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Tuesday, June 20, 2006 - Page updated at 06:22 PM

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Brier Dudley

A conversation with Bill Gates: Reflecting on where he's been, where he's going

Seattle Times staff columnist

From the Kalahari to Kathmandu and everywhere in between, Bill Gates is a household name, the icon of the personal computing era and the symbol of modern capitalism.

Where does he go from there? For Seattle's most famous son, there was really only one choice.

Last week he decided to seek a new and potentially more rewarding role on the world's stage — as the pre-eminent philanthropist in history.

Instead of praising Gates for the technology he helped make widely accessible and affordable — and blaming him for its glitches — people everywhere will be counting on the world's richest man to eradicate diseases, fix schools and ease suffering in developing countries.

Yet Gates downplayed his emerging stature as global statesman during a wide-ranging conversation in his office the day after he relinquished his position as Microsoft's chief software architect. He sidestepped questions about his legacy and contributions to the Seattle area, and instead pointed to Microsoft employees who support local causes.

He shared more details about his decision to shift careers and work with his wife, Melinda, at their charitable foundation. He also raised concerns about immigration reform, and explained the work that led to China President Hu Jintao's recent visit.

Despite the weighty subjects, Gates was particularly relaxed and chatty. Only a few times did he cross his arms, lean back and turn aside to signal he wouldn't be answering a question he didn't like.

Ray Ozzie


Age: 50

New title: Chief software architect

Education: University of Illinois, bachelor's degree in computer science

Years at Microsoft: 1

Background: Joined Microsoft as chief technical officer. Founded Groove Networks and Iris Associates. Worked at Lotus Development and developed Lotus Notes. Worked at Data General.

Craig Mundie


Age: 56

New title: Chief research and strategy officer

Education: Georgia Institute of Technology, bachelor's degree in electrical engineering, master's degree in information theory and computer science

Years at Microsoft: 14

Background: Has been involved in a string of key initiatives at Microsoft. Helped found Alliant Computer Systems. Worked at Data General.

Ray Ozzie and Craig Mundie, the two men appointed to fill his tech leadership role at the company, joined him in the bright, wood-paneled aerie atop Microsoft's woodsy campus to discuss their new roles at the company, its challenges and its future in the Puget Sound region.

Here's an edited transcript:

On the changes

Q: How do you feel today Bill, different?

Gates: I'm glad that we got the message across about having a good plan. Certainly talking to the employees and looking at the financial reaction, people are seeing this as a very professional and well thought-out way of taking the change in my priorities and making sure that Microsoft continues to do super well. I feel very good about it.

Q: Was there a moment of epiphany for you where this all came about?

Gates: My first thought about the possibility goes all the way back to 2004 and then a little bit in that summer and fall, talking to Steve [Ballmer]. The real decision only came this last Tuesday, although at the last board meeting I talked to the board and we picked mid-June as the point where I would make a final decision.

Every stage counted in terms of Steve listening to me, why I wanted to do it, and then helping think through what I do for the company and how we'd handle each of those things — and the work at the foundation becoming more complex and more impactful ... with some of the successes that have been had there. So both of those things were developing in parallel, and then when I felt we could execute on a great transition plan and my [direct involvement in the] foundation could make a big difference, I felt very comfortable with the decision I made Tuesday morning.

There's a lot of steps along the way. I said at the press conference, first broaching the possibility with Steve, I had some trepidation about that because Steve and I worked together every day, love working together. That's just been, for the past 26 years, what we do.

Q: It seems you have a potent message when you come to a country — China, India, wherever. You represent the foundation, Microsoft and the economic opportunities of a software industry in these countries. How's that going to change — is Microsoft going to lose that powerful tool?

Gates: First of all, I wouldn't overestimate what impact that has. I can fly into a country that has 90 percent [software] piracy and when I fly out it's still 90 percent piracy. It's not like all of a sudden people change those things. Yes there's a lot of hubbub and attention on some of those visits but they're not, 'What database do they decide to use, what e-mail system do they decide to use, what courses do they teach in their universities.' That's much more [the job] of the employees we build up in that country.

If I'd never visited any one of those countries I don't think it would be hugely different. We would have gotten a lot less ink and headlines — maybe it helps some. Obviously we must think it helps some; otherwise I wouldn't go do it. But it's not that magic thing. Craig visits more countries than I do, and a lot of the impact is a very slow thing of talking to them about their local software industry, talking to them about the courses in their college and how we can work together, talking to them about getting computers to their schools.

