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Why is Microsoft Successful
Is Bill Gates a Genius?

By:David K. Every
©Copyright 1999


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, and so on. 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 operate -- but there are worse evils in the world (like the press' incessant ability to misinform the public, because sensationalism makes a better story). Well, the hype about Bill Gates is one of those sensationalist stories. Of course the hype about Steve and Steve (Jobs and Woz) is sensationalized too, but this one has fallen out of favor of late. But let me explain why I don't think Gates is a genius -- let's start at the beginning of (personal) computers.

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 -- but lets 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 (like cars in the 20's and 30's), and they rode the tide upwards to success.

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

The 70's

Bill Gates (after dropping out of college) and a friend (Paul Allen) started making software (Mid 70's). The first thing they did was steal (uh, borrow?) some computer time from a college and they implemented Basic (a Language) for the Altair Computer (made by MITS). Basic had been around for many years before Bill implemented a version of it . They did provide a service, but it is not that impressive technically to take public domain code from one machine and port it to another. Yawn. It was also very questionable (ethically) to sell a language who's definition was in public domain, and develop it on computer time borrowed from a school. But I don't think ethics bother Bill Gates too much -- and in the over all scheme of things, this was one of the lesser of the "moral gray areas".

Before this time, most commercial software was 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 wanted to play on Micro's -- it was ego and fun that was the motivation, not insight or business sense. Of course it is easy to be "gutsy" when you have no overhead (you are a kid living at home or college) and your parents are quite "comfortable" and you have a safety net to fall back on.

Computers weren't mainstream yet -- so writing this language was not about money (at least not about making more than a few bucks), it wasn't about business sense -- it was about doing something that 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 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, and so they started pirating Gates Basic. Ironically, the pirated versions got the bugs fixed and features added, and was a better version of Basic than the commercial one, and it was better before Gates Basic was even released. But Microsoft has never been about quality (more about marketing). Gates threw a tantrum, and wrote a letter than called all the people improving his product thieves for stealing his software (ironic since his software was originally public domain and developed on stolen computer time). This tirade pissed off his customers -- last 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.

Well, 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 success was that there was no competition for languages in Micros.

Microsoft continued to grow. Much of that success was because there weren't many commercial applications yet and people had to program them themselves, so people needed Basic. Because Basic made many computers useful to businesses, many hardware companies (like Apple) licensed their languages from Microsoft. These royalties paid the Bill's (so to speak) -- but the big money was in Application Development (something Gates didn't learn until his company was a decade old).

Then a guy named Dan Bricklin created VisiCalc. It 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). This was known as the first "Killer App". It not only sold a ton of copies of itself, but people bought computers (Apple]['s) just to run VisiCalc on. This package revolutionized Microcomputers and brought them from hobby devices into many more businesses and far more homes -- and seriously contributed to the success of Apple][ (and Apple Computers). Did I mention that Dan Bricklin went to Bill Gates and Microsoft and asked them to sell the package for him, but Gates was disinterested? Seems Microsoft didn't think it would be useful (or not important enough to market). Again, you seldom hear this story when talking about Bill Gates Genius -- Microsoft (and Apple) had turned down what was the most revolutionary Application in the history of Microcomputers, the first Spreadsheet. No big deal, later Microsoft ripped off the design and they made their own version, Multiplan, which later became Excel. Of course others ripped off the concept as well, and companies were built around rip-off products, like Lotus (1..2..3). But the point is that rejecting Multiplan was not a move made by a Genius or a visionary.

Actually, the real Genius of Microsoft seems to be how they handled it. Let someone else do things (and take the risks), then when they start becoming successful, they rip them off. Then Microsoft uses their size, money and unfair advantages (by making the Operating System) to steal the other company's market -- not through quality of product and features, but by just forcing them out because of size and deep pockets. Though I don't know how much Genius there is in that (unless you call muggers and bankrobbers "Geniuses").

