The story
Founded by Richard Greenblatt on Aug 13, 1979.1
The following parable-like story is told about LMI by Steven Levy and used for the first time in Hackers: Heroes of the Computer Revolution (1984). Levy's account of hackers is in large part based on the values of the hackers at MIT Artificial Intelligence Laboratory. Among these hackers was Richard Stallman, whom Levy at the time called the last true hacker.
The people at the lab came together, and together created a true hacker's machine, the original Lisp Machines. When Russell Noftsker suggested that they move on, and spread the gospel beyond the walls of the lab, the hackers at the lab differed wildly in how they wanted the company run.
Greenblatt insisted that the company remain true to the hacker spirit, in that it should bow to no one, and focus solely on the creation of a good product. Some other hackers felt that this was not the way to lead a company. If this was done, it would never grow and truly spread the word of the hacker ethic. Furthermore, Greenblatt demanded control over the company, to ensure that his vision was carried forth. Others (including Bill Gosper and Tom Knight) felt that to be under the rule of Greenblatt was unacceptable.
When Noftsker started Symbolics, while he was able to pay salaries, he didn't actually have a building or any equipment for the programmers to work on. He bargained with Patrick Winston that, in exchange for allowing Symbolics' staff to keep working out of MIT, Symbolics would let MIT use internally and freely all the software Symbolics developed. Unfortunately this openness would later lead to accusations of intellectual property theft.
In the early 1980s, to prevent software from being used on their competitors' computers, manufacturers stopped distributing source code and began using copyright and restrictive software licenses to limit or prohibit copying and redistribution. Such proprietary software had existed before, but this shift in the legal characteristics of software was triggered by the U.S. Copyright Act of 1976; see software copyright.
While both companies delivered proprietary software, Richard Stallman believed that LMI, unlike Symbolics, had tried to avoid hurting the lab. Stallman had proclaimed that "the prospect of charging money for software was a crime against humanity." He clarified, years later, that it is blocking the user's freedom that he believes is a "crime", not the act of charging for a copy of the software.
Symbolics had recruited most of the remaining MIT hackers including notable hacker Bill Gosper, who then left the AI Lab. Symbolics forced Greenblatt to also resign at the AI lab, by citing MIT policies. So for two years at the MIT AI Lab, from 1982 to the end of 1983, Stallman attempted to duplicate the efforts of the Symbolics programmers, in order to prevent them from gaining a monopoly on the lab's computers.
From Wikipedia’s article on Lisp Machines, shared under CC BY-SA 4.0.4