Steve Ballmer

millionaires out of its employees. After seating control of the company to such an Adela in Bomber purchased the Los Angeles Clippers for two billion dollars, joining Microsoft co founder Paul Allen as a fellow NBA owner. He recently sat down with Carlisle Group co founder David Rubinstein. They spoke on David Rubinstein's Bloomberg television program Peer to Peer Conversations. As we sit here today, you were the owner of the l A Clippers. Let's talk about how you became

an owner of the Clipper. So you retired in two thousand fourteen from Microsoft as a CEO, and the Clippers were more or less going to be available. You paid two billion dollars for the team at the highest price than ever paid for a sports team in basketball, where all the other owners happy with you because you elevated the value of all their franchises. And I assume they've pat you on the back whenever they see you. Now, when I bought that, I think there were two reactions

about the team. Number One, yes, as you described, yes, our teams, Well, this has been a great investment. The second was, oh, my god, I wonder if this guy's gonna throw over ound money in a way in a way that's gonna and the league has plenty of rules so you can only it's it's hard to outspend anybody else. But I think there was a little concerned about that. Okay,

so you were living in Seattle area. Now you have a team in the l A. Do you go down there and yell and scream like all the other fans. I do. In fact, we have forty one home games. I've probably made thirty eight this year and maybe another seven away games. So I make it to a lot of games, and uh, it's fun to be enthusiastic. I enjoy it. Uh, you know, things are most fun when it's your kid playing. Uh. Second, most, you know this owner thing is pretty good because you have a sense

of the dynamics of the guys. So you go into the locker rooms and say, well, you know, guys could do this better, or that you tell them anything in the locker room, or you give any tips. I got three principles. Number one, don't talk to anybody after a loss.

That's number one. Coach, yes, but not players. Number two, Uh, you know, pump guys up, which I do usually with texts after a game, or sometimes I go talk to somebody after big games in the locker room when we lose or win our last game of the season in the locker room, and I go to training camp at the beginning of the year, give a little speech, um, a little bit of a pump up. I guess you'd say, But you have coached um young children in basketball. Do you ever take any of the tips and give them

give them to your l a Clippers coach. No. I hear their owners to do that, and I'm not gonna be that guy. Well, you're famous when you were Microsoft for pumping up people. You have a voice that projects and when you're watching the game, do you yell and scream like everybody else, I yell and scream. I've become a little more moderate, so I preserve my vocal cords because you know, it certainly can be a problem when you're let's go, let's get these goods. You know, um, yeah,

it can be an issue. So what's more fun running Microsoft or running the l A Clippers? Running the l A Clippers, I mean, running Microsoft was a ton of fun, and it was you know, it's kind of inspirational because we were working on stuff that literally transformed the world. And I got a lot out of that, and the intellectual challenges were strong, and I loved that, and I thought a unique value to add. But just for fun, fun fun. There's really no stress running a basketball team,

except you really want to win. Let's talk about your background. If you grew up in the Detroit area, your parents were immigrants. Where were they from? My dad was an immigrant from Switzerland. He let Switzerland after World War Two, worked for the U. S Military as an interpreter at the war trials at Nuremberg because they were looking for German speakers who were not German citizens because they were afraid of that. And then he met his sponsor. Uh was one of the g I s dad who he

had worked with as an interpreter. I don't think he finished high school. He's never precisely and that certainly didn't go to college, but he worked at Ford. My mom actually not an immigrant, her parents were and they came from I guess it was probably Russia at the time. Okay, so you did pretty well in high school. Your validatornamor class. Yes, he went to Harvard. And then when you're at Harvard you have a classmate that's down the hall name Bill Gates.

It was interesting because the guy who introduced and says, you guys are both kind of weird, energetic guys you should meet. So we did. And the time we met was just about the time he was starting Microsoft plus or minus a month, I want to say. And that clearly was more than this is just going to be another random guy. I mean, a guy starting his own company. It was the second company A done one in high school. Uh. He was clearly a special, a special guy, and I

got to know him pretty well. You graduated Magna Cloudy and then you decided to go to Procter and Gamble. I did Procter and Gamble now very often Procter and Gamble gets a lot of very talented people in their young trading programs. Did anybody famous work alongside you? Well, Bunny, you should mention that a number of people did when I was there. Scott Cook, who started into it, was there.

