Gates looks back on 30 years at Microsoft

If you were to ask Bill Gates what life will be like when he stops working full time at Microsoft, he'd have to get back to you.

That's because, so close to the transition, he still hasn't slowed down his pace. If anything, things have picked up as he tries to have one last meeting with all the leaders and projects that are important to him.

Gates, who dropped out of school more than 30 years ago to run Microsoft, steps down from full-time work on 27 June. He'll remain chairman and a part-time Microsoft employee.

The Microsoft co-founder did take some time out of his schedule recently to sit down and offer some reflections on the early days of the PC market, as well as thoughts on where Microsoft is now and what technologies he will need in his new role, working full time for the Bill & Melinda Gates Foundation.

In the interview, Gates shared some little-known stories from the company's early days, including the fact that Microsoft seriously entertained combining with Lotus but talks ended when that company's chief executive pulled out. Gates also noted that Microsoft was invited and then uninvited to the launch event for the first IBM PC.

"We'd been invited, and then they decided not to invite us," Gates said. "Well, we had been working night and day... That was a little bit of a downer."

Q: As you've been thinking about the transition, what are the kinds of things that have been on your mind the most?
A: Well, for 33 years I've worked at Microsoft and come in every day, and thought about the new things we need to do, and what's my personal role in that — [there's been] a lot of email, lots of meetings [and] lots of product reviews. So, in a sense, it's hard for me to project what it's going to be like for me or Microsoft when I'm not here.

As long as I'm here, I'm still sending a lot of email and in a lot of meetings, and so the real change, in terms of people having an opportunity to step up and do things, to some degree, [will come] after 1 July, when my involvement is only a very specific involvement on particular projects, as opposed to the overall strategy thing.

Everybody likes to pick the current competitive battles that we're in and kind of think: "OK, those are the big things". For me, I'd pick the tablet or interactive TV — things that are, according to me — but I've been over-optimistic before — on the verge of big, big impact. So, I've been sending a lot of mail to the tablet and interactive TV team — sort of sending now the mail I would [otherwise] have sent three months from now — just giving them encouragement. Because, you know, [as regards] all the big successes, whether it's Office integration or Windows, it takes a long time for those things to get established.

We thought it would be a good idea for me to go to the Windows 7 group and go see the work, and I was thrilled. Steven Sinofsky [senior vice president in the Windows and Windows Live Engineering Group] took me around and showed me what they're doing.

So, you're going to product group by product group?
Well, in terms of big meetings, that's pretty much done. Like the Windows group had a meeting and the Surface group had a meeting, but this is more just sitting down with the top executives: [for example] Stephen Elop, Craig Mundie, Kevin Turner.

The timing is actually pretty good. We just did our business reviews. We do the business planning, which is for the next fiscal year, which starts 1 July. So, we have the plans in place, and I sat through that last set of reviews, but it's a perfect example of something that, as just a board member working on projects, I won't sit in those business-plan reviews in the future. I mean, Steve [Ballmer] may ask me to sit in on one that touches directly on something I'm doing, but the default is that I'm not there at all.

I hear search is one area you're still pretty enthused about.
Yes. That doesn't mean I'd necessarily go to their business-plan review, but...

...I've developed a relationship with them [around] brainstorming and thinking about what things we'd pick and how we do it.

You know, it's another good example of something that breakthrough work is not — it doesn't happen in a day; it happens in many years. Now, many of those years, fortunately, are the years we've already put into it. But — to really help [the search group] keep on track and just to give [the group] positive feedback as they're going — that's actually the only [thing] that's truly concrete at this point, where, literally, we've scheduled out a bit of this summer and even some[time] into the fall [concerning] when and how I'm going to look at various aspects of their work.

Can you think of a time when the company was coming from behind? I mean, we've all heard about the early days of developing the first version of DOS, but are there other times where it was kind of a mad scramble?
Well, we weren't that well known publicly until sometime in the 1980s. One of my favourite articles was where they wrote that there were four software companies, and none of them was that much different than the others. But we knew at that time that the other three just weren't long term, hiring the right people [and] thinking globally.

It was ourselves; Ashton-Tate; WordPerfect; and, I guess, Lotus. There were many software companies that were bigger than us. VisiCorp was bigger than us at a point in time. MicroPro [publisher of WordStar] was bigger than us at a point in time. And then each of those three — WordPerfect, Lotus and Ashton-Tate — were bigger than us at a time.

But the way we were going about it, and just thinking about software, and how was the chip going to change, and how did the pieces come together, and how did you do business in Europe and stuff — we were just different; we were just a long-term company.

