UK: Microsoft's secret weapon.

UK: Microsoft's secret weapon. - With his stake in Microsoft valued by Forbes at $12 billion, Steve Ballmer is the world's wealthiest employee. But does he really deserve all that money, or was he, asks Malcolm Wheatley, just in the right place, with the

Last Updated: 31 Aug 2010

With his stake in Microsoft valued by Forbes at $12 billion, Steve Ballmer is the world's wealthiest employee. But does he really deserve all that money, or was he, asks Malcolm Wheatley, just in the right place, with the right friend, at the right time?

Steve Ballmer is one of Bill Gates' better kept secrets - a stratospherically high-powered 42-year-old whose stake in Microsoft is valued by Forbes magazine at $12 billion (or £7 billion), making him America's fifth richest individual, worth more than Ted Turner or Ross Perot. Relatively unknown outside the company, Ballmer was appointed as Microsoft's president last July, a move described by Gates as formalising a role that he had in fact been playing for some years.

Ballmer has long been one of the company's small ruling circle, and someone whose fearsome reputation for toughness and belligerence precedes him. The steady drip-drip of negative stories has been unrelenting: Ballmer the hard-nosed salesman and 'attack-dog' marketeer with a taste for competitors' blood; Ballmer the master tactician who 'admits to knowing more about Napoleon than the average person'. And then there are the screaming tantrums - a yarn about how Ballmer once damaged his vocal chords by bellowing at his fellow Microsoft employees. There are also tales of Ballmer's ruthless determination, his will to win - his critics recount the story of how Ballmer stripped off and swam across 'Lake Bill', one of the Microsoft campus' larger ornamental ponds, just to win a small bet.

It is difficult, none the less, to reconcile these stories with the jovial giant sitting in front of me - although the cowed deference of subordinates is hard to mistake. When we meet, Ballmer - temporarily escaping the anti-trust brouhaha in Washington - is on a visit to the UK to launch Microsoft's new alliance with Computacentre, He comes over simply as a surprisingly charming man, intelligently promoting his company.

So who is Steven Ballmer, really? As president of Microsoft, you might expect him to be some kind of technical whiz, out-nerding Gates and co-founder Paul Allen in his mastery of PC minutiae. You'd be wrong.

Ballmer admits to not having programmed a computer since learning elementary programming at Harvard University in 1974 - which is when he first met, and became friends with, a socially maladroit 19-year-old from Seattle called Bill Gates.

Similarities between the two abound: each possesses an intensity, intelligence and passion that is evident the first time you meet them, although these manifest themselves in different ways. In Gates' case, it is the metronomic rocking that attracts attention, in Ballmer's, it is the volume at which he speaks - or rather, bellows. (The two aren't above emulating each other's mannerisms, either. Several of the better books in the growing body of literature on Microsoft - such as the gloriously scurrilous Hard Drive, which reportedly provoked Gates into a fury when he read it - recount instances of Gates and Ballmer rocking back and forth together as they pondered thorny problems of strategy. And anyone who's talked to Gates a few times and hung around the Microsoft campus finds the stories of Gates' high-volume screaming matches, a la Ballmer, all too believable.)

But there are differences, too. Whereas Gates reckoned that his perfect score of 800 on his college pre-entry intelligence test gave him the freedom to cut classes, acquire a reputation for all-night poker games and fiddle around with the newly emerging first generation of microcomputers, the more industrious (but just as highly scoring) Ballmer chose to complete his degree rather than drop out. A conventional career beckoned, and after Harvard he spent a couple of years working for Procter & Gamble, before enrolling at Stanford Business School.

Then came the call from Gates. The Microsoft that he joined in 1980 consisted of Bill Gates, a secretary and 28 programmers - among them co-founder Paul Allen. The reception couldn't have been worse: Gates was in the middle of a court battle to avoid coughing up some back pay to which his employees were legally entitled, and Ballmer was tasked with sorting out the resulting mess. Hardly an easy assignment and one which must have required an unusually thick skin. Things were not helped by a disgruntled programmer, jealous of the well-rewarded incomer, posting a copy of Ballmer's job offer on the noticeboard: $50,000 (£30,000) a year, plus a chunk of the company. With the shares, it was a considerable amount of money for the time. And if the job's title - assistant to the president - was vague, the supposed duties were even less precisely defined.

Despite the fact that sales revenues were comfortably in excess of $1 million a year and that $250,000 was sitting in the company's bank account, Gates could see that a gap existed in the organisation structure. As Gates has subsequently put it: 'We were a great research and development group, but nothing more. Steve knew nothing about computers, but a lot about business.'

