From Startup to Exit
Welcome to the Startup to Exit podcast where we bring you world-class entrepreneurs and VCs to share their hard-earned success stories and secrets. This podcast has been brought to you by TiE Seattle. TiE is a global non-profit that focuses on fostering entrepreneurship. TiE Seattle offers a range of programs including the GoVertical Startup Creation Weekend, TiE Entrepreneur Institute, and the TiE Seattle Angel Network. We encourage you to become a TiE member so you can gain access to these great programs. To become a member, please visit www.Seattle.tie.org.
From Startup to Exit
Microsoft@50: Birth of Microsoft Office, with President of Business Systems Division, Jeff Raikes
This is the 2nd installment of the Microsoft@50 series. We interview Jeff Raikes, who was President of the Business Systems Division at Microsoft. Jeff was the one of the senior most executives at Microsoft after Bill Gates and Steve Ballmer. Jeff served as a member of the company’s senior leadership team that set the overall strategy and direction for the firm. He began his career with Microsoft in 1981 and was instrumental in creating the Microsoft Office suite of productivity applications.
Jeff Raikes is a co-founder of the Raikes Foundation with his wife, Tricia. The Foundation works toward a just and inclusive society where all young people have the support they need to achieve their full potential. Key areas of focus include reimagining an educational system that creates conditions for all students to succeed; ensuring housing stability for youth; building a fair and representative democracy; and supporting donors and philanthropic organizations in moving resources toward justice.
Jeff is the former CEO of the Bill and Melinda Gates Foundation, where he led the foundation’s efforts to promote equity for people around the world.
At JPMorgan Private Bank, wealth is understood to be more than just numbers. It's about creating a legacy, achieving dreams, and securing a family's future. Clients benefit from a personalized approach, working closely with experts in philanthropy, family office management, fiduciary services, and special advisory services. The mission is to make the financial journey as seamless as possible from the initial meet to ongoing management of assets. For more, visit privatebank.jpmorgan.com.
Brought to you by TiE Seattle
Hosts: Shirish Nadkarni and Gowri Shankar
Producers: Minee Verma and Eesha Jain
YouTube Channel: https://www.youtube.com/@fromstartuptoexitpodcast
What were the three key features of Lotus 123? It had bigger spreadsheets, faster spreadsheets, and built-in business graphics. Lotus 123 differentiated the IBM PC on one of the most important types of software, spreadsheets. And so what I learned from that, and I used that phrase in 1983, is that if you want to win big, you have to make the right bet on the winning platform. And I could see that the IBM PC and then compatibles were going to be the winning platform. And I could see that Lotus had made the right bet.
SPEAKER_00:Welcome to the Startup to Exit podcast, where we will bring you world-class entrepreneurs and VCs to share their hard-earned success stories and secrets. This podcast has been brought to you by Ty Seattle. Ty is a global nonprofit that focuses on entrepreneurship. Ty Seattle offers the artist. Hi entrepreneurs. Hi, Seattle. Become a member.org.
SPEAKER_01:Hello, everybody. Welcome to another episode of our podcast from Startup to Exit. I'm here with my co-host Sharish Natkarney. My name is Gary Shankar. We both serve on the board of Thai Seattle, which produces this podcast. First of all, we both want to thank you for all the support that you've given us over the last year, where we have brought this podcast to all of you, and I hope all of you have enjoyed all the content that we are bringing from our guests. We are launching a very special series. We are launching a series that is very close to both our hearts because we are both Seattleites. Microsoft just turned 50. And as a tribute to the company and the impact it's had on the world and our city, we are going to talk to some of the very early executives who shaped and grew the Microsoft brand to what it is today. I hope all of you enjoy it. We will be talking to many of them, and over the time you will learn a lot of things about the early years of Microsoft. Thank you all and hope you enjoy it.
SPEAKER_04:We are interviewing Jeff Riggs. Jeff was one of the senior most executives at Microsoft after Bill Gates and Steve Bomber. He was the president of the Microsoft Business Division and served as a member of the company's senior leadership team. He began his career at Microsoft in 1981. I think he was the 100th employee and was instrumental in creating an office suite of products, which we'll talk about in length. I was very fortunate to also work for Jeff while I was at Microsoft. We worked on the integrated office strategy, trying to compete with the likes of uh all in one and IBM profs. So welcome, Jeff.
SPEAKER_02:Great. Well, thank you very much, Therese, and uh appreciate the opportunity to spend some time with your audience. That's great. Thank you.
SPEAKER_04:So uh you grew up in Nebraska in a farming community. Uh what was it like growing up on a farm? And how did you end up at Stanford for your undergrad?
