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# Microsoft: Bill and Paul's excellent adventure

Updated Friday, 20th June 2008
The Money Programme team spoke exclusively with Bill Gates and his colleagues as Bill prepared to step down from his day-to-day role at Microsoft.

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Here you can watch longer versions of four of the interviews recorded as Bill Gates was about to hand over day-to-day control of the company he built up.

Bill Gates (part 1)

Bill Gates shares stories about the early years, including a tale of raiding rubbish bins for source code.

Fiona Bruce (interviewer)

I'm Fiona Bruce, thank you very much for agreeing to do this.

BILL GATES – THE EARLY YEARS

HOW GATES PROGRAMMES THE SCHOOL SCHEDULE TO HIS ADVANTAGE

Bill Gates

I did this scheduling programme and, but, you know, it meant I had the position of sort of deciding who was in which class, the different sections and things, and now we had just merged with a girls’ school and so we had only about 25 per cent girls.

Fiona

So you saw a bit of an opportunity there?

Bill

Some of them were more interesting than others. So my classes were unusually strange in terms of having more girls than boys.

HOW THE TEENAGE GATES AND HIS FRIEND PAUL ALLEN GOT ACCESS TO A COMPUTER

Bill

We became almost fanatical about using computers, and a company in Seattle got a really cool computer, very expensive, but they were willing to let us use it at night if we could, it would be pretty good if we could find problems because they had a deal where they didn’t have to pay the rent if they’d found enough problems. So we were brought in almost like monkeys at night. When the machine was free we could come in and if we found problems that would help them. And so it was only a few miles from my house, So I used to go up there quite a bit at night and stay all night and read the manuals and just try to figure out what was going on. It was a fascinating puzzle.

Fiona

So you’d stay out to what, the small hours of the morning and then...?

Bill

Oh, there were a few, I mean I was young and sleep wasn’t that important. There were a few times we stayed there all night and just were reading and trying to figure things out. It was fascinating. And our sophistication went up. At first, we were just kind of tinkering and then eventually we found the source code listings for the operating system in one of the trash bins. I was actually lowered in to this big trash bin with lots of coffee grounds in and my friend, Paul, lowered me in, but we got this great thing and ...

Fiona

Paul? Paul Allen?

Bill

Right.

