Why isn't Bill Gates richer

He has been worth about ~$100 billion since the 90s from what I remember of him. His net worth dipped a bit in the aughts then recovered.

But didn’t microsofts market cap peak at almost 1.5 trillion before the coronavirus, up from maybe 250 billion around 2005? Why Didn’t Gates net worth go up six fold from 2005 to 2020?

But according to this forbes chart, he peaked in the 90s, went down to about 50 billion, now is back up to about 100 billion.

But again, wasn’t microsofts market cap far smaller in the 90s than it is now?

I know Gates has donated some money to charity, something like 30-50 billion. But does that alone explain why his net worth isn’t higher?

I can’t find what microsofts market cap was in the 90s, but I’m sure it was much lower than the 1.5 trillion it was pre coronavirus.

I don’t know if all his money is in Microsoft. I would guess a lot is, but *some *must be diversified.

He’s given away as you said something like 30-50 billion, and his net worth’s 1990s peak was a combination of the bubble in tech stocks + his large ownership stake in Microsoft.

Throughout the 2000s he’s steadily divested his ownership of Microsoft to the point I think he only holds a small number of shares in the company and his holdings are not a large portion of shares outstanding nor are they a large portion of his own personal wealth. Basically Gates didn’t want his personal finances and Microsoft’s being massively intertwined, for reasons both relating to himself and for the company. He wanted to slowly retire from Microsoft (which he has done) and he knew as long as he owned a huge portion of the shares he would always have to be fairly heavily involved with the company. So he sold off his shares in large blocks every quarter for like five years to avoid disrupting the market and so he could gracefully divest.

Since then his money has been managed by a company that he founded and whose only job is managing his money (it’s ran by a pretty big resume asset manager), as best I can tell their strategy for Gates investments hasn’t been to see him beat the market or have crazy high returns, but just safe and steady returns–I imagine a man of Bill’s wealth feels like from his massive capital position he doesn’t need to chase crazy returns.

If he had kept his large ownership stake in Microsoft he probably would be richer today, but it’s also possible Microsoft would be worth less. Part of the reason Bill sold was so he could retire from Microsoft, and if he wanted to retire it’s highly likely the same energy/drive that made him successful at building the company, would not have persisted if he was begrudgingly running the company simply to preserve his net worth.

He is diversified and has billions invested in various companies through Cascade Investment.

Ok, so as a thought experiment if he had kept the % of microsoft shares he owned at his peak (and I’m not sure what that is), what would his net worth have been when microsofts market cap was 1.5 trillion?

He owned 49% of the company at the IPO in 1986, and I’m guessing that was his position back to the founding of the company seeing as MS was profitable from the start. So there’s your upper bound.

i dont know how true it ever was but i read somewhere that he stopped taking paychecks from ms in between win 3.1 and the win 95 era and his fortune was linked to ms stock and company valuation after that

Alternatively, Steve Jobs had a huge influence on the founding and ultimate success of Apple but I don’t think he ever attained such wealth as Gates. At least it is never discussed, at least to the casual viewer like I am.

It’s typical for big-company CEOs to not take a salary, when the salary pales in comparison to their stock.

Cool, a potential net worth of 750 billion dollars. But if he owned half the stock who knows if the stock value would’ve been as high as it got.

Jobs was a much worse businessman than Gates up until the early 2000s, basically when Jobs attained a very high level of success in what was ultimately a very different type of business. Jobs is arguably a more interesting story because he did have several major failures in business, and I think he had even said he learned important things from them that were instrumental to his turning Apple around when they brought him back for round two.

Gates was thinking much bigger picture and about turning Microsoft into a Fortune 500 as early as like 1977. He was very concerned about his stake in Microsoft, and frankly for as “mean” as Jobs has been portrayed, up until the late 90s Gates was probably one of the most ruthless leaders in modern American business. Gates has genuinely rehabilitated his image to the point younger people probably don’t even know about the old Gates, but he was just absolutely savage in building Microsoft. Jobs was more of a angry/tantrum throwing punk, while Gates was like a malevolent supervillain. [Note I don’t really believe in either characterization, just painting the “outsider/simplistic view” you could take of both men.]

Gates basically bullied Paul Allen into taking a 64/36 split in ownership of the company, and was well aware of the ultimate potential from an IPO. Back in '77 Allen was a smart as hell computer guy and technically much more knowledgeable than Bill, but Bill understood business much more intuitively, Allen was still mostly interested in the technical challenges and making software for PCs, which was a super new technology in the consumer market at the time.

