The dream boss? What it was like to work for Bill Gates

This is part three of a series of stories by Robert Gaskins who helped invent PowerPoint at Forethought Inc. in 1984 (see part one and part two). It was the first significant acquisition made by Microsoft. We spoke to Robert about the process of building a startup in the 1980s and what life was like negotiating with, and working for Microsoft. After the sale Robert reported directly to Bill Gates, heading up Microsoft’s business unit in Silicon Valley. He managed the growth of PowerPoint to $100 million in annual sales before his retirement in 1993.

This post looks at what it was like working with Bill Gates, including being grilled by him in an pre-acquisition interview, working closely with him, and the insights Gates bought to running Microsoft in the early days of its’ existence. 

Here’s Gaskins in his own words…

The Interview

One of the explicit conditions of the Microsoft offer to acquire Forethought was that I had to pass a full-blown interview by Bill Gates (I was the only person singled out in this way). So when the acquisition discussions were under way, I went up to Redmond alone, and met with Bill in his office, one-on-one, for a couple of hours. We had had a number of business meetings before, so we knew each other slightly.

Bill Gates 2Even so, it certainly concentrates the mind to be personally interviewed by Bill, with the whole $14 million acquisition and the best chance of liquidity for our investors and financial reward for our employees all riding on his evaluation.

Bill had a normal conversation with me, probing me about technical details of our software and the Mac platform, about marketing positioning and plans, about business numbers and ratios, and about individual employees. It went very well, since I had all those areas at my fingertips. I had just written my history of the company’s restart in the prior two weeks, I prepared all the business plans, I lived and breathed the technical details, and I had had six weeks to recover from the first customer ship.

I didn’t expect anything different, but just for the record, Bill did not ask me:

  • Why manhole covers are round
  • How many gas stations there are in the U.S.
  • Whether I could code FizzBuzz in a language of my choice on the whiteboard.

We just had a perfectly normal and pleasant conversation, all of it at the enhanced level of intellectual intensity characteristic of Bill. I came away feeling that things had gone very well.

By Monday, two days later, word came in a telephone call that Bill had approved me and was in agreement with the deal, but was leaving the details of that deal to others.

Working with Bill Gates

After the acquisition, I worked a lot with Bill. For the first year after the acquisition, I reported directly to Bill, in his role of Acting VP of Applications. Then Bill hired the great Mike Maples to replace Bill VP of Apps, but I still saw Bill and talked with him often.

gates1.png
Microsoft Applications Division Management Circa 1989. (Mike Maples, VP Apps, and his direct reports). Seated, from left: Jeff Raikes, Bob Gaskins, Pete Higgins, Mike Maples, Susan Boeschen, Tandy Trower. Standing, from left: Charles Stevens, Peter Morse

Bill very often came down to Silicon Valley to review PowerPoint progress, because he considered it an important product, and because (since we were the only development group outside of the Redmond campus) he heard less about us in hallway conversations.

We would go over every detail of the code and of the business plan with Bill, and he would give us feedback on everything. This was extremely valuable; there was virtually never a time when Bill had an opinion that we thought was wrong. And Bill had in mind every detail of all the other Microsoft applications, of all of our competitors’ applications, of the various operating systems (Mac, Windows, OS/2), of all the personal computer hardware shipping or forthcoming, and of how actual customers were using all of these, so he could offer informed opinions and specific facts that were invaluable in our planning.

Bill especially was a perfect master of judging when a piece of software was adequate to ship.

He would personally review our specs, try our builds, and try our competitors, and tell us very frankly whether he thought the product concept was adequate and whether the implementation was sound enough to ship. He didn’t try to make the decision for me, but there was no one whose opinion we took more seriously.

Gates’ skills

In short, Bill Gates was just the perfect hands-on technical guru to be my boss. Things got even better when he hired Mike Maples, because Mike also knew how to manage thousands of people in a deep multi-level organization and get things done. The combination of Bill and Mike, during the first years after the acquisition, was an ideal context for success.

bil-gates-4Part of Bill’s secret was that he had a healthy respect for decentralized knowledge. He had a strong opinion on everything, but he didn’t ignore other opinions. At the Apps Division’s executive staff retreat in early April 1989, there was a discussion of the outcome of having reorganized the division into business units the preceding September. There were still some authoritarians who thought it was too messy to have all these independent units doing different things in their own ways.

Bill had the right comeback, immediately:

“We don’t lack the power to enforce our decisions; we lack the information about what we should require.”

The Microsoft system of the time allowed our group to make repeated course corrections and get to the right final result for our product, while other products at the same time made different calls.

