My college buddy from down the hall, Bill Gates, gave me a call and said, "Hey look, we've been building our company. We need a business guy. We don't have a, quote, 'business guy,' unquote." And my vast business experience—ad manager of the school paper, football team manager, publisher of the literary magazine in college, plus learning a little bit about advertising at Procter & Gamble—and man oh man, was I the big businessman, if you will. We kind of grew from there.
Steve Ballmer is a prominent American businessman and philanthropist, best known for his role as CEO of Microsoft from 2000 to 2014. Microsoft grew to $80 billion in revenue under Ballmer's tenure, and Ballmer himself became an institutional figure in Silicon Valley, well known for his distinctive management style and marketing talent. Beyond his corporate achievements, Ballmer launched USAFacts in 2017, a nonprofit organization dedicated to equipping Americans with the big data points on the biggest issues that face our country today: the economy, immigration, and healthcare. Ballmer and his wife Connie also co-founded the Ballmer Group, whose philanthropic mission focuses on improving economic mobility for families across the United States. Notably, Ballmer also purchased the NBA's LA Clippers in 2014, where he has financed the construction of a brand new stadium and can often be found courtside of games. In today's episode, Ballmer shares the circumstances of his upbringing in Detroit, Michigan, the early days of Microsoft, and his concerns about the public's wavering faith in the American dream. Ballmer also discusses his work with USAFacts, his advice to entrepreneurs, and the shifting landscape in big tech today. Steve's enthusiasm for business and clear passion for his charitable work are all evident to those who meet him. Don't miss hearing from Steve Ballmer on this latest episode of the Sunday Special.
Steve Ballmer, thanks so much for taking the time. Really appreciate it.
My pleasure. Thanks for having me.
So I want to talk to you about USAFacts in just a few minutes, but I want to begin with sort of your business career, because that's how most people know you. They know you from your days at Microsoft or they know you as owner of the Clippers. I want to start with sort of the general idea of the American dream. There's been a lot of talk politically from all sides about how the American dream is dying, how it's dead, but your story is an American dream story. So how does someone like you—you're, I guess, the 30th employee at Microsoft—end up as the head of Microsoft, CEO of Microsoft? Can you take us through that journey?
Yeah, maybe I'll give you more than you want. You cut me off if I go too long. In a sense, I'll say our two-generation story, if you will, is an American dream. My grandparents on my mom's side were immigrants from what's now Belarus and Ukraine—Jewish immigrants trying to avoid the pogroms, etc. They came here before World War I. My dad himself was an immigrant. He came here after World War II. He'd been an interpreter at the war trials at Nuremberg. So I'm pretty recent, as my folks would have said, off the boat. Neither of my parents went to college. My dad didn't finish high school. My grandfather on my mom's side didn't finish second grade. So while asking for no empathy, I will say we're recent in the country. I was brought up, I would say, solidly middle class. My dad worked his way up from payroll clerk at Ford. But they were able to give us a good education. I got a scholarship to a nice, fancy private high school that helped me a lot, and then went to Harvard. After that, if you will, I was quite set up. I no longer was at the bottom of the American dream. Graduated, worked for a couple years at Procter & Gamble, one year back in business school at Stanford.
And then my college buddy from down the hall, Bill Gates, gave me a call and said, "Hey look, we've been building our company. We need a business guy. We don't have a, quote, 'business guy,' unquote." And my vast business experience—ad manager of the school paper, football team manager, publisher of the literary magazine in college, plus learning a little bit about advertising at Procter & Gamble—and man oh man, was I the big businessman, if you will. We kind of grew from there. We were a partnership. We had to incorporate. We were 30 people, and we had done the year I started, we did, I think, 7.5 million of revenue, maybe a million of profit, I can't recall. So we incorporated the business, we put in stock option plans. First thing Bill and I had a chance to, quote, "fight about," unquote, after about a month and a half: I wanted to add another 18 people to the 30 people we had. Bill said, "You're going to bankrupt us. I didn't ask you to drop out." And I was going to go back to school. And then Bill said to me, "No, no, we're going to put a computer on every desk and in every home." That sounded like a big, broad ambition, and he said, "All right, hire one good person and we'll figure out about the other 17." It kind of all came together. When I left the company, I think it was about 88,000 people. We had about 27 billion of pre-tax income, and they've taken it now to higher heights, if you will.
