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- December 26, 1983
- Vol. 20
- No. 26
Dropping Out of Harvard Pays Off for a Computer Whiz Kid Who's Making Hard Cash from Software
Unlike that earlier visionary, Isaac Newton, Gates did not have an Apple fall on his head; it was an IBM. Back in July of 1980, two IBM strategists flew 4,000 miles from Boca Raton, Fla. to meet Gates in his offices in Bellevue, Wash., outside Seattle. After pledging him to secrecy, they dropped a bombshell: IBM was considering building a personal computer. It had to be out in a year. Could Gates help them?
Though no outsider had ever worked so closely with IBM on a computer, Gates spent a hectic year perfecting the operating software that controls the IBM PC. After that success, IBM again turned to Gates for its PCjr. Today Microsoft's operating software is an industry standard used by an estimated 900,000 personal computers.
Software is replacing sex as the real passion among consenting adults, and Gates is happy to play matchmaker. Microsoft is now going directly to consumers with games (Flight Simulator), business programs (Multiplan), word processing (Microsoft Word) and a "windowing" package that allows users to juggle several programs.
Microsoft is a popular neighbor in Seattle. It does not pollute downstream or give off smoke. Instead, rising above the blue waters of Lake Washington is the bracing fragrance of freshly minted money. Sales have doubled every year since 1974 (they should hit $100 million by next June), and the staff has grown tenfold from 40 in 1980 to 450 today. "I love being at the center," says Gates, whose favorite prefix is "super," as in "super-important." He adds: "Software is driving the industry. And it's fun."
The fun began when Gates, the son of a prominent Seattle lawyer, was a seventh grader at private Lakeside School. The mothers' club bought computer time on a Digital terminal, and Bill and another student, Paul Allen, got hooked. Soon they were scheduling the school's classes and had started a business studying traffic patterns for local communities. Eventually he and Allen were contracted by TRW to help analyze electrical power requirements around the Northwest and Canada. "No one knew then we were just in ninth and 10th grades," Gates says. An Eagle Scout, he spent the summer of 1972 as a congressional page (where he made a killing buying 5,000 McGovern-Eagleton campaign buttons for three cents each and then selling them as collectors' items for $20.25 apiece after Eagleton was dumped from the ticket).
Gates entered Harvard, though Allen was urging that they start a microcomputer company. The two already had spent $360 to buy one of the very first microcomputer chips. "Paul saw that the technology was there," Gates recalls. "He kept saying, 'It's gonna be too late. We'll miss it.' "
The turning point came when they read in Popular Electronics about a build-it-yourself computer, the Altair, made by an Albuquerque company called MITS. "We called up and said, 'Look, would you like a BASIC?' " Gates remembers. They blithely claimed they'd already adapted the language to microcomputers—and then spent the next three weeks frantically writing a simulated program on a larger computer. It worked. "MITS didn't understand the importance of it," Gates says. "Nobody did. But we knew that people in schools everywhere would have these computers."
Gates dropped out of Harvard at the end of his sophomore year in 1975. Eighteen months later he and Allen had already made "a few hundred thousand dollars" for the new Microsoft firm. Soon they were writing slick, tight code for struggling companies with names like Apple and Commodore. "Bill had a vision," says one of his head programmers. "It was that microcomputers will be important, and that software will be the most important part of microcomputers."
Today Gates is chairman of his firm (Allen is VP of research and development) but still might be mistaken for a stockroom clerk. Like everyone at Microsoft, where the average age is 26, he dresses in Eddie Bauer casuals—a sweater, corduroys—and running shoes. He drives a Mercedes to work from his lakefront house in Seattle's Laurelhurst district. On his home terminal there he can tap out "electronic mail" memos by the dozen to his staff. Gates works most nights and usually one day on weekends.
His biggest managerial problem is coping with the aftershocks of rapid expansion. A president he hired last year lasted only 11 months. Gates is looking at taking the privately held company public in a few years, a step that would finance more growth (as well as make Gates a zillionaire). "We want to be to software what IBM is to hardware," sums up a Microsoft vice-president. That, as Gates would say, is the biggest reward for writing slick, tight code.
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