SPEAKER_02:So um uh my family have been farming in Nebraska since 1854. Uh we've been in the same location since 1900. Uh so for us it was a way of life. I grew up uh on a farm near a small rural community where I went to school. And, you know, it was definitely hard work, but it was great work. I mean, I the values that I carry have carried throughout my life. I learned, you know, working on that farm, being in that community, uh, you know, the importance of work ethic, the importance of integrity, uh, the importance of uh being connected to your community, uh discipline. Those are those are things that I I learned uh growing up on the farm. And it really showed me a lot of important lessons, you know, that effort matters, outcomes are not always controllable. You don't control the weather, you don't control the pricing. And so um, you know, growing up on the farm was very important. For Stanford, getting to Stanford, my dad thought that I should get a business degree instead of an agricultural degree. My brother was an agricultural economics professor at Iowa State University. And so my dad told me that Stanford had the best business school. Uh, I don't know, Sharish may disagree with that, but uh but uh anyway, as a high school kid, I knew nothing about Stanford. I mean, I'd heard of Harvard, but that was about it. And so as a senior in high school, my mother and I were visiting out in California and we drove up Palm Drive. Uh, I saw how beautiful the campus was. It was 72 degrees, it was 12 below zero in Nebraska. And I said to my mother, I think I'd like to go here. Uh and uh so I was very lucky to get accepted. I was not, you know, my high school was not like the big city kids, you know, with lots of AP courses and that sort of thing. Out of my class of 75, only one 15 went on to college, and only one left the Midwest. And so, you know, I got to Stanford and I found out there's no undergraduate business program. I was pretty good at math and science, and so I thought, well, I should go to this engineering picnic, and you know, during uh orientation weekend, and and I met a couple of professors, identical twin brothers. One uh oversaw electrical engineering, and the other one was the department chair of engineering economic systems, and they'd grown up on a hog farm in Missouri. So I felt, okay, I I I found my piece. Uh and so I ended up uh creating a degree in uh an undergraduate degree in economic engineering economic systems because my intention was to use that type of analytic discipline to go work on agricultural policy, perhaps at the USDA. But but along the way, I bought an Apple II computer to help my brother run our farming operations and uh never done any job interviews because I'd always worked at on the farm, and so Apple Computer uh came to campus and I interviewed with them, and they gave me the opportunity to work on a product that most of your listeners probably don't know, but it was a product called VisaCalc, and it had only been introduced nine months before I started, so it was a brand new product, VisaCalc, the visible calculator. And uh it was the first electronic spreadsheet, it is the grandfather of Microsoft Excel. And so my first job at in the industry was working for Apple Computer on VisaCalc.
SPEAKER_04:So I understand that while you were at Apple that uh Steve Jobs made an offer to you to join the Macintosh team, and then later he tried to dissuade you from joining Microsoft. So tell us more about what happened.
SPEAKER_02:Well, that was that was exciting. You know, it my time at Apple was was was short, but very influential. You know, I learned three things. One is I learned that I absolutely loved software. You know, people would come to me with uh what they thought would be a problem to solve in in spreadsheets that you couldn't do. I mean, Jeff, can you do a perk chart in a spreadsheet and you know, uh for project management? And I, you know, and I'd spend all night figuring out how to get Vizical to do a perk chart, and then you come in that next morning and you demonstrate that to them, you show them that, and their eyes light up. That was addictive. You know, the power of software was addictive. The second thing I learned beyond loving software was that hardware companies really only care about software to sell their hardware. That was the mantra of Apple at that point in time, and that just that didn't feel right to me for what I loved to do. Uh and by the way, Sharish, and you'll appreciate this. The third thing I learned at Apple Computer, stock options. I was at Apple Computer during the time they went public, and so I saw what that meant in terms of wealth creation. And so, so I really I really loved software. I wanted to, you know, uh, I wasn't that interested in Microsoft, but Steve Bommer called me up and and we went to lunch at Chef Chu's at the corner of uh San Antonio Road and El Camino and in Mountain View, and he was all charismatic, you know, explaining you know the company and what we could do, you know, at Microsoft. And I wasn't all that interested, but my my sister one of my sisters lived in Seattle, so if I agreed to interview, I got a free trip to see my sister. And so I put him off for about three months, and then finally I went up there in August. And you know, Sharish and I know that the most beautiful time of year to be in Seattle is in August. Yeah. And uh, you know, and you know, there was a funny thing about that, that you know, being recruited by Steve, and and that'll lead up to the Steve Jobs uh discussion, is that you know, I only said I'd only come up on a weekend, so my interviews were all on a Saturday. And when I interviewed, uh started my interview with Steve, Steve walked me by a room and he said, That room is locked. I can't tell you what's in that room, but it's very exciting. And I'm like, Well, that's kind of weird. And then, you know, I go do my interview with Steve, and he's walking me over to meet with Bill Gates, and and we walk by that room, and he says, Yeah, it's still locked. And of course, I realized uh that in a few months the IBM PC was going to be announced, and that what Steve was messaging to me was that they at Microsoft in 1981 they were already working on the IBM PC. And as I walked down the halls of Microsoft, it was amazing. There were all of these computers from different manufacturers, there were CPM 80 machines, there were machines from Japan. And and like when you're an Apple Computer, you think Apple Computer is the center of the universe. And instead, what I was seeing was all of these different computers from different manufacturers, and I didn't know who was going to win in hardware, but I knew that Microsoft was doing software for all of them. And so that kind of turned my head, and I suddenly got interested in in Microsoft, and uh about a month later, um you know uh Steve Jobs had uh had taken over the Macintosh project, and uh he wanted me to work on the Mac. I think I would have been like the sixth person or seventh person I would have worked for Joanna Hoffman. And I just I I you know Microsoft was about software. I just thought it was about software, and I had stock options at Apple, and my boss at the time at Apple Computer was Ida Cole. And Ida, uh she was a great leader and very kind to me. She said, Well, let's let's hold off on announcing my uh departure until after my first vesting date. She was a little afraid that maybe Steve might try and screw me out of my stock options. Anyway, uh I announced my uh departure for Microsoft on November 1st, 1981. And November 2nd at 2 p.m. in the afternoon, I get a phone call. And it's Steve Jobs, and he's yelling at me, you know, what are you doing? You know, that's crazy. And you know, I said, Well, Steve, I really like Seattle and I can afford to buy a home there. And he says, You can afford to buy a home in Scotts Valley and so on and so forth. And then he goes into what became known as the Steve Jobs reality distortion field. Steve, in the most eloquent way, describes to me how Microsoft is going to go out of business. And I'm like, hmm, that's interesting. I'm listening to this. And then, you know, finally, when he's kind of done with his soliloquy, I say, Well, Steve, you might be right, but in my case, I can always go back to our family farm and that would be okay with me. And then I hung up. And so, you know, it part of it was I didn't happen to love the way Steve Jobs kind of treated people. I'd seen how he treated engineers, and and uh, you know, part of it was my love of of software, and part of it was my enthusiasm to um to to be able to um you know move to Seattle and and so on and so forth. So there were a lot of things that that came together.
