♪ DAVID RUBENSTEIN: WHEN YOU'RE AT HARVARD, YOU HAVE A CLASSMATE NAMED BILL GATES.

STEVE BALLMER: THE GUY WHO INTRODUCED US SAYS, "YOU GUYS ARE BOTH KIND OF WEIRD, ENERGETIC GUYS.

YOU SHOULD MEET."

DAVID: AND YOU'RE THE 30th EMPLOYEE OF MICROSOFT.

STEVE: I BECAME THE KIND OF SALESMAN ON IBM.

WHY?

I KNEW HOW TO WEAR A TIE.

DAVID: YOU'RE THE BIGGEST INDIVIDUAL SHAREHOLDER OF MICROSOFT.

STEVE: I'M A LOYAL, LOYAL DUDE.

I STILL DRIVE FORDS.

MY DAD WORKED AT FORD, AND I STILL OWN MICROSOFT STOCK.

DAVID: DO YOU EVER TAKE ANY OF THE TIPS AND GIVE THEM TO YOUR L.A. CLIPPERS COACH?

STEVE: NO!

I HEAR THERE ARE OWNERS WHO DO THAT, AND I'M NOT GOING TO BE THAT GUY.

WOMAN: WOULD YOU FIX YOUR TIE, PLEASE?

DAVID: WELL, PEOPLE WOULDN'T RECOGNIZE ME IF MY TIE WAS FIXED, BUT OK. JUST LEAVE IT THIS WAY.

ALL RIGHT.

♪ DAVID: I DON'T CONSIDER MYSELF A JOURNALIST.

AND NOBODY ELSE WOULD CONSIDER MYSELF A JOURNALIST.

I BEGAN TO TAKE ON THE LIFE OF BEING AN INTERVIEWER EVEN THOUGH I HAVE A DAY JOB OF RUNNING A PRIVATE EQUITY FIRM.

HOW DO YOU DEFINE LEADERSHIP?

WHAT IS IT THAT MAKES SOMEBODY TICK?

DAVID: WELL, AS WE SIT HERE TODAY, YOU ARE THE OWNER OF THE L.A. CLIPPERS.

LET'S TALK ABOUT HOW YOU BECAME AN OWNER OF THE CLIPPERS.

SO, YOU RETIRED IN 2014 FROM MICROSOFT AS A CEO, AND THE CLIPPERS WERE MORE OR LESS GOING TO BE AVAILABLE.

YOU PAID $2 BILLION FOR THE TEAM, THE HIGHEST PRICE THEN EVER PAID FOR A SPORTS TEAM IN BASKETBALL.

WERE ALL THE OTHER OWNERS HAPPY WITH YOU BECAUSE YOU ELEVATED THE VALUE OF ALL THEIR FRANCHISES?

AND I ASSUME THEY PAT YOU ON THE BACK WHENEVER THEY SEE YOU NOW.

STEVE: I THINK THERE WERE TWO REACTIONS WHEN I BOUGHT THE TEAM.

NUMBER ONE, "YES!," AS YOU DESCRIBED.

"YES, OUR TEAM'S--THIS HAS BEEN A GREAT INVESTMENT."

THE SECOND ONE IS, "OH, MY GOD.

I WONDER IF THIS GUY'S GOING TO THROW AROUND MONEY IN A WAY THAT'S GONNA..." AND THE LEAGUE HAS PLENTY OF RULES.

SO YOU CAN ONLY--IT'S HARD TO OUTSPEND ANYBODY ELSE, BUT I THINK THERE WAS A LITTLE CONCERN ABOUT THAT.

DAVID: OK, SO YOU WERE LIVING IN THE SEATTLE AREA.

NOW YOU HAVE A TEAM IN L.A. DO YOU GO DOWN THERE AND YELL AND SCREAM LIKE ALL THE OTHER FANS?

STEVE: I DO, IN FACT.

WE HAVE 41 HOME GAMES.

I PROBABLY MADE 38 THIS YEAR AND MAYBE ANOTHER SEVEN AWAY GAMES.

SO I MAKE IT TO A LOT OF GAMES.

AND IT'S FUN TO BE ENTHUSIASTIC.

I ENJOY IT.

YOU KNOW, THINGS ARE MOST FUN WHEN IT'S YOUR KID PLAYING.

SECOND MOST, YOU KNOW, THIS OWNER THING IS PRETTY GOOD BECAUSE YOU HAVE A SENSE OF THE DYNAMICS OF THE GUYS.

DAVID: SO DO YOU GO INTO THE LOCKER ROOMS AND SAY, "WELL, "GUYS, COULD YOU DO THIS BETTER," OR THAT?

YOU TELL THEM ANYTHING IN THE LOCKER ROOM, OR DO YOU GIVE THEM ANY TIPS?

STEVE: I GOT THREE PRINCIPLES.

NUMBER ONE--DON'T TALK TO ANYBODY AFTER A LOSS.

THAT'S NUMBER ONE.

COACH, YES, BUT NOT PLAYERS.

NUMBER TWO, YOU KNOW.

PUMP GUYS UP, WHICH I DO USUALLY WITH TEXTS AFTER A GAME OR SOMETIMES I GO TALK TO SOMEBODY.

AFTER BIG GAMES IN THE LOCKER ROOM WHEN WE LOSE OR WIN OUR LAST GAME OF THE SEASON, IN THE LOCKER ROOM.

AND I GO TO TRAINING CAMP AT THE BEGINNING OF THE YEAR, GIVE A LITTLE SPEECH.

A LITTLE BIT OF A PUMP-UP, I GUESS YOU'D SAY.

DAVID: ALL RIGHT.

BUT YOU HAVE COACHED YOUNG CHILDREN IN BASKETBALL.

