Steve Ballmer, Microsoft executive and NBA owner

Steven Anthony Ballmer, born March 24, 1956, served as chief executive officer of Microsoft from 2000 to 2014. Today he is the owner of the Los Angeles Clippers of the National Basketball Association (NBA). Steve Ballmer’s personal wealth is around $145 billion, making him the tenth-richest person in the world. Together with Gates, their personalities defined Microsoft’s public image for about 30 years.

The son of an auto worker, Ballmer was the first in his family to graduate from college. He attended Harvard, where he lived down the hall from fellow sophomore Bill Gates. The two knew each other in college and were friends. He graduated magna cum laude with a Bachelor of Arts in applied mathematics and economics in 1977.

After college, Ballmer worked as an assistant product manager at Procter & Gamble for two years, where he was in charge of Duncan Hines brownie mix, blueberry muffin mix, and Moist ‘n’ Easy Snack Cake mix. Deciding that selling cake mix wasn’t what he wanted to do with his life, he briefly tried writing screenplays in Hollywood. When that didn’t lead where he wanted to be, he started attending the Stanford Graduate School of Business for his MBA. Then his Harvard buddy Gates came back into the picture.

Steve Ballmer at Microsoft

While he was halfway through his first year at Stanford, Gates phoned him, recruiting. Software was an unproven thing, but Gates was convincing, and it sounded better than selling cake mix. So Ballmer joined Microsoft on June 11, 1980. He was Microsoft’s 30th employee. His initial salary was $50,000 plus 10% of the profit he generated and no equity.

Ballmer’s profit-share ballooned out of control as Microsoft grew. When Microsoft reorganized as a corporation instead of a private partnership in 1981, Ballmer took 8% of the company in exchange for cancelling the profit-sharing model. He sold half his stake for about $955 million in 2003.

In his first 20 years at the company, Ballmer headed several Microsoft divisions, including operations, operating systems development, and sales and support. In February 1992, he became Executive Vice President for Sales and Support. Ballmer led Microsoft’s development of the .NET Framework. And in July 1998, Microsoft promoted Ballmer to President, making him the de facto number two after the chairman and CEO, Bill Gates.

Microsoft chief executive officer, 2000–2014

On January 13, 2000, Ballmer was officially named the chief executive officer of Microsoft, succeeding Bill Gates. Gates remained chairman of the board and still retained control of the “technological vision” as chief software architect until 2006.

When Ballmer took over as CEO, the company was fighting an antitrust lawsuit brought on by the U.S. government and 20 states. Gates’ preference was to fight, but Ballmer sought to settle the litigation, seeing the ligitation as all downside.

Ballmer had mixed results as Microsoft CEO. The company’s annual revenue surged from $25 billion to $70 billion. Meanwhile, its net income increased 215% to $23 billion. Its gross profit of 75 cents on every dollar was double that of IBM or the darling post-dotcom juggernaut Google. And in 2012, Businessweek said Microsoft had arguably its best product lineup in its history.

Ballmer’s mixed track record

Ballmer’s total annual profit growth rate of 16.4% exceeded that of well-known CEOs like General Electric’s Jack Welch, at 11.2%, and IBM’s Lou Gerstner, at 2%. It came from growing the existing Windows and Office franchises but also expanding into SaaS with Office 365 (mimicking Adobe’s subscription model) and cloud services, each of which grew larger than the Windows division.

And yet, during his tenure, Microsoft’s share price stagnated.

The knock on Ballmer was that he failed to capitalize on emerging consumer technologies like tablets, smartphones, headsets, and music players and thus missed out on growth opportunities. Microsoft in many cases had projects in these spaces before Apple or Google did, but Ballmer required detailed business justification to approve new products, rather than allowing hundreds of products that sounded potentially interesting or trendy. The result was when Apple or Google released something, Microsoft had to play catch-up. In May 2012, hedge fund manager David Einhorn called on Ballmer to step down. The same month, Adam Hartung called Ballmer “the worst CEO of a large publicly traded American company”, saying he had “steered Microsoft out of some of the fastest growing and most lucrative tech markets (mobile music, headsets and tablets).”

Infamous Ballmer missteps

Ballmer infamously said the iPhone would never sell because of its high price of $600-$700. He later justified his opinion by saying he didn’t anticipate carriers rolling the price into customers’ monthly bill.

As part of his plans to expand on hardware, on June 19, 2012, Ballmer revealed Microsoft’s first ever computer device, a tablet called Microsoft Surface at an event held in Hollywood, Los Angeles. He followed this by announcing the company’s purchase of Nokia’s mobile phone division in September 2013, his last major acquisition for Microsoft as CEO. While the Surface did evolve into a successful product line, Microsoft’s foray into phones did not. Ballmer never learned to play the infinite game like Steve Jobs did.

On August 23, 2013, Microsoft announced that Ballmer would retire within the next 12 months. Here’s my surprised blog post I wrote the day after. On February 4, 2014, Satya Nadella succeeded Ballmer as CEO.

Steve Ballmer and the Los Angeles Clippers

In 2014, Ballmer paid $2 billion to acquire the Los Angeles Clippers of the National Basketball Association after their previous owner, Donald Sterling, was caught making a racist tirade on tape and public outcry and a player revolt forced Sterling to sell the team. Some questioned the purchase price, as the Clippers had not been a good team, and Ballmer paid four times as much as the last NBA team to change ownership.

Although the Clippers have yet to win a title under Ballmer’s ownership, the team had 10 consecutive winning seasons and he spent an additional $2 billion to build the team a new stadium. At $120 billion, Ballmer is the wealthiest sports owner in the United States.

Ballmer wasn’t the first Microsoft executive to buy a sports franchise. Microsoft cofounder Paul Allen owned the NFL’s Seattle Seahawks, the NBA’s Portland Trail Blazers, and he had a part ownership in the Seattle Sounders FC of Major League Soccer.

How Steve Ballmer overcame his shyness

Ballmer was shy as a child and it extended into his early career. He learned to get over his nerves by playing loud music in his car and giving himself loud pep talks. It eventually transformed him into a bombastic and energetic Microsoft executive. His entrance on stage at Microsoft’s 25th anniversary event in September 2000 became a viral video. Another video of a sweaty Ballmer chanting the word “developers” repeatedly at a Windows 2000 developers’ conference went viral.

Another viral video showed Ballmer in a tacky, poorly fitting suit pitching Windows 1.0 in 1986 in the style of a kitschy low-budget late-night TV commercial. It was an internal video for Microsoft employees that was never aired as an actual television commercial.

Relationship with Bill Gates

Upon hearing IBM was interested in licensing software from Microsoft, Gates reportedly confided in Ballmer, who told him to buy a suit. Ballmer was Gates’ best man at his wedding to Melinda French, and the two men were so close for years that another Microsoft executive described it as a mind meld. Although they were friendly, they argued loudly and frequently.

The transition from Gates to Ballmer as CEO strained the relationship. And Ballmer’s resignation in 2013 resulted in more animosity between the two. Ballmer said in 2016 the two had drifted apart, partly because the two disagreed on Microsoft’s push into the hardware business. Gates wanted to stay out of hardware, especially smartphones, while Ballmer supported it.

Dave Farquhar

David Farquhar is a computer security professional, entrepreneur, and author. He has written professionally about computers since 1991, so he was writing about retro computers when they were still new. He has been working in IT professionally since 1994 and has specialized in vulnerability management since 2013. He holds Security+ and CISSP certifications. Today he blogs five times a week, mostly about retro computers and retro gaming covering the time period from 1975 to 2000.