Yeah, so that story is an amazing story, but it also happens to be a fairly typical one in the sense that I know a lot of people who have made a lot of money in the United States and very few of them were born to the silver spoon. You know, I know that when we started our company, obviously, my sort of family history is actually quite similar to yours. My grandparents on both sides ended up coming to the United States very early on in the 20th century, and I was raised very middle class. My parents were college graduates, but they certainly weren't rich. My mom was a secretary, my dad played piano at a restaurant, and they gave me the basis to do things like go to a private high school and then go on to UCLA and Harvard Law School, and then launch a business. And so this bizarre idea that the American dream is dead, that something is fundamentally shifted in the United States such that those sorts of stories are not possible, and that all the people you see who are very, very rich, they're just privileged as opposed to being beneficiaries of the American system—which means that we're all privileged. We live in a great system that allows for meritocracy, it allows for free markets, it allows for generational advancement to be made. Not everybody's going to make it from the bottom of the mountain all the way to the mountaintop, but you can move up the mountain such that your kids can make it the rest of the way. Do you feel like the American dream has fundamentally shifted over the course of your lifetime, or is that still a possibility for people?
I think it's a possibility, for sure. But I also feel as if it is—and the data from Raj Chetty, an economist at Harvard who's been working in collaboration actually with the IRS so we can look at specific data, if you will, would show that the economic mobility for African Americans born in the country, particularly African American males, and for Latinos, are not as good. Is the American dream alive for some folks? Not clear. I'm not saying it isn't, but certainly the data would say tougher for some groups to achieve that kind of mobility. And I'm sure if we went to Appalachia, just as a specific example, we'd find some of the same, if you will, for white people growing up in certain pockets. So it is possible. I believe in it. I totally believe in the American dream. I want it to be equally available to everybody in the country, and it's not. It's not just race and ethnicity that factors in; I just think there are some situational factors. Ironically, economic mobility today is better for women in the country than it is for men, particularly if you're of color. So it's just sort of a broader package. But do I believe in it? Yes. Do I view it as part of what we're trying to do philanthropically to make sure it is alive? Yes. So those things are, I think, quite important.
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So when we look at your story over at Microsoft, you know, obviously, we start a business, we're nowhere near Microsoft's level of success. So when you give business advice to people, which I'm sure you do all the time, what are some of the biggest lessons that you learned during your course of business, and what are some of the biggest fights that you had with people like Bill Gates along the way? Because as somebody who has a couple of business partners, those fights are fairly constant. I think people don't really tend to see that outside the company, but that sort of stuff is happening all the time behind the scenes.
Yeah, I'd say a few things. Number one, folks have to find something that they're either passionate about or they develop passion about. Not every job or not every career will you have passion about at the start, but sometimes that can really cascade. But you need to look. You've got to actually have a plan to see what's out there. Give an example: when I was an undergraduate, my dad worked for Ford, but I interviewed with about 32 different companies on campus just to learn, okay, what is it like to work in the back office of a bank? What does it look like to be an accountant? What does it look like to be a salesperson? I think it's really important to take that on as a mission to find a passion, not hope you randomly luck out and find one. So that'd be number one.
Number two is hard work. If you're working harder than the person who's doing your job in your competitor, that gives you more grace. It gives you more opportunity to, if you will, make a mistake, because you're going to work it through, you're going to catch up. So I absolutely believe that hard work is critical. The thing I have learned, I think, a little bit since Microsoft is you need to still retain a little bit of brain space—a little more brain space to speculate on what may come next. If you become a dreamer, not going to work. If you become totally a grinder, not going to work. So that'd be number two.
And then number three, let's face it, there is an element of luck. And I think people like to act like, "Well, I'm a master of the universe because I didn't have any help before. I did it all on my brain power, my hard work, and energy." And I think that's unfair. I think there is a clear element of luck in this game. So I would highlight those three things.
Then when you become a leader of a business, I think there's important things to really think about. Number one: be long-term in your perspective. If you're trying to build something, things don't arrive overnight. Number two: I like to tell businesses to get in the weight room. Build new skills before you know you need them. You have to be building skills, building talent, do the recruiting. Create a sense of optimism in your business. Colin Powell, we had him come speak one time to our executive staff, and he emphasized that optimism is a force multiplier. Businesses really need that kind of optimism. Leadership—leadership is about thought leadership. It's not just about people leadership. If you're very charismatic and you're running off a cliff, more people are going to follow you off the cliff. So damn, man, you better pick the right direction. Just a little bit of food for thought.
Yeah, I mean, there are a couple things there that I want to hone in on a little bit. The first one that you mentioned, which is passion for the thing—again, when I talk with folks who are very successful, there is this kind of bizarre idea out there that they became very successful because they're constantly thinking about money. Not a single person I know who has founded a successful company originally thought predominantly about the money. They thought more about the idea of the business and why they were enchanted with the idea of spreading that business. In fact, it's almost the reverse: if you think too much about the money when you're first starting a business, you actually end up doing the wrong thing. I remember when I was in law school and I was interviewing for law firm jobs, and I really had no interest in working at a law firm. And so I remember being in an interview and somebody said, "So why do you want to work at a law firm?" And I gave the honest answer, which was "for the money," because the starting salary was like $180,000 a year. And that was the wrong answer, as it turns out. And I thought to myself, but that's true. I mean, nobody's joining a law firm because they want to work 2,200 billable hours a year doing doc review in the back room. But the reality is that the employers looked at that answer and what they were recognizing is that if you are in it for the money, you're not going to stay in it. If you start a business because you think that's where the money is, you're not going to have the passion to go through the hard times, because the minute that the money doesn't come, you're just going to move on to the next thing.
