Bill Gates Leaves Microsoft to Focus on Philanthropy

June 16, 2006 at 5:34 PM EDT

BILL GATES, Microsoft Founder: I really like this portable computer they made for me.


JEFFREY BROWN: Entrepreneur, monopolist, philanthropist. All of these have been used to describe Microsoft founder Bill Gates, who, no matter what he does, does it in a very big way. Yesterday came the latest turn, as Gates announced he would give up his day-to-day role in Microsoft to focus on his nonprofit foundation.

BILL GATES: I’ve decided that, two years from today, starting July 2008, I will re-order my personal priorities. Today, I’m working full-time for Microsoft and part-time for the Gates Foundation. Starting two years from now, I will shift to work full-time at the foundation and part-time at Microsoft, as chairman and as a senior technical adviser.

JEFFREY BROWN: A Harvard dropout, Bill Gates founded Microsoft in 1975 with his college roommate, Paul Allen. His vision: to have a computer on every desk, in every American home and business, running on the software Microsoft supplied.

As the computer revolution took off, the company became a behemoth, the new symbol of American technological power, with Bill Gates, the man, celebrated as its nerdy, but dominating, public face, and then the richest man in the world, today said to be worth around $50 billion.

Both the man and the company have also at times been vilified by rivals who accused Microsoft of anti-competitive, illegal business practices. The U.S. government’s suit against Microsoft was the most-watched antitrust case of modern times.

In 1994, Gates and his wife launched what would become the Bill and Melinda Gates Foundation, which to date has given away more than $10 billion to education and global health initiatives, such as vaccines, immunizations and AIDS research.

It’s now the largest charitable foundation in the world, with an endowment of $29 billion. That’s 10 times the size of the Rockefeller Foundation and dwarfs the gross domestic product of many third-world countries.

Yesterday, Gates spoke of his charitable work.

BILL GATES: I believe that with great wealth comes great responsibility, a responsibility to give back to society and a responsibility to see that those resources are put to work in the best possible way to help those most in need.

JEFFREY BROWN: Even as Bill Gates shifts his attention to philanthropy, Microsoft faces unprecedented challenges, as the technology focus moves from computer boxes to the Internet, and companies like Google have moved into prominence.

Gates plans to remain Microsoft’s chairman and its largest shareholder.

"This is the end of an epoch"

JEFFREY BROWN: And some thoughts now on the man, the company, and the foundation from David Kirkpatrick, senior editor at Fortune magazine. He covers technology and the Internet.

And Stacy Palmer, editor of the Chronicle of Philanthropy, an independent newspaper.

Mr. Kirkpatrick, starting with you, how big a deal is this in the world of business and technology?

DAVID KIRKPATRICK, Senior Editor, Fortune Magazine: Well, it's a huge deal in the world of business, because Bill Gates largely personified business and, certainly, Microsoft, but he was the most visible leader in technology and business for most of the last 20 years. So his shifting away from business into philanthropy is really the end of an epoch, in my opinion.

JEFFREY BROWN: Give us a little background. How has he evolved as a businessman and as a public figure?

DAVID KIRKPATRICK: Well, he's evolved tremendously, but there is a sense in which he hasn't evolved, which is that he has always been a man of tremendous focus and discipline and vision, and he's stuck with his visions from the beginning.

He started, when he started Microsoft in 1975, with a very clear idea of what he wanted to do, which was to make inexpensive, high-volume software that would enable everybody to have computers that gave them a lot of power for not a lot of money. He really believed in empowering the individual.

Microsoft's mantra from the beginning was a computer on every desk and in every home, and he really came amazingly close to fulfilling that vision. I think, over time, you know, he has really done a tremendous job building the company.

It now has around 75,000 employees; it's literally in just about every country on the planet. You know, it's probably built -- its products are probably used by more people than almost any other company you can name. There are only a few that, perhaps, build products made by more -- products that are used by more people, maybe Coca-Cola, for example, or Google.

So there is where you get into the problem, and there's where Gates hasn't really evolved. I think, in a sense, you know, he hasn't really figured out how to turn Microsoft into the company that it needs to be to compete in the era of Web services, in an era where software is funded by advertising, not paid for as a software product or coming along with a PC.

Shift from the box to the Internet

JEFFREY BROWN: And staying with you, so this is what people are talking about in terms of the end of an era. It's this shift from the box itself to the Internet, and people are seeing what happens to Gates personally, in terms of that shift?

DAVID KIRKPATRICK: Well, I think it's an end of an era for Microsoft. It's an end of an era for business, because he has been the most prominent leader of business.

I'll tell you, for really most of the last two decades, whenever we at Fortune wanted to sell the most copies of the magazine, we put Bill Gates on the cover. I can't even count how many times he's been there.

And you yourself just showed a bunch of covers of magazines. The reason he was there over and over again was because he was the business leader people were most interested in seeing. So that's what I mean when I say it's an end of an epoch.

Microsoft has a whole bunch of issues about Bill Gates leaving, because he, in a sense, personified the company in a way more than almost any individual has ever personified any company. There was a certain identity of image between Microsoft and Bill Gates, and that's something the company is going to take some time to get over.

On the other hand, I think Gates has such a strong personality, and he's had such respect on the part of the employees of Microsoft, and he's done such a good job recruiting, that his personal traits, and his philosophy, and his drive has, in a sense, been inculcated in the company itself and is now kind of part of that company's DNA. So I think it will survive.

The impact of the Gates Foundation

JEFFREY BROWN: Stacy Palmer, let's move to the foundation side, the Gates Foundation. How big a role does it play in the philanthropy world? And what gaps, in particular, has it filled?