SPEAKER_04:Right, right. So initially you worked on uh multiplan, um, and the multi-plan strategy at that time, uh, as I recall, was to be on all platforms. Uh, but then in uh January of 1983, uh Lotus 123 came out and it was heavily optimized for the IB IBM PC platform. And that changed your mindset about focusing on multiple platforms, and then and instead of you know just focusing on two or three one or two specific hardware platforms like the IBM PC and the Macintosh. Yeah. So tell us what changed your mind, you know.
SPEAKER_02:Well, you know, when I when I joined Microsoft, my my first day was November 13th, 1981, and and there were some really fascinating it there was a there was an all-company meeting. I think it was the second time they'd brought everybody together. And there was a guy named Kay Nishi that was Microsoft uh Japan. And Kay says, you know, the telephone is an extension of your ear, the television is an extension of your eye, but the computer is an extension of your brain. So that was that was kind of my introduction to Microsoft Vision. Uh and then uh Charles Simone, who I was very fortunate to work with, Charles does this presentation which became known as the the Simoney Revenue Bomb. And the idea of the Simone Revenue Bomb is all about leveraging code. You leverage code from one application to another, from multi-plan to a word processor to a database, and you leverage code from one machine to another using a P-code or pseudocode interpreter. And that was the the application strategy was to be able to leverage code. And if you did had that leverage, you'd have to hire so many people in sales that there'd be this revenue bomb. And so that was the the Simone revenue bomb. And that was our strategy. And then as Sharish, as you said, January 20th, that's the date, 1983, Lotus 123 launched, about the same time that the compact IBM compatible launched. And so suddenly you had a clone of the IBM PC that could run Lotus 123 as well as the IBM PC. So Lotus 123 really uh shaped my thinking about software strategy. How did the IBM P, how was the IBM PC different from the Apple II? Well, it had a faster processor, a faster microprocessor, it had more memory, and it had higher resolution graphics. What were the three key features of Lotus 123? It had bigger spreadsheets, faster spreadsheets, and built-in business graphics. So Lotus 123 differentiated the IBM PC on one of the most important types of software, spreadsheets. And so what I learned from that, and I used that phrase in in 1983, is that if you want to win big, you have to make the right bet on the winning platform. And I could see that the IBM PC and then compatibles were going to be the winning platform, and I could see that uh Lotus had made the right bet. You know, they thought they won because it was an integrated, it was integrated software, but really why they won was because it was uh a better spreadsheet. And and by the way, they made a mistake thinking that they won because it was an integrated software product. They built this product called Symphony, which was even more integrated and never was as successful. So they didn't understand the seeds of their own success. And so on February 1st, 1983, we started the PC Word project. And the P Microsoft Word on the PC was not designed to run across all of the those computers. Uh, it was designed to take advantage of the IBM PC architecture. So we could do bold and italics on the screen, we could use a computer mouse, so on and so forth. And and Microsoft Word on the PC shipped on October 25th, 1983. So that was uh very accelerated development project, and then that was the pivot in our our uh the first pivot. And then if you want me to go on, I can tell you about the the the second pivot which occurred in that that next year.
SPEAKER_04:Right, yeah. Please uh talk I assume you're talking about uh Excel first on the PC platform and then eventually on the Mac.
