The Origins of America On-Line

By Mike Nadelman


  Hear Part of the Story


In 1976, I worked for a medical electronics company, Marquette Electronics based in Milwaukee, Wisconsin. We collected electronic heart beat data (EKG's) and transmitted them over the telephone line to a central computer.  When we switched to a new higher speed 1200-baud modem, we had problems.  GTE, located north of Seattle said that the speed was simply too fast to word properly by normal telephone lines. I maintained this was not true. I had the Pacific Bell in Seattle run a 'Private Wire' telephone line to the hospital. It worked without error.  Six months later, my company got a bill for thousands of dollars. We presented the bill with evidence to GTE. Consequently the billed was reversed by GTE. I had conclusive evidence that the higher speed modems were reliable and efficient.


In 1979, a small computer store in the Richmond district of San Francisco emerged.  We all rushed out to buy the first line of Apple II computers.  The 'basic' operating system worked without even a disk drive. There was no disk drive available.  We had to load the operating system from tape. Many programs had to be typed in assembly language.  If you mistyped an "O" instead of a zero, the program did not work and complete re-entry was required.  The store offered training free of charge and the first Apple II user group would meet at Homestead Savings on Geary Blvd.  The user group members were from all different fields.  Programmers, Lawyers, bankers, technicians all got involved with the first friendly computer.  Many of these people went on to get much more involved in the birth of this industry.  The founders of some of the major software and hardware companies started here along with the original Macintosh design team. 


A year or so later came the first floppy disk drive for a personal computer and along with it the birth of DOS (Disk Operating System).  Digital Research was well into CPM as a competitor.  Soon, CPM was available along with a second processor for the Apple.  In those days, most companies were still using mainframes, minicomputers, and VAX minicomputers. Small companies were still using pen, paper and cash registers to run their businesses. 


Parts of the elite Apple Core user group were the founders of Apple.  A subculture surrounding this marvel was developing.  Steve Wozniac's (Apple Co-founder) friend John Draper got into trouble when they developed a Blue-Box to make long distance calls.  Consequently, he served time in a minimal security prison at night and was in a work furlough during the day.  He developed the first powerful word processor for the Apple.  I helped get his Diablo daisywheel printer to work with this system and thus the birth of Easy-Writer and a number of programs for mailing lists and mail merging became reality for the home computer.


IBM soon heard about CPM and the new home computer based programs like Easy-Writer and spreadsheet programs like Visicalc and Supercalc (later to become Word and Lotus 123). Bill Gates was just toying with software in those days and liked what he saw with Digital Research's CPM.  He developed a similar operating system and came up with a new type of DOS. IBM decided they could make a better deal with a smaller company like Microsoft rather than Digital Research. 


Meanwhile in San Francisco, the Apple Core User Group expanded. Home Savings was too small for the hundreds of users wanting the latest information on Apple software and hardware.  I quit my medical equipment repair job and started my computer repair company.  Much of the work we did for ComputerLand and Digital Research.  We had an old Apple with a single disk drive in a furnace closet at our first location.  It was the home of the director of KQED at number 1 Russian Hill in San Francisco.  The computer had a modem and ran a program called Communitree.  This was the first bulletin board software system we know of.  It ran on a proprietary operating system and we had now way to change it. It became quite popular with Commodore users and when the disk was full, we were deluged with phone calls to purge the disk.  We simply had more callers that we had equipment. Today's equivalent bulletin board is an Internet Chat-Room.  About that time 'The Source' public dial-up bulletin board system also appeared and was eventually a model for others like "The Well".


It was about this time that I first met with George Thornally at Incline Village, Nevada. He had an idea for a new computer store at Incline Village, called Stereoscope Microcomputers. Combining a bakery and coffee shop with a computer store integrated the 'User Group' concept into the store.  The process to become an Apple dealer was complicated and was audited by Apple on a continual basis. Much of the business we did was over coffee and cake at the Stereoscope Microcomputer.  We stayed at George's home at the lake discussing business while it snowed outside.  George maintained an apartment at Macondray Lane on Russian Hill in San Francisco.  I helped as a technical advisor to George and the Stereoscope along with running my own repair facility in San Francisco.


 The industry was extremely disorganized.  Osborne computer went bankrupt.  This was the first sign of turmoil in the computer industry. The Apple III was developed and was countered by the first IBM PC. The first Apple III user group met at the San Francisco Bar Association.  These users were often first timers but more corporate in nature.  Accountants, Lawyers, Television Reporters were all part of this small elite group.  The operating system for the Apple III was developed in Pascal like French soup with a dash of Unix and CPM. In those days if you really wanted to get inside information about the development of Pascal, you went to parties. Parties at Woz's house in the hills near Scotts Valley were a favorite.  He had lamas in the back yard, a computer tech room and a room filled with pinball machines.  Hot tubs and nudist camps were another favorite place to discuss the operating system upgrades.  Anyone with involvement with the new computers was in the spotlight.  The sexual revolution hit the computer industry and it was 'in' for beautiful women to seek out 'computer nerds'. Anyone with any money wanted to invest in selling hardware and software.  Programmers were big Marijuana users. Some computers were purchased with bags of homegrown weed.



Ziff Davis magazines got into the act. The editors decided to get into testing of Apple products and writing about them. They modeled their testing facility from our larger new computer repair facility on Van Ness Blvd.  George at this time was hard to keep track of.  While still maintaining his apartment on Russian Hill, he got involved with 'New Age' and awareness on Beach Street. We all had expanded our imaginations with the potential of the computer. Many grew rich and many went bankrupt.  Out of the computer revolution, Comdex was born as a meeting place for computer hardware and software manufacturers to show off their goods.  It has become the largest of all the Las Vegas conventions in history.


George Thornally, with his 'new age' vision of the future saw a glimpse of the future with 'The Source' dial-up bulletin board.  That guiding light led him to one of the first on-line systems. Without his help, America On-line would not be what it is today.  After all, promotion, marketing and perseverance dwarfed Prodigy, CompuServe and many other forerunners of the new Internet age of URL-Land.


George Thornally, PHD, has written a book entitled 'AOL by George, The Inside Story and will be available at bookstores everywhere. You may also contact George by email at or visit