I agree with you if you're trying to have that kind of drive to do something new. Now, for some people, I think people elect a profession where they say, "Hey, with greater certainty, I can have a very nice lifestyle if I pick this profession." I'm sure some lawyers do that. And that's okay. It's not all about the money, it's not about getting rich, but, "Hey, with relatively low risk, I have a chance of doing relatively well." This will sound a little bit off, but I think some of that is also true in getting into the investment business, whether it's venture capital or private equity, or even advising corporations on finance—those jobs pay well—or consulting. Capitalism works on this in the sense that if you look at top graduates of top schools who go into business, guess what? While the kids will say they don't care about the money, the jobs that pay do attract the highest percentage of the people. Now, I'm a big believer that markets actually are very efficient. If you put an incentive out there and it appeals to some, it's going to work.
Yeah, one of the other things you mentioned there was the luck aspect. And there certainly is a luck aspect to what works and what doesn't, and sometimes things you don't think are going to work definitely do. But there are some studies that suggest that one of the things that distinguishes successful leaders from unsuccessful leaders is actually how much they attribute their success to luck in a way that you wouldn't sort of expect, which is: successful leaders, when something goes right, they tend to attribute that to luck; and when you're an unsuccessful leader, you tend to attribute bad things happening to luck. So if you're a successful leader, you think, "Everything that's going wrong is my fault; everything that's going right, that's luck." And if you're a bad leader, you tend to think, "Everything that's going right, that's me; and everything that's going wrong, that's luck." And so I think that you're almost naturally doing that when you say success is luck. What you really mean by that, I think, and what a lot of us mean when we say that, is because I'm expected to put in the work, and if I fail, then that's something I can fix, that's probably something that's my own fault. The minute that you attribute your failure to luck, you're now saying that your own success is outside of your purview.
Yeah, I agree with that. To me, it's another way of saying not everything is controllable. We say this in basketball too, as owner of the LA Clippers: control what you can control. You can control how much work you put in. You can work on your kind of mental mindset so you really can be, okay, missed that one, next play, next play, next play. Can I tell you just a short Microsoft story that sort of confirmed my view of luck? Within a month after me coming to Microsoft, we got a call from some guys from IBM. IBM was the behemoth of computing in 1980. People might not know that now—younger people, my kids who are in their late 20s and 30s, they'll say, "What does that company do anyway?" But back then, they were the computer industry. These guys call and they say, "Hey, we want to come talk to you about something. We're not going to tell you what it's about, and you'll sign a non-disclosure agreement, and then we'll tell you, and that's how it'll work." And we said, "Okay, when do you want to come?" And they said, "Well, you know, we're down the street now." I may be exaggerating a little bit, but it sticks in my head. And so all good. They wanted to buy an operating system from us for the PC they said they were going to build. Whoa. Now, we didn't have an operating system. We had a bunch of language software, and there was some confusion because we had licensed one for a variety of reasons. Anyway, we said we don't have one, but we really wanted them in the PC business. So we literally called the number one operating systems company at the time, a company called Digital Research, and said, "We're going to put some guys on the phone, treat them right." IBM talked to them, same spiel they gave us. They fly down there, but the CEO at the time was out flying. His wife, who was a business partner of his, was there, refused to sign the non-disclosure agreement. We then said, "Hey, we'll get you an operating system." And if there isn't some luck in that, I don't know what luck is. So early on in my business career, we were the great beneficiary of good luck.
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So one of the other questions I asked earlier was sort of about how you navigate conflicts in the boardroom. How do you deal with top-level conflicts? I'm going to take this advice again with my own business partners.
Yeah, I would say you really have to work things out, and people have different personalities. From the time Paul Allen, who co-founded Microsoft, retired in about '83 after dealing with Hodgkin's disease, I was basically the number two guy at Microsoft and number one business guy. Bill and I would tussle about things, and there was a certain way we'd work them out. They were never decided in one cataclysmic meeting. There was a lot of struggle and body punching and mind gives, and we worked it out. 20 years later, Bill asked me to be CEO of the company, and I said, "Do you really want me to be CEO, like the number one guy, and you're going to be the number two guy and you're going to do the tech?" And he said yes. Well, guess what? We barely talked for that first year. It was very hard for us to figure out how to reverse roles. And even after, I would say it took a while before I really felt comfortable in taking freedom of action. So it is tricky. It is absolutely tricky. And I suspect if you get two hard heads—I call Bill and I two hard heads—it's a little bit different than if you have two different personalities: somebody who's a little quieter, but no less steely, versus a hard head. Everybody works it out in their own way, I guess, or they don't work it out and things blow up.
