Co-founder shares surprises, letdowns, morsels from early Microsoft days

By Ina Fried
Staff Writer, CNET News.com
June 24, 2008 4:00 AM PST

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

That's because, a week away from 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 Friday. He'll remain chairman and a part-time Microsoft employee.

Credit: Ina Fried

Bill Gates poses for a shot in his office, which includes a three-monitor display
set-up as well as a Surface tabletop computer.

The Microsoft co-founder did take some time out of his schedule recently to sit down with CNET News.com's Ina Fried 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 and 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. I had told people, yeah, we had this invitation that said, 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."

Q: As you've been thinking about the transition, what are the kinds of things that have been on your mind the most?
Gates: Well, for 33 years I've worked at Microsoft and come in every day, and thought about what are the new things we need to do, and what's my personal role in that, a lot of e-mail, lot of meetings, lot 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 e-mail 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 it's after July 1 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 like tablet or interactive TV 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 the mail I would have sent three months from now, now, just giving them encouragement. Because, you know, 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 took me around, showed me what they're doing.

So, you're going to product group by product group?
Gates: 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, so 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 July 1. 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 you're still pretty enthused about.
Gates: Yeah, that doesn't mean I'd necessarily go to their business plan review, but I've developed a relationship with them where 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--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 that keep on track, and just to give them the positive feedback as they're going through it, that group, that's actually the only one that's truly concrete at this point where literally we've scheduled out a bit this summer and even some into the fall when and how I'm going to look at various aspects of their work.

We weren't that well-known publicly until sometime in the 1980s, and one of my favorite 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, thinking globally.

Can you think of a time when the company really sort of behind the scenes was coming from behind? I mean, we've all heard sort of the early days of developing the first version of DOS, but are there other times where it was kind of a mad scramble?
Gates: Well, we weren't that well-known publicly until sometime in the 1980s, and one of my favorite 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, 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, 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'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 CEO 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 that said, 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, but...

Looking back at those early days, if you could give that 21-year-old you just starting Microsoft some advice, what would you--is there something that you know now that you didn't then that would have been useful?
Gates: Not really. I mean, you can 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 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.

Today, as you get a large company, having a push that says, hey, we've got to stay somewhat engineering-centric, even as you have all these different skill sets, you know, I could have told myself that guys' IQ, it's not as fungible to learn other things. If they show IQ in domain A, you know, I always thought, well, then just use them in domain B.

And that worked a bit. You even see another company in the industry doing this bit where you'll hire somebody who's a good scientist, and you say they can be a programmer, and you only--you interview them on sort of their--the depth of knowledge about the field they've spent in, and assume they can come to the other field. Some of that is true. But when you go into, say, management-type things or dealing with people-type things, then the number of people whose IQ is fungible is surprisingly low.

The thing that I would drool over is to walk over to Microsoft Research and see that here are people spending full time on vision, full time on speech, full time on machine learning, full time on software proof, where at early Microsoft we couldn't give back to the intellectual base.

I mean, that's the greatest surprise to me of all in my whole business career is 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, very similar, and yet they're very poor at the one and just beyond brilliant at the other.

What do you think--if that same 21-year-old you could see where things have gotten, what do you think would be most surprising? Because it sounds like you had the ambition all along.
Gates: 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 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, 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 here are people spending full time on vision, full time on speech, full time on machine learning, full time on software proof, where 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 thing. I mean, we're rated No. 1. 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--geez, 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. To have a time warp would feel like such a discontinuity, like, hey, if you haven't seen code, you're not me. So, it would be confusing.

Do you have a sense of what technologies are going to be important to you personally in your new role?
Gates: 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 the diseases. And so in the biggest 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.

If you take something like education, the whole way that teachers improve and learn from each other, and what is 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.