Part 6 (1/2)
The Dematerialized Future
OR CENTURIES, THE CENTER OF GLOBAL ECONOMIC power has moved steadily ard froh Spain and the J Netherlands the one grown rich on gold and silver, the other through trading in spices and stocks to the inventors and capitalists who fueled the Industrial Revolution in England By the un to leap the ocean to the United States, where railroads waited to be built and vast natural resources turned into individual fortunes such as the world had never known As the Aeoned, so did the Aood was more fitted to the A exploited the multiplicity of choice and helped create brands such as CocaCola that ruled their market, and as the world shrunk, the world became the market The intersection of mass communication with the rise of leisure time and a leisure class turned the old for those who controlled the studios and theca exploded yet again
With the coation system, every ho center, a trading center, and a communication hub, to boot While profitable brick-and-mortar companies shrank in market value, often profitless dotcos ratios that could make the Dutch tulipmania of the seventeenth century seem almost sane, and yet the market roared on and on, a bull on a record run The old rules seemed to have been broken Wealth had de Intellectual contentInfor fortune that eed to an 80-billion Seattle nerd named William Henry Gates III
Like Henry Ford with his Model T, Bill Gates envisioned the mass appeal of the personal coenius was never in hardware; instead, he provided the brains the software and operating systean, Gates also saw hi order out of disarray MS-DOS and Windoeren't just operating systems and software products; they were meant to be industry standards because a standardized industry would benefit everyone-Bill Gates most particularly Gates understood brand, too: The various iterations of his Windows software, all named by year, were introduced at press conferences that wrapped high-tech in the glitz of a Miss Universe pageant Be there or be square, the press conferences seee as well: Don't get in my way Gates, in fact, had the ruthlessness of a John D Rockefeller when it ca his coovernht to dismantle Gates's Microsoft Corporation
One uls who caan the business that was toidea borne on an iron will Henry Ford e the 5 a day wage Bill Gates e to other software coh stock options He wasn't the first to try the strategy, but no one had ever shared the wealth quite like this Before the century was out, Microsoft would create more than twenty thousand in-house millionaires, from code writers to secretaries Gates and all the others who helped launch the Infore also shared the wealth in one more critical way that would remake the world as surely as the Industrial Revolution had done: They provided the infrastructure that anyone, anywhere on earth could use Nearly a thousand years earlier, Godric had had to battle improbable odds simply to win the chance to raise himself out of abject poverty Now, for the first tiuls, nates, the people who create andthem to their fullest fruition such business s to many different people To some they are saints, promises that democratic capitalism nurtures a meritocracy of the naturally talented Others laud the John D Rockefellers for their generosity, even as they decry the ruthlessness that propels theuls are evil incarnate, representatives of all that's wrong in a system that not only allows but sometimes seem to thrive on the econoest of the s at once: Henry Ford the first billionaire, Henry Ford the social innovator, Henry Ford the almost-president, Henry Ford the creator of the modern industrial order, Henry Ford the Fascist syoes on and on And so it is with Bill Gates
No human has ever been so rich Because Bill Gates is so heavily invested in his own coiven moment is tied intimately to the share price of Microsoft stock That meant that in 1996, when the company's stock soared by 88 percent, Gates made nearly 11 billion on paper, or about 30 million a day John D Rockefeller was said to have earned roughly 2 a second at his pri at a pace nearly 175 tih every minute to buy a new Honda Accord True to Gates's decree that Microsoft should always have enough cash in the bank to operate for a year without any revenues, his co a balance of 8 billion With his own money, Gates built a 40,000 square foot hoton, outside Seattle The vaulted garage alone can hold 30 cars Modern in the extreme, this house is also palatial in the extree
Rarely, too, has one hus to quite so uage of the digerati about Gates's ability to ”parallel process,” his ”unli” They note that he works on two co Microsoft caton: One co in from the Internet, while the other handles the hundreds of daily e-h which Gates keeps in touch with his own eer world Hiscapacities of the best co enormous input into finely crafted answers At least in part, Gates goes along with the idea
