William H. (Bill) Gates was co-founder and CEO of Microsoft Corp. As such, he not only accumulated a fortune -- in 2013 he was the richest person in the world, with a net worth of $72.1 billion -- but was a key player in the computer revolution that has fundamentally changed the nature of business and culture in the United States and around the world. Although Bill Gates began his career with the benefits of being the scion of an accomplished and well-off family, with excellent education opportunities and access to a broad network of personal connections, no one has argued that his success was not primarily the result of his own talents and efforts. In addition to co-founding Microsoft, he co-founded the Bill & Melinda Gates Foundation and since 2008 has devoted his energies to that large philanthropy.
Gates was born on October 28, 1955, in Seattle. At birth, he was called William H. Gates III (nicknamed "Trey"). He no longer uses the "III." He was the second of three children, and the only son, born to William H. Gates Sr. (b. 1925) and Mary Gates (1929-1994). (Gates's father was previously known as Gates II and Gates Jr.) His family has deep roots in the Northwest. His great-grandfather William Henry Gates moved to Seattle in the 1880s, and his great-grandparents on his mother's side of the family moved from Nebraska to South Bend, Washington, in 1892.
By all accounts, the Gates family was a close-knit one that ingrained in Gates a strong work ethic and a sense of competitiveness. As a young child, he liked board games, especially Risk and Monopoly. He also enjoyed non-team sports such as rollerskating, tennis, skiing, and waterskiing. He was an avid Boy Scout who fell only a few badges short of being an Eagle Scout.
As it was for fellow Seattleite and eventual Microsoft co-founder Paul Allen (b. 1953), the 1962 World's Fair in Seattle was a notable turning point in Gates's life. According to Gates, "It was a huge event, a neat deal. We went to every pavilion" (Manes, p. 15). At one of those pavilions, "The General Electric Living," the 7-year-old Gates would have seen television programming projected on walls, electronic libraries, and home computers. (These "home computers" were not yet consumer products. They were simulations, with limited [if any] functionality of the home and office of the future. They were said to be for keeping recipes, record keeping, and writing checks.)
Gates's parents wanted to send him to public schools but were concerned about his level of maturity. According to his mother, they were "anxious that he learned good study habits, get some discipline in his life, not sit around thinking all the time, but that he prepare himself to develop some kind of a good school record so that he could go to any college that he wanted to attend" (Manes, p. 24). According to his father, they "thought he was a little immature and that a little bit smaller class setting would be more supportive" (Manes, p. 24). As a result, they sent young Bill to Lakeside School, a private school that catered to Seattle's elite.
The decision to send Bill to Lakeside turned out to be a fateful one for two reasons. First, Lakeside was one of the very few schools that had a computer lab available for students to use. Actually, the lab -- funded by the Lakeside Mothers' Club -- consisted of a single room containing an electric typewriter and a teletype that was connected to a remote GE-635, a General Electric mainframe computer. That’s where, in the fall of 1968, Gates met a fellow student named Paul Allen.
Although two years behind Allen and most other students who frequented the computer lab, Gates quickly worked his way into the circle. "I go around saying I taught him all he knows," remembered Bill Dougall (1921-2009), a teacher at Lakeside who managed the computer lab. "It took him a week to pass me" (Manes, p. 27).
Gates had a tendency toward intellectual impatience. According to Dougall, Gates could often be heard saying, "That's the stupidest thing I've ever heard of!" (Manes, p 34). Many future Microsoft employees would tell a similar story. That trait put him at odds with some of his fellow students. According to one student, Gates was "an extremely annoying person. He was very easy to sort of dislike. And I think that probably me and a lot of people took a little extra pleasure in sort of bumping him while passing him in the hall and basically giving him a little bit of a hard time ... . In public school, the guy would've been killed" (Manes, p. 34).
Gates and Allen were soon collaborating on a variety of projects, including earning time on a mainframe computer by troubleshooting programs for a Seattle computer-time-sharing company. In November 1970, a Portland time-sharing company offered Allen and Gates a contract to write a payroll program. In 1972, the 17-year-old Gates was paid $4,200 to develop a program for scheduling classes at Lakeside. According to Gates, he did not overlook the opportunity to schedule his own classes such that his senior history class contained only one other boy and "all the good girls in the school" (Manes, p. 47).