GATES AND ALLEN'S VISION: FROM MINI COMPUTERS TO COMPUTERS ON A CHIP

Bill

Computers were gigantic, and the first mini computers were about a fifth of a room size and they kept shrinking them. There were still all these circuit boards and they were quite expensive. I mean a $20,000 computer was the cheapest that they made. Then a chip company came along and put most of the elements of a computer onto a single chip, Intel. Now at first it wasn’t very powerful, but Paul had showed me this announcement and explained how quickly it would improve, and we said well that’s stunning, that’s going to be more powerful than even these big machines in about six or seven years. FUN AND GAMES IN ALBUQUERQUE, LOCATION OF MICROSOFT'S FIRST OFFICE Bill We quickly hired some of our friends and so we ended up with about twelve people and we were writing a lot of different software and working very, very hard and so we didn’t have much. We did go out. We went out to movies. I had bought my first car which was a Porsche, and it was an unbelievably nice car, and I would drive it up in the mountains just to see if I could beat my speed record. And I saw up there this place they were building a new highway. Well part of the highway was a good place for me to test whether my driving was good because there was nobody else on the new highway. But when I took a friend out there, one night, we got out and we’re looking at these huge machines, earth-moving machines, and we climbed in and we realised they didn’t lock them or anything. They just left them. They didn’t think anybody was going to come along and try to turn it on or anything. So we actually started moving dirt around. Took us a while to figure out how to use those things; that’s a very skilled operation. We almost put one over the hill, we almost ran into my car which was sitting out there. But it was one of those fun things and I think we went out there almost ten times. Finally, they did, a guard came along and kicked us off. Didn’t cause too much trouble but it did come to an end. GATES AND ALLEN: THE PARTNERSHIP THAT STARTED MICROSOFT Bill Paul relied on me in terms of hiring people and figuring out the prices and doing sales and things like that. So I was in charge, but in terms of the vision of the company he and I would always work that out, and he was an absolutely central element to all of that. Fiona I mean you were quoted as saying that you could describe yourself as the doer and Paul the idea man. You said yeah I’m more aggressive and crazily competitive. Bill No, I wouldn’t say that there was any perfect separation in terms of the dreams or the ideas or anything like that. He and I were partners. Fiona But in terms of how you describe yourself, you know, aggressive and crazily competitive, I mean are you still like that? I mean what is it that makes you like that do you think? Bill Well, I would commit to Paul that we’d go and get more customers, and that we’d get them excited about the products, so I’m not sure. We had a belief that this was very important and that it was empowering and that we could communicate that to other people. And we were very successful. In fact, when people would see how much we understood, they would, you know, go wow, this is a very unusual thing to have young people talking like this and thinking like this. And so we developed fantastic relationships with our customers. In fact, they were asking us to do more things than we could, and one of our difficulties was that when they would offer some opportunity, picking between all the different choices we had, and that’s one of the things Paul and I always had to talk about was which new software did we want to go write next? GATES AND THE COP ON THE ROAD FROM ALBUQUERQUE TO SEATTLE Bill I drove the car up to Seattle and I was going full speed, over 100mph, and I got three really bad tickets. Fiona What, just on that one journey? Bill Yes. In fact the worst one was, I was in California and I’m going 110mph and I see a guy gaining on me from behind, so I think well either that guy’s crazy or that’s the California Highway Patrol. So I slowed down to about 50mph. He comes up, California Highway Patrol guy comes up, almost rear-ends me because he didn’t realise I’d slowed down, pulls me over and gave me this ticket. And then, so for about an hour I’d drive really properly and then I’d take a cut-off on a side road and then I’d just say okay I’m going to go fast again. Anyway, about a half hour later, I’m pulled over again. It turns out it was the same guy, had the aerial information and was told that I was going fast again. So I got two tickets from the same guy and he almost wanted me to stay overnight and see a judge. But, anyway, he was nice enough to let me go. So, you know, I don’t drive like that any more but in those days it was a fun thing. Fiona In those days you were a maniac on the roads by the sounds of it? Bill Well, I was trying to drive carefully. I was trying to drive safely but I was driving at high speed. GATES' RELATIONSHIP WITH HIS COLLEGE BUDDY, STEVE BALLMER, MICROSOFT'S CHIEF EXECUTIVE Bill Well Steve and I have a lot in common. He was a great student at Harvard and we got to be friends there. He, you know, knew everybody and was friends with them and I was in a much smaller group that was more into computers and science. But people saw how energetic and optimistic we both were and decided that we should get together. And they were right, we became very close friends. And he was pursuing a more traditional education. He graduated from Harvard, which of course I did not. He worked at Procter & Gamble, which is a great learning training opportunity, and they treated him super-well, and then he went to Stanford Business School. And he’d come by and see me many times, you know, and I’d explain how we were kind of overloaded and maybe we could have charged differently for something and we weren’t sure exactly how to structure things. And so he was giving me good advice. We were brainstorming. And one summer when he visited, I realised the ideal thing for the company would be to hire Steve in and get him to help us on many of the business things and so I could focus on technical things and we could just expand. And this idea of what should we commit to, he would be my partner and thinking those kinds of problems through while Paul and I drove the software technology. It was a challenge because he was in the middle of Stanford Business School and his parents wanted him to go work for a big company. His father had worked at Ford Motor and sort of wanted his son to go even further than he had, and inside the company, this idea of bringing in a non-technical person, was considered a little strange. I mean I was in charge so nobody was going to say no if that’s what I wanted to do but it was just different because everybody knew how to read source code and do work. I did the non-technical things and we had gotten to the point where now we were going to have to have a mix of skills in the company. MICROSOFT'S BUSINESS PLAN. BASED ON ITS MS-DOS OPERATING SYSTEM FOR THE IBM PERSONAL COMPUTER Bill There was no software industry at that point, and so a key thing we did was saw that having partners who wrote various type of software on top of our MS-DOS, later Windows, would be key to our success, and so this was a completely novel thing, and we recruited literally thousands of people to start companies and build packages; packages for doctors and dentists and undertakers and engineers and lawyers. And that was the cycle that we’d been looking forward to where the more software we’d got, the more people would buy the machine, the higher the volume, the lower the price because all these components would get cheaper, which would make it more attractive. And so the IBM PC became the one that a diagram I’d put on the board for Paul, many years ago, it created this virtuous cycle of more software, more machines makes more software, and because the volume of the software could be sold at low prices, not the traditional computer industry where the very key software companies sold things for hundreds of thousands of dollars, here we could have software for$50 or $80 and these companies could make money because they could sell so many copies. So the magic wasn’t so much in the nature of the deal with IBM but rather that we did this evangelisation and we gave tools and information and just let anybody write software who wanted to and so the whole PC industry really took off around the