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  At Opposite Ends of a Century, Rockefeller and Gates Converge

By Linton Weeks
Washington Post Staff Writer
Thursday, June 18, 1998; Page C01

There is, in the National Portrait Gallery, a pale plaster bust of a sag-shouldered man with snaky eyes, sunken cheeks and straitened lips. If the sculpture weren't labeled, you might never guess that this wizened little guy was John D. Rockefeller Sr. – the ruthless 19th-century American kerosene king who made millions and built an oil-refining monopoly by conspiring with railroads, quashing the competition, bribing government officials and skirting the law.

To Ron Chernow, author of the just-published "Titan: The Life of John D. Rockefeller, Sr.," the statue doesn't capture the fullness of Rockefeller. It was fashioned after Rockefeller retired, Chernow explains, when the robber baron's health was failing, his hair had fallen out and he was wearing a wig.

In Chernow's mind, Rockefeller will always remain a handsome young entrepreneurial juggernaut. Fiercely determined, maniacally driven, perpetually scheming, yes, but also congenial, generous and deeply complicated.

Like Bill Gates.

The comparison between Rockefeller – the country's richest man at the turn of the 20th century – and Gates – the richest at the turn of the 21st – is inevitable, says Chernow, but not one the author anticipated during his five years of research and writing. When the earliest reviewers of "Titan" began connecting the dots, Chernow was more than willing to play along. In fact, he relishes the similarities between Rockefeller and Gates, while also noting some differences.

Sitting in the shade of the gallery's courtyard, Chernow, 49, is easygoing and somewhat self-deprecating. Silver hair, silver-rim specs, blue blazer, khakis, black bluchers and a blue-and-white striped shirt – buttoned down but not up. He fesses up that he made it through Yale without taking a single history course. At Cambridge University in England, he earned a master's degree in English.

He turned to writing business history only because he failed as a novelist. He won the 1990 National Book Award for his study of J.P. Morgan, "The House of Morgan." He followed with "The Warburgs" and "The Death of the Banker."

Chernow has never met Gates. Of course, he never met Rockefeller either.

The parallels, he says, are compelling.

The searing similarity at the moment is that Rockefeller's Standard Oil was deemed a monopoly and busted up by the government. In May, the Justice Department lodged antitrust complaints against Microsoft, declaring that the Redmond, Wash.-based company is using its Windows operating system, which runs in 90 percent of all personal computers, to dominate user access to the Internet. In the Industrial Age, Standard Oil controlled about 90 percent of the world's oil supplies.

"You can't bypass Gates," Chernow points out, "the way you couldn't bypass Standard Oil."

As happened with Rockefeller, Chernow says, there is growing public sentiment toward Gates that "this man has too much power."

Rockefeller believed, and Gates believes, that gargantuan profits are deserved when one takes gargantuan risks. The late 19th-century railroad companies were skittish about investing in technologically advanced tank cars, for instance. Rockefeller owned 5,000 of them and leased them to the railroads. Gates is investing $2.6 billion in research.

Able to amass piles and piles of money, Rockefeller gave money away. So does Gates.

Greg Shaw, a Microsoft spokesman, begs to differ with Chernow. The comparisons between Rockefeller and Gates are "not quite fair," he says. "It's true that these are two American companies facing antitrust issues. The biggest difference is that intellectual property is not a scarce natural resource, whereas petroleum is. The barriers to entry in the software industry are quite low."

All it takes, Shaw says, is a good innovation, a personal computer, the ability to write code and a desire to market the product. "Netscape," he adds, "is the latest poster child of that idea."

One thing is sure: Each magnate helped define, and redefine, the era he lived in. "Gates has the same missionary zeal that Rockefeller did," says Chernow, "a messianic faith in himself."