While at Lakeside, family connections provided Gates his first taste of politics. Thanks to Daniel Evans (b. 1925), family friend and Washington governor, Gates served as a legislative page in the spring of 1971 in Olympia. And in the summer of 1972, another family friend, U.S. Representative Brock Adams (1927-2004), arranged for Gates to have a paid position as a congressional page in Washington, D.C.
During his senior year at Lakeside, Gates received a call from defense contractor TRW Inc., inviting him to interview for a job debugging software TRW was developing for the Bonneville Power Administration. Gates called Allen, who was by then attending Washington State University, and the two headed for Vancouver, Washington. They both were offered jobs at $165
a week. Gates received a leave of absence from Lakeside, Allen dropped out of WSU, and they rented an apartment together in Vancouver.
By the time Gates returned to Seattle to complete his senior year at Lakeside, he had already been accepted at Harvard. In the fall of 1973, just short of his 18th birthday, Gates began his freshman year at Harvard.
Paul Allen had warned Gates that Harvard would be more challenging than Lakeside. "You know, Bill," Allen said, "when you get to Harvard, there are going to be some people a lot better in math than you are" (Allen, p. 65). "No way," Gates replied. Allen was proved right, and the realization ultimately pushed Gates toward other pursuits.
While at Harvard, Gates impressed one professor with his technical skills ... and with his lack of social skills. "He was a hell of a good programmer," said Professor Thomas Cheatham (1929-2001) of Harvard's Aiken Computer Laboratory. But he added, "He put people down when it was not necessary, and was just generally not be a pleasant fellow to have around the place" (Manes, p. 58).
As it happened, Gates was not around the place for long. Shortly after arriving at Harvard, Gates began interviewing with tech companies in the area. "Paul and I were thinking we'd get a job, maybe take a year off and get a job together," Gates told an interviewer (Manes, p. 60). In fact, one of the places Gates interviewed was Honeywell. He was offered a job and, at his urging, so was Paul Allen. Allen took the job. Gates did not, opting to remain in school, though he would work at Honeywell during the summer of 1974.
The important thing, though, was that Allen moved to Boston, where his collaboration with Gates resumed. And one day in December 1974, that collaboration took a fateful turn, thanks to a magazine Allen bought in Harvard Square. The issue of Popular Electronics carried a cover story with the headline "Project Breakthrough! World's first minicomputer kit to rival commercial models." Allen ran with the magazine to Gates's dorm room. The Altair 8800 was just what they had been waiting for -- a computer based on Intel's 8080 microprocessor.
"As Bill read the story, he began rocking back and forth in his chair, a sign that he was deep in concentration," writes Allen. "I could tell he was impressed. 'It's expandable, just like a microcomputer,' he murmured'" (Allen, p. 7). According to Allen, "Our train was leaving the station at last" (Allen, p. 8).
Gates and Allen spent the next two months in Harvard's computer lab writing a BASIC program to run the Altair 8800. Allen took the result to the Albuquerque headquarters of Micro Instrumentation and Telemetry Systems (MITS), the manufacturer of the Altair computer. Gates had agreed that Allen should make the trip alone. "I had my beard going and at least looked like an adult," writes Allen, "while Bill -- who'd routinely get carded into his thirties -- still could pass for a high school sophomore" (Allen, p. 8).
Allen's demonstration of Altair BASIC to MITS President Ed Roberts (1941-2010) went off without a hitch, which resulted both in a contract for BASIC and Allen being hired as MITS's director of software development. In April 1975, Allen moved to Albuquerque. Gates remained behind at Harvard, trying to continue his studies while still spending countless hours programming more powerful 8K and 12K versions of BASIC.
Gates did, however, spend the summer of 1975 in Albuquerque living with Allen and working at MITS. At that time, he and Allen formed a partnership they called "Micro-Soft." It was not to be an equal partnership. Gates insisted on a 60-40 split, arguing that Allen was getting paid by MITS whereas Gates had been working without salary at Harvard on BASIC.
