Microsoft just reached $2T, pushing Steve Ballmer's net worth to $80B.
Interestingly: when Ballmer joined MSFT in 1980, he was employee #30 and received ZERO equity. By its IPO in 1986, he owned 8% of MSFT.
How did Ballmer get that stake? A contract quirk.
Here's the story🧵
1/ Ballmer's Microsoft tale begins in 1975, his sophomore year at Harvard.
He lived down the hall from some dude named Bill Gates.
While Gates dropped out to start Microsoft, Ballmer was a total Harvard head -- playing on the Football team and writing for The Crimson.
2/ After graduating, Ballmer tried his hands at a few things:
◻️ Product Manager at P&G, where he worked with future GE CEO Jeff Immelt
◻️ A brief attempt at Hollywood screenwriting
◻️ Stanford Business School
While at Stanford, Ballmer was convinced by Gates to drop out...
3/ ...and come join Microsoft.
It was 1980 and the software co. was seeing explosive revenue growth: $16k in 1976 --> $8m in 1980.
Ballmer was to be Gates' first non-technical hire and the offer he gave reflects the fact that Gates' hadn't recruited a business person before.
4/ Ballmer's offer:
◻️ the title of "business manager"
◻️ $50k base salary
◻️ZERO equity
◻️CRUCIALLY-- as Microsoft was so desperate for sales know-how -- Gates (and co-founder Paul Allen) gave Ballmer "10% of profit growth" he could generate.
5/ With Microsoft growing like a weed (it would 2x to $17m in 1981), Ballmer's "10% of profits" deal was not sustainable.
At the time, Microsoft was a partnership (Gates 64% / Allen 36%).
One early VC (Dave Marquardt) wanted to restructure the corp for wider stock ownership.
6/ Gates wanted nothing to do with the restructuring, so Ballmer and Marquardt took the lead.
This was the corporate structure they drafted:
◻️ Gates and Allen own 84%
◻️ 8% goes to investors
◻️ 8% goes to Ballmer (in exchange for *waiving* his 10% profit share deal)
7/ Gates was OK with the deal but Allen was not.
He wanted Ballmer to own 5% max...so Gates agreed to drawdown the rest of the equity to give Ballmer from his own pool.
By 1986, Ballmer owned 8% of $MSFT. It was worth ~$56m when Microsoft IPO'd at $700m.
8/ In the decades since, Ballmer -- who was Microsoft's high-energy CEO from 2000-2014 -- has largely kept his stake in $MSFT.
Today, he owns ~4% of the tech giant while Gates owns ~1.4% (Allen died in 2018, and long ran down his stake).
9/ Ballmer is currently the world's 14th richest person and very high-profile owner of the LA Clippers (which he bought for $2B in 2014).
As far as "contract quirks" go, the one Ballmer had when he signed with Microsoft has to be one of the most outrageously lucrative ever.
10/ Follow @TrungTPhan for other baller business stories and -- also -- a steady drip of dumb memes:
11/ Sources
NYT: nytimes.com/2007/01/28/bus…
Wiki: en.wikipedia.org/wiki/Steve_Bal…
Forbes: forbes.com/sites/georgean…
12/ Here’s a random video of Ballmer waiving his hands around like Dennis Rodman:
13/ This may or may not have been Ballmer when he signed the MSFT contract that gave him 8% of the company:
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