Hard Drive: Bill Gates and the Making of the Microsoft Empire (35 page)

Their partnership had been disintegrating for months, and Gates now had to decide between friendship and what was best for his company. Nishi had become too unpredictable, too impulsive, and Gates was convinced Nishi was not going to change his cowboy ways. He felt that Nishi was not pushing Microsoft’s products, such as Multiplan, hard enough in Japan, but was instead running around promoting his own random high-tech projects. Nishi, for example, wanted to branch out into semiconductors. Gates wanted to stay with software. Nishi thought special chips should be designed to take over the duties of the operating system. Gates belittled the chip-development efforts of Nishi’s company, ASCII. Microsoft’s operating system was a standard, he said, and what Nishi proposed didn’t make sense.

“If microcomputer software based on a standard is not a good thing,” Gates told the
Los Angeles Times,
“then hey, we’re not going to do much business. If that’s wrong, then God bless Kay Nishi and I hope he finds a raft that floats, because I’m on this ship tied to the wheel.”

Although the two computer whiz kids were much alike, Nishi had a wild streak that Gates never exhibited, especially when it came to business. “They were both very bright, intense, ambitious and driven,” said one Microsoft executive who worked closely with the two. “But Kay was always wanting to go off and do something else. His attention span was not very long. He always wanted to start something new and he always tended to have a dozen things going at the same time, of which six were just great and the other six were just random. Who knew what he was going to try and do next? So he was pretty much uncontrollable.”

Nishi had become something of a Japanese folk hero. He Was featured in the Japanese edition of
Playboy
magazine. And he was spending money like crazy, which did not please the fiscally conservative Gates. Nishi lived out of the most expensive hotel rooms available. He traveled to appointments by helicopter. On one occasion, when he was trying to get an appointment with the president of Fujitsu Ltd., Nishi waited outside the executive’s home and cornered him when he arrived. This kind of flamboyance did not engender the trust from business executives that is so important in Japan.

The final straw for Gates came when Nishi spent $1 million for a life-size replica of a dinosaur, complete with special effects, as a prop for a television show to teach school children about computers, as well as to promote Nishi’s own computer company, ASCII. The brontosaurus was erected outside the Tokyo train station. Although the story line for the television show was about a boy who used Microsoft’s software to recreate a dinosaur on his computer, Gates went ballistic when he found out how Nishi had spent the money. There were better ways to market Microsoft’s software, he told his friend in a series of angry telegrams to Tokyo.

Shortly before Microsoft went public, according to the
Wall Street Journal,
Gates realized he had to get Nishi under control. Gates offered him a full-time job with Microsoft, as well as a very attractive stock package. Although Nishi was a director in the company and a vice-president, as Microsoft’s Far East agent he was paid a thirty percent commission on OEM sales. He was not considered a regular employee.

Nishi refused Microsoft’s offer. “Bill Gates demands 100 percent loyalty and demands being his subordinate,” Nishi said. “I’d be very happy to work with him, but I don’t want to sell my soul to him.”

The day after Microsoft went public, with their relationship on the skids, Nishi and Gates met in Microsoft’s office in Sydney, Australia. They then flew to Tokyo and spent three days trying to resolve their differences and save the partnership. “We’d talk about our vision, and then we’d get mad at each other and then we’d apologize,” Gates said.

But they were unable to patch things up. The bitter breakup was especially painful for Gates. He and Nishi had been very close. “Kay’s more like me than probably anybody I’ve ever met,” Gates said. “But he just went overboard.”

At the time the partnership ended in March 1986, Nishi owed Microsoft $509,850. Not wanting to file suit, Microsoft was unable to collect the debt. Nishi had borrowed the money as a result of a series of bad investments. For example, a couple of years earlier Gates was in the San Jose airport about to board a plane when he was paged by Nishi. Nishi had bought $275,000 of stock in an American company, and now his broker was demanding payment. Nishi didn’t have the money to cover the debt. Gates loaned him the cash—at twelve percent annual interest. “What did I want, my best guy ever to go to jail for bad debts?” Gates said later, explaining whv he bailed out his friend.