Gates told Walter Isaacson of Ti unique about huence All the neurons in the brain that make up perceptions and emotions operate in a binary fashi+on We can someday replicate that on a enoence in a carbonbased syste soe
Even Gates's fa to Microsoft executive Steve Ballraduated, Gates didn't) whom Gates lured to the coood thing The difference fro Politeness was at a preentle civility that keeps you fro to the heart of an issue quickly He likes it when anyone, even a junior ees hi back
As for Gates's softer, less binary side, supporters point to his philanthropy and to his friendshi+p with the very low-tech billionaire, Warren Buffett, whom Gates superseded as Aie, Gates has expressed a desire to spendaway his h a foundation run by Gates's father, Gates and his wife, Melinda, have donated billions of dollars, mostly for education, libraries, and public health For the year 1999, grants from the Bill & Melinda Gates Foundation included nearly 950 ainst preventable diseases and an even 1 billion to fund the Gates Millenniuher education A the points of attraction between Gates and Buffett, who is 25 years his senior, is a fascination with games of all sorts, and a marathon-like capacity to pursue theether with their wives at Buffett's San Francisco hoe
Where Bill Gates is concerned, though, such benign assessments never want for counterbalance Gates and Microsoft spent al assault: The antitrust suit filed by the justice Departe Thomas Penfield Jackson's order to break up the coation by the Federal Trade Commission Next to the verbal and written assaults on Gates, though, the legal one seems almost tepid
Rob Glaser, a former Microsoft executive who left to run an Internet sound system company, RealAudio, has called his former boss ”Darwinian He doesn't look for in situations with others, but for ways tothe co excellence” Thanks to Gates's contentious style, Glaser went on, the Microsoft ”atas even if it would blindside people you were supposed to be working with”
Others like Silicon Valley lawyer Gary Rebacky” The charge is a corollary of another longtih-tech companies and their proponents: that both Gates and his company are evolutionary, not revolutionary The saenerally, from Cosimo de' Medici to Henry Ford Just as Cosiasoline-powered auto the job better But in the digital, everything-athered resonance
Gates's i the man, his products, and his company Borland CEO Philippe Kahn once compared Microsoft to Germany under Adolph Hitler; another time, he likened Microsoft's Windows system to AIDS Lotus founder Mitch Kapor looked around the landscape of the software industry and declared that Microsoft's dodom of the dead” Oracle CEO Larry Ellison is probably the onistic of Gates's many industry coainst Microsoft, Ellison told a May 1998 Harvard computer conference that the coal[John D] Rockefeller ever did” and he accused Gates of ”lying” about Microsoft's record of innovation For good ency, Investigative Group International, to dig up dirt on its rival, literally going through Microsoft's trash
In cyberspace, things only get worse Half a year into the newsysteator to find Web sites with names like Boycott Microsoft, Punch Bill Gates, the Microsoft Hate Page, Microsoft Boycott Can, IHateBillGatescom, and the Bill Gates Personal Wealth Clock, which tracks Gates's gross worth by the fractional second, based on the 141,159,990 million shares of Microsoft he owned as of 1995, adjusted for splits in 1996, 1998, and 1999 As of Friday, December 15, 2000, at 13:45:47 PM Eastern Standard Ti at 48875, Bill Gates orth 551936 billion, the clock noted, or 199,738 for every living Aer point, the clock also included an old Irish saying directly beneath its calcula tions: ”If you want to knohat God thinks about ives it to”
The real Bill Gates is probably best described by a quote attributed to a competitor in the software business who also described himself as a friend of the Microsoft cofounder Gates, this person said, is ”one part Albert Einstein, one part John McEnroe, and one part General Patton” one part, that is, scientific genius, one part the teenius For good ht also have thrown in Thoenius but also an ultra-successful entrepreneur who kne to turn technological innovation into sales
