The David Rubenstein Show: Steve Ballmer

[Music] when you're in Harvard you have a classmate named Bill Gates the guy who introduced it says you guys are both kind of weird energetic guys you should meet and your xxx employee of Microsoft I became the kind of sales men on IBM why I knew how to wear a tie we're the biggest individual shareholder of Microsoft I'm a loyal loyal dude I still drive forwards my dad worked at Ford and I still owned Microsoft stock would you ever take any of the tips and give them give them to your LA Clippers coach no I hear their owners who do that and I'm not gonna be that guy would you fix your time please well people wouldn't recognize me if my tie was fixed but just leave it this way all right I don't consider myself a journalist and nobody else would consider myself a journalist I began to take on the life of being an interviewer even though I have a day job of running a private equity firm how do you define leadership what is it that makes somebody tick as we sit here today you are the owner of the LA Clippers let's talk about how you became an owner of the Clippers so you retired in 2014 from Microsoft as a CEO and the Clippers were more or less going to be available you paid two billion dollars for the team the highest price then ever paid for a sports team in basketball where all the other owners happy with you because you elevated the value of all their franchises and I assume they pat you on the back whenever they see you now when I bought that I think there were two reactions there about the team number one yes as you described yes our teams where this has been a great investment the second was oh my god I wonder if this guy's gonna throw around money in a way no way that's gonna the league has plenty of rules so you can owe me it's it's hard to outspend anybody else there was a little concern about that okay so you were living in Seattle area now you have a team in the LA do you go down there and yell and scream like all the other fans I do in fact we have 41 home games that probably made 38 this year and maybe another 7 away game so I make it to a lot of games and it's fun to be enthusiastic I I enjoy it you know things are most fun when it's your kid playing second most you know this owner thing is pretty good because you have a sense of the dynamics of the guys so you go into the locker rooms and say well you know guys could do this better or that you tell them anything in the locker room or you get many tips I got three principals number one don't talk to anybody after a loss that's number one coach yes but not players number two you know pump guys up which I do usually with Tech's after a game or sometimes I'll go talk to somebody after big games in the locker room when we lose or win our last game of the season in the locker room and I go to training camp at the beginning of the year give a little speech a little bit of a pump up I guess it's right but you have coached young children in basketball do you ever takes any of the tips and give them given to your LA Clippers coach no I hear their owners who do that and I'm not gonna be that guy well you're famous when you were Microsoft for pumping up people you have a voice that projects and when you're watching the game do you yell and scream like everybody else I yell and scream I've become a little more moderate so I preserve my vocal chords because you know it certainly can be a problem when you're let's go yeah it can be an issue so what's more fun running Microsoft we're running the LA Clippers running the LA Clippers running Microsoft was a ton of fun and it was you know it's kind of inspirational because we were working on stuff that literally transformed the world and I got a lot out of that and the intellectual challenges we're strong and I love that and I thought a unique value to add but just for fun fun fun there's a really no stress running a basketball team except you really want to win let's talk about your background you grew up in the Detroit area your parents were immigrants where were they from my dad was an immigrant from Switzerland he let Switzerland after World War two worked for the US military as an interpreter at the war trials at Nuremberg because they were looking for German speakers who were not German citizens because they were afraid that and then he met a sponsor was one of the GIS dad who he had worked with as an interpreter I don't think he finished high school who's never precise on that certainly didn't go to college but he worked at Ford my mom actually not an immigrant her parents were and they came from I guess it was probably Russia at the time okay so you did pretty well in high school you were Valle de tournay of your class yes he went to Harvard and then when you're in Harvard you have a classmate that's down the hall named Bill Gates it was interesting because the guy who introduced it says you guys are both kind of weird energetic guys you should meet so we did and the time we met was just about the time he was starting Microsoft plus or minus a month I want to say and that clearly was more than this is just gonna be another random guy I mean a guy starting his own company it was the second company a dumb one in high school he was clearly a special a special guy and I got to know him pretty well you graduated magna laude and then you decided to go to Procter & Gamble I did Procter & Gamble now very often Procter & Gamble gets a lot of very talented people in their young trading programs did anybody famous worked alongside you well funny you should mention that a number of