When the partnership with Nishi ended, Microsoft opened its own subsidiary in Japan in May of 1986 and hired away more than a dozen of Nishi’s top people from ASCII, which infuriated Nishi. In various interviews, Nishi called Gates a series of names. Gates fired back some shots of his own.

“The guy’s life is a mess,” Gates said. “He’s worth negative half a million and I’m worth X million—that’s certainly seeds for bitterness.”

Among the people Gates sent to Japan to help establish Microsoft’s new subsidiary was his old Lakeside pal Chris Larson. Gates had finally been able to persuade Larson to come to work for Microsoft full-time, rather than go on to graduate school at Stanford. Gates kept promising Larson more and more stock in the company, until the offer was so good Larson couldn’t refuse. Larson was one of many at Microsoft who became an instant multi-millionaire the day the company went public.

Microsoft’s growth at the time of the public offering continued to explode off the company’s planning charts, just as Charles Simonyi had predicted in his famous “revenue bomb” speech in 1981. Gates was worried that Microsoft would lose its competitive edge if it became too big, but there seemed to be nothing he could do.

Not long after the move from Albuquerque into the Old National Bank building in downtown Bellevue, Gates had told one of his programmers that he never wanted his company to have more than a couple hundred people. Several years later, at a pizza party with some of his managers in the Northup building, Gates once again emphasized his desire to keep Microsoft small. “People were starting to worry the growth was getting out of hand,” recalled Leo Nikora, one of those munching on pizza that day as the chairman talked about the future. “Bill said he felt the same way. He agreed there had been a lot of growth, but he said it was going to slow down. He said that he never wanted the company to become larger than 1,000 people.”

Not only did the growth not slow down, it accelerated. By March of 1986, Microsoft had nearly 1,200 employees. The company had outgrown the Northup complex and was about to move into new offices about eight miles away, on the outskirts of Redmond. Microsoft had purchased 29 acres of an undeveloped corporate park and hurriedly constructed four X-shaped buildings, specially designed so every employee had his or her own windowed office that looked out onto the woodsy surroundings. The software engineers were put in two buildings, and everyone else was put in the other two. Each building, designated by a number from one to four, had its own fast-food 7- Eleven store. All beverages were free. Employees were also given free memberships in a sports club less than a mile away. Sports fields were soon added to the campus so people could play baseball, soccer, and volleyball. In the middle of the four buildings was a small artificial lake that became known as Lake Bill.

The company’s long-range capital improvement plans called for no more than three more office buildings to be built over the next 25 years. Within the year, however, construction was started on buildings five and six, which were full before they were finished. Building seven was skipped because it was to have been located in a spot occupied by a nice stand of trees. By the time buildings eight and nine had been completed, Microsoft occupied the equivalent of a 60-story skyscraper. Eventually, the company purchased the entire corporate park and changed the name of the perimeter street to Microsoft Way. Six years after the move from the Northup complex, the “campus” had grown to 22 buildings on 260 acres.

From the beginning, the new corporate headquarters had the genial informality of a campus. Such an atmosphere was no accident.

“The idea was to foster that sense of collegiality,” said Ingrid Rasch, Microsoft’s director of human resources at the time of the move. “We were basically taking a lot of young kids, who in many cases had never been away from home or only as far as wherever they went to college, and we were moving them halfway across the country. How do you make them comfortable? These are not necessarily people who would go out and immerse themselves in the social opportunities of the area. They weren’t going to go out and make friends easily or quickly or participate in a lot of the things going on in the area, and besides, we needed them at work. So we wanted to keep the atmosphere at work one they were somewhat familiar with, and secondly, also make sure it gave them a sense of social belonging.”

Employees were encouraged to decorate their offices however they wanted. “It was kind of like their dorm room,” said Rasch. “They could have whatever they wanted in there with them and their computer. It was their space.”

