tv The David Rubenstein Show Peer to Peer Conversations Bloomberg July 18, 2018 9:00pm-9:31pm EDT
♪ harvard,en you are at you have a classmate named bill gates. steve: the guy who introduced me said you should meet. david: you are the 30th employee of microsoft. steve: why? i knew how to wear a tie. david: you are the biggest individual shareholder. steve: i am a loyal dude. i still drive fords. david: do you give tips to your l.a. clippers coach? steve: no, i hear there are owners who do that, and i'm not going to be that guy. >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok.
just leave it this way. alright. ♪ david: i don't consider myself a journalist. and nobody else would consider myself a journalist. i began to take on the life of being an interviewer even though i have a day job of running a private equity firm. how do you define leadership? what is it that makes somebody tick? as we sit here today, you are the owner of the los angeles clippers. let's talk about how you became an owner of the clippers. you retired in 2014 from microsoft. the clippers were going to be available. ,ou pay $2 billion for the team the highest price then ever paid for a sports team in basketball. were the other owners happy with you because you elevate the value of their franchises? steve: i think there were two
reactions. number one, yes. yes, this is a great investment. the second one is, oh my god. i wonder if this guy is going to throw around money. it is hard to outspend anybody else. i think there was concerned about that. david: you were living in seattle. now you have a team in l.a.. do you yell and scream like the other fans? steve: i do. i make it to a lot of games. it is fun to be enthusiastic. i enjoyed it. things are most fun when your kids play. second, this owner thing is pretty good. go into the locker room and say, well, you could do this better? do you give them many tips? steve: three principles.
don't talk to anybody after a loss. coach, yes, but not players. , pump guys up. after big games in the locker room when we lose or win, our last game of the season, in the locker room. i go to training camp and give a little speech at the beginning of the year, a pop up. david: you have coached young children in basketball. do you take the tips and get them to your l.a. clippers coach? steve: no. i hear there are owners that do that, and i'm not going to be that guy. david: you were famous for pumping of people. when you are watching the game, do you yell and scream? steve: i yell and scream. i become more moderate so i preserve my vocal cords. it can be a problem.
yet, it can be in issue. david: what is more fun, running microsoft or the l.a. clippers? steve: running the l.a. clippers. running microsoft was a ton of fun. it was inspirational. we were working on stuff to transform the world. i got a lot out of that. the intellectual challenges were strong. i thought i had unique value to add. for fun, fun, fun, it is no stress running a basketball team, except you really want to win. ♪ david: let's talk about your background. you grew up in detroit. where were your parents from? steve: my dad was an immigrant from switzerland, left after world war ii, worked as an interpreter at the war trials in nuremberg. they were looking for german speakers who were not german citizens. he met his sponsor, one of the dads who he had worked
with as an interpreter. i don't think he finished high school. he worked at ford. my mom's parents came from russia at the time. david: you did well. you are valedictorian. you went to harvard. at harvard, you have a classmate down the hall named bill gates. introduced us who said you guys are both weird, energetic guys. you should meet. so we did. the time we met was the time he was starting microsoft, plus or minus a month. that clearly was more than this is going to be another random guy. that guy is starting his own company. it is his second company. he had done one in high school. he was clearly a special guy. david: you graduated magna cum laude and decided to go to procter & gamble? steve: i did.
david: proctor and gamble gets a lot of talented people in their training programs. did anyone famous work alongside you? steve: a number of people did. scott cook was there. ge. immelt, who ran he and i worked together. the dynamic drivers of brownie mix sales. he was around. meg whitman came after i left. it was a great place. david: you go to stanford and are going to get your nba. you decide to drop out and work at a startup in seattle call microsoft -- called microsoft. what did your father say about that? steve: he was apoplectic in a way. he did not try to stop me. i called home, and he said, what the heck is software?
he had been involved installing ang systems. my mom said, why would a person never need to computer? it wasn't crazy in 1980. they said, we hear you. if it doesn't work out, you go back to business school, right? never came back. david: you stay there and ultimate become next to bill gates and paul allen the biggest shareholder. what were the perks as you work your way up? steve: i was bill's assistant. chief cook and bottle washer. . set up the accounting there was some, but we need it professionalized. i hired everybody. when ibm came the first time about the personal computer, i became the salesman on ibm. why? i knew how to wear a tie.