Gates’ belief in PowerPoint

The first breakthrough version of Windows was version 3.0, shipped in May of 1990; PowerPoint’s new version 2.0 shipped the same day, and Bill Gates used PowerPoint to demonstrate what the new Windows could do. Both Windows and PowerPoint started flying off the shelves.

Two years later, in April 1992, the next version of Windows (version 3.1) introduced proper typography and TrueType fonts. PowerPoint had contributed a great deal to that, and again a new version 3.0 of PowerPoint was shipped on the same day as the new Windows, again Bill Gates used PowerPoint to demonstrate the huge improvements in Windows and again sales blew away all expectations.

Bill Gates 3.png

With these two versions of Windows and of PowerPoint, Windows PCs began to outsell Macintoshes by large multiples: from ten times as many (1992) to twenty-five times as many (1997) to fifty times as many Windows machines as Macintosh machines sold (2003). The success of Windows was crucial to PowerPoint, but the success of PowerPoint was also crucial to Windows.

Bill Gates was my direct boss for the first year after the acquisition, so we saw a lot of each other. It was a great experience.


If you enjoyed reading this post you’ll love our online file converter and API.
We even convert PowerPoint files!

 

This is the last in a series of stories from our interview with Robert Gaskins. Why not check out the other posts in the series:

Image credits:
Bill Gates with floppy disk – adapted from https://flic.kr/p/7BFWkj
Bill Gates with hand on chin – https://flic.kr/p/7BFWkj
All other images are sourced from Robert Gaskin’s excellent website covering the history of PowerPoint. His book “Sweating Bullets” remains the definitive read on that topic.

Advertisements

Deal of the century? How Microsoft beat Apple to buy PowerPoint for $14 million

This is part one of a series of stories from Robert Gaskins who helped invent PowerPoint at Forethought Inc. in 1984. It was the first significant acquisition made by Microsoft. We interviewed Robert about the process of building a startup in the 1980s and what life was like negotiating with, and working for Microsoft. After the sale Robert reported directly to Bill Gates, heading up Microsoft’s business unit in Silicon Valley. He managed the growth of PowerPoint to $100 million in annual sales before his retirement in 1993.

This post looks at the negotiation process between Forethought Inc and Microsoft – why it came about, how Apple missed out, and the eventual closing of the deal which netted Forethought $14 million in cash.

microsoft-reception-menlo-park

Robert picks up the story …

The First Offer

“We did our launch event for PowerPoint on 22 February 1987, two months before our planned ship date. Five days later, we got a completely unexpected Microsoft offer for PowerPoint.

Bill Gates told us that Microsoft would definitely be in the presentation market one way or another, and wanted PowerPoint as the best product.

He wanted to do an acquisition of our product for cash, immediately. Developers would stay in Sunnyvale and work remotely, at least initially; all other functions would be handled in Redmond.

Three weeks later, 13 March 1987, we had dinner in Silicon Valley with Jon Shirley (the President of Microsoft) and Jeff Raikes (head of Applications marketing). They repeated a similar offer, with more details. They told us they were working on a business plan to develop a presentation product internally, and already had people assigned to it; but they wanted to accelerate their work by acquiring a product.

They offered $5.3 million to the investors, plus incentives to the developers. They were interested only in PowerPoint; they said that they expected that our [Forethought Inc] other big product, FileMaker Plus for Mac, would not be popular on Windows.

screendump-about-box-ppt1-on-mac-sys4

This offer seemed a positive vote of confidence in PowerPoint, but the rest of the terms weren’t so attractive; the amount of money offered would not have provided much return for our investors. Also, we had received two other serious offers of acquisition in the preceding week.

Shipping PowerPoint & Offer #2

PowerPoint Iamge 7We decided to sit tight and ship PowerPoint before taking any other step. Other possibilities were swirling around. A potential underwriter for our doing an IPO, Baer & Co., had scheduled a meeting with us. The final details of the PowerPoint software continued to come together on schedule, thanks to calmly heroic efforts by Dennis Austin (head of software design and development for PowerPoint) and Tom Rudkin (headed up the work on a future Windows version of what was being designed and implemented first for Macintosh), who were doing the development.

After that we continued to get a trickle of offers from Microsoft, usually each one better than the last, but with a changing profile of complications from one offer to the next. There was clearly some improvisation going on.