Shortly after the move, colleagues of a programmer who was out of town for a couple days moved all his office furniture into the hall, put down sod throughout the room, then brought the furniture back in, along with several potted flowers. When the programmer returned to work and walked into his new grass yard, a tape of environment music was playing on his stereo.

Given the long hours and fanatical pace, having a comfortable work environment was essential to morale and mental health.

There were no assigned parking places on the new campus, either, even for Chairman Bill. The best places went to those who arrived at work first. After Microsoft went public, these parking lots began to be sprinkled with Porsches, Mercedes, and even a Ferrari or two as a result of the number of employees who had been around long enough to buy stock at bargain prices who were suddenly paper millionaires, or at least financially well off. (It was not until 1991 that Gates finally got his own reserved underground parking spot. The reason, according to Microsoft, was that he was sometimes harassed as he walked to his car by people wanting to borrow money from him.)

As Gates had feared, the public offering diverted attention from people’s work. Charts began showing up in offices, plotting the price of Microsoft’s stock. “Is this a distraction?” a concerned Gates asked one programmer who posted a stock chart on his office door. Some long-time employees started coming to work wearing buttons inscribed with the letters FYIFV, which stood for “Fuck You. I’m Fully Vested.”

Gates warned employees not to get carried away by their paper wealth. “It’s stupid,” he told
Fortune
magazine. “The company is a high-tech stock, and high-tech stocks are volatile.” For his part, Gates spent very little of his new fortune on himself. He and Paul Allen did give some money in August of 1986 to Lakeside School, where their dream of one day owning a computer company had originated, donating $2.2 million for a new science and math center to be named after them. Unable to decide whose name should go first, they flipped a coin. Allen won. The building was called Allen Gates Hall.

And Gates also bought a speedboat. But even then, he kept a cool head when it came to spending his money, according to Vem Raburn, who went shopping with Gates at a Seattle-area boat show.

“Bill had been saying for years, ‘Gosh, I should get a boat,’ but he just couldn’t bring himself to spend the money,” said Raburn. “At the boat show, we walked around all day, and he just wouldn’t do it. Finally, a half hour before the show closed, he bought a ski boat. Not a terribly fancy one, something like $12,000. It was a nice one, but not the fastest or most expensive one around. He agonized over buying that thing like he was spending fifty million bucks.”

True to form, Gates soon got a speeding ticket in his new boat.

“Bill is not an extravagant consumer,” said Ann Winblad, who had also accompanied Gates on the boat-buying trip. “The local media, they focus on the silly things, like his Porsche. Everyone knows Bill bought a Porsche. How many times do the people have to know that? It’s not ‘Bill Gates: The life of the rich and famous.’ Bill loves his work.”

Gates and Winblad had been dating since 1984. They met when they were speaking at an industry conference. The two entrepreneurs had a lot in common. Winblad had just sold her Minneapolis startup software company, which she had founded with $500, for $15 million. Winblad would later team up with John Hummer, a former Seattle SuperSonic basketball player, to form Hummer/Winblad Venture Partners.

Winblad, who is about six years older than Gates, found Gates to be nothing like the nerdish character she had read about in many news stories. “I always learn something when I’m around Bill,” Winblad said. “He’s an adventurer, a risk taker who likes to live close to the edge.
...”

Winblad recalled one trip with Gates to Mexico when she went to the restroom and came out to find that Gates had subleased their rental car to a couple of hippies for $10 for the afternoon. She was sure Bill would never see the car again. Four hours later they showed up, looking like they were tripping on acid, but with the car still in one piece.

Winblad had a beach house not far from Kitty Hawk, on the outer banks of North Carolina. Once, Gates arrived at her place for a short vacation without his suitcase; she had to take him shopping for clothes at a Ben Franklin store in Kitty Hawk. True to form, Gates color-coordinated his wardrobe, just as his mother used to do for him years before.