bill said, you have a tie and suit. why don't you come to the meeting? david: when did you realize this is not a small start up its going to be one company in the software world. it's going to be a dominant company? steve: late 80's for sure. i knew the company would be something. saidember when andy grove one day there will be 100 million computers a year sold. bill and i looked at each other and said there will never be 100 million. now there are 300 million plus. david: what did germ mother and father say at this point? steve: they got comfortable when we went public. they knew i would not be broke. he'll offered me a decent starting salary. $40,000, $50,000. they knew that was a good choice. my dad had a little skepticism. there were all these people and
nothing physical. he said, what do all these people do? there is no product. what do they all do? that was a confusing point. he is a smart guy, but he always asked me that. david: you are the biggest individual shareholder of microsoft? steve: that's right. david: how can you did not sell more shares? bill gates and paul allen sold a lot of their shares? was ceo, somehow it didn't feel right to me. i should stay invested. i should stay there. but i am a loyal dude. i still drive fords. i still on microsoft stock. ♪
were you surprised bill decided to retire? was surprised. bill asked me to be president in 1998. i said fine. that was another number two position. i was fine with that. said, will yound be ceo? i said do you want me to be ceo or a figurehead? just tell me. he said i want you to be ceo. -- bill stayed working every day until 2008. i said i did not feel like a total ceo, probably, until bill was not working every day in 2008. there was a lot of shared responsibility. david: talk about the things that happened while you were ceo. you moved into video gaming, xbox. steve: we were saying, what is the path for software, if you will come into the living room? at only path that was clear
the time was the video gaming systems. there was no way to be in the videogame business and not filled the hardware. we had been in the hardware business in a small way. we had our mouse products and a few other products along the way , and frankly, i think we in many ways should have done more hardware sooner. david: you made another investment that was criticized come and investment in a company called facebook. i think you invested $300 million or so. why did you do that? did you regret trying not to buy the whole company? steve: i did regret not buying the whole thing. zuckerberg came to seattle. we met there. i put a concrete offer on the table. perot tried to buy microsoft from bill gates in 1979, and hill said no. founders have a lot of love and passion around their stuff. even though facebook was tiny, i
think it was 2009, and i offered $20 billion come absolutely no interest. david: a couple of other businesses, the smartphone business that apple has perfected, at least in the united states. you were skeptical that would be a great business. do you think microsoft could have gotten into that business earlier? steve: we could have and should have. i believe that. david: one of the other things that happen during this time when you were ceo was cloud computing. and amazon, built this big business under your nose. you surprised they became so big and cloud? successhey had more than i anticipated. i did not sell them short. here is why. for avery hard sometimes big company to do something very different. i call it doing a second trick. at the time i would call amazon a one trick pony come of this
retail stuff, on awesome job, but you don't get a lot of companies who do a second trip. -- trick. we started this thing called azure and office 365. david: right before you left, you tried to buy and it ultimately, the nokia acquisition. that was an effort to get into smartphones. why do you think it didn't work out? steve: i think there were two reasons. number one, maybe it was late. left, the, after i company went ahead and bought it, but i don't think there was the same level of enthusiasm at the board level and management level for scaling up and investing in it. david: ok. so you ultimately decided to leave. your successor was session at successor was -- steve: he was the recommendation
i made. i thought he was the candidate to replace me, which is why we moved him into running one of the big divisions. i'm glad he got the job, because he has done a great job. david: you dramatically increase sales while you were there, and earnings were higher. the stock price did not go up. not a you think there was correlation between stock price, earnings, and revenue. steve: two factors. number one, i took over at the worst time if you want your stock price to go up. i came in at the heart of the dot-com bubble. everything was sky high. the bubble breaks, and by the way, i judge orders the breakup of microsoft. that was within several months of me taking over. you have to build back up. that is number one. by the end, i had a reputation with wall street. that favorable. not about my performance, but keep doingeople,
this thing, but are all these new things going to break through profit wise? , mostly people on wall street that i over invested and was spending too much money. chance to reposition was when he started. he has done a good job of repositioning the company in investors minds. david: the stock has gone up, worth has gone up as well. how can you did not sell more shares? steve: when i was ceo, i did not think it was right. it did not feel right to me. even what i have done to diversify at that time, it was not like i was going to go broke. it wasn't doing poorly. i ran the company.