variety of software packages that we got people to write. HOW MICROSOFT BEAT RIVAL SOFTWARE COMPANIES Bill We had a very expansive view of what we wanted to do, and most of our competitors were very poorly run. They didn’t understand going round the globe; they didn’t understand how to bring in people with business experience and engineering people and put them together. And our products were successful enough that even when we did make a mistake and we hired the wrong person or organised things the wrong way, we were frank enough with ourselves to say oops this isn’t working and yet my conservative balance sheet approach meant that, for all the mistakes we made, we have a chance to learn from them and do different things. And most of our competitors were one-product wonders, where they would do one product, never get their engineering down. They didn’t think software in this broad way. They didn’t think about tools and efficiency. And so they would do their one product but then they wouldn’t renew it and get it to the next generation, whereas we were doing a whole range of products. Fiona Bruce (presenter) Let’s go right back to the early days, first of all. How did you and Bill come together at school? How did you find your shared interest in computing? Paul Allen Well, there was a, what we call a Teletype room in the Math Department at Lakeside which was a private high school in Seattle, and there was a math teacher out there that was really enthusiastic about time-sharing computing and so there was a Teletype machine, a big oily, noisy machine, that you type on a keyboard, punch a paper tape and you call up a time-sharing service, run the paper tape through and probably it was like 30 or 40 statements of this basic programme code and then you wrote it in your programme. And so as students would slowly start to discover, it was there if you wanted to learn about it and some of us became really excited and fanatic about it so that’s where I first met Bill. Fiona You know, there was you, you were, what, a couple of years older than… Paul Yeah, I think I was 15 and Bill was 13. Fiona … Bill, weren’t you, and he was just a little kid. I mean what did he bring to the project, as a personality, with his abilities? Paul Well, I think back then just, you know, all of us were so passionate and excited about it, I mean, but, you know, if you meet Bill for just a few minutes, you know just how intense he is, just how creative he is, and so all of us kind of formed our own little club or group out there. Like at one point we were called the Lakeside Programming Group and we just evolved into ever more complicated and fascinating problems and finally we ended up helping this time-sharing company test out their, the new machines they were getting which was a lot of fun. Fiona And we heard from Bill Dougall at Lakeside how he had to chase you and your friends off the computer at the end of the day and then you used to kind of sneak back at night. Do you remember those days? Paul Yeah. I mean, there was kind of a monthly thing that would happen, too, where the amount of computer time that you used was billed. It’s not like these days where you can use your computer as much as you want and there’s no charge. So every month there’d be, the teacher would come in and post up on the wall this bill of how much computer time and I think Bill and I were always one or two up there and then you just dreaded having to explain to your parents, you know, you’d spent$60 or $75 that month on computer time. So it wasn’t free until we got to help that one time-sharing company out. Fiona So C-Cubed, let’s talk about C-Cubed because you were allowed to look for bugs in the programme. That was why they took you on. Tell me a bit about that. Paul Right. They were a time-sharing company that was started by some ex-University of Washington professors. And another student told us about that. I remember going down to, you know, …[unclear], it’s only a few miles away, and just looking at this glorious black PDP10 computer behind glass, just thinking if we could just get in there, if we could just start writing programmes for that, how great that would be as compared to having to dial up and have these bills come in every month. So we finally were able to convince them we could help test and then, pretty soon, at night we would just go there after school. We’d take a bus down there, all with our little briefcases, and we would just invade this little Teletype room and all sit there busily typing in our programmes and then stay there as long as we could and eat pizza. Fiona Eat pizza? Spending as much time as you could? Paul Yeah. Fiona There’s a story, tell me if this is true, about either you or Bill, I think it was you, getting into, trying to get into a big bin, being lowered into a bin to get some source code. What’s that? Paul Well, they had some big dumpsters outside C-Cubed, Computer Centre Corporation, where they would put all listings of the operating system and programmes that we hadn’t seen. So, of course, if there’s anything that you become fascinated about, it’s something you haven’t seen, so these listings would be in there with coffee grounds on them and all sorts of stuff and we would literally jump in the dumpsters, haul these things out and then take them home and just page through these. I mean it was very complicated code and we only would get glimmers of understanding. It was just the idea that it was kind of an obscure, unknown piece of software which just fascinated us. Fiona Bill was going to go to university... Paul And his parents wanted him to go to Harvard, one of the top schools, and I went to Washington State. And while I was at Washington State, he convinced me to take some time off and do some work on the class scheduling programme that he’d committed to work on. So I took some time off to do that during one summer and that was a lot of fun. And then, I think it was after his first year at Harvard, he said come on, Paul, you know, drop out of college and come back and I’ll drop out of Harvard for semester 2, we’ll do a bunch of programming together, it’s going to be fantastic. So I moved all the way up to Boston and then Bill said no, no, my parents really want me to go back to school so we’ll have to do things at night. So that’s what we ended up doing. That’s how we ended up writing the first BASIC programme was all at night. Fiona So he persuaded you to drop out of university but he carried on meantime? Paul Right, and then later I persuaded him, as Microsoft started to take off, I persuaded him to drop out of university, which his parents weren’t happy about for a few years and finally they got to be okay with it. Fiona Tell me about Altair because that was a big breakthrough for you. You had the idea of using this big computer at Harvard to try to simulate the Altair. But, of course, you couldn’t actually try it out because you didn’t have an Altair to try it out on. How did that work? Paul Correct. Well that’s an interesting story. A couple of years earlier, Bill and I had started this small company called Traf-O-Data and our goal then was, you know, there used to be rubber hoses in the street and you’d drive over them and it would count the number of cars going by. I don’t know if it’s still done in the UK that way. But we wanted to have a cheap computer to process these tapes because they were using high school students to read the tapes. So we met a guy that could build us such a computer based on a microprocessor chip and we were trying to build the cheapest computer we could. So by doing that, this was on an Intel chip called the 8008, we were able basically to have a really inexpensive computer but based on a microprocessor. So, after that happened, although that company wasn’t successful, I kept telling Bill, look, the chips are going to get better. At some point someone’s going to build a personal computer based on the 8080 chip that they got out subsequently. And he said well tell me, tell me if somebody actually does build such a computer, then we’ll think about it, we'll talk about it. So I was in Harvard Square in Cambridge, Massachusetts, and I saw this Popular Electronics with this Altair computer on the cover. So I ran back to Bill. I said Bill, Bill, look at this, someone’s done it. We’ve got to do software for this computer. So he called up the president of the company and … Fiona But he called up pretending to be you didn’t he? Paul He called up pretending to be me, yeah, and … Fiona