Bill Gates: Behind Microsoft, Money, Malaria

by Forbes Staff

  The neighbors appreciate the efforts. Says architect Doss: “They just want to meet Bill, make cookies for him, have him over for tea.”

  If it’s possible to build a $35 million house inconspicuously and without making too many enemies, Bill Gates seems to have found the way.

  ON THE ROAD WITH BILL GATES

  By Rich Karlgaard

  March 1994

  MICROSOFT’S CHIEF, known by his email handle “billg,” recently went on a five-day, five-city tour to help beat the drum for a major software upgrade. Called Office 4.0, it is a so-called “suite” that combines five programs, including longtime hits Word and Excel, into one. The stakes on this tour were high, raised by the surprising success of SmartSuite from rival Lotus and by cutthroat pricing throughout the software industry. Though Gates is not inclined to give long interviews, he invited Forbes ASAP to accompany him on his arduous road show.

  10-17-93

  7:00 A.M. DEPART SEATTLE … ARRIVE WASHINGTON, D.C. 4:34 P.M.

  WASH. D.C. 5:00 P.M.

  1. When Bill walks through National Airport, heads turn. After 10 years on magazine covers Gates, 38, is a celebrity, the result of being, on any given day, the first or second richest person in America. Though he retains his boyish haircut and oversized glasses (not as thick as reported), the smallish Gates (5’9” or so) walks purposefully with long, fluid strides.

  Before cocktails with USA Today and dinner with the Washington Post, Bill speaks to a federal government Windows NT users’ group in a conference room at the Four Seasons Hotel. In front of a room overflowing with suits, Bill wears an open-neck shirt and keeps his arms folded as if cold.

  After dinner, there is a late-evening rehearsal back at the hotel for the next day’s Office 4.0 presentation. Bill relaxes into a seat, leans farther and farther back, then suddenly sits straight up and starts rocking. Staffers gather around him, talking about a WordPerfect lawsuit over some ads.

  During the rehearsal, Bill is easily distracted, reading a business magazine. When he reads something he disagrees with, he’ll squint at the text in disbelief, then dramatically read the offending line to anyone within earshot.

  Suddenly he’s focused on the rehearsal: “No, no, that demo slide is the worst! It’s supposed to explain a feedback loop—but where is the time element? The last time we used this slide we demoted the guy.” He laughs, but all at once everyone is paying close attention. Bill makes disparaging remarks about the pink color scheme that prevails in the presentation graphics. Nothing concludes; people just get tired and leave. By 11:00, it’s over.

  2. The next day the presentation goes off with some embarrassing hitches, including a couple of computer freeze-ups. Bill looks dapper in a fashionable charcoal-gray suit, though he wears scuffed black loafers that will be the only shoes he appears in during the entire trip. Just before he goes on, Pam Edstrom, his longtime PR chief, tells him of John Sculley’s new job at Spectrum. Bill snorts. We talk about Sculley’s Learjet, and I ask Bill when he’s getting one. “I could make an economic argument for one, but it still seems so decadent,” he says.

  3 & 4. Before leaving D.C., Bill meets with Department of Defense customers, infowonks with brass on their hats. An army major, heavily armed with New Age business clichés, explains the DoD’s mission. Bill rocks back and forth, smiling.

  At the next meeting, with a civilian customers’ group, Bill attacks a big foe. He says the difference between Microsoft and IBM is that “we spend our money creating products, not sponsoring golf tournaments.” Minutes later he delivers the coup de grace: “Believe me, OS/2 has no future.”

  Finished, we ride off to National Airport in a hotel van. Bill slouches, not happy with the presentation. He is offered a box lunch and seems uninterested, but when told it’s a cheeseburger his eyes light up: “A cheeseburger!—I am seduced!” After lunch, he speed-reads a George Gilder piece on digital newspapers in Forbes ASAP and pronounces it wrong: “How will newspapers make money if there are no barriers to entry?” Bill thinks popular writers will detach from newspapers and sell their services on the network.

  5. Bill often upgrades to first class on long flights (Pam Edstrom claims United does it for him), but on short hops he squeezes into coach along with other corporate prole-players and frugal Forbes editors. On the flight is Boston Globe political writer Thomas Oliphant, who takes no notice of America’s most famous CEO.

