CAMBRIDGE, MA—In the summer of 1980, MIT graduates Donald Faber and Peter Haberle moved into an empty two-car garage and started work building their first ever personal home computer. Almost 30 years later, what began as a humble two-man operation has since grown into an even more humble, even more cramped computer company, based out of an even smaller single-car garage.

"We started out with pretty much nothing," said Peter Haberle who, along with Faber, sat down with reporters on Monday to reminisce about the early days of Xalaga Technologies. "I remember we had this old workbench, which we called our development station. And we got our hands on a few wooden chairs from this dumpster across the street. Donald even had to borrow an air mattress so we'd have somewhere to sleep at night."

Added Haberle, letting out a deep sigh, "That place was a palace compared to today."

According to Faber and Haberle, a lot has changed since Xalaga was first founded. What was once a struggling $7,500-a-year business with only a dozen or so paying customers is now a desperate $6,400-a-year business with only a half dozen or so paying customers.

An ad from the days when Xalaga Technologies was just getting off its feet in far more spacious surroundings.

Indeed, long gone are the dark days of scraping together donations from friends, and applying to banks for loans, as those channels have completely run dry and Faber and Haberle were forced to take on second and third jobs to finance their dream venture nearly a decade ago.

Faber, who turned down a promising position with GE in order to start Xalaga, a decision he now says he regrets each and every waking day, told reporters that he knew almost immediately that his company had something not-at-all special on its hands.

"We sold only one computer that first year, then the following year it was three computers, then suddenly 10 computers, then just as suddenly five computers, then back down to three computers again, and finally only one or two machines every other year for pretty much the next decade," said Faber, standing up from the plastic milk crate that now serves as his desk. "Had someone told us when we first started that we'd be here today, operating out of a much smaller, somehow less expensive garage, we probably would have laughed right in their face."

"Well, nobody's laughing now," Faber added.

Despite their eventual lack of success, and the complete absence of any recognition whatsoever, those early days didn't always go as planned. In 1986, Haberle was left with no choice but to move permanently into Xalaga's garage-headquarters after his then-fiancée left him and he was evicted from his one- bedroom apartment. Then in 1993, the pair saw months of exhausting work go up in flames when an electrical fire destroyed dozens of circuit boards, driving Xalaga Technologies even further into debt.

Still, it was those initial setbacks that made all the setbacks still to come that much more painful.

"I'd be lying if I said Donald and I didn't have doubts—heck, those first 30 years were pretty tough for us," said Haberle, who recently celebrated his 53th birthday. "But trust me, places like Google and Apple went through the exact same thing when they began…."

"Hold on just a second," continued Haberle, quickly gathering up a number of unfinished microprocessors, memory boards, and other belongings piled high on the ground. "Looks like the owner wants to park his car."