Mundie: You can take China as an example of the way I think about this. Bill and I really have partnered on the strategy and the engagement with all the different levels of government for seven years. So when you saw President Hu come to Microsoft, that was obviously the culmination of a seven-year program of engagement.

I actually think — Bill can say whether he agrees or not — but there is a natural symbiosis between what Microsoft is going to do in many countries of the world and what Bill thinks the foundation will do in its areas of education and health, too.

Gates: Just to be hard-core specific, Microsoft will probably get more of my time in very poor countries than it's gotten in the past and it will get a lot less of my time in rich countries. So if you want to sell to Nigeria, this is your lucky day.

A lot of my travel will be foundation driven. The two things are separate. When I went to Bangladesh, I went primarily because of the foundation. I wouldn't have gone for the Microsoft thing, but I took a half-day and I think we kicked off some things that will be helpful there. Vietnam, I actually went to totally for a Microsoft thing, and I got to learn some things that are helpful to me in our foundation work because Vietnam is actually a country that does amazingly well on health care and it was interesting to see that. But, say, going to Germany — I love Germany, but I will do Microsoft work in Germany quite a bit less after the two years is over.

Q: But, Bill, will you continue the statesman role you've kind of moved into?

Gates: Well, I don't recognize having moved into a statesman role. I've been meeting with government leaders for over 20 years. I remember going down to Brazil and they had all these rules against importing software, repatriating dollars. It was a really messed up thing. I'd met with the Brazilian government for two days and I remember thinking, "geez, I've met with the Brazilian government more than I've ever met with the U.S. government" in those days. Because we were small enough [then] that in the U.S. we didn't have any issues where political meetings were at all important or necessary.

I remember in Japan in the early days the embassy really wanted to get involved and help and that's natural for them, but we didn't want to make any of the issues we were running into a country-vs.-country issue, so actually on several of those things we said, "Thanks but we'll stick to the pure commercial approach to what were trying to do here and that wasn't necessary."

I don't have a statesman role. Everything I do when I'm working for Microsoft is about advancing Microsoft's interests and meeting with political leaders and the future of their country and how they should invest, their interests in meeting with us, and that it's mutually beneficial.

Q: Would you be interested in getting more involved in politics?

Gates: Politics? I'll never run, I can't see any circumstance where I would ever run for any office. It just wouldn't suit what I'm good at.

But spending time with politicians about how they look at issues and allocate resources, I think that will stay about the same. Some more of those meetings will be about global health resources than broadband buildout.

Education is one [issue] I've always been super interested in and is something that spans both the foundation and Microsoft — each country getting the most out of their education investments, that's something the company cares a lot about ... and that's one of the two big causes for the foundation.

On the company

Q: I'd like to hear more about this technology vision office you're created here. It seems like Craig, you've got the external, and Ray, you've got the internal. Is that too superficial?

Ozzie: There are some aspects of the way that we'll be dividing up the role in that dimension. But, really, you can think of it more as a spectrum from, at one end, technology, and at the other end, customers.

Craig not only deals in research, he also runs incubations that are in that realm. That's kind of where I begin. I also run some incubations but my skills, my background, tend to move toward product, toward building products and architecting products, and then toward customer solutions.

Mundie: There's a third axis to that — which is a little bit the time horizon. The stuff I do is typically three to 10 years in the time horizon. What Ray's focused on increasingly is helping the product groups in the next one or two product cycles.

Gates: Zero to five years.

Q: Bill has a kind of a spiritual leader role. Are you guys up to filling that role in 2008?

Ozzie: There's always an irreplaceable place in people's hearts and minds for the founders of the company and, regardless of whether Bill's full-time at the foundation, he'll always have been the founder, co-founder of Microsoft with Paul [Allen]. I'm sure Paul has a place in people's minds and hearts even though he hasn't been here in quite a while.

So no, those are not shoes that we can fill. However, as I have more of an impact on product over time, essentially I earn the respect of the people who I interact with, much as I've had a very close relationship with many people in other companies over time. I very much look forward to that.