SPEAKER_02:That's right. In October of 1983, we held a retreat of engineers and and Jay Blumenthal, the program manager. Jay was brilliant. I mean, he had evaluated every spreadsheet out there uh because there were a lot of spreadsheets and financial planning products, and and you know, Doug Clender was an awesome you know developer, and they together designed uh uh what was codenamed Odyssey, and um it was gonna be a uh a competitor to Lotus 123 on PCMS DOS. And in the spring of 1984, this is a few months after multiplant uh had shipped on the Macintosh, and Apple Macintosh shipped in January of 84, and Microsoft was the applications company, the first one to have software products on the Macintosh. We had been working internally and secretly on what was called SAND, S A N D, Steve's amazing new device. And so we we got our products out there and and then in the spring of 84, and Bill and I were super enthusiastic about graphic user interface, and we really admired you know the Macintosh. And I had been offered, in addition to being offered the job on the Mac, I'd been offered the job on Lisa, which was a higher-end Apple Apple graphic user interface computer that didn't do very well. And uh so the the net the net result was um I went to Bill and I said, look, I I think we should we should bet on the Macintosh and we should bet on graphic user interface. Graphic user interface is going to be the winning platform, so we need to make the right bet to on the winning platform in order to win big. And so Bill agreed and we moved uh the Odyssey project over to the Macintosh. Doug Blunder wasn't very happy with us, and he basically said, I'll do it, but then I quit. Uh and and he lived up to his word. He did it, and then he quit. And so we uh announced the uh Microsoft Excel on the Mac in 1980 May of '85 at Tavern on the Green in New York City, and then we shipped it in September of 1985. And Steve Jobs was kind of a little bit dismissive because he was so he was kind of enamored with Lotus One Two Three and Lotus Symphony, and Lotus had done an integrated product on the Mac, and so he thought, well, you know. Excel will be okay, but you know, Lotus is gonna be doing really well. And I just want to tell you that I think it was computer reseller news that came out that following uh spring in 1986 and said that you know Microsoft Excel was out selling uh Lotus on the Mac 10 to nothing. So that's pretty good. Uh that's pretty good, yeah.
SPEAKER_04:Yeah, that's great. So um on on the uh DOS uh platform, uh you know, WordPerfect and Lotus 123 were the dominant uh players, uh, but ultimately you were able to uh displace them as the market leaders uh through the Office on Windows strategy. And you talk about the importance of technology platform shift, you know, married with business model innovation. So tell us more about that. Yeah.
SPEAKER_02:Yeah, so so let's extrapolate from what I learned uh from Lotus 123, which was to win big, you have to make the right bet on the winning platform. And and so later on, I began to see that the greatest opportunities for to create value in our industry are when you have a technology paradigm shift compared with a business model transformation. So let's step back and and in Microsoft history. Uh when did that first happen? Well, it was Bill Gates that figured out that there was the opportunity to create an independent software company, an independent operating system and languages company. Uh, and so he bet on the IBM PC. That was the um shift from the 6502 uh to the 8080, uh, or eight, sorry, and the 8080 shift from those two product processors to the 8088. And uh, and then he was able to, you know, he went to IBM, uh, or IBM came to him really, but they they worked out a deal where he would flat fee MS-DOS to IBM, but retain the rights to sell MS-DOS to all of the other computer manufacturers on a on a royalty. And so he innovated in that business model while also betting on that technology paradigm shift from the 8080 to the 8088. Okay. So in the mid in the mid to late 80s, you know, we made the bet on graphic user interface. And that was a tough bet, Sharish, because look, the Macintosh was not selling that well. And Windows was not released later than expected and wasn't really very good or very powerful until Windows 3. And so, you know, we were we were really kind of struggling. And so uh one of my great, great mentors at Microsoft was John Shirley, who was president of the company. And I went to John and I said, Look, why don't we take two of these products, or sorry, three of these products, and put them into a single box for the price of two. That was the beginning of the Office productivity suite. It started out with a bundle on the Macintosh. Uh, I think actually it was Valerie Houchens, who was my product manager on that later, succeeded by Laura Jennings. And so the idea was we were going to put the applications together. So we were making a bet on a technology paradigm shift from character user interface and MS DOS over to graphic user interface on the Mac and Windows, and we were doing a business model transformation. Instead of selling, you know, against WordPerfect and against LOTUS and against Ash and T base D base and against Harbor Graphics, we were going to have the Microsoft Office productivity suite with a consistent user experience, the ability to share data uh amongst the applications. And then there were a few other things, Sharice. You know, really, I mean, Steve Ballmer was an unbelievable leader and mentor. And one of the things that Steve really innovated was on how we did the licensing with corporations. And so that was another part of the business model transformation, is that we were able to do an enterprise license with the corporation so that they didn't have to stack a bunch of retail boxes in a warehouse to show that they had the licenses. And so when you put those the apps together into a suite, and then you have a singular licensing agreement that makes it easy for the customer, that was the business model transformation. And then, of course, um uh through the the uh improvements in Windows 3 and 3.1, we now had a powerful enough platform. So by 1990, we were turning the corner, and by 1994, 95, Microsoft Office really was the uh I won't say dominant, it was the leading uh application productivity suite. Yeah. And I was just gonna say part of part of it was our competitors were suspicious of Windows and OS 2, and so they drank their feet. And that that that is a mistake.
SPEAKER_04:Right.
SPEAKER_02:Bill taught me it, you know, better to cannibalize yourself than to let somebody else cannibalize you.
