IoD: All of us here today are trying, in tougher economic times, to harness our teams to work better together to generate more revenues. You've probably recruited more high intellect people and on a global basis than almost any other company I can think of. How do you manage to harness all that intellect and all those egos into one cohesive team?
BG:Well that's a huge challenge. Often the IQs can subtract instead of adding up the intelligence into what you'd like to see! I'd say there's an element of using technology, so that once you pick a goal everybody's seen the hard facts about how you're meeting it or falling short.
But even more important is how you pick the people in the first place and then how you organise them. What's really turned out to be important for us is that as we pick people to manage it isn't just purely about them being an expert in each of the areas, because you're never going to find someone who's business and sales and manufacturing and engineering. It's how they work with the other people [that's important]. So early in our history we had a tendency to say "Ok if you're a top engineer, this management thing, you know just go read a book. And be nice to people because that's what we're supposed to be." In a few cases that worked and in many it didn't. So really, selecting the people for their collaborative behaviour and how they appreciate the experts in the areas they're not knowledgeable in and how they draw them in and create a team around that.
Saying to people "This is what counts, this is how you're going to have more responsibility and how you will prove yourself." It's been interesting...and that's let us have a pretty cohesive team.
IoD: In a previous interview with Jack Welch he said however talented the individual if the teamwork ethic wasn't there he either didn't recruit them or got rid of them. Where you've had geniuses who couldn't be team players what did you do?
BG:Well I think there's still room for geniuses somewhere. If you get down to the [lower levels] of the organisation, where they're sitting there doing the design, working on things, then you can create a special environment for them. And sometimes that is worth doing.
But if you move up, if they want to have responsibility for broad decisions, then I get to the point that Jack was at where it just isn't enough to be very smart. People have to enjoy working for you and with you and you have to set an example, whether it's hard work, following the rules, reaching out to the customers and listening to them. And every level you move up you've just got to make it clear to them that the standard for those things gets higher and higher.
Now if you're a genius down in that [lower level] who's inventing things, we'll actually pay you very well - equivalent to a vice president - but we wont give you broad responsibility and you will be in a fairly confined environment.
IoD: Were there times when you had a dark moment and thought "This is a really big risk even for me?" and it gave you a few sleepless nights? If so, what advice have you got for all of us here today in terms of managing real stress as you try to grow a business?
BG:Well there's certainly been stressful points along the way. I'd say try not to get sued by anybody! Particularly your own government... Especially if it's unjust.
As a company grows you do go through a load change. In the early Microsoft, I wrote most of the code and any other code that was written I would look it over and make sure it was good. So I was ruthless about the quality of the code. Then as we got past about 20 people I couldn't review everybody's code so I had to trust other people to do that.
Then, as we got multiple products, I had to make sure we were being a multi product organisation. Our most popular product at the time was MS-DOS but I couldn't be the man who did MS-DOS, I had to let someone else really live that product, live the feedback and prioritisation and nurture the other new products that would come along like Windows. [It's a case of] stepping up to what the delegation approach is. What is the checkpoint approach, the structure?
Going from 10 employees to about 70,000, we've had a least five times where we've had to really rethink and say "Ok, the way were doing things was fine for that smaller size but this is not that size. We're more global, broader in what we're doing and so we have to come up with new structures."
We always had a disdain for management overhead. So at each level we didn't want to get ahead of ourselves by bringing in too much process. So I'd say in the case of Microsoft, we always did the new processes maybe two years later than we should have - when it became dead obvious that it really had to be done.
But you will have managers that don't make that next transition. If you hire really good people then you can get a high percentage of that. I remember when we hired a person to run our operation in Italy. We had 20 people in Italy at the time and he had 400 people and I thought "Jeez he's going to expect to have 400 people." I said to him "You're not going to have 400 people" and he said "I'm patient."
Sure enough, eight years later we had more than 400 employers. He saw the opportunity. You can pick people who've had those outside experiences. We've hired a lot of people who've had failures because, in a sense, that prompted them more than having been involved in a success. We're good at getting diverse skills but you do get boundary points where you have to step back and rethink what process you're using.
