Bill Gates and Paul Allen co-founded Microsoft in 1975 after developing a BASIC interpreter for the Altair 8800. The partnership began when the two childhood friends saw the Altair 8800 featured on the cover of Popular Electronics.
They contacted MITS, the Altair's manufacturer, claiming to have a BASIC interpreter ready. Although they had not yet written it, Allen created an emulator while Gates developed the interpreter. Their demonstration worked, leading to a licensing deal with MITS.
The company was originally named Micro-Soft, combining “microcomputer” and “software.” Microsoft later became a major software company through products including MS-DOS, Windows, and Microsoft Office. A common mix-up is attributing Microsoft's founding to Windows; Windows was not released until 1985, a decade after the company began.