Evolving Toward Product and Market-Orientation
The dormitory's vendor of pinball machines and arcade games decided to pull out. He just could not make enough profit to justify coping with all the aggravation of servicing the machines in an MIT undergraduate house. Douglas Macrae, sophomore vice president of MIT's MacGregor House, thought this might be a good chance to make some spending money while serving the dorm's needs. With an agreed 50-50 split of revenues between himself and the dorm, Doug took over the operation, his first "business" venture. Sales boomed and problems from house residents eased off, now that one of their own was taking care of things and the dorm was generating a profit that went for house events. Growing student "addiction" to game- playing during the next two years led Doug to invest his profits into more machines, installing them in other MIT dormitories, requiring that his friend and classmate ('81) Kevin Curran join Doug to handle the increasing demands on their time. Doug says, "We did some wild things to promote business. For example, we used to give five quarters as change for a dollar. What did we care? All of it would soon be deposited in our machines."
A senior year co-op assignment at Computervision (founded by MIT alumnus Phil Villers) gave Doug new skills in chip design. He and Kevin developed an "enhancement board" that could be wired into Atari's "Missile Command", one of the arcade video games in the dorm, providing it with new features that appealed to their customers. The enthusiastic market feedback encouraged them to get more serious about their activities, and they began to sell the board through game hobbyist magazines for $295, a reasonable markup they felt over their $30 out-of-pocket costs. Assembly and shipping was done from Doug's off-campus apartment living room, with John Tylko, a two-year-older MIT grad joining as the third partner to help this growing enterprise. They incorporated as General Computer Company, investing $25,000 in profits from their prior activities and borrowing an additional $25,000 from Doug's mother to expand more rapidly.
The trio started working on their second enhancement board, intended