STACY PALMER, Editor, The Chronicle of Philanthropy: It's very big. As you noted, it's bigger than any of the other foundations, dwarfs all of them, and they've been particularly focused on global health, which isn't a subject that lots of foundations spend their time on, at least not foundations with the resources that Gates has.

And they have made remarkable progress, in terms of trying to alleviate some of the diseases that are really hobbling very poor people in very poor countries.

JEFFREY BROWN: Has the foundation itself changed over time its focus or the way it gives money?

STACY PALMER: Very much so. When it started out, it was really just about putting technology in libraries and doing the kinds of thing that Bill Gates knew about and what you might expect.

And then he discovered all of the problems in the global health world, and a lot of smart people came to him, and he sought them out, and they realized that there was an awful lot that could be done.

And part of what he's done has not been just writing a check, sitting back and saying, "Here's the foundation money; go off and do with it." But he realizes that he needs to influence both businesses and governments. And I would expect now he's going to spend a lot more time trying to do that, and that's what's so important about this decision for him, to get personally involved.

It takes a lot more than money; it takes influence to really make change happen.

JEFFREY BROWN: Well, that's what I wanted to ask you about. How important -- you're saying that he has been relatively important up to this time, but now everyone is looking for real impact. It's Bill Gates full-time.

STACY PALMER: Absolutely.

JEFFREY BROWN: And what does that mean, in terms of bringing the entrepreneurship to a field that -- does it usually see that kind of thing?

STACY PALMER: It sees it a little bit, but it's a little bit slow-moving and has been reluctant to embrace change, and so I think that he could make a dramatic difference as he looks at things in a new way. He brings a very different experience than most people in philanthropy.

You know, most foundations are started by people through their bequests. You don't have a living donor being involved in a philanthropy, and here he is and his wife, and they've been very involved in it already. They're going to get much more involved.

So brings a lot of ideas. And he's also kind of a geek who tends to get really involved in things, as we know, and he reads up on everything, studies. He loves the detail of what the foundation is doing and asking smart people about those things.

So I think he's going to see things in a different way than many traditional philanthropists who sort of sit back a little bit more have done.

Tremendous change in the foundation

JEFFREY BROWN: You know there's been a lot of comparisons -- and we brought it up in our set-up -- to the great philanthropists, the businessmen philanthropists of the past, Ford, Rockefeller, Andrew Carnegie. Does the comparison hold up? Or what did you see from the past that tells you about Gates?

STACY PALMER: I think absolutely he has the potential to be on that kind of par. Already he's given more money than they have, if you, you know, do the economic analysis, so, just in terms of the generosity, it's been huge.

But also the fact that he's been very thoughtful about what he's doing, and he has evolved a lot and thought about different ways of philanthropy, and hopefully that he'll put new energy into it and really have a legacy of philanthropy.

We don't really know, of course, and he could make a misstep, as well. Certainly all eyes are going to be on him, and I think there's going to be intense scrutiny of his foundation. Foundations aren't very regulated; they're not very accountable to things, so there's a flip side, too.

JEFFREY BROWN: So he might be under scrutiny again, as in his past in Microsoft?

STACY PALMER: Exactly, just as he was in Microsoft. So, you know, there are very good things that he can do for society, but everybody is going to be watching him very carefully.

JEFFREY BROWN: Mr. Kirkpatrick, I remember, a few years ago, as I'm sure you do, when he was chided for not giving to charity. This was when he was first getting all the attention for being the world's wealthiest man. How has he, from what he's written or said or the people close to him that you talk to, how does he see his own sense of history or himself in history?

DAVID KIRKPATRICK: Well, you know, he's not really that into thinking about himself that way, frankly. I think it's very easy to think about him that way, because he is such a major figure in modern life and society and business.

I think he's really just an extremely focused, disciplined guy who is extremely pragmatic and very strategic, and he just thinks about what it is he wants to get done. He doesn't really think that much about his image. I mean, if he did, he'd probably have a better haircut, for God's sakes.

But, you know, I do really agree with Stacy that this is a guy who's going to come to philanthropy with a focus and a discipline that we've never seen before. He's going to be as aggressive in his foundation, I think, when he gets there full-time, as has been in Microsoft.

And I think you can anticipate tremendous change in the foundation, and probably that will have ramifications throughout the charitable world and possibly in the business world, as well, because he is a role model and his demonstration of his own personal belief in the need to get involved to this degree, I think, could turn some heads.

He's already had a lot of impact in philanthropy in prompting, I think, a lot of other very wealthy people it start their own foundations, along with Ted Turner, who also gave, you know, $1 billion to the U.N., not too different in time from when Bill Gates really got into the foundation.

I think the two of them really had a catalytic effect, and I think this could have a catalytic effect, as well.

But, I'm sorry, in terms of your real question and why he did it when he did, I think -- you know, Microsoft has had huge image problems. And they had anti-trust assault from the U.S. government and the European Union, and a lot of the motivation, I think, for when he got involved in philanthropy as deeply as he did was partly his own either subconscious or conscious desire to improve the company and his own image.

JEFFREY BROWN: And for whatever reason it happened, though, you see big changes coming. Your world will be watching carefully?

STACY PALMER: Very carefully. And part of the reason is this idea that he may well attract many people into philanthropy, the fact that his image is so important to people. If more people see that this is a vital role that somebody who has had such a successful business career has decided that this is what I want to do full-time, a lot of other people may think about making that kind of commitment to society.

So that's why I think it's incredibly important and perhaps more important than the money he actually puts into his foundation, is that impact on getting more people to give of their time.

DAVID KIRKPATRICK: I couldn't agree...

JEFFREY BROWN: OK, Stacy Palmer and David, I'm sorry, we're going to have stop there. David Kirkpatrick, Stacy Palmer, thanks a lot.

STACY PALMER: Thank you.