(6 of 17)



As with Allen, the relationship was sometimes stormy. "Our first major row came when I insisted it was time to hire 17 more people," Ballmer recalls. "He claimed I was trying to bankrupt him." Gates has a rule that Microsoft, rather than incurring debt, must always have enough money in the bank to run for a year even with no revenues. (It currently has $8 billion in cash and no long-term debt.) "I was living with him at the time, and I got so pissed off I moved out." The elder Gates smoothed things over, and soon the new employees were hired.

"Bill brings to the company the idea that conflict can be a good thing," says Ballmer. "The difference from P&G is striking. Politeness was at a premium there. Bill knows it's important to avoid that gentle civility that keeps you from getting to the heart of an issue quickly. He likes it when anyone, even a junior employee, challenges him, and you know he respects you when he starts shouting back." Around Microsoft, it's known as the "math camp" mentality: a lot of cocky geeks willing to wave their fingers and yell with the cute conviction that all problems have a right answer. Among Gates' favorite phrases is "That's the stupidest thing I've ever heard," and victims wear it as a badge of honor, bragging about it the way they do about getting a late-night E-mail from him.

The contentious atmosphere can promote flexibility. The Microsoft Network began as a proprietary online system like CompuServe or America Online. When the open standards of the Internet changed the game, Microsoft was initially caught flat-footed. Arguments ensued. Soon it became clear it was time to try a new strategy and raise the stakes. Gates turned his company around in just one year to disprove the maxim that a leader of one revolution will be left behind by the next.

During the bachelor years in the early '80s, the math-camp mentality was accompanied by a frat-boy recreational style. Gates, Ballmer and friends would eat out at Denny's, go to movies and gather for intellectual games like advanced forms of trivia and Boggle. As friends started getting married, there were bachelor parties involving local strippers and skinny-dipping in Gates' pool. But eventually, after Gates wed, he took up more mature pursuits such as golf. "Bill got into golf in the same addictive way he gets into anything else," says Ballmer. "It gets his competitive juice flowing."

It's a rainy night, and Gates is bombing around in his dark blue Lexus. He loves fast cars. When Microsoft was based in Albuquerque, New Mexico, in its early years, he bought a Porsche 911 and used to race it in the desert; Paul Allen had to bail him out of jail after one midnight escapade. He got three speeding tickets--two from the same cop who was trailing him--just on the drive from Albuquerque the weekend he moved Microsoft to Seattle. Later he bought a Porsche 930 Turbo he called the "rocket," then a Mercedes, a Jaguar XJ6, a $60,000 Carrera Cabriolet 964, a $380,000 Porsche 959 that ended up impounded in a customs shed because it couldn't meet import emission standards, and a Ferrari 348 that became known as the "dune buggy" after he spun it into the sand.