In 1975, Bill Gates launched what we know now as Microsoft Corp. from the poker room at his Harvard dorm. Today, Gates is the world's richest man with a net worth of $81.3 billion (as of September 2016). This puts his net worth ahead of investor Warren Buffett ($64.8 billion) and Facebook founder Mark Zuckerberg ($54.7 billion).
And it may sound surprising, but he’s been richer. In 1999, at the highest summit of the dot-com bubble, Gates’ fortune peaked at $101 billion, making him the world’s first "centibillionaire." Gates was listed as a billionaire for the first time in Forbes magazine's 1987 Richest People in America issue, the year after Microsoft’s IPO, and only a few days before his 32nd birthday. At the time, he was the youngest self-made billionaire in the world, with a net worth of $1.25 billion.
So how did Gates go from experimenting in his dorm room to become the pioneer of modern computing and the world's wealthiest man? Read on to find out.
Early Life and Education
Born in Seattle to an attorney father and banker mother, Gates was a computer whiz from an early age. During this era, few kids even knew how to turn on a computer; however, he learned to program at 13 on a Teletype Model 33 purchased by his school. His first creation was a tic-tac-toe game that pitted the user against the computer. Impressed by what they saw, his teachers began excusing him from class to give him more time to hone his programming skills in the computer lab.
At Harvard, Gates continued to spend most of his time in the lab, eventually, with his parents' blessing, dropping out of college to focus full-time on developing a new operating system.
The Gates Success Story
Beginning as a small company headquartered in Albuquerque, New Mexico, Microsoft leaped onto the tech industry's radar in 1980 when IBM hired the nascent business to upgrade its personal computer. The partnership became a springboard for Gates, who, in 1985, used his relationship with IBM to retrofit its computers with two operating systems he had created: Microsoft Windows and OS/2.
Gates' IBM-based operating system battled with Steve Jobs' Apple for supremacy in the home PC market during most of the 1980s. The following decade, while Apple struggled in the absence of Jobs, who left the company in 1985, Microsoft developed the revolutionary Windows 95 operating system. This highly user-friendly upgrade from previous Windows versions would swing the pendulum sharply in favor of Microsoft. Apple, by contrast, continued to struggle until the early 21st century when, buoyed by the return of Jobs, the company created its iMac line, which made it a viable competitor once again.
Gates was known as an innovator and a shrewd manager who brooked no nonsense and little dissent. He shot down subordinates' ideas he found not to be worthwhile, often with a dismissive tone that humiliated the person with the idea. Though remaining in Gates' good graces meant staying on their toes, most employees applauded his management style as maximizing efficiency, minimizing red tape and always keeping the company moving forward.
Bill Gates Creates the Microcomputer
Before Bill Gates could climb to the top of the PC software market, he needed to design a world-class computing prototype: the microcomputer.
Twenty-year-old Bill had just dropped out of Harvard when the microcomputer revolution kicked off with the MITS Altair 8800 computer kit. With a price tag of $397 in 1975, it was one of the most affordable computers on the market and saw an avalanche of orders as a result. This Altair 8800 was also featured in the cover story for the January 1975 issue of Popular Electronics. After reading the article, Gates called MITS and told them that he and others were creating a BASIC programming language for the machine. Ed Roberts, the president of MITS, responded by asking to see a demo. This was a problem, as Gates was bluffing, trying to gauge the company’s interest. However, in just a few weeks, Gates, along with his friend and business partner, Paul Allen, wrote a programming language that they named Altair BASIC.
The demo was a success, and with the new computing language under their belts, they moved to Albuquerque, New Mexico, to work for MITS. In the summer of 1975, they founded Microsoft Corp (MSFT). The MITS Altair computer kits remained wildly popular, with annual sales topping $6 million by 1977. Microsoft's BASIC was a hit with the computer hobbyists of the day, but even in the 1970s, Gates ran into a problem that still plagues digital properties 40 years later: users were illegally copying and sharing his popular program. The issue of illegal copying was so widespread that Gates wrote an “Open Letter to Hobbyists” in the February 1976 MITS newsletter to tell users that that MITS could not continue to produce software without payment.
