17 May 2011

Bill Gates: capitalist to philanthropist

Microsoft founder and chairman Bill Gates turned from cut-throat capitalist to philanthropist when he decided to devote himself to his charitable foundation.

Is it too easy to suggest that the uber-nerds who led the personal computer revolution at the end of the last millennium fall mainly into two categories: those who were born with the vision thing and those who had it thrust upon them?

Were the billionaire code-boffins also prophets who realised how they could change the world? Or were they geeks pure and simple, wishing for nothing more than to write code, and suddenly finding they had more money than they could ever burn?

It is a simplistic opposition but one that has until recently plagued Bill Gates, founder of Microsoft and the richest man in the United States (estimated net worth in September 2010: $54bn), who this week finds himself among other global plutocrats at the World Economic Forum in Davos.

Why? Because Gates’s career, previously characterised as that of a cut-throat capitalist and the ultimate vengeful nerd, has run in almost exact synchrony with that of Steve Jobs, founder and chief executive of Apple Inc.

Bill Gates, chairman and founder of Microsoft (Getty)

Good Apple
Apple has always fed off the perception that Microsoft and its products – most notably its Windows operating system – are utilitarian, user-unfriendly and ultimately dull. Apple, by contrast, creates products that are easy to use, beautiful and – yes – life-enhancing. Where Apple is iconic, Microsoft is merely ubiquitous.

A seminal Apple advert from 1984 (the year is significant) proposes an opposition between the colourful individualism offered by the new Apple Macintosh computer and the Big Brother bleakness of other computers. Although the advert’s target was IBM, viewers of an updated 2004 version of the ad to promote the iPod are said to have associated the Big Brother target with Microsoft.

The tables may now be turning, though. Apple, whose products had until recently been touched with a sort of counter-cultural gold dust, now vies with Exxon Mobil for the title of biggest company on the planet (by market capitalisation).

Last May, bolstered by the international success of its iPod, iPhone and iPad, Apple overtook Microsoft to become the world’s most valuable technology firm. Channel 4 News business producer Ben King wrote that “Microsoft is still a fantastically profitable company – it makes far more profit than Apple. But markets worry where the growth will come from.”

And as Steve Jobs takes leave of absence from Apple to focus on his health, the attention of Bill Gates has turned away from computing and towards nothing less visionary than the elimination of poverty and disease in the world.

Visionary Gates
Unlike Apple, which has always produced hardware as well as the software to run it, Microsoft has achieved its fortune through software manufacture. The latest version of its Windows operating system was released in 2009; the first version, Windows 1.0, went public in November 1985.

Microsoft was founded a decade earlier, in 1975, by Bill Gates and his childhood friend Paul Allen. Although Allen has not worked for Microsoft since 1983 (he officially left the company in 2000), his stock in the company means that he, like Gates and several others, is a Microsoft billionaire. In September 2010 Forbes calculated his net worth at $12.7bn.

Allen’s time at Microsoft overlapped with the appointment of Steve Ballmer, now Microsoft chief executive but in 1980 the first business manager to be appointed by Gates (Gates and Ballmer knew each other from their time at Harvard in the early 70s).

The larger-than-life Ballmer – his official biography describes him as “ebullient, focused, funny, passionate, sincere, hard-charging and dynamic” – took over from Gates as company CEO in January 2000, since which time Microsoft’s market capitalisation has declined by over $100bn. Forbes estimates Ballmer’s wealth at $13.1bn.

The big issues
Although Bill Gates remains Microsoft chairman, his priorities may nowadays lie elsewhere. In 1994 he married Melinda French (the couple have three children), and in the same year they established the Bill & Melinda Gates Foundation.

The foundation is co-chaired by William H Gates Senior, Bill Gates’s lawyer father, and former Microsoft Business Division president Jeff Raikes, originally recruited to the company by Steve Ballmer in 1981. It says its main focus is to tackle hunger and poverty among the world’s poorest people, to use science to save lives in developing countries, and to improve education, housing and access to information in the United States.

In 2006 Warren Buffett, another of the world’s richest men (in 2010 Forbes ranked him third behind the Mexican Carlos Slim and Bill Gates), announced that he had pledged to give away 85 per cent of his stock in Berkshire Hathaway, his investment vehicle, to five philanthropic foundations. Five-sixths of that 85 per cent would go to the Bill & Melinda Gates Foundation, both of whose principals have been friends with Buffet since the early 1990s.

Pledging to give
Last year Gates, his wife, and Warren Buffett launched The Giving Pledge, which proclaims its aim “to invite the wealthiest individuals and families in America to commit to giving the majority of their wealth to the philanthropic causes and charitable organisations of their choice”. Supporters include Oracle founder Larry Ellison, Facebook’s Mark Zuckerberg, and other stars in the US technology firmament.

But Steve Jobs’s name was absent. As a 2006 commentary for Wired.com notes, it may be that the Apple founder gives enormous sums of money to charity anonymously – which means his name will not show up on any list, regardless of the size of his gift. Nobody knows.

In that respect he is different from Bill Gates. The nerd from Seattle may not quite have inherited the earth but, since 1994, his foundation has committed just under $24bn in grants worldwide. No mean achievement for a cut-throat capitalist.