Hard Drive: Bill Gates and the Making of the Microsoft Empire (17 page)

Ballmer phoned Metcalfe and told him they should resign from the board, immediately. Why?, asked Metcalfe. Because, Ballmer explained, Newman had just told him that the purchase of cocaine was a justifiable business expense. “We got out, before it blew up in our faces, and the company went away,” recalled Metcalfe.

After Microsoft licensed XENIX to 3Com, Metcalfe became a consultant for General Electric and arranged a secret meeting between Gates and one of the company’s senior executives to discuss General Electric’s possible entry into the personal computer market. Although GE had licensed Microsoft’s BASIC in 1976, it did not have a personal computer but planned to use the language on a minicomputer. The meeting between Gates and the GE executive took place in a room Metcalfe reserved in the San Francisco Airport. Gates flew down from Bellevue. General Electric’s well-heeled representative flew in from Stamford, Connecticut. They met for less than two hours before each got back on a plane and headed home.

“Gates didn’t really feel GE had the mentality for personal computers, and he was right,” said Metcalfe. “GE found Bill to be flaky. He looked like he was 17 years old, and he didn’t wear pin-striped suits like they did. It was oil and water.”

While Gates was off selling Microsoft to AT&T, Xerox, and the like, as well as making a few public speeches, Paul Allen was quietly recruiting programmers and directing the company’s technical work. In early 1980, Allen jumped in with a contribution that would prove to be as big a financial boost to Microsoft as the deals being hammered out by Gates. Sales of the Apple II had taken off, especially since it was the only computer licensed to run the extremely popular VisiCalc application program. The Apple II, however, had its own unique chip, the 6502, and a proprietary operating system. Apple didn’t want anyone else to “clone” its computer. Microsoft faced a dilemma. Most of its programs and languages, comprising more than a quarter of a million bytes of code, had been developed for Intel’s 8080 chip and the CP/M operating system of Digital Research. Programs and applications written for CP/M, which had become an industry standard, would not work on the Apple operating system. Other software companies with CP/M products were in the same fix as Microsoft.

Gates badly wanted a slice of the rapidly growing Apple software market. But it would be a major effort to translate all of Microsoft’s 8080 code into 6502 code. One day, while sitting in the back of a pickup truck in the company’s parking lot, Allen, brainstorming with Gates about the Apple problem, came up with an idea. Why not try a hardware solution to the software problem? His ingenious suggestion was to design an expansion card that could be plugged into the Apple to run programs and applications written for CP/M. With this card, Apple II users could run any of Microsoft’s programs written for the 8080 chip and Gary Kildall’s operating system.

Allen asked Tim Paterson of Seattle Computer Products to take a crack at developing what Microsoft decided to call the SoftCard. Paterson produced a prototype, but he could not get it to work properly. Allen brought in another programmer and put him on Microsoft’s payroll to help finish the project. The SoftCard was released in the. summer of 1980. Allen had hoped Microsoft could sell 5,000 of the cards. It sold that many in a couple of months. By the end of the year, more than 25,000 had been snatched up by Apple II owners. In all, more than
were sold. The SoftCard, with Zilog’s Z80 microprocessor (a faster clone of the 8080), was teamed with CP/M, which Microsoft licensed from Digital Research, and came with a copy of Microsoft BASIC.

The SoftCard was Microsoft’s first piece of hardware, produced in the company’s new consumer products division headed by Vern Raburn.

“It was not until the Apple II came along that everyone realized just how huge a marketplace software could be,” said Allen.

While Gates played the more visible and exciting public role of wheeling, dealing, and managing Microsoft, Allen was conlent to stay behind the scenes, working on technical innovations like the SoftCard. But their abilities and personalities tended to complement one another and thus the company.

Steve Wood, who would leave Microsoft for another job about the time the SoftCard came out, explained the differences and similarities he found in working with the two: “Bill was extremely driven, very intense, very impatient, and in terms of personal relationships, he was very challenging. He could be very confrontational, extremely so. A lot of people found him difficult to work with over long periods of time because of that. You had to have a lot of self-confidence. But what a lot of people don’t understand is that Paul, to some extent, had some of those same traits. They just manifested themselves in different ways. He, too, was very ambitious and very competitive. But Paul tended to be a lot more patient about things than Bill. That was always a very nice counter.”

Allen also had a diverse set of interests outside of work. He loved going to Seattle SuperSonics basketball games with his father, mother, and sister, or jamming with other Microsoft musicians at his home. He and a few of the company’s new programmers had even formed a band. Gates, on the other hand, was much more focused on work. He had little in the way of a social life outside of Microsoft. “Bill was much less one of the guys than Paul,” said a programmer who went to work at Microsoft in early 1980. “He was much more into working. If you wanted to be around him, you worked with him.”

But Gates did unwind occasionally at Microsoft parties, which were thrown fairly often, usually at someone’s home or apartment on a weekend night. These parties were a welcome break. Another programmer described the Microsoft party
scene in 1980, before the company’s project with IBM pretty much put everything outside of work on hold for about a year, this way: “There was drinking, some pot smoking. The parties were for the most part limited to people from the company staff. The number of males was pretty lopsided, just like at the company. It was fairly typical stuff for that age group at that time. It occasionally got out of hand, but usually not too much. I do remember one time Bill stumbling and falling down a staircase, and when somebody made a remark about that, he said something to the effect that he liked stair-diving, and he went up to the top of the stairs and did it again.”

