Wednesday, May 29, 2024

Why Microsoft Should Fire Bill Gates, Too

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Now that we’ve endured the unpleasant spectacle of Steve Ballmer crying over the loss of the company he ruined during his 14 years as CEO, it’s time to focus on who put Ballmer in charge in the first place: Microsoft co-founder and chairman Bill Gates.

Three major Microsoft investors are pushing the company’s board to remove Gates as Chairman. They’re especially concerned about Gates’ power on the committee seeking a replacement for Ballmer, fearing another catastrophic executive in charge.

I think the board needs to go further: Gates should be removed from the Microsoft board altogether, and I’ll tell you why below.

But wait, you might say. Gates is a genius and a visionary, right?

Wrong. Gates is Not a Genius Visionary

While everybody says Gates is brilliant, history suggests otherwise. In fact, the history of Gates’ decision-making at Microsoft is mostly a long list of missed opportunities, bad judgment calls and blunders.

Yes, Microsoft and Gates have made a truckloads of money over the years. But Gate’s business successes while he ruled Microsoft were at least as attributable to total engagement, incredibly hard work and blind luck as they were to Gate’s vision or genius.

Gates was always a hard-core workaholic and a slave driver par excellence. He was famous for ripping subordinates to shreds in meetings, destroying the ideas of others by saying: “That’s the stupidest thing I’ve ever heard.”

The ability to humiliate staff was the one thing Gates had in common with arch-rival Steve Jobs, co-founder and CEO of Apple. Gates was always great at keeping employees afraid, which is an effective motivator he can no longer use from the board.

Gates did have early insight into software as his generation’s biggest business opportunity. When hippy hackers thought software should be free, Gates insisted on charging whatever the market would bear. When IBM thought operating system software was unimportant enough to control, Gates knew it was a Golden Goose.

But Gates always had a blind spot for understanding people — i.e., customers, users, markets and culture — and this led to Gates consistently make incredibly bad decisions, such as:

* Missing every Internet opportunity, until it was way too late, including search engines

* Failing to maintain the lead in browsers with Internet Explorer

* Failing with AutoPC, Microsoft’s play for the automotive market

* Pushing pen computing as a layer on top of bloated, expensive Windows

* Believing Microsoft Bob and Clippy were the solutions to Microsoft’s overly complex and confusing interfaces.

* Pushing OEM partners to embrace Origami, the Microsoft-led mobile initiative that failed catastrophically

* Making Steve Ballmer, Gates’ incompetent college pal, CEO

* Keeping Ballmer in charge even after years of obvious failure

* Shipping Windows Vista and not knowing it would harm the company

* Failing to understand how complex Windows versioning options hurt the brand

* Launching Zune, Windows Phone or Microsoft Surface RT years too late to make a difference

As you can see, these are not small blunders, but gigantic ones: Microsoft has failed with every one of its Internet initiatives and every one of its mobile initiatives. This is especially bad because the Internet and mobile computing have been the leading drivers of technology for the past 14 years.

These blunders all have a common origin, too: Bill Gates always had way too much power, and no understanding of human nature.

Contrast this against Steve Jobs, a CEO with relatively limited technical expertise but a very keen insight into human desires. While Gates and his man Ballmer drove Microsoft into the ground since 1999, Jobs built Apple into the most valuable company in the world.

Gates devotes most his time and energy to the Bill & Melinda Gates Foundation. So he doesn’t bring his core value to the company — his workaholic, slave-driving obsession. And he’s never been a visionary.

His only role now on the Microsoft board is to use his outsized influence as founder and former CEO to keep the company from making better decisions.

I believe Gates installed and supported Ballmer because he would run the company the Bill Gates way. Ballmer’s only qualification for the CEO job was his total loyalty to Gates.

When Ballmer became CEO in 2000, Microsoft’s valuation had recently hit its record of over $620 billion. That’s about $850 billion in today’s money when adjusted for inflation. Under the co-leadership of Ballmer and Gates, that valuation has dropped from $850 billion to $280 billion, a loss in shareholder value of $570 billion.

Why Gates Can Be Fired

How do you remove the company’s largest shareholder from a board, anyway?

You can’t, usually. But Gates won’t be the biggest shareholder for long. Gates currently holds just 4.5% of Microsoft’s stock. And even the three investors calling for his removal represent more shares (5%) than Gates owns.

If enough investors unite, Gates could be outvoted and removed.

Besides, Gates sells Microsoft shares at a pre-determined rate that leaves him with zero shares in less than five years. Unless Gates changes something, he will own no Microsoft stock by 2018.

Microsoft is currently looking for a new CEO. Regardless of whether the company brings in someone from the outside or promotes from within — or puts Nokia’s CEO Stephen Elop in charge of Microsoft — that new leader will be lorded over by a domineering Gates, under whose chairmanship Microsoft has lost approximately half its value since 1999.

What Microsoft Needs Now

Removing Gates from the Microsoft board is an unpopular idea. This is Microsoft! He’s Bill Gates! It’s not right to remove the founder from leadership in his own company, right? Besides, he’s such an awesome guy now, saving lives with his foundation and all.

Sure, if you believe corporate directors should hold their seats for sentimental reasons, or purely for the happiness of the directors, then Bill Gates should be on the board. And if you like the direction Gates and his man Ballmer have taken the company in the past 14 years and want more of the same, then by all means advocate his place on the board.

But for anyone who thinks Microsoft has been failing for the past 14 years, and who believes a director who has been driving that failure is a liability to the company, then Gates has got to go.

What Microsoft needs now is a bold leader with a clue, not another yes-man personally selected by Gates. The next CEO needs to solve Microsoft’s historic inability to launch products based on its own research. He or she needs to get desktop touch computing into the hands of consumers.

And most of all, Microsoft needs to figure out how to ship great products before or at the same time as comparable products from Apple and Google, not several years later.

But even the best leader will fail if Microsoft’s founder, former CEO and board chairman continues to use his outsized influence to push the wrong products — or the right products at the wrong time — based on his tone deaf inability to understand what customers really want.

Microsoft needs to reverse its long decline. And as every Microsoft user knows, the only fix it is a full reboot.

It’s time to give Bill Gates the three-finger salute.

Photo courtesy of Shutterstock.

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