Sunday, December 03, 2006

Is Bill Gates a Genius?

Is Bill Gates a Genius? A history of Microsoft successes...
     By: David K. Every


I''ve heard it 10,000 times. Someone in a store or a party talking about how Bill Gates is a Genius, and how that lead to Microsoft's success. If I hear it one more time, I'm going to have to start dishing out the wedgie of death; turning one person into two, by tugging really hard on their undergarments!

I know, I know -- because I don't want to kiss Bill Gates ring, I am some biased Microsoft hater or Gates basher. Honestly, I don't like a lot of things that Microsoft does, but they are just a Company. I can't say I admire how they've always operated. I'm one of those weird people who think that the ends doesn't justify the means, and how you play is as important is if you win. But honestly, there are worse evils in the world than Microsoft.

Just because you are successful doesn't mean you are smart (or THAT smart). Let's start at the beginning of personal computers.

In the beginning

A bunch of geeks got interested in computers because they were fun, and they didn't have much of a social life. Many of these people were sharp -- but not THAT sharp. They geeked around and played with electronics and computer BECAUSE THEY LIKED IT! Now some of these people happened to be in the right place at the right time, and had the wisdom to take advantage of it. Let's not pretend these guys were that insightful! They were doing what they enjoyed, and it just happened to be in an industry that took off. This has happened in the past with cars, planes, the industrial revolution, ad infinitum. If you are at the right place at the right time, and you aren't stupid, you can succeed.

Bill Gates was one of these. He was lucky, had connections (and wealthy parents), and happened to be in the right places at the right time. Oh, yeah, and he wasn't stupid either, and took advantage of opportunity.

The 70's

Bill Gates (after dropping out of college) and a friend (Paul Allen) started making software (Mid 70's). They had a few nothing projects to make pocket change, and then stumbled on one that made them more. They saw this proto home computer kit (the Altair from MITS), and they decided that BASIC would be perfect for it. BASIC was a language that had been around for years, and made computers easier to program than programming the machine code. So they stole computer time from a College (you aren't supposed to use University resources for private commercial projects), and they reworked some stolen (er, borrowed) BASIC code (you aren't supposed to sell things derived from public domain code). So the ethics were a little shaky, but they ethics never got in the way of Microsoft's business.


Before this time, most commercial software wasm written under contract for big businesses and mainframe and minicomputers, so writing software for Microcomputers was a bit of a risk. If Gates had been really smart, they could have made a fortune by programming professionally for others. But Gates and Allen didn't fit the corporate mold, and more wanted to play on their own things than be smart and make good money. But Micros took off, and they happened to be there. This was probably more ego or for fun than insight or business sense. Don't get me wrong, people knew that Micros were going to have some business; but no one knew they were going to take off like they did. It is also easier to take risks like this, when you are a College kid with no overhead, and living off of Mommy and Daddy.

Computers weren't mainstream yet -- so writing thislanguage was not about money it was fun. They got some prestige
in the geek circles, and they made a few bucks, but were not exactly wildly successful -- just college kids playing big-shots.

Bill Gates made some major mistakes, and managed to piss off most of his market when he and MITS charged more for the language than the computer itself cost. This pissed many off, that they started pirating Gates BASIC, and they started fixing the many bugs in it, and adding features. Soon the pirated versions were better than the 'for sale' one.

Gates threw a fit, and wrote a letter than called all the people improving his product thieves for stealing his software. The irony was lost on Bill, who had borrowed the software he was selling, as he had the computer time he'd built it on. This tirade pissed off his customers, and last time I checked, knowing your market would be a part of being a "marketing genius" that Gates is credited with, but I digress.

BASIC was better than programming in assembly language, so they had some sort of business going and that was the beginning of Microsoft. Once they had some market, they immediately made their BASIC non-standard, and kept adding incompatibilities with the standard. That way code written for Microsoft's BASIC wouldn't run on anything else.

Gates thought Languages were cool and was going to be where the money was. So they produced a couple (mainly flavors of BASIC for different machines). They sold OK, but their BASIC never really followed the standards -- but when you are the only game in town (as they often were), even bad implementations would sell. So part of Microsoft's early genius was just that there was little or no competition for languages in Micros.

