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Weekly Column

The New New Bill Gates: A Revisionist Look at the Richest Man on Earth

Status: [CLOSED]
By Robert X. Cringely

I have been interviewing and writing about Bill Gates for 20 years. Two decades ago, Bill was just a nerdy kid from Seattle with a need to dominate the programmers around him. Today, he is something of a statesman, if an awkward one. Then, he was a womanizer with greasy hair. Now, he is a happily married father of two and a wearer of Italian suits and monogrammed shirts. The Bill Gates of 20 years ago wasn't a billionaire, just a spoiled rich kid. Today, he is the biggest philanthropist on earth. Maybe it's time to take another look at this guy and what makes him tick.

Often we don't want our icons to change. The image we have of some hero or villain is usually frozen in time, even to the point where we see him as wearing specific clothes. The Bill Gates frozen in most of our minds is a tousle-haired skinny kid with big eyeglasses and no facial hair, wearing peculiar colors of beige and green. Those were the days when Bill's mother still bought his clothes. The present reality is a middle-aged man with a worried expression and a big butt. Jesse Berst, a journalist and long-time Bill Gates watcher whose office is just across the street from Microsoft headquarters, says the ever-spreading Gates now looks like he's wearing Huggies disposable diapers.

Professional Gates watchers, and there are quite a few of us, can cite whole eras in his development as a business leader. At the heart of it all is a sense of competition fostered by his grandmother, and played-out in board games and family athletic contests. The single most driving force in the development of Bill Gates today or any day is his competitive nature. The guy simply has to win, and will do pretty much whatever it takes to succeed. Over the years, this need to win at any cost has changed its appearance a bit as times have changed, but it is still there. Bill plays to win. A graceless win is still a win. And if he can't win, then he'd rather not play.

These traits showed themselves in practically the first moments of Microsoft. Gates was a freshman studying mathematics at Harvard University when Paul Allen presented the idea of writing a version of the BASIC computer language for the Altair 8800, the first personal computer produced in quantity. Only halfway through his first year at Harvard, Gates was spending more time playing poker for money than going to class, probably because he had discovered the sorry truth that he wasn't the smartest math student at Harvard. It was a game he couldn't win, so he decided not to play. Computer software looked easier.

Competition showed again when Microsoft was finally in business in a motel room in Albuquerque, New Mexico, near the headquarters of MITS, the company that built the Altair. As co-founders, Gates and Allen had to decide who would have the greater amount of Microsoft stock (not that it was worth much at the time). This, too, became a competition, one that was settled with logic. Bill thought he deserved more stock than Paul, and based his argument on the fact that Paul, as the new head of software development for MITS, had more than one job. This ignores the important fact that Allen was not only half of the Microsoft team, he was also Microsoft's only customer. Relentlessly pushing the argument that as the only Microsoft employee totally devoted to serving the MITS account, Gates deserved more Microsoft shares, he of course got his way. Bill Gates received 64 percent of Microsoft to Paul Allen's 36 percent, which explains why Gates is the richest man in the world and Allen is only number two or three on the list. Ironically, Gates later went to MITS president Ed Roberts to beg for a job. This is according to Roberts, who agreed to hire the impoverished Gates for $10 per hour. Under these changed circumstances, one might have expected Paul Allen to call for a redistribution of shares, but he didn't. Bill was allowed to keep his victory.

There comes a time, of course, when even childish adults have to grow up. For Gates that time came when Paul Allen almost died from Hodgkins Disease in 1983. Allen left Microsoft, and that put Gates in sole command of the company. It was a role for which he was unprepared. His managerial skills were taxed just leading a small group of programmers, but leading an entire corporation was more than he could handle. To his credit, Gates realized this and recruited professional management. He churned through a couple of bad choices before finding Jon Shirley, who had been running the computer division of Radio Shack. Shirley — 20 years Gates' senior — brought experience to the company along with a willingness to stand up to Gates. That Bill Gates was later a successful CEO in his own right can probably be attributed to the lessons he learned while working "under" Jon Shirley.

One skill Gates had to learn was production planning. Determined to help Windows 1.0 to succeed, he had committed Microsoft to enter the hardware business, building mice for all the PCs he was sure would soon be converted from MS-DOS to Windows. The most important rule of planning is that we tend to overestimate change in the short term, which is exactly what Gates did. He was so convinced that Windows would succeed that when Jon Shirley took over he found a seven-year supply of mice in Microsoft's warehouse. If you have ever wondered why for years Microsoft mice were always white, no matter what color the computer, this is why.