Born to wealthy parents in Seattle where his father was a pro Greenfield, the longtiton Post Gates attended the fashi+onable and acadeorous Lakeside School It was there that he and his friend Paul Allen first discovered coht with the proceeds froraders had learned the BASIC cora a corade, Gates riting a progra for Lakeside About the same time, he, Paul Allen, and a third friend, Kent Evans, secured jobs writing a payroll syste traffic data for the City of Seattle (Evans, probably Gates's best friend fro accident before the three of the from Lakeside in 1973, Gates moved on to Harvard, while Allen went to work for Honeywell Two years later, in January 1975, cay as the oes, Allen, who had driven East to be near his computer pal, held up a copy of the new issue of Popular Electronics in!” What inspired Allen was a cover mockup of the MITS (for Micro Instrumentation and Telemetry Systems) Altair 8800, a kit computer that despite its primitive and often unworkable nature was to be the first personal computer Gates and Allen ie for the Altair, and on February 1 of that year, they sold it to MITS, their first customer Thus it was that Bill Gates became Harvard's most famous dropout he and Allen set up shop in Albuquerque, New Mexico, where MITS was headquartered and Microsoft was launched The conception turned into a very quick birth
Micro-soft, as it was first spelled, ended 1975 with three employees and 16,005 in revenues, but Gates and Allen ell on their way to settling a fundamental question that was to make all the difference in the co business were they going to be in Allen, ould leave the cokin's disease and go on to become a major venture capitalist as well as a sports team owner and the founder of a rockand-roll museum, had favored a combination of software and hardware Hardware, after all, was the business that nearly all the co Gates wanted to do software only, and luckily for Microsoft's eventual shareholders, he prevailed
”When you have thein power every two years, in a sense you can think of computer power as almost free,” Gates told a Playboy intervieho asked about the rift ”So you ask, Why be in the business ofthat's almost free? What is the scarce resource? What is it that li power? Software Another way to look at it is that I just understood a lot more about software than I did about hardware, so I was sticking to what I kneell and that turned out to be so important”
By 1980, Microsoft had shed the hyphen, ton state, and was a 40-person co about 75 million in revenues The company would end 1981 with three times as many employees and more than double the revenue What happened in betas IBM The co with a request: Would Microsoft be willing to develop languages and an operating systeust 12, 1981, IBM introduced with great fanfare its Personal Computer Far less noticed at the time was the 16-bit brain inside the PC Microsoft's Disk Operating System, or MS-DOS, for short or the fact that Gates had pressured the industry behehts to license MS-DOS For Bill Gates and Microsoft, the train had left the station
”We wanted to make sure only we could license it,” Gates has said ”We did the deal with the that would help popularize it We knew that good IBM products are usually cloned, so it didn't take a rocket scientist to figure out that eventually we could license DOS to others We knew that if ere ever going toto couys, not from IBM”
And make a lot ofup by IBM's failure to take control of its own operating system, Gates and co syste their attention toward domination of what's known as the ”office suite”: the co, spreadsheet, and presentation Each new conquest further engrained MS-DOS and, later, its Windows successors as the industry standard Happily for Microsoft, too, the co systereement that Gates' critics would come to deride as the ”computer tax,” all manufacturers of IBM personal computer clones had to pay Microsoft a royalty on every computer shi+pped, whether or not the machine was equipped with MS-DOS
By theto pay off in a serious fashi+on Revenues for 1985 stood at over 140 million, more than nine ti system was first introduced The next year, on March 13, 1986, the co to 28 by the end of the trading day (Fourteen years later, one of those original shares orth about 10,000, adjusting for stock splits) It was, of course, only the beginning
A second revolution in co this one led by Bob Kahn, Vint Cerf, and others had been underway ever since the 1960s when the Defense Departency had authorized an experi known as the Arpanet As the Arpanet evolved into the Internet, the digital interconnection of the world was launched, with all the new economic opportunities that entailed To make certain that co Microsoft products, the coation software, called the MS Internet Explorer It had the cash reserves to afford the luxury, and the killer competitive instincts to dry up its coator would never fly far fro system and its users would never fly far from home, Microsoft bundled the Internet Explorer with Windows and created, in mid-1995, MSN the Microsoft Network as a full-service Internet portal Within its first three months, MSN had enrolled more than half a million members Thus as by far thesoftware became by far the most popular Web exploration software In time, Microsoft would spread itself all over the Internet and intranets, and into , Web TV, and just about anywhere else that a company with a limitless appetite and some 15 billion in annual revenues could take it
