How Bill Gates & His Business Partner, Paul Allen, Became Successful

Introduction

“Your most unhappy customers are your greatest source of learning,” says William “Bill” Henry Gates III, a very successful entrepreneur and businessman. Bill Gates and his business partner, Paul Allen, teamed up and built the world’s largest software business, which is known as Microsoft.

Early Life and Educational Background

In 1986, Bill took Microsoft public, offering shares at $21.00 per share. At the young age of 31, Bill was a millionaire. As a child, Bill enjoyed reading; his favorite book was the encyclopedia, and he would spend hours just reading through them. Bill was what some people would consider a loner in school. His parents noticed that he was getting bored and having some behavior issues. They decided to enroll him in a private school where he eventually excelled. The school offered computer time to students, something that the parents of the school came together to fundraise for, enabling the purchase of a computer. Bill became interested in the computer and how it functioned. He even wrote a software program that allowed students to play tic-tac-toe against the computer.

The Birth of a Partnership

Bill had a good friend through high school named Paul Allen. They connected because both had a love for computers. They spent a lot of time together working on new computer programs. There were times when they would get into such bad arguments that Paul would kick Bill out of the computer lab. Bill was combative, whereas Paul was quiet and shy. They would always argue about who was going to run the computer lab. During this time, they created bugs within the software to allow them more computer time. Unfortunately, they got caught and were suspended from using the computers. When the suspension was up, Bill and Paul offered to fix the program bugs in exchange for more computer time. The school approached Bill and asked if he would write a program for the school’s student scheduling. Of course, Bill had some fun with the program, placing himself in three classes with all the pretty girls. When the school’s software company filed for bankruptcy, they approached Bill and asked him to write a payroll program. Bill agreed, provided he was given computer time and royalties for the software program. The school agreed to his request.

Ventures and Education

Later, Bill and Paul created a small business that made traffic counters to monitor traffic patterns in Seattle. This venture proved successful, earning $30,000 within a few months. However, it was short-lived since both Bill and Paul’s parents wanted them to pursue further education. Bill graduated from high school with a 1590 on his SAT (1600 being the perfect score) and was accepted into Harvard University, where his father had also graduated. He initially declared Pre-Law as his major, following in his father's footsteps, but his true passion was computers and computer programs. Bill spent most of his time in the computer lab, taking Math and Graduate Level Computer Science classes. He was not a student who required much sleep and would often study at the last minute yet still pass his exams. After two years at Harvard, Bill decided to drop out and pursue his dream of becoming a successful business owner. His parents were supportive, understanding that he could always return to finish his degree if his plans did not succeed.

The Birth of Microsoft

Paul also dropped out of college and moved to Boston, MA, where he began working with Honeywell. He came across an article about a new MITS Altair minicomputer kit and immediately showed it to Bill. They decided to contact MITS, claiming they were working on a software program for the Altair computer. In truth, they did not have a program ready, but they wanted to see if MITS was interested in hiring someone to develop their software. The President of MITS, Ed Roberts, contacted Bill and wanted to see a demonstration of the software. After months of work, Paul flew to New Mexico and demonstrated the program on the Altair computer. Despite not having been tested prior, the program worked, and MITS purchased the software language for $3,000 plus royalties for each copy sold. Paul became the Vice President and Director of Software for MITS. Bill and the President of MITS did not have a good working relationship, and when the President decided to sell the business and pursue a different career direction, Bill and Paul had to sue the new owner to retain their software rights. Subsequently, Bill and Paul formed a partnership and registered their trademark, “Microsoft,” with Bill owning 60% and Paul 40% of the partnership. They became increasingly frustrated with the widespread piracy of Microsoft software during the early years, prompting Bill to create a Read Only Memory.

Growth and Legacy

Since Bill and Paul retained their rights and now had a trademark, they could write software in different formats for other computer companies such as IBM. This was just the beginning of a very successful and profitable business for Bill Gates and Paul Allen. They became billionaires because they found interest in computers at a time when people were still trying to understand their potential and uses. In fact, I am typing this paper on a Microsoft program. Just as Bill Gates said, “As we look ahead into the next century, leaders will be those who empower others” (Gates, 1999).

References

• Gates, B. (1999). Business @ the Speed of Thought: Succeeding in the Digital Economy. Warner Books.