IoD: Imagine for a moment that you were a college kid again and you were thinking about dropping out of Harvard. What business would you start, assuming you had hundreds of dollars not billions of dollars in your bank account. What business would you start and why?
BG:I think everything connected to science is where cool new things happen. And so, in biology, if I thought I had an insight into great new drugs that would cure diseases that's fun and then in the next 10 years they can tell quite a story about neat things they'll do. I think in energy, the idea there's a need now for something that's cheaper than what we have today, not more expensive but also [answering] environmental problems.
The size of opportunity if you're the one who gets it right is a Microsoft-sized opportunity. I'd still say though that software is the coolest thing because it's used by all those other people. How do they look at all the data of what goes on in biology? They use software. We're kind of an enabling element. There are so many of these important things like interaction we're just now getting to and making software more intelligent, so I'm pretty sure I'd pick the same thing.
Hopefully, I'd have an idea that Microsoft doesn't, because how you get ahead is to see something the big guys somehow have a blind spot for.
IoD: Let's move onto the Bill and Melinda Gates foundation now. You've got endowment assets of over $30 billion. Then two years ago Warren Buffett kicked in another $31 billion of assets. So you have the weaponry and huge ambitions, but with 2.5 billion people still living on less than $2 a day around the world - 40 per cent of the world's population - how do you possibly prioritise the literally hundreds of projects that must come across your desk every day?
BG:The thing that we picked to be the majority of what we do is global health. That is taking on the diseases that are still rampant amongst the poor that are not in the rich countries. For example, malaria was in Europe, it was in the US but it was eliminated. It is killing over a million children a day and a high percentage of people in Africa a year suffer from malaria. So that is huge.
In fact, one of the most amazing things that I learned that helped me really pick global health was that as you improve health then the population growth goes down. Parents are having a lot of kids because they want to have a high chance of some of them surviving to support them in adulthood since there's no pension scheme. So as soon as you improve health, the population growth goes down. So feeding, educating... all of those become more reasonable. There are many of these diseases. The top five: AIDS, TB, malaria, diarrhoea, respiratory [is where] we think we can make breakthroughs even in the next 10 years. I'd say some reasonable percentage of these will cut the death rates down very dramatically.
That was the missing piece. Governments don't fund that kind of drug discovery. They don't bring scientists together and take those kinds of risks. That's much more the kind of thing that a software company does or a pharmaceutical company does. We even have partners we give money to. GlaxoSmithKline (GSK) is a very important partner and has set a great example on this and we're working to get the other companies to come along and do more of those things.
We saw a chance for a breakthrough and we saw the tragedy, the inequity that those lives were treated as not being as valuable. We knew we needed to focus, so that became the thing that over half our activity is focused on.
I really do think as we make those improvements it will help with all the other things. After all it's nice that we can save 2.5 billion who are in a terrible plight, as it used to be almost everybody. Yet now Mexico, China, Malaysia, large parts of the world have moved up and we just need that virtuous cycle that those countries have undergone to get going in places like subterranean Africa where it's not yet happening.
IoD: The list last year from Forbes showed that there were 946 billionaires now on the planet. As the top two you and Warren Buffett have set a great example. Are you going to try and persuade a lot of those other billionaires to follow your example and put their money into the fund?
BG:Absolutely. But I'm going to do it in a perfectly friendly way, which is just to tell them that it really can have a big impact. There are lots of things they could pick where they would be experts and really drive results. [I'd] tell them how much fun I'm having.
There's a sense that this kind of philanthropy is often wasted money and that these countries are so tough to work with. We're trying to show the success stories and how you can be concrete about these things so more people are drawn in. We need more philanthropy, we need more business involvement - I use the term creative capitalism - and we need more government aid to be a bit more generous. Actually, the UK and the [levels of money] Gordon Brown has [pledged] has raised development assistance a lot and that helps us. Every country that does that helps us go to the other countries and say "Ok, now you should step up."
All these resources are necessary. Even as big as the foundation is in terms of the drug delivery systems or education, we're actually a fairly small piece. We need to work in partnership and drive generosity from all these different groups.
IoD: You'll be seeing Gordon Brown later today. Do you feel that we're giving enough as a country?