Since the partnership was not at the time formalized, Gates and Allen contracted with MITS as individuals. They received $3,000 when Roberts signed the contract for Altair BASIC, and they were to receive royalties for each copy delivered with hardware.
The contract also meant that Gates would not be staying long at Harvard. He returned for the fall term, which would be his last, despite strong objections from his parents. (In 2007 Gates received an honorary doctorate from Harvard. At the commencement, he told students, "I'm a bad influence. That's why I was invited to speak at your graduation. If I had spoken at your orientation, fewer of you might be here today" [Lin]).
Although the Altair 8800 was popular, the royalties didn't match Gates's hopes. A major reason for this was that MITS's customers were copying and distributing BASIC instead of paying for it. In February 1976, in his first foray into the media, Gates wrote an impassioned and outraged open letter that was widely published in computer magazines. "As the majority of hobbyists must be aware, most of you steal your software," wrote Gates. "Hardware must be paid for, but software is something to share. Who cares if the people who worked on it get paid? Is this fair?" The letter was signed "Bill Gates, general partner, Micro-Soft" ("Open Letter to Hobbyists").
It wasn't until February 3, 1977, after Gates had returned to Albuquerque, that he and Allen signed a formal partnership agreement. To Allen's surprise, Gates demanded an even more uneven 64-36 split, arguing that he had written most of the BASIC code and had had to leave Harvard. "He might have argued that the numbers reflected our contributions," writes Allen, "but they also exposed the differences between the son of a librarian and the son of a lawyer" (Allen, p. 103). Allen agreed to the split.
Moving Back to Seattle
Devoting his energies full-time to Microsoft now, Gates focused on expanding sales and on marketing BASIC to other hardware companies. He was also occupied with trying to navigate growing conflicts with MITS president Roberts over legal and marketing issues. MITS wanted to keep BASIC exclusive to the Altair, while Gates was aware that Microsoft's fortunes lay with selling computer languages to as many computer makers as possible. Microsoft's survival was threatened by MITS's attempts to block Microsoft sales of BASIC.
Gates prevailed. In 1977, Roberts sold MITS to Pertec, a company that made disk and tape drives. By then, the most valuable thing MITS had was its contract for BASIC and Pertec was intent on preventing Microsoft from marketing the programming language to other computer makes. As specified in the contract between Microsoft and MITS, the issue went to a binding arbitration, which Microsoft won.
Once free to market BASIC to a rapidly growing computer industry, Microsoft began to grow. Gates and Allen, seeing no reason to remain in Albuquerque, were both eager to move the company back to their hometown of Seattle. By the end of 1978, Microsoft, which now had 25 employees, was ensconced in a small suite of offices in downtown Bellevue, across Lake Washington from Seattle. That year, the company grossed $2.5 million.
By all reports, Gates was fully in charge of the enterprise, reviewing every line of code the company licensed. But according to several reports, including that of Allen, Gates quickly turned to focus more on the business side of the company. "I always focused on new ideas and creating new technologies," Allen told a Gates biographer. "Bill would occasionally jump in and get involved in that, but he was always more involved on the business side, more attracted to the business relationship side of things" (Wallace and Erickson, p. 119).
A Big IBM Deal
On July 22, 1980, IBM executive Jack Sams arrived at Microsoft's Bellevue offices for a meeting with Gates. Sams was in charge of software development for a secret IBM project dubbed "Chess." The project was to bring to market an IBM personal computer. IBM had the hardware
end pretty well covered. What they didn't have was a programming language and an operating system. Microsoft was an industry leader in the first category, at least.
"When someone came out to take us back to his office I thought the guy who came out was the office boy. It was Bill. Well, I'll tell you or anybody else, and I told IBM executives this the next week, that by the time you were with Bill for 15 minutes, you no longer thought about how old
he was or what he looked like. He had the most brilliant mind that I have ever dealt with" (Wallace, p. 169).
Initially, IBM wanted Digital Research's CP/M as an operating system for the new PC. But for reasons that are still not clear, IBM and Digital Research never reached an agreement. Gates stepped into the breach, promising to deliver an operating system. The only thing was, Microsoft didn't yet have a PC operating system.