On Tuesday 28 April 1987, just about a week after shipping, we spent a whole day entertaining a Microsoft delegation at Forethought. There was a discussion about the acquisition structure. The Microsoft group had thought about it a lot more than we had and suggested three models:

  1. A “development center” – just developers working remotely and visiting Redmond often to liaise.
  2. A “product center” – with program management doing product specification, plus development, documentation, and testing
  3. A “business center” – an independent business unit.

Their preference was (2), a product center, with marketing and everything else consolidated in Redmond. In any of the three choices, the developers would remain in Silicon Valley.

On 13 May 1987, after time for legal review, Microsoft faxed us a formal letter of intent.

The amount of this offer was 100,000 shares of MSFT stock, worth about $12 million at the time.

Microsoft stock was 6x since the IPO a year earlier. That was more than twice the amount offered on the 13th of March, two months earlier (pre-shipping), so we’d made progress in raising the price.

Some of the details in the letter of intent were surprising. Unlike the discussion we had just held at Forethought, the entire business now was to be completely relocated to Redmond, including development, with nothing left in California. Key personnel, to be named (but certainly including all the senior developers and me), would be required to agree to relocate to Redmond as a condition of the deal.

Also, there was a command performance: “An essential part of the technical and due diligence investigation will be Bill Gates’ meeting with Bob Gaskins of Forethought during the week of May 18 or as soon thereafter as possible … .”

I was the only person named in the letter of intent as requiring such vetting.

Multiple Offers – Apple, Borland & Xerox

We held our Annual Meeting of the Forethought Board of Directors on 10 June 1987. We discussed all the acquisition offers. First was Microsoft. I had previously prepared a written recommendation to the Board that we should pursue the acquisition by Microsoft. At the same meeting we considered acquisition offers from Apple (no offer finalized), Ansa (to merge for an IPO in the fall, to be done by Alex. Brown at a $75 million value), a “firm” offer from Borland to acquire Forethought for $18 million in cash, with action absolutely guaranteed within the week (never happened), and an immensely complex offer from Xerox (after hours of negotiations) for exclusive sales rights to PowerPoint, for which they would pay something above $18 million. The meeting ended with a summary of the agreed directions to management: “Our real agenda is to get a clean, high offer from Microsoft.”

PowerPoint Image 3
Microsoft’s first presence in Silicon Valley, in 1987. 250 Sobrante Way, Sunnyvale, the circa-1950 tilt-up which had housed the Forethought startup.

And on Microsoft, the specific direction was: contact Microsoft immediately and see if it were possible to get a deal which was higher in value and with fewer complications. If so, accept it. If not, then get in touch with Dave Marquardt (the venture capital investor who served on Microsoft’s board) and connect him to our VC investors to continue negotiations.

The call to Microsoft resulted in a further offer which was different, but not one which was cleaner. Now the offer was to make us a “product/marketing center,” which would include development and limited marketing in Silicon Valley, for a total of 15–20 people. All else, including again all sales, would be in Redmond. The price was upped to a maximum of $15 million, but computed as a $9 million base plus a “royalty” of $75 per unit of Mac product shipped for eight months, and further bonuses for releasing Windows and OS/2 versions by agreed dates. The new offer, however, was for cash rather than MSFT stock, overcoming one hesitation of our investors.

The prospect of remaining in Silicon Valley was good, but the new idea of “royalties” seemed unnecessarily complex.

We moved on to the plan of trying to make progress through negotiations between the VCs for the two companies – Phil Lamoreaux met Dave Marquardt. His pitch was that the VCs who had invested in Forethought were interested to conclude the Microsoft offer and were able to make it happen, but (1) the offer was a little light and (2) the structure could be improved. The aim was closure, fairly quickly.

Marquardt  volunteered that it was a “make vs. buy” decision for Microsoft, and they had concluded that they had to buy. They had looked at three companies, and we were the only ones left on their list, so they were also motivated to close. Marquardt would ask Jon Shirley the following day, 22 June 1987, to get involved and try to get closure within a week.

Closing the Deal with Microsoft

PowerPoint Image 2And three days later, Thursday, 25 June 1987, about 11:30 a.m., we got the word: Microsoft had agreed to a very clean deal, at a price of $14 million in cash. Jon Shirley said that he considered the acquisition a firm deal, subject to due diligence in the areas of accounting, legal, and technical. Contrary to previous offers, we were to be a permanent installation in California, and we would be a “Business Unit,” the first such group in the Apps Division, comparable to a few similar, self-contained organizations that already existed in the Systems Division.