With Jon Shirley running the business side of Microsoft, Gates was in charge of product planning and programming, which allowed him to compete with dozens and eventually thousands of nerds. His motivation tool was the claim that whatever task was at hand, HE could accomplish it in a weekend if he had to, yet somehow the need never came up. Of course, it was a lie. The last time Bill Gates actually wrote production software was in 1983. What developed instead was a cult of personality in which Bill was the god of software and everyone at Microsoft waited for edicts to be issued. The ranks below Bill all accepted as fact that they were lesser programmers and could never compete with him, so they competed with each other. At Microsoft, the competition among business units for internal rate of return is so great that it often seems as if they hate each other as much as they hate the company's outside competitors.

Part of this competition even extended to how much like Bill could the other programmers be. Bill would rock forward and back in his chair during meetings. Soon many people rocked in meetings. Bill had odd ways of pronouncing words, but his pronunciations became standard at Microsoft. And why not? Whatever he did seemed to work.

Those were the days of the hard-working and hard-playing Bill Gates. Already a programming god and soon a millionaire, he found great success with women. And he liked to drink. On one trip to Mexico with a girlfriend, he had too many margaritas, and for some reason decided to sublet his rental car for $5.00 to some students whose names he didn't even know. But the Gates luck held. Late that night, they returned the car.

How does a super-eligible bachelor with questionable judgment remain single? Like almost everything else in the life of Bill Gates, it requires the application of an algorithm, a rule for his own behavior. Studying the lives of scientific geniuses through history, Gates noticed that their best work was often done when those scientists were in their 20s. So he declared over and over again that Microsoft could not afford for him to be distracted by a wife and children. Those could come when he was in his 30s and slowing down. Until then, bring on the girls! But when he reached his 30s, Microsoft was at a critical juncture (this was 1985, just a year before Microsoft's Initial Public Offering of stock), and Gates felt he still couldn't marry. And he didn't seem to be slowing down or becoming any less smart, either. So maybe, just in his case, such a marriage could wait for a few more years. Finally, under severe pressure from both his parents, Gates said he would marry when he was finished building his new house.

Ah, the house. Bill Gates' 3,700 square meter house on Lake Washington, across from Seattle, has over the years taken on a significance far greater than it deserves. The house appears from the water like a small group of buildings, but it is really more like a small Disney World — a single building that lies mainly underground with what appear to be separate buildings piercing the earth above. The house was first conceived as a showcase for Microsoft technology, then adapted as an excuse for Bill not getting married. Over seven years of planning and construction, the house went through three generations of computer hardware before it was finally finished. There are bigger houses in America, more expensive houses, but few have required such time-consuming construction. The cost, rumored to be $60 million, is unimportant given the fact that during the 1990s, Bill Gates' net worth grew at an average rate of $34 million PER DAY. To a guy making more than $200 million per week, a $60 million house is nothing.

Still, it is a grand house. There are two facts about the house that I find most revealing about the character of its owner. One fact is that construction of the house required that a 23-meter Douglas Fir tree be moved 15 centimeters to one side. Who would do that but a perfectionist? The other interesting fact concerns the house's system of active badges. These are electronic badges worn by everyone to identify to the house computers where each resident and visitor is in the house. The myth of the active badge is that it allows the house to adjust climate, music, lighting — even the electronic artwork on the walls — to match the preferences of visitors as they move from room to room. The reality is that active badges are there to keep visitors like me out of the children's rooms. And what happens when more than one person is in a room? The reality of active badges is that Bill Gates is still king. When Bill is in the room, his taste rules.

It is perhaps ironic that Bill's house wasn't completed until after his marriage. Mary Gates, Bill's mother, biggest fan, and strongest prodder, finally laid down an ultimatum in 1993. She was dying of cancer, and wanted to see her only son married. Bill Gates married Melinda French in Hawaii on January 1, 1994, and his mother died a few months later. In characteristic Gates fashion, the couple kept news photographers away from the wedding simply by hiring every hotel room on the island and chartering for the day every helicopter in the state.