Mundie: Let me give you two more thoughts on that. We've all been founders of companies. Bill founded this one, I founded Alliant, [Ray] founded two or three, and so in a way it gives us some perspective on what it's really about — you understand the transition, how companies grow and what you can and can't do. I came here in a handshake deal with him [Bill] and Nathan Myhrvold almost 14 years ago to do startups inside Microsoft. I actually feel like a founder of some of our businesses, and I would say that there's certainly a portion of the population of the company today who are involved in Windows CE and handheld phones and television and other things, all of which we did as startups in this company between 1992 and 1998. You can't see it under the greater Microsoft umbrella, but I certainly feel that for that community I certainly have been a founding partner with Bill in making that happen

Gates: That's partly why the "Live" (online services initiative) thing is so great because it plays to what Ray's done and thought about and yet it's kind of this new thing so you get this group that's very enthused about it. You get them working with a quite variety of the product groups thinking, "OK, here's how we connect up to this," or, "Here's how we need this thing." So Ray in a certain sense is the founder of this Live thing and is kind of driving that, so it was a wonderful first huge assignment.

What Craig's talking about is he was one of the founders of the "beyond the PC" [effort] — what are we doing with copy machines and phones and TV. Because it was new territory, we made plenty of missteps, and it's fun to have seen that out of those missteps and that early optimism, willingness to invest, the phone effort really has come together, the Xbox thing has more than come together, the IPTV thing is definitely coming together. A few of them, like auto and watches, are still in the early stages. Craig and I still believe in those things and stick up for them, but they're not ready to make us a lot of money yet.

Mundie: Many of the things that the company does, they change the global society over time, and we learned that there's a lot of hysteresis in that and it takes time. The fact the company has had the resources and the leadership and the patience to do these things that really do turn out to take so much time is an asset that very few other companies have.

Q: One question I get asked a lot is about the future of Microsoft in Seattle. For the first time, after July 2008, there won't be a Seattle guy in charge here.

Gates: That's not true. Steve is in charge here. Well, OK, he wasn't born here. I understand what you're saying — a Seattle native. I wouldn't worry about it.

Mundie: It's highly unlikely a Boeing thing would happen here.

Q: Where do you see the company being, here, in 10 or 20 years?

Gates: Well the headquarters of the company are here and I can't imagine anything would every change that. I suppose if you get 20 or 30 years down the road it's hard to know what the shape of the industry is and what Microsoft's exact role will be. But we're here, we're hiring lots and lots of people here. We hired more in the last year than ever before. We're also hiring at a lot of international locations, and that's important for us.

When I met with the Danish prime minister [last week], he was enthused that we have this development site there. That actually came through an acquisition, of Navision. We're growing what we do in China quite a bit. We're growing what we do in India quite a bit. But the bulk of the development activity is here in Seattle; it remains here in Seattle.

We're more worried about these immigration issues where our countries have policies that allow very smart people, even if they get educated here in a subsidized way, they don't even allow them to stay and take high-paying jobs. That's one where the tech industry says, "Boy, if you're not going to let high-skilled people in, it is going to tilt the degree to which you're forcing projects to be done outside the United States." Which is tough for us because we're so oriented towards being here and that's where we get the full set of skills here. And there's this decline of people going into computer science that's going to make the impact of these limited immigration policies even worse.

Mundie: When you think of other large companies, many tend to grow into conglomerates where they have completely dissimilar business units — jet engines and locomotives and plastics and things like that. Because of the malleability of software, we think that it's sort of an unlimited palette from which you can paint these future pictures. We tend to be distributed in where we get things done, but it's not like we have whole separate business divisions in other parts of the world or the country.

Q: Speaking of acquiring people, you are bringing lots of interesting people here, but Steve acknowledged recently that Google has been able to beat you every now and then. Can you talk about your challenge recruiting new talent?

Gates: Microsoft research is second to none in terms of attracting the best talent. There's no competitor who's even close on that. They're going after the best computer science Ph.D.s and they get them.

Q: How about recruiting for product groups?

Gates: We've hired more people last year than ever before and we're doing super, super well on recruiting. It's not a limiting factor. We do have a lot of people that are waiting for the visa thing. It's a problem, but that's different than hiring.

Mundie: We have said Google is one of the few companies to come along who seems to have a big focus on recruiting top talent the way that we always have. I think our reach globally is still dramatically larger than theirs in the aggregate. If you look this year, we've been very competitive in terms of the percentage of offers accepted and the growth rate of our recruiting capability. We actually saw year-over-year decline in attrition in the company, so there's certainly no sign of any mass exodus and certainly no substantive problem in competing for the people that are available.