BG:The UK has taken on the goal of moving to 0.7 per cent of GDP which is a very generous level. And the UK is on track for that. One thing that's great about this issue in this country is it's a bi-partisan issue. I met with David Cameron at the World Economic Forum and he also believes in this. It is becoming a big bone of contention and you have both the key parties really seeing that the UK can set a great example. It is making a huge difference that the UK stepped up. We will get all the countries to move to this higher level of generosity.
IoD: If you look at AIDS, 22 million of the current sufferers - two thirds of the world's sufferers - are in sub-Saharan Africa. Will you then go to governments like China, who after all seem to be buying up most of the raw material assets of Africa, and say "You should be providing support as well"?
BG:Absolutely. The China story is a phenomenal story. In 1980 they were incredibly poor. Most of the people lived on under $1 a day and they reduced that down to somewhere under 10 per cent of the population.
Given that success, it is time as someone who received a lot of aid help in getting to that point - although their own government was a key element as well - that they turn around and give. In fact, in the latest world bank funding round, they did come in. [It's] a pretty minor level but it just shows the change [from] the biggest aid recipient in the world about 10 years ago to now somewhat of an aid donor...
IoD: Last question before we open to the floor - a political one. If you look at what you've achieved and the business experience you've got, you're about to get much more experience in solving world poverty and education issues. A lot of people are getting very disillusioned with politicians around the world now, in their ability to make major change. It might seem logical that your next step could be to run as a senator or even to run for president one day. Does that fill you with horror or do you think that's a great opportunity?
BG:I'm certainly not going to do it! I do work with politicians and getting them to tell a story about why the voters should be good about generosity. We need to get better at that. I enjoy doing that but my role is very much being full time with the foundation and making sure we've got the best malaria scientists and TB scientists and this whole aid system that's measurable and that when it doesn't work we know....
I didn't see the same type of metrics in the development world that we just take as a given in the business world. If you're in the UN, you should come in and see these red, yellow and green SharePoint indicators and say "Whoops nutrition, we didn't too well. What did we do there? What did we do different?" Like the things we were talking about for businesses of all sizes. We're bring these new approaches, letting them communicate better, overlap less and get the word out when things go well.
There's a lot of reform and improvement being off on the side working with governments and development agencies and filling our unique role. I think that's the highest impact, so running for an election, worrying about the next election, I don't think I'll get into that.
Audience: I was on your foundation website last week and I got the impression that yours and Melinda's donation might have a few conditions attached to it. I wondered if I'd got that right and your reasoning and what the implications might be? [The questioner then clarified that he was asking if Gates wouldn't continue to fund the foundation in the future]
BG:No. My wealth that I'm lucky enough to have is overwhelmingly going to the foundation. There's already some $30 billion in there and more to come. Once it's in, the way these things work, it's in. That money is dedicated to global health.
We have made a commitment that within about 50 years or so we will spend all the money. We decided not to create something that will last forever because we think [it's better] spending the money now [so] the policies are clear as opposed to having some board that's there after we're gone trying to figure it out. So we're going to have a smaller lifetime but that just means we get to apply more resources to these key problems.
Audience: Microsoft as a company covers the entire planet more than the sun covers in a year. It influences the life of everybody. Do you think a corporation like Microsoft would ever be able to speak to the governments regarding some of the policies of human rights or democracy?
BG:Microsoft is very involved working with governments in areas that's our expertise. India is one of the great examples. We have a research centre there that's dedicated to low-cost world computing and, at the state level, we have a lot of good relationships. I don't think that we're going to cause new governments to come into power. That's not really our role.
I do think that the internet and software has a huge role in driving democracy. You get the ability to look out to the world of information. The idea of censorship or really measuring "Why is my country doing so much poorly than these other countries?" is a huge political thing. Voters can be more [inquisitive] and look at the budget or look at the speeches. So we feel we're an enabling factor for education, which will drive democracy for income improvement and transparency.
Audience: The continued success of Microsoft will eventually make my work obsolete! I'm a graphologist - a handwriting expert - and more and more people tell me they never write. I have one simple request for you Bill: Would you kindly leave for me a sample of your handwriting before you go as I would like to find out how many of the 10 qualities required to make a successful individual you possess!
