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The Origin of Purple Guy
In 1976 William had twins: a little blonde girl and a little brunette boy. He started to teach Michael to take care of them, because "Daddy won't be around forever".
During his free time, William started designing and projecting new robots (he hated the name "animatronics") and plans for his own company: Afton Robotics. But he had another plan under his sleeve: ruin FFP from the inside.
He disguised himself as Dave Miller and started working applied for day time security guard at FFP. As he was always wearing purple - the uniform's colour - and usually hid in the shadows to stay out of sight of anyone who might recognize him, he was nicknamed by every child as "The Purple Guy".
During this time, in 1980, he did his evil plan: using the Spring Bonnie suit he built years earlier, he lured five children to a back room, murdered them and hid inside the body of the animatronics. In case you're wondering what he did with the fifth one, he obviously hid it inside a spare Freddy suit he then painted yellow, duh.
Fortunately for Billy, they actually caught Henry instead of him, as one of the cameras caught him walking around in one of the suits. He got out sometime later, as they managed to prove he had some mental disabilities and had a fixation with wearing the suits around, and had no violent behaviour.
But Dave? Well, he was fired when FFP closed.
Circus Baby
With the help of the money he got from selling the children's organs in the black market, William opened Afton Robotics and had everything ready to open his own kid-friendly restaurant: Circus Baby's Pizza World. The problem is that he got a new hobby, and this where his hill went down.
He liked so much the idea of killing children and the profit he could get from selling their organs - healthy children organs are way more valuable than adults' -, he made special alterations in his robots, turning them into kid-kidnapping and killing machines.
The problem is that, in 1982, he accidently let his daughter get close to Baby when he wasn't looking; and Baby killed her. He knew he was the one to blame, but he actually blamed Michael for this, saying that he, as the older brother, should've protected her.
This incident lead to the pizzeria's cancellation and William's divorce. His wife took Michael and the other boy with her, leaving him alone. His new hobby and this incident in his life lead him to become a human monster.