Refining Business
Loosed on the world in 1839, John Davison Rockefeller Sr. was the son of William Avery "Big Bill" Rockefeller, a slick-as-elixir mountebank, and Eliza, a devout Baptist churchwoman. While John was growing up in Cleveland, his traveling-salesman father was seldom at home. Big Bill often pretended to be deaf and dumb when hawking his snake oils and herbal remedies. He pretended in other ways, too. In fact, the old man was living two lives; he had another name and another family in another town.

From his mother, young John inherited a soul-deep religious streak and a steely resolve. From his father, a conniving nature and a mania for money. When he was in school, Rockefeller bragged to a classmate that he would someday be worth $100,000.

After taking a three-month course at a commercial college, Rockefeller embarked on a legendary weeks-long job hunt and was delighted to be hired as a low-level accountant in a produce commission house. He was a hustler. In post-Civil War America, the oil fields of western Pennsylvania were booming. Rockefeller persuaded his employer to buy into a refining enterprise. By the time he was 27, Rockefeller owned the whole shebang.

He had a passion for dealing. And along the way he realized, Chernow says, that the discovery of oil was not as important as the refining of it. "He believed in the long-term benefits of the business," Chernow writes, and "never treated it as a mirage that would soon fade."

Rockefeller, Chernow writes, "had picked the right entry point to the business. Searching for oil was wildly unpredictable, whereas refining seemed safe and methodical by comparison. Before too long he realized that refining was the critical point where he could exert maximum leverage over the industry."

By flexing his muscle, Rockefeller controlled kerosene production and delivery, undercut his competitors and either bought their businesses or drove them out of existence. He sacrificed profits to gain a greater share of the market.

In 1899, Standard Oil of New Jersey was the largest, slickest, bloodthirstiest purveyor of oil products in the world. Rockefeller had outdone his father – an oil salesman of another stripe – many times over.

He demanded hard work and a rah-rah attitude from his employees and, in return for their loyalty, let them share in the astounding profits. He operated in grand secrecy, forging clandestine alliances with other firms. He believed that God put him on Earth to make money. And to give it away.

Throughout his life, Rockefeller was a dedicated philanthropist. He gloried in giving and through his Rockefeller Foundation parceled out hundreds of millions of dollars for medical research and education.

But the regulators were always at the door. For three decades, various branches of government hounded the mogul, charging Rockefeller – who had amassed an empire of dozens of subsidiaries – with unsavory business practices and a competition-muzzling monopoly. Finally, the Supreme Court ruled in 1911 that the company had to be sliced and diced into 34 smaller, independent companies.

John D. Rockefeller died on May 23, 1937.

The Gate to Success
From the get-go, Bill Gates was a bright kid.

He was born William Henry Gates III on Oct. 28, 1955; his father, William Henry Gates Jr., is a retired Seattle lawyer and his mother, Mary, is a former schoolteacher. When Gates was 11, he recited the entire Sermon on the Mount. The next year, a parents group at his private school used rummage-sale money to buy a Teletype machine and some computer time and young Bill became enraptured. He designed a class-scheduling program that told him where the pretty girls were and he fashioned a computerized version of Risk, a game about taking over the world. He boasted to a teacher at his school that someday he would be a millionaire.

Like Rockefeller, Gates was gaga over numbers. And he studied the computer business from monitor to microchip. He believed in the long-term benefits of the machine. After two years at Harvard, he dropped out to form his own company, Microsoft.

While the personal computer business was still in its infancy, Gates – and his partner Paul Allen – realized that the future was not in building the machines but in developing the operating systems that would run within the machines. By developing the software, Gates has been able to exert maximum leverage over the industry.

After writing the predominant program for the Altair, the first commercially produced microcomputer, he followed with programs for Apple, Commodore and Radio Shack machines.

In 1980, IBM asked Microsoft to come up with an operating system for its personal computers, and Gates was off to the races. By 1983 Microsoft had installed its software in 40 percent of all personal computers, and each year since the percentage has increased.

Microsoft employees, dubbed Microserfs, are expected to work long and hard. They are rewarded with good wages and stock options.

