Playing hardball in software business

Money

William H. Gates III

Playing hardball in software business

What makes Gates tick

Kathy Rebello
USA Today

January 16, 1991

REDMOND, Wash. - For each of the past six years, William H. Gates III, co- founder of Microsoft Corp., has thrown one heck of a summer party. At least he calls it a party.

This year, the theme was African Safari. But skip any fantasies of coconut drinks by a swimming pool. Gates' parties thrive on competition, challenges, games. About 100 guests vied for prizes in African Jeopardy, banana gathering and sand-castle building. Gates, his date, his parents and two sisters were judges.

``Bill is competitive-plus,'' says friend Vern Raburn, who worked for Gates for four years. ``Race-car drivers have a phrase for it: red mist. They get so pumped up, they get blood in their eyes. Bill gets red mist.''

Seeing red has landed the 35-year-old Gates in a sea of green. For the latest fiscal year , his company surpassed $1.2 billion in revenue - the first PC-software firm to do so. His Microsoft stake , at Tuesday's closing price of $78 3/8, is worth $3 billion.

Microsoft markets at least 40 software products, including three of the industry's critical software standards. Those standards - MS-DOS, Windows 3.0 and OS/2 - dictate how a computer uses applications software such as Lotus 1-2-3 or WordPerfect.

``Bill now wields more power than anybody else in the computer industry,'' says Mitch Kapor, founder of competing Lotus Development Corp. ``When the history books are written, Microsoft will be the Standard Oil of the post-industrial empire. And Bill's got a place like Rockefeller had in the 19th century.''

It's a place both despised and revered . Some of that is brought on by basic envy and fear of power. But some of that is brought on by Gates' style. He is technically brilliant and doesn't hesitate to browbeat others with his knowledge. He is determined, combative if questioned, seldom tactful, a ruthless dealmaker. ``I half-jokingly say there is only one person with fewer friends than Saddam Hussein,'' says J. Paul Grayson, a friendly competitor. ``And that's Bill Gates.''

Gates isn't concerned. He knows how people portray him and although he thinks it's ``weird, disappointing,'' he sees it as --a challenge. ``It's pleasing to me when people try and come up with stuff about how we've done things wrong and they come up with so little,'' he says. ``I'm glad to have so many ombudsmen and referees.''

That attitude comes easy for Gates, who has the panache of a Seattle blueblood - which he is. He is the son of Bill Gates, a prominent attorney, and Mary Gates, a former schoolteacher who sits on several boards, including First Interstate Bank's. Says Gates with characteristic sarcasm: ``I didn't grow up hungry.''

But even by the Gates family standards, Bill - called Trey at home because of his III designation - is enormously wealthy and soon will live the part. After years of penny pinching - he lives in a modest home by a lake in Seattle - he will break ground on a $10 million estate. The 45,800-square- foot abode will include three kitchens, a theater room, a swimming pool, a lakeside pavilion, raquetball and volleyball courts, a two-dock boat slip, an artificial estuary for a salmon run and an underground 20-car garage.

Gates downplays the extravagance. He says most of the home will be used for Microsoft meetings and parties - hence, the huge garage. ``I plan to live in it for a long, long time - say 20 years or so,'' says Gates, a bachelor. ``I've designed the house so I could have a wife and family.'' Any time soon? ``That's not valuable to speculate on more specifically.''

The story of Bill Gates the computer whiz started 23 years ago at Lakeside School, a private institution. The Lakeside Mothers' Club bought time on a mainframe computer for the students. Gates and three friends - including Paul Allen, who would co-found Microsoft - were enthralled. ``We use to take the bus over and program until 3 and 4 a.m., typing and eating pizzas,'' says Allen.

At Harvard , Gates was part techno whiz, part poker addict. He would stay up all night playing cards. ``We all knew him as that crazy guy from Seattle with the messy room,'' says Steve Ballmer, a Harvard friend and Microsoft senior vice president. ``The guy never even put sheets on his bed.''

These were Gates' formative years - in more ways than one. Allen moved to Boston so the two could continue their computer programming. They set out to adapt a computer language called BASIC to run on the Altair, the first commercial PC. After Gates dropped out of Harvard, the two formed Microsoft and in 1979 returned to Seattle. Their big break came in 1980 when Gates agreed to develop an operating system for IBM 's first PC. Today, that system, MS-DOS, is the guts of more than 80% of PCs.

Now Gates is CEO of a firm with 5,200 employees. Yet he is as much the kid as he ever was. People describe him as:

- Adventuresome. Ann Winblad, a friend and venture capitalist in Silicon Valley, says Gates ``likes life a lot. He likes going to the edge all the time.'' Winblad recalls when she and Gates were in Mexico vacationing and she went to the restroom. When she returned, Gates told her he had subleased their rental car to a couple of hippies. He charged them $10 for the afternoon. ``But four hours later, these guys who looked like they were still on an acid trip showed up with the car. To Bill, it was just a big adventure,'' she says.

- Curious. Gates is voracious about technology. Former Microsoft President Jon Shirley remembers when he and Gates visited countless electronics stores in Japan. ``Bill knew every single machine, what they could do and what was inside them. He just had this insatiable curiosity.''

- Addicted to information. Heidi Roizen, friend and president of software firm T-Maker, says she can't grab a bite at Burger King with Gates without him poring through Economist, Scientific American and U.S. News and World Report. Gates has read a dozen books about Napoleon, six about President Franklin Roosevelt and everything by F. Scott Fitzgerald.

- One of the team. Gates says no one at Microsoft should have special parking spaces. But this year, he was accosted in the parking lot three times - one person wanted a job, another wanted donations, a third harassed him. Now Gates has an assigned, protected spot for his Lexus.

- Sentimental. One of his favorite songs is Smoke Gets in Your Eyes. One of his favorite movies is the Audrey Hepburn classic Roman Holiday. And he has been known to recite passages from Catcher in the Rye to his girlfriends. Says Winblad: ``When you're running a $1 billion company, it's not going to be a normal life. It's not normal to be 35 and worth $3 billion. But there's a lot more texture and character to this person than most people see. He really is human.'' What makes Gates tick Age: 35

Marital status: Single

Family: Parents Mary and William Gates II and two sisters, Kristianne and Libby.

His wealth: Gates owns 35.9%, or 40 million shares, of Microsoft stock. At Tuesday's close of $78 3/8 a share, that translates into a paper worth of $3 billion. Gates says 95% of his net worth is tied up in Microsoft.

On money: ``I grew up in a family where my father was a successful lawyer. Money was never a big deal,'' he says. That partly explains why he has not diversified his fortune. ``There are personal-indifference curves at a certain level of worth,'' he says. ``In terms of my eating hamburgers, buying ketchup or sheets, it's OK. I have an infinite amount of money.''

Whom he admires: Richard Feynman, the physicist author who died recently of cancer (``If he didn't understand something, he'd never say, `Ah-huh.' He'd say, `I don't get it.' ''); Ken Olsen, founder of Digital Equipment Corp. (``He stayed with his job.''); Steve Jobs, co-founder of Apple Computer and now head of NeXT Inc.

CUTLINE: AT HOME: Gates lives in a modest Seattle home but soon will build a $10 million estate.

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PHOTO;color,Geoff Manasse