BG:...I was at the World Economic Forum a couple of years ago and during a conference I wrote down some notes and I left them behind. One of the UK newspapers found it and decided it was Tony Blair's handwriting and wrote this scathing article about what a weak leader he was and he didn't know what he was doing. I saw this in the newspaper and thought "That's my handwriting!"
We have these tablet computers that use a pen and you just write on the surface so you can take notes, schools now where you don't use text books because you have this ability, and we have OneNote that lets you do these things so we're trying to bring it into the mainstream... We're not trying to get rid of [handwriting] at all.
IoD: Do you ever think there's too much communication and not enough thinking sometimes.
BG:Well all these new tools can be abused. When books were invented they were deeply worried that people would sit inside and read instead of going out and doing things. Some people did it's been awful.
TV is the thing. It is really unbelievable the amount people sit there and passively watch TV. The big thing about the internet is that it is taking away from time watching TV passively as you have something that's interactive and engaging that is more personalised. It covers a wide range of acts but I do think that's better than just passive watching.
As parent you have to think of a balance of acts you want you kinds to engage in but I think we as humans will shape these tools and use them in a way that's most [comfortable] and effective for us. That will drive the success rather than them driving us.
Audience: How do you feel about the role of technology to change the world and solve the world's problems as opposed to more practical approaches? I was wondering how your vision of technology fits in with the practicalities?
BG:Bed nets are technology. Sumitomo Chemical built a plant where now the insecticide lasts five years instead of having to be applied every year. There's a university that's working on a bed net where you don't even need insecticide - just the way the fabric is designed actually traps the mosquitoes. It's a very brilliant piece of work.
So we need technology, but technology that's adaptive to the very tough conditions in these countries where there may be no electricity, there may be no roads. Why is the world able to feed six billion? That is technology.
If you look at the last 100 years, life expectancy has doubled and the literacy rate went from about 10 per cent to about 85 per cent. So we have some great things that have happened and sometimes simple technology like bathrooms and shoes - things that are way simpler than antibiotics. I believe if we just go back and say "No" sit in our houses, growing tomatoes in the garden, what that means for the poorest is they wont get clean water. [The effect of not doing this isn't on the rich countries], the affect is on Africa where a drought could mean you starve to death, not that you drive down grain stores or use a little bit of your savings. Innovation is the key element in this thing.... There's a lot of amazing stuff that is going on.
Audience: You said that you have a lot of competition in the consumer space. When it comes to the corporate space (I should say I'm chief information officer of a law firm), you have very little competition for the basics. So Windows, I have no choice. Office, I have no choice and likewise all the corporates. That tends to inspire what you might call a slightly arrogant approach by some of Microsoft's people...Every other supplier I have either has changed [terms and conditions] or I fire them and they change them and then I re-engage them. I don't have that choice with you. Does that worry you in the least?
BG:I'd love to see what terms and conditions you have with IBM. I promise we will match those right away. People do have lots of choices in these things. Products are popular because people make a choice to use them. You can choose to use an old version. You can choose to use alternative things. There is a tonne of stuff out there.
The competition in the business space with some many companies, whether it's IBM or Oracle or lots and lots of companies that come into [the market] is there, it just doesn't get covered as much. So what I said is that it's the consumer space that gets covered.
Actually, there is an amazing amount of innovative stuff that goes on in the business space. We only get revenue when we make new breakthroughs. Anybody can keep using Windows and Office. The older versions pay us nothing - that is zero revenue. We have to have such amazing breakthroughs that it is worth licensing, worth installing, worth learning and worth using. If we don't meet that test for you, then shame on us. That's the feedback we get from the marketplace.
People should wish that other parts of commerce were as competitive and innovative as the software space. Just think what food would cost, and what advances you would have experienced. This is the fastest moving sector in the economy by far.
Audience: Increasingly organisations of all sizes are being encouraged to give forward in a sense and to generate future wealth. What do you think about that, in particular the hindsight Microsoft has gained from giving more and sooner, or are we in a different age now? I wonder if giving earlier would have helped Microsoft grow even faster?
