Science, Maths & Technology

# How a Geek Changed the World transcript

Updated Friday, 20th June 2008
Fiona Bruce met Bill Gates as he stepped down from his role at Microsoft. This is a record of their conversation.

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Fiona Bruce (commentary)

On the Money Programme tonight; we have exclusive access to Bill Gates.

Fiona

Nice to meet you. Not just one of the richest people in the world but a man who’s changed the way we live and work.

Bill Gates

Our brilliance was to have a product that was explosively successful.

The Microsoft campus [Image: Microsoft]

Fiona

Gates’ original dream was crazily ambitious.

Steve Ballmer

Bill said; Steve, you don’t get it. We’re going to put a computer on every desk and in every home. Come on! You’ve got to stick with me.

Fiona

Like most people I spend hours every day in front of the computer and for much of that time I’m one of Bill Gates’ customers because Microsoft provides so much of the software.

Sir Alan Sugar

He has taken over the world. End of story! Live with it!

Bill

Hey, this is software, we can do anything.

Fiona

But not according to the courts.

Fiona

Did you think they were right when they ruled that you’d behaved in this predatory, anti-competitive manner?

Bill

No, I didn’t think, I didn’t think that they were right in that but we did everything they asked us to.

Fiona

And in today’s Internet world Microsoft has powerful new rivals.

Charlene Li

They’ve been trying for years to compete against Google and they haven’t succeeded, in fact their market share is dropping.

Fiona

From next week Gates will be devoting himself to giving away his enormous pile of cash through the charitable foundation he runs with his wife Melinda and his father.

William Gates Snr

He said; well Dad, he said, I’ve just been thinking about it, Melinda and I are pretty sure that we’re going to over the next year, year and a half we’ll put twenty-four billion in.

Bill

This wealth, we’ve chosen not to pass it to our children or, you know, buy all sorts of mansions or whatever, we’re getting it back to society in the way that can have the most positive impact.

Fiona

As Bill Gates prepares to step down from Microsoft I’ll be finding out he built his extraordinary money making machine.

Fiona

After two years of negotiations with Microsoft...

Fiona

I’m here to see Bill Gates.

Fiona (commentary)

...my filming with Bill Gates has finally been scheduled.

Bill

Come on in.

Fiona

Bill

It is.

Fiona

Wow! So this is where it all happens.

Bill

Has for a long time.

Fiona (commentary)

That looks like a top of the range computer. But I had to ask.

Fiona

Does it ever crash like my computer at work does sometimes?

Bill

No, I, this is a super reliable system. If there’s anything I don’t like about the software I certainly send e-mail, you know...

Fiona

And you get it changed, I’m sure you do.

Bill

...like the guys work on Outlook, which was a fantastic piece of work but I’m always having ideas and just shoot mail off to them. No, I get to make suggestions and if I make them at the right time it could make, make a big difference.

Fiona (commentary)

I’ve been finding out about Bill Gates from his friends and his colleagues.

Fiona

And I’ve been talking to his critics, many of whom are damming about Microsoft’s ubiquitous software.

Mitch Kapor

There have been billions of wasted hours of people fiddling with their computers and pressing Control, Alt, Delete and armies of paid consultants who do nothing but go around and make computers work and that I really believe did not have to be as bad as that.

Fiona (commentary)

The first impression at company headquarters is that Gates exerts an extraordinary influence on Microsoft’s ninety thousand staff.

Steven Vanroekel

You can see a little piece of the culture of Bill, Bill’s work ethic and, and really the inner Bill inside all the employees you meet.

Chris Capossela

I used to have a job where I ran a relatively small business Microsoft project, which was a wonderful business for us and when Bill would spend a couple of hours on that business or do a speech on our behalf, you know, you’d get sort of six months of morale juice out of that for the entire, you know, one hundred people working on the project business.

Fiona

I’ve talked to a lot of people in, in, in many companies; I’ve never, ever come across a figure who is talked about as Bill is as a kind of revered, almost mythical stroke messianic figure.

Chris Capossela

Yeah, I mean it, it’s true, I mean the things that the, that Bill has done are just legendary.

It will be released in May.

Bill

Right, but I’m not supposed to say that, right?

Chris

No, you can say that, you can say it will be coming soon, within a few months.

Bill

Ok.

Chris

Not a specific date.

Fiona

When staff meet Gates it’s a big deal. This team are waiting for him to review their work. For years he’s had a reputation for getting stroppy.

Miriam Lubow

There would always be heated arguments between Bill and the programmers. He’s very famous for having always said; that’s the dumbest thing I ever heard.

Doug Klunder

He’s always been pretty confrontational but that worked well, I was confrontational also. As long as you stood up to Bill he respected that.

Bill

....no, no, do they, these are different compilers, so they’re not going to do any source code level things, right.

Microsoft worker

That, that’s, that’s right.

Fiona (commentary)

Last time Microsoft let a TV crew film Gates in action it captured a flavour of his management style.

Bill

That’s ridiculous, I’m not, I’m not using this thing. No, no, no, no, somebody’s confused, somebody’s just not thinking.

I mean there’s no way.

Chris

He’s certainly passionate, err...

Fiona

So how do I interpret that? Does that mean he shouts?

Chris

Yeah, there are times, of course there are times he shouts. I think that as he’s grown older that the ratio of shouting to non-shouting has tremendously decreased.

Fiona

Spoken like a true Microsoft geek.

Fiona (commentary)

Today, Gates listens intently and responds with just a nerve inducing frown. This will be one of the last chances to talk tech with Gates. Next week, he’s off.

Fiona

Are you going to miss this because of course you’re not going to be in here quite so often now are you when you stand down?

Bill

Absolutely but that’s the decision I’ve made and I’ve done the same thing basically since I was seventeen years old so it will be a bit of a change.

Teletype machine [Image: Twylo under CC-BY-SA licence]

Fiona (commentary)

To understand Bill Gates, 17 years old is a good place to start. He was at a private school near Seattle, sent by his well to do parents.

Fiona

The mother’s club had donated a Teletype machine which sent computer code down a phone line.