Just as had been the case with Standard Oil almost nine decades earlier, the justice Department and courts seeovernment appeared to have won In February 1999, StatMarket, an Internet fact gatherer, reported that the Microsoft Internet Explorer was being used by nearly 65 percent of all Net surfers ide ByJune 2000, afterJudgeJackson had ruled against Microsoft in the antitrust case,the Internet Explorer an increase of 32 percent in a scant 16 al assault against the colobal Net surfers were also using a Microsoft licensed Windows operating system product, StatMarket found
Bill Gates, who prefers to think of hiist, not a businessman, had become both one of the world's most admired men and one of its most despised men, as well as its richest citizen
John D Rockefeller was in his early 70s when the breakup of Standard Oil ordered by the Supreme Court helped to triple his fortune in two short years to just under 1 billion Henry Ford was 45 before he sold his first Model T and in his 60s before he becae 43, Bill Gates, was a billionaire nearly 80 tiital era, the speed at which infor So was the speed at which wealth accumulates, products seize their s Radio needed 20 years to garner 10 million listeners Television halved that to 10 years Netscape got to 10 million users in only 28 months, and Hotmail made it in a quarter of the time -a mere 7 months
One year into the new lobally were expected to be using the Internet, according to Computer Industry Almanac By the end of 2005, the wired ide population is predicted to hit 765 ital wealth will spread At the outset of the twenty-first century, about 43 percent of all Internet users were Aure should drop to 28 percent Alht, Australia and Finland, the 11 tiascar, Ro-on away A web had been created a literal web: Touch it anywhere and you are in touch with its whole being And as the Web was spreading exponentially, opportunity was spreading with it Microsoft, AOL, Macintosh, Lotus, Netscape, Bill Gates, Steve Case, Steve jobs, Vint Cerf, Bob Kahn, and tens of thousands of others had all played a role in launching an opportunity machine such as the world had never known one that spread the chance for a better econoinable
For hundreds of years, the woe of Tan Mixay (pronounced taan meesay) have lived simply, nearly untouched by the outside world They spin silk and weave it into intricate designs passed down through generations Their country, Laos, is one of the least developed nations on the planet --a victim of decades of war and revolution For most people who live there, ”the randparents and ancestors going back centuries: the town square where local produce is bought and sold Just as they have been for generations, fishi+ng and far out of the nation's er resources To see how the new interconnected world creates opportunity, though, it's useful to look at three wolobal interconnection in this once unlikely place: Me Tha, Vivian Wee, and Nikone Nanong The odds are against any of thees they are involved in may be even more profound
Since she was a child, Me Tha has woven silk just as herahbors in Tan Mixay, but soon her silks will be available on the Internet No stay-at-ho businesses in remote countries like Laos learn how to use e-colobally and take advantage of the global appetite for goods Between the two, half as broker, half as facilitator, stands Nikone Nanong Born into a typical Lao fa as part of their ions of entrepreneurs before her aspired to more In 1992, with 1,000 in start-up capital and six looms, she launched Nikone's Handcraft Center in Laos' capital, Vientiane By the start of the new century, those six loorown into a business that employs 150 women from all over Laos Some of them work in the handcraft center; others like Me Tha ree, where they can care for their children Where they do the weaving is ilobal h Nikone's website, where she sells all her silks That marketplace expands constantly as each new link to the Internet is made, and as the marketplace expands, the potential for profit expands exponentially with it (”The value of a network goes up as the square of the users,” as Bob Metcalf, founder of the Ethernet, has put it) Nikone's Internet site (orldforallcom) is operated by A World for All, a nonprofit foundation dedicated to i community life in impoverished areas The site includes artisans from Cambodia, Thailand, and Vietnaoods for sale e from simple pillowcases to more ornate throws Most items sell for about 50; just a few climb to over 200 The site itself is absent the bells and whistles colobal Internet econoenerated at aworldforallcom is not even a drop in the bucket, but it's a vital drop all the sa in some of the world's most forlorn economies can compete with other weavers and textile entrepreneurs in every corner of the planet And in a nation like Laos where yearly incoed less than 1,300 a person, it takes only a relatively few e-business sales tofor the craftspeople and the families and communities they help support
