Recasting His Image

Microsoft Rebooted
by Robert Slater

(Page 3 of 5)

In the early part of his career, Bill Gates had been in the media's eyes, the supernova of the technology world. He had been the boy genius of technology, creator of the company admiringly dubbed the smartest in the world. As the person who in the 1970s had almost single-handedly created the personal computer revolution, and as the wealthiest man alive during the 1990s, he had become a household name. Many had paid him the rare compliment of being the Henry Ford, the John D. Rockefeller, or the Thomas Edison of his age. At one stage in 1999, worth more than $100 billion, he was richer than many countries. He and Microsoft had sat on top of the heap and nothing seemed likely to budge them from that spot, but then, when evidence piled up of Microsoft's alleged unsavory business practices and the media gleefully applied such terms as predator and monopolist to Gates, his near-perfect image became badly tarnished. Shockingly, Gates could no longer count on history treating him with great reverence.

The verdict on whether he was supernova or predator remained unclear as Time magazine's 1993 profile of him suggested: "Though Gates is famous for his lack of pretension, his habit of flying in coach class, and his easy accessibility, he can also be brash, imperious, and brutally blunt." Five years later, the same magazine acknowledged that the verdict had still not come in on him: "[T]he real battle seems to be between two warring views of Gates. Is he the brilliant innovator who has brought the wonders of the information age to millions of satisfied customers? Or is he the rapacious capitalist leveraging his software monopoly to crush competitors?"

At a certain point during the trial, he began to disgorge himself of billions of dollars of his net worth, in the process creating the richest foundation in the world. Undoubtedly, he was deeply moved by the plight of millions of poor people and wanted to help them. And there seemed little reason to doubt his assertion that he was giving away most of his fortune to keep his children from having to bear the burden of living with inherited billions. What he did not say, however, what he could not say, was that he was emerging as the world's most generous philanthropist in order to recast his image, an image shattered into a thousand tiny pieces by the daily barrage of trial-related verbal abuse heaped upon his persona.

Because the Bill and Melinda Gates Foundation's largesse had the undeniable effect of saving thousands of lives, its creation led some to suggest that Bill Gates might become better known for his philanthropy than for his pioneering work in the development of personal computer software. From such utterings, Gates hoped to repair his reputation. He hated being called a devil. He loved being known as a savior.

The judge's decision the next day, November 1, 2002, if it went the right way for Gates, would help him erase or at least bring to a halt the constant battering against him and against Microsoft. Hence, her decision was crucial to their futures. It seemed ironic that Gates would worry how history would judge him. He had, after all, despite his relative youth (he had turned forty-seven three days earlier), already made more of a mark on this planet than most others had.

Though he had clearly made that mark, he was so fanatically devoted to building what he called "magical software" that any thought of his departing Microsoft seemed unimaginable. Consequently, long after many of his contemporary founders of companies, especially wealthy founders, had drifted away from their businesses, Gates remained in charge of Microsoft. He had never quite adjusted to having all that wealth and he certainly had no interest in using that wealth to retire to some island. He had, however, easily adjusted to ruling the software world, and he had no desire to give up the crown.

His Worst Crisis

His climb to the top had not been easy. The trial had not been his first crisis, only his worst. Confronting much larger, much more powerful rivals, he had forced himself to read the burgeoning computer market carefully, trying to spot emerging trends. When he did, unlike far more conservative business leaders, he was prepared to shift the company's product strategy on a dime, reorganizing whole divisions overnight. He lived in fear that another company was secretly devising its own product strategy that would bring Microsoft to its knees. With little choice in his mind, he raised paranoia to a new art form in the business world.

That paranoia led Gates to turn the reinventing of his company into one of Microsoft's core competencies, suddenly dropping the MS-DOS operating system in favor of Windows and shifting personnel from other projects to Internet work overnight. "It is deep in the culture that success is never guaranteed," observed Pam Edstrom, explaining Bill Gates's paranoia and his reinventing strategies in one neat sentence. She joined Microsoft back in 1982 with the task of handling the company's public relations (in 2003 she was still running its PR through her own agency, Waggener Edstrom).

To Bob Herbold, the company's executive vice president, Gates's savvy and guts reflected in his reinventing strategies were all the more remarkable after Herbold's twenty-six years at Procter & Gamble. Perhaps because of the slower innovation rate of the consumer products industry, or perhaps because P&G had been so bureaucratically entrenched, nothing happened fast at his former employer. But Gates was able to move with the speed of lightning. Herbold remembered vividly, "After the launch of Windows 95, I was at a board meeting and Bill explained how, in the next two or three weeks, he was going to take hundreds of people from existing divisions and quickly define a new product division to jump on a new opportunity - very impressive." Impressive, yes; but the reinventing strategy was risky as well. Gates knew the risks were high. He always felt like he was in a fight for his life.

* * *

Now, on October 31, 2002, by his own personal choice, he was in another fight for his life. It was in fact the fight of his life. He hoped for a positive decision, one that would give him a welcome sense of closure to the four-year trauma and that would permit Steve Ballmer and himself the freedom to devote their full energies to the company. For all sorts of reasons, of which the trial was only one, Microsoft had not been running up to speed for a while. The company's annual growth rate, as high as 49 percent in 1996, had slipped tellingly to a mere 12 percent this year as its annual revenue stood for the fiscal year ending the previous June 30 at $28.37 billion.

Despite valiant efforts, the company remained a one- or, at best, a two-product firm (Windows and Office), and only three of its seven business segments (Client, Information worker, and the Server platforms) were showing profits. It seemed a minor miracle that the company was doing that well for the place was in turmoil. Senior executives were jumping ship. Morale among the rank and file was at an all-time low. Once they had boasted to friends and relatives that they worked at Microsoft. Now they kept it a secret, uneager to enter conversations about which of the allegations were actually true. No longer could they at least take solace in holding highly valued stock options in the company; the stock market had taken a plunge and the options were of far less value.

November 1, 2002, 8:30 a.m. Microsoft's attorneys and public relations executives gathered in a theater on the Redmond campus at Microsoft's studio a few blocks from Building 34. The theater lacked windows. Some in the room felt under siege, and not just because of the windowless room.

Gates and Ballmer were there and for the next ninety minutes the lawyers walked them through postverdict scenarios over scrambled eggs and bacon. The food gave the room a partylike atmosphere. But this was no party.

Copyright © 2004 Robert Slater. All rights reserved. This excerpt, or any parts thereof, may not be reproduced without permission.

About the Author

Robert Slater is the author of more than twenty books, among them the recently released The Wal-Mart Decade and the national bestsellers Jack Welch and the GE Way and Get Better or Get Beaten. He was a reporter with Time magazine for two decades.