  With his glasses off and his hair in midday disarray, Bill looks much, much younger than fellow billionaire and friend Warren Buffett.

  On the flight Bill says that he likes his frontline managers to have gone through a failure—prior to coming to Microsoft, of course. He says that the trouble with capitalism is that there isn’t enough of it.

  BOSTON 4:00 P.M.

  6. During an Office 4.0 presentation at the Copley Marriott, Bill seems to be running out of steam; as if on cue, the demo freezes a few times.

  7 & 8. At dinner with reporters from the Boston Globe, Bill is in a feisty mood, rocking incessantly, saying sarcastic things about Lotus, Apple, Borland and IBM, chopping the air with his hand, his shirt collar rising as if excited.

  Bill waxes pungent on the information highway: “Reporters show up at your door and ask, ‘What are you doing about the information highway?’ Your mom calls up and you have to say, ‘Hey, Mom, I’m driving spikes along the information highway,’ and Mom says, ‘Hallelujah!’”

  Later he says, “The when and where of the information highway is anyone’s guess. It may be a business where you have to lose money at first. There will be winnowing-outs.”

  9. At a John Hancock Hall meeting of the Boston Computer Society, teenage hackers and overweight true believers line up to ask questions like pilgrims seeking an audience with the Dalai Lama. Bill takes off his tie and enthusiastically pitches in. Preceding the formal, high-tech New York Office 4.0 introduction tomorrow, it is a throwback to the way companies used to stump for their products.

  Bill seems happy and relaxed amid the hardcore computer jocks. They, in turn, enthuse over Office 4.0’s features. They know what’s under the hood, a major 1990s Microsoft technology strategy: something called object linking and embedding, or OLE in the acronym-crazy computer industry. The idea with OLE is to allow seamless movement between programs. Bill dazzles the crowd when he “drags and drops” numbers between Word and Excel, bypassing the usual “cut and paste.”

  On the flight from Logan to La Guardia, Bill works on his Compaq notebook, a 486 machine with 12 megs of RAM. He has Benjamin Graham’s classic 1949 investment book The Intelligent Investor perched on his lap. Graham, who died in 1976, was a Columbia finance professor who taught Warren Buffett. Acolyte Buffett, America’s richest man ahead of Gates, has urged Gates to study Graham. After the tour, Gates will fly to Bermuda for a week’s vacation with Buffett and a few other deep-pocketed followers of Graham’s value-investing philosophy.

  Bill, ever the student, reads, taps the keys, reads again. Before landing, a flight attendant asks him to turn off the computer, but he never does.

  NEW YORK 11:45 P.M.

  10 & 11. In the limo on the way to the Hotel Macklowe in midtown Manhattan, Bill slouches in his seat next to Pam Edstrom and lets loose about the presentation—“The slides are terrible … beyond bad!”—then reads The Economist for the rest of the ride. It’s midnight after a long day, and the strain shows.

  12. The big New York Office 4.0 launch show is scheduled for 1 p.m. Tuesday at the Hudson Theater, an 850-seat playhouse adjoining the hotel, with satellite downlinks allowing 50,000 people to view the presentation around the country. At 8 a.m., surrounded by anxious troops, Bill watches a run-through of the show on which Microsoft is spending $800,000.

  13. Pete Higgins, senior VP of desktop applications, sick and feverish in Washington, has lost his voice entirely. There’s concern whether he can go on.

  14. Refreshed after a night’s sleep—seven hours does the trick, says Edstrom—Bill is in a more playful
mood, and the troops laugh on cue. The humor doesn’t last too long, though. The slides are still bothering Bill; despite his complaints little has been changed since the Washington show. One of his assistants tells him that no one has criticized the slides yet. Bill: “That’s because people never come up and say, ‘I had trouble with your seventh slide.’ The problem is, Lotus or WordPerfect could say just what we’re saying. Where do you get the sense that we’re a leader?”

  At 9:30 a.m., presentation guru Jerry Weissman appears, apparently to coach Pete Higgins and Michael Risse, Office 4.0 product manager. Bill barely acknowledges him and seems to have lost patience with rehearsal.

  15. During the rehearsal, Edstrom tells him that Gregg Zachary and Don Clark have a piece in The Wall Street Journal announcing some pending layoffs at Microsoft. Bill’s initial reaction: “I don’t dispute the facts, but the timing couldn’t be worse.” Later, backstage, Edstrom and Bill have a tense conversation about how the writers got their information.