So, it was funny to me that the article was written right as if somebody had really looked carefully. [If they had], they would see that we were quite different than those others. And then it was only about four years later that there was a spoof article in InfoWorld where they said: "Microsoft announced today that Ashton-Tate never existed", which is kind of an over-the-top thing. But that was a period where we came to the fore.

There was actually a point where we talked with Lotus about getting together with them, but it wasn't a good cultural fit there

Bill Gates

There's a lot of interesting twists and turns. There was actually a point where we talked with Lotus about getting together with them, but it wasn't a good cultural fit there. It was actually [Lotus chief executive Jim] Manzi who — I mean, it wouldn't necessarily have happened — but it was Manzi who ended the discussions.

There was one day that was rather funny. IBM didn't invite us to the introduction of the PC. We'd been invited, and then they decided not to invite us. Well, we had been working night and day. I had told people: "Yeah, we had this invitation... Yeah, we're going to go... There's going to be a big deal". And then they decided: "Nah, we don't want you to come to the thing." That was a little bit of a downer. Now, who cares?

Looking back at those early days, if you could give the 21-year-old you, who was just starting Microsoft, some advice, what would you say? Is there something that you know now that you didn't then that would have been useful?
Not really. I mean, you could say: "Hey, you're going to be successful, so don't work so hard", or something like that, but then it might completely erase the whole thing. Or [you could say]: "Learn that you're going to need a mix of skills, not just engineering skills." But, at first, the fact that we were just over-the-top engineering-centric wasn't so stupid.

I mean, that's the greatest surprise to me of all in my whole business career: that you find people who are so good at one thing, and, where the principles and models and approaches in that and in the other area are actually very similar, yet they're very poor at the one and just beyond brilliant at the other.

If that same 21-year-old you could see where things have gone, what do you think would be most surprising? Because it sounds like you had the ambition all along.
Well, yeah, we certainly said: "A computer on every desk and in every home." I had calculated out that we'd only need a thousand developers to write all the software that we were going to do all the horizontal software. So, definitely, if you took me to this place, I'm sure that, as a 21-year-old, I'd say: "What do all these people do? And...

...how can you afford [all of this]? Look at these offices! Look at this wasted space! Shuttles? Come on! Somebody is paying for all these shrubberies and things? You guys are crazy! You have too many people!". And just the cost structure would blow my mind, because I was thinking: "OK, should we let people have two chairs in their office or just one chair?" That kind of thing.

I'd come into this office and meet myself and I'd say: "Well, are you still reading all the code? I mean, these guys could ship some really crummy code; I hope you're still reading it." And I'd be like: "Are you kidding? It's been a decade since I took anybody's listing home and read it." It would be like: "Well, then how do you keep it good?"

The thing that I would drool over is to walk over to Microsoft Research and see that people are spending full time on vision, full time on speech, full time on machine learning, full time on software proof, while, at early Microsoft, we couldn't give back to the intellectual base. We drew on the base that the universities and Xerox had done, and we used it in a fantastic way, as did Apple and the whole personal computer industry.

Now we are very significant. In fact, if you leave universities out of it, we are probably the most significant computer-science research [body]. I mean, we're rated number one. We have the most papers.

So, I would be in awe of the hard things that this kind of scale and success lets you do, and I'd be really torn: "Should I go over to that research group and just go help those guys, or should I learn that chairman's office-type thing where you kind of have to give people positive feedback, negative feedback, balance that well, think about people?"

Do you have a sense of what technologies are going to be important to you personally in your new role?
Well, immunology is very important, because that's the science that teaches us how to make vaccines. Vaccines teach your immune system how to block diseases. And so in the biggest [Bill & Melinda Gates Foundation] program, Global Health, the key miracles we're looking for are vaccines: a vaccine for malaria, a vaccine for tuberculosis, a vaccine for AIDS, a vaccine for pneumonia, a vaccine for the various diarrheal diseases.

Someday they will write that Microsoft has peaked and someday they will be right

Bill Gates

If you take something like education — the whole way that teachers improve and learn from each other, and what makes an effective teacher and how do you encourage them to adopt best practices — that's a very complex area that I want to learn a lot about. To some degree, online video can come in and play a role there, particularly as you get up to college and community college.

I'll have to read a lot of books and go out and do a lot of visits to play the right role, in terms of strategy-making and education.