DO YOU EVER TAKE ANY OF THE TIPS AND GIVE THEM TO YOUR L.A. CLIPPERS COACH?

[STEVE LAUGHING] STEVE: NO!

DAVID: OH, YOU DON'T DO THAT?

STEVE: I HEAR THERE ARE OWNERS WHO DO THAT, AND I'M NOT GOING TO BE THAT GUY.

DAVID: WELL, YOU WERE FAMOUS WHEN YOU WERE AT MICROSOFT FOR PUMPING UP PEOPLE.

YOU HAVE A VOICE THAT PROJECTS.

AND WHEN YOU'RE WATCHING THE GAME, DO YOU YELL AND SCREAM LIKE EVERYBODY ELSE?

STEVE: I YELL AND SCREAM.

I'VE BECOME A LITTLE MORE MODERATE, SO I PRESERVE MY VOCAL CORDS BECAUSE IT CERTAINLY CAN BE A PROBLEM WHEN YOU'RE, "YEAH!

LET'S GO!

LET'S GET THESE GUYS!"

YOU KNOW, YEAH.

IT CAN BE AN ISSUE.

DAVID: SO WHAT'S MORE FUN, RUNNING MICROSOFT OR RUNNING THE L.A. CLIPPERS?

STEVE: RUNNING THE L.A. CLIPPERS.

HA HA!

I MEAN, RUNNING MICROSOFT WAS A TON OF FUN, AND, YOU KNOW, IT'S KIND OF INSPIRATIONAL, BECAUSE WE WERE WORKING ON STUFF THAT LITERALLY TRANSFORMED THE WORLD.

AND I GOT A LOT OUT OF THAT.

AND THE INTELLECTUAL CHALLENGES WERE STRONG.

AND I LOVED THAT.

I THOUGHT I HAD UNIQUE VALUE TO ADD.

BUT JUST FOR FUN, FUN, FUN?

THERE'S REALLY NO STRESS RUNNING A BASKETBALL TEAM, EXCEPT YOU REALLY WANT TO WIN.

[CHEERING] ANNOUNCER: WHOA!

WHOA!

WHOA... DAVID: AND YOU THINK YOU CAN WIN AND WIN AN NBA CHAMPIONSHIP SOMEDAY, OR IT TAKES A LONG TIME TO GET THERE?

STEVE: I THINK WE CAN.

I THINK WE HAVE TO BE SMART.

IT TURNS OUT IT TAKES A LOT MORE SMARTS, CREATIVITY TO PUT TOGETHER THE RIGHT TEAM OF GUYS, BUT I THINK WE'VE GOT THE BRAINPOWER TO GO DO THAT.

AND YOU GOT TO GET A LITTLE LUCKY.

I MEAN, IF YOU DRAFT--YOU KNOW, PHILADELPHIA TOOK JOEL EMBIID AT NUMBER 4.

THEY'RE GONNA BE A GREAT TEAM.

BUT YOU GOT TO GET A LITTLE LUCKY IN ADDITION TO BEING SMART.

DAVID: LET'S TALK ABOUT YOUR BACKGROUND.

YOU GREW UP IN THE DETROIT AREA.

YOUR PARENTS WERE IMMIGRANTS.

WHERE WERE THEY FROM?

STEVE: MY DAD WAS AN IMMIGRANT FROM SWITZERLAND.

HE LEFT SWITZERLAND AFTER WORLD WAR II, WORKED FOR THE U.S. MILITARY AS AN INTERPRETER AT THE WAR TRIALS AT NUREMBERG.

BECAUSE THEY WERE LOOKING FOR GERMAN SPEAKERS WHO WERE NOT GERMAN CITIZENS, BECAUSE THEY WERE AFRAID OF THAT.

AND THEN HE MET HIS SPONSOR, WAS ONE OF THE G.I.

's DADS WHO HE HAD WORKED WITH AS AN INTERPRETER.

I DON'T THINK HE FINISHED HIGH SCHOOL.

HE WAS NEVER PRECISE ON THAT.

HE CERTAINLY DIDN'T GO TO COLLEGE, BUT HE WORKED AT FORD.

NOW, MY MOM ACTUALLY IS NOT AN IMMIGRANT.

HER PARENTS WERE AND THEY CAME FROM--I GUESS IT WAS PROBABLY RUSSIA AT THE TIME.

DAVID: AND SO WHEN YOU'RE GROWING UP, WERE YOU A VERY GOOD STUDENT?

BECAUSE YOU WON A LOT OF MATH AWARDS WHEN YOU WERE IN HIGH SCHOOL.

SO WHEN DID YOU REALIZE YOU WERE PRETTY GOOD AT MATH?

STEVE: IT'S INTERESTING.

IN SECOND GRADE, MY SECOND GRADE TEACHER-- WE MOVED TO BELGIUM RIGHT AT THE END OF THE SCHOOL YEAR.

AND THE BELGIAN TEACHER SAID, "HE'S NOT VERY GOOD AT MATH," SPECIFICALLY.

"PROBABLY WILL FAIL THE THIRD GRADE UNLESS HE WORKS HARD," WHICH I THINK WAS KIND OF THE THING THAT GOT ME FIRED UP THE FIRST TIME.

AND THEN WHEN I WENT TO MY HIGH SCHOOL, AS IT TURNED OUT, I WAS A YEAR BEHIND IN MATH.

AND THOSE TWO THINGS, YOU KNOW, I SORT OF SAID, "AH!

I CAN SHOW 'EM.

I'M GONNA DO WELL AT THIS SUBJECT."

AND IT TURNED OUT I DO HAVE AN APTITUDE.

DAVID: OK.

SO YOU DID PRETTY WELL IN HIGH SCHOOL.