Gates was smart enough to be ruthless though. When someone would offer any language, he'd drop the price of his, or do anything to "get the business", until he starved them out. Then he'd raise the price back up again. He seemed to have an ego problem where he had to win, no matter how little business sense it made. Luckily for him, he was able to starve out all the small fry's before he went bankrupt; but in most markets, that is not a practical business plan.

Microsoft continued to grow. There weren't many commercial applications back then, and so people had to program to make things useful; and so there was a demand for BASIC. And soon, Microsoft was licensing their BASIC to computer makers as a "must have". These royalties paid the bills (pun intended). Even back then, the big money was Applications; something Bill (and Microsoft) didn't learn for nearly a decade.

So after 6 years of having a Software Business that was puttering along, in an industry where Millionaires were being made daily, Microsoft (and Bill Gates) got their big break. Notice that Microsoft was not a huge Company (going in to 1980) -- Apple had far outgrown them (in less time), as had many others. Up to this point in time, there doesn't seem to be any Genius or Magic to Microsoft or Bill Gates. Then the fortune of the company changed.

Things will never be the same again (the 80's)

Mary Gates (Bill's Mom) and a high level Executive at IBM (Akers) were chatting (they were both involved in the United Way), and it became known that IBM was looking at getting into the Microcomputer business. Well one thing lead to another, and Bill got a visit from IBM. And IBM chose a product that Bill didn't even have, and gave him an awesome contract. This is another big secret to success -- be born into the right family, and get the right contacts. Some call it genius -- I guess it takes a smart kid to pick the right parents.

IBM left their brains back in Boca Raton Florida when negotiating a deal with Bill Gates for their Disk Operating System (DOS). Bill Gates didn't even have a DOS, but he convinced IBM he was almost finished with one. (Another element of business Genius seems to be being a pathological liar). Perhaps it had something to do with the President of IBM telling the small team creating the PC to "see Mary Gates son Bill" that influenced them to be blind. Or that IBM had just gotten out of a huge lawsuit with the Department of Justice about being a monopoly, and so they wanted to outsource something. Or that IBM didn't think that Microcomputers were going anywhere, and they wanted to make a lame one to try to sell more mainframes. But for whatever reasons, they made a deal where they'd license DOS from Bill, but Bill got to keep the rights to everything and sell it to anyone else he wanted. So another secret to success if find a rich (but dumb) sugar Daddy that's willing to finance you, pay you to develop a product for yourself, and let you borrow the biggest name in the business (IBM's) for your own success.

Microsoft then bought DOS off someone else (Seattle Computings' Quick-and-Dirty OS, QDOS). This product was actually a cheap rip-off (clone) product of a friend of Gates (Gary Kildalls' CP/M), and Bill knew it. They had actually had a gentlemen's agreement; that Bill Gates wouldn't do Operating Systems, and Gary Kildall wouldn't do languages. Also Seattle Computing was mislead on the value of the contract, and the intent of it's usage, and sold cheap for $50,000 (a fraction of what it was worth). But therein lies another part of Genius; the lack of integrity/scruples, and stumbling on multiple opportunities.


Gary Kildall was quite offended by the whole ordeal. Imagine Gary's surprise when Gates not only did an OS, but it was really a poorly ripped-off copy of his own OS. Once again, Microsoft lacked the imagination to write their own OS or think of anything new. Why should they, when they could just steal someone else's code? Then, Microsoft continually evolved things to be different and incompatible with the standard they'd borrowed from; just like they had with BASIC. Do you notice a patterns?

There were better Operating Systems out there for micros before DOS, and IBM ignored that. I still think they wanted the "lame" thing to not compete with their big iron. And there were better Operating Systems while IBM was selling DOS on their PC's. But IBM really only leant their name (enthusiasm) to PC-DOS (Microsoft IBM labeled version), which starved out all the competition except Microsoft (since they were the only one compatible); and guaranteed Bill's success. Then IBM continued to pay Microsoft for improvements, that Microsoft repeatedly delivered late, if at all, and most were buggy; but Microsoft got to sell in their own product.

As they used to say, "no one ever got fired for buying IBM".