  16. Before the presentation Bill holds a series of TV interviews in his 52nd-floor suite. One talking head presses for details about Bill’s marriage, to no avail. Then the embarrassed interviewer mentions he does some amateur programming in Visual C and suddenly all is forgiven. “Wow! That’s hardcore!” says Bill.

  Between TV interviews Bill paces, looks out the window and vents his worries to Jon Lazarus, VP of systems software strategy for Microsoft: “This is one of the coolest products we’ve announced since Windows 3.0, and we’re not getting the message across! Instead, we have 59 bullshit words to describe what’s going on.”

  17. For lunch, Bill confronts yet another cheeseburger, this one the $16.95 hotel variety. As a youngster, Bill battled colitis. Now entering middle age, does he worry about his fatty food likes?

  18. Before heading back down to the Hudson Theater, Bill grabs five minutes of slouch time. Thus fortified, he gives a strong 15-minute speech during the presentation. Speech coach Weissman claims that Bill has “regressed” since he worked with him two years before, but the show-and-tell goes off without a hitch. Even Pete Higgins croaks his way through admirably.

  The crowd applauds boisterously at the sight of Office 4.0 features: “dragging and dropping” and something called IntelliSense, which produces on-the-fly spell checking.

  19. While the billionaire boys’ club is inside pitching software, the satellite downlink crew outside the Hudson Theater pitches pennies with no less intensity.

  20. Later, in a Macklowe suite, Bill meets with journalists and analysts. At first he appears to feel cornered. A talk with influential Goldman Sachs analyst Rick Sherlund, however, energizes Bill again. When Sherlund asks about The Wall Street Journal piece, Bill defends the layoffs as the inevitable result of merging the Cairo and NT divisions. Bill appears very comfortable with Wall Streeters, greeting them by name, talking easily and openly.

  Bill fields a bevy of questions on Microsoft’s profitability. “I’ve always said 25% net margins are not a forever thing.”

  21. On the way to the airport after a second presentation, I take notes while one of the wealthiest men in America states his distaste for big limos.

  22. For the first time since morning, Bill is happy and relaxed. He ranks the presentation below Windows 3.0, but above most. “Better than Workgroup for Windows,” he giggles. “That was so bad, I thought Ballmer [Steve, Microsoft’s No. 2] was going to retch.” Higgins asks if anyone knows how the satellite downlink version of the show went over. Risse says he took a call from the Phoenix office, which raved about it. “Phoenix is a butt-licker of an office,” Bill says with a laugh.

  Is Office 4.0 hard to explain to customers? I ask. “Microsoft will never have an easier product to sell,” says Bill. “It’s all features. Systems are hard.”

  We start talking about the origins of rival Sun Microsystems and the importance of maniacal intensity in the computer business. Bill expounds:

  Sun is a lot like Microsoft. They understand there’s a few key wins that if you don’t win you’re dead—just dead! After they got the [National Security Agency] design win, they just ripped the hell out of Apollo and kicked ass.

  Q: Does Sun still have that intensity?

  A: No, but I’m biased. We have such good alert systems that if there is an OEM design win that we’re going to lose, even a hint we’re going to lose it. … Say it’s some PC guy in Mexico or Indonesia. Joachim Kempin [senior VP, OEM sales] will have emailed an alert to me like that! His guys are trained! There’s only one deep fatal sin, and that’s not to say that you’re losing an account. It’s OK to lose it, as long as you spotted that you’re going to lose it. [Pause] Actually, it’s not OK to lose it.

  23 & 24. Bill’s mood is up and his socks are down, and, for a brief moment, he is out.

  25. At La Guardia, Bill ducks into the men’s room for his ritual change into the flying uniform of rugby shirt and blue chinos and sits down to go through the day’s 200 email messages.

  CHICAGO 8:00 A.M.

  26. After morning interviews with a talk jockey on WGN radio and Jim Coates, a Chicago Tribune technology writer, Bill meets with the top brass of the Tribune. Isolated across a large table, he sits rocking back and forth and seems lethargic. Someone asks if he’s read Gilder’s article about digital newspapers. A sly look crosses his face and he immediately begins putting it down.