A few months later, Microsoft formally separated from MITS and continued developing software and programming languages for a variety of systems for several years, leaving Albuquerque for Bellevue, Washington, in 1979. In these early years, Gates ran the business while still writing and reviewing code.
The big break for Microsoft and Gates came in 1980 when technology industry behemoth International Business Machines Corp. (IBM) approached Microsoft about the personal computer it planned to release, which it called the IBM PC. Initial discussions centered on Microsoft creating a BASIC interpreter for the machine, but an IBM representative mentioned at the time that the computer still needed an operating system.At the time, Microsoft had a Unix-based operating system, but nothing IBM would be interested in, so Gates referred IBM to Digital Research (DRI) and its popular CP/M system. After failing to come to an agreement with DRI, IBM again knocked on Gates’ door.
This time, Gates threw his hat in the ring. He proposed that IBM use a version of an operating system created by nearby Seattle Computer Products (SCP). Before doing so, however, he made sure that Microsoft was the exclusive licensing agent of the SCP system, of which the company soon became full owner. Microsoft adapted the SCP system for the IBM PC and sold it to IBM with the name PC DOS for a paltry $50,000. But Gates made sure that Microsoft kept the copyright on PC-DOS (Personal Computer Disk Operating System), later known as MS-DOS. Because IBM was the biggest, most respected name in computer technology at the time, other computer manufacturers quickly cloned IBM’s new PC. However, to make their machines run like IBM’s, those manufacturers would have to pay Microsoft for MS-DOS. That rush of follow-the-leader sales quickly made Microsoft a huge name in the technology industry.
In 1981, Microsoft re-incorporated in Washington state, with Gates as president and chairman of the board. Meanwhile, in the early 80s, Apple Inc. (AAPL) was making waves in the home computer market with its 1983 Lisa and 1984 Macintosh machines, which were the first to feature a mouse and a more intuitive, user-friendly visual interface. Apple’s developments were based on earlier inventions made by Xerox Corp.(XRX).
Not to be left behind, Microsoft began work on a similar user interface and operating system, which it named Windows. To compete with Apple’s Macintosh, it released Windows 1.0 in November 1985. The first version had a frustrating array of flaws and didn’t win many fans. But it didn’t matter if Windows was an inferior operating system at the time. Windows was built off of MS-DOS, which was entrenched as the operating system for the majority of all personal computers on the market. So Microsoft had a captive audience as it made the fixes that would result in Windows 2.0, then 3.0 and so forth.
In 1986 with a growing stranglehold on the PC software market and annual revenues of $172.5 million, Microsoft relocated to Redmond, Washington, and went public, raising $61 million in its IPO.
The IPO netted Gates a quick $1.6 million for the shares he sold at the time. However, more importantly, with the IPO, the investing public valued his 45% stake in the company at $350 million. The deal placed Gates, only 30 years old at the time, among the 100 richest Americans.
From then on, Gates and Microsoft continued to dominate the PC market, creating products like Microsoft Office and Internet Explorer that would become industry standards. Gates was known for his aggressiveness, both in expanding Microsoft’s range of goods and defending its market-leading position with vigor.
That competitive, aggressive strength led to Microsoft’s explosive growth, and to Gates’ fortune growing by leaps and bounds. By 1995, at age 39, he had a net worth of $12.9 billion and was crowned the world’s richest man, a title he would hold on and off for the next two decades.
However, Gates’ vigor also led Microsoft into actions that weren’t altogether legal. From 1993 until 2002, the company faced a bevy of charges from the Federal Trade Commission and the Department of Justice over its business practices, which the regulators charged were monopolistic, anti-competitive, and harmful to consumers, rivals, and other companies. After a few reversals in court, Microsoft agreed to a settlement, rather than face the possibility of being forced to break up.
In 2000, Gates resigned from the role of Microsoft CEO, to focus his energies on a number of philanthropic endeavors, such as the Bill & Melinda Gates Foundation. In 2006, Gates stepped further away from Microsoft, shifting to part-time work. In 2014, he relinquished the title of Chairman, remaining connected to the company as a technology advisor.