Jeff Immelt who ran Ge and I worked together on Duncan Hind's Brownie Blueberry Muffin and Moist and Easy Snack Cake Mix. We were the dynamic drivers of brownie mix sales. Um so he was. He was around. Meg Whitman came right after I left. It really was a great, a great place. Go to Stanford and you're gonna get your m b A. And then you decide to leave and drop out of Stanford to go to this tiny startup in Seattle are called Microsoft. What did your father saying

about that? Oh? He he was apoplectic in a way. I mean, he didn't try to stop me. But I remember when I called home and my dad said, what the heck is software? Uh, he'd actually been involved installing Wang systems old word processors. But what software? And then my mom said, why would a person ever need a computer? Now today you'd say that's crazy but wasn't crazy in night. But they said, okay, okay, we hear you, we hear you. If it doesn't work out, you go back to business school, right,

I said, right, And then never came back. So the summer ends and you stay there, and you're the thirtieth employee of Microsoft, and ultimately you become I guess next to Bill Gates and Paul I on the biggest shareholder. What were the jobs you had as you work your way up? Well? I started out as assistant to the president. I was Bill's assistant, basically chief cook and bottle washershire So I set up the accounting, which there was some, but we needed a professionalize. I was the HR department.

I hired everybody. When IBM came the first time about their personal computer, I became the kind of salesman on IBM. Why I knew how to wear a tie. I was about the only guy around the place, and Bill said, you have a diet in a suit? Why did you come to the meeting? So when did you realize this isn't a little startup that's gonna be a nice little company in in one part of the software world. It's going to be a dominant company in the world. By the late eighties, I would say, for sure, I knew

the company is going to be something. I remember when Andy Grove, who went who ran Intel, said someday there'll be a hundred million computers a year or sold. Bill and I looked at each other and said, he's nuts. There's never gonna be a hundred million. These days, there's three hundred million plus computer sold a year. And your father and mother, what did they say at this point? Yeah? And then they got they got comfortable when we went public.

They knew I wasn't gonna be brokeh Will actually offered me a decent starting salary. It was either forty or fifty grand I can't remember which looked good in that in that day and age. So they knew that was a good choice. Now, my dad still had a little skepticism. There were all these people and there was nothing physical you could get your What do all these people do? There's no there's no product. What did they all do?

So that that that was a confusing point. I mean's a smart guy, but he'd always asked me that every time we went through the campus. So and near two thousand, you become the CEO. Bill decides to sort of sort of retired, became the chief software architect, but no longer CEO, so you now can run the place where you were surprised that Bill decided to retire. I was surprised. I was surprised. Bill had asked me to be president. Said fine, and that was a another number two position and I

was fine with that. And then Bill came to me and said, hey, will you be CEO? And I asked him, do you really want me to be CEO or do you really kind of want me to be a figurehead? Um, just just tell me. He says, no, I really want

you to be CEO. And I would say, was I CEO? Well, because Bill, you know, stayed working every day, told about two thousand eight, and I would say I didn't feel like a total CEO probably until Bill wasn't working there every day in two thousand and eight, because there was a lot of shared responsibility. Talk about some of the things that happened while you were CEO. You moved into

video gaming, I guess Xbox. Yeah. We were saying, what's the path for uh software if you will, into the living room, and the only path that was really clear at the time was the video gaming systems. There was no way to be in the video game business and not build the hardware. We had been in the hardware business in a small way. We'd had our mouse product, a few other products along the way, and frankly, I

think we probably in many ways have done more hardware sooner. Well, you've made another investment at the time that was actually criticized. It was an investment in a company called Facebook. I think you invested about three hundred million dollars or so. And why did you do that and did you regret not trying to buy the whole company. I did try to buy the whole thing. Uh. Zuckerberg came up to Seattle, we met down there. I put a concrete financial offer

on the table, but it's a little ross. Pero tried to buy Microsoft from Bill Gates in like seventy nine, and Bill said, no, founders really have a lot of love and passion around their stuff. And even though Facebook was tiny I think it was two thousand nine and I offered twenty plus billion dollars something like that and market absolutely no interest. Wow. Okay, So a couple other businesses, they think the smartphone business that Apple is now more

