31: Playing the Long Game: Steve Ballmer Talks New Beginnings

Former CEO Steve Ballmer is the largest individual holder of Microsoft stock, because he hasn't sold much.

Former CEO Steve Ballmer is the largest individual holder of Microsoft stock, because he hasn't sold much.

Steve Ballmer retired from the Microsoft CEO job three and a half years ago. Then he bought the L.A. Clippers, the basketball team, for two billion dollars.

Ballmer has that kind of money because he's the one person in the world who owns the most shares of Microsoft stock. What's that? You thought Bill Gates owned the most? He did. But he's been selling a lot of it over the years.  

Not Steve Ballmer. He's sold a little, but he's held onto most of it. More than 300 million shares, to be precise. So let's do a little arithmetic. That's 300 million, times 71 bucks a share, which is about where Microsoft was trading at the beginning of June 2017. That's $21.3 billion dollars. 

I had the pleasure of covering Microsoft, and Ballmer, for a good stretch during the past two decades. I got some time with him recently in Rancho Palos Verdes California, at the Code Conference. We put a little of it on CNBC, but I decided to share the whole thing for this episode of the Fortt Knox Podcast. Here are just a couple of highlights:

Wall Street Doesn't Know Everything

According to conventional wisdom, Steve Ballmer's tenure as Microsoft CEO was fraught. The stock didn't do well. Google's search empire emerged and Microsoft couldn't catch up. Apple beat Microsoft in mobile. Ballmer tried unsuccessfully to buy Yahoo (a deal investors were glad didn't happen) and successfully bought Nokia (a deal investors wish hadn't happened).

But here's what the historians often leave out: Ballmer took over just before the dot-com crash, a no-win situation. Despite Google's brilliance, it failed to take down Microsoft Office with Google Docs. Chairman Bill Gates was still working full-time at the company as it missed the modern smartphone and produced the Zune. (If you've been following my writing on LinkedIn, you'll note that I've held this opinion of the Ballmer legacy for a long time: See "Ode to Clippers Owner Steve Ballmer, Underrated Billionaire.")

And ... this is controversial, but I'm just going to put it out there – Microsoft wasn't in such terrible shape when Steve Ballmer retired. When companies are in bad shape, new CEOs clear out senior executives and bring in new blood. New CEO Satya Nadella didn't do that. He has reorganized the leadership structure, elevated some people, made some bold acquisitions; the stock has roughly doubled. Here's how Ballmer put it:

"I think we did a good job building profits; over time there's some correlation that's got to exist between profits and stock price, although this market has sort of said we're willing to be very long-term patient with some [company stock prices] that are way out of whack with the current earnings," Ballmer says. "Frankly, I don't think the stock price had any chance to move as long as I was CEO. People were locked into a worldview about how things were, and sort of the change of CEO let people step back and say, OK, let's think about this thing again."

Facts Matter to Democracy

Another project he's spending time on: USAFacts. It's a trove of information about where our federal tax dollars really go – you can find it at USAFacts.org, and play with the numbers yourself.

Ballmer started digging after his wife asked him to get more involved in the family foundation's charitable work. Ballmer is passionate about making sure kids have the opportunity to do better than their parents did financially. I asked him if there's a philosophical grounding to the idea.

"I won't remember the quote – somebody gave me a Jeffersonian quote on this topic – something to the effect that if you want to have a representative democracy, you have to have an educated citizenry. And I think numbers are an important part of the education process," Ballmer says. "When push comes to shove, you're either writing a law, or you're deciding how much money to put into something. Or you're imposing regulation. Those are the real, three tools of government."