BUSINEES

THE GOSPEL ACCORDING TO BILL

STEVE MAICH July 21 2008
BUSINEES

THE GOSPEL ACCORDING TO BILL

STEVE MAICH July 21 2008

THE GOSPEL ACCORDING TO BILL

In business, Bill Gates ruthlessly crushed his opponents. Now, he's taking the same approach to saving lives,

STEVE MAICH

BUSINEES

When the historians go looking for the moment when the world changed for Bill Gates, they might want to consider a visit the founder and then-CEO of Microsoft took to South Africa in 1997. Like many corporations, Microsoft’s modest offerings to charity at the time were mostly gifts of their own products. In this case, the company had provided a computer and software to a new community centre in Soweto, and Gates was there to take part in the grand opening.

It was all smiling children and glad-handing dignitaries, but the centre had no electricity. They had run an extension cord to a generator more than 200 yards away to ensure the computer would be up and running when their VIP guest arrived. Of course, Gates knew it would be unplugged as soon as he left and the generator would be put to some more pressing need. “They’d go back to worrying about the very basic challenges they face in their lives—problems that a computer was not going to fix,” Gates said in a speech a couple of years ago. That frustrating day seems to have provided a spark that ignited

the biggest and most important philanthropic effort in modern history.

Last week, Gates walked away from the software juggernaut he created to dedicate himself full-time to the Bill and Melinda Gates Foundation, which he began with his wife eight years ago with the goal of bringing billions of dollars in aid to some of the most intractable problems in global health and education. From now on, he plans to spend about 15 hours per week offering guidance and insight to Microsoft, and the rest of his time figuring out how to spend more than a billion dollars a year in the service of humanity. It’s harder than it sounds.

For all his amazing successes in the world of business, Bill Gates is still rarely considered a giant, transformative figure. To his many critics, Gates is a guy who tripped across one important idea in the 1970s and then spent three decades exploiting it and ruthlessly defending his monopoly at all costs. The fact is, Gates planted the seed of the world’s first, and still-biggest software megacorporation 30 years ago when he famously envisioned a world in which there would be a computer on every desk, in every office and

every home. When he convinced IBM to let his little company create an operating system for their personal computers, and to let him license that system to other manufacturers, he triggered what would become the personal computer revolution. Suddenly, computers were standardized. Suddenly, whether you bought your machine from IBM or HP or Casio, they all worked the same. They could even communicate with each other.

Even now, despite rising competition, quality problems, copyright challenges and rampant piracy, Microsoft still reeled in $51 billion in sales last year. That alone should qualify Gates among the all-time greats of corporate success. But people still sneer at Bill. The Google guys are smarter, they say. He’s nothing but a bully. And besides, he’s a geek. With his glasses, his skinny frame, and his affinity for rumpled khakis and button-down dress shirts, it’s easy to underestimate him. See him alongside Bill Clinton or Bono, or any of the philanthropic glitterati who have become his closest allies, and he always looks like somebody’s awkward little brother. But take a closer look at the mission he’s embarked upon and you may look at him differently.

Over the next 50 years or sô, the Bill and Melinda Gates Foundation will give away close to $60 billion on projects as complex as vaccine discovery and as simple as the distribution of mosquito nets. If Gates can be half as successful in this as he was in reshaping the world of computers, then he will bring the world of aid and philanthropy into the era of globalization and mega-wealth.

The question is: can a cut-throat businessman, admittedly short on personal charm, who spent the first two-thirds of his life dedicated to smiting business rivals and thumbing his nose at dim-witted regulators transform himself into a selfless beacon of generosity? Well, it’s happened before.

At the turn of the last century, John D. Rockefeller was the most feared businessman in the world. He had built Standard Oil into an unassailable monopoly and all but created the modern fuel industry. According to legend, he would invite recalcitrant rivals into his Cleveland office and show them his books so they could see what they were up against. Once they were suitably intimidated, he would calmly explain that they could sell their refineries to him or be driven out of business, at which point he’d buy their assets at auction.

In 1904, muckraking journalist Ida Tarbell published her exposé of Standard Oil, painting Rockefeller as a cruel and ruthless bully.

And in 1911, the government ruled that Standard Oil had illegally abused its monopoly position and split it into 34 separate companies, including the firms that would become Chevron, Mobil, Exxon and Conocco.