SPEAKER_04:Right, right. But even at that time it wasn't there was a big debate about best of breed versus uh you know, suites. And you know, a lot of people thought that best of breed would win out and that you couldn't really combine a set of products together and hope to you know beat the competition. That's right. It turned but it turned out that uh Word and Excel and PowerPoint were best of breed, and optimized for Windows.
SPEAKER_02:Yeah, I mean they exactly. And people thought it somehow was mutually exclusive that you know you couldn't be you couldn't have the best word processor in a suite. And it turned out, yes, you can. And we have yeah, as you well know, because you were there with me, we had great technical talent. You know, the the software engineers we had, people like Doug Clunder, Dave Moore, Charles Simone, Jeff Harbers, you know, on and on and on. We had great technical talent and they and and great designers like Jay Blumenthal, you know, and so so you know, we we were able to be best of breed within a suite. And when Windows caught up to us with uh adequate power, then that really that really showed through. And the fact that we had the early work on the Mac really taught us about how to do graphic user interface applications uh in general uh on Windows and OS2 as well. And so, you know, by making those early bets and really sticking to them, uh we we succeeded. You know, what I said to Bill in '84 when we were pivoting to Excel was I said, look, you know, you take BC Word, we can slog it out with WordStar and WordPerfect, and we'll gain single digits of market share. But you know, if we bet on the technology paradigm shift, if we bet on graphic user interface, we can gain dozens and dozens of points of market share.
SPEAKER_03:Yeah.
SPEAKER_02:And and uh so Bill and I were in sync on on what the strategy was gonna be. That's great.
SPEAKER_04:All right, let me turn it over to Gowry to continue the discussion.
SPEAKER_01:Hey Jeff. Um we sort of go back a little bit, right? At the beginning, you said you went to Stanford thinking you'd get a business degree, go be uh maybe a policy wonk and USDA, yeah, and affect agricultural policy, right? Instead, you became uh you became a uh software guy, and uh and uh essentially uh the dawn of productivity software was born uh with you coming into Microsoft. And I sort of listened to those, right? You might have affected humanity as a policy wonk at USDA because you might have made a lot of changes to how agriculture works, and you might have brought computing into it because your your brother was using computers. Instead, you actually innovated and brought a set of software that has actually touched all of humanity. It's hard to believe that humanity has not been affected by Microsoft Office in some fashion in their day-to-day lives, right? Others have come along, but this has been the change that brought about. Seems like both were very intentional uh on your part, even though you were in your 20s. From our audience perspective, there are a lot of young uh entrepreneurs or young folks now thinking of what they could do next. Looking back, how are those intentional decisions uh you made and uh therefore how you move forward?
SPEAKER_02:Yeah, well let me uh that is a great question. Thank you very much. And let me kind of come back for a couple of points. I wouldn't overrate my uh ability to predict what impact I could could have. I mean, I would I want you to keep in mind that when I joined Microsoft, there were just a hundred employees. Actually, uh the gal that became my wife, Trisha, she joined in July when there were only 75 uh employees. And so that gives you a sense of what the growth rate was at that point in time. And and by the way, Gary, Trisha and I hold the distinction of being the first couple to meet at Microsoft and get married. Uh so you know, when when we were at Microsoft then, the idea that there would be a half billion to a billion people using Microsoft Office applications, I mean, we didn't have that. Yes, we thought there could be a computer on every desk and in every home, but you know, Microsoft's a little old software company. We were 12 million in annual revenue. I mean, we debated whether there would ever be a hundred million dollar software company, you know, and so so it it wasn't quite as intentional as you would make it seem. The intentional part of it was that I knew I loved software, I knew I loved information tools built on software. And so, you know, it was a little bit like what I told Steve Jobs. If it doesn't work out, I can always go back to the farm. But uh, you know, it it uh um it it it's been an amazing, amazing ride. And there's a principle that my father implicitly taught me, which I want to share with your listeners. You know, my dad was a chemical engineer and he didn't intend to run our farm, but my grandfather was losing our farm during the Great Depression, 1932. And so my dad literally and figuratively saved our saved our family farm. You know, he could have gone on to MIT, he had an opportunity to do graduate work there, but he saw an opportunity, and the thing I learned from my dad is that you can have a plan but be open to opportunity. I had a plan. I was gonna go work for the USDA and then maybe after 10 years go and work with my brother, but I saw an opportunity, this personal computer revolution. It was amazing. You know, I was gonna work at Apple Computer and and build software for their machines, but then I had the chance to to meet Steve Ballmer and and get the opportunity to help him create product marketing at Microsoft, and and you know, and then the opportunity to work on creating Office, I mean, that's incredible. So, you know, I had I had a plan, I had plans at different point uh points in my life, but I was open to opportunity. And that's the same thing I would say to your listeners. You know, you're you're always gonna do better if you find the type of work that you love so much that it's also kind of your hobby. Uh, you know, you're gonna you're gonna do better in life if you have the discipline of planning, but make yourself open to opportunity because sometimes, you know, like look, we grew up in this industry. We know that you can't predict everything that's gonna happen. And so be open to opportunity. And so those those things, you know, in my case, I'm a farm kid from Nebraska. I've been at the right place at the right time around great people who gave me the opportunity to really do some some um amazing stuff together. And I couldn't be more grateful for that. You know, that's part of having a plan, but being open to opportunity.