Then you have new areas, like agriculture, where I'm just amazed at the way seeds work and how they can be improved. I didn't even understand fertiliser. I mean, 10 years ago, if you asked me how you make fertiliser, I would have given you this vague thing about nitrogen, but I didn't understand where it is, why it costs money, how you apply it, how much of it drains away, could it be put in something where most of it doesn't drain away, so you don't need as much. Anyway, there are some really brilliant things that are coming along in that area, where you need far less of it.

And things like cold chain [with] vaccines — what is the gating factor once you have a vaccine of actually getting it out to rural areas? It's the fact that they have to be in refrigerators the whole way. If they ever get too cold, they freeze and they're bad, and, if they ever get too warm, they denature and they're bad. A lot of these new vaccines we're making are quite large unfortunately, and so the refrigerator capacity of this delivery chain is nowhere near adequate for the new things that we want to put into it. So, thinking through: "OK, do you do better refrigerators; do you do these super-Thermos things?" The answer is super-Thermos things, you know, but how do you design those and what are the particular needs of developing countries? So, there's a lot of technologies but, if you had to pick one, it would be immunology.

You mentioned early on that there was this question of: "Would IBM be the IBM of the software world?", and it's still an important company but it doesn't occupy the role that it did. A lot is written that Microsoft is going to find itself in a similar bind.
Someday they will write that Microsoft has peaked and someday they will be right. They said we didn't understand server operating systems, and that only Sun with Unix understood those things, and...

...I can show you the articles. They never do follow-up articles; I don't understand why. When they predict my death, they never reincarnate me.

But it's an appropriate dialogue, yes. There is a question whenever something new happens in the industry: will the leader be agile enough to take what they're good at and this new thing, and bring them together or not? That's always fair game.

People always tend to underestimate the assets that the leader has. I mean, how many times was it predicted that IBM would do well in various things? Well, heck, they did well in a lot of things for a long time.

So, our core skill set is software. Software on phones is a lot the same; software in TV sets is a lot the same; software in video games is a lot the same. We've always done software for a huge variety of devices.

Google is a very strong competitor, and so people will enjoy watching whether they can be challenged. The world will be better off if they are challenged effectively, and I think there's only one company left in terms of the depth and breadth and staying power that you need [to] really give them a big challenge.

Which is the bigger challenge? Is it Google the company because of their approach and their ambition and their assets and their talent, or is it the changes in the economics that's come with search and advertising and changes in software?
The economics haven't changed. I mean, the economics of software are very simple. Most of the profitability is made up out of making businesses more efficient. We saw operating systems and we saw productivity software, and those are not advertising-driven things. The online is changing some of how you deliver email and collaboration and those things, but we've been doing that off of servers; we have great cloud stuff that Ray [Ozzie] is driving. So, it's not really the economics.

The consumer side has always been that you weren't going to make a tonne of money there, but you could get great exposure.

Google is a very strong competitor, and so people will enjoy watching whether they can be challenged. The world will be better off if they are challenged effectively

Bill Gates

So, the business dynamic is very much the same [as is] the amount we can save, if you think of our economic impact, by making a worker have that intelligent whiteboard and intelligent desk and be able to look at business sales trends and look at what product you should buy, how do you work with your colleague in another country — improving those things. That's the huge impact of software in these next 10 years, not whether ads gleam on the left-hand side of your computer.

The breakthroughs have to do with natural user interface; data mining. Taking Office to the next level; that's way more impactful than anything about search-based advertising. I mean, Microsoft, fortunately, can be involved in both of those.

Were you relieved or disappointed that the Yahoo deal didn't go through?
Well, I've gotten a chance to help Steve [Ballmer] as he's worked this thing through. He feels very good about [making that] offer ... if they had embraced that thing, he and I would have been very happy with that. They didn't, and we're very happy with our stand-alone strategy.

So, I think it's kind of strange for people to say: "Oh, what a blow to us." Well, hey, we created an option that was out of our control — whether or not they had the right timeliness, enthusiasm, reasonableness. That was completely in their control; that's fair. Well, it's between them and their shareholders whether that's fair, but we knew they had a choice to make, and they — during the relevant time frame — in none of those three did they meet what would have made it make sense for us.

We have a good stand-alone strategy. It takes longer to get scale in terms of scale of advertising, end-user share, but it's all predicated on brilliant innovation. You can't have a stand-alone strategy or a strategy that involves any acquisition unless you're going to have a search that, in important respects, people view as a better search. So, it starts with something that the world at large doesn't have to believe yet but we believe in, which is that we can have something that's really fantastic and competes for consumers in. If you have that, even without the acquisition, that's a great thing. It's just how do you go and get the scale? It will take you longer.