BG:Microsoft's investment in things like educational software, software that enables blind people who just had brail books to get in and browse and have all that read to them, that's been a big thing for us. Really early on in our history, we matched all employee donations and we made software available for free for charitable-type projects. I think it has had helped us hire better employees and do things.
In terms of people doing things free, there's truly free and there's advertiser-supported. TV is ad-supported. That model has been around for many decades and most things on the internet are ad-supported.
There's great revenue coming out of that - things like search. You don't have to feel sorry for Google. They'll be ok! I don't consider that a charitable act. They don't give anything to you; they keep all the money from those ads. So if that's charity wow, it's hard at work!
There are many business models. There's the idea of giving cash. There's the idea of innovating new products. There are things where you think about the less well off customers and sometimes, if you're clever, you can design things at a lower cost to them. Then there are some things that customers will never be able to afford and you just have to do the work for them. That's where you get partnerships like we have with GSK where we're funding the costs. They're being very charitable in applying their most innovative people. That's why Microsoft has a lab that's dedicated to the needs of people who'll never be able to afford broadband or hardware or software. That's our way of saying "Ok, even though there is no capitalistic feedback, we still want to do that."
If you go back to what I wrote in the 70s abut corporate giving and corporate social responsibility, I've been [encouraging] the technology industry for some time. Now, as I go full time with the foundation, reaching out to other sectors - banking, food the cell phone companies - that's what I'll have more time for.
Audience: We don't really have much true democracy in the world. People live in countries where democracy is a veneer and you don't have true freedom. A very simple question, whilst applauding the huge investment in improving world health, is it better to be free and unhealthy or healthy and a slave in a non-democratic regime?
BG:It's better to be alive.
The worst countries have a mixture of things that really hold them in to a negative cycle where you have high population growth, bad health, not much education and bad governance. There are lots of great books written about why that cycle happens in some places whereas in other places we've gotten out of that cycle. Now most of humanity has gotten out of that cycle.
There's more democracy today than ever, there's more literacy, there's more good health. But you can take either the bottom two billion or one billion and say the advances for them have been slower. [But], even in that portion, literacy has gone up and health has improved, but not nearly at the rate we would like it too. Part of it is that we don't have visibility of those things. You can see that as you improve health then you improve education and then you get much more democratic governance.
Basically, in most cases, you've got to give people something to care about. A vote is not the ultimate thing. If your child's dying of malaria, if they're starving to death, saying "Go in to this booth and vote..." that's not like some big thing where they go "Wow. Thank you! I don't mind that my children are dying." There are some things that are very basic, but if you could tell me how I could spend money and create democracy, I would gladly fund that too.
The idea of how you make that happen in a very poor country, that's an unsolved problem and we should wish that somebody comes along with a solution. I'll be the first to make sure they have tonnes of resources to pursue it....
Audience: As a young businessman, I've been inspired by the success of Microsoft and yourself. I just wanted to know who inspired you and why?
BG:I think there has been some great scientists and some great businessmen. Reading their biographies or autobiographies makes you want to strive to do things very well.
The person I've learned the most from, outside of my family? I'd pick two people. Steve Ballmer. In terms of creating the business and how we organise it, it has been an incredible business partnership. He's been chief executive officer (CEO) since the year 2000, but even before than he and I really ran the thing together.
The other is my best friend Warren Buffett, even though he's not in the technical business (he doesn't use a PC except to play bridge online!). Him, in terms of values and integrity and positive energy, the approach he has and the simple way he can take very complex issues like the financial markets and really cut to the heart of what really counts in these things. He's been amazing and I've learned a phenomenal amount from him.
The list would be very long but he'd be right there at the top.
IoD: And is there one piece of advice for entrepreneurs on the way up?
BG:I didn't think of Microsoft being a super valuable business. I worked on software because it was fun to work on software and I thought people can see that software can do these things so let's work on that. We never thought we'd have a big business with all these employees...
If you're engaged and you enjoy it, you're more likely to do world-class work than if you're just saying "Ok that's got a good wage rate..." For an entrepreneur, picking something you're passionate about is by far the most important thing.