YOU WERE THE VALEDICTORIAN OF YOUR CLASS.

STEVE: YES.

DAVID: AND YOU WERE ALSO AN ATHLETE.

DID YOU PLAY ANY SPORTS OR...?

STEVE: WELL, LET'S BE CLEAR.

I PLAYED SPORTS.

I WAS NOT AN ATHLETE.

HA HA!

WE ACTUALLY DIDN'T HAVE A PHYSICAL EDUCATION PROGRAM AT MY HIGH SCHOOL, SO EVERYBODY HAD TO PLAY SPORTS.

SO I PLAYED FOOTBALL, I PUT THE SHOT ON THE TRACK TEAM, I PLAYED BASKETBALL FOR A YEAR.

SO I DID DO SPORTS.

DAVID: YOU WERE A NATIONAL MERIT SCHOLAR.

AND DID YOU APPLY ONLY TO HARVARD?

STEVE: I APPLIED 3 PLACES-- HARVARD, M.I.T., AND CAL TECH.

DAVID: AND YOU GOT IN ALL.

STEVE: I DID.

DAVID: ALL RIGHT.

YOU WENT TO HARVARD.

AND THEN WHEN YOU'RE AT HARVARD, YOU HAVE A CLASSMATE THAT'S DOWN THE HALL NAMED BILL GATES.

STEVE: IT WAS INTERESTING, BECAUSE THE GUY WHO INTRODUCED US SAYS, "YOU GUYS ARE BOTH KIND OF WEIRD, ENERGETIC GUYS.

YOU SHOULD MEET."

SO WE DID.

AND THE TIME WE MET WAS JUST ABOUT THE TIME HE WAS STARTING MICROSOFT, PLUS OR MINUS A MONTH, I WANT TO SAY.

AND THAT CLEARLY WAS MORE THAN, THIS IS JUST GOING TO BE ANOTHER RANDOM GUY.

I MEAN, A GUY STARTING HIS OWN COMPANY?

IT WAS HIS SECOND COMPANY.

HE HAD DONE ONE IN HIGH SCHOOL.

HE WAS CLEARLY A SPECIAL GUY.

AND I GOT TO KNOW HIM PRETTY WELL.

DAVID: YOU GRADUATED MAGNA CUM LAUDE, AND THEN YOU DECIDED TO GO TO PROCTER & GAMBLE?

STEVE: I DID.

PROCTOR & GAMBLE.

DAVID: NOW, VERY OFTEN, PROCTER & GAMBLE GETS A LOT OF VERY TALENTED PEOPLE IN THEIR YOUNG TRAINING PROGRAMS.

DID ANYBODY FAMOUS WORK ALONGSIDE YOU?

STEVE: WELL, FUNNY YOU SHOULD MENTION THAT.

A NUMBER OF PEOPLE DID.

WHEN I WAS THERE, SCOTT COOK, WHO STARTED INTUIT, WAS THERE.

JEFF IMMELT, WHO RAN G.E., HE AND I WORKED TOGETHER ON THE DUNCAN HINES BROWNIE, BLUEBERRY MUFFIN, AND MOIST & EASY SNACK CAKE MIX.

WE WERE THE DYNAMIC DRIVERS OF BROWNIE MIX SALES.

SO HE WAS AROUND.

MEG WHITMAN CAME RIGHT AFTER I LEFT.

IT REALLY WAS A GREAT PLACE.

DAVID: YOU GO TO STANFORD, AND YOU'RE GOING TO GET YOUR MBA.

AND THEN YOU DECIDE TO LEAVE AND DROP OUT OF STANFORD TO GO TO THIS TINY STARTUP IN THE SEATTLE AREA CALLED MICROSOFT.

WHAT DID YOUR FATHER SAY ABOUT THAT?

STEVE: OH, HE WAS APOPLECTIC IN A WAY.

I MEAN, HE DIDN'T TRY TO STOP ME.

BUT I REMEMBER WHEN I CALLED HOME AND MY DAD SAID, "WHAT THE HECK IS SOFTWARE?"

HE'D ACTUALLY BEEN INVOLVED INSTALLING WANG SYSTEMS' OLD WORD PROCESSORS.

BUT "WHAT'S SOFTWARE?"

AND THEN MY MOM SAID, "WHY WOULD A PERSON EVER NEED A COMPUTER?"

NOW, TODAY, YOU'D SAY THAT'S CRAZY, BUT IT WASN'T CRAZY IN 1980.

BUT THEY SAID, "OK, OK, WE HEAR YOU.

WE HEAR YOU.

IF IT DOESN'T WORK OUT, YOU'LL GO BACK TO BUSINESS SCHOOL, RIGHT?"

I SAID, "RIGHT," AND THEN NEVER CAME BACK.

DAVID: SO THE SUMMER ENDS, AND YOU STAY THERE, AND YOU'RE THE 30th EMPLOYEE OF MICROSOFT, AND, ULTIMATELY, YOU BECOME, I GUESS, NEXT TO BILL GATES AND PAUL ALLEN, THE BIGGEST SHAREHOLDER.

WHAT WERE THE JOBS YOU HAD AS YOU WORKED YOUR WAY UP?

STEVE: WELL, I STARTED OUT AS ASSISTANT TO THE PRESIDENT.

I WAS BILL'S ASSISTANT, BASICALLY.

CHIEF COOK AND BOTTLE WASHER.

SO I SET UP THE ACCOUNTING, WHICH THERE WAS SOME, BUT WE NEEDED IT PROFESSIONALIZED.

I WAS THE HR DEPARTMENT.

I HIRED EVERYBODY.

WHEN IBM CAME THE FIRST TIME ABOUT THEIR PERSONAL COMPUTER, I BECAME THE KIND OF SALESMAN ON IBM.

