With a big, clear vision in place, you can make the most of any opportunity that comes your way.

Bill Gates is today best known for being the richest man in the world, thanks to the astounding success of the company he co-founded. But what do we really know of Gates the person, and what is the secret of Microsoft’s success?

There are now many Gates biographies, but Hard Drive: Bill Gates and the Making of the Microsoft Empire, written by two Seattle journalists, still gives the best insights into the early years of Microsoft and what it was like to work under its chief executive. This is a fantastic read, better than many novels. If you are about to start a business, it may expand your thinking of what you should aim for.

At another level, if you use a Microsoft operating system or application, it is fascinating to learn of the long road that was taken before these products seemed easy to use. Although this was a company that grew incredibly fast, it was still almost 15 years before Windows became a household name.

The book was written in 1992 and covers only Microsoft’s first 15 or so years, but these were the most interesting and the most instructive in terms of lessons for the wealth creator.

Seeing the future and acting on it

It is well known that Gates started Microsoft with friend Paul Allen when he was only 19, having dropped out of Harvard. However, by this time he was already an expert programmer, having spent the previous few years working on a primitive computer at school. When still in his final year, he was offered a job (with Allen) at $165 a week to debug the computer system of a defence contractor. His school, the enlightened, expensive Lakeside in Seattle, allowed him to take a whole semester off to accept the posting.

The pair had talked about starting their own software company for years, and shared a vision that almost everybody would some day have their own personal computer (this was in the age when computers filled whole rooms and were so expensive, only corporations and the military had them). Why should they not be the ones who provided the software programs?

Gates’ parents, however, expected him to go to college. At Harvard, he wanted to find people who were smarter than he. Disappointed, he spent a lot of time playing poker in addition to doing some maths courses, but it was still a fruitful time. The authors note: ‘At Harvard, Gates read business books like other male students read Playboy. He wanted to know everything he could about running a company, from managing people to marketing products.’

When Allen saw an article in Popular Electronics about a new ‘personal computer’ that was being made by a company called MITS in New Mexico, he and Gates realised they had to make their move. They flew south and convinced the hardware firm that they could write a software program that would actually make the Altair computer usable by enthusiasts.

Latching onto software

Relocating to Albuquerque, in a great hurry they tailored a version of the Basic programming language for the Altair. Gates put everything into the new business, taking only a few days off during its first two years.

However, it soon became obvious that the real value in the computer was its software, and Gates and Allen were eager to sell their program to other firms. Eventually they were able to wriggle out of the contract with MITS and became free to sell versions of Basic to other companies. Amazingly, these included big names such as General Electric and National Cash Register. The tiny outfit began to make real money.

Later, after Microsoft had relocated to Seattle to be nearer Gates’ parents, he confessed to a fellow programmer his two ambitions: to design software that would make a computer easy enough for his mother to use and to build a company bigger than his dad’s law firm.

By 1981, having made an agreement with its Goliath, IBM, Microsoft had already fulfilled the second aim.

Customers first, profits second

Potential clients coming to Microsoft headquarters frequently thought that Gates was the office boy. At 25 he still looked 17, and often wore a pizza stained t-shirt he had slept in the night before. But once the youthful chief executive started talking, Wallace and Erickson note, clients forgot his age. Clearly a master not only of the technical stuff but of the business of the computer industry, he even wrote his own contracts, taking clauses from corporate law textbooks.

In his zeal for customers, Gates went for market share first, often quoting too low for the work involved and imposing ridiculous timeframes on his programmers. Yet his ethos of ‘satisfy the customer first, profits second’, meant that the company raced ahead of its competitors.

In the early days, Wallace and Erickson write: ‘Gates sustained Microsoft through tireless salesmanship,’ making cold calls and haranguing potential buyers until they relented. In an echo of Michael Gerber’s advice of ‘work on your business, not in it’, Gates, although an excellent programmer, was always slightly more inspired by the business of Microsoft and where it could go than the actual products themselves.

He was an intense communicator, willing to tear a person to pieces on some intellectual, business, or programming point. Yet he was also able to listen and change his mind in a hurry if the facts pointed that way. Microsoft hired people in his image: very high IQ, passionate, willing to work around the clock. When a deadline loomed, the whole company would be forced into a frenzy, pulling all-nighters to meet deadlines. His habit of making it onto planes just before the gates closed was symbolic of a larger outlook of taking things to the edge.

Final comments

Was there something special about Gates himself that enabled Microsoft to become top dog in the software industry, or was it just a case of good timing, along with a basic amount of brainpower and hard work?

What really set Gates apart was the boldness of his vision: ‘A computer on every desk, and Microsoft software in every computer’, and his natural brilliance as a businessman.

While it is hard to believe now, many very intelligent people in the early 1980s thought that personal computing would not amount to much, that business applications were the real growth area.

In betting their young lives on the former, Gates and Allen reaped the benefits, although luck certainly played its part. In IBM’s hurry to put a personal computer onto the market, it had to use other companies’ software and create a machine out of non-proprietary parts. This gave Microsoft a huge opportunity, as the ubiquity of IBM ‘clones’ meant that software, rather than the machines themselves, became the valuable thing. And yet, it could also be said that if Gates and Allen had not had the vision in the first place, they may not have made so much of the opportunity.

As well as being a great read, Hard Drive highlights the benefits of working in a ‘star’ company. In business strategy terms, this is one that doubles in size every year or so because it is the clear leader of its fast-growing category.

Most of the early employees of Microsoft, once stock options were introduced, became multi-millionaires or billionaires. Thousands of other employees hit a bonanza just by working in the right company at the right time. They had to be brainy to get their foot in the door and then they worked very hard, but their experience shows that if you are not one to start a business on your own, picking the right employer is often half the task in becoming wealthy.

In a similar vein

• Richard Branson, Losing My Virginity
• Anita Roddick, Business As Usual
• Howard Schultz, Pour Your Heart Into It

James Wallace and Jim Erickson

James Wallace and Jim Erickson wrote Hard Drive while they were investigative reporters for the Seattle Post-Intelligencer. Wallace remains a senior journalist for the newspaper, and followed Hard Drive with a sequel, Overdrive: Bill Gates and the Race to Control Cyberspace (1997). Erickson is now a senior reporter for Time magazine in Hong Kong.

Extracted from 50 PROSPERITY CLASSICS: Attract it, Create it, Manage It, Share It, by Tom Butler-Bowdon, published by Nicholas Brealey Publishing.