Microsoft founder Bill Gates may have seemed like an awkward geek, but he successfully made several critical transitions as his company — and his fortune — grew.
Photos, L to R: Doug Wilson; Matthew Mcvay; Sorbo Robert; Alain Nogues The Bill Gates that most people are familiar with is the socially awkward nerd who strong-armed his way into becoming the head of the largest software company in the world.
In reality, Gates is a smooth operator who, despite his uncombed hair, baby face and disheveled appearance, knew exactly what he was doing every step of the way. He successfully transitioned from cocky college dropout to brass-knuckle negotiator to seasoned captain of industry, eventually becoming the richest man in the world and a model philanthropist.
"This is a guy who really morphed over time," says Mary Jo Foley, a longtime Microsoft watcher and author of Microsoft 2.0: How Microsoft Plans to Stay Relevant in the Post-Gates Era. "When I look at other CEOs -- guys like [Oracle CEO] Larry Ellison -- they haven't changed much, but Gates has really changed. I still think he's a hard-charging businessman, though -- I don't think he's gone soft."
Here's a look at some of the tricky transitions that Gates successfully navigated over the course of his career. Each of these changes were necessary and probably inevitable for any ambitious entrepreneur. It's a measure of Gates' business acumen that he successfully pulled these off where many lesser entrepreneurs have failed.
Transition One: Coder to Negotiator
If you told the 20-year-old Gates, who co-founded Microsoft in 1975, that he actually pulled off his grand plan he probably wouldn't be surprised. And that's part of his charm.
Back in 1980, when Gates was barely old enough to rent a car, he walked into a room filled with IBM execs and sold them a product he didn't even have. IBM wanted to get into the computer business, and Bill Gates wanted to get into the software business. He didn't have any negotiating skills, but he landed a deal under which IBM licensed MS-DOS from Microsoft. It was a ridiculously advantageous arrangement since it gave Microsoft the freedom to license the operating system to any other computer maker -- which is what eventually fueled Microsoft's fantastic growth.
"He's not a rock star programmer, but he's always had a knack for seeing where the industry is going. He's not always right, but he's a visionary in terms of seeing how markets and industries evolve," Foley says.
Transition Two: Founder to Fortune 500 CEO
Many entrepreneurs are fully brilliant leaders of startups, but they crash and burn when those companies grew beyond the startup stage. There's little overlap between the skill sets involved in running a small startup and those required to steer a major corporation.
Gates is one of the few to pull off both feats with aplomb.
"His management style worked really well when they were a scrappy upstart. He brought in young smart guys like him. But he had to tone it down when Microsoft became a big company. A ruthless management style doesn't work as well with a company of 80,000 people," says Foley.
Gates matured simultaneously with the company. He learned to tuck his shirt in, comb his hair, and make polite cocktail conversation.
"When I was a summer intern at Microsoft in grad school in 1989, he hosted the summer MBA interns to a very nice backyard barbecue at his old house, before he got married. He worked the crowd expertly, despite his reputation for being ill-at-ease with people, and gave everyone their chance to ask him a question or two," says Ted Weinstein, a San Francisco-based literary agent.
Transition Three: Monopolist to Savvy Defendant
His visions didn't help when the feds came knocking in the late 1990s for one of the longest, most drawn-out antitrust cases in U.S. history. In what has been famously characterized as the 1998 "Rainman" deposition, Gates rocked back and forth in his chair, at times snapping at prosecuting attorney David Boies and generally behaving like a temperamental child. The thing is, it worked. Gates didn't give an inch. And roughly 10 years later, even Boies concedes that Gates' performance was spot on, both in the deposition and on the stand in court.
"He was the most potentially effective witness," Boies says. "Nobody knew the stuff as well as he did, and nobody had the passion for it that he did. I definitely would have called him to the stand ... He's a very smart guy."
Gates wasn't the most sympathetic witness, though, and in many ways it was a risk to let him testify.
"If you're going toe to toe with the government, and the message you want to send is, 'Come hell or high water, we're fighting this until the end,' then you do exactly what [Gates] did," says Barbara Sicalides, an antitrust attorney with Pepper Hamilton. "But in any case where you have a client the size of Microsoft, and where you have inflammatory documents, it's the sort of situation where you'd want to think twice about fighting until the bitter end ... For the most part, I think Microsoft's lawyers were exactly right."
Transition Four: Captain of Industry to 'Venture Philanthropist'
It was a peculiar situation, though, when, in his early 40s, Gates found himself one of the richest men in the world and had to start thinking about giving away his money, while he was still hungry to earn more. His initial attempts at philanthropy did not go over well.
The Gates Library Foundation, founded in 1997, was widely criticized for being too modest (he initially funded it with $200 million) and for being self-serving. And indeed it was -- the mission of the foundation was to provide libraries in low-income communities with internet access and computers. While a worthy cause, Microsoft was also a beneficiary of the foundation's work.
"I think he started the library effort because it was related to things he knew about," says Stacy Palmer, editor of The Chronicle of Philanthropy. "That's pretty typical. I think it was successful, but it was limited compared to the things he's involved with now."
It didn't take long until philanthropy became Gates' full-time occupation. In 1999 Gates folded his various charitable efforts into one organization, the Bill and Melinda Gates Foundation, and in 2000, Gates stepped down as CEO to spend more time on philanthropy.
"He seemed to be really interested in philanthropy from the beginning," says Foley. "He's the kind of guy who doesn't care what other people think of him, so I don't think he was bowing to pressure."
The net effect is that he has shaken up the philanthropy world. In earlier decades, industry titans often gave locally and more or less felt that their work was done at that point. Bill Gates -- and other tech-made billionaires -- have changed the landscape.
"We're seeing a growing emphasis on bringing bottom-line efficiency to venture philanthropy," says Palmer. "It's fairly dramatic -- he's trying to change the face of global philanthropy, but it started in a fairly parochial way."
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