WHY?

I KNEW HOW TO WEAR A TIE.

I WAS ABOUT THE ONLY GUY AROUND THE PLACE, AND BILL SAID, "WELL, YOU HAVE A TIE AND A SUIT.

WHY DON'T YOU COME TO THE MEETING?"

DAVID: YOU DIDN'T EVER SAY TO BILL, "LOOK, I GRADUATED "MAGNA CUM LAUDE FROM HARVARD.

YOU DROPPED OUT.

"I WENT TO STANFORD BUSINESS SCHOOL FOR A WHILE.

"YOU DIDN'T GO TO BUSINESS SCHOOL.

I SHOULD BE EQUAL TO YOU"?

YOU DIDN'T THINK THAT BECAUSE HE HAD STARTED THE COMPANY?

STEVE: HE STARTED THE COMPANY.

AND, LOOK, BILL'S THE SMARTEST GUY I'VE EVER MET.

AND, YOU KNOW, I WAS LIKE A LITTLE PUPPY IN TERMS OF GOING TO SCHOOL ON THE TOPIC OF TECHNOLOGY.

I DIDN'T REALLY KNOW ANYTHING.

AND BILL AND PAUL, YOU KNOW, THEY WERE THERE.

I COULD ASK QUESTIONS, I COULD LEARN.

YOU KNOW, WHEN PAUL WOUND UP LEAVING IN ABOUT '82, I WAS CLEARLY THE NUMBER-TWO GUY, AND I WAS HAPPY BEING THE NUMBER-TWO GUY.

DAVID: SO WHEN DID YOU REALIZE, THIS ISN'T A LITTLE STARTUP THAT'S GOING TO BE A NICE LITTLE COMPANY IN ONE PART OF THE SOFTWARE WORLD, IT'S GOING TO BE A DOMINANT COMPANY IN THE WORLD?

STEVE: BY THE LATE '80S, I WOULD SAY, FOR SURE, I KNEW THE COMPANY WAS GONNA BE SOMETHING.

I REMEMBER WHEN ANDY GROVE, WHO RAN INTEL, SAID, "SOMEDAY THERE WILL BE 100 MILLION COMPUTERS A YEAR SOLD."

BILL AND I LOOKED AT EACH OTHER AND SAID, "HE'S NUTS.

THERE'S NEVER GONNA BE 100 MILLION."

THESE DAYS, THERE'S 300 MILLION-PLUS COMPUTERS SOLD A YEAR.

DAVID: AND YOUR FATHER AND MOTHER, WHAT DID THEY SAY AT THIS POINT?

STEVE: YEAH.

THEY GOT COMFORTABLE WHEN WE WENT PUBLIC.

THEY KNEW I WASN'T GOING TO BE BROKE.

BILL ACTUALLY OFFERED ME A DECENT STARTING SALARY.

IT WAS EITHER 40 GRAND OR 50 GRAND, I CAN'T REMEMBER, WHICH LOOKED GOOD IN THAT DAY AND AGE.

SO THEY KNEW THAT WAS A GOOD CHOICE.

NOW, MY DAD STILL HAD A LITTLE SKEPTICISM.

THERE WERE ALL THESE PEOPLE, AND THERE WAS NOTHING PHYSICAL.

"WHAT DO ALL THESE PEOPLE DO?

THERE'S NO PRODUCT.

WHAT DO THEY ALL DO?"

SO THAT WAS A CONFUSING POINT.

I MEAN, HE'S A SMART GUY, BUT HE'D ALWAYS ASK ME THAT EVERY TIME WE WENT THROUGH THE CAMPUS.

DAVID: SO IN THE YEAR 2000, YOU BECOME THE CEO.

BILL DECIDES TO SORT OF RETIRE.

HE BECAME THE CHIEF SOFTWARE ARCHITECT BUT NO LONGER CEO.

STEVE: CORRECT.

DAVID: SO YOU NOW CAN RUN THE PLACE.

WERE YOU SURPRISED THAT BILL DECIDED TO RETIRE?

STEVE: I WAS SURPRISED.

I WAS SURPRISED.

BILL HAD ASKED ME TO BE PRESIDENT IN 1998.

AND I SAID, FINE.

AND THAT WAS ANOTHER NUMBER-TWO POSITION.

AND I WAS FINE WITH THAT.

AND THEN BILL CAME TO ME AND SAID, "HEY, WILL YOU BE CEO?"

AND I ASKED HIM, "DO YOU REALLY WANT ME TO BE CEO, "OR DO YOU REALLY KIND OF WANT ME TO BE A FIGUREHEAD?

JUST TELL ME."

HE SAYS, "NO, I REALLY WANT YOU TO BE CEO."

AND I WOULD SAY, "WAS I CEO?"

BECAUSE BILL, YOU KNOW, STAYED WORKING EVERY DAY UNTIL ABOUT 2008.

AND I WOULD SAY, I DIDN'T FEEL LIKE A TOTAL CEO PROBABLY UNTIL BILL WASN'T WORKING THERE EVERY DAY IN 2008.

BECAUSE THERE WAS A LOT OF SHARED RESPONSIBILITY.

DAVID: TALK ABOUT SOME OF THE THINGS THAT HAPPENED WHILE YOU WERE CEO.

YOU MOVED INTO VIDEO GAMING, I GUESS XBOX.

WHEN YOU DID THAT AT THE TIME, I SAID, "WHY IS MICROSOFT GOING INTO SORT OF A HARDWARE BUSINESS IN XBOX?"

BUT WHAT DID YOU SEE IN THE VIDEO GAMES THAT I DIDN'T SEE?

STEVE: YEAH.

WE WERE SAYING, WHAT'S THE PATH FOR SOFTWARE, IF YOU WILL, INTO THE LIVING ROOM?