Bill Dougall

I would kind of phrase it that this was the machine that started Microsoft.

Fiona (commentary)

Former teacher, Bill Dougall, showed Bill Gates how it worked.

Bill

He somehow was naturally interested in computers and programming.

Fiona

Gates had to use punch cards to run programmes remotely on a computer at the local university.

Boy at school

With the typewriter that Bill had to use, you know, he had these cards and programming on each card and...

Girl at school

It was amazing what he’s done.

Boy at school

...I wouldn’t even know where to start to make a programme.

Girl at school

I wouldn’t know how to, yeah, it’s mind blowing.

Fiona (commentary)

The young Gates became part of a group who were determined to master the Teletype machine, including an older boy, Paul Allen.

Paul Allen

All of us were so passionate and excited about it, I mean but, you know, you meet Bill for just a few minutes, you know, you know, just how intense he is.

Fiona (commentary)

For Gates, it was endlessly fascinating. His father, a prominent Seattle lawyer, wasn’t so sure.

William Gates Snr

It was an addiction almost for him and a, and a few others, they spent all their spare time in that little lab building where the computer was located.

Fiona (commentary)

Gates was soon known as the computer expert.

Vicki Weeks

We had a computer assignment that we had to do for physics and basically nobody knew how to do it. So, you went and found Bill in the little computer room and either he helped you figure out how to do it or he did it for you.

Fiona (commentary)

The young Gates took a shine to Vicki and when it was time for the school prom.

Vicki

Bill called and asked me. So I said; I’m planning on asking someone else and essentially turned him down. And, as you can imagine, that’s something I’ve regretted since.

Fiona (commentary)

Gates graduated as one of the school’s star pupils and went to Harvard to study law. But he couldn’t kick the computer habit. Especially when his old school friend Paul Allen turned up waving a magazine featuring a mail order computer kit.

Bill

Here was somebody offering a computer and we thought, jeez, we want to do the software for this thing.

Fiona (commentary)

Working on the big university computer they managed to write a programme for the new computer without even having seen one. Paul Allen was to fly to New Mexico the next day to demo the programme to the manufacturers.

Bill

I spent the whole night studying that manual just to make sure we hadn’t got something wrong because the slightest detail and this thing wouldn’t have worked.

Fiona (commentary)

Allen arrived and fed his tape into the kit computer.

Paul Allen

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, that it was going to work at all.

Bill

So he called me up and said, hey, it actually works, which was incredible.

Altair 8800 [Image: Phrenologist under CC-BY-NC licence]

Fiona (commentary)

The makers of the Altair computer were so impressed they made Gates and Allen an offer for their software.

Bill

That was really the start of Microsoft.

Fiona (commentary)

The first office was in Albuquerque, close to their first customer. The new partners were sure they were on to something big.

Bill

The idea that Paul and I had that computers would be very cheap and they could be used for processing and e-mail and games, things like that, somehow the traditional computer people just didn’t think of it that way.

Steve Wood

Software as a separate business was to some degree kind of a controversial idea.

Fiona (commentary)

Steve Wood and his wife Marla were among the first Microsoft staff in Albuquerque.

Steve

There was a debate about whether you could actually create a, a substantial sized company purely on software because after all software is intangible.

Fiona (commentary)

The new secretary was surprised by a young visitor to the office.

Miriam Lubow

In walks this kid, walks passed my desk, waves hi! So I run to Steve and I say; hey, there’s this kid that just ran into the computer room, he’s sitting down, he’s typing away like he owns the place. And Steve said; guess what, he does own the place and that’s Mr Gates, the President. I said; what, the kid looks sixteen, how old is he? Oh, he says, he’s twenty-two.

Fiona (commentary)

Gates had dropped out of Harvard to the horror of his parents.

William Gates Snr

We were discomforted by that to put it mildly and we certainly expected that our son was going to graduate from college and we’re not, you’re not quite sure what, what happens to somebody who doesn’t have a college degree, like we did.

Fiona Bruce

It was only last year that Gates went back to Harvard to collect an honorary degree.

Bill Gates

I’ve been waiting more than thirty years to say this; Dad, I always told you I’d come back and get my degree.

Fiona Bruce

Gates was no ordinary college drop-out. He’d left because he wanted to spend more time working. He and Allen set an exhausting pace for their new business.

Paul Allen

We would programme until, I don’t know, 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.

Marla Wood

There was no, no life outside of Microsoft at that point. It was like, you get up, you go to work, you come home, if you socialise other than the few things with family it was with Microsoft friends.

Fiona (commentary)

But the hard work paid off as Gates signed up more and more customers.

James Wallace

Pretty soon a lot of people in three piece suits were coming to Albuquerque, New Mexico to do business with a kid in a t-shirt and pizza stains.

Fiona (commentary)

After a couple of years with annual sales of over one million dollars Gates and Allen decided to move the company back to their homes near Seattle. To mark the occasion there was a staff photo. That was exactly thirty years ago. Today, Microsoft has of course its own film studios and they’ve all come together to re-enact that photograph for the very first time.

Bill

Ok, I guess it’s Paul, doesn’t have his moustache.

Fiona (commentary)

The original Microsoft staff were mostly programmers, more interested in technology than business. But their work was the start of a company that produced at least three billionaires and an estimated ten thousand millionaires.

Some of the original group among them. When this picture was taken the world of computers was dominated by a superpower. IBM. Built on profits from big mainframe computers. But a new market in small computers was taking off thanks to the success of Apple. IBM was losing out and wanted to make its own small computer.

Jack Sams was sent to Seattle to check out Microsoft.

Jack Sams

When a young fellow came out and said; come on back, I didn’t realise that’s who it was. Then he walked around behind the desk and sat down and I suddenly realised ok, so this is Gates.

Fiona (commentary)

It was down to Gates to persuade the man from IBM that he could deliver.

Jack Sams

Within 15 minutes it was pretty clear he was a better programmer than I was, that he was a better lawyer than my lawyer and probably a better engineer than my engineer.

Fiona (commentary)

IBM was looking for an operating system; something to make the whole computer run. Microsoft didn’t have one but Bill wasn’t going to let a chance like this slip through his fingers.