Rockefeller would have seen a kindred spirit in Gates. For one thing, both men practically invented an industry from scratch, says Ron Chernow, a business historian and author of Titan: The Life of John D. Rockefeller Sr. They both also held a deep belief that the success of their companies had substantially enriched and helped the people of the world— Rockefeller by providing affordable fuel to expand the economy, Gates by ushering in the communications revolution.

But by the late 1990s Microsoft’s astonishing growth was rapidly cooling. The Internet was proving to be a more difficult business to dominate than software. The complaints about its often-buggy software and its vicious suppression of rivals were getting louder. Gates was more famous for his personal wealth, and for his legendary mansion on the shore of Lake Washington, than for his role as a tech visionary. Finally, just like Standard Oil, governments began to hound Microsoft for being a predatory monopoly.

Like Rockefeller, Gates felt unfairly maligned. To some, it was only a matter of time before Gates began to ask “what’s it all for?” “Through luck and smarts he stumbled into the greatest fortune in modern times,” says Howard Means, author of Money & Power; the History of Business. “But that’s not a legacy. The legacy is what he does with it.”

“Rockefeller had been through an antitrust battle and a lot of controversy and he wanted to do something that was inarguably good,” Chernow says. “That’s why he focused on health and education, and I don’t think it’s a coincidence that Gates is focusing on health and education. You know, nobody is going to fault you for coming up

MICROSOFT

USHERED IN THE AGE OF THE PC. BUT GATES IS STILL SEEN AS A LUCKY GEEK.

with a malaria vaccine.” Specifically, Rockefeller found direction by emulating his contemporary Andrew Carnegie.

Carnegie had built his phenomenal fortune in the steel business. By 1889, with his empire at its apex, he began turning his attention to the moral implications of his prodigious wealth. He published an essay, now known as “The Gospel of Wealth,” which produced the memorable quote: “There is no class so pitiably wretched as that which possesses money and nothing else.”

He argued that the greatest danger of extreme success is that large fortunes will be frittered away on extravagances and passed down to children who are ill-equipped to handle the responsibility. To prove the point, he alluded to the “great families” of Europe, which had been mismanaged by a succession of greedy, dim-witted heirs: “In monarchial countries, the estates and the greatest portion of the wealth are left to the first son, that the vanity of the parent may be gratified by the thought that his name and tide are to descend to succeeding generations unimpaired. The condition of this class in Europe today teaches the futility of such hopes or ambitions.” Carnegie challenged his fellow industrialists to dedicate their later years to serving the public good. That way, he said, the benefactor could enjoy the fruits of his generosity and wield some personal control over the use

of his assets. Carnegie gave away almost his entire fortune—the modern-day equivalent of roughly $4 billion—to found thousands of free libraries around the world, to establish the Carnegie Institute of Technology, and to endow the Carnegie Hero Fund to reward acts of selfless heroism.

By doing so, he built a legacy that stood far apart from the tactics that created his fortune, and Rockefeller sought to do the same. “Rockefeller was certainly aware and very much influenced by Carnegie’s precedent,” Chernow says. “Rockefeller felt because of the sheer size of his fortune, he had to pioneer what he called ‘wholesale philanthropy.’ He wanted something that could provide universal impact, rather than just social welfare.”

The extent of Rockefeller’s largesse is still astounding, even today, 71 years after his death. Just 20 years after the end of the Civil War, he funded a college for black women in Atlanta that would become Spelman College; he provided $80 million to start the University of Chicago and continued to pay much of its operating budget for years thereafter; in 1902 he created the General Education Board, which was active in the building and support of black schools in the South; and in 1901 he founded the Rockefeller Institute for Medical Research in New York City—a revolutionary approach at a time when medicine was still largely a pseudo-science.

Rockefeller’s efforts went beyond funding for research. At the turn of the century, hookworm infection was an epidemic throughout the southern U.S. The parasite was contracted by walking barefoot in muddy fields, causing anemia and chronic fatigue. Many historians

believe more than half of southern children were infected, and that it was largely responsible for the stereotype of the “lazy southerner” so common in the lore and literature of the day. Rockefeller’s charities launched a massive treatment and prevention program, including giving shoes to thousands of poor farm families, and virtually eradicated the plague within a generation.