And what, he did that, what, because you looked, you were older than him but also he looked so absurdly young, didn’t he at the time? Paul Well, I think he knew I was going to be the one to go out there deliver the software so he said no we’re well along with the software and we’re just, let us know if you’re interested in it and … Fiona And you hadn’t even started it? Paul We hadn’t started, so as soon as Ed Roberts, who was the President of MITS, the maker of the Altair, said, you know, yeah, if you guys write BASIC for this chip, sure, come out and show us because nobody else has been able to do it. So then we went, as soon as we, we had, literally the next day we went out, got the manual for the chip, and because we’d done it for this previous chip, it was really easy to do it for the 8080 chip, and so we were able to do that first, amazingly, that first version of BASIC, and I think it was about two and a half months, and then I flew out to Albuquerque with the paper tape with the BASICon. Fiona You must have been nervous about it because they were doing this big demo of what you’d been pioneering but you’d never actually used it on that system. So the first time you were actually going to trial it for real was in front of the people that you were trying to sell your expertise to. Paul That’s exactly right and Bill had stayed up the night before I left and didn’t get any sleep, just checking the, what was called the op codes, the instructions, the computer instructions, to make sure that the numbers that were in the simulator were the numbers in the real chip and so forth. But I’d already triple-checked them myself. But it turned out that the first time we’d loaded this paper tape of the BASIC into an Altair that it worked and Ed Roberts and this engineer, Bill Yates, were there and they said wait it typed something, and then we were able to run this little Lunar Lander simulator programme in BASIC, and they were like wow it actually does something. I’m going like oh if you only knew how much, you know, work and how nervous I was that it was going to work at all. Because we’d never actually seen that microprocessor or seen a computer based on that chip. We’d used this big computer at Harvard to pretend it was the new chip. So, at that point, that first Altair, I think, had 5K, 5,000 bytes of memory. You know, people talk about megabytes or gigabytes now, this was 5,000 bytes. So our first BASIC was handcrafted and had to fit into 5,000 bytes of memory. Fiona You must have had quite a bit of front, you pair. You know, there you were, you were just these two kind of students, well, Bill was still a student, you’d decided not to do that, there you go to this company with this thing that you’d never even seen if it works or not, you know. Paul Right. Fiona Hutzpah, you might call it. Paul Well, we knew what we could do technically but I think if you got to meet Bill, he’s a very confident person, and sometimes we’d go visit like Radio Shack or other big companies, and they had no idea what to expect. So you could tell they were doing a double-take when they saw me and Bill. Because Bill has always looked younger than his actual age and especially then, I think, when he was in his early twenties he looked like he was, you know, a fairly young teenager. But the minute, you know, you’d start talking to us, these corporations would realise that we knew what we were talking about and we had the goods in terms of what our software could do. Fiona From that, Microsoft grew, set up in Albuquerque. What was the atmosphere like then? Paul It was very informal which you can, of course, tell from the photograph, the famous photograph. I mean basically we would come in late in the day, probably towards noon, in my case. We would programme until six or seven pm, go have dinner, see a movie, come back and basically write or cut code until three in the morning, four in the morning sometimes, so every day was like that and so we didn’t have a lot of entertainment. We had a few parties and things. But it was really, a lot of this fascination with the creative process of making the software and working with all these different new chips. Because at that point it wasn’t the dominance of just a few computer companies or a few chip manufacturers, there were a bunch of different chip manufacturers, so we did our BASIC for all these different chips, and just dozens and dozens of different people trying to make these first personal computers. MICROSOFT CHAIRMAN BILL GATES TALKS ABOUT...MICROSOFT SINCE 1995 AND HIS MOVE INTO PHILATHROPY HOW INTERNET FEVER CHANGED MICROSOFT IN THE MID-NINETIES Bill Gates We knew that kind of thing was going to happen, somewhere, somehow, but the fact it was catching on in schools and then the specifics of it. It was using a particular kind of protocol, TCP/IP. They were organising the information in a certain way and we thought wow this is a very big thing. And so that kicked off a period of about a year where we really said okay how do we get, make sure our software work is focused on this? But the timing was kind of perfect because we were finishing the major version of Windows, Windows 95, that drove Windows totally into the mainstream, and so as we’d got that completed, we had all the talented people available to say okay what’s the next big thing to do and doing internet software including the browser and the server and all those things became that new focus. And so it was actually pretty timely for us and it really drove personal computer sales. I mean today you can say, you know, what’s one of the main things people do on a personal computer? Browsing the internet is probably number one. WAS THE INTERNET A THREAT OR AN OPPORTUNITY FOR MICROSOFT? Bill We had made this huge bet on graphics interface, and Windows 95 had, you know, vindicated the bet we’d made there, and we tried to get everybody who did productivity software to come along and support Windows but they were quite slow on it. So, in fact, our own Windows applications, Word, Excel, were doing just incredibly well and so we had just immense success and credibility at the time and so the idea that we could okay seize that new thing when it wasn’t obvious to people outside of Microsoft, that, you know, it was very, very exciting. You know, I remember how enthused people were and, you know, people thought, all different businesses, who were challenged by the internet, would come visit us as though we knew all the answers. And we did know a lot about the software answers but how it would affect different types of businesses of course that wasn’t our expertise. HOW HAS MICROSOFT BEEN CHANGD BY ITS LEGAL BATTLES? Bill Yeah, certainly as you should get into the late nineties, I won’t remember the exact dates but ’98, ’99, there’s some legal stuff that is very painful for us, you know, we’ve learned from it. It wasn’t fun to go through but, you know, it’s been a, it had a real impact on how we articulate what we’re doing. You know, it is great that during that whole time the company stayed very focused on writing great software. You know, we did a phenomenal job even with tough competitors reaching out and finding a settlement that they were happy with, so today we have actually very little of that. Not a zero but very little of what, say, in ’99, 2000 was quite a range of things. And so I think we’re smarter today and we reach out in better ways. IS MICROSOFT VULNERABLE TO GOOD IDEAS BY SMALL STARTUPS? Bill There’s always breakthrough ideas and ours is an industry where anybody can get into the software business. You know, how long ago was it that Google was founded, now they’re viewed as a very top company and compete with us in a lot of different areas. So there’s no barriers to entry but a lot of the greatest contributions are things that require patience and a large-scale of investment, that we feel very lucky we can do that, that we can have the research centre here and the research centre in Cambridge, and the one in China, and the one in India. And some of the work they’re doing like quantum computing is very risky. Even if it works, it won’t have an impact for ten years, but we’re there, always trying the new things out, you know, and that really is what makes us feel good about that we’re inventing the future. THE FUTURE OF MICROSOFT Bill We’re about software. We’re about hiring the smartest people who can write software, getting them working together, listening to customers. And we do that for all kinds of software from