In Search Of The Real Bill Gates

By Walter Isaacson

Page 3

Gates met Melinda French 10 years ago at a Microsoft press event in Manhattan. She was working for the company and later became one of the executives in charge of interactive content. Their daughter Jennifer was born last April. Melinda, 32, is no longer at Microsoft, and she is active in charity work and on the board of Duke, where she studied computer science as an undergraduate and then got a graduate degree in business. Like Gates, she is smart and independent. Like his mother, she is also friendly and social, with an easy manner of organizing trips and activities. But she zealously guards her privacy and doesn't give interviews.

"I used to think I wouldn't be all that interested in the baby until she was two or so and could talk," says Gates as he shows off the more intimate family quarters. "But I'm totally into it now. She's just started to say 'ba-ba' and have a personality."

Melinda is Catholic, goes to church and wants to raise Jennifer that way. "But she offered me a deal," Gates says. "If I start going to church--my family was Congregationalist--then Jennifer could be raised in whatever religion I choose." Gates admits that he is tempted, because he would prefer she have a religion that "has less theology and all" than Catholicism, but he has not yet taken up the offer. "Just in terms of allocation of time resources, religion is not very efficient," he explains. "There's a lot more I could be doing on a Sunday morning."

If Ballmer is Gates' social goad, his intellectual one is Nathan Myhrvold (pronounced Meer-voll), 37, who likes to joke that he's got more degrees than a thermometer, including a doctorate in physics from Princeton. With a fast and exuberant laugh, he has a passion for subjects ranging from technology (he heads Microsoft's advanced-research group) to dinosaurs (he's about to publish a paper on the aerodynamics of the apatosaurus tail) to cooking. He sometimes moonlights as a chef at Rover's, a French restaurant in Seattle.

When he arrives there for dinner, owner Thierry Rautureau comes out to hug him and pour champagne. There follows a procession of a dozen courses, from black truffles and pureed celery root in smoked game consomme to venison with obscure types of mushrooms, each with different vintage wines. (The bill for two comes to $390, and picking it up assuages my discomfort that Gates had insisted on putting the previous evening's $37 tab at the Indian restaurant on his MasterCard.)

"There are two types of tech companies," Myhrvold says in between pauses to inhale the aroma of the food. "Those where the guy in charge knows how to surf, and those where he depends on experts on the beach to guide him." The key point about Gates is that he knows--indeed loves--the intricacies of creating software. "Every decision he makes is based on his knowledge of the merits. He doesn't need to rely on personal politics. It sets the tone."

Myhrvold describes a typical private session with Gates. Pacing around a room, they will talk for hours about future technologies such as voice recognition (they call their team working on it the "wreck a nice beach" group, because that's what invariably appears on the screen when someone speaks the phrase "recognize speech" into the system), then wander onto topics ranging from quantum physics to genetic engineering. "Bill is not threatened by smart people," he says, "only stupid ones."

Microsoft has long hired based on I.Q. and "intellectual bandwidth." Gates is the undisputed ideal: talking to most people is like sipping from a fountain, goes the saying at the company, but with Gates it's like drinking from a fire hose. Gates, Ballmer and Myhrvold believe it's better to get a brilliant but untrained young brain--they're called "Bill clones"--than someone with too much experience. The interview process tests not what the applicants know but how well they can process tricky questions: If you wanted to figure out how many times on average you would have to flip the pages of the Manhattan phone book to find a specific name, how would you approach the problem?

Gates' intellect is marked by an ability, as he puts it, to "drill down." On a visit to Time Inc.'s new-media facility, he answered questions from a collection of magazine editors as if by rote, but on his way out he asked to see the Internet servers and spent 45 minutes grilling the claque of awed techies there. Broad discussions bore him, he shows little curiosity about other people, and he becomes disengaged when people use small talk to try to establish a personal rapport. Even after spending a lot of time with him, you get the feeling that he knows much about your thinking but nothing about such things as where you live or if you have a family. Or that he cares.

In that regard he is the opposite of, say, Bill Clinton, who brackets the other end of the baby boom: Gates analytically rigorous and emotionally reserved, the President equally smart but intellectually undisciplined and readily intimate. They played golf on Martha's Vineyard once, and the President, as usual, worked hard at bonding emotionally and being personally charming and intimate. He expressed sorrow about the death of Gates' mother, shared the pain of the recent death of his own mother and gave golfing tips to Melinda. But Gates noticed that Clinton never bore in or showed rigorous curiosity about technological issues. Though he vaguely considers himself a Democrat, Gates stayed neutral in the presidential election.

