Dueling Fools

Dueling Fools
More Jobs or Higher Gates?
March 10, 1999

Bill Gates Bull's Pen
by Yi-Hsin Chang (tmfpuck@aol.com)

If I could invest in a person, a single individual anywhere in the world, I would put my money on Bill Gates.

Not only did the Seattle native start one of the most successful companies in the world, Microsoft (Nasdaq: MSFT) -- the largest in terms of market capitalization -- he also worked his way from an upper-middle-class upbringing to becoming a self-made billionaire by the age of 31 and in recent years the richest man in the world. In the last three years alone, Gates' net worth has ballooned from $18.5 billion in 1996 to $36.4 billion in 1997 to $51 billion in 1998 to $76.5 billion now -- that's an annual growth rate of 61%. It's unlikely that anyone will surpass Gates in wealth this year or at any point in the foreseeable future.

More than any other contemporary figure, Bill Gates is the John D. Rockefeller, Andrew Carnegie, and Cornelius Vanderbilt of our time. Just as these American capitalists were at the forefront of the Industrial Revolution, Gates is on the cutting edge of the Technological Revolution. He's the captain of industry for PCs and computer software.

Bill GatesDespite occasional bugs and computer crashes, Microsoft Windows and Microsoft Office have truly improved the lives of hundreds of millions of people around the world by making computing as simple as possible for average PC users. Without such innovation, computers and the Internet would not be so incredibly central to our daily lives today. As People magazine pointed out in 1983, Gates "is to software what Edison was to the light bulb -- part innovator, part entrepreneur, part salesman, and full-time genius."

But just like the "robber barons" of the late nineteenth century, who, as the name implies, were vilified even as they were celebrated at the same time, Gates has as many critics as he does admirers. Like Warren Buffett, he has made millions of investors rich, but he has also made plenty of enemies along the way -- from among his competitors and also people who just hate or envy him by virtue of his success and net worth, and prominence as a cultural icon.

In fact, Gates and Microsoft have been placed under intense scrutiny because they have been so successful. A few years back, Britain's Economist magazine depicted Gates as a giant spider weaving a web to catch its prey. A Fortune magazine article described him as a "pushy dweeb with a bad haircut and an ego to match the size of his bank account." Ouch, do I sense some jealousy and bitterness there? The U.S. Department of Justice has taken Microsoft to trial for allegedly violating antitrust laws. Many observers have compared the case against Microsoft to the government's attack on Standard Oil. If you ask me, it's not so bad to be placed in the same category as one of the biggest and most successful corporations ever in the history of the world.

In an appearance on CNBC last fall, Michael Dell was asked about the antitrust trial against Microsoft and whether he thought Dell Computer (Nasdaq: DELL) would ever be similarly targeted by the Justice Department. His response (paraphrased): I hope so. I hope we become as big and successful as Microsoft as to bring about antitrust charges.

Like Rockefeller and Carnegie, Gates has also become a generous philanthropist. He has long said he will give away his fortune during his lifetime. That's not just talk; he's already started. Gates has given more than $800 million to charities. He has also established the William H. Gates Foundation, which with assets of $5.2 billion ranks among the nation's most well-endowed charitable foundations. The foundation gives grants to organizations involved with world wealth, education, and giving in the Pacific Northwest, where Gates is from and where Microsoft is now based. The Gates Learning Foundation, with assets totaling $1.3 billion, donates computers, support, and services to libraries in low-income areas.

No matter what you may personally think about Gates, it's hard to dispute the success of Microsoft as a company and as a stock. It has the highest profit margin among Fortune 500 companies -- 30.4%. Since going public in March 1986, Microsoft shares have gained 45,718%, or around 61% a year. That annual return stomps such popular and top-performing companies as Wal-Mart (26%), Coca-Cola (26%) and Intel (39%) for the same period of time. Incidentally, Apple's comparable annual return was a mere 9.5%.

If you had bought $1,000 in Microsoft shares back in 1986, your investment would now be worth close to $460,000. A few thousand dollars, and you would now be a millionaire. Even if you despise Gates and consider him the devil, you have to admit that when it comes to making money, Bill Gates is king. And just think, he's only 43.

As the March 15 Fortune cover story points out: "Today, Bill Gates is known variously as the creator of Microsoft, as the richest man in the world, and as a monopolist hell-bent on world infotech domination. Hard as it may be for some people to swallow, future generations may remember Bill Gates instead as the greatest philanthropist the world has ever known."