SPEAKER_01:I think being growing up in a farm, right? Farms don't have seven days. It's every day. There's not uh, you know, things don't turn off on. I mean, rains don't come on Friday, and then there's takes a break for two days, and then you know, it's seven days. So planning was central to uh to a farm kit because seasons, the days, etc. Let me just kind of shift to the leaders you have mentioned in our interview, right? Seems like you had this power of persuasion uh to at that time, uh the young Bill Gates or a young Steve Bomber, who were running fast and had had a very set, very smart people, very clear thinking, etc. But you had to persuade them to take business decisions a lot, and a lot of the time we find ourselves in persuading those around us to follow a path that may not be very apparent at the time of persuasion. And you you persuaded yourself to not take Steve Jobs' ranting, but you persuaded Bill Gates to say you gotta put your bet on uh graphical user interface. Talk to us a little bit about where uh where that came from, or how how are you how do you see that working for every everybody who's listening to you?
SPEAKER_02:Well, there's a few things. Um uh one is I'm gonna uh talk about my mom and dad a little bit more. My you know, as a freshman in high school, my dad felt that instead of me doing um vocational agriculture, which in my high school would have been a class to take, that I should do speech and drama. And uh gosh, that that was such an important uh suggestion from my dad because I didn't realize how much of my career would be speaking and acting. You know, Sharice were at some of those sales meetings. You know, so so you know that you know, that was important. You know, I I learned that the importance of communicating, articulating, uh, you know, when appropriate, using, you know, my emotions or different types of emotions. And so uh communication, the skill of communications is is extremely uh extremely important. Another thing that I think I really benefit from is I have intense intellectual curiosity. I I am very curious and I'll ask all kinds of questions. And you know, especially when you're building relationships with people, if you're curious about them, what they're doing, what they're interesting, interesting, it helps you to build a relationship with them, a common bond. And so I think that that combination of intellectual curiosity, my ability to build relationships with people, to gain their trust. I mean, I was I was very fortunate early on to you know gain the trust of Bill Gates. I mean, there was kind of a seminal meeting uh in February of 1984 that you know we had introduced the Mac and um multiplant on the Macintosh in January, and by February, maybe early March, we discovered there was a serious bug, and it was serious, it was a data loss bug that had to do with linking spreadsheets. And so Jeff Harbors and I had to go and meet with Bill, and Bill has this habit of kind of looking down and rocking, and you know, we were delivering bad news, and so we were a little nervous, and you know, I explained that we found this bug and and that um you know it was a serious bug, and Bill didn't say anything, he just kind of listened and nodded, and then Jeff Harbors explained that you know this is what we probably should have done differently in the the testing process that would have helped us um you know catch the bug. And Bill didn't say anything. He just kind of listened or nodded, and and then I said, you know, look, we're gonna have to recall the product, and it's gonna cost us some money. It's probably gonna cost us 250 or$300,000. This is our reputation, and you know, I feel very bad, but we gotta do that, and and Bill didn't really say anything. So we thought, okay, this is the moment we get fired. Uh and then he looks up and he says, You came in today, you lost$300,000, you come in tomorrow and you do better. Wow. And that was the end of the meeting. And I I have to tell you, I still get emotional thinking about that moment. I mean, the amount of loyalty he engendered in me from, you know, he recognized that we were doing things that hadn't been done before. We were building graphic user interface applications that had not been done at serious scale before. And so what Bill really wanted to know, he what he really wanted to know was were we learning? We're you know, we'll make mistakes because we're breaking new ground, but are we learning so that we don't repeat those mistakes? And so I have huge admiration for for Bill and the way in which he handled that uh that situation.
SPEAKER_01:Yeah, yeah. Uh this always right uh uh goes back to right this combination you talk about. I I always feel Bill Gates uh is viewed as the Edison of our current, but he really had a Rockefeller in him who knew how to take this uh astounding software and make business out of it, right? The business models you discussed. It's incredible to see those two come into one person. Uh because usually very good scientists are very good business people.
SPEAKER_02:Yeah, no, he he he's he's amazing. His depth of understanding of business. If you read his new book, and I highly recommend it, uh called Source Code, he talks about just not only how much he got into computing, but also how his parents set it up for him to be connected with business people in Seattle and hear what they were doing and learn from them. I remember sitting at a dinner one night where Bill was explaining to me the distribution model of the Caterpillar Corporation. You know, I mean, it just you know, he he's a guy who reads The Economist cover to cover uh every week. And so his command of not only technology, but also business, uh politics, you know, uh global affairs, it is it is it is impressive. And there you won't meet very many people in your lifetime, if at all, that have that level of breadth, breadth and depth.
SPEAKER_01:But it looks like you uh you stumbled upon to the art of storytelling in high school, right? And then you had this in uh you had this innate thing of curiosity in you. So you took those two and really moved from product to sales. It seems like that was the most natural movement that your career should have taken. Is that did that play a role? Uh, or was that you had to do it because Bomber became the uh CEO of the company?