That may be something of an exaggeration. Ballmer, like Gates, was still in his mid-twenties and it is debatable how useful a couple of years in a highly structured organisation such as Procter & Gamble would be in the entrepreneurial shifting sands of the nascent microcomputer software market. On the other hand, you don't necessarily need to know a lot about business to see that some of what Microsoft was doing was plainly wrong - such as its chronic lateness when it came to product launches, its skeletal staffing and its sloppy approach to customer service. (The technical support department, according to well-corroborated accounts, largely consisted of several tables laden with unanswered mail.)

Ballmer himself is modest about his contribution. 'Energy' is a word he uses a lot, as is 'focus'; and his account of the early years is essentially a list of the varied areas of the business into which he was either directed or, by dint of circumstance, directed himself.

So while Gates and Allen concentrated on the software and the technology, Ballmer recalls that, 'I put a lot of energy into the business side of the company - like recruiting, which was one of the first major things that I did, and at which, frankly, the company wasn't very good. I got respect for that. And I was the IBM account manager. Not everyone loved, or wanted, that opportunity.' For 'IBM account manager' read 'in charge of the single biggest business relationship that was to shape Microsoft's future'. Soon after Ballmer's arrival, the company sewed up a deal in which Microsoft supplied the operating system - PC-DOS - for IBM's new line of personal computers, but was also free to sell a differently badged version of the same product (MS-DOS) to the hordes of clone-makers such as Compaq and Dell.

DOS was a licence to print money - provided that something untoward didn't occur to upset the relationship with IBM. Ballmer's task was to make sure that nothing did happen to foul up the relationship. He became the company fixer. And with his impressive vocal volume you can easily imagine him ensuring that things ran smoothly. When Allen became ill with Hodgkin's disease and gradually began to take a back seat, it was Gates and Ballmer who together decided what hot new companies and technologies to buy - and at what price.

When the much delayed Windows system simply had to be launched to hit an important industry deadline, it was Ballmer to whom the get-it-finished task was assigned. When in the early 1990s the company decided to move away from its tight focus on operating systems and into application programmes - such as spreadsheets, word-processing programs and database packages - it was once again Ballmer who led the charge.

Remember such software giants as Lotus 123, WordPerfect and dBase? They have now been consigned to tiny market niches, and it is easy to fall for the line that these somehow fell prey to superior software development - apparently yet another aspect of the Gates miracle. It is less easy to recall that Microsoft's early versions of its competing products were so awful that they were universally panned - one of them, a database program, being so bad that it didn't even make it to market, the plug being pulled by Gates himself. Competitors allege that the company's dominance stems in some way from unsavoury business practices. Microsoft naturally denies this. And whether this is true or not, there is no doubt that Ballmer and Gates play business hard-ball ...

All of which lend some credence to the stories that have emerged from Seattle over the years about the role that Ballmer has played in Microsoft's meteoric rise to its position as America's second-highest valued company.

So back to the original question: who is Steve Ballmer? Is he the smiling, genial giant sitting across from me, or the intimidating - even slightly sinister - character whispered about in the corridors of Microsoft's 26-acre campus? Slippery as a fish, Ballmer coolly dismisses each of these stories, one after the other.

Damage his vocal chords shouting? Ballmer adopts a look of injured innocence.

He had been on a long overseas trip to Asia, he explains, and become dehydrated on aeroplanes. He had spent long days in smoke-filled rooms - and caught a throat infection, you see. When he had to address a group of customers, he did so whispering into a microphone. Worst thing he could have done, apparently, and as a result surgery was required to excise some nodules from his vocal chords.

Well ... maybe. But then he is indexed in books about Microsoft under 'volume of voice'. And Ballmer's supposed Napoleonic expertise? This time the laughter virtually blows the tape recorder away. Napoleon? No, no, this, he insists, was a genuine misunderstanding. Completely untrue. How about his rep as an attack-dog marketeer, and master tactician?

Well, yes. Pay dirt at last. Ballmer cheerily admits to being honoured by the description. 'I don't fool myself. I'm not a visionary for the company in terms of identifying new possibilities for the technology.

Bill expects me to bring to the table an understanding of those things in which I invest my time and energies, an understanding that is certainly equal to his understanding, or better. Everybody has got something that they are supposed to be uniquely good at. Bill's focus has been on the central vision ... I've been pretty good at keeping our own people focused.' It's no stretch to imagine Ballmer as a strict disciplinarian, keeping the troops 'focused' like some corporate super-sergeant-major.