Jon Shirley retired from Microsoft in 1990, and Gates became the company's literal, as well as spiritual leader. The decade that followed was exciting for Microsoft as it grew into the most valuable company on Earth and Gates became the planet's richest individual. The company succeeded by applying the same rules by which Gates ran his life — competing aggressively, using every weapon at the company's disposal, all toward the end of putting a computer on every desk and in every home running Microsoft software. And it worked. That the company became wealthy as a result came from the fact that, as Gates once told me, the way to make money is by setting de facto standards. Windows is, of course, that standard.

Then two things happened on the way to world domination. Microsoft caught the attention of the U.S. Government, and running the most valuable company in the world suddenly became a lot less fun. Gates, the former poker player, liked to maintain Microsoft's relationships with other companies using the same kind of bullying tactics that worked so well with the company's own programmers. Intimidation seemed a perfectly good business technique, though apparently it was against the law. When the case finally came to trial, Gates and his company relied on the same kind of twisted sophomoric logic that he might have used in high school. Using threats to get another company to change its course was okay, Microsoft argued, because they never intended to follow through on the threats. Like in poker, it was all a bluff. But in business, even bluffs can sometimes be illegal. Even worse, Gates, the master strategist, claimed under oath not to know the definition of market share. Sure.

Microsoft lost the legal case, which is now under appeal. But no matter how it ends in court, the company's innocence is gone, along with dozens of top executives, who have recently found it not so much fun anymore to be in the software business. And one of those executives is Bill Gates, who is no longer Microsoft's CEO, having handed that job over to Steve Ballmer, who lived down the hall from him at Harvard and has been at Microsoft since 1980. Today, Bill Gates continues as Microsoft's Chairman and Chief Software Architect, but Ballmer runs the company.

This rise of Steve Ballmer says as much about Gates as anything. Ballmer's first office at Microsoft was the end of a sofa in Bill's office. He has always been subservient to Bill, and that subservience has been an important aspect of Ballmer's success at Microsoft. When they were students at Harvard, Ballmer and Gates competed for the Putnam national mathematics prize and while neither won, Ballmer scored higher than Gates, a fact that neither man chooses to mention. In his own right, Ballmer once took an individual business risk that pales anything ever accomplished by Gates. In the late 1980s, when Microsoft was approaching the release of Windows 3.0 — the first version of the software to do more or less what it claimed — Ballmer borrowed almost $50 million against his Microsoft stock and anything else he owned, and used the money to buy more Microsoft shares. Software tycoons don't do things like this. They sell shares, not buy them. Gates has never bought a single share of Microsoft, but Ballmer did, and the $50 million grew over the following decade to more than $12 billion, earning him the CEO job he has today. That Gates allowed Ballmer to not only succeed him, but to remake Microsoft in Ballmer's image, indicated that Gates was ready to move on to a new level of competition.

Ballmer's rise came just as Bill Gates discovered the joys of fatherhood. Now he spends less time at the office, and more time with the kids. And as business life has become more stern and less fun, Gates has discovered the joy of giving his money away. Back in the 1980s, when local Seattle charities asked Gates for donations, the standard line they were given was, "Bill Gates is too young to be a pillar of his community." Well, that appears to have changed, since the Bill and Melinda Gates Foundation is endowed with $21 billion, making it the richest charity in the USA. And American tax laws require that at least five percent of the fund — more than $1 billion — be given away every year. And where his early philanthropic efforts seemed to be aimed at using Microsoft's money to encourage more computer use, recent grants are in areas that generally have nothing to do with PCs. The Bill and Melinda Gates Foundation has committed $750 million to childhood vaccination programs, primarily in the Third World.

This change in focus doesn't mean that Bill Gates is any less competitive, just that he has once again redefined the game into one at which he knows he can win. When you are the richest man in the world, nobody can beat you at giving money away. Gates is competitive even at philanthropy. And if, in the process, you discover in yourself a real streak of humanitarianism, well that's a bonus. The New New Bill Gates spends more time thinking about world health and education than inventing Microsoft business strategy. That is now Ballmer's job, and the job of all the new executives Ballmer is hiring. At a recent conference in Seattle on the Digital Divide between rich and poor and First World and Third World, Gates argued strongly that putting PCs in African classrooms wasn't the answer to world poverty. It's much better, he said, to start with clean drinking water and good health care and forget about the PCs. Can this be the same Bill Gates?

Hidden in his Microsoft billions, Gates has more than $6 billion in outside investments, primarily in biotechnology companies and new media. When the Age of the PC is past and Microsoft is someday in decline, these biotech investments will probably keep Gates in his position as richest of the rich. Then he'll have to try even harder to give it all away.

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