SPEAKER_02:No, I uh well, so let me take you back to December of 1991. Bill and I had ventured out to Digital Equipment Corporation deck in um uh that that month, and we met with um Bill met with Ken Olson and probably related to Sharish, I was meeting with the all-in-one group, uh trying to convince them that they should be building all in one or working with us to build all in one on sorry on PC. And on the plane ride back, Bill says to me, he wants me to move over to US or North American sales. And I'm thinking, This is the craziest thing I've ever heard. I mean, I'm a product guy. I I said to Bill, I said, Look, I haven't been trained as a salesperson. Um Uh, I'm not uh a sales manager. And he said, no, no, no, no. You understand our strategies and you understand how to build the assets that we're going to need to implement those strategies. Sorry. And so um, you know, I in terms of career management, my principle was try and do something that I enjoyed and try and do something that the company needed me to do. And so uh so I did it. And one thing I'll I'll say about it is that I don't think I was very good at the beginning because Microsoft product divisions they have a certain culture, very self-critical, uh, not into a lot of recognition, much more important to, you know, uh, you know, be tough and inward looking, so on and so forth. And you go over to the sales and marketing group and you have that kind of uh uh leadership style. It doesn't work very well with the sales and marketing people. You know, they really they really uh seek recognition. That's part of the persona. They're out there trying to win deals and and so on and so forth. So I would say it took me a good 18 months to really learn how to adapt my leadership style from what was the product culture of Microsoft to the the uh the sales and marketing culture. And you know, fortunately, I was working for Steve. He was leading worldwide sales at the beginning, and I was leading US and then North American sales. And Steve, as you can tell, is an awesome uh leader in many dimensions, but one of them was his charisma and how he could motivate and inspire the sales force. I can't do it the way Steve does, but I tried to do do it in my own way. And um, and so uh that was a great transformation for me. And it was a lesson in leadership that I carried throughout my career, including to my time at the Gates Foundation.
SPEAKER_01:So um you work for many leaders, but uh let's kind of take the the three CEOs of Microsoft uh uh uh that has ever had. You work closely with Bill, Steve Bomber recruited you into Microsoft, and uh as I understand uh the current CEO Satya worked for you in the early days. Uh in fact, I think there is some there is a YouTube video somewhere floating of Satya talking about Excel in a in some kind of a marketing, you know, Microsoft video that they did. Uh so now you you've seen all three of them, they all are different personalities, different strengths, and uh they all seem to have uh brought uh a particular thing back to the company. What you as you what was your experience working with all of them, and how do you see each of them change the company?
SPEAKER_02:Yeah, well they all three of them have great leadership attributes. I mean, Bill's ability to see the future of technology. Uh you know, we used to go to these exec staff retreats where he would explain, you know, what was going to happen in terms of microprocessor horsepower and what was going to happen in terms of memory and storage and and graphics and what would that mean for our business and so on and so forth. Um I think it might have been Jack Welch, the who was uh CEO of GE, you said to me that great CEOs see around corners, and Bill could see around corners, you know. He had that he had that bill ability. He didn't have the same kind of leadership persona that Steve had, you know. Uh but it it but it was a great leadership persona. It was about technology and a vision for that technology, you know, and Bill was smart enough to know that he needed a partner in Steve to really build the business of Microsoft and to help shape those strategies. And so, and I give Steve incredible uh you know credit and gratitude for you know how he built our culture of working with developers, working with small uh with solution providers who would sell the small and medium businesses, how to build our enterprise services. You know, Steve had you know, Steve contributed to Microsoft in in so many ways. Um I didn't get to work with Satya as closely as I I might have liked. Um I didn't get a chance to work with Satya maybe as as closely as I would have liked. He actually he worked in in the business division, but I think he was working uh for somebody who worked for me, uh Doug Bergum, and the the business application space. And, you know, but you know, it was pretty easy for me to see that Satya was a great talent. And I think what Satya's done, one of the things I admire the most is how he's made sort of a cultural pivot at Microsoft, which I think was very important for its growth. He invited me over to see him his first week as CEO. And we talked, you know, he was seeking advice from a number of people. I was one of them, uh, just to kind of say, you know, what how should he think about the role and what what should he do? And and so I I gave him uh multiple thoughts about the culture and how I thought the culture would need to evolve. And one of the things I told him was to read this book called Boys in the Boat, and written by uh Daniel Brown. And I said, you know, you get to, I think it was page 235, and there's gonna be this discussion of how uh uh the the famous coach Pocock is telling Joe Rance, the very talented uh rower, that the only way the boat was gonna perform at its peak is if everybody in the boat trust each trusts each other. And that was the the the thing that I thought was so important from a leadership standpoint is Satya needed to have a uh a leadership team that had that level of trust in each other, and and so you know I think Satya's really worked very hard on that. In addition, we had a lot of smart people at Microsoft, and and very often you had this situation where you had the smart people, you know, arguing with each other, almost trying to prove who's the smartest person in the room. And Satya's principle was not to try and be the smartest person in the work room, but to be the most intellectually curious person in the room. And I think I think those were our examples of his leadership in making a cultural pivot at Microsoft, which is equally important to his bet on uh you know the broader office experience, his bet on Azure, the cloud, now AI. You know, you can't do those things if you don't have the right culture. And so I think we ought to give Satya Nadella a lot of credit for how he has uh helped to develop and transform the culture of Microsoft.