AND THE ONLY PATH THAT WAS REALLY CLEAR AT THE TIME WAS THE VIDEO GAMING SYSTEMS.

THERE WAS NO WAY TO BE IN THE VIDEO GAME BUSINESS AND NOT BUILD THE HARDWARE.

BECAUSE THE COMPETITORS AT THE TIME WERE SELLING THE HARDWARE ALMOST AT A DISCOUNT AND MAKING MONEY BACK UP ON THE SOFTWARE.

OBVIOUSLY, THE MODEL DOESN'T WORK UNLESS YOU HAVE BOTH PIECES OF THE ECONOMIC PIE.

WE HAD BEEN IN THE HARDWARE BUSINESS IN A SMALL WAY.

WE'D HAD OUR MOUSE PRODUCTS, A FEW OTHER PRODUCTS ALONG THE WAY.

AND FRANKLY, I THINK WE PROBABLY IN MANY WAYS SHOULD HAVE DONE MORE HARDWARE SOONER.

YOU KNOW, WE STARTED A LINE OF TABLETS AND PCs.

I THINK WE SHOULD'VE GOTTEN INTO THE PHONE BUSINESS EARLY, BECAUSE SOME--YOU COULD SAY THAT'S A HARDWARE PRODUCT.

I WOULD SAY IT'S A SOFTWARE PRODUCT.

THESE THINGS ARE SOFTWARE PRODUCTS DISGUISED AS HARDWARE.

DAVID: WELL, YOU MADE ANOTHER INVESTMENT AT THE TIME THAT WAS ACTUALLY CRITICIZED.

IT WAS AN INVESTMENT IN A COMPANY CALLED FACEBOOK.

I THINK YOU INVESTED ABOUT $300 MILLION OR SO.

AND WHY DID YOU DO THAT, AND DO YOU REGRET NOT TRYING TO BUY THE WHOLE COMPANY?

OR DID YOU TRY TO BUY THE WHOLE COMPANY?

STEVE: WE INVESTED BECAUSE WE WANTED TO HAVE A PARTNERSHIP AROUND AD SALES AND SOME OTHER THINGS, SO WE BOUGHT A PIECE.

I DID TRY TO BUY THE WHOLE THING.

ZUCKERBERG CAME UP TO SEATTLE.

WE MET DOWN THERE.

I PUT A CONCRETE FINANCIAL OFFER ON THE TABLE.

BUT-- ROSS PEROT TRIED TO BUY MICROSOFT FROM BILL GATES IN, LIKE, '79, AND BILL SAID NO.

FOUNDERS REALLY HAVE A LOT OF LOVE AND PASSION AROUND THEIR STUFF.

AND EVEN THOUGH FACEBOOK WAS TINY--I THINK IT WAS 2009--AND I OFFERED, I DON'T KNOW, $20 BILLION-PLUS, SOMETHING LIKE THAT.

AND MARK HAD ABSOLUTELY NO INTEREST.

DAVID: WOW.

OK.

SO A COUPLE OF OTHER BUSINESSES.

TAKE THE SMARTPHONE BUSINESS THAT APPLE HAS MORE OR LESS PERFECTED, AT LEAST IN THE UNITED STATES.

YOU WERE SKEPTICAL THAT THAT WOULD BE A GREAT BUSINESS.

DO YOU THINK MICROSOFT COULD HAVE GOTTEN INTO THAT BUSINESS EARLIER?

STEVE: YES.

WE COULD HAVE AND SHOULD HAVE.

IN MY OPINION, WE SHOULD HAVE GOTTEN IN THE HARDWARE BUSINESS, AND THAT'S MY--I BLEW THAT.

DAVID: ONE OF THE OTHER THINGS THAT HAPPENED DURING THIS PERIOD OF TIME WHEN YOU WERE THE CEO WAS CLOUD COMPUTING.

YOUR OWN NEIGHBOR, AMAZON, BUILT THIS BIG BUSINESS UNDER YOUR OWN NOSE.

WERE YOU SURPRISED THAT THEY HAD BECOME SO BIG IN CLOUD?

STEVE: THEY'VE HAD MORE SUCCESS THAN I ANTICIPATED.

I DIDN'T SELL THEM SHORT, BUT THEY HAVE HAD MORE SUCCESS.

HERE'S WHY--I'M NOT SAYING I WAS COMPLETELY DUBIOUS.

IT IS VERY HARD SOMETIMES FOR A BIG COMPANY TO DO SOMETHING VERY DIFFERENT.

I CALL IT DOING A SECOND TRICK.

AT THE TIME, I WOULD CALL AMAZON A ONE TRICK PONY.

IT WAS DOING THIS RETAIL STUFF, IT WAS DOING AN AWESOME JOB.

BUT TO DO A SECOND TRICK?

YOU DON'T GET A LOT OF COMPANIES WHO DO THAT.

THAT DOESN'T MEAN MICROSOFT'S OUT OF THE GAME.

YOU KNOW, WE STARTED THIS THING CALLED AZURE AND OFFICE 365.

AND MY SUCCESSOR SATYA HAS TAKEN THE THING TO VERY MUCH NEW HEIGHTS.

DAVID: AND RIGHT BEFORE YOU LEFT, YOU TRIED TO BUY-- AND YOU DID, ULTIMATELY, AFTER YOU LEFT, I THINK THEY COMPLETED THE NOKIA ACQUISITION.

AND THAT WAS AN EFFORT TO GET INTO SMARTPHONES.

THAT DIDN'T WORK OUT.

WHY DO YOU THINK IT DIDN'T WORK OUT?

STEVE: I THINK THERE WERE PROBABLY TWO REASONS.

NUMBER ONE--MAYBE IT WAS LATE.

