speak up if you find anything wrong here.

New organization plan

Dan Drake, Keith Marcelius, and Jack Stuppin met on March 15 with Robert Tufts, who will be the attorney for the corporation, to review our plans for setting up the corporation. Nothing was fundamentally wrong, but there are some serious regulatory problems that have forced some changes in the plans. Here is the new organization plan:

The initial offering of stock will be to the 13 founders who are legal residents of California. These people will buy the units of one share and one warrant, as described in the last letter, in return for cash, equipment, or accounts receivable (in the case of Marinchip Systems Ltd). The company will then hire employees (us) and offer up to 3,000 shares of stock apiece in return for 10% notes (by law, only employees can buy stock for notes).

After all this is done, the company will hire more employees, namely the people who aren't residents of California. As an incentive to join the company these people will get stock options which will put them on essentially the same basis as the original employees.

There won't be any special issue of warrants beyond the one-for-one deal with shares of stock, because that could raise tax problems. However, we expect to offer a large option to the president of the company, John Walker, to give him an incentive to commit his time and capital.

General meeting

At the March 16 meeting we went over all these legalities and discussed some questions that Bob Tufts had raised. The rest of this section gives the decisions that we reached.

Though we are capitalizing the company in a way that saves us from meeting the fantastically expensive requirements of the Securities and Exchange Commission, there remain the less stringent requirements of the state of California. We have the choice of applying in advance for a permit to offer stock or simply filing notice of a private offering with the Secretary of State. The former slightly reduces the risk of later legal problems at a cost of $700–1,000 and 2–3 weeks delay. The consensus of the meeting was that it's not worth it; we'll sell the stock, then file the notice of private offering.

Private corporations often have special agreements that prevent stock from getting into the hands of outsiders. In order to cover lots of contingencies, including death, divorce, bankruptcy, and other involuntary transfers of stock, these agreements get very long and messy. Our decision was that a fancy agreement is not worth the time and expense; we'll just make an agreement that the company and its stockholders have first refusal if anyone wants to sell his stock to an outsider.

MSP obviously doesn't want to force its employees (ourselves) to sign the usual employee software rights agreement, with the usual restrictive and unenforceable clauses. We'll write our own agreement that says: I have the right to produce software for MSP without a prior claim by someone else; I won't use other people's trade secrets; I won't steal trade secrets from MSP; I will give MSP first refusal on any ideas I develop for mass market software. Under the last clause you can write anything that's not for a large market; if it later develops mass market potential, you give MSP first refusal on it.

We have collected the full legal names and addresses of nearly everyone in the company, as needed for company records, stock registration, and whatnot. The list is given at the end of this letter. If your name is not on it, please give us your full legal name, with parentheses around parts of the name that are not normally used (!), and your address.

Finally, the Board of Directors of the company will have 3-5 members, an item that must appear in the articles of incorporation. Though nothing has been officially determined, it is likely that the board will consist initially of the people in the north bay area who are actively in touch and have time to devote to organizational trivia: Dan Drake, Keith Marcelius, Jack Stuppin, and John Walker.

Plans: Incorporation

At the March 16 meeting we reached a pseudo-consensus on an unsatisfactory name for the corporation (Autodesk Inc.), but by the weekend the consensus seemed to have fallen apart. On this crucial question no one is satisfied, but everyone feels burned out. So we're going to file the Articles of Incorporation in a few days, using the name INSIGHT AUTOMATION LTD unless (1) the state disallows it[Footnote] or (2) someone comes up with the perfect name in the next 5 or 6 days.[Footnote]

Technical progress

John Walker made an impressive demo version of Autodesk, our super filing system, for the Computer Faire. It got quite a good response, especially considering that we didn't claim to be able to release it in less than three months.

John also has the Z80 slave processor from Sierra Data Systems running CPM 2.2 under supervision of our 9900 system. This means we can install CPM in any of our systems for about $600. He has also converted WINDOW to CB-80, the compiled version of CBASIC. All we have to do is convert 1,000–2,000 lines of assembly code, which will allow it to page files on disc, and we have a valuable product for CPM systems ready to go![Footnote]

Technical plans

If only because of the support burden, we can't target every computer system in the world during the first few months. The current idea is to pursue the CPM (8080 and Z80) market immediately with all we've got. This means installing the Sierra Z80 board in lots of existing computers.

We need to do more evaluation of the IBM and Apple situation with respect to both technical and marketing questions. We ought to be getting hardware for non-Z80 systems within 4–6 weeks.

The products that we expect to concentrate on are MicroCAD, Autodesk, Opticalc, and Window. One non-yucky name in the whole bunch. For those who haven't kept up with the latest nomenclature and bright ideas, here's a quick description.


The new name for Mike Riddle's computer graphics package. We've printed brochures for this, so the name is pretty well committed. Naturally, this won't be on 8-bit machines; we're hitting IBM first.


The instant filing system that will knock Visidex etc. out of the running. This too has a brochure.


The name we've been using for a brilliant idea that came up during the Faire: a VisiClone (spreadsheet package) that performs some optimization on its own.


Marinchip's screen editor, converted to CPM systems.

We're also looking closely at JPLDIS, a very useful data base system written in Univac Fortran. The program is in the public domain, so we have the right to convert it to microcomputers and sell it. In fact, it apparently is being sold now under the name of Dbase II, but there's nothing to stop us from getting into the act.

We still need to make decisions about an implementation language, for which the candidates seem to be CB-80, C, and PL/1. We now know that CB-80 works, and we can expect it on the 8086 sometime soon. PL/1 also works, and we can get a beta test version in May. C is supposed to be available on every microcomputer; we need to know more about the quality and standardization of the various versions.

The office drawing was done in the week before COMDEX 1982 as a flagship demo to show off zooming and block manipulation capability. It was the most-used demo at the introduction of AutoCAD.

AutoCAD Office drawing

Information Letter 3     Initial Stock Distribution