Paul Allen

We had a discussion in Bill’s office. And Bill said; well, Paul, do you know, what alternatives do we have. And I said well there’s, there’s this company in Seattle that has a small operating system but I don’t know how good it is but let me see if I can buy it. So I was able to, to buy it for under fifty thousand dollars, complete rights to do whatever we wanted with it.

Fiona (commentary)

The deal was the foundation of Microsoft’s power. They adapted the software for IBM and in the small print of their IBM contract they pulled off another coup.

Fiona

There was one key clause wasn’t there, that let you sell the operating system to other customers.

Bill

Well they didn’t push that hard on asking for an exclusivity.

Fiona

And was it obvious to you at the time how crucial that was?

Bill Gates

Oh, absolutely.

Paul Allen

We knew it was a coup but it obviously was a, you know, it was a key part of the evolution of the personal computer industry.

Fiona Bruce

In 1981, the new IBM computer was launched, with Microsoft software inside. Sales took off and soon other manufacturers entered the market. All potential customers for Microsoft.

Fiona (commentary)

In Britain, Alan Sugar had turned himself from hi-fi maker to computer mogul. His Amstrad was the market leader.

Fiona (commentary)

Sir Alan Sugar

You know, I was one of those guys that said; how much is that tube cost, how much is that floppy drive cost, how much is this keyboard cost. And software, I’m certainly not paying any money for software because I can’t touch it.

Sir Alan Sugar

£80 for this lot. Have you gone mad?

Amstrad PPC512 [Image: Jayce_31 under CC-BY-NC-SA licence]

Fiona (commentary)

Like it or not, even Sugar’s computers needed software. And Sugar was planning to install a disc operating system, DOS from a rival to Microsoft. But a Microsoft salesman had other ideas.

Sir Alan Sugar

Over comes this mid-Atlantic smoothie, sent over by Microsoft and the guy said to me; you know, you need to have MS DOS, Microsoft, MS DOS in this product. And I, and I said to him; well, you know, why? I said; look mate, you know, we are a consumer electronics manufacturer here, we’re not a bunch of geeks here, we don’t give a damn, you know, personally I don’t see no value for this Microsoft, the value there is for you.

Fiona (commentary)

The man from Microsoft finally agreed to sell Sugar the Microsoft system for a pittance. Gates’s strategy was to get his operating system out there, even if the deal wasn’t worth much.

Sir Alan Sugar

That showed me the first spark of entrepreneurial brilliance of Bill Gates in as he recognised, doesn’t matter what the price is we’ve got to be there.

Fiona Bruce (commentary)

Gates prides himself on being brainy and by all accounts he’s extremely well read.

Fiona

Because I was reading in one of your volumes about how you would take books on holiday, on a particular subject to just learn about that particular subject while you were away. Is that right?

Bill Gates

Yeah I, you know, I love to read, it’s the most relaxing thing for me and so I take a pile of books and read, you know, hopefully a couple of books a day if I’m just on vacation.

Fiona

A couple of books a day!

Fiona

His image, if you don’t mind me saying, is a bit of a kind of super nerd, in some ways. Is that what he’s like?

Chris Capossela

Well, he’s certainly super smart.

Bill

When an Aries nebular, there were many supernovas in that area or one?

Microsoft worker 1

Well this is just a really, really large cloud, an uber cloud of gas and dust.

Fiona (commentary)

Gates’s braininess is seen as a key asset at Microsoft.

Bill

No, I mean, can I define exactly that to be the syntax that my macroling, which processes, I don’t understand, I mean, it’s a turning machine that, this is the syntax right?

Microsoft worker 2

That’s right.

Bill

Ok, well that was a great update. Thank you.

Fiona (commentary)

For all Gates’s nerdiness it was the shrewdness of his business strategy that really paid dividends, putting Microsoft at the heart of the industry.

Heidi Roizen

Because they were the operating system everyone else in the industry had to deal with them. They were the conduit that connected the applications developers with the hardware manufacturers. So, the position was probably more important even than the actual revenues of the company.

Fiona (commentary)

Microsoft’s pivotal role soon had software rivals crying foul. Mitch Kapor’s Lotus company was once bigger than Microsoft thanks to the success of its spreadsheet 1-2-3.

Mitch Kapor

If the operating system changed we would have to change in response to it. And they never changed the operating system in ways that intentionally made it easier just for us but I have no doubt that they wound up making decisions which they understood, even if it weren’t their primary purpose, would make things more difficult for us. They took advantage of, of their position.

Fiona

Some of your critics have said that you’ve taken advantage in controlling the operating system.

Bill

Well, the irony there is that the reason that our operating system is so successful is that we invented this idea of evangelisation, of going out telling people about it and so the very model we brought of reaching out and saying to people, please write software for our platform, that’s been key to its success. You don’t need any permission to write software, you didn’t for MS DOS, you didn’t for Windows and that was very new.

Fiona (commentary)