AND NUMBER TWO--AFTER I LEFT, WELL, THE COMPANY WENT AHEAD AND BOUGHT IT, I DON'T THINK THERE WAS THE SAME LEVEL OF ENTHUSIASM AT THE BOARD LEVEL AND MANAGEMENT LEVEL FOR SCALING UP AND INVESTING THERE.

DAVID: OK.

SO YOU ULTIMATELY DECIDED TO LEAVE.

AND YOUR SUCCESSOR IS SATYA NADELLA.

WERE YOU SURPRISED WHEN HE WAS SELECTED?

STEVE: NO, NO.

HE WAS THE RECOMMENDATION THAT I MADE.

HE WAS THE RECOMMENDATION THAT BILL GATES MADE.

I THOUGHT HE WAS THE CANDIDATE TO REPLACE ME, WHICH IS WHY WE MOVED HIM INTO HIS LAST JOB, WHICH WAS RUNNING ONE OF THE BIG DIVISIONS.

AND I WAS GLAD HE GOT THE JOB, BECAUSE HE HAS DONE A GREAT JOB.

DAVID: NOW, WHEN YOU WERE THERE, YOU DRAMATICALLY INCREASED SALES, AND EARNINGS WERE DRAMATICALLY HIGHER.

THE STOCK PRICE DIDN'T GO UP.

WHY DO YOU THINK THERE WASN'T A CORRELATION BETWEEN THE STOCK PRICE AND EARNINGS AND REVENUE?

STEVE: I THINK PROBABLY TWO FACTORS.

NUMBER ONE--I TOOK OVER AT LEAST AT THE WORST TIME IF YOU WANT YOUR STOCK PRICE TO GO UP.

I CAME IN RIGHT AT THE HEART OF THE DOT-COM BUBBLE.

EVERYTHING WAS SKY HIGH.

THE BUBBLE BREAKS, AND, OH, BY THE WAY, A JUDGE ORDERS THE BREAKUP OF MICROSOFT.

THAT HAPPENS, I DON'T KNOW, WITHIN SEVERAL MONTHS OF ME TAKING OVER.

AND THINGS FALL DOWN, AND THEN YOU HAVE TO BUILD BACK UP.

THAT'S NUMBER ONE.

BY THE END OF MY TENURE, I HAD A CERTAIN KIND OF REPUTATION WITH WALL STREET, AND NOT THAT FAVORABLE.

NOT ABOUT MY PERFORMANCE, BUT CERTAINLY PEOPLE: "HEY, "THE GUY'S A GRINDER.

HE'S GOING TO KEEP DOING THIS THING.

"BUT ARE ALL THESE NEW THINGS GOING TO ACTUALLY BREAK THROUGH PROFIT-WISE?"

AND, NUMBER TWO, I THINK MOSTLY PEOPLE ON WALL STREET WOULD'VE SAID I OVER-INVESTED, I WAS SPENDING TOO MUCH MONEY.

AND THE ONLY CHANCE TO REPOSITION THE COMPANY REALLY CAME WHEN SATYA STARTED.

AND, YOU KNOW, HE'S DONE A GOOD JOB OF REPOSITIONING THE COMPANY IN INVESTORS' MINDS.

DAVID: SO SINCE YOU'VE LEFT, THE STOCK HAS GONE UP A FAIR BIT, AND YOUR NET WORTH HAS GONE UP A FAIR BIT AS A RESULT.

YOU'RE THE BIGGEST INDIVIDUAL SHAREHOLDER OF MICROSOFT, IS THAT RIGHT?

STEVE: YEAH.

THAT'S RIGHT.

DAVID: SO HOW COME YOU DIDN'T SELL MORE SHARES?

BECAUSE BILL GATES AND PAUL ALLEN HAVE SOLD A LARGE PART OF THEIR SHARES.

STEVE: WELL, WHEN I WAS CEO, I JUST DIDN'T THINK IT WAS RIGHT.

SOMEHOW, IT DIDN'T FEEL RIGHT TO ME.

IT'S NOT LIKE--EVEN WITH WHAT I HAD DONE TO DIVERSIFY AT THAT TIME, IT'S NOT LIKE I WAS GOING TO GO BROKE IF THE MICROSOFT STOCK DOES POORLY.

AND IT WASN'T DOING POORLY.

AND I RAN THE COMPANY.

IF I DIDN'T BELIEVE--AND PEOPLE KNEW I ALREADY HAD ENOUGH MONEY--I SHOULD STAY INVESTED.

I SHOULD STAY THERE.

WHEN I LEFT, I STILL LOVED THE COMPANY.

I DID A LITTLE BIT OF STUFF TO DIVERSIFY SLIGHTLY.

I PUT SOME MONEY ASIDE FOR CHARITY, BUT I STILL, YOU KNOW, I'M A LOYAL, LOYAL DUDE.

I STILL DRIVE FORDS.

MY DAD WORKED AT FORD, AND I STILL OWN MICROSOFT STOCK.

DAVID: SO YOU RETIRE AS THE CEO AT THE AGE OF 57.

WHAT DID YOU DECIDE YOU WANTED TO DO WHEN YOU LEFT?

STEVE: I HAD NOT REALLY GIVEN IT A TON OF THOUGHT UNTIL I LEFT.

I, AGAIN, HAD THIS SORT OF HARD-CORE NOTION.

I WAS SUPPOSED TO JUST GIVE IT ALL FOR MICROSOFT UNTIL I LEAVE.

SO I LEAVE, AND WHAT AM I GOING TO DO?

WELL, OWNING A SPORTS TEAM WAS ATTRACTIVE.

SO WITHIN A FEW WEEKS, I WENT AND VISITED ROGER GOODELL AND ADAM SILVER, THE NBA AND NFL COMMISSIONERS.