Warren Buffett, the Omaha, Nebraska, investor whom Gates demoted to being merely the second richest American, seems an unlikely person to be among his closest pals. A jovial, outgoing 66-year-old grandfather, Buffett only recently learned to use a computer. But as multibillionaires go, both are unpretentious, and they enjoy taking vacations together. Buffett's secretary apologetically explains that Buffett isn't giving interviews these days and at the moment is traveling, but she promises to pass along the request. Less than three hours later, Buffett calls to say he happens to be in the Time & Life Building with some free time between meetings in Manhattan, and he would be happy to come by to be interviewed. He likes to talk about Gates.

His favorite story is about the 1995 excursion to China that Bill and Melinda organized for seven couples. "For part of the trip we stayed on a ship in the Yangtze with five decks that normally accommodates hundreds of people," he says with the glee of a kid describing Walt Disney World. "Each evening Melinda arranged different activities." There was karaoke singing in the ship's ballroom, performances of quickie versions of Shakespeare plays, "and a trivia quiz on such things as how many meals we'd eaten, with prizes that Melinda and Bill handed out." When relaxed, Buffett says, Gates has a fun sense of humor. In the Forbidden City they were given a show of huge ancient scrolls that were silently rolled and unrolled by women trained for the task. "There's a $2 fine," Gates whispered, "if you return a scroll not rewound."

When Gates decided to propose to Melinda in 1993, he secretly diverted the chartered plane they were taking home from Palm Springs one Sunday night to land in Omaha. There Buffett met them, arranged to open a jewelry store that he owned and helped them pick a ring. That year Gates made a movie for Buffett's birthday. It featured Gates pretending to wander the country in search of tales about Buffett and calling Melinda with them from pay phones. After each call, Gates is shown checking the coin slot for loose change. When she mentions that Buffett is only the country's second richest man, he informs her that on the new Forbes list Buffett had (at least that one year) regained the top spot. The phone suddenly goes dead. "Melinda, Melinda," Gates sputters, "you still there? Hello?"

Last October Gates brought Melinda and their new daughter to visit Buffett and his wife in San Francisco. They ended up playing bridge for nine hours straight. Another marathon session in Seattle started in the morning and lasted--with a break for Melinda to pick up lunch at Burger King--until guests started arriving for dinner. "He loves games that involve problem solving," Buffett says. "I showed him a set of four dice with numbers arranged in a complex way so that any one of them would on average beat one of the others. He was one of three people I ever showed them to who figured this out and saw the way to win was to make me choose first which one I'd roll." (For math buffs: the dice were nontransitive. One of the others who figured it out was the logician Saul Kripke.)

Their relationship is not financial. Buffett, who does not invest in technology stocks, bought 100 shares of Microsoft just as a curiosity back when he met Gates ("I wish I'd bought more," he laughs), and Gates describes his investment with Buffett as "only" about $10 million ("I wish I'd invested more," he likewise jokes). But Gates shares Buffett's interest in the media world and even likes to joke that he has created a digital encyclopedia called Encarta that now outsells World Book, which is controlled by Buffett. So far Microsoft has mainly treated content as something that its software managers can create from scratch. But given the relative cheapness of some media stocks compared with that of Microsoft, Gates may someday look for some big acquisitions (he was in serious talks about taking a $2 billion stake in CNN before Time Warner merged with Turner Communications), and Buffett would be a useful partner.

Another of Gates' vacation companions is Ann Winblad, the software entrepreneur and venture capitalist he dated during the 1980s. They met in 1984 at a Ben Rosen-Esther Dyson computer conference and started going on "virtual dates" by driving to the same movie at the same time in different cities and discussing it on their cell phones. For a few years she even persuaded him to stop eating meat, an experiment he has since resolutely abandoned.

They were kindred minds as well as spirits. On a vacation to Brazil, he took James Watson's 1,100-page textbook, Molecular Biology of the Gene, and they studied bioengineering together. On another vacation, to a Santa Barbara, California, ranch, she took tapes of Richard Feynman's lectures at Cornell, and they studied physics. And on a larger excursion with friends to central Africa, which ended at some beach cottages on an island off Zanzibar, among their companions was anthropologist Donald Johanson, known for his work on the human ancestor Lucy, who helped teach them about human evolution. In the evenings on each trip they would go to the beach with four or five other couples for bonfires, Hood Canal-style games and a tradition they called the sing-down, where each team is given a word and has to come up with songs that feature it. Winblad remembers Gates disappearing on a dark beach after his group had been given the word sea, and then slowly emerging from the mist singing a high-pitched solo of Puff, the Magic Dragon.