"We could sell the promise and pull it off, because we had the money and the smart technical people and commitment. And virtually everything that we sold was not a product when we sold it. We sold promises," recalls Steve Smith, Microsoft marketing director at the time (Manes, p. 130).
Microsoft also happened to know about an existing operating system that just might work. Only weeks before, Tim Paterson (b. 1956) of Seattle Computer Products had contacted Paul Allen to see if Microsoft might want to write a version of BASIC for the 86-QDOS operating system Paterson had written for the Intel 8086 chip, which was the processor IBM planned to use in its new PC.
Gates quickly arranged a deal to be the exclusive licensing agent for 86-DOS and Microsoft would soon purchase the product outright for only $50,000. By November 1980, Microsoft had redesigned 86-QDOS to work with the IBM PC, and IBM and Microsoft had signed a contract. By 1991, Microsoft would be making $200 million a year on sales of MS-DOS.
Growth and Transition
The deal with IBM launched a period of spectacular growth for Microsoft. Since Gates and Allen had formed their partnership, its revenues had roughly doubled each year, reaching $16 million in 1981. But that was only the beginning of a spectacular climb. From 1981 to 1990, annual revenues would grow to $1.2 billion. Over the same period the number of Microsoft employees would grow from 128 to 5,635.
According to one biographer, just after moving Microsoft from Albuquerque to Bellevue, Gates told one of his programmers that he had two ambitions: to develop software that would make a computer easy enough for his mother to use, and to build a company larger than his father's law firm (Wallace, p. 208). He reached the latter goal by November 1981. The first goal would take a little longer.
Microsoft's rapid growth meant it was time to incorporate. On July 1, 1981, Microsoft became a corporation, with Gates taking the position of chairman of the board and 53 percent of the company's shares. Allen received 31 percent of the shares, and Steve Ballmer (b. 1956), a Harvard classmate of Gates and Microsoft's future CEO, received 8 percent.
By Gates's own account, he was increasingly focusing on the business side of the company. "I guess you could call me the doer and Paul the idea man," he told the Seattle Post-Intelligencer. "I'm more aggressive and crazily competitive, the front man in running the business day-to-day, while Paul keeps us up front in research and development" (Manes, p. 178).
But by 1983 Allen had been diagnosed with Hodgkin's disease, and he resigned from the company.
New Directions for Microsoft
Even as Microsoft's revenues and number of employees were growing by leaps and bounds, Gates was preparing to take his company in major new directions.
First, he was intent on developing an operating system with a graphical user interface. In 1983, Microsoft announced Windows as a extension of the MS-DOS operating system. Characteristically, Microsoft had not yet developed Windows. But the announcement itself prevented many users from abandoning MS-DOS for other operating systems. The first version of Windows would not actually launch until November 1985.
Second, Gates pushed Microsoft into developing applications. Microsoft had launched Multiplan, a spreadsheet application, in 1982. And it shipped a DOS version of Microsoft Word in 1983. But Gates was intent on developing suites of applications that would run in a graphical user interface. "I should have hired people faster and gotten into the applications business sooner," responded Gates when asked by a 1992 interview about major mistakes he had made (Manes, p. 184).
Initially, Gates's strategy was to develop applications for as many platforms as possible. As the computer industry matured, that strategy was soon narrowed down to two platforms: Windows and Macintosh. By 1985, Microsoft would release its Microsoft Office suite of integrated applications for the Macintosh. A Windows version would ship in 1990.
Gates made two other critical moves in 1986. First, he moved the company headquarters to Redmond, Washington, where there was ample room to expand. By 2007, the campus would occupy 388 acres and would accommodate 70 buildings.
Also in 1986, Gates took Microsoft public. The company's stock initially sold for $21, making Gates -- who then personally owned 45 percent of the company's 24.7 million shares -- a multimillionaire at the age of 31. By 1987, with the company's stock hitting over $90 per share, he would become a billionaire.
If the 1980s presented Gates with the challenge of growing Microsoft, the 1990s brought other kinds of challenges. In 1990, the Federal Trade Commission launched an investigation into possible collusion between IBM and Microsoft to split the market for operating systems. It was the first of several antitrust actions that would dog Gates and Microsoft.