people did when I was there Scott cook who started into it was there Jeff Immelt who ran GE he and I worked together on Duncan Hines brownie blueberry muffin and moist and easy snack cake mix we were the dynamic drivers of brownie mix sales so he was he was around Meg Whitman came right after I left it really was a great great place you go to Stanford and you're gonna get your MBA and then you decide to leave and drop out of Stanford to go to this tiny start-up in Seattle where he called Microsoft what your father say about that no he he was apoplectic in a way I mean he didn't try to stop me but I remember when I called home and my dad said what the heck is software he'd actually been involved installing Wang systems old word processors but what software and then my mom said why would a person ever need a computer now today you'd say that's crazy but wasn't crazy in 1980 but they said okay okay we hear you we hear you if it doesn't work out you go back to business school right I said right no and then never came back so you the summer ends and you stay there and you're the 30th employee of Microsoft and ultimately you become I guess next to Bill Gates and Paul Allen the biggest shareholder what were the jobs you had as you work your way up when I started out as assistant to the president I was Bill's assistant basically chief cook and bottle washer so I set up the accounting which there was some but we needed a professionalized I was the HR department I hired everybody when IBM came the first time about their personal computer I became the kind of sales men on IBM why I knew how to wear a tie I was about the only guy around the place that bill said you have a tie and a suit why did you come to the meeting so when did you realize this isn't a little startup that's gonna be a nice little company in in one part of the the software world it's gonna be a dominant company in the world by the late 80s I would say for sure I knew the company's going to be something I remember when Andy Grove when I ran Intel said someday there'll be a hundred million computers a year sold bill and I looked at each other and said he's nuts he's never gonna be a hundred million these days there's 300 million plus computers sold a year and your father and mother what did they say at this point yeah and they got comfortable when we go in public they knew I wasn't gonna be broke bill actually offered me a decent starting salary it was either 40 or 50 grand I can't remember which looked good in that in that day and age so they knew that was a good choice now my dad still had a little skepticism there were all these people and there was nothing physical you could get your what do all these people do there's no there's no product what did they all do so that that that was a confusing point I'm he's a smart guy but he he'd always ask me that every time we went through the campbells you're the biggest individual shareholder Microsoft is that right yeah that's right so how come you didn't sell more shares because Bill Gates and Paul Allen have sold a large part of their shares well when I was CEO I just didn't think it was right somehow it didn't feel right to me I should stay invested I should stay there but I still I'm a loyal loyal dude I still drive forwards my dad worked at Ford and I still owned Microsoft stock so in the year 2000 you become the CEO Bill decides to sort of retire became the chief Software Architect but no longer CEO so you now can run the place were you surprised that Bill decided to retire I was surprised I was surprised bill had asked me to be president in 1998 and I said fine and that was a another number-2 position and I was fine with that and then Bill came to me and said hey will you be CEO and I asked him do you really want me to be CEO or do you really kind of want me to be a figurehead just just tell me he says no I really want you to be CEO and I would say was I CEO well because Bill you know stayed working every day till about 2008 and I would say I didn't feel like a total CEO probably until bill wasn't working there every day in 2008 because there was a lot of shared responsibility talk about some of the things that happened while you were CEO you moved into video gaming I guess Xbox yeah we were saying what's the path for software if you will into the living room and the only path that was really clear at the time was the video gaming systems there was no way to be in the video game business and not build the hardware we had been in the hardware business in a small way we'd had our mouths product a few other products along the way and frankly I think we probably in many ways should have done more Hardware sooner well you've been other investment time that was actually criticized it was an investment in a company called Facebook I think you invested about three hundred million dollars or so and why did you do that and did you regret not trying to buy the whole company I did try to buy the whole thing Zuckerberg came up to Seattle we met down there I put a concrete financial offer on the table but it's a little Ross Perot tried to buy Microsoft from Bill Gates in like 79 and bill said no founders really have a lot of love and passion around their stuff and even though Facebook was tiny I think it was 2009 and I offered no 20 plus billion dollars something like that and Mark had absolutely no interest okay so a couple other businesses they think the smartphone business that Apple is now more or less perfected at least in the United States you were skeptical that that would be a great business do you think Microsoft