These parties were also a time for competitive game playing, in keeping with the character of the people who worked at Microsoft and their stair-diving boss. One game in particular, “spoons,” was played at nearly every company party back then. Players sat in a circle, in the center of which a small circle of spoons were arranged with handles facing out. There was one less spoon than the number of players. Cards were then dealt as in poker, and when a player got a predetermined hand, he or she could reach for a spoon. Everyone else immediately grabbed for a spoon, too. The player who didn’t react quickly enough was out of the game. But just like in poker, bluffing was a big part of the game, and anyone touching a spoon on a bluff was out.

“Of all the times that I played that game, and there was something like a couple of times a month at least, I don’t think I ever saw a game that Bill didn’t win,” said Michael Orr, a manager on Microsoft’s COBOL language development project who was hired in late 1979. “You can believe that a lot of pretty energetic and talented people were saying to themselves, ‘God damn it, I’m going to get this guy this time, no matter what!’ But I don’t think I ever saw him lose.”

This intense competitive spirit had been woven into the fabric of the company, and it was as much a part of the work scene as the party scene. Gates and his senior programmers, who often had out-of-town business with OEM customers, had a running contest to see who could leave the downtown Bellevue office closest to flight time and still catch their plane at Seattle- Tacoma International Airport, about 18 miles way. Gates held the record at something like 12 minutes, which would have been astounding even with no other cars on the road. And the freeways around Seattle, especially heading to the airport, were always congested.

Pushing things to the edge was the Gates way. The work ethic at Microsoft, if anything, had intensified since the move to Bellevue. There was, in fact, a mystique about the long hours employees worked at Microsoft. There was an unstated job requirement that employees had to be at the office late into the night and on the weekends, regardless of how much work they had on a given day. No one wanted to be the first to leave.

“We were being driven to the edge all the time,” said one programmer.

The long hours and demanding personality of Gates finally got to Marla Wood, who kept the company’s books and helped with other office chores after the move from Albuquerque. She often had to fetch hamburgers and milk shakes from across the street each day for the programmers, who never left the office for lunch.

For a while, Marla had been
the
office staff, but gradually the company hired a secretary, a receptionist, and several other people for clerical duties. Then Gates started dating Microsoft’s secretary, which created hard feelings in the office. The young woman would show up late and leave early—not exactly the regimen expected of someone who worked for Microsoft.

Gates was often condescending to the five or six other women who worked in the office, none of whom had any technical background. Gates would often lose his temper, which was upsetting to staff workers unfamiliar with his confrontational style.

“Paul was much easier to work for,” said Marla. “He would blow up, but five minutes later it would be as if nothing happened. ... Of the two, I’d rather work for Paul than Bill any day. They are very different personalities. .. . [We] were always relieved when he was out of town.”

In 1980, Steve and Marla Wood had bought a new home and were trying to landscape the yard and fix the place up. But because of the long hours they put in at Microsoft, they never got home until well after dark. They would typically sleep for a few hours, get up the next day, and head back to the office. They could only spend time working on their home from weekend to weekend, and even then, Steve was often unavailable.

“I was getting very frustrated with things,” recalled Marla. “It was getting extremely hectic.”

The last straw came for her one day at work when she went to see Steve, who was not only her husband but her boss, to tell him the women in the office wanted to be paid for all the hours of overtime they had been putting in. In addition, they wanted all the back pay they were entitled to. Unlike the men, who were paid a straight salary, the women were hourly workers.

Steve Wood took their grievance to Gates, who agreed to start paying overtime, but refused to pay any back pay.

Marla had warned Steve that the women might file a wage complaint with the state Department of Labor and Industries if their demands were not met. “Let them,” Gates told Steve. “I don’t care.” So the women did just that.

“Bill came storming into my office, absolutely purple he was screaming so much,” recalled Marla. “He said we had ruined the reputation of his company.” She went in tears to Steve’s office, saying she couldn’t take it anymore. At that point, Steve told her that he himself had an appointment the next day with a corporate headhunter. It was the first time Marla realized her husband, Microsoft’s general manager, wanted out, too.

Gates’ fit over the overtime pay seemed excessive given that it amounted to only a couple hundred dollars. In the end, the

women got their way.

When Marla Wood left, Microsoft hired a professional bookkeeper. The bookkeeper was appalled that a company approaching eight million dollars in annual revenues was keeping track of its money by handwritten ledgers. Microsoft soon computerized its bookkeeping, though even then it used only a small Radio Shack TRS-80.

Steve Wood left the company to join a young Texas outfit called Datapoint. Unlike his wife, it was not the work load that had driven him out. Microsoft was a partnership between Gates and Allen, and there was no equity participation for anyone else, no employee stock plan. For him there was little financial incentive to stay and work so hard. Also, Wood believed that Datapoint was on the cutting edge of computer technology, making state-of-the-art developments in office automation, word processing, networking, and electronic mail.
■

With Wood about to leave, Gates again turned to a friend for a key management job in the company. In June 1980, he brought in Steve Ballmer as assistant to the president.

Gates said later in an i
n
terview: “When we got up to 30 (employees), it was still just me, a secretary, and 28 programmers. I wrote all the checks, answered the mail, took the phone calls—it was a great research and development group, nothing more. Then I brought in Steve Ballmer, who knew a lot about business and not much about computers.”

The son of Swiss immigrants, Ballmer grew up in Detroit, where his father worked for the Ford Motor Company. After getting his applied mathematics degree from Harvard, Ballmer worked for a couple years as assistant products manager at Procter & Gamble before heading off to Stanford’s business school. He had been, there about a year when Gates called.

At Procter & Gamble, Ballmer had become known for redesigning the company’s Duncan Hines cake mix box so that it sat on store shelves horizontally rather than vertically to grab more shelf space. Ballmer would later say that’s what he wanted to do at Microsoft—help Gates squeeze out the competition.