We all know Windows. Microsoft’s operating system is now all conquering. But it wasn’t always like that. By the early 1980s the success of the earlier DOS system had boosted company sales to $50 million a year. Now Gates wanted a more advanced graphical system. But developing Windows was a struggle. James Wallace It became something like a death march, I mean it consumed the company, there were delays, after delays, after delays and Gates would come into meetings and something would be wrong and he’d scream at the top of his voice. It really was an ordeal. Bill We totally bet the company on this being popular and at first it did not catch on. Windows did not sell very well but we knew it was right, we needed the chips to get better, we needed the software companies to figure out how to write this software. Fiona But it must have been dispiriting given this was such a big idea. That, that, that... Bill I wouldn’t say it was dispiriting. Fiona ...it took a while to take off. Bill It was another one of those things where we said; we know this is going to be popular and we just need to get the word out. Fiona (commentary) Gates had hired someone who was good at getting the word out; an old Harvard buddy, Steve Ballmer, whom he lured away from a more conventional business career with a big promise. Steve Ballmer Bill said; Steve, you don’t get it, we’re going to put a computer on every desk and in every home. Come on; you got to stick with me! And, it worked. Robert Cringely He completed Bill in a sense. Bill wouldn’t have known good marketing if he’d seen it and, and Steve had worked at Proctor and Gamble and he knew how to sell soap. Fiona (commentary) With Ballmer on sales and with Windows on its third version it finally took off. By 1990, Microsoft’s income topped a billion dollars. Bill Gates found himself an unlikely celebrity. Bill I’m, I’m Bill Gates, the...Bill Gates. Man in hat Oh Bill, ok, I’ve heard of Bill Gates, the great Bill Gates. Bill I don’t know. Man in hat Pleased to meet you Bill. Fiona (commentary) His image as a businessman was far from conventional. How many other chief executives are prepared to show off their party tricks on television? CBS interviewer Is it true that you can leap over a chair from a standing position? Bill Gates It depends on the size of the chair. I’ll cheat a little bit. CBS interviewer Yes! Fiona (commentary) But media coverage wasn’t all as jolly. James Wallace Microsoft became so powerful that Gates was landing on the cover of all the magazines and all those stories began to paint him as a bully. A myth developed around Gates that it wasn’t Conan the Barbarian with all the muscles but this little computer nerd who exerted tremendous influence on the industry and a lot of people thought it was bad. Fiona (commentary) Rivals had a more personal grievance too as Microsoft shares kept rising Gates’s wealth was going off the scale. In 1995, he was named the richest man in the world, a title he kept for thirteen years. But apparently he doesn’t really care. Heidi Roizen I can’t remember him ever saying; well, I’m worth more than so-and-so. I mean it didn’t matter, that wasn’t the goal and if anything I would say the only time I remember him ever saying something was he made a comment to me once about being the ‘richest person in the world’ as a burden. Fiona Most people think, that must be great, must be great never to worry about money. Is that what it’s like or is that just too simplistic? Bill You know, I’m lucky that I never have to worry about money, you know, so my kids get a great education, whatever books they want to buy, things like that, it allows me to focus on the things I love doing and so, you know, it is, it’s a privilege and umm... Fiona Is it overwhelming, I mean the ball park puts you at$58 billion, is that about right?

Bill

Yeah, but that number, you know, doesn’t really matter. Having a job where you work as hard as I do, it’s fun, it’s hectic and I wouldn’t trade places with anyone so, umm, and it’s not because of the number it’s because of the day to day activity that I love.

Fiona (commentary)

The scale of Bill Gates’s wealth is almost unimaginable. But all that money hasn’t changed his eating habits.

Fiona

Mmm! Bill Gates likes his hamburgers. This cost me $7.49. Now if he was feeling really generous he could buy every single person in the world, that’s all 6.7 billion of us a cheeseburger combo and he’d still have$8 billion left. Which is not a bad tip.

Burgermaster: Bill's favourite grill [Image: K W Reinsch under CC-BY-NC licence]

Fiona (commentary)

The staff here have been serving cheeseburgers to Bill Gates for 26 years.

Stacie Mendoza

He comes in with his family, he comes in by himself. He’s come in in a cab before.

Fiona

Generous tipper?

Stacie Mendoza

Umm, yeah, above average, definitely. Yes.