I THOUGHT THAT WOULD BE A FUN THING TO DO.

AND MY WIFE, WHO HAD BEEN INVOLVED IN PHILANTHROPIC STUFF, REALLY FOCUSED IN ON FOSTER KIDS AND DISADVANTAGED KIDS IN THE STATE OF WASHINGTON.

SHE SAID, "COME ON, DUDE.

IT'S TIME.

YOU GOT TO GET INVOLVED."

SO I DID.

AT FIRST, I SAID, "COME ON.

THE GOVERNMENT TAKES CARE OF THESE PROBLEMS."

AND SHE SAID, "NO, PHILANTHROPY HAS GOT A ROLE."

BUT IT DID INTRIGUE ME TO WHAT DEGREE GOVERNMENT REALLY DOES HELP DISADVANTAGED KIDS.

I HAD A HARD TIME FINDING THE NUMBERS, WHICH LED TO ME STARTING THIS THING CALLED USAFacts.

AND BETWEEN USAFacts, OUR PHILANTHROPY, THE CLIPPERS, AND HAVING A GOOD TIME, WHICH IN MY CASE MEANS EXERCISING AND PLAYING GOLF, MY LIFE'S PRETTY FULL.

DAVID: OK.

I DON'T PLAY GOLF BECAUSE MY THEORY WAS IF I HAD A MEETING WITH YOU AND YOU THOUGHT I WAS COMPETENT AND INTELLIGENT AND YOU SAW ME ON THE GOLF COURSE, IT WOULD DESTROY THE ILLUSION OF COMPETENCE, SO THAT'S WHY I DON'T PLAY.

BUT, UH... [STEVE LAUGHING] STEVE: YOU'RE PROBABLY RIGHT, AND I STILL PLAY.

DAVID: SO LET'S TALK ABOUT THE ORGANIZATION YOU STARTED, USAFacts.

HOW DID YOU GET INVOLVED IN THIS IDEA, AND WHAT IS IT NOW DOING?

STEVE: SO I SAID, I REALLY WANT A CONSOLIDATED VIEW OF WHAT GOVERNMENT DOES.

WHERE DOES THE MONEY COME FROM?

WHERE DOES IT GO?

AND, OH, BY THE WAY, ALSO, WHAT ARE THE IMPACTS?

YOU KNOW, IF WE'RE TRANSFERRING WEALTH, WHAT DOES QUALITY OF LIFE LOOK LIKE?

IF WE'RE INVESTING IN EDUCATION, WHAT IS THE QUALITY OF THE OUTCOME?

HOW WELL ARE OUR KIDS DOING?

DAVID: WHAT ARE YOUR PHILANTHROPIC GOALS, WOULD YOU SAY, IN TERMS OF AREAS YOU WANT TO FOCUS ON WITH THE WEALTH YOU HAVE?

STEVE: WE'RE SINGLE-PURPOSE.

WHAT CAN WE DO TO IMPROVE THE CHANCES THAT KIDS BORN AT THE BOTTOM OF THE ECONOMIC TOTEM POLE--THEIR PARENTS ARE-- MOVE UP ECONOMICALLY?

YOU'RE ALWAYS GOING TO HAVE SOME PEOPLE WHO ARE AT THE BOTTOM OF THE ECONOMIC TOTEM POLE.

IT SHOULDN'T JUST BE THE SAME PEOPLE ALL THE TIME.

PEOPLE SHOULD BE MOVING UP.

PEOPLE SHOULD HAVE A SHOT AT THE AMERICAN DREAM, WHICH IS THE CHANCE TO DO WHATEVER YOU WANT TO DO.

AND THAT'S NOT TRUE FOR A LOT OF KIDS.

WHEN THEY'RE BORN, THEIR PROBABILITY OF STAYING WHERE THEY ARE ECONOMICALLY IS VERY, VERY HIGH.

I DON'T THINK THAT'S OK.

THERE ARE A LOT OF REASONS.

PEOPLE POINT TO EDUCATION.

EDUCATION IS A PART OF IT, BUT THERE ARE A LOT OF REASONS WHY KIDS CAN'T GET AN EDUCATION.

AND I THINK IT'S IMPORTANT TO TAKE A LOOK AT THAT CHAIN AND THEN TRY TO FIND NOT ONLY THE NOT-FOR-PROFITS TO INVEST IN, WE THINK IT'S VERY IMPORTANT TO TRY TO STIMULATE THE RIGHT BEHAVIORS BY GOVERNMENT AND THE RIGHT SPENDING BY GOVERNMENT, BECAUSE IT CAN MAKE A HUGE DIFFERENCE.

DAVID: SO IF YOU LOOK BACK AT YOUR EXTRAORDINARY CAREER AT MICROSOFT AND NOW WHAT YOU'RE DOING, ANY REGRETS?

OR YOU'RE HAPPY WITH EVERYTHING THE WAY IT WORKED OUT?

STEVE: I'M PRETTY HAPPY WITH THE WAY THINGS WORKED OUT.

I MEAN, I CAN GO BACK, AND THERE'S DECISIONS I'D MAKE DIFFERENTLY IF I WAS AT MICROSOFT, BUT, YOU KNOW, IF I LOOK AT THE SPAN OF WORK, WE WENT FROM A COMPANY THAT HAD $2.5 MILLION IN SALES AND 30 PEOPLE TO A COMPANY THAT HAD 100,000 PEOPLE AND 80 BILLION ROUGHLY IN SALES AND LOTS OF PROFIT.

I CAN FEEL GOOD ABOUT THAT EVEN THOUGH THERE WERE MISTAKES.

I STARTED OUT THE PROCESS WITH A LOT OF FRIENDS.

