We’re thinking, “Oh my God, the revolution could happen without us.” And so that’s when Paul pleads that I should drop out [of Harvard] and we should get out there and become the software suppliers to this kit first personal computer. . .That’s where Microsoft gets started. We’re watching the chip revolution and it finally delivers a microprocessor that is beyond a mini-computer. [4:51]

When you do get there three months earlier and get more people and get the better customers, the mythology is like, “Oh my God, nobody ever thought of that. Nobody ever did anything like that.” Well, it’s b******t. Actually, probably, some guy did it years before you did, but he just didn’t get all these pieces right. [6:10]

Paul was totally critical to there being a Microsoft at all. Paul read about hardware. I didn’t like hardware. He drew me into that. He got me to read about that...Even when I go to Harvard, he takes a job back in Boston, he’d tell me all the time, “We’ve got to get going.” [10:30]

Paul wanted us to actually build a personal computer. I said, “No, no. We’re just going to do software.” [11:05]

[The insight that allowed Microsoft to scale]: If our BASIC was on every machine – a library of BASIC programs – various applications, games to business applications, would be written in our BASIC, which had unique and proprietary aspects to it. Then anybody doing a new computer would want Microsoft BASIC. [14:45]

When IBM first comes to us, they viewed this as an experiment. So we jumped on that opportunity. We saw it as a chance to get from 8-bit computers to 16-bit computers. We put so much energy into this thing. Then they introduced the PC. It becomes kind of the model [19:25]

And they were really good at quality, particularly IBM Japan was so picky about quality. At first, we were like, “Who are these guys? They’re crazy.” But then we realized, “Actually, they’re not that crazy. They’re just disciplined and oh God, we’re going to have to learn how to do that.” So having IBM Japan as a customer was incredibly helpful for us. [21:07]

If you can pick these toughest customers and meet their needs, then you can sit back and wait. You’re going to be fine. [21:53]

[Why Bill needed a partner like Steve Ballmer] Because I’m innovation–engineering-oriented, I needed a partner who thought about comm structure, organizational structure, and could go out and have lunch with 50 people. Just because of time allocation and lack of skill or whatever – I’m going to be a little more daft about that stuff. [23:48]

It was the virtuous cycle: The cheaper the PC was, the more volume there was for PCs, the more software for our platform there was, the more people would want to buy those PCs. [25:30]

We decided you had to do first-party applications [and not just operating systems]. So that business model really gets its full proof in the late ’90s as Windows 95 ships and we do Office software around it. [29:00]

He [a competitor] said, “Bill is wrong. But he works so hard, he probably will succeed even though he’s wrong in this case.” And I viewed that as quite a compliment, that my hardcore-ness could bend even the outcome of what was the right approach. [30:00]

[The biggest mistakes of Microsoft] The fact that Google got so far ahead in search, we didn’t do the right things to catch up. The fact that we didn’t get the phone or tablet stuff right. Economically, the phone one is the most egregious thing in the whole history of the company. The tablet one actually bothers me the most for a lot of reasons in terms of mistakes I shouldn’t have made. [37:23]

Full podcast here: Bill Gates on Masters of Scale

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Bill Gates on Masters of Scale: How To Accelerate History