Fiona

He’s not leaving you $100 bills or anything. Stacie Mendoza No. No, no. Fiona (commentary) Well, he could if he wanted. If he’s made$58 billion in his 33 years at Microsoft, Burgermaster’s most famous customer has been earning $5 million a day since 1975. Announcer Ladies and gentlemen; welcome to the launch of Windows 95. Fiona (commentary) Windows 95 took Microsoft into the mainstream and it gave a massive boost to Microsoft applications like Excel and Word. Robert Cringely It was Microsoft generally entering the big time saying; Windows ninety-five and the associated Microsoft Office product, you know, these are the two profit centres, the one-two punch that we’re going to use to dominate computing for many years to come. And they did. Fiona (commentary) It’s software, not hardware, that makes the big profits in computers today. Sir Alan Sugar He was right and I was wrong. If you go to a supermarket these days and you go and pick one up for a £150 and you would be amazed to know how that £150, how much of that is going to good old Bill. Quite a lot. Fiona (commentary) And Sugar admits he’s had to eat his words after thinking he didn’t have to pay Bill Gates for something as intangible as software. Sir Alan Sugar He has taken over the world. End of story. Live with it. You know, accept it. It’s done. Fiona (commentary) At Gates’s old school, and in much of the world, his audacious ambition – a computer on every desk and in every home – has been achieved. Boy 1 at school If I didn’t have my computer I’d probably lose most of my connections with my family because I have family in different parts of the world and it’s so easy to get in touch with them. Boy 2 at school Like communication with friends. Girl at school Or music. Boy 2 at school Or music. Girl at school I use it for music all the time. Fiona (commentary) Today Microsoft makes profits of almost a billion dollars a week and every kid is a computer expert. Girl at school Our teachers are usually blown away of how we know so much more about than they do because it’s our generation, we are the computer generation. Fiona (commentary) But Gates’s success has produced many disappointed rivals. Small software companies were afraid of attracting competition from Microsoft. Robert Cringely Bill Gates just didn’t understand what the problem was. Of course he was just competing and crushing and killing these companies. Seemed perfectly normal to him. Doug Klunder The rules are, after you win you have to play nicer. And I think Bill and Steve and really the whole company didn’t realise we had won. Fiona One of the things that critics say is that Microsoft is as aggressive about winning now as a tiny start-up that’s fighting for its life. Bill Well, that sounds like a compliment... Fiona Well, I suppose what they’re getting at... Bill Gates It’s a very competitive business and so, you know, we have, always have tons of competitors and that’s one of the things that’s fun about it, you know. Fiona But I suppose what they were getting at is here you are, you are this massive company, do you need, still need to be winning 10-nil. Bill This is not a game where we’re on a field, you know, tackling each other, this is a game where you write good software and you take it to a customer and they have a choice. They can go to any web site, they can buy software, there’s free software, there’s software from many, many other companies and so they choose. Fiona (commentary) By the mid-90s, Bill Gates had it all. He’d built Microsoft into one of America’s most successful businesses and in the process virtually invented an industry. The rewards were riches beyond imagination. Fiona (commentary) But storm clouds were gathering over Bill Gates’s empire. His claim to be the champion of consumer choice was soon to be challenged; not by his rivals but by his own government. Janet Reno Microsoft is unlawfully taking advantage of its Windows monopoly to protect and extend that monopoly and to undermine consumer choice. Fiona (commentary) At the same time, Microsoft would be threatened by a new technological phenomenon and a new generation of competitors. John Battelle Much as IBM was a defining company in the seventies and, you know, Microsoft in the nineties I think that this is Google’s decade. Fiona (commentary) To top it all the richest man in the world decided to take on his ultimate challenge on a global stage. Robert Cringely Bill needs a goal. Bill Gates’ goal is to win a Nobel Peace Prize. Fiona (commentary) By 1995, it looked as though things couldn’t get any better for Bill Gates. Microsoft shares were going through the roof with the launch of Windows 95 and he’d just been named the richest man in the world. But privately Bill was worried. Fiona (commentary) Microsoft’s position may have seemed impregnable but a new hi-tech force was emerging on campuses across America. They called it the world wide web. Rosanne Siino The college students definitely picked up on this notion of, there’s this thing called the web that Tim Burnsley had created. Students loved the idea that they could post information, right, so that you could create content and put it out on this web. Fiona (commentary) One of Bill Gates’s engineers spotted web fever on a visit to his old college. Steven Sinofsky .....What we saw was students using the Internet as a, as an integral part of their, their course work and their college experience, not just in the computer science classes like we did but in history or in English or in, in any liberal arts. Fiona (commentary) He was so impressed he sent his boss an e-mail. Bill So it was phenomenal to see that in this university environment they really had connected the machines up and that started to lead to new ways of using it. The class scheduling, ordering pizzas, using e-mail in a very mainstream way. Fiona (commentary) A small company called Netscape released a new piece of software called a browser making it easier to surf the web. Almost overnight the cult of the web turned into a mass movement. John Battelle There was so much excitement about the knowledge that this was going to happen, that there was going to be a vast network of computers serving information on demand to the world. It was like you were continually exploring a new frontier. Fiona (commentary) As Netscape’s web browser took off Bill Gates saw through the Internet hype but spotted the potential impact on Microsoft. Bill People were just getting so excited about it and many of the things were over the top, you know, that all the banks would be shut down and the stores would be shut down, I mean some wild predictions that were far too radical in terms of people’s behaviour but it was a very important thing and we needed to rethink our strategy. Roseanne Siino Every business magazine, every newspaper was talking about the phenomenon of the world wide web and all of the things that were happening because of it. So, of course Microsoft wanted a part of that business but it was pretty clear that they were late coming to the party, a little late and a little late in Internet time meant a lot late. Fiona (commentary) Microsoft staff were already working night and day on their booming operating system business. Now their boss wanted to prioritise the Internet. With engineer Steve Sinofsky by his side Bill Gates rallied the troops. Bill He helped me write a very key memo, which was called the Internet Tidal Wave memo that said to the whole company, this is as big, literally it’s as big as the original PC because so many new things will be enabled by it and we need to move quickly to be the leader in this. Fiona (commentary) Gates’s memo announced he was reinventing his company. He wrote; "Now I assign the Internet the highest level of importance. In this memo I want to make clear that our focus on the Internet is critical to every part of our business." Fiona (commentary) The e-mail was a clarion call to Microsoft and a warning to the competition. The battle for the Internet had begun. Later that year Microsoft released their own web browser, Internet Explorer. Instead of producing it as a separate product they included it free with their ubiquitous Windows software. Nicholas Carr What Microsoft did was to quickly cobble together its own browser, Internet Explorer, to fight off the threat it saw from Netscape and because it was able to bundle that, that, that browser in with its traditional Windows operating system it could essentially give it away for free and it undercut Netscape’s entire business model. A cuddly alternative? Promoting Internet Explorer in Korea. [Image: StudioEgo under CC-BY-NC-SA licence] Fiona (commentary) The two companies went to war with new improved versions of their browsers. But Microsoft had a tactical advantage when it came to the hardware boxes since it was already selling to the PC makers. Robert Cringely And so Microsoft wanted those boxes to have Windows and Internet Explorer in them and not Netscape. So they tried to cut deals where they pressured them to not put Netscape in. Rosanne Siino Sales people at Netscape were reporting back to us that these deals that Microsoft was cutting were saying, you know, you’re not going to be able to conclude Netscape on this piece of, piece of hardware because we’re not going to license the operating system to you if you do so. Fiona (commentary) Microsoft was gaining on their Internet rival, however many in the industry believed the race to win control of the on-line market brought out the company’s ruthless side. Not for the first time they claimed the Microsoft juggernaut was trying to crush the opposition. Mitch Kapor Part of what rubbed people the wrong way about Bill was the feeling that they won not based on their own merits but by cheating, by taking advantage, by doing things that were illegal and then obviously just denying that completely and in fact claiming that their software was winning just because it was better. Fiona (commentary) The battle of the browsers brought to a head the accusations of unfair play. In 1998, the US government decided to bring charges. Janet Reno Microsoft is unlawfully taking advantage of its Windows monopoly to protect and extend that monopoly and to undermine consumer choice. The Department of Justice will not tolerate that kind of conduct. Fiona (commentary) Inside company headquarters the news was greeted with disbelief. Steve Ballmer If you asked me what was my general reaction; yes, it was one of shock. We’d behaved, in my view, completely properly, we were serving the consumer well, great value, low prices, etcetera but the government hadn’t and brought a law suit against us. Fiona (commentary) Today Bill Gates tries to make light of this historic moment in American corporate history. Interviewer What advice have you got for us all here today, in terms of managing real stress as you’re trying to grow a business? Bill Gates Well there’s certainly been stressful points along the way, err, no, I’d say try not to get sued by anybody, umm, particularly... Interviewer You’ve had a few problems there? Bill Gates ...your own government, that’s....stress inducing. Fiona (commentary) At the time, however, friends say Bill Gates took the case of the United States versus Microsoft personally. Heidi Roizen In Bill’s mind, from every conversation I ever had with him, he never believed he was doing anything wrong and he believed he was out there competing, the way he needed to compete and that it was a real punch in the gut emotionally to have one’s own government come after your company. Fiona (commentary) Bill Gates’s videotaped deposition was played in court providing a revealing insight into the boss of one of America’s most powerful companies. Interviewer Did you tell people publically that Netscape would not do fine if Internet software or browsers were free? Bill What do you mean by Internet software? Interviewer Umm, what I mean is, what you refer to as Internet software in these various quotations. Bill I’m afraid we’re not going to be able to know what my state of mind was when I gave that interview. If you want to define it, I’ll be glad to answer the question. Robert Cringely You know, he’s not the best witness. His mannerisms were bad, his explanations were bad, his, his body language was bad, you know, he was a defence attorney’s nightmare. Fiona (commentary) After a year-long hearing the verdict was announced. BBC News Reader An American judge has ruled that the Microsoft computer company has used its market monopoly to crush its competitors. Assistant Attorney General This is truly an important victory for America’s consumers and for the American economy. Fiona Bruce Microsoft was judged to have used its dominance in the software market to control an emerging one. The Internet. Fiona That’s the key thing; did you think they were right when they ruled that you’d behaved in this predatory, anti-competitive manner? Bill No, I didn’t, I didn’t think that they were right in that but we did everything they asked us to including making sure that there wouldn’t be another misunderstanding about that kind of thing again. So it had a huge impact on us. Fiona (commentary) Bill Gates’s desire to dominate the Internet had resulted in the ultimate sanction. His company faced the threat of being broken up. Some say Microsoft was only saved by a timely election. Robert Cringely There was a change of presidential administrations in the United States and went from Democrats to Republicans, went from, you know, business is kind of good to business is really good. Microsoft was a really big business. So, inside the Department of Justice, the people who were doing the negotiating suddenly got different, different marching orders from the new Attorney General and they said, settle the case. Fiona (commentary) But Microsoft’s courtroom battles just won’t go away. Earlier this year the company was fined a record one point four billion dollars by the European Union for not complying with its competition rulings. The regulators are starting to hit the software giant where it hurts. James Wallace They’ve begun to fine them not millions of dollars but billions of dollars. A billion here, a billion there and pretty soon you’re talking about real money that can have an impact on Microsoft’s bottom line so I think they’ve got Microsoft’s attention, they may not have completely changed Microsoft’s behaviour but Microsoft is taking notice because they’re having to pay out a lot of money. Fiona (commentary) Bill Gates says his company has learned from its bruising encounters with the regulators. Bill We were once proud that we didn’t have anybody talking with governments, well we, we took too long to understand that having people there and being part of that dialogue was a very important thing so we’ve gotten a lot better at that, going in early, talking about new things we’re going to do. So, yes, we’re wiser and the law suits are a factor in, in the lessons of, of this decade. Fiona (commentary) The last 10 years has seen Microsoft go on another voyage of discovery; learning to adapt and diversify to new markets. John Battelle I think if you measure the businesses that they have started outside of their core Office and Windows franchises, they’re quite successful. They’re big, many of them are profitable like XBOX or they’ve got a little hardware business which is doing very well. Fiona Seen Google Earth? How about Microsoft’s new service, World Wide Telescope? Fiona (commentary) Part of Bill Gates’s recipe for success is to invest an unrivalled$6 billion a year in research. And he still manages to keep plenty aside for a rainy day.