Halo 3 all the way to SQL Server and business applications. And I think the importance of software is continuing to grow. The original insight about hey software matters and a company that takes a long-term view and brings great people together, that’s more relevant today than it’s ever been as TV’s going to be software-driven, as we’re doing speech recognition, visual recognition, and so it’s a wonderful time to be a leading software company. And that’s what we’ll always be about. We’ll have different ways that we charge for it and there may be some new things that haven’t even been invented yet but there’ll be value in high quality software where all the pieces work together and we have a relationship or we’re listening and always adopting what the new opportunities are. USING GATES' MONEY – AND WARREN BUFFET'S – FOR PHILANTHROPY THROUGH GATES' FOUNDATION Bill You know, it’s the right for this money to be used for because, you know, a great success like I’ve had or Warren’s had, it really is partly success of society. I mean the educational system, the legal system, all those things that allowed me to write software. If I’d been born a hundred years ago, you know, none of that would have been there, and if I’d been born in a different country, say, you know, Bangladesh or something, it’s unlikely that that cherishing entrepreneurship, being able to hire people who went to great universities, it wouldn’t have come together, and so it’s very fitting to take and have this money go back and try and have a big positive impact. HOW WOULD YOU LIKE TO BE REMEMBERED? Bill Well, I don’t think I care about being remembered at all. Fiona Bruce(presenter) Don’t you? Bill No. I mean the computer revolution will be remembered because it continues to make a big difference and empower people, let people learn. You know, the Foundation’s trying to make a big difference but, in fact, that’s in partnerships with governments and people we fund to do various things and so it’s just an actor. Just like Microsoft is a significant actor but not the only actor in this whole software empowerment thing that’s taken place, and so the role of any individual, it’s always going to be, in a sense, exaggerated because you’re trying to simplify an entire industry and say okay Steve Jobs did this and, you know, Bill Gates did that, or Larry Page did this. Well, in fact, there are thousands of brilliant people who really are writing the code and testing it and things like that so, you know, the fact that its oversimplified it, yes, that can’t be avoided but, in fact, other than, yes, science and engineering is great, more people should go into that, you know, I’m not sure I’m promoting anything about myself individually. Fiona Bruce (presenter) How did you and Bill work together? I mean who did what and did you get on always? Paul Allen Well, working, as people will tell you, working with Bill is obviously a pretty intense thing. He’s always thinking about every technical angle. He’s an amazing programmer. Another thing I remember happening, back in the Harvard days, is we were working on some code late at night for that first BASIC, and he fell asleep and he put his forehead down on the keyboard and, you know, I had to keep … working, working. It’s like two hours later, he lifted his head, he blinked and he resumed typing from the exact same position he’d left off. And I couldn’t imagine that with many people, they could keep a problem in their mind like he could. Another time he wrote a whole small disc operating system that he’d been thinking about all summer. He wrote it all down and got it working in about ten days, which still amazes me to this day. So he knew all the technical aspects and then, you know, his father’s an attorney and so I think he’d been exposed to more business, the business side of things, more than me. So Bill focused on the business side and certain parts of the technology where I tried to take a broader view where the technology was going and try to think what the next steps of the evolution could be. Fiona And did you always see eye to eye? I mean, as you say, he’s quite an intense person and people talk about quite a bit of shouting going on. Paul I think that’s, I think that’s how I think all of us remember that period. I mean a lot of intense interaction. I think, you know, Bill likes to play the devil’s advocate with all of these things and have a very intensive, he loves very intense engagement and discussions, and you had to be ready for that intensity yourself if you were talking about something and fortunately I could match that intensity in discussion and other people like Steve Ballmer when he joined had that same kind of intensity, too. So it kind of became a little bit characteristic that you would really challenge each other, argue things out. Fiona Now, after about four years, at the start of ’79, you and Bill moved the company back to the Seattle area which was a homecoming but how are your families feeling about it? Were they feeling that here were their two sons who had perhaps failed to fulfil the ambitions that they wanted for you at that time? Paul No, I think both of our families really were supportive of whatever we wanted to do and … Fiona But did they want you to go into more kind of, I mean, this was a very new area that you were in. I mean did they want you to go into more kind of traditional type businesses? Paul Well, I think Bill’s parents definitely wanted him to finish his degree at Harvard because that would help him in his – I’m sure they thought that would help him in his business career and whatever he decided. But, you know, you had the feeling, we were starting to get a tiger by the tail with our technology, even back then, but we had a big decision to make, where we were going to go, and we had a discussion at my house in Albuquerque where we kind of went back and forth, should we move the company to the Bay area where companies like Apple were really starting to take root or should we move the company to Seattle where we had, you know, family, we’d see our families and spend more time with them. That was persuasive. But in the Bay area people changed jobs every 18 months and Seattle, people didn’t do that and pretty much it rains here nine months of the year so you’d be inside writing code, it was kind of a natural thing to do in Seattle, so we thought it would be a great business environment for the company. Fiona I wanted to ask you about the IBM deal because you, they needed an operating system, you were able to licence one from Seattle Computer and modify it to become MS-DOS. Did you and Bill at the time realise the significance of retaining the rights to licence that operating system to other manufacturers? Was it clear to you how important that was? Paul Well, I think we had a sense of it but not maybe the full importance of it. I mean what happened basically is that IBM came to us and said wow we love all your software but one thing we don’t have an operating system for a new computer or for this computer, where can we get that? And the one that was most successful at that time was CPM which was a company, well, called Digital Research in Monterey, California, so we sent IBM down there. And there’s the famous incident where Gary Kilgore who ran Digital Research was up flying an airplane for fun and wasn’t there to meet with IBM and they insisted IBM sign a seven-page non-disclosure agreement and the IBM guy said we’re IBM, you don’t understand, our Legal Department will take a year just to review this thing, don’t you want to do business with us? And they said no we can’t do business with you unless you sign this agreement. So the IBM guys came back and said we can’t work with these guys you sent us down to meet. Do you have any other ideas? And so we headed this guy in Bill’s office and Bill said well, Paul, what alternatives do we have? I said well there’s this company in Seattle that sell computer products that has a small operating system and already works on the chip, I don’t know how good it is but let me see if I can buy it. So I was able to buy it for under$50,000 complete, rights to do whatever you wanted with it. And at that time we knew that was a coup, that if IBM used this operating system, we could sell that to other people. Of course, you didn’t know how well other people were going to be able to compete with IBM in the personal computer area but you knew some, a few would try, and that turned out to be an incredible windfall for the company.