Today, Gates is worth almost $50 billion. But, as with Rockefeller, there's a cloud behind the silver lining. In 1991, the Federal Trade Commission launched an investigation into possible monopolistic practices by Microsoft and IBM. Last month the Justice Department and a score of states filed suits.

Chernow says that Gates is in the hot seat for several reasons. Some people claim that Microsoft engages in a modern variation of predatory pricing, Chernow says. "Microsoft is the dominant producer of operating systems," the historian says, so "to bundle the browser with the operating system and essentially give it away for free could be construed as extending Microsoft's power from one product to another." The antitrust case is complicated, Chernow explains, because Microsoft considers its Internet browser to be a feature of its operating system. The Justice Department, on the other hand, treats it as a separate product.

In addition, as people rapidly become more familiar with computers and the Internet, "businessmen in every industry," Chernow says, "are petrified that Gates will invade their industry."

As the Internet promises to become a feasible sales platform, Chernow says, people who once sat on the sidelines now are in the middle of the ballgame.

And, "as more people become more sophisticated about computers," Chernow says, "there is more and more grumbling about the shortcomings of Microsoft."

The Men, Side by Side
Varied and many are the similarities between Rockefeller and Gates. But there are differences, says author Chernow, such as personality. "Rockefeller was tightly controlled and disciplined," he says. "His self-control was almost superhuman. He would never, for instance, have spoken sharply to his enemies or his critics. In fact, in moments of extreme tension, Rockefeller would get cooler and cooler."

Gates, on the other hand, is a bundle of hyper-energy and "is too quick to lash out at his critics," Chernow says.

Rockefeller never went through honeymoon periods with the public, the press or the government. "For Gates," Chernow says, "the honeymoon is over with the press and the government. It's not completely over with the public."

Though Gates has a philanthropic bent, says Chernow, he's no Rockefeller. And, in the end, Chernow says, this parsimony could prove to be the bug in Gates's system. "The problem with Gates as a philanthropist is that a lot of his philanthropy looks like an extension of his business."

From the time Rockefeller was a teenager, Chernow says, he tithed regularly to the Baptist church.

As for Gates's attitude, Chernow cites a recent Fortune magazine article in which the Microsoft mogul says he would be willing to sign a consent decree that allowed him to continue doing business as usual, but ordered him to give away 95 percent of his money.

He has made some contributions. He takes pleasure in endeavors such as the Gates Library Foundation, which provides computers to libraries. "But if you're going to be serious about giving a lot of money away," Gates told Fortune, "you really have to put a lot of time into it. And right now this job is what I believe in."

In other words, Chernow translates, Gates is not devoting a significant amount of time to charity. "It's not too early to get into a little bit of philanthropy," Chernow says. He says mega-rich folks like Gates and Warren Buffett should be thinking about their place in posterity. "If there's a downturn in the market," he says, "the legitimacy of these great titans will be called into question."

According to Microsoft's Shaw, Gates has said for many years that he plans to give away 95 percent of his wealth. "Bill doesn't believe in leaving behind vast wealth to his family," Shaw says. "In the past five or six years, he and his wife, Melinda, have given away approximately $800 million."

A fourth of that went to the Gates Library Foundation, Shaw says, the rest to education causes, public health initiatives and various Puget Sound, Wash., nonprofit civic organizations and arts groups.

"Bill and Melinda Gates feel quite passionately that access to technology is important to children and others in terms of education and worker training," Shaw says. "They feel like it's an important contribution to society."

Part of Chernow's mission is to point out that Rockefeller was ruthless and amoral, but he was also generous his whole life through. And to resurrect the image of the young, energetic and creative Rockefeller.

"The Rockefeller we know is an old man handing out dimes to people in the newsreels," Chernow says. But at the end of the last century, he and other tycoons like Henry Flagler and Andrew Carnegie "were guys like Gates and Paul Allen, young guys in their twenties and thirties.

"Rockefeller said it, 'We were just a bunch of boys having a good time.' "

© Copyright 1998 The Washington Post Company

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