As part of the Applications Division, we would report to Bill Gates as Acting VP of Applications. The transaction would be for a flat $14 million in cash, plus possibly some incentives to be defined for our employees joining Microsoft. Everyone at Forethought who would not be part of the PowerPoint Business Unit would be offered a suitable job with Microsoft in Redmond or in local field offices, or outplaced with severance, and Microsoft wanted to “go the extra mile” to be sure everyone was treated well.

We had the internal announcement at Forethought on Thursday, 9 July 1987, at 3:00 p.m. Jon Shirley and Jeff Raikes came down to be there in person. It impressed me that Jon was willing to go to so much trouble to make a brief appearance before all our people.

Joining the Microsoft family

I had dealt with Jon Shirley fairly often in the past, going back to 1983, and had always been particularly impressed by his intelligence and plain speaking. His talk on this occasion was simple and convincing, nothing canned or pompous, and very thoughtfully aimed at precisely the concerns of the Forethought people who were hearing about this, as a fact rather than a rumour, for the first time.

Jon began by saying that this was the “first major acquisition by Microsoft.” What they were looking for were great products, great people, and complementary visions, and Forethought met all three criteria.

microsoft-employees-menlo-park
Microsoft employees at the Graphics Business Unit at 2460 Sand Hill Road in 1992 – Robert Gaskins is 3rd from the right in the 2nd row.

He went on to say that PowerPoint was “not only great, but [was] a pioneering product— a major new category, a leadership product.” (I did think how much easier the preceding three years would have been if I had had that quote available to use at the beginning of the project.)

Jon said a lot of things that reassured even me. Microsoft wanted to build up a real team, here, to do graphics products. The location in Silicon Valley was important to them; not all the best people in the world could be hired in Redmond. It would be important for Microsoft to have other development centers in other locations, and this was the first. A year from now, there would be more people in the GBU than were in all of Forethought at the acquisition; within a year, we would need to move to a larger building in our area. (This specific detail confirmed to me that the “permanent unit” plan was true.)

PowerPoint Image 5
Microsoft Applications Division. Senior Mgmt, c.1989. Seated from left: Jeff Raikes, Robert Gaskins, Pete Higgins, Mike Maples, Susan Boeschen, Tandy Trower. Standing from left: Charles Stevens, Peter Morse.

The major assets of Microsoft were people, and the aim was to place all of Forethought’s people within Microsoft; they had “never laid off a person at Microsoft.”

Jeff Raikes stressed that we would be first-class citizens of Microsoft, even though residing in a distant part of the empire, with all the same advantages as people in Redmond: private enclosed offices for everyone, worldwide email access (a rare perquisite in 1987), all the lavish company benefits, and we would all attend the next company meeting in Seattle in October (this was true, and most impressive).

Right product, right place, right time

So, we had been fortunate to launch our PowerPoint product just at the same moment that Microsoft had become convinced that they needed essentially the same product, and when they were looking for an acquisition to substitute for their initial internal development plans. Bill’s initial thoughts on price (prior to our ship) had been about $5 million in MSFT stock, but after a very successful ship (we sold out our entire initial manufacturing run on the first day) and glowing reviews, we managed to get a valuation of three times that much (and in cash) which made the deal attractive to our long-term VC investors.

forethought-powerpoint-v1-box

The best feature of the outcome was the comparative autonomy of the group in the first five years following the acquisition by Microsoft. Because we had been a fully functioning stand-alone company for a long time, and had more than one shipping product, it had seemed plausible (and to us seemed an achievable negotiating position) to make us the first “Business Unit” within Microsoft’s Applications Division, and to allow us to continue independently. If we had been mostly just a handful of developers, it might have been a non-negotiable and obvious move to just insert us into some existing organization in Redmond.

It was our gaining five more years of real independence, with all the clout and resources of Microsoft at our backs, that enabled us to equip PowerPoint for long-term success even beyond its original uses.

I had recommended no conditions on a deal, but I had privately hoped we could end up staying in Silicon Valley rather than moving to Redmond. To be part of Microsoft would be bliss, but to be part of Microsoft and yet be able to stay in San Francisco would be very heaven.

PowerPoint Image 6If we could avoid forced relocation, things would be perfect. Somehow, it worked out. I used to joke, afterward, that the whole dramatic struggle of Forethought and the whole acquisition had been merely an elaborate scheme that I used in order to get a job with Microsoft without having to move to Seattle.”


If you enjoyed reading this post you’ll love our online file converter and API.
We even convert PowerPoint files!

 

This is the first in a series of stories from our interview with Robert Gaskins. Other posts will cover:

Image credits: All images are sourced from Robert Gaskin’s excellent website covering the history of PowerPoint. His book “Sweating Bullets” remains the definitive read on that topic.