It's difficult to tell just how much of the federal attention was a result of federal concern and how much was a result of a concerted campaign by Microsoft's competitors.
"As one federal inquiry morphed into the next, Gates and Ballmer gradually came to see the investigations not merely as legal scrutiny but as a kind of proxy warfare (and, later, as nothing less than a vast high tech conspiracy) instigated by their rivals in the Valley and elsewhere," wrote journalist John Heilemann in 2000 (Heilemann).
"Gates' hunger for new conquests left a trail of bloody bodies strewn in Microsoft's wake. Digital Research. WordPerfect. Novell. Lotus. Borland. Apple," added Heilemann.
"There's no doubt that we wouldn't have a DOJ dispute here if some of our competitors hadn't decided that battling it out in the marketplace was -- that their product wasn't going to do well enough on its own that way, that they were going to try and use the government to cripple us," Gates said in 1998. "And I use that word very carefully, because the idea of trying to tell us to ship products with features deleted, those are crippled products" (Gates, p. 67).
The most serious of the antitrust actions came when the Department of Justice in May 1998 charged Microsoft with anticompetitive practices aimed at maintaining its monopoly in PC operating systems and extending that monopoly to Web browsing software. Twenty state attorneys general and the District of Columbia took similar action against Microsoft.
In 1999, federal District Judge Thomas Penfield Jackson (1937-2013) ruled that Microsoft had, indeed, engaged in such behavior and he ordered that the company be split into two parts: one to make the operating system and to make applications.
By that time, writes Heilemann, "Microsoft's Nasdaq value had been chopped nearly in half since March -- wiping out more than $200 billion in wealth. Competitors crowed. The press piled on. Private class-action antitrust lawyers began to swarm" (Hellerman). Fortunately for Gates and Microsoft, in 2001 Penfield's ruling was overturned on appeal.
According to Gates, the decade-long legal battles were draining. "When your own government sues you, it's not a pleasant experience. I wasn't sitting there going, 'Ha, ha, ha, I'll do what I want.' I was thinking this is the worst thing that's ever happened to me," said Gates in 1998 (Gates, p. 67).
Enter the Internet
The other major challenge that Gates faced in the 1990s was Microsoft's tardy response to the emerging Internet.
In a 1995 memo intended for internal consumption, Gates wrote, "I assign the Internet the highest level of importance. In this memo I want to make clear that our focus on the Internet is crucial to every part of our business. The Internet is the most important single development to come along since the IBM PC was introduced in 1981. It is even more important than the arrival of the graphical user interface (GUI)" (This Day in Tech).
Noting that Netscape's Internet browser had a 70 percent market share and that, therefore, Netscape could influence what data types, communications protocols, and, ultimately, applications would be employed, Gates called on Microsoft "to define an integrated strategy that makes it clear that Windows machines are the best choice for the Internet" (This Day in Tech).
Gates's memo, which referred to the "Internet tidal wave," outlined a strategy that Microsoft largely followed, including rapid development of its Internet Explorer, integration of Internet-based collaboration tools into Microsoft Office and other applications, and giving away client code that encourages Windows-specific protocols to be used across the Internet.
Microsoft took a major step to match Gates's challenge in his Internet Tidal Wave memo in 1995 by launching Internet Explorer as part of the new version of Windows, Windows 95. At the same time, Gates's fortune, which had by now grown to $12.9 billion, made him for the first time the richest man in the world.
Even as he was embroiled in the string of antitrust actions and in trying to move Microsoft to the crest of the Internet tidal wave, Gates was also beginning to broaden his life beyond the confines of Microsoft.
In 1994, Gates married Melinda French (b. 1964), a Microsoft employee who had joined the company in 1987. The two met at a company picnic in 1988, dated occasionally and by 1992 the relationship had grown serious. Gates and French were intent on privacy. While many at Microsoft knew of the developing relationship, Gates asked the media not to discuss it. The media complied.
Bill and Melinda Gates have three children: Jennifer Catherine (b. 1996); Rory John (b. 1999); and Phoebe Adele (b. 2002).