So I'm going to come back to the Clippers of it in a bit, but I want to get to USAFacts. So this is a new venture that you've started, a nonprofit that's designed to essentially provide just the facts. Obviously, we live in what people have termed a "post-fact" environment, where everything is narrative. One of the difficulties in the industry that I'm in, because I'm in the media industry and that means that I do opinion journalism, is trying to make clear to my audience what is opinion and what is fact. So one of the sort of rubrics that I've used historically is you listen to my show, then listen to Pod Save America. If we say things that are the same, those are the facts. Everything else is probably the opinion that's being drawn from that set of facts. USAFacts is an attempt to sort of distill down what those facts are. Where did you come up with this and how's it been developed?
Yeah, let me do origin first. I retire and I'm thinking, "Isn't this great? I don't have to do anything for a while. I can relax." And my wife says, "No, no, no, no, you're going to help with our philanthropy." And she was focused in on foster kids at the time, and kids who grew up in tougher circumstances without maybe that ability to dream the American dream. I say, "No, no, no, the government takes care of those things. We don't do philanthropy, the government pays for them." And she said, "No, we're going to do philanthropy." And so I jumped in, but it got me keyed up to understand: what does wealth transfer look like in America? Which got me more interested in taxes, who pays them, what the government spends the money on. From there, I got interested: well, government's not a business, but what kind of outcomes do we get for the money that gets spent? And once my shape of what I was interested in became clear, I said, "Gosh, I wish I had something like a 10-K report that every corporation files with the Securities and Exchange Commission." Why? That report is comprehensive across everything the business does. It has to break the business into clear segments that you can understand. The report can't forecast the future, which I consider a biased activity; it just has to report the numbers that have happened in the past. There's a caveat: pension plans do forward progress, and we do publish those. And the thing would also have to be then comprehensive, comprehensible, and because we're talking about government, it makes it almost by definition nonpartisan, because we're just reporting on what happened. We don't even take an opinion about what should happen. I mean, it's very hard to grade things. Take spending on transportation infrastructure. If you look at the data from the Army Corps of Engineers, most of our bridges and roads have been getting better and better and better with the roughly $200 billion a year we were investing as a country. Great, that's super. And then somebody comes along and says, "Let's do an infrastructure bill to spend more." Well, if you're me, you say, "Hey, is that a good use of tax dollars? Because I can live with the balance." If you're my daughter-in-law with our grandchild, guess what? You might say if there's even 1% of roads or...
bridges that are deemed unsafe, we should spend more. So there's no normative way to say what is better and what is worse. So no score-carding, just here are the numbers. And before you have your damn debate, at least let's debate from what's true. And let's not be like a politician where, boom, we just grab one number out of the ether, give it no context to somehow alarm people or excite people. And if you look at them in context, you know, things look very different.
I'll give you one example. If you look at the median wage in our country, the median wage has gone up 21% essentially since the start of COVID. At the same time, inflation's been about 19% since the start of COVID. So that's what's true by the numbers. Now, there's a lot of feelings from politicians, there's a lot of feelings from citizens—I don't dispute any of those—but the numbers are what the numbers are. And how people choose to react, what people forecast for the future, what actions people want to take, that becomes partisan. All of that becomes partisan.
I majored in applied math and economics, and I used to think economics was a science. I really did. And now I know there's kind of left-wing and right-wing economists. It's a little hard to think about it as a science anymore. And the last thing: we only use government data, much as a corporation only uses its own data. We're not asking people to look at survey data from a think tank that might be biased. I believe, in general, we have very professional statisticians in our government agencies. It's imperfect. We don't collect all the data. Sometimes two collection systems lead to things that don't say exactly the same. But if you're a decision-maker in this country, I don't know where better to start.
And if you're a politician and you want to complain about the data, then I say to you: damn you, that's on you. You politicians are in control, in a position to make the data. If you don't think it's right, push on those statisticians. The citizens can't do that. You want us to believe that. Anyway, long-winded, but that's how I feel about it.
So to give people sort of a sample of what you're talking about, I wanted to play a clip from a video that is about budgetary issues. Here is something from USAFacts talking about the aging of the American population.
People are more likely to live alone today than anytime in the past. 29% of households today consist of individuals living alone without a child, compared to 13% in 1960. Second, a greater share of the population is over 65, increasing from 13% of the total in 2010 to nearly 18% in 2023. More retirees rely on income from Social Security and support from government services like Medicare.