The Killer App

Around the same time as IBM was getting into the microcomputer business, a guy, named Dan Bricklin, created VisiCalc; the world's first "Killer App". VisiCalc was the first spreadsheet for computers. Basically a spreadsheet allowed for business people to lay out numbers into columns and make the computer add them up for you, enabling it to do all sorts of wonderful things (for accountants and business people). It was just a common sense version of an electronic ledger or columnar sheet. But VisiCalc was so popular, that it not only sold itself by the tons, but people bought computers (Apple]['s) just to run VisiCalc on. VisiCalc revolutionized Microcomputers and brought them from hobby devices into many more businesses and far more homes -- and seriously contributed to the success of Apple.

Not only did Bill Gates not invent this revolution, but Dan Bricklin went to Microsoft (Bill Gates), as well as Apple Computers, and asked them to sell the package for him. Gates didn't think it would sell. At least Apple had a lame excuse; they were in the hardware business; but Bill sold software. You seldom hear that Bill Gates turned down what was the most revolutionary Application in the history of Microcomputers.

Why innovate when you can steal? Later Microsoft ripped off the design and undercut the VisiCalc (and the copies of it), using the profits from DOS and Languages to subsidize himself and starve out everyone else. Sadly, they did this because Apple asked them to, and gave them computers and help to break into the Application market. Apple did this because they wanted support for their new computer (the Macintosh), and Apple didn't want to compete with their software developers. Microsoft had a big name, and it leant credibility, and seemed like a good idea at the time. (Did I mention silly partners seems to be a secret of Microsoft success?).

Eventually, Microsofts rip-off of VisiCalc (first named Multiplan, and later renamed to Excel) became the only man left standing. Oh, and at first, Multiplan was compatible with everything else. Over time, it became more proprietary and non-standard. (Think of patterns). Also Microsoft started a new pattern, tying. They had started tying sales of DOS to licensing their BASIC, both to the sale of new hardware (to get DOS you had to sell it on every computer you made), and their version of Multiplan (or Excel) to their Word Processor, and so on. They would use their proven products in one market to wedge their new products into the market and drive everyone else. This is not a new trick, it was one of the things our Anti-Trust (Anti-Monopoly) laws had been written to stop, nearly 100 years earlier.


The genius of Microsoft was their business plan: let someone innovate (and take the risks), then rip them off. Microsoft used their size, money and unfair advantages from the start, to bully others out of business. They were never better, just bigger. And that was something a lot of people didn't realize, just because Microsoft could do it, doesn't mean you could follow it; unless you had their resources, which no one else had.
More money, more money, more money
IBM obviously felt the problem was that they weren't paying Microsoft enough -- so they then got involved with Microsoft to make a "Windowing" Operating System (Called OS/2) -- to make the PC's more like the Mac. Over the next 10 years, IBM gave Microsoft BILLIONS of dollars to develop software for... Microsoft.

Note: I didn't say that they paid Microsoft to write software for IBM. IBM once again had agreements where Microsoft would get to keep whatever code they created, but at least this time IBM got the code as well. Since Microsoft kept most of the people that wrote the code, they were the ones that could effectively use it (support it). On top of that, Microsoft also pulled some fast ones, where some of the code they kept as "theirs" and they kept using the profits (from writing stuff for IBM), to add in their own features to their own version of OS/2 (called Windows) that IBM couldn't touch.

The real hero of Microsoft was their lawyers, and the complete stupidity of IBM's lawyers and negotiators. In the end this one way deal -- a way for Microsoft to get Billions of Dollars, and get to use the IBM name -- and IBM got, almost nothing (except mediocre code and the opportunity to make another company's executives rich).

Now I cut Microsoft a little slack there; it wasn't their fault that IBM was stupid. And some things aren't as bad as they sound. Microsoft kept two projects; Windows and OS/2. And many of the reasons that OS/2 was late and slow was because it was being done by IBM (who was always slow), compounded by two companies trying to collaborate (which usually makes things worse). But Microsoft could and did cherry pick the best people for their own project, and the best code, and so on. And they weren't innocent in delaying OS/2 in favor of their own, and stabbing IBM in the back to guarantee their own success; can you say "conflict of interest"? IBM didn't.

Needless to say, Microsoft grew tremendously in the 80's. Billions of Dollars and IBM's name has always a recipe for success. Is there Genius in getting a cushy deal and riding on someone else's coattails?