  A Tribune exec then asks boldly:

  Q: Some analysts say IBM went to you for the operating system [in 1980] because they were under scrutiny by the Justice Department at the time, hence gun-shy. What’s your reaction to the Justice Department, and now will you, like IBM, become gun-shy?

  A: First, for me to become gun-shy might require surgery. Second, the idea that IBM came to us because it feared the Justice Department didn’t have a damn thing to do with it. That’s bad history.

  27. Outside the gothic tower of the Tribune, Bill delights in his jabs at the Gilder article, until the aggrieved editor attempts mock strangulation.

  28. Between meetings Bill catches up with the day’s WSJ, keenly studying a commentary on Wal-Mart’s battles with the Justice Department’s Anne Bingaman. “Selling drugs at lower prices is bad?” he mutters.

  Bill reads voraciously. In airports and hotels he rarely watches people, preferring to keep his eyes on newspapers, magazines or his laptop. Curiously, he carries no paperwork from Microsoft and no cellular phone. In fact, during the entire trip, Bill is never seen to make a phone call.

  While he’s being miked for yet another speech at Microsoft’s downtown Chicago office, Bill overhears a conversation about whether a private jet should be hired to fly the Office 4.0 group to San Francisco rather than have them arrive on the commercial flight well after midnight. He bursts out rather angrily, “What’s the thinking here? There must be some thinking going on here.” He doesn’t seem as much concerned about the money as the reasoning behind the decision. Finally, the private jet is vetoed, meaning that Bill arrives at O’Hare with no time to spare for …

  29. … a stop at Pizza Strada, one of his favorite way stations. Pam Edstrom eases the pain by delivering a greasy cheeseburger and fries from a nearby food stand. Bill hunches over his burger, muttering about an article someone has mentioned in which a rival CEO apparently likened him to Hitler. A stranger sidles up behind Bill and eavesdrops on the conversation. “Is that really Bill Gates?” the stranger asks Mike Risse.

  OAKLAND 8:00 A.M.

  30. The first stop in the Bay Area is at Oakland TV station KTVU, where ComputerLand has rented a studio for a joint announcement of Office 4.0 to be narrowcast to ComputerLand stores around the country. Bill sits in the plaque-lined station waiting room talking with William Tauscher, chairman and CEO of ComputerLand, while on the TV screen, ’50s idol Eddie Fisher, fat and pockmarked, answers Sally Jessy’s questions—or is it Oprah?

  The narrowcast takes the form of a mock afternoon talk show, with Bill and Tauscher fielding questions from a moderator and then f
rom phone callers. Off camera, Edstrom paces back and forth, fretting that there won’t be enough calls. There are—Office 4.0 is going over well on the satellite downlinks—and the show moves quickly.

  Bill goes to all this trouble for ComputerLand because they are what he calls “solution providers,” offering technical support at the business level that Microsoft’s sales force isn’t geared for as software grows increasingly complex.

  SAN FRANCISCO 11:45 A.M.

  31. A local Microsoft sales manager drives Bill & Co. across the Bay Bridge for a speech to the Commonwealth Club. The driver worries that traffic may make the boss late. He says that he has made two practice runs to test the traffic at different times of the day.

  32. Before his speech Bill runs into Microsoft board member Dave Marquardt, the only venture capitalist allowed to invest in Microsoft before it went public in 1986. If held, his stock today would be worth 953 times his $1 million investment. After five grueling days, Bill gives his best speech of the trip. NAFTA and the information highway are the main topics. Bill’s charming manner and broad insights surprise the Commonwealth Club crowd, which evidently expected a nerdier version of Bill.

  33. After the speech Bill is surrounded by TV, radio and print reporters. He’s upbeat, cooperative, obviously relieved to have the road show over. Bill may be more comfortable running Microsoft via email, but he’s an American celeb, and there’s no going back now.

  BILL GATES TOUR

  Gatespeak

  Snippets from a conversation with Bill on United Flight 85, New York to Chicago.

  Information Highway Frenzy

  Believe me, in this game, the really good assets are not at all clear, or won’t be for many years. You can’t rule out anyone. It could be a business where you have to go through a period of losing a lot of money before you come out on the other side with a big asset. There are not too many businesses where you just get in early, make a lot of money and it’s fine. Most businesses have winnowing-outs.