I STILL HAVE MOSTLY THE SAME FRIENDS AS I DID, WHICH I FEEL VERY GOOD ABOUT THAT.

I'M IN A VERY GOOD PLACE IN MY LIFE NOW, PROBABLY, YOU KNOW, IN A WAY, THE BEST EVER, ALTHOUGH I WOULDN'T TRADE OUT ANYTHING I DID IN THE PAST.

AT LEAST AT THIS AGE, I LIKE BEING A LITTLE LESS BUSY.

THAT'S GOOD FOR ME.

I'M PRETTY PLEASED.

DAVID: SO AS A LEADER, YOU ARE WELL-KNOWN FOR VERY VISIBLE AND VOCAL EXPRESSIONS OF YOUR THOUGHTS.

IS THAT A STYLE YOU CONSCIOUSLY ADOPTED, OR IT JUST HAPPENED THAT WAY?

STEVE: I WAS A VERY, VERY SHY KID.

A VERY SHY KID.

I WAS A SHY KID WHEN I GOT TO HARVARD.

AND THEN I BUILT MY CONFIDENCE AS MY-- I BUILT IT BECAUSE I WAS DOING THINGS AND BEING SUCCESSFUL.

I WAS SHY WHEN I GOT TO BUSINESS SCHOOL.

OH, WHEN I GOT TO PROCTER & GAMBLE, FIRST DAY I STARTED, THE GUY WHO WOULD UP MY ROOMMATE, HE SAID IT WAS LIKE THIS: [HIGH-PITCHED VOICE] "HI.

MY NAME'S STEVE BALLMER.

MY PALM'S SWEATY BECAUSE I'M SO NERVOUS."

SO SHY KID.

AND THEN I GOT BETTER AND BETTER.

AND I DEVELOPED SOME CONFIDENCE IN PUBLIC SPEAKING.

AND, IT TURNS OUT, I HAVE SOMETHING OF A KNACK, AND PART OF THAT IS GETTING IN FRONT OF YOUR TROOPS AND PUMPING THEM UP AND TELL A STORY.

AND I WILL DO--AND BASKETBALL'S A WEIRD ENVIRONMENT.

BECAUSE, OF COURSE, I DON'T HAVE A LOT OF CREDIBILITY.

I'M AN OWNER, FOR GOD'S SAKES.

I'M NOT AN EXPERT.

BUT, YOU KNOW, AT THE END OF THE DAY AT LEAST, I CAN GET INTO THE GAME AND BE VERBAL AND VOCAL.

DAVID: OK. WHAT WOULD YOU SAY IS THE MOST IMPORTANT CHARACTERISTIC TO BE A GOOD LEADER?

STEVE: COMMITMENT.

YOU REALLY HAVE TO HAVE YOUR HEAD IN THE GAME AND BE COMMITTED TO BE A GOOD LEADER.

THERE'S TWO PARTS TO LEADERSHIP.

ONE IS LEADING PEOPLE.

AND THAT'S ABOUT COMMITMENT AND PEOPLE UNDERSTANDING YOU HAVE COMMITMENT.

THE OTHER PART OF LEADERSHIP, WHICH DOESN'T GET TALKED ABOUT MUCH, IS YOU HAVE TO BE A LEADER OF IDEAS.

THE WORST THING YOU CAN DO, BOTH FOR YOUR PEOPLE AND IN GENERAL, IS TO SAY, "LET'S GO!"

AND YOU POINT THAT WAY, AND THE TRUTH IS YOU SHOULD'VE GONE THAT WAY.

SO LEADERS HAVE TO BE LEADERS OF IDEAS.

THE IDEAS COMPEL THE PEOPLE, BUT THEN THE IDEAS HAVE TO BE RIGHT, AND YOU HAVE TO STAY COMMITTED.

DAVID: IF 20 YEARS FROM TODAY OR 25 YEARS FROM TODAY, YOU'RE LOOKING BACK ON YOUR LIFE, WHAT WOULD YOU WANT PEOPLE TO SAY WAS YOUR LEGACY, WHAT YOU CONTRIBUTED TO OUR COUNTRY?

STEVE: WELL, YOU ASKED A VERY SPECIFIC QUESTION.

"WHAT HAVE I CONTRIBUTED TO OUR COUNTRY?"

WHAT I HOPE WE DO IS MAKE SOME DIFFERENCE IN THE LIVES OF KIDS.

THAT'S NUMBER TWO.

NUMBER ONE, HEY, WE DEMOCRATIZED COMPUTING.

AND PUTTING THAT KIND OF POWER AND CAPABILITY FOR PEOPLE TO THRIVE, TO INVESTIGATE, TO BE SMARTER, TO CREATE MORE, I FEEL IMMENSE PRIDE ABOUT THAT.

I WOULD PUT THAT NUMBER ONE.

I THINK THAT WAS NOT ONLY SOMETHING THAT AFFECTED THIS COUNTRY BUT THE WORLD.

WHATEVER WE DO PHILANTHROPICALLY I HOPE MAKES A BIG, BIG DIFFERENCE.

IT'S HARD TO MAKE A BIGGER DIFFERENCE THAN BEING INVOLVED IN THE POPULARIZATION OF COMPUTING.

DAVID: AND THE FIVE NBA CHAMPIONSHIPS YOU WILL HAVE WON, THAT WILL BE IMPORTANT AS WELL, RIGHT?

STEVE: YEAH, THAT'S KIND OF A ZERO-SUM GAME.

WHEN WE WIN THEM, SOMEBODY ELSE DOESN'T WIN THEM.

SO IT'S A LITTLE HARDER TO SAY IT'S A BROAD CONTRIBUTION, BUT IN L.A., THAT WOULD BE A BIG CONTRIBUTION.

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