or less perfected, at least the United States. Uh, you were skeptical that that would be a great business. Do you think Microsoft could have gotten into that business or earlier? Yes, we could have and should have. We should have done in my opinion, we should have gotten in the harbor business. And that's my I blew that. One of the other things that happened during this period of time when you were the CEO was cloud computing. Your own neighbor, Amazon

built this big business under your own nose. Were you surprised that they have become so big in cloud? They've had more success than I anticipated. I didn't sell them short, but they have had more success. Here's here's why I'm not saying I was completely dubious. It is very hard sometimes for big companies to do something very different. I call it doing a second trick. At the time, I would call Amazon a one trick pony. It was doing

this retail stuff. It was doing an awesome job. But to do a second trick, you don't get a lot of companies who do that. That doesn't mean Microsoft's out of the game, are you know? We started this thing called Azure and Office three and my successor, Sata has taken the thing too very much New Heights, and right before you left you tried to buy and you did. Ultimately after you left, I think they completed the Nokia acquisition and that was an effort to get into smartphones

that didn't work out. Why do you think it didn't work out? I think out. I think there were probably two reasons. Number one, maybe it was late, and number two, after I left, while the company went ahead and bought it um, I don't think there was the same level of enthusiasm at the board level and management level for scaling up and investing there. Okay, so you ultimately decided to leave and your successor UH is such an Adela or your surprise when he was selected? No? No, he

was the recommendation that I made. He's the recommendation that Bill Gates made. I thought he was a candidate to replace me, which is why we moved him into his last job, which was running one of the big divisions. And I was glad he got the job because he's done a great job. Now, when you were there, you dramatically increase sales UH, and earnings were dramatically higher. The stock price didn't go up. Why do you think there wasn't a correlation between the stock price and earnings and revenue.

Probably two factors. Number One, I took over at least at the worst time if you want your stock price to go up. I came in right at the heart of the dot com bubble. Everything was sky high. The bubble breaks, and by the way Judge orders the breakup of Microsoft, that happens, you know, within several months of me taking over, and things fall down and then you

have to build back up. That's number one. By the end of my tenure, I had a certain kind of reputation with Wall Street and and not not that favorable, not about my performance, but certainly people, Hey, the guys a grinder's gonna keep doing this thing, but are all these new things gonna actually break through profit wise? And number two, I think mostly people on Wall Street would have said I overinvested. I was spending too much money. Uh. And the only chance to position the company really came

when Sacha started. And you know, he's done a good job of repositioning the company and investor's minds. So since you've left, the stock has gone up a fair bit and your net worth is going up a fair bit. As a result, you're the biggest individual shareholder of Microsoft. Is that right? Yeah, that's right. So how come you didn't sell more shares because Bill Gates and Paul Ellend have sold a large part of their shares well. When I was CEO, I just didn't think it was right.

Somehow didn't feel right to me. And it's not like I'm even with what I had done to diversify at that time. It's not like I'm going to go broke if the Microsoft stock does poorly. Uh, And it wasn't doing poorly, and I ran the company. If I didn't believe, and people knew I already had enough money, I should stay invested. I should stay there. When I left, I still loved the company. I did a little bit of

of stuff to diversify slightly. I put some money aside for charity, but I still you know, I'm a loyal loil dude. I still drive Forwards. My dad worked at Forward, and I still own Microsoft stock. So you retire off as the CEO at the age of fifty seven. What did you decide you wanted to do when you left? I had not really given it a ton of thought until I left. I again had this sort of hardcore notion. I was supposed to just give give it all from Microsoft until they leave. So I leave, and what am

I gonna do? Well? Owning a sports team was attractive, so within a few weeks I went and visited Roger Goodell and Adam Silver, the NBA and NFL commissioners. I thought that would be a fun thing to do. Uh, and my wife, who had been involved in philanthropic stuff, really focused in on foster kids and disadvantaged kids and state of Washington. She said, come on, dude, time you gotta get involved. Uh So I did. Um At first, I said, come on, government takes care of these problems,

and she said, no, Philanthropy's got her role. But it did intrigue me to what degree government really does help disadvantage kids. I had a hard time finding the numbers, which led to me starting this thing called USA Facts and between USA Facts or philanthropy, the clippers and having a good time, which in my case means exercising and playing golf. Um, my life's pretty full. Okay, I don't play golf because my theory was, if I had a meeting with you and you thought I was competent, intelligent,