Bill Gates’ Real Estate
With some of the money he has amassed as the former CEO and Chairman of Microsoft, Gates has built a dream home that rivals the estates of any American plutocrat before or since. He had his 66,000-square-foot home built into the side of a hill in Medina, Washington; that overlooks Lake Washington. The house itself took seven years to construct at the cost of $63.2 million.
Among its many features, Gates’ mansion offers a private library with a domed roof and oculus, as well as the Codex Leicester, an original manuscript of writings and drawings by Leonardo da Vinci, which Gates purchased at auction in 1994 for $30.8 million.
The estate also boasts its own server system, a gym and a 60-foot swimming pool with an underwater music system, as well as heated floors and driveways. As one of the home’s high-tech amenities, the house can track the movement of guests and adjust the temperature, music, and lighting to their liking as they move around.
Estimates put the value of the house at roughly $155 million. In 2009, Gates spent just over $1 million in property taxes for the house.
The Bill and Melinda Gates Foundation
Aside from the many perks of being incredibly wealthy, Gates has said that he dislikes the attention brought on by being the richest man in the world. To that end, Gates has increasingly turned his focus over the past 15 years to putting his fortune toward promoting global prosperity.
Now that Gates is retired from running the day-to-day operations at Microsoft, he spends most of his time heading the Bill and Melinda Gates Foundation, a charity the couple founded in conjunction with Gates' father, William H. Gates Sr. in 2000 to reduce global poverty and expand access to healthcare and information technology. Since the foundation’s creation, it has made several strides to foster education and economic development in the U.S. and abroad. The foundation is guided by 15 principles that reflect the Gates' beliefs and values and through the foundation, and the couple has publicly claimed they will give away 95% of their wealth to charity.
In 2006, the foundation's assets increased dramatically when famous investor and friend Warren Buffett pledged billions of dollars to the foundation. So far, Bill and Melinda Gates have given more than $30 billion to charity, while more than 95% of their vast estate is earmarked for eventual donation to charitable causes. In 2007, Bill and Melinda Gates were recognized as the second-most generous philanthropists in America. And in 2013, their foundation was listed as the world's wealthiest, with more than $35 billion in assets, according to reports.
Bill Gates’ Most Influential Quotes
As of writing, Bill Gates is the richest man in America, so it's no wonder his quotes are so sought after. Here are a select few of his most memorable and insightful words of wisdom:
- “Most people overestimate what they can do in one year and underestimate what they can do in 10 years.”
- "Success is a lousy teacher. It seduces smart people into thinking they can't lose."
- “Your most unhappy customers are your greatest source of learning.”
- “If you give people tools, and they use their natural abilities and their curiosity, they will develop things in ways that will surprise you very much beyond what you might have expected.”
- “This is a fantastic time to be entering the business world because business is going to change more in the next 10 years than it has in the last 50.”
The Bottom Line
As the man behind the window-pane logo that glows on most computer screens when they start up or power down, Gates is one of the iconic creators of modern technology. Today, 89.3% of all desktops and laptops currently run a Windows operating system (according to 2016 data from market share analysts at Net Applications), and Microsoft continues to be paid for every computer that ships with the operating system.
Although he hasn’t been the CEO of Microsoft Corp. (MSFT) since 2000, Gates’ stake in the company and his other investments have been the bedrock of his fortune. One of those investments led him, in 2004, to become a director of Berkshire Hathaway (BRK-B) the investment company headed by friend and fellow billionaire Warren Buffett.
In 2013 alone, Gates’ wealth increased by $15.8 billion to $78.5 billion, according to the Bloomberg Billionaires Index. He manages his fortune through an outfit called Cascade Investment LLC, which invests in a wide range of businesses, including Four Seasons Hotels and Resorts, and Corbis Corporation. Currently, the tech tycoon tops the Forbes Richest in Tech list for 2016 and was ranked the richest American on the magazine’s Top 400 list (2015).