The Lab That Invented the Future

In 1969, Xerox CEO Peter McColough had a terrifying premonition: the paperless office. The company that had built an empire on copying documents suddenly realized that digital technology might make paper irrelevant. His response was audacious—pour money into inventing the future before it could destroy you.

He tapped George Pake, a physicist from Washington University, to build something unprecedented: a corporate research lab with the intellectual freedom of a top university. They placed it 3,000 miles from Xerox's stifling Rochester headquarters, in the shadow of Stanford University. The Palo Alto Research Center—PARC—was born.

The culture Pake built was unlike any corporate environment of the era. Beanbag chairs replaced conference tables ("it's impossible to leap to your feet and denounce someone from a beanbag chair," noted Alan Kay). Researchers had near-unlimited budgets and zero commercial pressure. Friday "Dealer" meetings forced scientists to defend their ideas before brilliant, often ruthless peers. It was a hothouse for genius—and for expensive ideas that would never make Xerox a dime.

The Xerox Alto, completed in 1973, was the first modern personal computer. While IBM's mainframes filled entire rooms and used punch cards, the Alto was designed for a single user sitting at a desk. It had a portrait-oriented screen (to mimic a sheet of paper), a three-button mouse refined by Bill English from Doug Engelbart's original prototype, and a revolutionary bit-mapped display where every pixel could be controlled individually.

Chuck Thacker designed the hardware. Butler Lampson architected the system. But it was the software that made the Alto prophetic. Bravo, created by Charles Simonyi, was the first WYSIWYG word processor—what you saw on screen was exactly what would print. Bold text looked bold. Italics looked italic. The metaphor of the "desktop" began here.

On May 22, 1973, a researcher named Bob Metcalfe typed a memo outlining a system he called "Ethernet"—named after the luminiferous ether once thought to carry light waves. The problem was practical: PARC needed a way to connect their Altos to the laser printer Gary Starkweather was building. Metcalfe's solution would eventually connect the entire world.

Working with David Boggs, Metcalfe invented a protocol called CSMA/CD (Carrier Sense Multiple Access with Collision Detection). Think of it like a polite dinner party: you listen to see if anyone is talking, and if silence, you speak. If two people talk at once, both stop, wait a random interval, and try again. The original PARC Ethernet ran at 2.94 Mbps—blindingly fast compared to the 300-baud modems of the day.

Metcalfe would later leave PARC to found 3Com, finally commercializing the technology he'd invented. Ethernet became the backbone of local area networking, and eventually the physical layer of the internet itself. The memo is now in the Computer History Museum.

Gary Starkweather was an optical engineer at Xerox's main lab in Rochester when he had a dangerous idea: what if you used a laser to "paint" an image directly onto a xerographic drum, instead of using a lens to copy an existing paper document? His bosses hated it. They were in the copier business, not the printer business. He was told to stop or be fired.

Starkweather did what frustrated geniuses do—he called PARC. They welcomed him with open arms. By 1971, he had built the EARS system (Ethernet, Alto, Research character generator, Scanned laser output terminal), capable of printing 60 pages per minute at 300 dpi. The laser printer was born.

Ironically, this was the one PARC invention Xerox actually commercialized successfully. The Xerox 9700, released in 1977, became a multi-billion dollar product line. It arguably paid for all of PARC's other experiments—the ones Xerox would fail to monetize. The laser printer saved Xerox's business while proving they could commercialize innovation. They just chose not to do it with everything else.

Alan Kay's vision was wildly ambitious: a portable computer for children called the Dynabook. To make it work, he needed a programming language simple enough for kids but powerful enough for complex simulations. With Dan Ingalls and Adele Goldberg, he created Smalltalk—the first true object-oriented programming language.

Instead of a long list of procedural instructions, Smalltalk software was composed of "objects" that sent messages to each other. The paradigm shift was profound: programs became collections of autonomous entities collaborating, rather than monolithic scripts executing step by step. The Smalltalk environment also introduced the GUI elements we now take for granted—overlapping windows, pop-up menus, icons.

Kay never got his Dynabook (we're still waiting), but Smalltalk's DNA spread everywhere. Objective-C, which powered macOS and iOS for decades, borrowed heavily from it. Java's object model traces back to PARC. Every time you instantiate a class or call a method, you're speaking a language that began in Palo Alto.

This is the most famous meeting in tech history. In December 1979, a young Steve Jobs struck a deal: Xerox could buy 100,000 shares of pre-IPO Apple stock for $1 million. In exchange, Apple engineers got full access to PARC's technology. It was, in retrospect, one of the worst trades in corporate history.

There were two visits. The first was flashy but superficial. Jobs, realizing he hadn't seen the "real" stuff, demanded a second, deeper technical dive. Adele Goldberg famously fought against showing Apple the technology, arguing they were "giving away the kitchen sink." She was overruled by Xerox executives who saw a quick $1 million and not much else.

Jobs saw three things: Ethernet, object-oriented programming, and the graphical user interface. He largely ignored the first two but was mesmerized by the GUI. "I was so blinded by the first thing they showed me," he later said. "I thought it was the best thing I'd ever seen in my life." Apple's Lisa and Macintosh would follow—improving on PARC's vision with menu bars, drag-and-drop, and a simpler one-button mouse.

Why didn't Xerox become Apple or Microsoft? They tried. In 1981, Xerox released the Star 8010—years ahead of its time, but priced at $16,500 (roughly $50,000 today). An IBM PC cost $1,565. Xerox's sales force knew how to sell copiers to office managers, not complex networked computers to IT departments. The Star was a commercial disaster.

But the ideas didn't die—they scattered. John Warnock and Charles Geschke left to create Adobe, revolutionizing publishing with PostScript and PDF. Charles Simonyi joined Microsoft to build Word and Excel. Bob Metcalfe commercialized Ethernet through 3Com. The brilliant minds that Xerox couldn't figure out how to use became the architects of the modern tech industry.

As Alan Kay famously said: "The best way to predict the future is to invent it." PARC did exactly that. They just forgot to mention you also have to sell it.