Bill Gates Programs New Life as Donor
Microsoft Corp. Chairman Bill Gates said Thursday that he would begin relinquishing day-to-day oversight of the software giant he co-founded and steered to dominance to devote more energy to philanthropy.
In so doing, the man who became the archetype of the late-20th century mogul appeared intent on solidifying his legacy in the manner of tycoons from another era. Names such as Carnegie, Getty and Rockefeller are associated less today with the industries they led and more with the good works their fortunes enabled.
Over the next two years, Gates will transfer responsibility to newly promoted executives as he shifts his attention to the Bill & Melinda Gates Foundation, the charitable endowment he established with his wife in 1994.
“When you’re the richest guy in the world, how do you measure your success?” asked technology writer Mark Stephens, who goes by the pen name Robert X. Cringely. “A Nobel Peace Prize. He’s told friends privately that’s his goal.”
Gates, 50, will remain chairman of the company he built into a software powerhouse through a combination of being present at the birth of the industry, smart marketing and tough tactics. The company’s Windows operating system is installed in the overwhelming majority of the world’s personal computers and its Office productivity suite enjoys unchallenged dominance.
That success made Gates the wealthiest man in the world, with a current fortune estimated at $50 billion.
In recent years, though, his attention has focused increasingly on the Gates Foundation, which has spent more than $10 billion on campaigns to reform education and fight AIDS and malaria. The foundation has an endowment surpassing $29 billion and its spending rivals that of the World Health Organization.
The announcement of Gates’ transition comes as Redmond, Wash.-based Microsoft struggles to regain its competitive footing. The importance of its PC-based software is waning in the face of new online applications. Microsoft’s position at the center of the computing universe is under heavy attack from Internet companies such as Google Inc. and Yahoo Inc.
Gates began surrendering responsibility at Microsoft in 2000, when he elevated Steve Ballmer to chief executive during the height of the company’s antitrust battle with the Justice Department. During that fight, Gates frequently was reviled as a ruthless monopolist. Promoting Ballmer was seen in part as a way to put a gentler public face on Microsoft.
Thursday’s move, though, signals much deeper change, said Mark Stahlman, a technology strategist at Hedgerow Partners.
“This is a reflection of the fact that Gates is no longer able to wrap his own personality and understanding around the changes that have already occurred in the industry,” he said. “He was taken out of the leadership by the antitrust case and has been relying on other people. And in that time, the importance of what he’s said he wanted to do -- give away his fortune -- has gained momentum.”
The planned departure clears room for new blood at the top of Microsoft.
Gates’ current role as software and technical guru will be assumed by Ray Ozzie, creator of the Lotus Notes program, who joined Microsoft when it acquired his start-up, Groove Networks, last year. Chief Technical Officer Craig Mundie will become chief research and strategy officer, and General Counsel Brad Smith will oversee intellectual property and technology policy.
“Today was, in some sense, not about Bill Gates at all, but rather the promotion of other people to leading technology and strategy positions,” Stahlman said.
But other observers said the fact that Microsoft drafted three executives to fill Gates’ shoes underscored how much influence Gates wields at Microsoft, which he founded with Paul Allen in 1975 after dropping out of Harvard University. Allen is now a well-known technology investor and sports team owner.
“A lot of companies don’t come down to an individual, but in a large way Microsoft does,” said Michael Cohen, director of research for Pacific American Securities. “I think he’s somewhat replaceable as a technologist but irreplaceable as a business strategist. If Gates is still chairman and at the company part time, I think they will still be able to benefit from his genius of marrying business strategy with technology.”
Gates said Microsoft was stocked with talented engineers and managers, and observers had been overly focused on his contributions to the company.
The change will give Gates more time to focus on his role as perhaps the world’s most influential philanthropist through the foundation, which he financed with Microsoft stock. He and his wife have traveled the world, visiting crowded slums in India and remote villages in Africa.
“For a long time, he’s said that to give away money intelligently takes as much work as it does to get the money,” said Greg DeMichillie, an analyst at Directions on Microsoft, an independent research firm in Kirkland, Wash. “It seems natural that he would switch to the foundation.”
The Gates Foundation has taken a leading role in tackling health problems that still plague most of the world’s population, including malaria, tuberculosis and AIDS. Gates revels in studying the complex medical science behind the diseases and discussing them with renowned researchers and policymakers.
“He certainly found that the problems the foundation has to deal with are in some ways as exciting and complex as the ones he has to deal with as head of Microsoft,” said Ian Wilhelm, a senior reporter with Chronicle of Philanthropy.
Some see Gates as the classic self-styled industrialist, with striking similarities to oil magnate John D. Rockefeller.
“The parallels ... are eerie,” said Paul Saffo, a director at Institute for the Future in Palo Alto. Rockefeller “was involved in oil because that was the fastest-moving part of the business world. While Bill Gates certainly can write code, Bill became preoccupied by the power and the industrialism. Which is why Microsoft became an enormous company with bad products.”
The new leaders at Microsoft are trying to change that view. Mundie, who joined Microsoft in 1992, is a highly respected technologist. Ozzie has quickly risen up the ranks on the strength of a visionary approach to Internet-based services.
But neither carries the cachet of the departing chief software architect.
“I don’t see how Ray Ozzie coming into a group telling them how to do something will have the same effect,” said DeMichillie. “The most important title [Gates] had was ‘Bill Gates.’ ”
Gates said he planned to take a seven-week vacation this summer -- the first one longer than two weeks since he started Microsoft -- that will include a government leadership forum in Africa.
Several observers predicted that Gates would gradually refocus his famous competitive streak, focusing less on using Microsoft’s might to tackle business problems and more on using his fortune’s might to tackle world problems.
“Look at Microsoft’s miserable record of the last two years. The little Google bunny rabbit has just been running rings around this company,” Saffo said. “Bill’s got to secretly be relieved to focus on something else. He doesn’t have to worry about Google stealing his thunder in the philanthropic space.”
Gates said he would donate his time, not substantially more Microsoft stock, to the pursuit.
“I see myself as always being the largest shareholder of Microsoft,” he said. “I’m proud of that.”
Times staff writer Dawn C. Chmielewski contributed to this report.
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Bill & Melinda Gates Foundation
Founded: 1994
Headquarters: Seattle
Employees: 241
Endowment: $29.1 billion
Selected grant recipients: United Negro College Fund ($1 billion), GAVI Alliance vaccination programs ($1.5 billion), Malaria Vaccine Initiative ($258 million)
Source: Gates Foundation
Los Angeles Times