If Rockefeller was looking to polish away the tarnish of a rough-and-tumble business career, it worked. “He was just about the most hated person on earth in 1903 when Ida Tarbell’s book came out,” explains John Steele Gordon, author of six books ofU.S. business history. “But people don’t really remember the Rockefeller of Standard Oil. They remember Rockefeller University, the University of Chicago, The Rockefeller Fund, and all the good works he did.”

Hundreds of charitable foundations have been set up over the past century, many taking their inspiration from Rockefeller and Carnegie, but none has approached their level of public impact. But Bill Gates may be about to eclipse them both.

Let’s be honest: if Gates was looking for good press, the obvious and easy thing would’ve been to carve off a few billion, make some big donations, and get his name on the side of a few hospitals. Those who know Bill and Melinda Gates say it’s simply not in their character. Instead they seem to have poured themselves into the monumental task of changing the seemingly unchangeable. But then, no one, not even Rockefeller or Carnegie, has ever had this kind of cash, technology and expertise at their disposal. By the time he died in 1937, Rockefeller had given away $540 million—the modern equivalent of more than $6 billion. A conservative forecast suggests the Gates

foundation will easily give away 10 times that much—at least $30 billion of Gates’s own money and another $30 billion pledged by Warren Buffett.

And so, the Gates foundation has a chance to redefine philanthropy for the modern age of globalized trade and spectacular individual wealth, Means says. He is rewriting Carnegie’s “Gospel of Wealth” to deal with a world in which people can and do wield personal bank accounts bigger than Guatemala’s economy; a world in which 10 times more money is spent trying to find a cure for baldness than a cure for malaria. “I think he’s performing an enormously useful function in a time of highly concentrated wealth,” Means says. “He is modelling how to deal with being richer than any human being can imagine.”

But ambition and best intentions are one thing. Actually making “The Gospel of Bill” yield results worthy of his endowment will be far more difficult than it sounds.

A few years ago, Bill and Melinda were trying to educate their kids (Jennifer, now 12, Rory, 9, and Phoebe, 6) about some of the causes they were working for, when one of the kids began pressing them on why they weren’t out in poor countries more, ministering to the sick and dying. They showed the older kids a documentary about polio in Africa, and one of the children pointed to a boy on the screen, asking whether they had helped him, and whether they knew his name. Melinda explained that they were trying to help kids like him, but they didn’t know him personally. As Melinda tried to explain that there were different ways to help beyond working in a hospital, Bill had a typically blunt explanation: “I’m in wholesale, not retail.”

That surely didn’t mean much to the kids, but his echo of Rockefeller’s “wholesale philanthropy” concept gives a telling insight into the principles that Gates is aiming to bring

to the world of global health outreach.

By all accounts, Melinda was the driving force behind the creation of the foundation, driven in part by a message she received from Bill’s mother, Mary, at her 1993 bridal shower. Mary Gates had been a lifelong volunteer and campaigner with the United Way, and she told Melinda that marrying into the Gates fortune would bring with it hefty responsibilities. With an M.B.A. from Duke University and a natural ease with people, Melinda was a natural at philanthropic work from the start. Early on, she and Bill settled on the two key questions that would guide their giving: which problems affect the most people? And which of those problems have been largely ignored in the past? That’s why they don’t give to big, well-known charities like the Cancer Society or the Heart Association. From the beginning, their focus has been on things like acute diarrheal infections, tuberculosis, AIDS, and of course, malaria—things that kill poor people by the millions. “We want the world to allocate resources knowing that the death of a child in a poor country is every bit as tragic as the death of a child in a rich country,” Bill explained in a speech last year.

The specifics of their grants reflect Bill and Melinda’s differing priorities. Bill is fascinated with technological and systemic advances that might strike at the heart of a disease. He pushes for “deep science” projects like research into a malaria vaccine and the use of technology to reform elementary education in the U.S. Melinda meanwhile focuses on so-called “intervention techniques” that provide immediate relief—bed nets to protect people from the mosquitoes that spread malaria; condoms and microbicides that prevent the spread of AIDS. The foundation receives roughly 6,000 requests each year, and the founders personally evaluate applications seeking more than $40 million. “This is really

HE REFUSES TO DISCUSS LEGACY. ‘I DON’T THINK ABOUT HOW I’LL BE REMEMBERED.’

the antithesis of chequebook philanthropy,” Chernow says. “They’re not just giving money, they’re involved.”