So after 6 years of having a Software Business that was doing 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 somehow 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 (because of his mom). 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. 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) -- but therein lies another part of Genius; the lack of integrity/scruples. So buying a product for $50,000 (a fraction of what it was worth), and a little back-stabbing to your friend is an acceptable business maneuver. If you worship success over scruples, then this was worthy.

Gary Kildall was quite offended, because Gates and Kildall had a Gentlemans agreement -- Gates wouldn't do OS's, and Kildall wouldn't do languages. Imagine Gary's surprise when Gates not only did an OS, but it was really a poorly ripped-off copy of his own OS. Microsoft lacked the imagination to write their own OS or think of anything new. Why should they, when they could just steal someone elses design? Do you notice a pattern?

The only real genius in the deal (or stupidity) was in IBM letting Bill Gates have control of DOS. Basically the deal was written such that IBM paid Bill Gates (Microsoft) to create DOS, then IBM agreed to let him have it, and be able to sell it to whomever he wanted. Try to figure out what they were thinking -- because many other experts have and they all wander away scratching their head pondering this blunder.

There is more to this story, read IBM's Choice if you want more.

IBM paid Microsoft to develop (buy) DOS. There were better products for PC's out there -- but IBM only really leant their name (enthusiasm) to Microsofts DOS, which starved out all the competition. Then IBM continued to pay Microsoft for improvements, (that Microsoft repeatedly delivered late, if at all, and most were buggy). Microsoft already earned a bad name and reputation -- but people were already saying, "Sigh, well what can we do, they are the standard?". How could Microsoft fail, they had IBM's name and reputation behind them? Is there Genius in getting a cushy deal and riding on someone else's coattails?

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. For over 10 years, IBM gave Microsoft BILLIONS of dollars to develop software for Microsoft (1).

(1) Note, I didn't say IBM paid MS to develop for IBM -- they had agreements where Microsoft would get to keep whatever code they created, and IBM got the code as well; but since Microsoft had all the people that wrote the code, they were the ones that could effectively use it (support it). 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).

Needless to say, Microsoft grew tremendously in the 80's. Billions of Dollars, IBM's name -- that is always a recipe for 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.

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 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 (2). 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. And so on. They succeeded, but only through means that would embarrass a crook.

(2) Microsoft claims the deception was all just an accident, and to a small point it was, but it was not like they didn't know that writing Applications for Windows would guarantee its success. Even if it was an accident (as many in Microsoft claim), that accidental success is not the result of genius or planning. So it was either an evil plot (and fraud), or incompetance -- you choose.

So Microsoft was not so much brilliant, as it was unscrupulous. Some of it was 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). Most of it was not accidental. They cared about winning -- but the thing that enabled them to win was always their size, IBM's name (and later their own name). They didn't win because of good products -- their products were never that good (they weren't that bad either). They didn't win because of brilliant marketing -- their marketing wasn't that good. The didn't win because of any ability to see the future or anticipate markets (remember things like Bob, the first two versions of Windows, and so on) -- mostly they followed others, they just 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 (and Paul Allen and many others in Microsoft) did create a Multi-Billion Dollar Company (and one of the most overvalued companies on Wall Street Today). Bill Gates is sharp, and was a ruthless, slightly insecure, opportunist -- that was in the right place at the right time. 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 -- and you never know when some crazed geek is hiding around the corner ready to give them the wedgie of death!

This is the history as I remember it. Some of this was a tad before my time -- I was involved in the late '70's (and I asked a lot of questions). So even though some of this was a few years before me, I do have a pretty good idea of what was going on. I would welcome people to research more (and give me any feedback if you find anything else out). If you doubt any of this, then look it up and learn -- but help me fight myth and misinformation (and be historically accurate).

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. I don't like his company's actions -- and think ultimately he is responsible for those. I'll will remind people of that, in hopes that they can learn how not to do things they are later ashamed of (or should be).

Created: 01/22/98
Updated: 11/09/02

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