He's clearly comfortable, too, with the extent to which Microsoft the business reflects Ballmer the individual. He speaks slowly, choosing his words with care. 'The business decisions,' he says, 'are obviously a reflection of our people as a whole, wherever they are in the world. We're a pretty decentralised company. That's inevitable - and it's good.'

He then continues, speaking much faster: 'But there is passion in our business' - and the word 'passion' is accompanied first by a triumphant roar, then by an expansive wave of the arms that would have floored anyone unfortunate to connect with them and finally by the punching of a huge Ballmer fist into a Ballmer hand - 'and that passion is something to which I think I'm a significant contributor'. And he is genuinely passionate at this point. 'I think that I clearly set a tone about the importance of being brutally self-critical and asking, "Are we doing this right, or are we doing it wrong?" A lot of the focus on business performance - market share, revenues, success - is something I've helped to bring about.'

But there's a larger mystery to the man than contradictions between his public image and his behind-the-scenes reputation. Why does someone worth $12 billion bother to get up in the morning and go to work, not to mention put in the hours that Ballmer works? (John Dvorak, an industry insider, recently described Ballmer's lifestyle as 'pathological'.) After all, his net worth makes him the world's wealthiest employee. The response, a resigned sigh, is followed by a clearly well-rehearsed argument, but one that none the less carries evident emotional depth.

Within Microsoft, he insists, there is a sense that what the company is doing is, in Ballmer's words, 'fundamentally impacting on what people do, and the way in which they work. My number one reason for coming to work is that I share in that sense of positively impacting on the way that people work: it's fun - and it's motivating.'

Is that all? Well, no, there are, adds Ballmer, two further reasons.

'I genuinely enjoy pushing myself and seeing what I can do - and my role at Microsoft gives me that chance to push myself and be the best that I can be. I like that. No, I enjoy that. And I enjoy that more than the notion of just relaxing.' And the third reason? 'My kids. I want to be a good role model for them. And if you want to do that then somebody in the family should be out there doing something constructive and positive.'

All very worthy, but clearly not everyone at Microsoft feels like that.

There have, over the years, been a number of high-profile desertions from Microsoft, as individuals' stock valuations saw their wealth reach the point at which they no longer felt they needed to work, and so retired - aged 35, or whatever. I mention some names to Ballmer - he nods in recognition.

(Forbes maintains a separate list of Microsoft millionaires: it makes sobering reading.) So how do you prevent wealth on such a scale acting as a disincentive to climb the greasy corporate pole? It must be a problem motivating individuals in such circumstances?

Ballmer's rebuttal is fascinating, not least because it is offered in the face of apparently overwhelming evidence to the contrary. No one ever came to Microsoft or stayed with the company because of the money, he claims. (This must be a disingenuous argument as, although the company has a reputation for paying low-ish salaries, the stock-option scheme has always been regarded as a more than adequate compensation for this - that's what David Pritchard, Microsoft's long-serving global HR director, told Management Today in 1996.)

No, according to Ballmer, people join Microsoft because the work is exciting, and because they feel they can make an impact. They stay until they either feel that the work is no longer as exciting or as important as they once thought - or until the work/home balance in their lives is clearly out of kilter.

At that point, they might decide to leave, Ballmer admits. 'But the money isn't the reason they leave, it just gives them the flexibility to leave.' The distinction between these two reasons for leaving Microsoft is subtle - subtle enough, as far as I'm concerned, to be practically non-existent.

There's time for one more question. Ballmer must be one of the most significant object lessons in corporate America. Does it annoy him that he hasn't been the subject of a book? Or indeed, has he ever felt the need to put out his own version of events, as Gates did in The Road Ahead?

The response is laughter again, and an accusatory question fired right back: 'Just because someone has made a lot of money, why write a book about them? What message is there to tell? I'm not a private person, but I value at least some level of privacy. In some ways I feel bad for Bill, because it's so hard for him to get any privacy.' Fair enough. But is there a Ballmer formula for success that he feels he'd like to share?

His response is suddenly more serious. 'You mean set myself up as some kind of oracle, full of business insights?' he muses. 'I think I understand the personal computer business, and understand it very well, but how projectable those insights are to other businesses, I really don't know.'

The one thing that $12 billion can't buy him,it seems, is certainty.

And in his more reflective - one might even suggest quieter - moments he must occasionally wonder to himself whether he is a genuinely brilliant manager, a talented fixer, able to hack it in any business, or whether he just struck it lucky, finding himself in the right place, with the right friend, at the right time.

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