They broke up in 1987, partly because Winblad, five years older, was more ready for marriage. But they remain close friends. "When I was off on my own thinking about marrying Melinda," Gates says, "I called Ann and asked for her approval." She gave it. "I said she'd be a good match for him because she had intellectual stamina." Even now, Gates has an arrangement with his wife that he and Winblad can keep one vacation tradition alive. Every spring, as they have for more than a decade, Gates spends a long weekend with Winblad at her beach cottage on the Outer Banks of North Carolina, where they ride dune buggies, hang-glide and walk on the beach. "We can play putt-putt while discussing biotechnology," Gates says. Winblad puts it more grandly. "We share our thoughts about the world and ourselves," she says. "And we marvel about how, as two young overachievers, we began a great adventure on the fringes of a little-known industry and it landed us at the center of an amazing universe."

After a recent whirl of travel that included a speech in Las Vegas and a meeting in Switzerland, Gates detoured to a secluded resort in New York's Adirondacks to spend a weekend with Melinda and Jennifer. There they played with 1,000-piece jigsaw puzzles from a craftsman in Vermont who makes them for customers like Gates. Melinda has helped broaden her husband. Instead of studying biotechnology together, they find time to take singing lessons.

Gates is ambivalent about his celebrity. Although he believes that fame tends to be "very corrupting," he is comfortable as a public figure and as the personification of the company he built. Like Buffett, he remains unaffected, wandering Manhattan and Seattle without an entourage or driver. Nestled into a banquette one Sunday night at 44, a fashionable Manhattan restaurant, he is talking volubly when another diner approaches. Gates pulls inward, used to people who want his autograph or to share some notion about computers. But the diner doesn't recognize him and instead asks him to keep his voice down. Gates apologizes sheepishly. He seems pleased to be regarded as a boyish cutup rather than a celebrity.

The phone in Gates' office almost never rings. Nor do phones seem to ring much anywhere on the suburban Microsoft "campus," a cluster of 35 low-rise buildings, lawns, white pines and courtyards that resemble those of a state polytechnic college. Gates runs his company mainly through three methods: he bats out a hundred or more E-mail messages a day (and night), often chuckling as he dispatches them; he meets every month or so with a top management group that is still informally known as the boop (Bill and the Office of the President); and most important, taking up 70% of his schedule by his own calculation, he holds two or three small review meetings a day with a procession of teams working on the company's various products.

There is a relaxed, nonhierarchical atmosphere as the seven young managers of the "WebDVD" group, all in the standard winter uniform of khakis and flannel shirts, gather in a windowless conference room near Gates' office. They have been working for almost a year on a digital videodisc intended to provide content along with Web browsing for television sets, and he wants to review their progress before leaving for Japan, where he will meet with such potential partners as Toshiba.

Craig Mundy, the veteran Microsoft exec who oversees all noncomputer consumer products, lets the younger team members lead the discussion. Gates quickly flips ahead through the deck of papers and within minutes has the gist of their report. He starts rocking, peppering them with questions that segue from the politics of their potential partners, the details of the technology, the potential competition and the broad strategy. The answers are crisp, even as Gates drills down into arcane details. No one seems to be showing off or competing for attention, but neither do any hesitate to speak up or challenge Gates. To a man (and they all are), they rock when they think.

"Does this allow scripting in HTML?" he asks, referring to the authoring language used to create Websites. They explain how. He challenges them about why it requires four megabytes of memory. They explain; he drills down more; they finally prevail. There is an intense discussion of layers, sectors, modes, error corrections and mpeg-2 video-compression standards. "Our basic strategy must be processor agnostic," Gates decrees. Everyone nods. Then he shifts without missing a beat to corporate tactics. "Are we going to get Philips and other manufacturers and the moviemakers to agree on a standard?" We'll get to that in a minute, he's told. He wants to get to it now. There is a rapid discussion of the internal politics of Philips, Sony, Time Warner (the corporate parent of this magazine), Matsushita and Toshiba, along with their respective Hollywood alliances.