So involved, in fact, that the foundation has developed a reputation as a demanding benefactor, insisting on firm targets and conducting extensive audits to ensure objectives are not only met, but rigorously tracked and measured. To Gates this is about bringing professionalism and accountability to charity work, but it has created controversy.

One of the foundation’s earliest beneficiaries was the Global Alliance for Vaccines and Immunization (known as GAVI). Gates gave $750 million over five years to vaccinate children against things like polio, measles and tuberculosis. But when the program was getting off the ground, several countries were shocked to find their applications were rejected because they failed to provide enough detail or plans for oversight. Others were surprised when GAVI auditors later showed up to review paperwork verifying exactly when and where vaccinations had taken place. Those who were sloppy with the rec-

ords faced the prospect of being suspended from the program.

There were plenty who said GAVI was too stringent, but Gates made no apologies and eventually recipient nations complied. The tension, however, highlighted an aspect of Gates’s personal style that inevitably colours his charitable work—to put it bluntly, Gates can be a real jerk. He can be sarcastic, shorttempered and excitable, and he has difficulty hiding his contempt for those of lesser intelligence—which is a problem when you’re almost always the smartest guy in the room. Melinda’s natural social grace has helped smooth her husband’s roughest edges. Still, Bill can’t always hold back.

At the World Economic Forum in Davos, Switzerland last year, Gates took part in a panel discussion with William Easterly, a New York University economics professor and prominent critic of inefficient foreign aid. Easterly was complaining about the lack of economic development in Africa despite trillions of dollars in aid spending over the past 50 years, and Gates snapped. “I don’t promise that when a kid lives, it will cause a GNP increase. I think life has value.” Uncomfortable silence ensued.

Gates tends to leave bruised egos in his wake, but he makes his points. He believes governments, charities and corporations need to work together to create projects in the developing world where profit margins might be small but the opportunity is nonetheless vast. Microsoft, for example, has spent millions developing a text-free computer interface that would allow illiterate people to operate a computer. That has the potential to open profitable new markets, but it also directly targets a poor population that normally doesn’t get on the radar of big companies because they don’t have enough money. He has dubbed this his call for “creative capitalism” and it has attracted its share of sneering from both the left and the right, but there’s no doubt Gates has put money where his mouth is.

Perhaps the greatest endorsement came in 2006 when Gates’s long-time friend and fellow billionaire Warren Buffett announced he would give $30 billion to the Gates foundation, effectively doubling its endowment.

“If your goal is to return the money to society by attacking truly major problems that don’t have a commensurate funding base,” he said at the time, “what could you find that’s better than turning to a couple of people who are young, who are ungodly bright, whose ideas have been proven, who already have shown an ability to scale it up and do it right?”

Young, ungodly bright, well-funded and ferociously determined. Well, they’ll have to be. Malaria alone kills a child every 30 seconds in Africa. Tuberculosis claims another two million lives annually and that number is growing. AIDS claims 6,000 a day. Rotavirus kills half a million infants annually. Hundreds of charities and government agencies and NGOs have been fighting at the edges of these wildfires for generations. Billions have been spent, but the plagues are still raging. In short, putting a computer on every desk in North America was child’s play compared to the challenge Gates has set for his final act.

But that, Chernow says, is as it should be. Rockefeller believed that the very wealthy must have philanthropic ambition worthy of the size of their bankroll. Gates built an unprecedented fortune, and now has taken on an overwhelming set of challenges: incurable disease, systemic poverty, the state of basic education in America, even the course of modern capitalism.

It’s an undeniably noble endeavour, but Gates doesn’t want to talk about any of that. Asked once about how he’d like to be remembered, he cut off the interviewer. “I don’t think about how I’ll be remembered.”

Perhaps that’s just as well. Gates does not put his name on hospitals. They’re never going to build statues of him on the Washington Mall. They’ll probably never make movies about him, or name any holidays after him. A hundred years from now, if he’s celebrated at all, it’ll likely be a few modest plaques in tiny places in Africa and Asia where his efforts might yet save thousands of lives. But he won’t be forgotten either. “Making $50 billion before you’re 50 is a good way to become a legend,” Gordon says. “He’ll be remembered for having made a phenomenal fortune, then having done an enormous amount of good with it. There are worse legacies to leave behind.” M