could have gotten into that business earlier yes we could haven't should have we should have done in my opinion we should have gotten in the hardware business and that's my I blew that one of the other things that happened during this period of time when you were the CEO was cloud computing your own neighbor Amazon built this big business under your own nose were you surprised that they had become so big in cloud they've had more success than I anticipated I didn't sell them short but they have had more success here's here's why I'm not saying I was completely dubious it is very hard sometimes for big companies to do something very different I call it doing a second trick at the time I would call Amazon a one-trick pony it was doing this retail stuff it was doing an awesome job but to do a second trick you don't get a lot of companies who do that that doesn't mean Microsoft's out of the game are you know we started this thing called Azure and office 365 and my successor Satya has taken the thing to very much new heights and right before you left you tried to buy and you did ultimately after you left I think they completed the Nokia acquisition and that was an effort to get into smart moans that didn't work out what do you think it didn't work out I think out I think there were probably two reasons number one maybe it was late and number two after I left while the company went ahead and bought it I don't think there was the same level of enthusiasm at the board level and management level for scaling up and investing there okay so you ultimately decided to leave and your successor is such an Adela were you surprised when he was selected no no he was the recommendation that I made he's the recommendation that Bill Gates made I thought he was a candidate to replace me which is why we moved him into his last job which was running one of the big divisions and I was glad he got the job because he's done a great job now when you were there you dramatically increased sales and earnings were dramatically higher the stock price didn't go up why do you think there wasn't a correlation between the stock price and earnings and and revenue are you probably two factors number one I took over at least at the worst time if you want your stock price to go up I came in right at the heart of the dot-com bubble everything was sky-high the bubble breaks and oh by the way judge orders the breakup of Microsoft that happens and within several months of me taking over and things fall down and then you have to build back up that's number one by the end of my tenure I had a certain kind of reputation with Wall Street and not not that favorable not about my performance but certainly people hey the guy's a grinder he's gonna keep doing this thing but are all these new things going to actually break through profit wise and number two I think mostly people on Wall Street would have said I over invested I was spending too much money and the only chance to reposition the company really came when Sachi started and you know he's done a good job of repositioning the company and investors minds since you've left the stock has gone up a fair bit and your net worth has gone up a fair bit as a result you're the biggest individual shareholder of Microsoft is that right yeah that's right so how come you didn't sell more shares because Bill Gates and Paul Allen have sold a large part of their well when I was CEO I just didn't think it was right somehow it didn't feel right to me it's not like I'm even with what I had done to diversify at that time it's not like I'm gonna go broke if the Microsoft stock does poorly and it wasn't doing poorly and I ran the company if I didn't believe and people knew I already had enough money I should stay invested I should stay there when I left I still loved the company I did a little bit of stuff to diversify slightly I put some money aside for charity but I still you know I'm a loyal loyal dude I still drive forwards my dad worked it forward and I still owned Microsoft stock you are well known for very visible and vocal expressions of your thoughts it turns out I have something of a knack and part of that is getting in front of your troops and pumping them up and tell a story at the end of the day at least I can I can get into the game and be verbal and both [Music] [Applause] [Music] developers developers developers developers developers developers developers developers developers oh you retire off as the CEO at the age of 57 what did you decide you wanted to do when you left I had not really given it a ton of thought until I left I again had this sort of hardcore notion I supposed to just give give it all for Microsoft until they leave so I leave and what am I gonna do well owning a sports team was attractive so within a few weeks I went and visited Roger Goodell and Adam Silver the NBA and NFL commissioners I thought that would be a fun thing to do and my wife who'd been involved in philanthropic stuff really focused in on foster kids and disadvantaged kids in state of Washington she said come on dude time you got to get involved so I did at first I said come on government takes care of these problems and she said no philanthropies got a role but it did intrigue me to what degree government really does help disadvantaged kids I had a hard time finding the numbers which led to me starting this thing called USA facts and between us a facts are philanthropy the Clippers and having a good time which in my case means exercising and playing golf my life's pretty full okay I don't play golf because my theory was if I had a