Bill Gates, Version 2.0: Full-Time Philanthropist

By Sara Kehaulani Goo
Washington Post Staff Writer
Friday, June 16, 2006

Three decades after starting the most influential American technology company, Microsoft Corp. Chairman Bill Gates said yesterday that he plans to step down from day-to-day work at the software giant to focus his energy full time on the $29 billion foundation he started with his wife 12 years ago.

Although the transition will not take place until July 2008, the move signals a new era for the software company that has been closely associated with Gates's geeky persona and provides an opportunity, according to many in the public health community, for Gates to become one of the most important philanthropists in U.S. history.

Gates said he intends to remain chairman of Microsoft "for the rest of my life" but plans to relinquish all daily duties at the company and instead focus his legendary competitive drive on improving global health and access to technology. He and Microsoft chief executive Steven A. Ballmer yesterday laid out a two-year transition plan to begin grooming the next crop of executives to run the Redmond, Wash., firm.

Gates's sometimes relentless management style has bulled the company through many roadblocks, overcoming the government's attempt to break it up as a monopoly and overwhelming competitors such as Apple Computer Inc., International Business Machines Corp. and AOL. While Gates's founding vision of a personal computer on every desk has essentially come true, the basis on which he built the company -- software -- is being overtaken by the spread of high-speed Internet. New rivals such as Google Inc. promise a future where tools such as spreadsheets and e-mail reside online instead of in software on someone's hard drive. Gates's departure comes at a time when Microsoft is scrambling to adjust to that sudden shift.

"With success, I have been given great wealth. And with great wealth comes great responsibility to give back to society, to see that those resources are put to work in the best possible way to help those in need," Gates told a group of reporters yesterday afternoon from the company's headquarters. "Obviously, this decision was a hard one for me to make. I'm very lucky to have two passions."

Six years ago, Gates stepped down as chief executive to serve as "chief software architect," but he continued to be a towering daily presence at the company even as it saw the rise of Google and a new breed of competitors. Now 50, he made clear yesterday that he intends to step away from corporate life to focus on a foundation that already surpasses many governments across the globe in terms of spending and impact in the areas of vaccines, immunization and AIDS research.

The Bill & Melinda Gates Foundation's $29 billion endowment is 10 times the size of the Rockefeller Foundation and three times the size of the Ford Foundation. The foundation has contributed $159 million, or half of worldwide funding, for research and treatment that could result in nine or 10 new drugs that would help the world's poorest people fight diseases such as malaria and tuberculosis. Public health experts said the effort has invigorated areas of research that had fallen by the wayside and introduced innovative approaches by partnering with other nonprofit groups, governments and drug companies.

"This is good news for the world's poor," said Anne Lynam Goddard, chief of staff of CARE, an Atlanta-based nonprofit group focusing on ending global poverty and social injustice that received $10 million from the Gates foundation this year for health initiatives. "The Gates foundation has been a trendsetter. They've raised the bar in public health and reinvigorated interest in it."

Goddard and other public health experts said it is not just the sheer amount of money Gates brings to the table but also the businesslike focus on results and effectiveness that has made an impact. It's the "entrepreneurial, results-focused culture [that] has been a great thing for global health," said Orin Levine, executive director of a Johns Hopkins University program to spread access to pneumococcal vaccines, which received funding from the foundation.

"It wasn't that long ago people thought we couldn't make a malaria vaccine. But Bill said, 'No, let's do it,' " Levine recalled. "We had amazing results where we did a small but important trial in Mozambique, and this was the first evidence in the field that malaria vaccine could protect kids against malaria disease. It's indicative of what they've brought to the table. They're not afraid to tackle really big, difficult problems."

The Gates foundation has partnered with major drug companies to help subsidize research programs and bring a focus to some of the poorest countries. In Botswana, Bill and Melinda Gates spoke with former prostitutes to learn more about the spread of AIDS in that country. "In some countries, the issue of AIDS is very much an issue of commercial sex workers. Where others might have shied away from working in that sector, they haven't," Goddard said. "They come with no political agenda."

Gates made clear yesterday that he does not plan to take the helm of his foundation, where his wife, Melinda, already devotes much of her time. He said his role there will be similar to his current role at Microsoft, but he added, "I don't know what it will be like to not come to Microsoft every day." (Melinda Gates serves on the board of The Washington Post Co.)

Gates and Ballmer tried to assure investors and employees yesterday that the company would not change much once Gates departs, but that was hard to fathom given that his image and persona have long been intertwined with those of the company.

Microsoft went public in 1986, and the following year, Gates became the poster child for the self-made man and at 31 the youngest self-made billionaire.

Gates typically dresses in the casual geek-chic style of khakis and V-neck sweaters -- he wore one during his announcement yesterday -- and carries an equally self-effacing public demeanor. But behind closed doors, he has a reputation for being abrupt and dismissive of ideas he considers sub-par.

"There is that ruthless streak in him," said Laura DiDio, an analyst with the Yankee Group who also followed Gates as a reporter. During meetings, he was known to dismiss comments as "stupid," she said, and as his persona and Microsoft's corporate stature grew over the years, so did people's reluctance to challenge his authority. "You don't challenge the emperor on his home turf," DiDio said. "I don't think anybody's going to dominate Microsoft the way Bill has," and the company will benefit from new ideas and new blood of the younger generation of engineers, she said.

Staff writer Yuki Noguchi contributed to this report.

© 2006 The Washington Post Company