What’s interesting is that while Bill more or less sidelined and pushed Allen out of the company by the early 1980s, Microsoft’s most important early deal–to write DOS for IBM, was only successful because Allen was a great engineer and was able to buckle down and get that project done on very short order (they had actually sold DOS to IBM before even writing it, and had to crunch like hell to steal some code from a small software company in Seattle and port it to IBM’s specifications.) When Microsoft’s IPO hit Bill was instantly worth hundreds of millions, and was a billionaire by the end of the 1980s. His ruthless domination of the desktop PC market caused his fortunate to balloon even further with the release of Windows 95 and the massive revenue haul that represented in the company.

Jobs was on a very different trajectory, he had mismanaged bringing in investors to Apple and ultimately found himself fired from the company he helped found, with a much smaller amount of equity holdings. He started NeXT, which by all accounts produced great workstations for a niche market, but that company was gasping for air by the time Apple bought it out (largely as a part of its acquiring Steve Jobs to run the company again–this transaction also resulted in Jobs acquiring 1.5 million shares of Apple, the largest financial stake he had ever had in the company in $ value.) Interestingly up until very late in his life when Apple share prices had risen dramatically, I believe most of Jobs net worth actually came from his original funding of Pixar. When Disney bought Pixar they paid Pixar’s shareholders out with Disney shares, making Jobs one of the largest individual shareholders of Disney, and at that point in time he had more wealth from ownership in Disney than Apple. His Disney shares also were paying him around $90-110m/yr just in dividends for a good portion of the 2000s. Apple’s stock did well under Jobs but didn’t get really wild til near his death, and Jobs also seemed genuinely less interested in crazy compensation his second time with Apple, he was awarded stock grants throughout his time as CEO but nothing that would’ve produced, or been expected to produce, a Bill Gates sized fortune.

Googling, Steve Jobs was worth about ten billion when he died, which is a lot but only a tiny fraction of the value of Apple, and as said, only a small part of his net worth was Apple stock. His widow is now worth something like $27 billion, which is still enough to make her one of the richest people in the world.

It’s become a style point in Silicon Valley for a famous CEO to take a nominal salary, but overall it’s quite rare. If you’re never heard of the CEO, it’s pretty much guaranteed they’re making millions.

The large majority of Silicon Valley CEOs make jack squat, because their companies have little or no money.

But if you can manage to get yourself past a healthy Series A you might be able to squeeze out low six figs. From there it’s anyone’s guess.

I wasn’t clear. By “overall,” I meant the general run of Fortune 500 CEOs, whether they’re from Silicon Valley or not.

Gates said a while back that his kids will get at most 1% , the rest goes to his foundation and then to charities .

Speaking of Jobs, Apple never gave to charity when he was the CEO and he did not give either unless he did it anonymously. Apple gives to charity now and so does his widow.

I think it was Buffet who said “I gave my kids enough money they could do anything, but not so much that they could do nothing…”

I recall a piece by a fellow peripherally associated with Microsoft in its 80’s and 90’s big growth days, when they were being sued left right and center for assorted shenanigans. There was the story that for example they were getting a demo of extended memory tech in the early DOS/Windows 3.1 days. The dragged out the presentation and said they’d resume in the morning and persuaded the company to leave its tech in the presentation room overnight. The MS techs spent the night tearing apart and analyzing the tech, then sabotaged the demo so the next morning it failed and the company left without a deal. Microsoft duplicated their tech (and eventually got sued) This guy who did occasional work for Microsoft said that in any big tech company, there’s a bunch of gung-ho eager young engineers with crazy ideas. Then there’s a group of older engineers who’ve been through it all before who tell them “no, you can’t do that”. The guy’s impression of MS was that it was all those young wild-in-the-candy-store engineers and no older people to reign them in, so they did whatever they thought they could get away with. Sort of makes sense if they’re predominantly mildly autistic types with limited empathy and social skills.

Most CEO’s get paid bonuses in stock options which vest at certain times. (as do many executives) hence their biggest incentive is not long term growth or planning, but the next few quarters’ stock price, so they can get the stock at the option price and sell it at a profit. the story goes the airlines are broke today because they spent all their profits last few years buying abck stock to boost the price, now expect Washington to bail them out.

Bill Gates negotiated with Apple for Microsoft to acquire 150 million dollars worth of stock. If they had kept it and sold at the high it would have worth 11 billion dollars. Gates could have made more money from Apple then Jobs.

That logic only works if Microsoft hasn’t had capital increases via issuance of fresh stock since 1986. I googled around a bit but was not able to find if that has been the case (at least not from freely accessible data). They’ve had a series of share splits, but these would, of course, levae Gates’ percentage share unaffected.

A sort-of-similar thought experiment; how rich would John D Rockefeller be today if he owned as much of the various Standard Oil spin-offs as he did when he died, or when the breakup occurred? He would also be massively wealthy.