and people knew i already had enough money. i should stay invested. i should stay there. when i left, i still love the company. i did a little bit of stuff to diversify lightly. i put some money aside for charity, but i am a loyal dude. i still drive fords. my dad worked at ford. i stolen microsoft stock. david: you are well known for visible and vocal expressions of your thoughts. aeve: it turns out i have knack. part of that is getting in front of your troops and pumping them up, telling a story. at the end of the day, i can get in the game and be verbal and vocal. ♪ steve: developers, developers,
♪ david: so you retire at 57. what did you decide you wanted to do when you left? steve: i have not given it a ton of thought until i left. i had this hard-core notion. just give it all for microsoft until i leave. do? am i going to well, owning a sports team was attractive. i went and visited roger goodell and adam silver. i thought that would be a fun thing to do.
my wife, who had been involved in philanthropic stuff, focused in on foster kids and disadvantaged kids in washington. .he said, come on, dude, time you have to get involved. so i did. i said the government takes care of these problems. she said, no, philanthropy has a role, but it intrigued me what the government does to help disadvantaged kids. i had a hard time finding the numbers, which led to me calling and betweensa fax, the clippers and having a good time, exercising and playing golf, my life is pretty full. david: i don't play golf. my theory was if i had a meeting with you and you thought it was competent and solely of the golf course -- steve: you are probably right,
and i still play. david: let's talk about usa fax. what is this now doing? steve: i want a consolidated view of what government does. where does the money come from? where does it go? and by the way, what are the impacts? if we are transferring wealth come what does the quality of life look like? what is the quality of the outcome? how well are our kids doing? david: what are your philanthropic goals in terms of the areas you want to focus on? steve: we are single-purpose. what can we do to improve the chances that kids born at the bottom of the economic totem economically? you will always have people at the bottom of the economic totem pole. it should not be the same people all the time. people should be moving out. people should have a shot at the american dream, which is the chance to do whatever you want to do.
that is not true for a lot of kids. the they are born, probability of staying where they are economically is very high. i don't think that is ok. there are a lot of reasons. people point to education. education is part of it. i think it is important to look at that chain and find, not only the non-for profits, we think it is important to stimulate the right behaviors by government and the right spending by government, because it can make a huge difference. david: if you look back on your career at microsoft and now what you are doing, any regrets? steve: i am pretty happy with the way things worked out. there are decisions i would make differently if i was at microsoft, but if i look at the span of work, we went from a company with two point $5 million in sales and 30 people , $80 billionople in sales and lots of profit. i can feel good about that even
though there were mistakes. i started out with a lot of friends. i still have most of the same friends, which i feel very good about that. i am in a very good place in my life right now, probably in a way the best ever, although i would not trade out anything i did in the past, at least at this stage. i like being a little less busy. that is good for me. david: as a leader, you are well for very visible and vocal expressions of your thoughts. is that a style you consciously adopted, or it just happened that way? steve: i was a very shy kid. i was a shy kid when i got to harvard. i built my confidence because i was doing things and being successful. i wish i when i got to business school. the first day i started a procter & gamble, my roommate , hi.i
i am steve ballmer. are so sweaty because i am nervous. so a shy kid. i develop some confidence in public speaking. it turns out i have a knack, and part of that is getting in front of your troops and pumping them up and telling a story. basketball is a weird environment. i don't have a lot of credibility. i'm an owner, not an expert. gethe end of the day, i can into the game and be verbal and vocal. david: what would you say is the most important characteristic to be a good leader? steve: commitment. you have to have your head in the game and be committed to be a good leader. there are two parts to leadership, one is leading people. and is about commitment people understanding you have commitment. the other part of leadership is you have to be a leader of ideas. the worst thing you can do is say, let's go.
you point that weight come and the truth is you should've gone that way. so leaders have to be leaders of ideas. , butdeas compel the people the ideas have to be right and you have to stay committed. if 25 years from today you are looking back on your life, what would you want people to say was your legacy, what you contributed to our country? steve: you ask a very specific question. what have i contributed to our country. what i hope is we have made some difference in the lives of kids. we democratize computing. putting that kind of power and people to thrive, investigate, be smarter, 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 philanthropic lee i hope makes a big difference. it is hard to make a bigger difference than being involved
♪ david: you think that women can run defense companies better than men, or they can run all companies better than men? [laughter] [applause] marillyn: i would say, david, it is a team sport. it isn't all about me. david: donald trump sent out a tweet saying your biggest product, the f-35, was too expensive. marillyn: i personally engaged. my team engaged and had a chance to have a dialogue with them. david: what is so unique about the f-35? marillyn: it is the most advanced fighter in the world. david: you were recently voted the 22nd most powerful woman in the entire world. marillyn: i get a note from my brother that said, well, why was oprah higher than you?