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

Bill Gates with his wife, Melinda. Photo: Kjetil Ree via Wikimedia Commons.

Steve Jobs and Bill Gates were born in 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, while 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 smaller than the 26% stake he emerged with after the first serious round of fundraising in 1977. 

At today's price, those stakes would be worth more than $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 $79 billion.

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 optimistic about Apple in 1985, given the circumstances of his ouster -- not to mention the fact 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 then 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 is demonstrate the power of buy and hold investing.

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

Of equal importance are brilliant ideas that are identified in their infancy. 

Countless investors have become millionaires virtually overnight by riding the wave of technology driven by the likes of Gates and Jobs. In the process, these investors' lives have been radically transformed. Making money is no longer their objective; their challenge now is spending it on a lifestyle once thought unimaginable.

The key to these investors' success isn't the ability to recognize promising trends; all of us can do that. The key instead is the courage and conviction to put money on the line when you inevitably encounter a transformative idea.

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  • 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 ?

  • Report this Comment On April 01, 2015, at 3:01 PM, jaw444 wrote:

    i agree with other commenters. Gates richer than Jobs? Only in dollars, and dollars, as one commenter said, are only a means to an end. For all Gates's achievements, Jobs achieved so much more. He was far more creative, i don't think anyone considers that idea controversial.

    If Jobs had been into learning the "better tools" for increasing dollars, it probably would've been at the cost of various qualities that enabled him to be so creative and ground breaking, over and over again, and no one doubts that this would've gone on as long as he had lived, as one would say of jimi Hendrix or John Lennon.

    I don't think anyone would say that Bill Gates's death would put an end to an era in Microsoft accomplishment. It doesn't take a Bill Gates to carry it on.

    Jobs continued to be creative when he was very sick and weakened, it was the nature of his spirit and where his priorities came from.

    Apple will do its best to continue in the spirit of Jobs, he truly did try to shape staffing in the ways he felt were best for his vision. But anyone who considers the process of Apple's development and progress alongside Jobs's leadership role in the unfolding and evolving of it could not help but conclude that these processes were inextricably interrelated.

    One thing that exemplified Jobs's passionately devoted emotion-driven focus on what he intuited would bring pleasure and happiness to people, which was his mission, was the way he put huge amounts of his own money, his personal money, into projects that he believed in which had no other source of the funds it would take to do what he wanted to do, one of which was Pixar. Because his highly intelligent reasoning was at the service of his extremely intense emotion (which is what inspiration is), he believed in his instincts and intuitions and he was willing to take risks, with money, with relationships, with his health, in a sense where he didn't really believe he was risking anything, because of how strongly he believed in the reality of his vision, and more often than not, he was right.

    The world is blessed with a few people like that. Jobs, and not Gates, are on the level of unending creativity flowing from relatively unquestioning belief in self and intuitive grasp of the world around them that characterizes Jobs's idol, Bob Dylan.

    Wozniak was only the brains behind much of Apple's key technology. There is a lot more to Apple than its awesome technology. Wozniak was a key team player, but he was also someone who liked to go his own quiet and independent way, he was his own person, his contributions made Apple a success because of Jobs's leadership. Wozniak was not a leader and had no desire to be. There can be no Apple, or anything like it, without some kind of visionary leadership that never was Woz's contribution. It's not like Woz was an equal partner, or that he wanted to be. I'm sure $100 million is plenty for Woz, just as $11 billion was plenty for Jobs, and hopefully, $66 billion is plenty for Gates. As everyone knows, if someone wants to, they can take $100 million dollars and turn it into much more, if that's your trip. Different strokes for different folks. It's good to see people doing what makes them happy and being rewarded in many ways, financial and others, along the way.

  • Report this Comment On April 01, 2015, at 3:24 PM, ryanalexanderson wrote:

    > Only in dollars, and dollars, as one commenter said, are only a means to an end. For all Gates's achievements, Jobs achieved so much more.

    If you're talking about non-monetary achievements, then you're going to have to include the epic amount of charity work that Bill Gates' Foundation has done and will do, likely in perpetuity.

    I'd say that 100 years from now, Apple will have gone the way of Motorola but the Gates Foundation will remain.

  • Report this Comment On April 05, 2015, at 9:28 PM, quaker59 wrote:

    Respectful of all of the other writers and their opinions, l have to say l totally agree with the last commentator who said "The gates foundation will remain" even after 100 years.

    Steve Jobs, l've seen the aston kutcher movie, but l don't recall that Jobs was a philanthropic man, or his wife? Can someone comment on that please.

  • Report this Comment On August 17, 2015, at 3:20 PM, The1MAGE wrote:

    To the last 2 posters, (If none show up before this one does,) no the Gates foundation will not be here in 20 years, unless the Gates' are here in 80. The foundation is supposed to expend all funds within 20 years of their death.

  • Report this Comment On August 17, 2015, at 3:21 PM, The1MAGE wrote:

    Oops, I meant 100 years, not 20

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John is The Motley Fool's senior banking specialist. If you're interested in banking and/or finance, you should follow him on Twitter.

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