Q: There's lot of chatter on employee blogs and some concerns are bubbling up. I'd like to hear a few things that each of you would like to do to make Microsoft better.

Ozzie: I'm speaking at the incremental level here but one of my focuses historically — going all the way back in my career — is to build software that reduces the cost of coordination between people, managing large projects, geographically distributed projects, for customers, so I have a particular focus on that in the abstract so we can build those tools. What I hope to do is work pretty closely with a number of teams because part of my role is cross-group in nature, to understand from the palette of techniques I've learned over my career, which of those can be used to reduce coordination costs between cooperating groups.

Mundie: The company is near the end of a long product cycle in the operating system business and, to some extent, many of the things that will make life better for those product people has already been done. In part it was the price we paid.

For example, five years ago, when Bill and I started the Trustworthy Computing thing, we realized we had security issues and we focused mightily on them. In a way, that actually caused the delay in how long it took to ship what's now the Vista operating system. The end of these long cycles creates some anxiety; it's just a long process. I think we know we don't want to have processes that are that long.

I think we've done a lot of things that are now sort of slipstreamed into the process that will keep us from at least having to make those kind of stop-and-start-again decisions in some of these product groups across the company, not just in the Windows group. But you don't see the effect — it's like when we were talking about China awhile ago. You started seven years ago, you made a lot of changes, then suddenly you see something overt happen. I think there have been some changes that have been put into the system along the way and they'll begin to manifest as we get these major products shipped.

Q: So you don't think anything really big has to change — you don't have to divide the company up or scale it down?

Gates: Well, Steve organized the divisions, and that's only nine months old and we're all very excited about the leaders of those groups and the fact that creates some more autonomous decision making.

On the legacy

Q: Great buddy stories have come out about you, Bill, where you've found a great partner to do great things — Steve Ballmer, Paul Allen. Now you're going to the foundation. Is Melinda the new Bill buddy? How's that going to work?

Gates: Well, Steve has been an incredible friend and business partner. It's just a lot of fun to work with Steve; we have a lot of things we're similar at and a lot of things we're very different. I've had many people like that here at Microsoft — I've had that with Craig, I'm starting that with Ray. Jeff Raikes is someone I've worked with forever, enjoyed that.

At the foundation, yes, it's fantastic to do things with Melinda. We take trips separately a lot because that's efficient. We do a few together — we did one to India last December that was a lot of fun for us. We'll make sure we do at least one big trip together every year but because we'll get more time, we'll each be doing a couple on our own, but we come back and talk about it.

Q: What will the foundation be like five to 10 years from now? You're building an interesting campus in Seattle; it seems like a research and development center.

Gates: It's not an R&D center. There's not going to be a lot of test tubes or hospital beds or anything inside that facility. That's an expertise place, but a lot of the expertise is finding partners.

We are broadening some of our definitions of how we help in developing countries — to things like water and microfinance and new crops.

Q: How would you describe your legacy, your contribution to this region and how you'll be remembered?

Gates: I don't think about how I'll be remembered. The foundation does a lot in this area in terms of grantees and gifts and things like that, so [perhaps I'll be seen as someone who tried to] be a great member of the community and try and help out.

Certainly, Microsoft employees — they've got this matching program that they participate in and that's been a great thing. A lot of them get involved in using technologies in schools and nonprofit organizations they care about. They all care about this community and want it to be a great community; it's a community they're kids are growing up in. Someone can try and dimensionalize that; I certainly haven't tried to.

Q: When I was a kid this campus was a chicken farm. There were horse pastures around here and Redmond was the back country. Now look around this place.

Mundie: I saw a headline somewhere, maybe a week ago there was a survey and Seattle was ranked number one as the brainiest city in the U.S. or something. I'd love to know how they figured that out.

Gates: Random IQ tests.

Mundie: But I do think that one of the legacies of Bill and Microsoft was this focus on bringing smart people to the company from anywhere, and pro rata the company has been a force in the region to do that. And the ecosystem around Microsoft that supports us — it's been well established: It's a big and important economic component in the region.

So whether it's the economy or the influence on culture that has come from the people here who made money and have given it back in a variety of ways — not just Bill — those are things that are rooted in Bill's formation of the company.

Brier Dudley: 206-515-5687 or bdudley@seattletimes.com. He writes a technology column that appears Mondays in the Business/Technology section. During the week, he blogs at seattletimes.com/brierdudleysblog.

Copyright © 2006 The Seattle Times Company

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