Fiona

One thing that comes through was that you were a worrier; I mean is that how you would describe yourself?

Bill

Well, I’ve certainly read a lot of business stories and even seen businesses where things seem to be going well and then their fortune’s reversed and they hadn’t cushioned themselves, they hadn’t been smart about it.

Fiona

So you were always aware this could just be round the corner if you didn’t, if things didn’t go well.

Bill

Yeah, this idea that in the technology world there’s always big changes and so that I always wanted to have a great financial strength so that we’d have the flexibility to go off and do software in the new way, whatever you wanted to do, that’s always been in the culture of the company.

Fiona (commentary)

When a new venture isn’t yet making money, Gates explains the losses as being part of his long-term vision.

Bill

Well, that’s nice.

Fiona (commentary)

But when it comes to his Internet business it’s an argument that’s starting to wear a bit thin. It’s more than 10 years since Bill Gates predicted the Internet tidal wave would transform the computer industry. Well, he was right about that. But his aim to make it central to his company’s business hasn’t been achieved. For all their efforts Microsoft have yet to strike it big on the net.

A few months ago, however, many thought that was about to change.

California’s Silicon Valley; home of the leading names on the Internet. In February Microsoft announced a bold takeover of one of the biggest; Yahoo!

Dan Rosensweig

Well, it would certainly be the largest acquisition made in Silicon Valley that I can recall; it would be the largest acquisition Microsoft’s ever made. I mean we’re talking about, you know, a forty-five billion dollar acquisition.

Fiona (commentary)

Yahoo’s Internet services attract hundreds of millions of users and lots of cash from advertisers. By acquiring the company Microsoft hoped to boost their ad revenues and catch up with a competitor based a few miles down the road.

Nicholas Carr

Microsoft’s attempts to buy Yahoo I think was, was in many ways an act of desperation. It has been trying for many years now to build up a big Internet business to challenge Google in the search industry and to challenge Google in the advertising industry. And it really hasn’t been able to do that.

Fiona (commentary)

Google, more than any other company, has shown the profit-making potential of the Internet.

John Battelle

Much as IBM was a defining company in the seventies and Microsoft in the nineties I think that, that this is Google’s decade.

Fiona (commentary)

On-line advertising is now worth $21 billion a year in the US alone and Google dominates the most lucrative sector; Internet search. By merging with Yahoo Microsoft hoped to get a bigger piece of the ad money action. James Lamberti You know, a combined Microsoft Yahoo company would give you a 15 per cent share of the world wide search market. And, you know, that may not sound like a whole lot but just to give you a little perspective for every one percent of market share you get in the search space on line, you’re talking about adding$200-250 million of revenue to the, to your company.

