Paterson wrote the first version of DOS, QDOS while he was working for a company called Seattle Computer Products. After Microsoft bought exclusive rights to the operating system in 1981, Paterson went to work for Microsoft.
Educated at the University of Washington, Paterson worked as a repair technician for a computer store in Seattle, Washington. After he graduated Magna Cum Laude in June 1978, he went to work for Seattle Computer Products as a designer and engineer.
A month later, Intel released the 8086 CPU, and Paterson went to work designing an S-100 8086 board, which went to market in November 1979. The only commercial software that existed for the board was a standalone version of Microsoft BASIC, and without a true operating system, sales were slow. Paterson began work on QDOS in April 1980 to fill that void. QDOS was approximately 4,000 lines of 8086 assembly code and highly compatible with the APIs of the popular CP/M operating system, and version 0.10 was complete by July 1980.
Paterson worked for Microsoft from May 1981 to April 1982. After a brief second stint with SCP, Paterson started his own company, Falcon Technology, which was bought by Microsoft in 1986. Paterson did a second stint with Microsoft from 1986-1988 and a third stint from 1990-1998. During his third stint at Microsoft, he worked on Visual Basic and Microsoft's version of Java.
After leaving Microsoft a third time, Paterson founded another software development company, Paterson Technology, and also made several appearances on the Comedy Central television program BattleBots, where radio-controlled robots fight to the death.