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Here's Why Bill Gates Was So Much Richer Than Steve Jobs

Bill Gates with his wife, Melinda. Photograph by Kjetil Ree (Wikimedia Commons).

Steve Jobs and Bill Gates were born the same year. 

Both dropped out of college.

Both started companies with good friends: Gates founded Microsoft (NASDAQ: MSFT  ) with Paul Allen in April 1975; Jobs founded Apple (NASDAQ: AAPL  ) with Steve Wozniak exactly one year later.

Photograph by Matt Yohe (Wikimedia Commons).

And both got rich -- extremely rich.

But it's here where things diverge, because at the time of Jobs' untimely death in 2011, his $11 billion net worth was a fraction of Gates' $66 billion. This discrepancy may strike you as odd, given that Apple's market capitalization at the time was $132 billion greater than Microsoft's.

So how do you explain this?

If you're familiar with Jobs' story, then you already know the answer: He sold all but one of his original Apple shares in 1985, the year he was ousted from the company by then-CEO John Sculley and its board.

Jobs' 11% stake in Apple was worth somewhere in the neighborhood of $130 million at the time. And, for the record, this was considerably less than the 26% stake that he emerged with after the first serious round of fundraising in 1977. 

At today's price, by comparison, those stakes would be worth upward of $54 billion and $127 billion, respectively.

Had he not sold shares along the way, in other words, Jobs would have been the world's richest person by leaps and bounds, as Gates' current net worth is estimated at $78 billion.

Now, don't get me wrong. I'm not trying to be critical -- far from it, in fact.

In the first case, Jobs had no reason to feel particularly optimistic about Apple in 1985, given the circumstances of his ouster -- not to mention that Apple may have gone the way of the dodo bird without Jobs' eventual return.

Moreover, there's every reason to believe that, had Jobs not left when he did, we wouldn't have Pixar, which he purchased from Lucasfilm in 1986 for $10 million, revitalized with money and technology, and subsequently sold to Disney (NYSE: DIS  ) in 2005 for $7.4 billion of the House of Mouse's stock -- thereby becoming the entertainment company's largest individual shareholder.

What I am trying to do, however, is to demonstrate the power of buy and hold.

Sure, I would love to be as rich as Steve Jobs was -- or even to have a net worth a fraction of his. But Jobs had contemporaries who, like Gates, wanted more.

In order to get more, as Gates' experience illustrates, there are few better tools than time and compounding returns -- both of which, by the way, are equally accessible to us mere mortals.

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 20, 2014, at 9:19 AM, yragsapo wrote:

    I'd "settle" for having $11 Billion. However, I'd rather have my middle-class lifestyle than be in Steve's current position. May he rest in peace.

  • Report this Comment On February 20, 2014, at 12:19 PM, Mathman6577 wrote:

    Steve Jobs didn't really care about money. His passion was creating great products. And he did.

  • Report this Comment On July 26, 2014, at 2:45 AM, jaw444 wrote:

    Mathman6577 summed it up. Steve Jobs was not a money guy. Money was a means to an end for him, one among other means. His power wasn't rooted in money. Money grew from his power. He was a zen guy, he was a craftsman, he was an intuitive manipulator of people and things, he was one of those amazingly creative people, he was loved and admired on a level similar to John Lennon or Jimi Hendrix. Bill Gates has his strengths as noted. Jobs's strengths were very different. He accomplished what he wanted to accomplish, creating great products, special products, products that have a charisma that makes them unique, almost a genre unto themselves. He also accomplished having a loving family and many lifelong friendships. He lived a full life, sadly short but he created more in the time he had than other powerful resourceful people can even dream of in double the time. He was a very rich man, in many ways in addition to financial wealth. He was a phenomenon.

  • Report this Comment On October 17, 2014, at 7:51 PM, Lisbet565 wrote:

    Jobs was worth billions, while his partner, and the brains behind Apple's technology -- Wozniak, has only 100 million ? How do you explain that ?

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