Gates doesn't address anyone by name, hand out praise or stroke any egos. But he listens intently, democratically. His famous temper is in check, even when he disagrees with someone's analysis of the DVD's capability to handle something called layering. "Educate me on that," he says in challenging the analysis, and after a minute or so cuts off the discussion by saying, "Send me the specs."

Gates does not hide his cutthroat instincts. "The competitive landscape here is strange, ranging from Navio to even WebTV," he says. He is particularly focused on Navio, a consumer-software consortium recently launched by Netscape and others designed to make sure that Windows and Windows CE (its consumer-electronics cousin) do not become the standard for interactive television and game machines. "I want to put something in our product that's hard for Navio to do. What are their plans?" The group admits that their intelligence on Navio is poor. Gates rocks harder. "You have to pick someone in your group," he tells Mundy, "whose task it is to track Navio full time. They're the ones I worry about. Sega is an investor. They may be willing to feed us info." Then he moves on to other competitors. "What about the Planet TV guys?" Mundy explains that they are focusing on video games, "a platform we haven't prioritized." Gates counters: "We can work with them now, but they have other ambitions. So we'll be competitive with them down the line."

Though the videodisc is not at the core of Microsoft's business, this is a competition Gates plans to win. The group argues that the $10-per-unit royalty is too low. "Why charge more?" he asks. They explain that it will be hard to make a profit at $10, given what they are putting in. Gates turns stern. They are missing the big picture. "Our whole relationship with the consumer-electronic guys hangs in the balance," he declares. "We can get wiped." Only the paranoid survive. "The strategic goal here is getting Windows CE standards into every device we can. We don't have to make money over the next few years. We didn't make money on MS-DOS in its first release. If you can get into this market at $10, take it." They nod.

His mother may have come to terms with this competitive intensity, but much of the computer world has not. There are Websites dedicated to reviling him, law firms focused on foiling him and former friends who sputter at the mention of his name. Companies such as Netscape, Oracle and Sun Microsystems publicly make thwarting his "plan for world domination" into a holy crusade.

The criticism is not just that he is successful but that he has tried to leverage, unfairly and perhaps illegally, Microsoft's near monopoly in desktop operating systems in ways that would let him dominate everything from word processing and spreadsheets to Web browsers and content. The company is integrating its Internet Explorer browser and Microsoft Network content into its Windows operating system, a process that will culminate with the "Active Desktop" planned for Windows 97, due out in a few months. Critics see a pattern of Microsoft's playing hardball to make life difficult for competing operating systems and applications: Microsoft Word has been buggy on Macintosh operating systems, users have found it tricky to make Netscape their default browser when going back and forth from Windows to the Microsoft Network, and application developers have complained that they don't get the full specs for new releases of Windows as quickly as Microsoft's own developers do.

"They are trying to use an existing monopoly to retard introduction of new technology," says Gary Reback, the Silicon Valley antitrust lawyer representing Netscape and other Microsoft competitors. The stakes are much higher than whose Web browser wins. Netscape is enhancing its browser to serve as a platform to run applications. "In other words," says Reback, "if Netscape is successful, you won't need Windows or a Microsoft operating system anymore." On the other hand, if Microsoft is allowed to embed its Web browser into its operating system in a manner that maintains its monopoly, Reback warns, "where will it stop? They'll go on to bundle in content, their Microsoft Network, financial transactions, travel services, everything. They have a game plan to monopolize every market they touch."

Gates makes no apologies. "Any operating system without a browser is going to be f______ out of business," he says. "Should we improve our product, or go out of business?" Later, on his trip to Japan, he returns to the subject in a two-page E-mail. "Customers are benefiting here in the same way they benefited from graphical interfaces, multitasking, compressions and dozens of other things," he writes. "If improving a product based on customer input is willful maintenance of trying to stay in business and not have Netscape turn their browser into the most popular operating system, then I think that is what we are supposed to do."

Though the stakes are clear, the law (which was developed in the era of railway barons) is not. After deadlocking, the Federal Trade Commission in 1993 surrendered jurisdiction over Microsoft to the Justice Department. FTC Commissioner Christine Varney, an expert in the field, says it's hard to apply antitrust law in a fluid situation. "My concern is with the law's ability to keep pace with market conditions in fields that change so rapidly," she says. "Once it's clear a practice is anticompetitive, the issue may already be moot."

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