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When IBM's representatives mentioned that they needed an operating system, Gates referred them to Digital Research (DRI), makers of the widely used CP/M operating system.

In his sophomore year, Gates devised an algorithm for pancake sorting as a solution to one of a series of unsolved problems After reading the January 1975 issue of Popular Electronics that demonstrated the Altair 8800, Gates contacted Micro Instrumentation and Telemetry Systems (MITS), the creators of the new microcomputer, to inform them that he and others were working on a BASIC interpreter for the platform.IBM representative Jack Sams mentioned the licensing difficulties during a subsequent meeting with Gates and told him to get an acceptable operating system.A few weeks later Gates proposed using 86-DOS (QDOS), an operating system similar to CP/M that Tim Paterson of Seattle Computer Products (SCP) had made for hardware similar to the PC.This letter was unpopular with many computer hobbyists, but Gates persisted in his belief that software developers should be able to demand payment.Microsoft became independent of MITS in late 1976, and it continued to develop programming language software for various systems.

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