Fiona

At the time, though, I mean because looking back on it, it was a master stroke. At the time was it clear quite how big a turning point that deal and that particular clause in it would be?

Paul

You know, you know it’s a great turn of events. You just, but like I’m saying, it's just it was, back then you have to remember you had Apple was really doing well in personal computers and IBM was a new entrant. Clearly, a lot of businesses were going to use IBM personal computers, now, but was somebody else going to be able to, you know, that was before Compaq and Dell and a lot of other companies really came into existence. You didn’t know that those companies were going to do so well but you did know that we already had a lot of Japanese customers. They were going to use MS-DOS. So we knew it was a coup but it obviously was a key part of the evolution of the personal computer industry.

Fiona

Microsoft was incorporated. You and Bill became squillionaires, effectively. I mean how did money change life for you and Bill?

Paul

Well, I think, you know, if you know Bill, you know, he’s very focused on not having whatever level of assets he has change his approach to work. I mean work is, he’s so focused, he’s so intense and loves the technology so much, loves interacting with people. So I don’t think that had the kind of impact initially that you might think, but it does open a lot of alternatives up for you and later we got into different things, philanthropy or travel or, you know, you find out that that level of resource enables you to do things that you only dreamed of as a kid and that’s been a lot of fun. But I think our approach to business and work and technology and those things hasn’t really changed that much.

Fiona

I mean two years after the incorporation, you were diagnosed with Hodgkin’s Disease which, thankfully, you beat. You left Microsoft. You chose not to go back, why not?

Paul

Right. I think if you go through one of those experiences, it really forces you to think about your course in life and what you want to do, and Microsoft had been very, very intense for me those, you know, from ’74 basically through ’83 when I left and so I just felt it was time for a change, time to do other things and, of course, I did get involved in a lot of other things since then that have been incredibly rewarding and challenging for me.

Fiona

Did part of you think I don’t want to go back to that intensity of work where work is so all-consuming, I want to find time for other things in my life now?

Paul

Sure. You know, you think about, wow, you know, I’ve been so, you know, I had such a monochromatic focus on making this one company successful and life is more than that and, of course, you don’t know if a cancer can recur or not. So, yeah, it forces you to broaden your thinking and you think about spending time with your family or friends, other things, so it does, I think, force you to think about life in a more balanced way.

Fiona

I wonder, you know, when you read about Microsoft’s success, you know, year after year after year and its level of growth has been phenomenal, do you ever think, wish I was still in there or do you think I’m glad I’m out?