Fiona (commentary)

However, as Bill Gates started clearing his desk Yahoo rejected Microsoft’s takeover bid. Gates’s successors are left playing catch-up with Google. They say the fight goes on.

Steve Ballmer [Image: Yuval Shosan under licence]

Steve Ballmer

Certainly there is a good competition between Microsoft and Google. There are areas where we’re strong, where frankly they have not made a dent and there’s areas where they’re strong, where frankly we have nary made a dent and so the question is, will the competition continue, the answer to that is certainly yes, on both sides.

Fiona (commentary)

However, the failed takeover of Yahoo was a major blow because the race for advertising revenue isn’t about boosting short-term profits, it’s fundamental to Microsoft’s future.

Charlene Li

Microsoft has been traditionally focused on desk top applications. So you pay once, you get a Windows machine, you get Office and then hopefully you will upgrade those every couple of years. Now the difference though in this new space is that everything’s being given away for free. Its g-mail and Yahoo services are all being given away for free and very much advertising supported.

Fiona (commentary)

With so much advertising cash Google can provide free services like word processing and e-mail.

What’s more these services don’t sit inside a PC but on a vast interconnected network of super computers on the Internet. It’s a new concept called the Cloud.

Charlene Li

My entire personal life is in the Cloud and so I have spreadsheets detailing where my kids will go to summer camp, and the reason why it’s in the Cloud is I want to be able to share that list with all the other mums. Now if I kept that in a spreadsheet on my desk top it would be very inefficient to keep e-mailing that and it wouldn’t be updated but because it’s in the Cloud it’s a new way of communicating, of sharing information that software by itself can’t do.

John Battelle

From Bill Gates’ point of view he and Steve Ballmer really clung for a very long time to the idea that the PC is the most important thing. Now, of course, they had a reason for that, which is that every time you bought a PC you had to buy a six hundred dollar licence to Windows and probably another six hundred dollars worth of Microsoft Office so the idea that all of a sudden that’s migrating to the Cloud and it becomes a subscription service or maybe even a free service, that’s very, very threatening to the core business model of Microsoft.

Fiona (commentary)

But the man in charge of Microsoft’s future says the company is ready for the Internet Cloud.

Steve Ballmer

Now increasingly software’s an experience that has components that run in the Internet and you have to redefine software, some of that experience will get paid for by traditional fees, some of it may get paid for by advertising. We’re not embracing one to the exclusion of the other; we need to embrace both.

Fiona (commentary)

Microsoft’s revenue still far outweigh those of rivals like Google but analysts say they need to adapt quickly or face being overtaken.

Charlene Li

Now the question becomes how agile can Microsoft as an organisation be to shift all the vast resources that they have into this Internet space. If they can’t do it they will look back and say; yes, the Internet was the nemesis for Microsoft.

John Battelle

No matter what Microsoft will have a strong business in Office and Windows for decades. The question is will it be a strongly profitable and growing business. No. Not if they don’t make this shift so it’s the biggest threat that they face.

Fiona (commentary)

While Bill Gates’s successors compete with their Internet rivals the man himself is taking on a new challenge of his own.

I caught up with him in London during a flying visit to promote his next venture; saving the world.

He’s made himself the richest man in the world. He’s changed the way we live and we work. For most people that would be enough. For Bill Gates it’s a case of been there, done that. For him Microsoft may just be the first act. Now he’s using his money and his influence to move onto a different and altogether bigger stage.

Next week Bill Gates is stepping down from Microsoft to focus on his charity. It’s goal; to rid the world of diseases like Malaria. By giving away around $30 billion. He’s always welcome in the corridors of power. Bill Gates immunizes Ishaka Bashiru against polio at Bini Community Health Post in Sokoto, Nigeria, assisted by mother Rashida Bashiru and Mrs. Luba Argungu of the National Primary Health Centre [Photo: Bill & Melinda Gates Foundation/ Prashant Panjiar] Fiona Is he supportive of the work you do in the foundation? Bill Yes, I’d say that Tony Blair and Gordon Brown have been two of the best world leaders on these issues both in terms of giving them visibility and increasing the generosity. Fiona (commentary) As well as dropping in on Downing Street Bill’s got a packed schedule of business meetings. His new agenda means he’s even busier than ever. Ann-Marie Duffy We have got a meeting with a number of chief information officers from big UK companies. From there he actually then meets with The Sunday Times Business Editor. One meeting is three minutes which is... Fiona (commentary) What can you say in three minutes? Maybe if you’re Bill Gates you’ve said it all. Announcer I’d like to introduce Bill Gates. Fiona (commentary) Chairman Bill may soon be spending less time in the office but the billionaire sales rep can’t resist pitching the latest Microsoft product; touch recognition technology. Bill Gates I picked a particular application here just to show you how touch might work. Underneath here this is just a Windows personal computer that has a camera and some magic software so it’s watching my fingers. Fiona (commentary) For the boss of Microsoft it’s a time of transition. The geek who transformed the computer industry is being rebooted. And the 2008 version of Bill Gates could have an even bigger impact. Fiona (commentary) Bill Gates is standing down from the company he built into one of the most profitable in the world. Having made his fortune he’s about to embark on the next stage of his career; giving it away. The Bill and Melinda Gates Foundation is growing in size and ambition, almost as fast as Microsoft did. But it’s a family affair to which the couple have promised to give almost all their fortune. By donating$30 billion to charity, Gates is now sharing a global platform with presidents, prime ministers and even rock stars.

Bill

This wealth we’ve chosen not to pass it to our children or, you know, buy all sorts of mansions or whatever, we’re getting it back to society in the way that can have the most positive impact.

Fiona (commentary)

Until now it’s been Melinda Gates who’s been spending more time on the Foundation.