and you saw me in the golf course. It would destroy the illusion of competence. So I guess why I don't play um, But you're probably right and I still play. So let's talk about the organization you started USA Facts. How did you get involved in this idea and what is it now doing? So I said, I really want a consolidated view of what government does. Where does the money come from, where does it go? And oh, by

the way, also, what are the impacts? You know, if we're transferring wealth, what does quality of life look like? We're investing in education, It is the quality of the outcome. How how good are or how well are our kids doing? What are your philanthropic goals? Would you say in terms of areas you want to focus on with the wealth that you have, Yeah, we're single purpose. What can we do to improve the chances that kids born at the bottom of the economic total poll their parents are move

up economically. You're always going to have some people who are at the bottom of the economic total poll. It shouldn't just be the same people all the time. People should be moving up. People should have a shot at the American dream, which is the chance to do whatever you want to do and that's not true. For a lot of kids when they're born, their probability of staying where they are economically is very, very high. I don't think that's okay. There are a lot of reasons people

point to education. Education is a part of it, but there are a lot of reasons why kids can't get an education. And I think it's important to take a look at that chain and then try to find not only the not for profits to invest in. We think it's very important to try to stimulate the right behaviors by government and the right spending by government because it

can make a huge difference. So if you look back at your extraordinary career at Microsoft and now what you're doing, any regrets or you're happy with everything the way it worked out. I'm pretty happy with the way things worked out. I mean, I can go back and there's decisions I'd

make differently if I was at Microsoft. But you know, if I look at the span of work, we went from a company that had two and a half million in sales and thirty people to a company that had a hundred thousand people and eighty billion roughly of sales and lots of profit. I can feel good about that. Even though, uh, there were mistakes. I started out the process with a lot of friends. I still have mostly the same friends as I did, which I feel very

good about that. I'm in a very good place in my life now, probably you know, in a way, the best ever. Although I wouldn't trade out anything I did in the past, at least at this age. I like being a little less busy. That's good for me. I'm pretty pleased. So as a leader, uh, you are well known for very visible and vocal expressions of your thoughts. Is that a style you consciously adopted or it just happened that way. I was a very very shy kid, very shy kid. I was a shy kid when I

got to Harvard. And then I built my confidence as my as I built it because I was doing things and being successful. I was shy when I got to business school. When I got to Procter and Gamble. First day I started a guy who wind up my roommate. He said it was like this, Hi, my name is Steve Bohmer. My palms sweaty because I'm so nervous, UM, so shy kid. And then I got better and better

and I developed some confidence in public speaking. And and it turns out I have something of a knack and part of that is getting in front of your troops and pumping them up and tell his story and um, I will do and bestball. It's a weird environment because of course I don't have a lot of credible why I'm an owner for that, sax, I'm not an expert. But you know, at the end of the day, at least I can I can get into the game and be verbal and vocal. Okay, what would you say is

the most important characteristic to be a good leader. Commitment. You really have to have your head in the game and be committed to be a good leader. There's two parts of leadership. One is leading people, and that's about commitment and people understanding you have commitment. The other part of leadership, which doesn't get talked about much because you have to be a leader of ideas. The worst thing you can do both for your people in generals to say let's go and you point that way, and the

truth is you should have gone that way. So leaders have to be leaders of ideas. The ideas compelled the people, but then the ideas have to be right and you have to stay committed. If twenty years from today or twenty five years today, you're looking back on your life, What would you want people to say was your legacy, what you contributed to our country? Well, you asked the very specific question, what would I would I contribute to our country? What I hope we do is make some

difference in the lives of kids. That's number two. Number one. Hey, we democratized computing and putting that kind of power and capability for people to to thrive, to investigate, to be smarter, to to create more. I feel immense pride about that. I put that number one. I think that was not only something that affected this country, but the world. Whatever we do philanthropically, I hope makes a big, big difference.

It's hard to make a bigger difference than being involved in the popularization of computing and the five NBA championships. You will have one that will be important as well, right, Yeah, but that's kind of a zero sum game. When we win them, somebody else doesn't win them, So it's a little harder to say it's a broad contribution. But in l a that would be a big contribution.