”Howto Laos?” Vivian Wee asks ”How e weaver to see how she weaves? The number who do that is so small compared to the number who can click on her website and visit Nikone”
”We are so far away,” Nikone adds ”I had never drealobal exposure gives her one e, she says: ”I can convince my staff, 'You , because now it's on the Web”'
The Netherlands grew rich in the sixteenth and seventeenth centuries as a trading center where rare goods brought out of North Africa, the Levant, and further East at great cost could begin to rew rich a half a reater risk Faith in the power of business is inextinguishable But today, the Internet accomplishes all that Godric and the Dutch East India traders did in the blink of an eye Goods frolobe, twenty-four hours a day and via every sort of barter exchange: meet a price, narew rich through financial exchange If you wanted a substantial loan in fifteenth century Europe one to raise an aret yourself to Florence or to one of Medicis' partner banks elsewhere on the continent For smaller concerns or ni the pawnbrokers and the banchi in hborhood banks Whichever one you dealt with and wherever, the exchange was sure to be in currency backed by precious rah the Internet, stocks, bonds, ht and sold on line, and currency trade has becolobe at the click of a o, a dollar bill still had to be backed up with a dollar's worth of gold or silver Today, h electric wires, bouncing off satellites: No currency anywhere in the world is backed by anything more than sheer faith
Matthew Boulton and Jaine and gave it greatly increased utility, but they didn't deine, you still had to have one installed and on location Henry Ford and John D Rockefeller both needed vast physical infrastructures to support their fortuneNow the Internet provides both the power source and the bulk of the infrastructure for many businesses like Nikone's Handcraft Center at a fraction of the cost The Net is not only an inforhway; it's also what the influential CEO of EDventure Holdings Inc, Esther Dyson, has called ”an information bicycle” an infrastructure built for personal freedom, one that allows entrepreneurs to do what they want to do, in whatever fashi+on urines or selling silk like your parents and parents' parents have always hout the last millennium, it was control that created fortunes: control over the oceans or the railroads, the highways or the airwaves At the start of the new millennium, it's still control this tis never change, but here's the great difference: This road to riches is open to everyone
Acknowledgments
HANKING EVERYONE RESPONSIBLE FOR A DOcu everyone who has helped with a book born from a documentary entails a double debt that will be inadequately paid in this brief space
First, profound thanks to David Grubin Productions, which created thewith producers Ed Gray and Nick Davis, assisted by Arateful to David Grubin, who not only created the idea but furnished me with a terrific script from which to work, and to Lesley Norratitude is owed to CNBC, which not only aired ”Money and Power” but helped in ways big and s and words, especially Bill Bolster and Bruno Cohen, who helped create the concept and make it happen; Charles MacLachlan and Andrew Darrow for all their support for the documentary and involvement in all aspects of the creation of this book; and Karin Annus for her cooes also to all those who took tie, wisdoht in front of the caes: Frederick Allen, Stephen Ambrose, Jim Andrews, David Bain, Alan Brinkley, Edward Chancellor, Ron Chernow, Esther Dyson, Neal Gabler, John Steele Gordon, Henry Grunwald, Joel Kaye, Dale Kent, Maury Klein, David Landes, Joe Lennox, David Lewis, Nikone Nanong, Jean Strouse, Jennifer Tann, Steven Watts, Jack Weatherford, and Vivian Wee
Thanks as well to those who helped in more anony, and resolve the oftenblocks in a project of this scope A DeVito, Benjamin Lamberton, my nephew Tom Means, and rateful to Washi+ngtonian azine for the use of its research facilities
Last, but certainly not least, thanks to my dedicated and passionate editor, Airie Dekidjiev, and her assistant, Jessica Noyes, at John Wiley & Sons; ency; and Claire Huismann at Impressions Book and Journal Services
Howard Means
Bethesda, Maryland
Source Notes
Major sources for Money and Power include the following: 1 ST GodRIC: God AND PROFIT
On-air interviews: Joe Lennox, Jack Weatherford Buechner, Frederick Godric New York: HarperCollins, 1980
Coulton, GG, ed Social Life in Britain froe University Press, 1918