Melinda Gates

This is the, this is the challenge that we have because people look at Bill and me and say; my gosh, they have a tonne of money right, ok, so we’ve started this foundation and when we started it we have, we’ve put into it $30 billion, that’s all money Bill’s earned essentially from this incredible company Microsoft. Fiona Bruce Bill Gates will soon be working alongside his wife and friends say they complement each other. Heidi Roizen You know Bill is off the charts in many ways but I think that his intensity and his competitiveness and the way he relates to things, you know, wants to get into the analytics and into the data is sometimes, runs counter to I think the, the way a public personality needs to be put on philanthropic efforts because they too need to gain acceptance and they need to collaborate with others and they need to, again have a very human touch to that and I think Melinda brings that to the table, she is a very warm person, she is a very, she’s good at connecting with other people. Boy I got kicked out of there four months before graduation. Melinda Gates And are you now trying to complete your GD or High school diploma? Boy I umm, I graduated, I already got my diploma with... Melinda Gates Great. Fiona (commentary) Bill’s father, William Gates Senior, is also on the board of the foundation. He recalls that his son was for many years a reluctant philanthropist. William Gates Snr He had been advised over the years about the advisability of his having a foundation from a variety of standpoints not all just, not all tax saving but he had resisted that because he felt like he didn’t have time in his life for another entity. Heidi Roizen For him, if he was going to put money into philanthropy he was going to do it the same way he does his business which is absolutely know what he was doing, have an impact, do it in a different way and that was not compatible early on his career with his mission of making Microsoft into what it was. Fiona (commentary) Bill’s marriage to Microsoft manager Melinda French in 1994 changed his commitment to charity. Robert Cringely What do you do with all that wealth? Do you give it to your kids, do you, you know, give it to the world, if you’re going to give it to the world or to anyone on what basis do you do so? And Bill and Melinda made a conscience, conscious shift and choice that they were going to give away their money with intent and with specific goals. Fiona (commentary) Bill Gates’s father remembers the moment when his son revealed how serious he was about giving it all away. William Gates Snr So I, I called him and he said; well Dad, I’ve just been thinking about it, Melinda and I are pretty sure that we’re, we’re going to over the next year, year and a half, we’ll put$24 billion in. That was one of my better phone calls.

Fiona (commentary)

The foundation’s aim is to promote global equality by alleviating the effects of diseases that blight the developing world.

Bill

Picking causes and you know, taking the advances of science and saying ok, let’s make sure that malaria, tuberculosis, these things that get almost no attention because it’s poor people who don’t have economic power and so the science has not focused on these things, making sure those things get solved so it’s very exciting.

HM Queen Elizabeth II

As a token of our thanks and appreciation.

Fiona (commentary)

But an honorary knighthood doesn’t mean Bill Gates has lost his famous drive and competitiveness. Some say it’s just been channelled towards a new purpose.

Robert Cringely

Does he wake up one morning, Malaria is, is defeated and he says; oh, I’ve achieved it, I can die happy now. Bill needs a goal. Bill Gates’ goal is to win a Nobel Peace Prize. And he will pay whatever it costs to win it. And you know what; more power to him.

Fiona (commentary)

As Gates steps down from Microsoft, his colleagues decided there wasn’t much point having a whip round.

Steve Ballmer

It’s been in the planning for the past two years. He’ll still be active as chairman...

Fiona (commentary)

But they did let him star in his own leaving video.

Steve

Yeah, I think Bill’s ready for his last day. He’s worked pretty hard, saved a little bit.

Fiona (commentary)

So what effect will Gates’s departure have on Microsoft? Insiders and outsiders already disagree.

Steve

We will miss Bill, Bill’s a phenomenal talent and we will miss having him here full time but we’ve got a lot of other phenomenal talent, we’ve had two years to prepare and I don’t really seeing us miss a beat because of Bill moving.

Charlene Li

What they’re going to lose is that founding focus and the ability in particular to rally the troops. No one speaks Microsoft, lives Microsoft, embodies Microsoft as much as Bill Gates does.

Fiona (commentary)

At the end of this chapter of his life, there already seems to be more than one Bill Gates.

Fiona (commentary)

First there’s the super geek.

John Battelle

He’s the most important figure in the history of the computer industry. There’s really no arguing that. He might be eclipsed by those to come but he was the measuring stick by which the industry defined itself for, you know, two decades.

Fiona (commentary)

Then there’s Gates the super competitor.

Robert Cringely

Every day, every week, every year, every deadline, every event, every product is, is a chance to win or lose. And, he likes to win.

Fiona (commentary)

Now there’s Saint Bill.

Bill

Almost nobody’s crying. That’s amazing.

Melinda Gates

I know.

Fiona (commentary)

So what’s it all add up to? Well, some people’s view will never change.

William Gates Snr

If there’s a prouder father somewhere I’d like to hear from him. I don’t think there is one.

Fiona (commentary)

For others, no amount of good works can exonerate Gates’ behaviour in business.

Mitch Kapor

I have admiration for the work he and Melinda are doing with their, with their philanthropy. What I’m waiting for is the point at which he holds up his own historical behaviour in the mirror and say that that behaviour running Microsoft did not meet the standards that he now has. That would really complete a circle, that would be great but, you know, until then I think it’s not about name calling, it’s about pointing out that he’s a complex guy, multi-faceted and we should be looking at all of it.

Heidi Roizen

It’s always interesting to me that people can have sour grapes about pretty much anything and here is a person, a couple, who are going to put more money into philanthropy than anyone who has ever come before them by many orders of magnitude, I believe ultimately and I believe looking back a hundred years from now people, Microsoft will be a footnote in the life of Bill Gates and it will be the, the work that he does as a philanthropist that will really make his mark in the world.

Fiona

Is it as important to you as Microsoft, the foundation?

Bill

Well, that’s like saying, you know, which of your children are the most important to you. You know, I started software when I was 17 years old, I’d been thinking about it, playing with it, so and nothing will change that that’s my, my primary contribution to the world.

Fiona (commentary)

When you meet Bill Gates there’s no sign of great wealth, great power or even a particularly strong personality. But over the years his relentless competitive drive has had an impact on billions of lives.

As he leaves Microsoft some will say; good riddance. Many more don’t even realise how this geek changed their world.

Fiona

Can you not get in Bill?

Bill

I don’t have my key card.

Fiona

Bill Gates

Oh.

Fiona

After you.

Bill

Thank you.

This edition of the Money Programme was originally broadcast on BBC Two 20 June 2008