meeting with you and you thought I was competent intelligent and you saw me on the golf course it would destroy the illusion of confidence so I guess if I don't play but you're probably right and I still play so let's talk about the organization you start at USA facts how did you get involved in this idea and what is it now doing so I said I really want a consolidated view of what government does where does the money come from where is it go and oh by the way also what are the impacts you know if we're transferring wealth what does quality of life look like we're investing in education what is the quality of the outcome how how good are how well are our kids doing what are your philanthropic goals would you say in terms of areas you want to focus on with the wealth that you have yeah we're single purpose what can we do to improve the chances that kids born at the bottom of the economic total polt their parents are move up economically you're always going to have some people who are at the bottom of the economic total poll it shouldn't just be the same people all the time people should be moving up people should have a shot at the American Dream which is the chance to do whatever you want to do and that's not true for a lot of kids when they're born their probability of staying where they are economically is very very high I don't think that's okay there are a lot of reasons people point to education education is a part of it but there are a lot of reasons why kids can't get an education and I think it's important to take a look at that chain and then try to find not only the not-for-profits to invest in we think it's very important to try to stimulate the right behaviors by government and the right spending by government because it can make a huge difference so if you look at back at your extraordinary career at Microsoft and now what you're doing any regrets or if you're happy with everything the way it worked out I'm pretty happy with the way things worked I mean I can go back and there's decisions I'd make differently if I was at Microsoft but you know if I look at the span of work we went from a company that had two and a half million in sales and 30 people to a company that had a hundred thousand people and 80 billion roughly of sales and lots of profit I can feel good about that even though there were mistakes I started out the process with a lot of friends I still have mostly the same friends as I did which I feel very good about that I'm in a very good place in my life now probably you know in a way the best ever although I wouldn't trade out anything I did in the past at least at this age I like being a little less busy that's good for me I'm pretty pleased so as a leader you are well known for very visible and vocal expressions of your thoughts is that a style you consciously adopted or it just happened that way I was a very very shy kid very shy kid I was a shy kid when I got to Harvard and then I built my confidence as my as I I built it because I was doing things and being successful I was shy when I got to Business School when I got to Procter and Gamble first day I started guy who wound up my roommate he said it was like this hi my name's Steve Ballmer my palms sweaty because I'm so nervous so shy kid and then I got better and better and I developed some confidence in public speaking and it turns out I have something of a knack and part of that is getting in front of your troops and pumping them up and tell a story and I I will do I'm basketball it's a weird environment because of course I don't have a lot of credibility I'm an owner for god sakes I I'm not an expert but you know at the end of the day at least I can I can get into the game and be verbal and vocal okay what would you say is the most important characteristic to be a good leader commitment you really have to have your head in the game and be committed to be a good leader there's two parts of leadership one is leading people and that's about commitment and people understanding you have commitment the other part of leadership which doesn't get talked about much is you have to be a leader of ideas the worst thing you can do both for your people in general is to say let's go and you point that way and the truth is you should have gone that way so leaders have to be leaders of ideas the ideas compel the people but then the ideas have to be right and you have to stay committed if 20 years from today or 25 years today you're looking back on your life what would you want people to say because your legacy what you contributed to our country well you asked a very specific question what would wouldn't rib Ute to our country what I hope we do is make some difference in the lives of kids that's number two all right number one hey we democratized computing and putting that kind of power and capability for people to thrive to investigate to be smarter to to create more I feel immense pride about that I put that number one I think that was not only something that affected this country but the world I whatever we do philanthropically I hope makes a big big difference it's hard to make a bigger difference than being involved in the popularization of computing and the five NBA championships you will have one that will be important as well right yeah that's kind of a zero-sum game when we win them somebody else doesn't win them so it's all harder to say it's a broad contribution but in LA that would be a big [Music]

Channel: David Rubenstein

Views: 319,335

Keywords: Bloomberg

Id: KopLe5NZBJc

Length: 24min 2sec (1442 seconds)

Published: Wed Jul 18 2018