Family life has had a big impact on Bill Gates. "I never took a day off in my 20s. Not one," he said in 2011. "And I'm still fanatical, but now I'm a little less fanatical. I play tennis, I play bridge, I spend time with my family ... . We have a minivan and that's what we use when it's the five of us. My eldest daughter rides horses, so we go to a lot of three-day shows. The kids are a big part of my schedule" (Gates, p. 55).
Gates also made other decisions in 1994 that showed a shift of focus. First, he bought Leonardo da Vinci's Codex Leicester at auction for $30.8 million.
“I personally have always been amazed by him because he personally worked out science on his own, and he understood things that no other scientist of that time did," Gates said in 2007. "So every one of these notebooks are amazing documents -- they’re kind of his rough-draft notes of texts that he eventually wanted to put together” (The Microsoft Blog).
Gates released an electronic version of the Codex, timed with the release of Windows Vista in 2007. "This is an innovative way to bring treasures -- including mine -- to a new audience," Gates said (Satter).
New Directions for Gates
The other major decision Gates made in 1994 was to launch the William H. Gates Foundation. Named after his father, the foundation was dedicated to supporting education, global health, and investment in low-income communities, and it marked the beginning of Gates's movement from the world of business to the world of philanthropy.
Also in 1995, Gates co-authored his first book, The Road Ahead. The book, written as Gates was becoming aware of the growing challenge of adapting to the emerging Internet, was revised to reflect that awareness. It spent seven weeks atop the New York Times bestseller list.
By the turn of the millennium, Gates was clearly moving further from his role as CEO of Microsoft. He authored another book in 1999, Business @ the Speed of Thought. And in 2000, he resigned as CEO of Microsoft, put Steve Ballmer in his place and took the title of "chief software architect." He and Melinda also formed the Bill & Melinda Gates Foundation to manage all of his family's philanthropic efforts, including that of the William H. Gates Foundation.
As Gates focused his efforts more on philanthropy and less on Microsoft, he began to receive more public accolades. Queen Elizabeth II gave him an honorary knighthood for his contributions to the United Kingdom and for his efforts to reduce poverty. Time magazine named Gates a "person of the year," along with Melinda Gates and Bono, for their efforts to improve global health.
The Bill & Melinda Gates Foundation
In 2006, Gates announced that he would be leaving Microsoft, phasing out his involvement over two years and giving his attention solely to his family and to the Bill & Melinda Gates Foundation. When he finally retired from his regular role at Microsoft on June 27, 2008, he told the Seattle Post-Intelligencer, "It will be an adjustment for me. If I didn't have the foundation -- which is so exciting, and the work is complex -- if I didn't have that, it would be tough for me, because I'm not a sit-on-the-beach type" (Gates p. 78). Indeed, he has given the foundation a great deal of his time and his money. He launched it with $28 billion of his own money.
The primary focus of the Bill & Melinda Gates Foundation is improving healthcare and reducing extreme poverty worldwide. In the United States, it additionally focuses on expanding educational opportunities and on ccess to information technology.
The foundation received a boost in 2006 when Gates's good friend Warren Buffet (b. 1930) pledged more than $30 billion. Gates and Buffet followed this up in 2010 by pledging to donate the majority of their fortunes to philanthropy. At the same time, they challenged other wealthy families to do the same. As of 2012, 81 individuals had taken the Giving Pledge.
As of 2013, the Bill & Melinda Gates Foundation reported an asset endowment of $36.4 billion and total grant payments since its inception of $26.1 billion.
"The motto of the foundation is that every life has equal value," said Gates in 2011. "There are more people dying of malaria than any specific cancer. When you die of malaria at age three it's different from being in your 70s, when you might die of a heart attack or you might die of cancer. And the world is putting massive amounts into cancer, so my wealth would have had a meaningless impact on that" (Gates, p. 59).
Gates told CNN in 2010 that the foundation had also captivated his energies. "I've been very lucky," he said. "I've had two jobs that were absolutely fantastic. When I was young, writing software, staying up all night, you know, dreaming about the personal computer I wanted and I thought would be great for everyone. That was the perfect thing for me. And now I've switched. I'm totally full-time on the foundation. You know, I'm loving advocating for these causes. I'm making sure that the money our foundation spends is -- is used in the best way possible ... . I love doing this work" (Gates, p. 28).