Paul

I think for a number of years, you know, depending what I was doing, I did have some thoughts like that because Microsoft has been at such a key turning point many times where the industry was going and what I like to do is look ahead and see where technology is going in the future so there are cases where I would have liked to have been there when decisions were made or were influencing the key decisions. I was on the Board for a number of years. But that’s not the same thing as being in a key management role. So, yeah, I used to think about that a lot. In retrospect now, though, I’m very happy that I took a different course and got to explore many other things.

Fiona

Looking back, Bill is about to step down, certainly full-time from the company, how would you characterise his strengths and his weaknesses?

Paul

No, I mean, Bill is, you know, obviously, he’s very intelligent, very capable, very intense and very focused on whether it’s developing the next product or areas of competition, all these things, and I just know that, you know, as he transitions into being the Chairman and not having a daily role in the company, that he’s going to bring that same kind of focus and intensity to the next areas he’s interested in, and I hope he follows up on some of the areas like neuroscience that he and I have talked about. So I think he’s got a great future ahead of him.

Fiona

What do you think people get wrong about him?

Paul

There’s, there’s, I mean, Bill has so many dimensions to his personality. One of the things people may not realise is he has a great sense of humour and we used to, whether we’d go to movies or current events, we used to just laugh so much and have a great time and joke around about things. He’s actually a pretty good athlete, too. He plays the golf and tennis and he’s just, you know, he’s just a really fun guy to hang around with, and I don’t think most people know that at all.

Doug, the first person hired on Microsoft's graduate recruitment programme in 1981, talks to the Money Programme.

AT ONE TIME HE CHUCKED IT ALL IN – AND EARNED THE NICKNAME 'THE LETTUCEPICKER'

Doug Klunder

I made not one of the brightest decisions of my life. I was through with technology, was going to just go be a wandering agricultural worker, I’d go pick lettuce. And so I went down to California and actually did work on odd jobs in the fields for about a month, and then I was just living in a tent out of a backpack and my backpack got stolen. So I was left in California pretty much with the shirt on my back and called up a friend at Microsoft and said, “So, you want to hire me?”

HE GO HIS JOB BACK AND RETURNED TO INTENSE CODE-WRITING

I had, on at least one occasion, spent a week living in the office, just grabbing a couple of hours of sleep and working to Titan code to get stuff shipped out for a deadline. It became much, much more intense and just focused on trying to do what was really kind of impossible in those days; do high functioning software under constraints, so very slow processors and very little memory. And so literally working on saving every byte of code to reduce space and a very challenging technical process.

DEALING WITH BILL GATES

He would certainly always challenge, but you'd challenge right back, and eventually end up with a better programme as the result of it. Some of the core parts of Excel, that no longer are important but at the time were very important for it, the speed of recalculation, was all based on my interpretation of what Bill said he wanted, though he later said that it wasn’t at all what he had had in mind. But it worked well.

WHEN STEVE BALMER CAME TO TELL THE STAFF ABOUT THEIR STOCK OPTIONS

I’d been there about nine months when it turned into a corporation and we first got the stock options. None of us really paid a whole lot of attention to them. Steve came around and told all of us that they thought if everything really went well the shares of stock would become worth $10. The original option price was$1. Those shares today after splits are worth, I think, somewhere around \$1,000 or more. Nobody had any idea where the company was going, and for that matter even as the company grew and got its own buildings, moved to its own campus, a lot of us still thought that it was a little over-hyped, things couldn’t keep going as well as they did. But, in fact, they kept going way better.

HOW BILL GATES BECAME A MORE DISTANT FIGURE AS THE COMPANY GREW

Instead of the casual everyone has contact with Bill, he’s just another person, it got to the stage where there were the meetings to prepare for the meetings with Bill, or the meetings to prepare for the meetings to prepare for the meetings with Bill, and especially new hires were just terrified to talk to him. Some of us old timers never really got it, it was it’s just Bill and you can still yell at him and he respects that. But for those who weren’t there in the early days, it’s a lot harder to come into a company and say, “Oh yes, I’m going to yell at the world’s richest man when I’m right out of college.”

THE RITUAL OF THE 'BILL REVIEW'– WHEN GATES LOOKED AT A PROGRAMMING TEAM'S WORK

His approach was to come in and have a meeting with everybody where you’d basically say all the things that were wrong with it and how in fact he could programme it in a weekend using BASIC. But that was more an opening gambit for people to respond with really what the issues were, how to deal with things, and to yell back at Bill and say, “No, you can’t.”

MICROSOFT'S 'SURVIVAL OF THE FITTEST' CULTURE

It was just overall, from the beginning, at Microsoft very much a kind of survival of the fittest environment. You needed to perform and you needed to stand up and do stuff. People who were the shy retiring type didn’t do very well at Microsoft.

WHY MICROSOFT WAS DIFFERENT FROM OTHER SOFTWARE COMPANIES

Companies would have one product which would be a huge success, but they couldn’t develop a second programme that would also be successful, and you look around and there’s lots of companies that have fallen by the wayside that were once the industry leaders; Ashton Tate with dBase, Lotus with 123, and Microsoft was the most successful at moving from product to product. What many people forget is that what really launched Microsoft was BASIC, which was, Microsoft BASIC was on pretty much every machine out there. And then they made the transition to DOS and then to applications and to Windows and managed to do all of those successfully. Not always on the first attempt. Bill was able to make those transitions from a business sense, and really unheard of, where he was both a good businessman and technically very strong, and I think that’s what made Microsoft the success it was.