More secrets of success
Microsoft (Bill Gates) did magnify their success in a variety of ways. They were known to hire lots of high-school kids and pay them dirt to write code - then beat them into the ground. If you got kids working for you before they worked anywhere else, they didn't know any better. Of course the few that survived in that hacking environment (not engineering) got stock options and became tyrannical immature millionaires, that thought that was how business is supposed to be done. So a corporate culture was created in the spirit of the Lord of the Flies.

Microsoft then relentlessly used its position as keeper of the OS, as a way to destroy any competition -- it wasn't about being the best, it was about being the only game in town (and making sure of it). Whenever Microsoft needed to gain market share in the Application Market (where the real money started to come from) -- they would come out with a new version of the OS, that would "accidentally" break everyone else's Applications, but somehow, Microsoft Apps would always work and take advantage of the newest features (and undocumented ones built into the Operating System itself). I guess there is Genius in illegally using your position in one market to drive people out of that and other markets?

Microsoft even pulled the greatest scams of all times -- they convinced the entire industry that OS/2 was the future of IBM, Microsoft (and all computers). Then when all the competition was committed to making Apps for OS/2, Microsoft came out with Windows 3.0, and had all their apps working for that (and started saying how OS/2 was dead, and Windows was the real future). In the time it took the competition to rewrite Apps for Windows, Microsoft had already captured most of the Application market.

Microsoft claims the deception was all just an accident. And to be fair, to a small point it was. But it was not like they didn't know that writing Applications for Windows would guarantee its success, or that they didn't think pulling an end run would hurt IBM or OS/2. So it was either an evil plot (and fraud) or an accident, and neither of those is genius and planning.

Microsoft would later distribute their Apps with their OS, and make it conditional that if you wanted their OS, then you had to take their Applications as well. Further killing the competition. This succeeded too, but only through means that would embarrass a Rockefeller. So Microsoft was not so much brilliant, as it was unscrupulous. Some of the events were by accident (they certainly didn't want to break up with IBM and lose the OS/2, as long as they had such a wonderfully parasitic relationship), some by design. But they didn't care about ethics, they cared about winning - and the thing that enabled them to win was always their size, IBM's name, and later their own name.

Microsoft didn't win because of good products -- their products were never that good; but they weren't that bad either. They didn't win because of brilliant marketing; their marketing wasn't that good. They didn't win because of any ability to see the future or anticipate markets; remember things like Bob, the first two versions of Windows, passing on major markets like VisiCalc, Databases, and so on. Mostly Microsoft followed others, then used their size and name to force the others out. They basically just won because they could afford to, because IBM was paying their way. By the time IBM finally caught on to this, and broke off the relationship, it was the 90's, and IBM had paid to develop DOS, Windows, most of Microsoft's Applications, and for the creation of WindowsNT -- and turned a small software company into the "evil empire" that we all know and love.

I know that people worship success. Fine. But lets not call it Genius -- it is a combination of luck (timing) and connections. Bill Gates, Paul Allen, and many others in Microsoft did create a Multi-Billion Dollar Company. Bill Gates is sharp, and was a ruthless, slightly insecure opportunist, that happened to be in the right place at the right time with the right family. But the catch is who couldn't have succeeded with Billions of IBM's Dollars, and getting to use IBM's name for over a decade?

I am sure there are many people that couldn't have made Microsoft AS successful as Bill Gates did. Gates is not stupid, and did quite well. However, I doubt there are many people that could have failed with Billions of Dollars and IBM's reputation. I am just as sure that there are many many other people that could have made Microsoft a far more successful company than Gates did, and without as being as amoral as he was (or his company was). So where is the genius?

So next time someone starts to talk publicly about Bill Gates Genius, give them this URL, and ask them to read it before they cram their foot in their mouths any further. You never know when some crazed geek is hiding around the corner ready to give them the wedgie of death!
Many people have a thing against people (Bill Gates) because of their money -- that is stupid! Why resent people over that? Bill Gates (Microsoft) has employed tens of thousands of people (directly and indirectly) -- so I could care less how rich he is. I wish him, and his company all the best (financially). I just refuse to let people forget how they got where they are, and what they did along the way. My problems with Microsoft have always been based on their actions, and how many people that got hurt along the way.

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