SPEAKER_01:You did a uh you went on to run the Gates Foundation, and now you are running the Riggs, uh, you're part of the Riggs Foundation. Um, what leadership uh learnings and traits you carried from your stint at Microsoft on to now what can we only measure as impact, right? There's no profits to be made, no revenue goals to be achieved. But uh every day you got to impact more than you did the day before. So can you uh talk a little bit about that transformation from corporate America to giving?
SPEAKER_02:It's a different mindset, and by the way, Gary, it's uh uh another example of have a plan, but be open to opportunity. I I went to Bill, see Bill in December of 2007, and I said, hey, you know, I said I'd double the office business in 10 years. We did it in seven years, so you know I'm gonna do something different. Uh, I want to pursue my next chapter. I'm 50 years old. Uh, maybe I'll teach business school. I love that op. I'd love that opportunity. Maybe I'll work with my brother on ag development. But I know you have this foundation with an ag program, and I'd be glad to provide some pro bono consulting support on the ag program. And then the next thing, six months later, I'm the CEO. Uh, you know, have a plan, but be open to opportunity. And uh so I ended up at the Gates Foundation. And uh similar, similar, and this goes back to what I was alluding to earlier when I took on sales. Uh I had to change my leadership. I had to adapt my leadership style. And in a foundation, you know, at Microsoft, you have a lot of people who are motivated by innovation and and growth and their stock options, and you know, uh in at the Gates Foundation, it's a mission-driven organization, it's about purpose, and so they're motivated by the mission, and you have to really inculcate that, you have to really understand that, and so you really have to dial up the way in which you think about uh recognition, so on and so forth. So it was another, you know, opportunity for me to hone aspects of my leadership style. And while you know, there are a lot of people who come who come into philanthropy and they say, Oh, yeah, philanthropy can be better, we'll just run it like a business. Well, that's not exactly right. What you do is you take best practices from business, but you put it into a different context. And my role for Bill and Melinda during that six-year period of time was really to put in place infrastructure that was going to help them achieve their impact. And so, you know, you you and I, we've all done the strategy reviews at Microsoft. Well, I put strategy review process in at the Gates Foundation. We needed a way for Bill and Melinda to be connected to each of the 22 strategies, where one of them is as big as ending polio or ending malaria and transforming USK through 12 education. We needed strategy reviews. We needed a human resources system that would help develop the people of the Gates Foundation, put in place leadership uh capabilities. We needed a financial, you know, stronger financial uh systems given the you know move from I think before I started was about a billion, a billion in payout, and ended up about four and a half billion during my tenure. So there there was a lot of growth, and my my job was to really help with that. Now, to your point, Gowry, about impact, uh you know, I can say, yeah, we sold another Microsoft Office. Kaching Kaching. But the other thing is that was impact for people. That was making a difference in their lives. You know, they can do things on spreadsheets better than what they're able to do on paper. And, you know, when you work at the Gates Foundation, you know, you you you can get kids vaccinated. It it saves their their life, it helps them be healthy. And so there's different ways to think about impact. In business, there is impact that can be connected to bringing in revenue. Philanthropy, impact is connected to lives saved, lives better. And so, you know, you you can think about impact in in different ways, but in both cases, you really want to try and and and deliver something that's meaningful to other people. I mean, the thing that was so great about Microsoft and so great about the Gates Foundation is that I think part of humanity is to feel like you're a part of something bigger than yourself. You know, it's not all about me or you. It's about we're helping to change the world through what software can do. You know, we're helping to improve the world through our work on vaccines or our work on agricultural development programs in India and Africa. And so the opportunity to be part of something bigger than yourself, I think, is a fundamental element of humanity. And so I think I've had the for good fortune of having a first-hand uh view of how to do that, both in the technology world and in the philanthropy world. And that's the same spirit I can't I come to my work with Trisha at the Rakes Foundation.
SPEAKER_01:So I'll uh turn it back to Sharish, and uh I can't uh this can go on for hours. So, but uh but I'll uh given your time, I'll have Sherish uh uh wrap up our our uh our conversation.
SPEAKER_04:Yeah. Thank you, Jeff. This was a phenomenal conversation, brings back some really great memories. Uh, really appreciated the time that I worked for you at at Microsoft was short, but was very eventful. And uh I wish you all the best uh with your initiatives at Breaks Foundation.
SPEAKER_02:Great. Well, thank you very much, and and congratulations on this series. I think it's fabulous that you're reaching out to our colleagues and sharing some of what we we what we learned at at Microsoft. You know, hopefully that's another way where we can help make people's lives better. Wonderful. Thank you. Great, thank you.
SPEAKER_01:Thank you for listening to our podcast from Startup Exit, brought to you by Dai Seattle. Assisting in production today are Isha Jay and Mini Varba. Please subscribe to our podcast and create our podcast wherever you listen to them. Hope you enjoyed it.