THE SCALE OF BILL GATES' AMBITION

I remember he’d only been at the company a couple of months and Paul Allen had moved, had a housewarming party and I was talking with Bill there, who had had a fair amount to drink, but was telling me, even then, how Microsoft was successful beyond his dreams and that it was just fated. That was his only explanation, it’s fated, it’s all going to happen, and I guess he’s right. At the time, I kind of wondered what have I gotten myself into, does this guy really believe he’s going to take over the world. And I guess the answer is yes, and he was right.

Patty Stonesifer, Chief Executive, Bill & Melinda Gates Foundation

Patty sheds light on Bill's new job, and tells us what it's like to work with the Gates family.

Patti Stonesifer

Rather than inventing a new way of doing philanthropy, we’re looking to the lessons of history. Whether those lessons were from Andrew Carnegie and the way that he pursued public libraries to ensure that everyone has the opportunity to critical information, or the early days of the Rockefeller Foundation and what they did about yellow fever. We’re kind of standing on the shoulders of history but looking to what makes today different. The internet, the quality of education, tying scientists together, bringing public/private partnerships together in new ways and trying to take advantages of both history and this moment in time, and plough this money back into society in the most responsible way possible.

WORKING WITH BILL AND MELINDA GATES

Patti

I tease sometimes that Bill and Melinda are the most engaged trustees that any foundation could ever have. They’re very engaged on both the very front end and the back end. So whether it's the early learning and the development of strategy, where they roll up their sleeves and read everything from history to web alerts about new science, new technology that could be applied, new learning that could be applied to our work. Very engaged in the strategic development end and very engaged at the end where we seek new partners; we work with governments; we work with the media; we work with the public. To bring these stories forward and reinforce our shared responsibility and find and build unique relationships and partnerships, whether those are with Bono or with Gordon Brown.

WHAT DOES BILL GATES ACTUALLY DO AT THE FOUNDATION?

Patti

Anybody that has spent time around Bill Gates knows that he works on the things he’s passionate about, whether that was as the Chief Technology Officer at Microsoft, or whether it is in the both creation and the propelling of our strategies here at the Gates Foundation. So you can see the similarity in the passion, the intensity of trying to solve problems. These are puzzles. They’ve been around for a long time. Why are two billion people living in this kind of extreme poverty? They’re not easy questions. And he loves to take apart the puzzle and try to understand the issues. And then the third I’d say would be the systems thinking. It's not good enough to deliver the water, to deliver the vaccine, but what do you do to change the system so that that person who receives today’s vaccine so that their grandchild is likely to receive that vaccine through the public systems, through the private systems that should have been serving that family in the first place.

THERE ARE COMPLAINTS THAT THE GATES FOUNDATION IS IMPOSING ITS VIEWS ON THE RESEARCH COMMUNITY

Patti

One of the great things about working with academia is that there is a certain freedom of speech – many of those who have been begun to say what about this other approach, what about this approach, are people that we have funded. Whether it is the important partnership with the W.H.O. or in the academic environment or in the scientific environment, that kind of autonomy and independence and the continuously questioning for better ways is part of the way that we are going to ensure not just that malaria is lessened now but is eradicated in the future. So the more voices raised, but hopefully raised in a productive way, trying to get to the right solutions and, ideally, trying to get a few more funders in there so that there is autonomy and variation across these big public issues.

WHAT WAS IT LIKE BEING MELINDA GATES' BOSS AT MICROSOFT?

Patti

Well Melinda was the product unit manager for a series of very successful products. Whether it was Microsoft Publisher or what became Expedia and a whole series of activity. So I had the pleasure of being her boss but at the same time she was dating and then marrying the CEO, Bill. Both of them showed, from the very early stage, the kind of partnership that they had would add more to problem-solving, add more to bringing new ideas and new energy forward, and so it was a pleasure to have her on my team, and now it's a pleasure to have the roles reversed and to be on her team.

COMPETITIVE PUZZLING WITH THE GATES

Patti

I actually was spending the weekend with them on a vacation and we had competitive puzzle making where there were boxes of unopened puzzles, all identical. We were given a butter knife in the box and we were put in two-person teams and the clock went off and you had to see who could actually put together this little mermaid puzzle the fastest. And, even then, you could see their competition, the problem-solving, the sorting of the individual pieces into like categories and the strategies that they would use to solve this, under the clock, with the pressure, and they got a lot of joy out of it, a lot of humour but they saw it as also a serious task to continuously try to improve their performance in that way. And I see them now bringing those same kinds of skills, the joy, the passion, the competitiveness and that kind of savvy about how do you solve big problems in the best way possible, to these much bigger issues tackled at the Gates Foundation.

Interviewer

And who was best at the puzzles?

Patti

The truth is, on the little mermaid puzzle, Melinda won.

Interviewer

And how did Bill take that?

Patti

I actually think he probably wanted a redo.

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